AEW UK REIT plc: NAV Update and Dividend Declaration

AEW UK REIT plc (AEWU) 
AEW UK REIT plc: NAV Update and Dividend Declaration 
21-Jul-2021 / 10:34 GMT/BST 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
=---------------------------------------------------------------------------------------------------------------------- 
The information contained within this announcement is deemed by the Company to constitute inside information as 
stipulated under the Market Abuse Regulation (EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit) 
Regulations 2019. 
 
21 July 2021 
 
AEW UK REIT Plc (the "Company") 
 
NAV Update and Dividend Declaration 
 
AEW UK REIT plc (LSE: AEWU) (the "Company"), which, as at 21 July 2021, directly owns a diversified portfolio of 36 
regional UK commercial property assets, announces its unaudited Net Asset Value ("NAV") and interim dividend for the 
three month period ended 30 June 2021. 
 
Highlights 
 
  ? Interim dividend of 2.00 pence per share for the three months ended 30 June 2021, in line with the targeted annual 
    dividend of 8.00 pence per share. 
  ? EPRA earnings per share ("EPRA EPS") for the quarter of 2.14 pence (31 March 2021 quarter: 1.10 pence). 
  ? NAV of GBP169.69 million or 107.11 pence per share as at 30 June 2021 (31 March 2021: GBP157.08 million or 99.15 pence 
    per share). 
  ? NAV total return of 10.04% for the quarter (31 March 2021 quarter: 5.51%). 
  ? Acquisitions of two properties: Arrow Point Retail Park, Shrewsbury, for GBP8.35 million and 15-33 Union Street, 
    Bristol, for GBP10.19 million. 
  ? Successful outcome of legal action against two well-funded national tenants to recover unpaid rent. All rent 
    arrears due from these tenants have since been collected. 
  ? The Company remains conservatively geared with a loan to NAV ratio of 29.76% (31 March 2021: 25.15%). As at 30 June 
    2021, the Company had a cash balance of GBP8.43 million and GBP8.89 million of its loan facility available to draw up 
    to the maximum 35% Loan to NAV at drawdown. 
  ? For the rental quarter commencing on 24 June 2021, 88% of rent has been collected or is expected to be received 
    under monthly payment plans prior to quarter end. The remainder of rents owed will continue to be pursued. 
 
Alex Short, Portfolio Manager, AEW UK REIT, commented: 
"The Company's portfolio generated record strong capital growth for the quarter with valuations increasing by 7.47% on 
a like-for-like basis, the highest quarterly increase since IPO in 2015.  As with the previous quarter, this was 
largely driven by the performance of the industrial assets in the portfolio which saw a like-for-like increase of 
10.62% for the quarter and make up 57% of the portfolio as at 30 June 2021. The industrial and logistics sectors have 
benefitted from accelerated changes in consumer habits and the shift towards online retail and this continues to be 
reflected in valuation movements. There is also some expectation that the UK will begin to see an increase in localised 
production as a result of supply chain disruption and this could lead to take up being focussed more on traditional 
manufacturing accommodation, which has seen a decline in total stock in recent years, rather than the currently 
favoured logistics assets. 
We are now seeing more attractive investment opportunities coming to the market and the Company made two acquisitions 
during the quarter for a combined gross purchase price of GBP18.54 million, drawing GBP11.00 million of its loan facility. 
The first, Arrow Point Retail Park in Shrewsbury, was acquired in May for GBP8.35 million and is a fully-let, 
purpose-built retail park prominently located on a busy commercial estate, providing a net initial yield of 8.7%. The 
second, 15-33 Union Street, Bristol, is a retail site located on a busy pedestrian thoroughfare in Bristol city centre 
and provides a net initial yield of 8.0%. Both of these assets provide opportunity for value growth in the medium to 
long term, and also strong and stable income streams from their tenancy profiles. While we continue to take a cautious 
approach towards the retail sector, judging each site on its specific merits, these two acquisitions are an excellent 
fit for the portfolio. The retail sector now makes up 18% of the portfolio valuation. 
The Company's EPRA EPS was 2.14 pence for the quarter, providing a dividend cover of 107% (31 March 2021: 1.10 pence 
and 55%). During the quarter, the Company announced the successful outcome of legal action against two well-funded 
national tenants to recover unpaid rent and subsequently recovered all rent arrears due from those tenants. The 
collection of these significant arrears allowed the reversal of the prudent doubtful debt provision which contributed a 
one-off 0.37 pence to EPRA EPS during the quarter. 
In the coming quarters the Company's earnings will benefit from its recent acquisitions as well as the completion of 
asset management initiatives. Ongoing remedial works at the Company's property in Blackpool, which amounted to 0.13 
pence per share for the quarter, and a high level of vacancy at its property in Glasgow, which has exchanged to be sold 
subject to achieving planning for student accommodation and vacant possession, are temporarily restricting the 
Company's earnings potential. Both are expected to be complete by early 2022. We are also encouraged by recent 
improvements in rent collection levels, which now stand at over 96% for each quarter since the onset of the pandemic 
(ex current quarter). It is hoped that continued easing of lockdown restrictions will allow this trend to continue. 
The Company has GBP8.43 million of cash and GBP8.89 million of its loan facility available to draw up to the maximum 35% 
Loan to NAV at drawdown, which will allow us to take advantage of further attractive opportunities in the market. The 
Company's share price was 96.00 pence as at 30 June 2021 (31 March 2021: 83.20 pence) and we hope that continued 
improvements in economic conditions will bring about the return of trading at a premium to NAV and enable growth of the 
Company to resume, which remains a key objective." 
 
Valuation movement 
As at 30 June 2021, the Company owned investment properties with a fair value of GBP210.91 million. The like-for-like 
valuation increase for the quarter of GBP13.37 million (7.47%) is broken down as follows by sector: 
Sector        Valuation 30 June 2021 Like-for-like valuation movement for the quarter 
              GBP million      %       GBP million                      % 
Industrial    120.42         57.10   11.57                          10.62 
Office        39.00          18.49   2.20                           5.98 
Retail        38.94          18.46   (0.40)                         (1.92) 
Other         12.55          5.95    0.00                           0.00 
Total         210.91         100.0   13.37                          7.47 

Net Asset Value

The Company's unaudited NAV as at 30 June 2021 was GBP169.69 million, or 107.11 pence per share. This reflects an increase of 8.03% compared with the NAV per share as at 31 March 2021. The Company's NAV total return, which includes the interim dividend of 2.00 pence per share for the period from 1 January 2021 to 31 March 2021, was 10.04% for the three-month period ended 30 June 2021.

                                              Pence per share  GBP million 
NAV at 1 April 2021                           99.15            157.08 
Portfolio acquisition costs                   (0.74)           (1.16) 
Valuation change in property portfolio        8.56             13.55 
Income earned for the period                  2.51             3.97 
Expenses and net finance costs for the period (0.37)           (0.58) 
Interim dividend paid                         (2.00)           (3.17) 
NAV at 30 June 2021                           107.11           169.69 

The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards. It incorporates the independent portfolio valuation as at 30 June 2021 and income for the period, but does not include a provision for the interim dividend for the three month period to 30 June 2021.

Dividend

Dividend declaration

The Company today announces an interim dividend of 2.00 pence per share for the period from 1 April 2021 to 30 June 2021. The dividend payment will be made on 31 August 2021 to shareholders on the register as at 30 July 2021. The ex-dividend date will be 29 July 2021.

The dividend of 2.00 pence per share will be designated 1.00 pence per share as an interim property income distribution ("PID") and 1.00 pence per share as an interim ordinary dividend ("non-PID").

The Company has now paid a 2.00 pence quarterly dividend for 23 consecutive quarters1.

1For the period 1 November 2017 to 31 December 2017, a pro rata dividend of 1.33 pence per share was paid for this 2 month period, following a change in the accounting period.

The EPRA EPS for the three-month period to 30 June 2021 was 2.14 pence (31 March 2021: 1.10 pence).

Dividend outlook

It remains the Company's intention to continue to pay dividends in line with its dividend policy and this will be kept under review given the current COVID-19 situation. In determining future dividend payments, regard will be given to the circumstances prevailing at the relevant time, as well as the Company's requirement, as a UK REIT, to distribute at least 90% of its distributable income annually, which will remain a key consideration.

Financing

Equity

The Company's share capital consists of 158,774,746 Ordinary Shares, of which 350,000 are currently held by the Company as treasury shares.

Debt

During the quarter, the Company drew GBP11.00 million of its loan facility, taking its total borrowings to GBP50.50 million as at 30 June 2021. This produces a Loan to NAV ratio of 29.76% and allows a further GBP8.89 million of the remaining GBP9.50 million facility to be drawn up to the maximum 35% Loan to Value at drawdown.

(MORE TO FOLLOW) Dow Jones Newswires

July 21, 2021 05:35 ET (09:35 GMT)