We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for real-time alerts, custom portfolio, and market movers
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Aew Uk Reit Plc | LSE:AEWU | London | Ordinary Share | GB00BWD24154 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 4.00 | 4.81% | 87.20 | 87.00 | 87.20 | 87.40 | 84.10 | 84.90 | 703,051 | 16:28:10 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Investment Trust | 20.72M | -11.33M | -0.0715 | -12.20 | 138.15M |
From Apr 2019 to Apr 2024
TIDMAEWU
RNS Number : 6266Y
AEW UK REIT PLC
07 December 2017
AEW UK REIT PLC
Interim Report and Financial Statements
for the six months ended 31 October 2017
Financial Highlights
Hot Features
Premium
-- Unaudited Net Asset Value ('NAV') of GBP148.22 million
and of 97.80 pence per share as at 31 October 2017 (30
April 2017: GBP118.67 million and 95.98 pence per share).
-- Operating profit before fair value changes is GBP4.96
million for the period (six months to 31 October 2016:
GBP4.99 million).
-- Unadjusted profit before tax ('PBT') of GBP6.99 million
and of 5.60 pence per share for the period (six months
to 31 October 2016: GBP0.49 million and of 0.42 pence
per share).
-- EPRA Earnings Per Share ('EPRA EPS') for the period were
3.73 pence (six months to 31 October 2016: 3.81 pence).
-- Total dividends of 4.00 pence per share have been declared
for the period (six months to 31 October 2016: 4.00 pence
per share).
-- Total shareholder return for the period was 5.17% (six
months to 31 October 2016: 2.73%).
-- AEW UK REIT Plc (the 'Company') raised total gross proceeds
of GBP28.05 million during the period (six months to
31 October 2016: GBP6.00 million).
-- The price of the Company's Ordinary Shares on the Main
Market of the London Stock Exchange was 101.50 pence
per share as at 31 October 2017 (30 April 2017: 99.56
pence per share).
-- As at 31 October 2017, the Company had a GBP40.0 million
(30 April 2017: GBP40.0 million) term credit facility
with The Royal Bank of Scotland International Limited
('RBSi') and was geared to 22.0% of the Gross Asset Value
(30 April 2017: 19.31%).
-- The Company held cash balances totalling GBP34.54 million
as at 31 October 2017 (30 April 2017: GBP3.65 million),
of which GBP32.44 million (30 April 2017: GBP1.31 million)
was held for the purpose of capital acquisitions.
Property Highlights
-- The Company acquired four properties in the period for
a total of GBP16.99 million (excluding acquisition costs)
(six months to 31 October 2016: two for a total of GBP13.20
million) and disposed of one property for gross sales
proceeds of GBP11.05 million (six months to 31 October
2016: GBPnil).
-- As at 31 October 2017, the Company's property portfolio
had a fair value of GBP147.79 million (30 April 2017:
GBP137.82 million) as compared to the combined purchase
price of the portfolio of GBP142.93 million (30 April
2017: GBP133.09 million) (excluding purchase costs),
representing an increase of GBP4.86 million (30 April
2017: GBP4.73 million), or 3.40% (30 April 2017: 3.55%).
-- The majority of assets that have been acquired are fully
let and the portfolio had a vacancy rate of 8.59% as
at 31 October 2017 (30 April 2017: 7.22%).
-- Rental income generated in the period under review was
GBP6.50 million (six months to 31 October 2016: GBP5.85
million). The number of tenants as at 31 October 2017
was 82 (30 April 2017: 79).
-- Average portfolio net initial yield of 7.41% (30 April
2017: 7.63%).
-- Weighted average unexpired lease term of 4.57 years (30
April 2017: 5.2 years) to break and 5.79 years (30 April
2017: 6.4 years) to expiry.
Chairman's Statement
Overview
I am pleased to present the unaudited interim results of the Company for the period from 1 May 2017 to 31 October 2017.
The Company began the period in May 2017 by completing the sale of the remaining units held in the AEW UK Core Property Fund ('Core Fund'), raising GBP7.7 million. These proceeds were used to acquire properties in Runcorn and Deeside for a total of GBP5.2 million. In July 2017, the Company acquired Wyndeham, Peterborough for GBP5.7 million, partially funded via a GBP3.5 million drawdown from the Company's loan facility with The Royal Bank of Scotland International Limited ('RBSi') and partially using remaining cash following the Core Fund disposal.
Following these transactions, the Company had fully utilised both cash of GBP121.3 million raised in share placings since its inception in May 2015, and its loan facility with RBSi of GBP32.5m. With this being the first quarter with a fully invested portfolio the Company yielded EPRA EPS of 2.10 pence from 1 May 2017 to 31 July 2017, in line with the Company target of a 2 pence quarterly dividend.
The Company has since disposed of Valley Retail Park, Belfast in September 2017 for GBP11.05 million. This property was acquired in August 2015 for GBP7.15 million and following extensive asset management, repositioning and implementing the business plan, the property was sold, realizing a significant profit against historical cost. The reported loss of GBP0.22 million compared to the carrying value in the six month period ended 31 October 2017 represents the selling costs.
During the period under review, I am pleased to report that the Company's share price consistently traded at a premium to NAV, ranging from 4.2% to a peak of 8.9%, enabling the Company to raise further capital. In October 2017, the Company issued 27.91 million new Ordinary shares at 100.5 pence per share, raising gross proceeds of GBP28.05 million. In a climate of Brexit related uncertainty, this was a positive result and is expected to benefit our shareholders by improving liquidity in the shares and further reducing the ongoing charges ratio. The Initial Issue price represented a premium of 3.76% to NAV, enabling the issuance costs to be absorbed without diluting NAV.
The Initial Issue of the 12 month share issuance programme, together with the sale of Belfast, will have a temporary dilutive impact on EPS until these funds are fully deployed in new property acquisitions. The Company purchased a property in Portsmouth for GBP6.4 million on 31 October and the Company expects to commit substantially all the net proceeds of the Initial Issue within 3 months. It remains the Company's target to pay a fully covered 2 pence per share dividend once fully invested.
Over the six month period, dividend payments combined with an increase in share price of 0.94% produced a total shareholder return of 5.17%.
As at 31 October 2017, the Company had established a diversified portfolio of 32 commercial investment properties throughout the UK with a weighted average true equivalent yield of 8.2%.
Underlying property valuations have shown like-for-like increases during the two quarterly valuation reviews in July and October 2017 of 1.33% and 1.5% respectively.
Financial Results
Period from Period from Year ended
1 May 2017 1 May 2016 30 April
to 31 October to 31 October 2017 (audited)
2017 (unaudited) 2016 (unaudited) GBP'000
------------------ ------------------ ----------------
Operating Profit before fair value
changes (GBP'000) 4,960 4,989 9,806
Operating Profit (GBP'000) 7,297 894 6,858
Profit after Tax (GBP'000) 6,989 493 6,099
Earnings Per Share (basic and diluted)
(pence) 5.60 0.42 5.04
EPRA Earnings Per Share (basic and
diluted) (pence) 3.73 3.81 7.57
Ongoing Charges (%) 1.30 1.67 1.52
Net Asset Value per share (pence) 97.80 95.47 95.98
EPRA Net Asset Value per share (pence) 97.78 95.41 95.95
Operating profit and profit after tax have seen significant increases in comparison with the six months to 31 October 2016, as a result of changes in the fair value of investment properties, being a GBP2.48 million increase for the six months to 31 October 2017 (six months to 31 October 2016: decrease of GBP3.73 million; twelve months to 30 April 2017: decrease of GBP3.16 million). These movements can be attributed to both the positive effect of asset management initiatives in the current period and positive yield movement, particularly across our portfolio of industrial assets.
The Ongoing Charges ratio has decreased significantly compared with both the six months to 31 October 2016 and the twelve months to 30 April 2017. This comes as the Company continues to raise new capital, but certain overhead costs remain fixed, allowing the Company to benefit from economies of scale.
NAV per share increased by 1.9% over the six months to 31 October 2017, which reflects the aforementioned valuation increases in the property portfolio. The Company's property portfolio has been independently valued by Knight Frank in accordance with the RICS Valuation - Professional Standards (the 'Red Book'). As at 31 October 2017, the Company's Portfolio had a Fair Value of GBP147.8 million, an increase of GBP4.9 million or 3.4% on the combined purchase price of the Portfolio of GBP142.9 million (excluding purchase costs).
Financing
During the six month period to 31 October 2017, the Company made utilisation requests totalling GBP3.5 million, bringing the total drawdown amount under the loan facility to GBP32.5 million.
On 17 October 2017, the Company amended the terms of its loan facility with RBSi to increase the facility limit from GBP32.5 million to GBP40 million.
The loan attracts interest at 3 month LIBOR +1.4%, making an all-in rate at 31 October 2017 of 1.69% (31 October 2016: 1.92%; 30 April 2017: 1.74%). The Company is protected from a significant rise in interest rates as it has interest rate CAPs with a combined notional value of GBP26.5 million and a strike rate of 2.5%.
As at 31 October 2017, the unexpired term of the facility was 3.0 years and the gearing was 22.0% (as calculated on the Gross Asset Value ('GAV') of the investment portfolio.
At the Company's General Meeting on 17 October 2017, a resolution was passed to increase the Company's maximum borrowing limit to 35% of GAV. The long term gearing target remains 25% or less of GAV.
Dividends
The Company has continued to deliver on its target of declaring dividends of two pence per Ordinary Share per quarter.
On 1 December 2017, the Board declared an interim dividend of two pence per Ordinary Share, in respect of the period from 1 August 2017 to 31 October 2017. This interim dividend will be paid on 29 December 2017 to shareholders on the register as at 15 December 2017.
The Directors will declare dividends taking into account the level of the Company's net income and the Directors' view on the outlook for sustainable recurring earnings. As such, the level of dividends paid may increase or decrease from the current annual dividend of 8 pence per share. Based on current market conditions, the Company expects to pay an annualised dividend of 8 pence per share in respect of the financial period ending 31 March 2018 and for the interim period to 30 September 2018.
In order to align dividend payments with the Company's new accounting period, in respect of the 3 month period to 31 October 2017, the Company expects to pay a dividend of 2 pence per share and then, in respect of the 2 month period to 31 December 2017, it currently intends to pay a further dividend at a rate of two-thirds of the 2 pence per share dividend currently being paid for a three month period (reflecting the two month period). With the dividend to the period to 31 October 2017, the Company will have paid 17.5 pence per share since launch.
Outlook
The Board are pleased with the strong total returns delivered to our shareholders to date through the diversified and high-yielding property portfolio that has been established by the Investment Manager. The Company has delivered total shareholder returns of 5.17% over the 6 months to 31 October 2017 and of 10.90% over the 12 months to 31 October 2017.
At the Company's recent General Meeting a resolution was passed to amend the Company's Investment Restrictions so that the value of properties, measured at the time of each investment, in any one of the following sectors: office properties, retail warehouses, high street retail and industrial/warehouse properties will not exceed 50 per cent of GAV, compared with NAV previously. This change enables the Company to purchase further properties in the Industrial sector, in which the Investment Manager continues to see significant opportunities. The sector weightings may change in the future in line with the Investment Manager's view of market opportunities at the time.
In the Company's Annual Report for the year ended 30 April 2017, I wrote that "it is still unknown how the impact of Brexit will unfold and it is likely we will need to wait for some time to know the terms of the UK's exit from the EU and how this will impact on the UK commercial property market". As I write, this still remains the case six months later. We await to hear the outcome of further Brexit negotiations and to see if the recent interest rate rise of 0.25% by the Bank of England has any impact on the economy and the property market.
Looking forward, our focus remains on continuing to grow the Company with further share issues as part of the 12 month share issuance programme as set out in the Company's Prospectus. The Company has a strategy to raise funds at intervals in order to minimise cash drag.
The Investment Manager continues to focus on adding value to the existing portfolio and on finding future acquisitions which will deliver an attractive return as part of a well-diversified portfolio. We look forward to announcing new acquisitions and asset management deals in the near future.
Finally, please note that the Company is changing its financial year end from 30 April to 31 March. As a result, our next Annual Report will cover a period of eleven months from 1 May 2017 to 31 March 2018. This change has been made to align the Company's reporting dates with those of its peers in the UK commercial property sector.
Mark Burton
Chairman
6 December 2017
Key Performance Indicators
KPI AND DEFINITION RELEVANCE TO STRATEGY PERFORMANCE
----------------------------- ------------------------------- -----------------------------
1. Triple Net Initial The Triple Net Initial 7.41%
Yield Yield is in line with at 31 October 2017
A representation to the Company's target (30 April 2017: 7.63%).
the investor of what dividend yield meaning
their initial net that, after costs, the
yield would be at Company should have
a predetermined purchase the ability to meet
price after taking its target dividend
account of all associated through property income.
costs. E.g. void costs
and rent free periods
----------------------------- ------------------------------- -----------------------------
2. True Equivalent An Equivalent Yield 8.24%
Yield profile in line with at 31 October 2017
The average weighted the Company's target (30 April 2017: 8.50%).
return a property dividend yield shows
will produce according that, after costs, the
to the present income Company should have
and estimated rental the ability to meet
value assumptions, its proposed dividend
assuming the income through property income.
is received quarterly
in advance.
----------------------------- ------------------------------- -----------------------------
3. Reversionary Yield A Reversionary Yield 8.12%
The expected return profile that is in line at 31 October 2017
the property will with an Initial Yield (30 April 2017: 8.37%).
provide once rack profile shows a potentially
rented. sustainable income stream
that can be used to
meet dividends past
the expiry of a property's
current leasing arrangements.
----------------------------- ------------------------------- -----------------------------
4. Weighted Average The Investment Manager 5.79 years
Unexpired Lease Term believes that current at 31 October 2017
('WAULT') to expiry market conditions present (30 April 2017: 6.37
The average lease an opportunity whereby years).
term remaining to assets with a shorter
expiry across the unexpired lease term
portfolio, weighted are often mispriced.
by contracted rent. It is also the Investment
Manager's view that
a shorter WAULT is useful
for active asset management
as it allows the Investment
Manager to engage in
direct negotiation with
tenants rather than
via rent review mechanisms
----------------------------- ------------------------------- -----------------------------
5. Weighted Average The Investment Manager 4.57 years
Unexpired Lease Term believes that current at 31 October 2017
to break market conditions present (30 April 2017: 5.22
The average lease an opportunity whereby years).
term remaining to assets with a shorter
break, across the unexpired lease term
portfolio weighted are often mispriced.
by contracted rent. As such, it is in line
with the Investment
Manager's strategy to
acquire properties with
a WAULT that is generally
shorter than the benchmark.
It is also the Investment
Manager's view that
a shorter WAULT is useful
for active asset management
as it allows the Investment
Manager to engage in
direct negotiation with
tenants rather than
via rent review mechanisms.
----------------------------- ------------------------------- -----------------------------
6. NAV The NAV reflects the GBP148.22 million
NAV is the value of Company's ability to at 31 October 2017
an entity's assets grow the portfolio and (30 April 2017: GBP118.67
minus the value of add value to it throughout million).
its liabilities. the life cycle of its
assets.
----------------------------- ------------------------------- -----------------------------
7. Leverage (Loan The Company utilises 22.00%
to Gross Asset Value) borrowings to enhance at 31 October 2017
The proportion of returns over the medium (30 April 2017: 19.31%).
our property portfolio term. Borrowings will
that is funded by not exceed 35% of GAV
borrowings. (measured at drawdown)
with a long term target
of 25% or less of GAV.
----------------------------- ------------------------------- -----------------------------
8. Vacant ('ERV') The Company's aim is 8.59%
The space in the property to minimise vacancy at 31 October 2017
portfolio which is of the properties. A (30 April 2017: 7.22%).
currently unlet, as low level of structural
a percentage of the vacancy provides an
total ERV of the portfolio. opportunity for the
Company to capture rental
uplifts and manage the
mix of tenants within
a property.
----------------------------- ------------------------------- -----------------------------
9. Dividend The dividend reflects 2.0 pence per share
Dividend declared the Company's ability for the quarter to
in relation to the to deliver a sustainable 31 October 2017.
year. The Company income stream from its This supports an annualised
targets a dividend portfolio. target of 8.0 pence
of 8.0 pence per Ordinary per share.
Share per annum.
----------------------------- ------------------------------- -----------------------------
10. Ongoing Charges The Ongoing Charges 1.30%
The ratio of total ratio provides a measure for the six months
administration and of total costs associated to 31 October 2017
operating costs expressed with managing and operating (30 April 2017: 1.52%).
as a percentage of the Company, which includes
average NAV through the management fees
the period. due to the Investment
Manager. The Investment
Manager presents this
measure to provide investors
with a clear picture
of operational costs
involved in running
the Company.
----------------------------- ------------------------------- -----------------------------
11. Profit before The PBT is an indication GBP6.99 million
tax of the Company's financial for the six months
PBT is a profitability performance for the to 31 October 2017
measure which considers period in which its (six months to 31 October
the Company's profit strategy is exercised. 2016: GBP0.49 million).
before the payment
of income tax.
----------------------------- ------------------------------- -----------------------------
12. Total Shareholder This reflects the return 5.17%
return seen by shareholders for the six months
The percentage change on their shareholdings. to 31 October 2017
in the share price (six months to 31 October
assuming dividends 2016: 2.73%).
are reinvested to
purchase additional
Ordinary Shares.
----------------------------- ------------------------------- -----------------------------
13. EPRA EPS This reflects the Company's 3.73 pps
Earnings from core ability to generate for the six months
operational activities. earnings from the portfolio to 31 October 2017
A key measure of a which underpins dividends. (six months to 31 October
company's underlying 2016: 3.81 pps).
operating results
from its property
rental business and
an indication of the
extent to which current
dividend payments
are supported by earnings.
See note 7.
----------------------------- ------------------------------- -----------------------------
Investment Manager's Report
MARKET OUTLOOK
UK Economic Outlook
Following a resilient response in the immediate aftermath of the Brexit vote, UK economic growth slowed in the first half of 2017 as inflation rose sharply, squeezing household spending power. There was a slight pick-up in Q3 2017 due to a stronger performance by the industrial sector, but expectations are that growth will remain subdued. The UK is forecast to grow by 1.5% in both 2017 and 2018 (Oxford Economics Country Economic Forecast UK), largely owing to continued uncertainty about the outcome of Brexit negotiations, which are projected to undermine investment decisions.
In November 2017, the Bank of England raised interest rates for the first time in more than 10 years, with Monetary Policy Committee (MPC) citing the rising inflation, low unemployment levels and stronger global economic growth as reasons behind the increase. Bank of England governor, Mark Carney, has said that the Bank expected the UK economy to grow at about 1.7% per annum over the next few years, which could result in further interest rate increases. The current interest rate rise, which merely reversed the cut after the EU referendum result, is unlikely to have a significant effect on growth, as interest rates are still at the lows seen since the financial crisis. However further rises in the short term could have a greater impact.
Looking ahead, Mr Carney has said: "The biggest determinate of our outlook is going to be those negotiations ongoing on Brexit - both a transition deal to a new arrangement and what is the longer form arrangement with the European Union."
UK Real Estate Outlook
The impact which rising inflation and interest rates have on the gilts curve will ultimately impact the relative pricing of property. For "traditional property", we are a long way through the cycle and property fundamentals are in some sectors relatively weak at this time of uncertainty. However, property is still in the advantageous position of offering one of the highest yields from traditional asset classes and the yield gap is relatively high. Our view is that this is because fixed income yields are low and unattractive, and that the rise in interest rates could see the yield gap start to close.
We do however believe that in an environment of normalising interest rates, rising in response to growing economic activity, it will be real estate strategies that focus more on the underlying value of the property fundamentals that should perform well, where the quality of the asset dictates the sustainability of income and the ability to capture income growth driven by the strength of the real economy. The Company aims to deliver an attractive total return to shareholders from investing predominantly in a portfolio of smaller commercial properties in strong commercial locations across the UK. In the Investment Manager's view, it is therefore not as susceptible to capital value erosion as may be experienced by holders of prime asset portfolios.
In terms of sector focus, demand from logistics operators remains strong in a supply constrained market, which is supporting strong investor demand that seems to have spread to all parts of the industrial market. Elsewhere there is strong competition among investors who can only buy long, investment grade income as a proxy for historically low fixed-income yields, but there is still good value to be found in a steady volume of traditional core opportunities being offered to the market. With much focus in the market on longer leased properties, we are seeing some compelling buying opportunities in our strategy which continues to find yield premium by investing in smaller lot size properties, let on shorter than average leases, but with a focus on sustainable locations and replicable income streams.
Pipeline
The Company has GBP39.9 million (cash for investment and debt facility) for further acquisitions of which GBP22.9 million is under offer (as 30 November 2017).
Investment Objective
The investment objective of the Company is to deliver an attractive total return to shareholders from investing predominantly in a portfolio of smaller commercial properties in the United Kingdom.
In order to achieve its investment objective the Company invests in freehold and leasehold properties across the whole spectrum of the commercial property sector (office properties, retail warehouses, high street retail, industrial/warehouse and alternative properties) to achieve a balanced portfolio with a diversified tenant base.
Investment Strategy
The Company exploits what it believes to be the compelling relative value opportunities offered by pricing inefficiencies in smaller commercial properties let on shorter occupational leases. The Company intends to supplement this core strategy with asset management initiatives to upgrade buildings and thereby improve the quality of income streams. In the current market environment the focus will be to invest in properties which:
-- typically have a value, on investment, of between GBP2.5 million and GBP15 million; -- have initial net yields, on investment, of typically between 7.5-10%;
-- achieve across the whole Portfolio weighted average lease term of between three to six years remaining;
-- achieve, across the whole Portfolio, a diverse and broad spread of tenants; and
-- have some potential for asset management initiatives to include refurbishment and re-lettings.
The Company's strategy is focused on delivering enhanced returns from the smaller end (up to GBP15 million) of the UK property market. The Company believes that there are currently pricing inefficiencies in smaller commercial properties relative to the long term pricing resulting in a significant yield advantage which the Company hopes to exploit. This is demonstrated in the graphs accessible through the links below;
http://www.rns-pdf.londonstockexchange.com/rns/6266Y_-2017-12-6.pdf
http://www.rns-pdf.londonstockexchange.com/rns/6266Y_1-2017-12-6.pdf
Portfolio Activity
The Company is invested in a diversified portfolio of commercial properties throughout the UK. New acquisitions have been selected to provide a sustainable income return and the potential for growth, whilst also limiting downside risk. The majority of the Company's assets are fully let and, as at 31 October 2017, the Company had a vacancy rate of 8.59% (30 April 2017: 7.22%). The following significant investment transactions were made during the period:
-- Unit 1005, Sarus Court, Runcorn - in May 2017, the Company acquired Unit 1005, Sarus Court for GBP0.61 million, which completed the Company's acquisition of the whole of the Sarus Court industrial estate. Unit 1005 offers significant reversionary potential, with a passing rent of GBP4.50 per sq ft which is more than 15% lower than a recent letting at 1003 Sarus Court, secured at GBP5.25 per sq ft. The purchase therefore offers rental upside and also adds value from an estate management perspective, by bringing the whole estate under the Company's ownership. The acquisition pricing reflects a Net Initial Yield of 7.8% and a capital value of GBP55 per sq ft.
-- Deeside Industrial Park - in July 2017, the Company announced the acquisition of a 97,000 sq ft single-let industrial building in Deeside, North Wales, for GBP4.31 million, reflecting a Net Initial Yield of 7.9% and a capital value of GBP45 per sq ft. The asset, which is located within the established Deeside Industrial Park, is fully let to global enterprise, Magellan Aerospace, for a term of just under 5 years to break and just under 10 years to expiry. The current passing rent of GBP3.75 per sq ft is significantly below that seen at other competing centres within the North West, such as in Warrington and Manchester.
-- Wyndeham, Peterborough - in July 2017, the Company announced the acquisition of a c.182,000 sq ft single-let industrial building in Peterborough for GBP5.7 million, reflecting a Net Initial Yield of 8.64% and a capital value of c.GBP31 per sq ft. The asset, which is located within the Eastern Industrial Estate, is fully let to Walstead Investments Limited for a term of just under 4 years to expiry. The passing rent of GBP2.88 per sq ft is low in comparison to some of the recent lettings in the city and the immediate vicinity of the property.
-- Commercial Road, Portsmouth - in October 2017, the Company acquired 208-220 Commercial Road and 7-13 Crasswell Street, Portsmouth, for GBP6.37 million. The asset provides a Net Initial Yield of 9.6% and is fully let to seven retail tenants and one office tenant, providing a WAULT of 4 years to expiry. The 12,475 sq ft retail property is situated within the prime pedestrianised pitch of Commercial Road within Portsmouth's city centre.
-- Valley Retail Park, Belfast - in September 2017, the Company completed the disposal of its retail park in Belfast for a price of GBP11.05 million. The purchase price in August 2015 was GBP7.1 million and new lettings to Go Outdoors and Smyths Toys were achieved during the hold period.
-- Core Fund - in May 2017, the Company announced the sale of its remaining units in the Core Fund for total proceeds of GBP7.67 million, comprising a capital element of GBP7.62 million and an income element of GBP0.05 million. These units generated a total return of 13% over the hold period.
As at 31 October 2017, the Company's portfolio had a fair value of GBP147.79 million (30 April 2017: GBP137.82 million). The increase of GBP9.97 million is represented by the acquisition of four properties for a combined purchase price of GBP16.99 million, the disposal of one property with carrying value of GBP11.05 million and a like-for-like valuation increase of GBP4.03 million over the period.
ASSET MANAGEMENT
We undertake active asset management to seek opportunities to achieve rental growth, let vacant space and enhance value through initiatives such as refurbishments. During the period, key asset management initiatives included:
-- Queen Square, Bristol - the Company announced in July 2017 that its 38,000 sq ft office building located in the prestigious Central Bristol, Queen Square had now been fully let following lettings to six occupiers totalling c.25,000 sq ft within the last 15 months. The building was 46% vacant when it was acquired in December 2015 and has shown strong performance due to the strength of the Bristol office market and the targeted refurbishment programme undertaken. This has resulted in a valuation uplift of 21.6% over the period.
-- Langthwaite Industrial Estate, South Kirkby - in October 2017, the Company completed the renewal of two leases with its largest tenant, Ardagh Glass, on two warehouse buildings at the Langthwaite Industrial Estate in South Kirkby, Yorkshire. Ardagh Glass use the premises for storage and distribution serving their nearby factories. The manufacturing group has taken the units for an additional term with around 3 years to expiry resulting in a valuation uplift of the property of 9% from GBP5.90 million to GBP6.45 million from 30 April 2017 to 31 October 2017.
-- Eastpoint Business Park, Oxford - the Company completed a new letting of 2,800 sq ft of office accommodation to publishing company, Capstone, at Eastpoint Business Park, Oxford. The unit has been let for a term of 5 years with a break option in year 3 at a rent of GBP15.50 per sq ft, which is in excess of ERV.
http://www.rns-pdf.londonstockexchange.com/rns/6266Y_2-2017-12-6.pdf
Financial Results
The Company continues to build on a diversified portfolio of properties and as at 31 October 2017 holds 32 investment properties (30 April 2017: 29 investment properties). Net rental income earned from the portfolio for the six months ended 31 October 2017 was GBP5.86 million (six months to 31 October 2016: GBP5.54 million; twelve months to 30 April 2017: GBP11.07 million), contributing to an operating profit before fair value changes and disposals of GBP4.96 million (six months to 31 October 2016: GBP4.99 million; twelve months to 30 April 2017: GBP9.81 million).
The Company disposed of its remaining holding in the Core Fund on 9 May 2017 for total proceeds of GBP7.67 million. The Company had held an ownership in the Core Fund since May 2015 and saw a total return of 13% over the hold period. The units were sold at a price in excess of the Core Fund's then most recent published NAV and generated a profit on disposal of GBP0.07 million.
Administrative expenses, which include the Investment Manager's fee and other costs attributable to the running of the Company, were GBP0.90 million for the period (six months to 31 October 2016: GBP0.87 million; twelve months to 30 April 2017: GBP1.84 million) and Ongoing Charges for the period were 1.30% (six months to 31 October 2016: 1.67%; twelve months to 30 April 2017: GBP1.52%).
The Company incurred finance costs of GBP0.31 million during the period (six months to 31 October 2016: GBP0.40 million; twelve months to 30 April 2017: GBP0.76 million). Included in these costs is a decrease in fair value of interest rate derivatives of GBP0.01 million for the six months to 31 October 2017 (six months to 31 October 2016: GBP0.07 million; twelve months to 30 April 2017: GBP0.12 million).
The total profit before tax for the period of GBP6.99 million (six months to 31 October 2016: GBP0.49 million; twelve months to 30 April 2017: GBP6.10 million) equates to a basic earnings per share of 5.60 pence (six months to 31 October 2016: 0.42 pence; twelve months to 30 April 2017: 5.04 pence). This increase is largely due to profits in the fair value of investment properties of GBP2.48 million for the six months to 31 October 2017 compared with losses of GBP3.73 million for the six months to 31 October 2016.
The Company's NAV as at 31 October 2017 was GBP148.22 million or 97.80 pence per share ("pps") (31 October 2016: GBP118.05 million or 95.47 pps; 30 April 2017: GBP118.67 million or 95.98 pps). This is an increase of 1.82 pps or 1.90%, with the underlying movement in NAV set out in the table below:
Pence per
share GBP million
---------- ------------
NAV at 1 May 2017 95.98 118.68
Change in fair value of investment
property 2.05 2.48
Change in fair value of derivatives (0.01) (0.01)
Loss on disposal of investment property (0.17) (0.22)
Profit on disposal of investments 0.05 0.07
Rental and other income earned for
the period 5.22 6.50
Expenses and net finance costs for
the period (1.47) (1.84)
Dividends paid (4.00) (4.94)
Issue of equity (net of costs) 0.15 27.50
---------- ------------
NAV at 31 October 2017 97.80 148.22
---------- ------------
EPRA EPS for the period was 3.73 pps (six months to 31 October 2016: 3.81 pps) which, based on dividends paid of 4 pps, reflects a dividend cover of 93.25%. As the Company continues to grow, EPRA EPS is adversely impacted by the time lag between raising and investing new capital. However the Company will benefit from a lower ongoing charges ratio and, once the capital proceeds have been fully invested, the Company expects to be able to sustain a fully covered dividend at 8 pps per annum.
FINANCING
As at 31 October, the Company had utilised GBP32.50 million (30 April 2017: GBP29.01 million) of an available GBP40 million credit facility with RBSi, maturing in October 2020. Gearing as at 31 October was 22.0% (Loan to GAV) (30 April 2017: 19.3%). The loan attracts interest at LIBOR +1.4% (30 April 2017: LIBOR +1.4%). To mitigate the interest rate risk that arises as a result of entering into a variable rate linked loan, the Company holds interest rate caps on GBP26.51 million (30 April 2017: GBP26.51 million) of the loan at a strike rate of 2.5% (30 April 2017: 2.5%), meaning that the loan is 82% hedged (30 April 2017: 91%).
AEW UK Investment Management LLP
6 December 2017
Principal Risks and Uncertainties
The principal risks and uncertainties the Company faces are described in detail on pages 26 to 29 of the 2017 Annual Report, and are summarised below.
The Board considers that the principal risks and uncertainties as presented in the 2017 Annual Report were unchanged during the period.
REAL ESTATE RISKS
-- Failure by tenants to pay rental obligations would reduce income and the ability of the Company to pay dividends.
-- Cost overruns from asset management initiatives may have a material adverse effect on the Company's profitability, the NAV and the share price.
-- Due diligence may not identify all the risks and liabilities in respect of an acquisition.
-- A fall in rental rates may have a material adverse effect on the Company's profitability, the NAV and the share price.
-- A property market recession or deterioration in the property market could, inter alia (i) cause the Company to realise its investments at lower valuations; (ii) delay the timings of the Company's realisations.
-- Properties are inherently difficult to value. There may be a material adverse effect on the Company's profitability, the NAV and the share price where properties are sold that were previously materially overstated.
FINANCIAL RISKS
-- Material adverse changes in valuations and net income may lead to breaches in the Loan to Value ('LTV') and interest cover ratio covenants in the Company's borrowings.
-- The Company is subject to the risk of rising LIBOR rates on its borrowings. Increases in LIBOR may adversely affect the Company's ability to pay dividends.
-- The Company has a credit facility with RBSi which expires in 2020. In the event that RBSi do not renew the facility, the Company may have to sell assets in order to repay the outstanding loan.
CORPORATE RISKS
-- The Company has no employees and is reliant upon the performance of third party service providers. Failure by any service provider could have a detrimental impact on the operations of the Company.
-- The Company is dependent on the continuance of the Investment Manager.
-- Poor relative total return performance may lead to an adverse reputational impact that affects the Company's ability to raise new capital and new funds.
TAXATION RISKS
-- The Company has a UK REIT status that provides a tax-efficient corporate structure. Any change to the tax status or in UK legislation could impact on the Company's ability to achieve its investment objectives and provide attractive returns to Shareholders.
POLITICAL / ECONOMIC RISK
-- Following the vote to leave the EU in the June 2016 referendum, uncertainty remains surrounding the EU exit process and timing. There could be further political and economic events that adversely impact on the Company's performance.
Responsibility statement of the Directors in respect of the interim financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
A list of the Directors is maintained on the AEW UK REIT plc website at www.aewukreit.com
By order of the Board
Mark Burton
Chairman
6 December 2017
Independent Review Report to AEW UK REIT plc
Conclusion
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2017 which comprises the Condensed Statement of Comprehensive Income, Condensed Statement of Changes in Equity, Condensed Statement of Financial Position, Condensed Statement of Cash Flows and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2017 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
The annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Bill Holland
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
6 December 2017
Financial Statements
Condensed Statement of Comprehensive Income
for the six months ended 31 October 2017
Period from Period from
1 May 2017 1 May 2016 Year ended
to 31 October to 31 October 30 April
2017 2016 2017
(unaudited) (unaudited) (audited)*
Note GBP'000 GBP'000 GBP'000
--------------- --------------- -----------
Income
Rental and other income 3 6,496 6,054 12,503
Property operating expenses 4 (641) (517) (1,434)
--------------- --------------- -----------
Net rental and other income 5,855 5,537 11,069
Dividend income 3 - 326 576
--------------- --------------- -----------
Net rental and dividend
income 5,855 5,863 11,645
Other operating expenses 4 (895) (874) (1,839)
--------------- --------------- -----------
Operating profit before
fair value changes 4,960 4,989 9,806
Change in fair value of
investment properties 9 2,480 (3,726) (3,159)
(Loss)/profit on disposal
of investment properties 9 (216) 410 731
Change in fair value of
investments 9 - (779) (407)
Profit/(loss) on disposal
of investments 9 73 - (113)
Operating profit 7,297 894 6,858
Finance expense 5 (308) (401) (759)
--------------- --------------- -----------
Profit before tax 6,989 493 6,099
Taxation 6 - - -
Profit after tax 6,989 493 6,099
Other comprehensive income - - -
--------------- --------------- -----------
Total comprehensive income
for the period/year 6,989 493 6,099
--------------- --------------- -----------
Earnings per share (pence
per share) (basic and diluted) 7 5.60 0.42 5.04
--------------- --------------- -----------
The notes below form an integral part of these condensed financial statements.
* Although not required by IAS 34, the comparative figures for the preceding year end and related notes have been included on a voluntary basis.
Condensed Statement of Changes in Equity
for the six months ended 31 October 2017
Total capital
Capital and reserves
Share reserve attributable
and to
Share premium retained owners of
For the period 1 May 2017 capital account earnings the Company
to
31 October 2017 (unaudited) Notes GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- --------------
Balance as at 1 May 2017 1,236 22,514 94,924 118,674
Total comprehensive income - - 6,989 6,989
Ordinary shares issued 15,16 279 27,771 - 28,050
Share issue costs 16 - (546) - (546)
Dividends paid 8 - - (4,946) (4,946)
--------- --------- --------- --------------
Balance as at 31 October
2017 1,515 49,739 96,967 148,221
Total capital
Capital and reserves
Share reserve attributable
and to
Share premium retained owners of
For the period 1 May 2016 capital account earnings the Company
to 31 October 2016 (unaudited) Notes GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- --------------
Balance at 1 May 2016 1,175 16,729 98,471 116,375
Total comprehensive income - - 493 493
Ordinary shares issued 15,16 61 5,938 - 5,999
Share issue costs 16 - (120) - (120)
Dividends paid 8 - - (4,700) (4,700)
--------- --------- --------- --------------
Balance as at 31 October
2016 1,236 22,547 94,264 118,047
--------- --------- --------- --------------
The notes below form an integral part of these condensed financial statements.
Total capital
Capital and reserves
Share reserve attributable
and to
Share premium retained owners of
For the year ended 30 capital account earnings the Company*
April 2017 (audited) Notes GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- --------------
Balance at 1 May 2016 1,175 16,729 98,471 116,375
Total comprehensive income - - 6,099 6,099
Ordinary shares issued 15,16 61 5,938 - 5,999
Share issue costs 16 - (153) - (153)
Dividends paid 8 - - (9,646) (9,646)
--------- --------- --------- --------------
Balance as at 30 April
2017 1,236 22,514 94,924 118,674
--------- --------- --------- --------------
The notes below form an integral part of these condensed financial statements.
* Although not required by IAS 34, the comparative figures for the preceding year end and related notes have been included on a voluntary basis.
Condensed Statement of Financial Position
as at 31 October 2017
As at As at As at
31 October 31 October 30 April
2017 2016 2017
(unaudited) (unaudited)* (audited)
Notes GBP'000 GBP'000 GBP'000
------------ ------------- ----------
Assets
Non-Current Assets
Investment property 9 147,030 125,734 135,570
Investments 9 - 9,330 -
------------ ------------- ----------
147,030 135,064 135,570
Current Assets
Investments held for sale 9 - - 7,594
Receivables and prepayments 10 2,204 4,600 3,382
Other financial assets
held at fair value 11 24 78 31
Cash and cash equivalents 34,537 10,155 3,653
36,765 14,833 14,660
Total assets 183,795 149,897 150,230
------------ ------------- ----------
Non-Current Liabilities
Interest bearing loans
and borrowings 12 (32,259) (26,201) (28,740)
Finance lease obligations 14 (591) (1,582) (55)
------------ ------------- ----------
(32,850) (27,783) (28,795)
Current Liabilities
Payables and accrued expenses 13 (2,677) (3,949) (2,756)
Finance lease obligations 14 (47) (118) (5)
------------ ------------- ----------
(2,724) (4,067) (2,761)
Total Liabilities (35,574) (31,850) (31,556)
------------ ------------- ----------
Net Assets 148,221 118,047 118,674
------------ ------------- ----------
Equity
Share capital 15 1,515 1,236 1,236
Share premium account 16 49,739 22,547 22,514
Capital reserve and retained
earnings 96,967 94,264 94,924
------------ ------------- ----------
Total capital and reserves
attributable to equity
holders of the Company 148,221 118,047 118,674
------------ ------------- ----------
Net Asset Value per share
(pence per share) 7 97.80 95.47 95.98
------------ ------------- ----------
The financial statements were approved by the Board of Directors on 6 December 2017 and were signed on its behalf by:
Mark Burton
Chairman
AEW UK REIT plc
Company number: 09522515
The notes above form an integral part of these condensed consolidated financial statements.
* Although not required by IAS 34, the comparative figures for the preceding period end and related notes have been included on a voluntary basis.
Condensed Statement of Cash Flows
for the six months ended 31 October 2017
Period from Period from For the year
1 May 2017 1 May 2016 ended 30 April
to to
31 October 31 October 2017
2017 2016
(unaudited) (unaudited) (audited)*
GBP'000 GBP'000 GBP'000
------------ ------------ ------------------------
Cash flows from operating activities
Operating profit 7,297 894 6,858
Adjustment for non-cash items:
(Gain)/loss from change in fair
value of investment property (2,480) 3,726 3,159
Loss from change in fair value
of investments - 779 407
Loss/(profit) on disposal of
investment property 216 (410) (731)
(Profit)/loss on disposal of
investments (73) - 113
Decrease/(increase) in other
receivables and prepayments 666 (1,638) (483)
(Decrease)/increase in other
payables and accrued expenses (1,178) 981 (283)
------------ ------------ ------------------------
Net cash generated from operating
activities 4,448 4,332 9,085
------------ ------------ ------------------------
Cash flows from investing activities
Purchase of investment property (17,329) (15,587) (28,062)
Disposal of investment property 10,858 710 2,681
Disposal of investments 7,667 - 1,995
------------ ------------ ------------------------
Net cash generated from/(used
in) investing activities 586 (14,877) (23,386)
------------ ------------ ------------------------
Cash flows from financing activities
Proceeds from issue of ordinary
share capital 28,050 5,999 5,999
Share issue costs (453) (117) (153)
Loan draw down 3,490 12,260 14,760
Finance costs (291) (705) (969)
Dividends paid (4,946) (4,700) (9,646)
------------ ------------ ------------------------
Net cash generated from financing
activities 25,850 12,737 9,991
------------ ------------ ------------------------
Net increase/(decrease) in cash
and cash equivalents 30,884 2,192 (4,310)
Cash and cash equivalents at
the start of the period/year 3,653 7,963 7,963
Cash and cash equivalents at
the end of the period/year 34,537 10,155 3,653
------------ ------------ ------------------------
The notes below form an integral part of these condensed consolidated financial statements.
* Although not required by IAS 34, the comparative figures for the preceding year end and related notes have been included on a voluntary basis.
Notes to the Condensed Financial Statements
for the six months ended 31 October 2017
1. Corporate information
AEW UK REIT plc (the 'Company') is a closed ended Real Estate Investment Trust ('REIT') incorporated on 1 April 2015 and domiciled in the UK.
The comparative information for the year to 30 April 2017 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The auditors reported on those accounts; their report was unqualified, and did not contain a statement under section 498(25) or (23) of the Companies Act 2006.
2. Accounting policies
2.1 Basis of preparation
These interim condensed unaudited financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, and should be read in conjunction with the Company's last financial statements for the year ended 30 April 2017. These condensed unaudited financial statements do not include all information required for a complete set of financial statements proposed in accordance with IFRS as adopted by the EU ("EU IFRS"), however, selected explanatory notes have been included to explain events and transactions that are significant in understanding changes in the Company's financial position and performance since the last financial statements. A review of the interim financial information has been performed by the Independent Auditor of the Company and was approved for issue on 6 December 2017.
The comparative figures disclosed in the condensed unaudited financial statements and related notes have been presented for the six month period to 31 October 2016 and year ended 30 April 2017 and as at 31 October 2016 and 30 April 2017.
Although not required by IAS 34, the comparative figures as at 31 October 2016 for the Condensed Statement of Financial Position and for the year ended 30 April 2017 for the Condensed Statement of Comprehensive Income, Condensed Statement of Changes in Equity and Condensed Statement of Cash Flows and related notes have been included on a voluntary basis.
These condensed unaudited financial statements have been prepared under the historical-cost convention, except for investment property, investments and interest rate derivatives that have been measured at fair value.
The condensed unaudited financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (GBP'000), except when otherwise indicated.
The Company is exempt by virtue of Section 402 of the Companies Act 2006 from the requirement to prepare group financial statements. These financial statements present information solely about the Company as an individual undertaking.
New standards, amendments and interpretations
There are a number of new standards and amendments to existing standards which have been published and are mandatory for the Company's accounting periods beginning after 1 November 2017 or later periods, but the Company has decided not to adopt them early. The following are the most relevant to the Company and their impact on the financial statements:
-- IFRS 7 (Financial Instruments: Disclosures) amendments regarding additional hedge accounting disclosures (applied when IFRS 9 is applied);
-- IFRS 9 (Financial Instruments) effective for annual periods beginning on or after 1 January 2018;
-- IFRS 15 (Revenue from Contracts with Customers) issued in May 2014 and applies to an annual reporting period beginning on or after 1 January 2018; and
-- IFRS 16 (Leases) issued in January 2016 and is effective for annual periods beginning on or after 1 January 2019.
The Company does not expect the adoption of new accounting standards issued but not yet effective to have a significant impact on the Financial Statements.
2.2 Significant accounting judgements and estimates
The preparation of financial statements in accordance with EU IFRS requires the Directors of the Company to make judgements, estimates and assumptions that affect the reported amounts recognised in the financial statements. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability in the future.
i) Valuation of investment property
The Company's investment property is held at fair value as determined by the independent valuer on the basis of fair value in accordance with the internationally accepted Royal Institution of Chartered Surveyors ('RICS') Appraisal and Valuation Standards.
ii) Valuation of investments
Investments in collective investment schemes are stated at NAV value with any resulting profit or loss recognised in profit or loss. The NAV value is considered by the Directors to be the best reflection of fair value available to the Company.
iii) Segmental information
In accordance with IFRS 8, the Company is organised into one main operating segment being investment in property and property related investments in the UK.
2.3 Going concern
The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has the resources to continue in business for at least 12 months. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern. Therefore, the financial statements have been prepared on the going concern basis.
2.4 Summary of significant accounting policies
The principle accounting policies applied in the preparation of these financial statements are consistent with those applied within the Company's Annual Report and Financial Statements for the year ended 30 April 2017.
3. Revenue
Period from Period from
1 May 2017 1 May 2016 Year ended
to to
31 October 31 October 30 April
2017 2016 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------ ------------ -----------
Gross rental income received 6,495 5,847 12,147
Dilapidation income received - 204 301
Other property income 1 3 55
------------ ------------ -----------
Total rental and other income 6,496 6,054 12,503
Dividend income:
Property income distribution* - 313 552
Dividend distribution - 13 24
------------ ------------ -----------
- 326 576
Total Revenue 6,496 6,380 13,079
------------ ------------ -----------
* Property income distribution ('PID') arose on the investment in the Core Fund which holds property directly.
Rent receivable under the terms of the leases is adjusted for the effect of any incentives agreed.
4. Expenses
Period from Period from
1 May 2017 1 May 2016 Year ended
to to
31 October 31 October 30 April
2017 2016 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------ ------------ -----------
Property operating expenses 641 517 1,434
------------ ------------ -----------
Other operating expenses
Investment management fee 519 526 1,034
Auditor remuneration 41 48 88
Operation costs 292 266 646
Directors' remuneration 43 34 71
------------ ------------ -----------
Total other operating expenses 895 874 1,839
------------ ------------ -----------
Total operating expesnes 1,536 1,391 3,273
------------ ------------ -----------
5. Finance expense
Period from Period from
1 May 2017 1 May 2016 Year ended
to to
31 October 31 October 30 April
2017 2016 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------ ------------ -----------
Interest payable on loan borrowings 268 244 483
Amortisation of loan arrangement
fee 41 39 78
Agency fee payable on loan borrowings (10) 10 21
Commitment fee payable on loan
borrowings 2 38 60
------------ ------------ -----------
301 331 642
Change in fair value of interest
rate derivatives 7 70 117
Total 308 401 759
------------ ------------ -----------
6. Taxation
Period from Period
from
1 May 2017 1 May 2016
to to Year ended
31 October 31 October 30 April
2017 2016 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------ ------------ -----------
Total tax charge - - -
Analysis of charge in the period/year
Profit before tax 6,989 493 6,099
------------ ------------ -----------
Theoretical tax at UK corporation
tax standard rate of 19% (31 October
2016: 20%; 30 April 2017: 19.92%) 1,328 98 1,215
Adjusted for:
Exempt REIT income (884) (868) (1,798)
UK dividends that are not taxable - (45) (5)
Non deductable investment losses (444) 815 588
------------ ------------ -----------
Total - - -
------------ ------------ -----------
7. Earnings per share and NAV per share
Period from Period from
1 May 2017 1 May 2016
to to Year ended
31 October 31 October 30 April
2017 2016 2017
Earnings per share
Total comprehensive income
(GBP'000) 6,989 493 6,099
Weighted average number
of shares 124,860,772 118,563,367 121,084,416
Earnings per share (basic
and diluted) (pence) 5.60 0.42 5.04
------------ ------------ ------------
EPRA earnings per share
Total comprehensive income
(GBP'000) 6,989 493 6,099
Adjustment to total comprehensive
income:
Change in fair value of
investment property (GBP'000) (2,480) 3,726 3,159
Loss/(profit) on disposal
of investment property (GBP'000) 216 (410) (731)
Loss/(gain) from change
in fair value of investment
(GBP'000) - 779 407
(Profit)/loss on disposal
of investments (GBP'000) (73) - 113
Change in fair value of
interest rate derivatives
(GBP'000) 7 (70) 117
------------ ------------ ------------
Total EPRA Earnings (GBP'000) 4,659 4,518 9,164
------------ ------------ ------------
EPRA earnings per share
(basic and
diluted) (pence) 3.73 3.81 7.57
------------ ------------ ------------
NAV per share:
Net assets (GBP'000) 148,221 118,047 118,674
------------ ------------ ------------
Ordinary Shares 151,558,251 123,647,250 123,647,250
------------ ------------ ------------
NAV per share (pence) 97.80 95.47 95.98
------------ ------------ ------------
EPRA NAV per share:
Net assets (GBP'000) 148,221 118,047 118,674
Adjustments to net assets:
Other financial assets held
at fair value (GBP'000) (24) (78) (31)
------------ ------------ ------------
EPRA NAV (GBP'000) 148,197 117,969 118,643
------------ ------------ ------------
EPRA NAV per share (pence) 97.78 95.41 95.95
------------ ------------ ------------
EPS amounts are calculated by dividing profit for the period attributable to ordinary equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period. EPRA NNNAV is equal to IFRS NAV and as such a reconciliation between the two measures has not been performed.
8. Dividends paid
Period from Period from
1 May 2017 1 May 2016
to to Year ended
31 October 31 October 30 April
2017 2016 2017
GBP'000 GBP'000 GBP'000
Fourth interim dividend paid in
respect of the period
1 February 2017 to 30 April 2017
at 2p per Ordinary Share 2,473 - -
First interim dividend paid in
respect of the period
1 May 2017 to 31 July 2017 at 2p
per Ordinary Share 2,473 - -
Fourth interim dividend paid in
respect of the period
1 February 2016 to 30 April 2016
at 2p per Ordinary Share - 2,350 2,350
First interim dividend paid in
respect of the period 1 May 2016
to 31 July 2016 at 2p per Ordinary
Share - 2,350 2,350
Second interim dividend paid in
respect of the period 1 August
2016 to 31 October 2016 at 2p per
Ordinary Share - - 2,473
Third interim dividend paid in
respect of the period 1 November
2016 to 31 January 2017 at 2p per
Ordinary Share - - 2,473
------------ ------------ -----------
Total dividends paid during the
period 4,946 4,700 9,646
Second interim dividend declared
in respect of the period 1 August
2017 to 31 October 2017 at 2p per
Ordinary Share* 2,473 - -
Fourth interim dividend declared
for the period 1 February 2017
to 30 April 2017 at 2p per Ordinary
Share (2,473) - -
Second interim dividend declared
in respect of the period 1 August
2016 to 31 October 2016 at 2p per
Ordinary Share* - 2,473 -
Fourth interim dividend declared
in respect of the period 1 February
2017 to 30 April 2017 at 2p per
Ordinary Share* - - 2,473
Fourth interim dividend declared
in respect of the period 1 February
2016 to 30 April 2016 at 2p per
Ordinary Share - (2,350) (2,350)
Total dividends in respect of the
period/year 4,946 4,823 9,769
------------ ------------ -----------
*Dividends declared after the period end are not included in the financial statements as a liability.
9. Investments
9.a) Investment property
Period from 1 May 2017 to
31 October 2017 (unaudited) Period from
1 May 2016 Year Ended
to 31 October 30 April
Investment Investment 2016 2017
properties properties (unaudited) (audited)
freehold leasehold Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ----------- ---------- --------------- -----------
UK Investment property
As at beginning of period/year 115,845 21,975 137,820 114,340 114,340
Purchases in the period/year 18,309 - 18,309 15,587 28,146
Disposals in the period/year (11,050) - (11,050) (300) (1,950)
Revaluation of investment
property 956 1,750 2,706 (3,742) (2,716)
Valuation provided by
Knight Frank 124,060 23,725 147,785 125,885 137,820
----------- ----------- ---------- --------------- -----------
Adjustment to fair value
for rent free debtor (1,393) (1,716) (2,230)
Adjustment to fair value
for rent guarantee debtor - (135) (80)
Adjustment for finance
lease obligations 638 1,700 60
---------- --------------- -----------
Total Investment property 147,030 125,734 135,570
---------- --------------- -----------
Change in fair value
of investment property
Profit/(loss) from change
in fair value 2,706 (3,742) (2,716)
Adjustment for movement
in the period/year:
in fair value for rent
free debtor (306) (634) (1,148)
in fair value for rent
guarantee debtor 80 650 705
---------- --------------- -----------
2,480 (3,726) (3,159)
---------- --------------- -----------
(Loss)/profit on sale
of the investment property
Net proceeds from disposals
of investment property
during the period/year 10,858 710 2,681
Cost of disposal (11,050) (300) (1,950)
Lease incentives amortised
in current period/year (24) - -
---------- --------------- -----------
(Loss)/profit on disposal
of investment property (216) 410 731
---------- --------------- -----------
Valuation of investment property
Valuation of investment property is performed by Knight Frank LLP, an accredited external valuer with recognised and relevant professional qualifications and recent experience of the location and category of the investment property being valued.
The valuation of the Company's investment property at fair value is determined by the external valuer on the basis of market value in accordance with the internationally accepted RICS Valuation - Professional Standards (incorporating the International Valuation Standards).
The determination of the fair value of investment property requires the use of estimates such as future cash flows from assets (such as lettings, tenants' profiles, future revenue streams, capital values of fixtures and fittings, plant and machinery, any environmental matters and the overall repair and condition of the property) and discount rates applicable to those flows.
9.b) Investment
Period from Period from
1 May 2017 1 May 2016 Year ended
to 31 October to 31 October 30 April
2017 2016 2017
(unaudited) (unaudited) (audited)
Total Total Total
GBP'000 GBP'000 GBP'000
Investment in AEW UK Core Property
Fund
As at beginning of period/year 7,594 10,109 10,109
Purchases in the period/year - - -
Disposals in the period/year (7,594) - (2,108)
-------------- -------------- -----------
Loss from change in fair value - (779) (407)
-------------- -------------- -----------
Total investment in AEW UK Core
Property Fund - 9,330 7,594
-------------- -------------- -----------
Profit/(loss) on disposal of
the investment in AEW UK Core
Property Fund
Proceeds from disposals of investments
during the period/year 7,667 - 1,995
Cost of disposal (7,594) - (2,108)
Profit/(loss) on disposal of
investments 73 - (113)
Valuation of investments
Investments in collective investment schemes are stated at NAV with any resulting profit or loss recognised in profit or loss. Fair value is assessed by the Directors based on the best available information.
As at 31 October 2017, the Company had no investment in the Core Fund.
9.c) Fair value measurement hierarchy
The following table provides the fair value measurement hierarchy for non-current assets:
31 October 2017
Significant Significant
Quoted prices observable unobservable
in
active markets inputs inputs
(Level 1) (Level (Level 3) Total
2)
GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------- ------------- --------
Assets measured at fair
value
Investment property - - 147,030 147,030
- - 147,030 147,030
---------------- --------------------------------------- ------------- --------
31 October 2016
Significant Significant
Quoted prices observable unobservable
in
active markets inputs inputs
(Level 1) (Level (Level 3) Total
2)
GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------- ------------- --------
Assets measured at fair
value
Investment property - - 125,734 125,734
Investment in AEW UK Core
Property Fund - - 9,330 9,330
---------------- ------------- ------------- --------
- - 135,064 135,064
---------------- ----------------------------------------- ------------- --------
30 April 2017
Significant Significant
Quoted prices observable unobservable
in
active markets inputs inputs
(Level 1) (Level (Level 3) Total
2)
GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------- ------------- --------
Assets measured at fair
value
Investment property - - 135,570 135,570
Investment in AEW UK Core
Property Fund - - 7,594 7,594
---------------- ------------- ------------- --------
- - 143,164 143,164
---------------- ----------------------------------------- ------------- --------
Explanation of the fair value hierarchy:
Level 1 - Quoted prices for an identical instrument in active markets;
Level 2 - Prices of recent transactions for identical instruments and valuation techniques using observable market data; and
Level 3 - Valuation techniques using non-observable data.
Sensitivity analysis to significant changes in unobservable inputs within Level 3 of the hierarchy
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy of the entity's portfolios of investment properties are:
1) Estimated Rental Value ('ERV')
2) Equivalent yield
Increases/(decreases) in the ERV (per sq ft perannum) in isolation would result in a higher/(lower) fair value measurement. Increases/(decreases) in the discount rate/yield in isolation would result in a lower/(higher) fair value measurement.
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy of the entity's investment is:
1) NAV
Increases/(decreases) in the NAV would result in a higher/(lower) fair value measurement.
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy of the portfolio of investment property and investments are:
Significant
Fair value Valuation unobservable
Class GBP'000 technique inputs Range
-------------- ----------- ---------------------- ------------------ ---------------
31 October
2017
GBP2.50 -
ERV GBP160.00
Investment
Property 147,785 Income capitalisation Equivalent yield 6.79% - 9.72%
31 October
2016
Investment GBP2.00 -
Property 125,885 Income capitalisation ERV GBP160.00
Equivalent yield 6.99% - 11.03%
Investments 9,330 Market capitalisation NAV GBP1.1612
-------------- ----------- ---------------------- ------------------ ---------------
30 April 2017
Investment GBP2.00 -
Property 137,820 Income capitalisation ERV GBP160.00
Equivalent yield 6.94% - 10.27%
Investments 7,594 NAV NAV GBP1.1942
-------------- ----------- ---------------------- ------------------ ---------------
Where possible, sensitivity of the fair values of Level 3 assets are tested to changes in unobservable inputs to reasonable alternatives.
Gains and losses recorded in profit or loss for recurring fair value measurements categorised within Level 3 of the fair value hierarchy are attributable to changes in unrealised profits or losses relating to investment property and investments held at the end of the reporting period.
With regards to both investment property and investments, profits and losses for recurring fair value measurements categorised within Level 3 of the fair value hierarchy, prior to adjustment for rent free debtor and rent guarantee debtor, are recorded in profit and loss.
The carrying amount of the assets and liabilities, detailed within the Condensed Consolidated Statement of Financial Position, is considered to be the same as their fair value.
31 October 2017
Change in ERV Change in equivalent yield
GBP000 GBP'000 GBP'000 GBP'000
-------- -------- -------------- -------------
Sensitivity Analysis +5% -5% +5% -5%
Resulting fair value
of investment property 154,000 141,059 139,125 156,441
31 October 2016
Change in ERV Change in equivalent yield
GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------------- -------------
Sensitivity Analysis +5% -5% +5% -5%
Resulting fair value
of investment property 131,540 120,505 118,895 133,605
30 April 2017
Change in ERV Change in equivalent yield
GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------------- -------------
Sensitivity Analysis +5% -5% +5% -5%
Resulting fair value
of investment property 143,606 131,979 129,906 145,906
10. Receivables and prepayments
31 October 31 October 30 April
2017 2016 2017
GBP'000 GBP'000 GBP'000
----------- ----------- ---------
Receivables
Rent debtor 653 2,155 461
Dividend receivable - 146 110
Other income debtors - - 192
Rent agent float account 58 51 57
Other receivables 44 309 213
----------- ----------- ---------
755 2,661 1,033
Rent free debtor 1,393 1,716 2,230
Rent guarantee debtor - 135 80
2,148 4,512 3,343
----------- ----------- ---------
Prepayments
Property related prepayments 30 57 10
Capital prepayments - - 1
Depositary services 7 7 8
Listing fees 4 3 8
Other prepayments 15 21 12
----------- ----------- ---------
56 88 39
----------- ----------- ---------
Total 2,204 4,600 3,382
----------- ----------- ---------
11. Interest rate derivatives
31 October 31 October 30 April
2017 2016 2017
GBP'000 GBP'000 GBP'000
----------- ----------- ---------
At the beginning of the period/year 31 77 77
Interest rate cap premium paid - 71 71
Changes in fair value of interest
rate derivatives (7) (70) (117)
----------- ----------- ---------
At the end of the period/year 24 78 31
----------- ----------- ---------
To mitigate the interest rate risk that arises as a result of entering into variable rate linked loans, the Company entered into an interest rate CAP, during the combined notional value of GBP26.51 million (2017: GBP26.51 million) and a strike rate of 2.5% (2017: 2.5%) for the relevant period in line with the life of the loan.
The total premium payable in the period towards securing the interest rate caps was GBPnil.
Fair Value hierarchy
The following table provides the fair value measurement hierarchy for interest rate derivatives:
Assets measured at fair value
Quoted prices Significant Significant
in active observable unobservable
markets input inputs
(Level 1) (Level 2) (Level 3) Total
Valuation GBP'000 GBP'000 GBP'000 GBP'000
date
--------------- ----------------- -------------- -------------- --------
31 October
2017 - 24 - 24
31 October
2016 - 78 - 78
30 April 2017 - 31 - 31
--------------- ----------------- -------------- -------------- --------
The fair value of these contracts are recorded in the Consolidated Statement of Financial Position as at the period end.
There have been no transfers between Level 1 and Level 2 during the period, nor have there been any transfers between Level 2 and Level 3 during the period.
The carrying amount of the assets and liabilities, detailed within the Consolidated Statement of Financial Position, is considered to be the same as their fair value.
12. Interest bearing loans and borrowings
Bank borrowings drawn
31 October 31 October 30 April
2017 2016 2017
GBP'000 GBP'000 GBP'000
----------- ----------- ---------
At the beginning of the period/year 29,010 14,250 14,250
Bank borrowings drawn in the
period/year 3,490 12,260 14,760
----------- ----------- ---------
Interest bearing loans and borrowings 32,500 26,510 29,010
----------- ----------- ---------
Less: loan issue costs incurred (400) (388) (388)
Plus: amortised loan issue costs 159 79 118
----------- ----------- ---------
At the end of the period/year 32,259 26,201 28,740
----------- ----------- ---------
Repayable between 2 and 5 years 32,500 26,510 29,010
Bank borrowings available but
undrawn in the period/year 7,500 13,490 10,990
----------- ----------- ---------
Total facility available 40,000 40,000 40,000
----------- ----------- ---------
The Company entered into a GBP40.0 million credit facility with the RBSi on 20 October 2015. On 11 May 2017, the Company reduced its available loan facility from GBP40.0 million to GBP32.5 million and on 17 October 2017, the Company increased the available facility back to GBP40.0 million. At the period end, GBP7.5 million remained undrawn.
Borrowing costs associated with the credit facility are shown as finance costs in note 5 to these financial statements.
The term to maturity as at the period end is 2.97 years.
13. Payables and accrued expenses
31 October 31 October 30 April
2017 2016 2017
GBP'000 GBP'000 GBP'000
----------- ----------- ---------
Deferred income 1,223 3,122 1,513
Accruals 532 526 534
Other creditors 922 301 709
----------- ----------- ---------
Total 2,677 3,949 2,756
----------- ----------- ---------
14. Finance lease obligations
Finance leases are capitalised at the lease's commencement at that lower of the fair value of the property and the present value of the minimum lease payments. The present value of the corresponding rental obligations are included as liabilities
The following table analyses the minimum lease payments under non-cancellable finance leases:
31 October 31 October 30 April
2017 2016 2017
GBP'000 GBP'000 GBP'000
----------- ----------- ---------
Not later than one year 47 118 5
Later than one year but not later
than five years 154 432 15
Later than five years 437 1,150 40
----------- ----------- ---------
591 1,582 55
----------- ----------- ---------
Total 638 1,700 60
----------- ----------- ---------
15. Issued Share Capital
For the period 1 May 2017 to
31 October 2017
Number of
GBP'000 Ordinary Shares
-------- ----------------
Ordinary Shares issued and fully
paid
At the beginning of the period 1,236 123,647,250
Issued on admission to trading
on the London Stock Exchange
on 24 October 2017 279 27,911,001
At the end of the period 1,515 151,558,251
-------- ----------------
On 24 October 2017, the Company issued 27,911,001 Ordinary Shares at a price of 100.5 pence per share pursuant to the Initial Placing, Initial Offer for Subscription and Intermediaries Offer of the Share Issuance Programme, as described in the prospectus published by the Company on 28 September 2017.
For the period 1 May 2016 to
31 October 2016
Number of
GBP'000 Ordinary Shares
-------- ----------------
Ordinary Shares issued and fully
paid
At the beginning of the period 1,175 117,510,000
Issued on admission to trading
on the London Stock Exchange
on 16 September 2016 24 2,450,000
Issued on admission to trading
on the London Stock Exchange
on 10 October 2016 37 3,687,250
-------- ----------------
At the end of the period 1,236 123,647,250
-------- ----------------
For the period ended 30 April
2017
Number of
GBP'000 Ordinary Shares
-------- ----------------
Ordinary Shares issued and fully
paid
At the beginning of the year 1,175 117,510,000
Issued on admission to trading
on the London Stock Exchange
on 16 September 2016 24 2,450,000
Issued on admission to trading
on the London Stock Exchange
on 10 October 2016 37 3,687,250
At the end of the period 1,236 123,647,250
-------- ----------------
16. Share premium account
Period from Period from
1 May 2017 1 May 2016 Year ended
to to
31 October 31 October 30 April
2017 2016 2017
GBP'000 GBP'000 GBP'000
------------ ------------ -----------
The share premium relates to
amounts subscribed for share
capital in excess of nominal
value:
Balance at the beginning of
the period/year 22,514 16,729 16,729
Share issue costs (paid and
accrued) - (23) (23)
Issued on admission to trading
on the London Stock Exchange
on 16 September 2016 - 2,352 2,352
Share issue costs (paid and
accrued) - (42) (42)
Issued on admission to trading
on the London Stock Exchange
on 10 October 2016 - 3,586 3,586
Share issue costs (paid and
accrued) - (55) (88)
Issued on admission to trading
on the London Stock Exchange
on 24 October 2017 27,771 - -
Share issue cost (546) - -
------------ ------------ -----------
Balance at the end of the period/year 49,739 22,547 22,514
------------ ------------ -----------
17. Transaction with related parties
As defined by IAS 24 Related Party Disclosures, parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.
For the six months ended 31 October 2017, the Directors' of the Company are considered to be the key management personnel. Directors' remuneration is disclosed in note 4.
The Company is party to an Investment Management Agreement with the Investment Manager, pursuant to which the Company has appointed the Investment Manager to provide investment management services relating to the respective assets on a day-to-day basis in accordance with their respective investment objectives and policies, subject to the overall supervision and direction of the Boards of Directors.
Under the Investment Management Agreement the Investment Manager receives a management fee which is calculated and accrued monthly at a rate equivalent to 0.9% per annum of NAV (excluding un-invested fund raising proceeds) and paid quarterly.
During the period 1 May 2017 to 31 October 2017, the Company incurred GBP519,373 (31 October 2016: GBP525,776; 30 April 2017: GBP1,033,637) in respect of investment management fees and expenses of which GBP259,276 was outstanding at 31 October 2017 (31 October 2016: GBP253,769; 30 April 2017: GBP252,850).
On 1 May 2017, the Company had a holding of 6,359,440 shares in the Core Fund, which were valued at GBP7,594,443. The investment was deemed to be with a related party due to the common influence of the Investment Manager over both parties. On 9 May 2017, the Company sold its remaining investment in the Core Fund for proceeds of GBP7.67 million.
18. Events after reporting date
Dividend
On 1 December 2017, the Board declared its second interim dividend of 2.00 pence per share in respect of the period from 1 August 2017 to 31 October 2017. This is to be paid on 29 December 2017 to shareholders on the register as at 15 December 2017. The ex-dividend date will be 14 December 2017.
EPRA Unaudited Performance Measures
Detailed below is a summary table showing the EPRA performance measures of the Company
MEASURE AND DEFINITION PURPOSE PERFORMANCE
---------------------------------- ------------------------------ -----------------------------
1. EPRA Earnings
Earnings from operational A key measure of a GBP4.66 million/3.73
activities. company's underlying pps
operating results and EPRA earnings for the
an indication of the six month period to
extent to which current 31 October 2017 (six
dividend payments are month period to 31
supported by earnings. October 2016: GBP4.52
million/3.81 pps)
2. EPRA NAV
Net asset value adjusted Makes adjustments to GBP148.20 million/97.78
to include properties IFRS NAV to provide pps
and other investment stakeholders with the EPRA NAV as at 31 October
interests at fair value most relevant information 2017 (At 30 April 2017:
and to exclude certain on the fair value of GBP118.64 million/95.95
items not expected the assets and liabilities pps)
to crystallise in a within a true real
long-term investment estate investment company
property business. with a long-term investment
strategy.
3. EPRA NNNAV
EPRA NAV adjusted to Makes adjustments to GBP148.22 million/97.80
include the fair values EPRA NAV to provide pps EPRA NNNAV as at
of: stakeholders with the 31 October 2017 (At
(i) financial instruments; most relevant information 30 April 2017: GBP118.67
(ii) debt; and on the current fair million/95.98 pps)
(iii) deferred taxes. value of all the assets
and liabilities within
a real estate company.
4.1 EPRA Net Initial
Yield ('NIY')
Annualised rental income A comparable measure 7.39%
based on the cash rents for portfolio valuations. EPRA NIY as at 31 October
passing at the balance This measure should 2017 (At 30 April 2017:
sheet date, less non-recoverable make it easier for 7.12%)
property operating investors to judge
expenses, divided by themselves, how the
the market value of valuation of portfolio
the property, increased X compares with portfolio
with (estimated) purchasers' Y.
costs.
4.2 EPRA 'Topped-Up'
NIY A comparable measure 7.79%
This measure incorporates for portfolio valuations. EPRA 'Topped-Up' NIY
an adjustment to the This measure should as at 31 October 2017
EPRA NIY in respect make it easier for (At 30 April 2017:
of the expiration of investors to judge 8.27%)
rent-free periods (or themselves, how the
other unexpired lease valuation of portfolio
incentives such as X compares with portfolio
discounted rent periods Y.
and step rents).
5. EPRA Vacancy
Estimated Market Rental A "pure" (%) measure 8.59%
Value ('ERV') of vacant of investment property EPRA vacancy as at
space divided by ERV space that is vacant, 31 October 2017 (At
of the whole portfolio. based on ERV. 30 April 2017: 7.22%)
6. EPRA Cost Ratio
Administrative and A key measure to enable 23.60%
operating costs (including meaningful measurement EPRA Cost Ratio (including
and excluding costs of the changes in a direct vacant cost)
of direct vacancy) company's operating as at 31 October 2017
divided by gross rental costs. (At 30 April 2017:
income. 24.20%)
15.54%
EPRA Cost ratio excluding
direct vacancy costs
as at 31 October 2017
(At 30 April 2017:
18.37%
Calculation of EPRA Net Initial Yield and 'topped-up' Net Initial Yield
31 October
2017
GBP'000
-----------
Investment property - wholly owned 147,785
Allowance for estimated purchasers' cost 10,049
-----------
Gross up completed property portfolio valuation 157,834
-----------
Annualised cash passing rental income 12,653
Property outgoings (984)
-----------
Annualised net rents 11,669
-----------
Rent expiration of rent-free periods and fixed uplifts 621
-----------
'Topped-up' net annualised rent 12,290
-----------
EPRA Net Initial Yield 7.39%
EPRA 'topped-up' Net Initial Yield 7.79%
EPRA Net Initial Yield (NIY) basis of calculation
EPRA NIY is calculated as the annualised net rent, divided by the gross value of the completed property portfolio.
The valuation of grossed up completed property portfolio is determined by our external valuers as at 31 October 2017, plus an allowance for estimated purchaser's costs. Estimated purchaser's costs are determined by the relevant stamp duty liability, plus an estimate by our valuers of agent and legal fees on notional acquisition. The net rent deduction allowed for property outgoings is based on our valuers' assumptions on future recurring non-recoverable revenue expenditure.
In calculating the EPRA 'topped-up' NIY, the annualised net rent is increased by the total contracted rent from expiry of rent-free periods and future contracted rental uplifts.
Calculation of EPRA Vacancy Rate
31 October
2017
GBP'000
-----------
Annualised potential rental value of vacant premises 1,190
Annualised potential rental value for the completed
property portfolio 13,849
-----------
EPRA Vacancy Rate 8.59%
-----------
Calculation of EPRA Cost Ratios 31 October
2017
GBP'000
Administrative/operating expense per IFRS income
statement 1,536
Less: Ground rent costs (4)
-----------
EPRA Costs (including direct vacancy costs) 1,532
Direct vacancy costs (523)
-----------
EPRA Costs (excluding direct vacancy costs) 1,009
Gross Rental Income 6,491
-----------
EPRA Cost Ratio (including direct vacancy costs) 23.60%
EPRA Cost Ratio (excluding direct vacancy costs) 15.54%
Company Information
Share Register Enquiries
The register for the Ordinary Shares is maintained by Computershare Investor Services PLC. In the event of queries regarding your holding, please contact the Registrar on 0370 889 4069 or email: web.queries@computershare.co.uk
Changes of name and/or address must be notified in writing to the Registrar, at the address shown below. You can check your shareholding and find practical help on transferring shares or updating your details at www.investorcentre.co.uk.
Share Information
Ordinary GBP0.01 Shares 151,558,251 SEDOL Number BWD2415 ISIN Number GB00BWD24154 Ticker/TIDM AEWU
Share Prices
The Company's Ordinary Shares are traded on the Main Market of the London Stock Exchange.
Annual and Interim Reports
Copies of the Annual and Interim Reports are available from the Company's website
Provisional Financial Calendar
31 March 2018 Year end (the Company is changing its financial
year end from 30 April to 31 March. As a result,
our next Annual Report will cover a period of
eleven months from 1 May 2017 to 31 May 2018)
June 2018 Announcement of annual results
September 2018 Annual General Meeting
30 September Half-year End
2018
November 2018 Announcement of interim results
Dividends
The following table summarises the amounts recognised as distributions to equity shareholders in the period:
GBP
----------
Interim dividend for the period 1 May 2017 to 31
July 2017 (payment made on 30 September 2017 2,472,945
Dividend for the period 1 August 2017 to 31 October
2017 (payment to be made on 29 December 2017) 3,031,165
----------
Total 5,504,110
----------
Directors
Mark Burton* (Non-executive Chairman)
James Hyslop (Non-executive Director)
Bimaljit ("Bim") Sandhu* (Non-executive Director)
Katrina Hart* (Non-executive Director)
Registered Office
6th Floor
65 Gresham Street
London
EC2V 7NQ
Investment Manager
AEW UK Investment Management LLP
33 Jermyn Street
London
SW1Y 6DN
Tel: 020 7016 4880
Website: www.aewuk.co.uk
Property Manager
M J Mapp
180 Great Portland Street
London
W1W 5QZ
Corporate Broker
Fidante Capital
1 Tudor Street
London
EC4Y 0AH
Legal Adviser to the Company
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
Depositary
Langham Hall UK LLP
5 Old Bailey
London
EC4M 7BA
Administrator
Link Alternative Fund Administrators Limited
Beaufort House
51 New North Road
Exeter
EX4 4EP
Company Secretary
Link Company Matters Limited
6th Floor
65 Gresham Street
London
EC2V 7NQ
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Auditor
KPMG LLP
15 Canada Square
London
E14 5GL
Valuer
Knight Frank LLP
55 Baker Street
London
W1U 8AN
*Independent of the Investment Manager.
Frequency of NAV publication:
The Company's NAV is released to the London Stock Exchange on a quarterly basis and is published on the Company's website.
National Storage Mechanism
A copy of the Interim Report will be submitted shortly to the National Storage Mechanism ('NSM') and will be available for inspection at the NSM, which is situated at www.morningstar.co.uk/uk/NSM.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UNURRBOAURUA
(END) Dow Jones Newswires
December 07, 2017 02:00 ET (07:00 GMT)
1 Year Aew Uk Reit Chart |
1 Month Aew Uk Reit Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
