Aew Uk Reit Share Discussion Threads

[williamcooper104] 19/7/2023 07:03

Bit junky in a good location is a decent mix of yield and opportunity

[williamcooper104] 19/7/2023 07:03

Yep; looks like there's good alternative use potential

[spectoacc] 19/7/2023 06:27

Uncapped RPI, well done AEWU finding that. 75% of the rent from NCP.

Struggling to picture which one it is (know York well), thinking it's just around the corner from the station.

Edit - can picture it now, opposite the bus station on Rougier St, not far from PCA's Hudson Qtr flats, 5 mins walk at most from station, 5 mins walk into town.

But it's a bit junky, as shown by the yield, and amazed NCP pay that sort of rent on it.

On plus side - there's a lot of the usual AEWU work to be done on it.

Not sure if this will work, but it's this, with the NCP entrance up the road to the right:

[skinny] 19/7/2023 06:02

Acquisition of high yielding mixed use asset in York

AEW UK REIT plc (LSE: AEWU) ("AEWU" or the "Company") is pleased to announce that it has completed the purchase of a freehold, mixed-use asset in York city centre for GBP10,020,000, reflecting an attractive net initial yield of 9.3%.

The 99,769 sq ft asset is multi-let to five tenants. 75% of the income is received from National Car Parks Ltd ("NCP"), who have occupied the 297-space car park since 2005 and have a further nine years remaining on their lease. The lease benefits from a 2027 rent review which will increase rent payable in line with the Retail Price Index, uncapped, resulting in a forecast reversionary yield in excess of 10%. NCP is one of the UK's largest car park operators with an estate of approximately 189,000 spaces over 642 sites. The company is owned by Park24, a Japanese based multi-national parking operator, and the Development Bank of Japan. Another four tenants occupy the ground and first floor retail and office accommodation fronting onto George Hudson Street.

The site totals 0.8 acres and is located inside the York City Wall, bordering the historic centre of the city, within the "Micklegate Quarter". It is situated in a prominent corner position on George Hudson Street and Tanner Row, within a 10-minute walk of key visitor attractions, including York Minster, the Yorkshire Museum and the York Dungeon. York's key retail provisions at Coppergate Shopping Centre, Coney Street, Davygate and Parliament Street are all within a 7-minute walk.

Following purchase of York, cash available for deployment in to high yielding pipeline assets is circa GBP15.0m.

Commenting on the purchase, Laura Elkin, Portfolio Manager of AEW UK REIT said, "We are pleased to have purchased this very well-located mixed-use asset at a day one yield that will be accretive to the Company's earnings. Our due diligence has shown that NCP trades well from the location and we expect this to continue given the popularity of York as a destination. Completion of the acquisition marks the strategic reinvestment into higher yielding assets of capital generated from recent sales. We continue to analyse an interesting pipeline of potential acquisitions and expect to make further purchase announcements in due course, which will bring us closer to our short-term target of full deployment of capital."

ENDS

[kenmitch] 04/7/2023 13:17

SOCAL. That IS how I see it now too. I.e other REITS are better choices for new buyers now. My key point is that AEWU is NOT a sell for any of us clever or lucky enough to have bought in a previous big dip (in my case 2020 covid dip)for reasons so well put by Tag57.

And SKYSHIP, as Tag57 and Spangle93 have just pointed out, my AEWU dividend yield IS 13% at my buy price, and it’s that yield that counts for me and not the yield now at a significantly higher share price! My current AEWU profit with dividends included is 100%. That’s good during a sector downturn.

And building on this point; I also bought Mining Trusts BRWM, CYN and BERI during a Mining sector dip in 2020 too. All 3 have fallen back but CYN is still more than 3 times higher than my buy price, and that’s EXCLUDING dividends on top, and the other two are still up over 150%. And the yield on big dividend paying BRWM is currently about 15% on my buy price and was more before a modest cut. And the yield on the other two though more modest is also high at 10% for CYN and 9% for BERI at my buy prices. So very useful income every year and far better than cash. i.e note my comment about John Lee’s dividends. Mine are pathetic in comparison, but at last I’ve woken up to a method that works a treat!

But my key point remains simply that AEWU is not necessarily a SELL. And for me and others using similar methods, AEWU is a strong hold. For new buyers, for now there are better choices.

[tag57] 04/7/2023 12:47

I would say that it is yielding at 13% on Ken's original investment and compounding at 7-8% pa. since 2020, giving a 16%+ return this year. If AEWU hold their divi for another couple of years he will have a free carry. While there is a chance of the divi getting cut nothing is guaranteed and this goes for other REITs and investments elsewhere.
I am using a similar methodology although my investments are taking a hit due to higher inflation rates but expecting these to come down somewhat in the next few years.
There is also the benefit of not having to watch the share price constantly, happy in the knowledge that you bought well - something I need to get much better at!

[skyship] 04/7/2023 12:46

SOCAL - that's exactly how I see it too. Though each to their own. If it works for Ken I suspect he is happy to play it that way!

[socal1] 04/7/2023 12:36

Ken, not talking about AEW specifically and definitely not opining that one must sell here, just talking in general terms about sunk cost / sunk benefit fallacy. Obviously it’s totally ok for one to like AEW here and also fine to adopt a long term buy / hold mindset; overtrading demonstrably hurts returns for most over time. But; if you are evaluating the best opportunities at the present moment and comparing them, then IMO best to cast your entry price out of the analysis; it has zero influence on the future returns you will enjoy from an investment.

[spangle93] 04/7/2023 12:34

@Skyship - the way I read kenmitch's post, he's saying he was farsighted enough to buy in 2020 when the price crashed below 70p, so on that basis, an 8p dividend for him equates to a 13% yield.

[skyship] 04/7/2023 12:15

Ken - AEWU is not paying 13%. It is yielding an uncovered 8.6% @ 93p.

[kenmitch] 04/7/2023 12:00

Just adding a brief bit to my previous post. These days (and I wish I had done it years ago) I use methods favoured by brilliant investors like John Lee and Warren Buffett. I.e look to hold our quality holdings long term. That way John Lee is now getting dividends of 100% and more a year from some of his holdings and the dividend yield every year is massive. I trade too, but buying the big dips and then holding works!

[kenmitch] 04/7/2023 09:56

Fair points but I also have to decide is it a sell now?

And with a 13% dividend it certainly isn’t, at least until the news changes for the worse or if there’s a dividend cut.

So it makes no sense at all anyone else who took advantage of those great buy opportunities in 2020 selling now on another big sector dip. After all SKYSHIP we have both bought EBOX recently. So you ARE buying the sector.

So can you really convince me or anyone that selling a REIT paying a 13% dividend during the current downturn AND still up 50% on my buy price is a definite sell? It’s been the best performer in the sector and could well be again when the sector turns up again.

I do agree though that for new buyers there are better choices now. E.g SREI, EBOX and API and I hold all 3.

[skyship] 04/7/2023 07:22

Sorry Ken - but IMO you should never view your investment from the perspective and parameters at the time of purchase. You have to assess the position as it is now - not 3yrs ago.

[socal1] 04/7/2023 06:25

Ken, if you wish to hold what you buy rather than trade, then that objective is going to override everything else, and you are simply going to hold what you buy. But if you invert the logic of everything else you wrote, you will see it does not a provide a logical basis to hold now: had you bought at a higher price, say a 4% yield, and the price had now fallen to offer you a juicy 10% yield, would that poor entry price be a good reason to sell at a 10% yield?

[kenmitch] 29/6/2023 14:11

SKYSHIP.

I usually agree with you (except on buybacks where nearly everyone disagrees with me) but are you really telling me I should sell AEWU?

I bought at 63p and at that price I’ve been getting 13% a year just in dividends. There has always been a risk of a dividend cut but shrewd Management decisions mean that AEWU was the only Commercial Property Trust not to cut the dividend during the covid sector bear market.

Even a cut to 6p would still give a yield of over 9% at my buy price, AND with every chance when the sector recovery comes eventually of the dividend being increased along with share price gains as well.

I’m not claiming it’s the best one to buy now as the discount is (deservedly) much narrower than the others, and the likes of EBOX and SREI look better choices for new buyers. But if there’s anyone else reading these threads who also buys these Trusts on the big dips and then looks to hold them for years in preference to trading them, and who also bought AEWU or others at lower prices than now, the case for holding is strong.

[stemis] 29/6/2023 13:25

But you've been saying that for a while now...
------------
SKYSHIP - 22 Oct 2020 - 07:41:47 - 1013 of 1457
AEWU NAV Q3 update - down just 0.7% from 93.37p to 92.73p.

Dividend again at 2.0p, but EPS at just 1.6p.

Dividend unsustainable surely.
------------
Since when they've held the 2p quarterly dividend 10x...

[skyship] 29/6/2023 13:13

SERE said the same....then cut yesterday!

"Reflecting the potential impact of higher interest costs on the Company's earnings and more patient capital deployment strategy, the quarterly target minimum dividend will be rebased to 1.48 euro cps per quarter (80% of the previous level), commencing with the third interim dividend payable in October 2023. This will allow management to be more patient deploying cash reserves into attractive investment opportunities that are likely to arise, as well as enabling the immediate payment of a fully covered dividend."

[killing_time] 29/6/2023 13:11

You obviously don't follow AEWU closely otherwise you would know that they stated when all the cash is invested in new properties the dividend will be fully covered.
So talk of cutting the dividend is utter rubbish.

[skyship] 29/6/2023 13:06

A very risky hold as the share price likely to drop to c85p when they eventually bite the bullet and cut to 7p pa. 6p would take them lower than that of course.

Upside - well, has to be seriously limited as far better buys across the board.

API, EBOX, SREI - discounts 32%-42% and yields 8.1%-8.4%.

Why would you hold AEWU on a mere 12% discount and a dubious 8.6% yield?

SELL!

[stemis] 29/6/2023 13:00

Much of the lack of cover is due to AEWU trading properties rather than holding them for their rentals. The recent sale of the two industrial assets generated a profit of £3.8m on purchase price, which equates to 2.4p/share. Don't se them cutting the dividend.

[nickrl] 29/6/2023 12:56

@aeonflux i came to that conclusion several years ago and never bought them believing they would have to rebase they never have. Laura has the knack of buying low selling high and generating enough surplus capital to keep the show on the road. I guess when that strategy no longer has legs we may get a reset. Divi good but trading too close to NAV currently compared to others.

[skyship] 29/6/2023 12:35

Could be a read across from SERE who yesterday cut their uncovered dividend.

[mondex] 29/6/2023 12:16

Aeon, the dividend has not been fully covered for 3 years, so, whilst your explanation is generally true it doesn't explain why today the share price drops 4.5%. THoughts about the timing?

[aeonflux] 29/6/2023 10:14

New major risk - Dividend sustainabilityThe dividend is not well covered by earnings and cash flows.Payout ratio: 132%Cash payout ratio: 129%Dividend yield: 8.4%This is considered a major risk. Companies that pay out too much of their earnings and cash flows are at risk of having to reduce or cut their dividend in future. If earnings or cash flows stagnate or fall, then there may not be enough to maintain the same dividend. Or in extreme cases, companies may opt to dig into capital reserves or take on debt to maintain the dividend. For dividend paying companies, any reduction in the dividend can significantly impact the share price.This is currently the only risk that has been identified for the company.

[mondex] 29/6/2023 08:20

Any idea why AEWU has dropped 4% this morning. Yes FTSE is down but AEWU seems particularly, badly affected.