Aew Uk Reit Share Discussion Threads

[badtime] 29/3/2021 12:29

Nice to see a bit of upward movement

[raptor_fund] 18/2/2021 13:10

Macron over our government for sure. To be fair though the government's vaccination program has been the first world class thing they've managed to organise.

[chucko1] 04/2/2021 11:36

Dn't forget with AEWU, though, that they have spent some effort spelling out their road-map to full dividend coverage. It is their intention to cover it as they reinvest proceeds of recent sales. They will likely get close, although hitting it fully may be difficult until they arrive at 95%+ on collections.

But getting close is fine as they have plenty of capital in the meantime. Additionally, it seems that the draw from capital is likely to be more than met by even a moderate continuation of their assert management initiatives.

The uncertainty of this pathway diminishes as vaccination and science improves, which appears to be on a very rapid trajectory. The policy choices on just about every aspect concerning vaccines seems to be correct. Who would you bet on - Oxford Univ. or Macron for such policy choices?!

[spectoacc] 04/2/2021 11:17

A little disingenuous when the portfolios were constructed by the same manager :)

AIRE:
"A quarter of the Group's rent is derived from the hotel and leisure industry, which has been particularly adversely affected by the COVID-19 related lockdown measures enforced during 2020 and, indeed, most remain closed. As a result, the Group currently has arrears from this sector equal to c.8.0% of its 2020 rents, which, when combined with the remedial work that the Group completed in December 2020 to ensure that its property in Swindon conforms with current Building Regulations, has impacted the Group's cash position, resulting in a lower dividend declared today in respect of the final quarter of 2020. The Board continues to target a resumption of a fully covered annual dividend of 5.5 pence per share1, all else being equal, by September 2022."

A reminder AEWU was 9% short of rent (collected 90%, 1% more due) at last report.


AIRE now has a covered divi. Unlike at AEWU where it's uncovered (but will continue to be paid: I don't expect AEWU to have any reason to cut). And NAV also up.

Hard to choose between them in truth - AIRE is collecting slightly better, AEWU had a higher NAV increase, AIRE lower but covered divi, AEWU paying out of capital. Neither have any LTV issues. Price & inflation protection has me far more in AIRE than AEWU atm.

[2wild] 04/2/2021 11:05

Ex 2p div this morning. I wonder if we'll get another opportunity to buy at 80p or below, giving a 10% yield.

I note AIRE slashed its div by 20% today, 27% below this time last year. So glad AEWU avoided low yielding index-linked property.

[lord gnome] 25/1/2021 17:30

That was certainly a very pleasant share price uplift today in what has otherwise been a dismal day in the markets. Happy to add to my REITs when funds permit. They will recover eventually to provide a nice capital profit and locking in those yields is a once in a decade opportunity.

[chucko1] 25/1/2021 16:10

AIRE will have its day! It had one recently (a few months back) so let it recharge its batteries while AEWU is centre-stage.

[2wild] 25/1/2021 16:05

Top sliced 7% of my holding at 85.73p, a nice 12% increase on my previous purchase a few weeks ago. Don't think this has much further to go, although 88.89p still gives a 9% yield and cost of debt is below 1.5%.

[davebowler] 25/1/2021 15:59

Liberum;
AEW UK REIT

Industrial value uplift caps strong year

Mkt Cap £127m | Prem/(disc) -16.7% | Div yield 10.0%

Event

AEW UK REIT's NAV per share at 31 December 2020 was 95.9p, representing a NAV total return of 5.5% in the quarter. Q4's strong performance benefited from a 7.6% like-for-like revaluation gain on the industrial assets (56% of the portfolio).

The overall portfolio valuation rose by 3.4% on a like-for-like basis in Q4, well ahead of the capital return of 0.6% for the MSCI IPD Index. The valuation movement by sector over the quarter was industrial +7.6%, office -0.7%, retail -1.1% and other -3.5%.


The portfolio has benefited from asset management initiatives including a number of lease extensions. Several of the industrial assets have experienced rental uplifts from new lettings and rent reviews:

Sandford House, Solihull - AEWU has agreed the sale of Sandford House for £10.5m, 9% ahead of the prior book value. The sale price is 94% above the acquisition price and the disposals follows a new 15-year lease with the tenant in July at a 30% premium to the prior passing rent.
Bath St, Glasgow - Contracts have been exchanged for the conditional sale of the office property to IQ Student Accommodation, conditional on planning permission for a 480 bed student property (final sale price will be within £8.6m to £9.3m range).
Moorside Rd, Swindon - A new letting was agreed with HB Accident Repair Network in November, just two months after the administration of the prior tenant, Tenant Nationwide Crash Repair Centres. The passing rent on the new ten-year lease is 10% ahead of the prior rent.
Sarus Court, Runcorn - A new 10-year lease to Di-Tec Power was 3% ahead of ERV and sets a new high tone of £5.65 per sq ft for the estate.
Storeys Bar Road, Peterborough - A 15-year lease renewal has been completed with one of the company's largest tenants, Wydenham, resulting in a 19% increase in the passing rent.
Brightside Lane Sheffield - A rent review settlement has been agreed, resulting in a 7% uplift to passing rent (also 7% above ERV).
Rent collection for the December quarterly payment date is expected to be broadly in line with the prior quarter. 64% of rent for Q1 2021 has been received, rising to 92% once monthly payments and longer term payment plans are included. An additional 1% is under negotiation.

AEWU - rent collection by quarter



Q2 2020

Q3 2020

Q4 2020

Q1 2021

Received

95%

89%

87%

64%

Monthly payments







26%

Agreed on long-term payment plans

2%

3%

4%

1%

Under negotiation

2%

4%

1%

1%



99%

96%

91%

92%

Outstanding

1%

4%

9%

8%

Total

100%

100%

100%

100%



Source: Liberum, Company data

EPRA EPS rose 5% to 1.68p for the quarter (0.84x dividend cover). The dividend has remained stable at 2p per share for Q4 2020. Dividend cover has reduced since the sale of the Corby asset in May at a 25% premium to NAV. Q4's EPRA EPS was reduced by 0.21p as a result of provisions against rental income (-0.13p) and remedial works at the Blackpool property (-0.08p). AEWU completed the acquisition of the multi-let industrial asset in Weston Super Mare for £5.4m (6.4% net initial yield, expected to rise to at least 7.4% over the medium term) and dividend cover should improve in 2021 as further acquisitions complete.

The balance sheet is in excellent shape with gross and net LTV ratios at 31 December 2020 of 21.6% and 17.5% respectively (23.1% and 15.3% at 30 September). AEWU can draw up to an additional £13.7m to fund new investments.. The company's cost of debt remains very low (1.45% average cost of debt) as it is hedged using caps.

Liberum view

AEWU has generated a highly creditable NAV total return of 7.3% in 2020 despite the significant volatility impact on property markets. Rent collection has remained high and new lettings have typically been above passing rent and ERV. The company's strategy is to invest in buildings with low obsolescence, focusing on good commercial locations with low levels of supply. The portfolio has benefited from a strong letting performance and other accretive asset management initiatives. The portfolio offers considerable scope for further growth given the weighting to industrial assets with low rents and capital values. The industrial properties are valued at £39 per sq ft, c.44% below construction costs (excluding land).


In the period from 31 December 2016 to 30 September 2020, AEWU has outperformed the diversified REIT peer group by 17%. Several factors have contributed to this including asset selection, sector weightings (high industrial and low retail exposure) and a high level of recurring income. AEWU has tight control over costs with the lowest interest rate in the peer group and one of the lowest EPRA cost ratios. We believe AEWU will continue to outperform peers given its significantly higher level of recurring income. We believe the shares are highly attractive at the current 17% discount to NAV (10.0% dividend yield).

[spectoacc] 25/1/2021 15:53

Know I've said it before, but does make me laugh how revered and successful Ms Alex & Laura are at AEWU, compared to being so unsuccessful at AEWL they got the push.

As an AIRE holder, I think the portfolio they constructed (and it's pretty much still that) is better than the market gives credit for. Success at AEWU shows that.

[chucko1] 25/1/2021 15:40

The update is all very well, but this move is another example of the immaturity of this part of the market.

I mean, an 8% move on a confirmed dividend and decent NAV update? Yet no moves in others which are not a million miles different.

[playful] 25/1/2021 15:38

The answer to this question piqued my interest here...

Changes to the Use Class Order, in particular Use class E, has been mentioned several times when discussing the Company's strategy. Can you say a bit more about the changes in use regulations and expected impacts on the market?

Looking forward, it is expected that we will see increasing utilisation of ‘change of use’ as a result of newly introduced changes to the national planning regime. These changes aim to increase flexibility of use, particularly in town centres and include the introduction of Use Class E which groups together a number of previously disparate commercial uses to allow greater ease of movement between them. For example, prior to the introduction of Use Class E, commercial property uses including light industrial, office, retail, health care and gymnasium where categorised in to different use classes so movement between these uses required express consent. The introduction of use Class E, where these uses are now classified together, increases ease of movement between them.

Well done Alex & Laura!

[chucko1] 25/1/2021 13:33

Your 84p target is basically tradable now.

[2wild] 25/1/2021 11:56

Someone brought 108K at 82.8p and subsequent purchases, has see my 84p target arrived 7 days early.

They say they have a pipeline of attractive opportunities, so don't see any problems in restoring 100% dividend cover over the next 3 to 9 months.

[badtime] 25/1/2021 11:34

Got in at 61...wishing I had taken more now

[nickrl] 25/1/2021 11:02

chucko there still putting out the cautionary statement on dividend though but guess thats only sensible in the current environment. Whilst they have marginally improved coverage this qtr they are losing c0.5m from Solihull sale and I estimate they've only covered about 50% of that with other asset mgt initiatives.

Im assessing the divi is costing 450k extra / qtr so they need to quickly recycle surplus capital off Solihull.

In the round its a transparent update and I have to honest and say i was waiting for it to get back to 75p was a mistake!

Should be read across to others with reasonable weighting of industrials in their portfolios

[chucko1] 25/1/2021 08:26

Even with that rent going begging, the redeployment of cash will take them close to 2pps dividend coverage. Let's say they end up at 95%, therefore 0.1pps short - compare that with the asset management gains of around 1pps and you have 10 quarters of coverage!! The industrials gain of 7.6% merely emphasises how the risk of slight dividend miss is offset by many other things going on with AEWU.

The idea of cutting the dividend was always way, way, way off the mark. Even thinking that might have prevented some from investing more aggressively in AEWU, which would not have been a great call given the continuing strong performance. It's been quite easy to buy, in fact, as there had been a keen seller the past weeks.

For now, general market concerns stop this from going a few pence higher. The NAV is only 1.37pps lower than it was a year ago whereas the share price is 16.5p lower. Furthermore, it keeps pumping out 8pps in divis with lower base rates.

[spectoacc] 25/1/2021 07:52

Big increase on the industrials valuation, making up for things elsewhere. Looks like 9% of rent going begging. Any NAV rise in this market is impressive.

[playful] 25/1/2021 07:32

Good update & 2p divi confirmed too....

NAV of £151.88 million or 95.87 pence per share as at 31 December 2020 (30 September 2020: £147.24 million or 92.73 pence per share.

Dividend declaration

The Company today announces an interim dividend of 2.00 pence per share for the period from 1 October 2020 to 31 December 2020. The dividend payment will be made on 26 February 2021 to shareholders on the register as at 5 February 2021. The ex-dividend date will be 4 February 2021.

[2wild] 20/1/2021 11:42

Looking good for a rise to 84p over the next two weeks, assuming they go ex 2p div on 7th February.

[johnroger] 18/1/2021 17:27

Last year it was the 16th but the year before the 25th, so possibly this week or next.

[ramellous] 18/1/2021 16:55

No divi notifications this month?

[chucko1] 05/1/2021 15:31

The seller is still there, it seems. A block of around 88k shares was sold at just over 76 this morning and the offer is large again and pressing down on the price. Assuming the seller wants out completely, this could go on for weeks. Seller has a total of 13.5mn to sell and has sold about 6mn so far.

I am considering my strategy accordingly! Which is centred around sitting doing little apart from selling a few when it pops and buying them back when the market makers back off as the seller gets fidgety. Dividend yield of 10.5% allows comfort while doing so.

[spangle93] 05/1/2021 13:07

Given your moniker, perhaps that hasn't always been the case ;-)