NAV Update and Dividend Declaration (769415)

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 AEW UK REIT plc (AEWU) 
NAV Update and Dividend Declaration 
 
25-Jan-2019 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
          25 January 2018 
 
NAV Update and Dividend Declaration for the three months to 31 December 2018 
 
  AEW UK REIT plc (LSE: AEWU) ("the Company"), which, as at 25 January 2019, 
 directly owns a diversified portfolio of 35 regional UK commercial property 
assets, announces its unaudited Net Asset Value ("NAV") and interim dividend 
          for the three month period ended 31 December 2018. 
 
          Highlights 
 
  · At 31 December 2018, the fair value independent valuation of the 
  property portfolio was GBP192.66 million (30 September 2018: GBP193.53 
  million), following the sale of Stoneferry Retail Park, Hull, during the 
  quarter. On a like-for-like basis the valuation of the property portfolio 
  increased by GBP1.03 million (0.53%) over the quarter (30 September 2018: 
  GBP2.48 million and 1.30%). 
 
  · NAV of GBP152.12 million or 100.37 pence per share (30 September 2018 : 
  GBP151.65 million or 100.06 pence per share). 
 
  · EPRA earnings per share ("EPRA EPS") for the quarter of 1.98 pence per 
  share (30 September 2018: 2.06 pence per share). 
 
  · The Company today announces an interim dividend of 2.00 pence per share 
  for the three months ended 31 December 2018. 
 
  · NAV total return of 2.31% for the three months ended 31 December 2018. 
 
  · The Company remains conservatively geared with a gross loan to value 
  ratio of 25.95% (30 September 2018: 25.84%). 
 
  · At 31 December 2018, the Company held GBP8.91 million cash for investment, 
  which we expect to invest in an attractive and high-yielding industrial 
  asset in the coming months. 
 
  · Portfolio and asset management activity during the period included: 
 
    · The renewal of the lease at Mangham Road, Rotherham, for a term of ten 
    years at a rent of GBP275,000 per annum, representing an increase in rent 
    of 20%. 
 
    · The letting of Unit 3, Above Bar Street, Southampton, for a ten year 
    term at a rent of GBP135,000 per annum. 
 
    · The sale of Stoneferry Retail Park, Hull, for gross proceeds of GBP1.80 
    million. 
 
    · A regear of the lease at London East Leisure Park, Dagenham, with 
    McDonalds Restaurants Ltd for a 15 year term at a rent of GBP75,000 per 
    annum in years 1 to 3, increasing to GBP90,000 thereafter. 
 
          Alex Short, Portfolio Manager, AEW UK REIT, commented: 
 
"Despite an uncertain political outlook, property performance generated from 
  the Company's portfolio continues to be strong, highlighting the expertise 
     of the Manager in selecting assets that will deliver sustainably strong 
 returns under a range of economic outlooks. We are pleased to start the New 
 Year with both a valuation uplift and stable EPRA earnings for the quarter, 
          which demonstrates the ongoing resilience of our strategy. 
 
 The like-for-like valuation uplift for the quarter of GBP1.03 million (0.53%) 
          is detailed as follows by sector: 
 
    Sector  Valuation 31 Dec         Valuation         Valuation 
                          18  movement for the  movement for the 
                                       quarter           quarter 
                   GBP million         GBP million                 % 
Industrial             87.23              2.35              2.77 
     Other             30.33              0.38              1.25 
    Office             43.20            (0.20)            (0.46) 
    Retail             31.90            (1.50)            (4.49) 
     Total            192.66              1.03              0.53 
 
       Whilst there continue to be concerns around the retail sector, we are 
 pleased the Company's exposure has fallen during the quarter from 18.24% to 
        16.56% of the portfolio valuation. This is partly as a result of the 
 disposal of Stoneferry Retail Park, Hull, for GBP1.80 million and partly as a 
result of the valuation losses shown above. Although the Company's remaining 
       retail assets have seen a fall in valuation due to negative sentiment 
towards the sector, they are generally located in town and city centres with 
       large catchment populations and in many cases are supported by strong 
  alternative use values and asset management options, limiting the downside 
          risk. 
 
        We firmly believe that, given the Company's light exposure to retail 
property and lack of exposure altogether to the Central London Office Market 
   where Brexit related demand concerns may be building, the Company is well 
 positioned to weather challenges in the wider economy and to take advantage 
          of opportunities in the market. 
 
 Following on from recent quarters' asset management successes, this quarter 
  saw further letting success with a 10 year lease renewal being signed with 
    Hydro Components UK Ltd on an 80,000 sq ft industrial unit in Rotherham, 
which crystallised a 20% uplift in the level of passing rent. In addition, a 
          new letting was completed with Footasylum on Above Bar Street in 
   Southampton, which highlighted that well located retail property is still 
    able to attract tenant demand and, as such, vacancy across the portfolio 
 remains low at 3.08%. Despite this low level of vacancy, we still expect to 
 see significant value add opportunity from the portfolio in coming quarters 
  as other asset management transactions that are currently being negotiated 
start to reach fruition. Other activity during the quarter included the sale 
    of the Stoneferry Retail Park in Hull to an owner occupier which further 
          reduced the portfolio's exposure to the retail sector. 
 
The sale of the asset in Hull, along with the use of our debt facility up to 
an LTV of 25.95%, provides us with further capital to invest and as such, we 
  are currently undertaking detailed due diligence on a new industrial asset 
 which we hope to be able to announce imminently. As shown by this potential 
acquisition, the Company's investment pipeline continues to look strong with 
        a variety of opportunities that could be accretive to our earnings." 
 
          Net Asset Value 
 
  The Company's unaudited NAV as at 31 December 2018 was GBP152.12 million, or 
100.37 pence per share. This reflects an increase of 0.31% compared with the 
 NAV as at 30 September 2018. The Company's NAV total return, which includes 
 the interim dividend for the period from 1 October 2018 to 31 December 2018 
       of 2.00 pence per share, is 2.31% for the three month period ended 31 
         December 2018. As at 31 December 2018, the Company owned investment 
           properties with a fair value of GBP192.66 million. 
 
                                      Pence per share  GBP million 
               NAV at 1 October 2018           100.06     151.65 
      Loss on disposal of investment           (0.20)     (0.30) 
                          properties 
                 Capital expenditure           (0.13)     (0.21) 
        Valuation change in property             0.75       1.14 
                           portfolio 
     Valuation change in derivatives           (0.09)     (0.14) 
        Income earned for the period             2.90       4.40 
  Expenses and net finance costs for           (0.92)     (1.39) 
                          the period 
               Interim dividend paid           (2.00)     (3.03) 
             NAV at 31 December 2018           100.37     152.12 
 
       The NAV attributable to the ordinary shares has been calculated under 
International Financial Reporting Standards and incorporates the independent 
   portfolio valuation as at 31 December 2018 and income for the period, but 
   does not include a provision for the interim dividend for the three month 
          period to 31 December 2018. 
 
          Dividend 
 
 The Company today announces an interim dividend of 2.00 pence per share for 
    the period from 1 October 2018 to 31 December 2018. The dividend payment 
    will be made on 28 February 2019 to shareholders on the register as at 8 
          February 2019. The ex-dividend date will be 7 February 2019. 
 
The dividend of 2.00 pence per share will be designated 2.00 pence per share 
          as an interim property income distribution ("PID"). 
 
  The EPRA EPS for the three month period to 31 December 2018 was 1.98 pence 
  (30 September 2018: 2.06 pence). The fall in EPRA earnings is largely as a 
  result of one-off charges on void units, equating to 0.07 pence per share. 
   The Company had GBP8.91 million cash for investment as at 31 December 2018, 
          which will provide the opportunity to increase earnings through 
          re-investment into high yielding assets. 
 
   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 8.00 pence per share. Based on 
current market conditions, the Company expects to pay an annualised dividend 
  of 8.00 pence per share in respect of the financial period ending 31 March 
          2019. 
 
   Investors should note that this target is for illustrative purposes only, 
based on current market conditions and is not intended to be, and should not 
        be taken as, a profit forecast or estimate. Actual returns cannot be 
predicted and may differ materially from this illustrative figure. There can 
   be no assurance that the target will be met or that any dividend or total 
          return will be achieved. 
 
          Financing 
 
          Equity 
 
The Company's issued share capital consists of 151,558,251 Ordinary Shares 
and there was no movement during the quarter. 
 
          Debt 
 

  The Company's borrowings remained at GBP50.00 million throughout the quarter 
 and at 31 December 2018, the Company was geared at a gross loan to value of 
          25.95% and a net loan to value of 21.33%. 
 
     The loan continues to attract interest at LIBOR + 1.4%. To mitigate the 
 interest rate risk that arises as a result of entering into a variable rate 
      linked loan, the Company has entered into interest rate caps on GBP36.51 
 million of the total value of the loan (GBP26.51 million at 2.5% cap rate and 
  GBP10.00 million at 2.0% cap rate) up to October 2020, resulting in the loan 
      being 73% hedged. The Investment Manager and the Company will keep the 
          levels of gearing and hedging under review. 
 
   On 22 October 2018, the Company extended the term of the loan facility by 
 three years up to October 2023, incurring arrangement fees of GBP270,000. The 
 Company also entered into interest rate caps covering the extension period, 
 capping a notional value of GBP46.51 million at LIBOR of 2.00% per annum from 
      October 2020 to October 2023, which represents 90% of the current loan 
           balance. The premium paid was GBP512,000. 
 
          Portfolio activity and asset management 
 
          Mangham Road, Rotherham 
 
In October 2018, the Company completed a lease renewal with Hydro Components 
    UK Limited for a ten year term at a rent of GBP275,000 per annum at its c. 
   80,000 sq ft industrial unit in Rotherham. This represents an increase of 
 20% in passing rent and the valuation of the property increased by over 30% 
          for the quarter. 
 
          Above Bar Street, Southampton 
 
 In October 2018, the Company completed the lease of Unit 3, 69/75 Above Bar 
Street, Southampton, to Footasylum Plc. for a term of ten years at a rent of 
           GBP135,000 per annum. 
 
          Stoneferry Retail Park, Hull 
 
 In December 2018, the Company completed the sale of Stoneferry Retail Park, 
  Hull, for gross proceeds of GBP1.80 million, reducing the Company's exposure 
          to the retail sector. 
 
          London East Leisure Park, Dagenham 
 
   In December, the Company completed the regear of the lease at London East 
Leisure Park, Dagenham, with McDonalds Restaurants Ltd for a 15 year term at 
    a rent of GBP75,000 in years 1 to 3, increasing to GBP90,000 thereafter. The 
           letting led to an increase in value of GBP250,000 for the quarter. 
 
                   Enquiries 
                      AEW UK 
                  Alex Short          [e-mail] 
                                        [phone] 
             Nicki Gladstone [e-mail] 
                                        [phone] 
           Company Secretary 
Link Company Matters Limited     [e-mail] 
                                     T: [phone] 
 
                   TB Cardew 
                  Ed Orlebar        [e-mail] 
                                           T: 07738 724 630 
           Lucy Featherstone [e-mail] 
                                    T: [phone] 
                                    M: [phone] 
 
             Liberum Capital 
              Gillian Martin        T: [phone] 
 
          Notes to Editors 
 
          About AEW UK REIT 
 
   AEW UK REIT plc (LSE: AEWU) aims to deliver an attractive total return to 
    shareholders by investing predominantly in smaller commercial properties 
 (typically less than GBP10 million), on shorter occupational leases in strong 
   commercial locations across the United Kingdom. The Company was listed on 
the Official List of the UK Listing Authority and admitted to trading on the 
   Main Market of the London Stock Exchange on 12 May 2015, raising GBP100.5m. 
           Since IPO it has raised a further GBP51m. 
 
 The Company is currently invested in office, retail, industrial and leisure 
          assets, with a focus on active asset management, repositioning the 
          properties and improving the quality of the income stream. 
 
          AEWU is currently paying an annualised dividend of 8p per share. 
 
          www.aewukreit.com [1] [2] 
 
          About AEW UK Investment Management LLP 
 
AEW UK Investment Management LLP employs a well-resourced team comprising 23 
 individuals covering investment, asset management, operations and strategy. 
   It is part of AEW Group, one of the world's largest real estate managers, 
with just over EUR63.5bn of assets under management as at 30 September 2018. 
          AEW Group comprises AEW SA and AEW Capital Management L.P., a U.S. 
 registered investment manager and their respective subsidiaries. In Europe, 
       as at 30 September 2018, AEW Group managed nearly EUR30bn in value in 
properties of all types located in 9 countries, with close to 400 staff. The 
   Investment Manager is a 50:50 joint venture between the principals of the 
          Investment Manager and AEW. 
 
ISIN:           GB00BWD24154 
Category Code:  MSCH 
TIDM:           AEWU 
LEI Code:       21380073LDXHV2LP5K50 
OAM Categories: 3.1. Additional regulated information required to be 
                disclosed under the laws of a Member State 
Sequence No.:   7250 
EQS News ID:    769415 
 
End of Announcement EQS News Service 
 
 
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(END) Dow Jones Newswires

January 25, 2019 02:01 ET (07:01 GMT)