NAV Update and Dividend Declaration (803661)

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 AEW UK REIT plc (AEWU) 
NAV Update and Dividend Declaration 
 
26-Apr-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. 
 
          26 April 2019 
 
NAV Update and Dividend Declaration for the three months to 31 March 2019 
 
    AEW UK REIT plc (LSE: AEWU) ("the Company"), which, as at 26 April 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 March 2019. 
 
          Highlights 
 
  · At 31 March 2019, the fair value independent valuation of the property 
  portfolio was GBP197.61 million (31 December 2018: GBP192.66 million), 
  following the acquisition of Lockwood Court, Leeds, and the sale of Waggon 
  Road, Mossley, during the quarter. On a like-for-like basis the valuation 
  of the property portfolio decreased by GBP1.75 million (0.91%) over the 
  quarter (31 December 2018: increase of GBP1.03 million and 0.53%). 
 
  · NAV of GBP149.46 million or 98.61 pence per share ( 31 December 2018: 
  GBP152.12 million or 100.37 pence per share). 
 
  · EPRA earnings per share ("EPRA EPS") for the quarter of 1.99 pence per 
  share (31 December 2018: 1.98 pence per share). 
 
  · The Company today announces an interim dividend of 2.00 pence per share 
  for the three months ended 31 March 2019, in line with the targeted annual 
  dividend of 8.00 pence per share. 
 
  · Shareholder total return of 5.6% for the three months ended 31 March 
  2019. 
 
  · The Company remains conservatively geared with a gross loan to value 
  ratio of 25.30% (31 December 2018: 25.95%). 
 
  · At 31 March 2019, the Company held GBP1.84 million cash for investment 
  which will be held for future capex projects. 
 
  · Portfolio and asset management activity during the period included: 
 
    · The acquisition of Lockwood Court, Parkside Industrial Estate, Leeds, 
    for a net purchase price of GBP6.93 million. The 187,794 sq ft warehouse 
    asset is fully let to LWS Yorkshire Ltd, a logistics and storage 
    provider for Harrogate Spring Water, on a 10 year lease from October 
    2018. 
 
    · The disposal of Waggon Road, Mossley, for gross proceeds of GBP450,000, 
    ahead of the most recent valuation of GBP350,000. 
 
          Alex Short, Portfolio Manager, AEW UK REIT, commented: 
 
  "The first quarter of 2019 has seen the Company's EPRA EPS figure increase 
  slightly to 1.99 pence per share, as the portfolio's income stream remains 
          stable and the vacancy level remains low at 2.99% by ERV. 
 
  Whilst it had been hoped that the first quarter of 2019 would have removed 
some element of political uncertainty, the Brexit deadline has been extended 
       to 31 October 2019 which is expected to hinder UK economic growth and 
investment. It is hoped that the extension has eliminated the possibility of 
      a 'no deal' outcome which would likely have had a significant negative 
       impact on the UK property market. We think that the portfolio is well 
positioned to mitigate the risks in the wider economy, having no exposure to 
    the Central London Office Market. However, the well-publicised headwinds 
facing the retail sector mean that the Company's property portfolio has seen 
  a like-for-like decrease in valuation over the quarter, albeit the overall 
 impact is relatively low given the Company's limited exposure to the retail 
          market. 
 
       The like-for-like valuation decrease for the quarter of GBP1.75 million 
          (0.91%) is detailed as follows by sector: 
 
    Sector      Valuation 31         Valuation         Valuation 
                  March 2019  movement for the  movement for the 
                                       quarter           quarter 
                   GBP million         GBP million                 % 
Industrial             94.13              0.20              0.23 
    Office             43.21              0.00              0.00 
     Other             30.02            (0.30)            (0.99) 
    Retail             30.25            (1.65)            (5.17) 
     Total            197.61            (1.75)            (0.91) 
 
The Company's industrial assets continue to perform relatively well and make 
 up 47.6% of the portfolio valuation as at 31 March 2019. We continue to see 
      attractive opportunities in the industrial sector, as evidenced by the 
   acquisition of Lockwood Court, Leeds, during the quarter. We hope to take 
 advantage of further opportunities in industrials, subject to cash becoming 
          available for investment. 
 
  The Company also profited on the disposal of one of its smaller industrial 
    assets during the quarter. Waggon Road, Mossley, was sold at auction for 
       gross proceeds of GBP450,000 compared with its most recent valuation of 
           GBP350,000. 
 
  Although the Company's retail assets have reduced in valuation, we believe 
  that our downside risk is limited by the strong alternative use values and 
   asset management options, as most of these assets are located in town and 
 city centre locations with large catchment populations. This is in addition 
 to the fact that the Company has relatively low overall exposure to retail, 
          as it makes up 15.3% of the portfolio valuation. 
 
        Whilst we have a low level of vacancy in the portfolio, we expect to 
   continue adding value through an active approach to asset management. The 
 portfolio has a weighted average unexpired lease term of 4.9 years to break 
  and over GBP2 million of passing rent reaching a lease event within the next 
    12 months. This will allow the opportunity to negotiate higher rents and 
    boost the income profile of the portfolio. We continue to see attractive 
         opportunities across our target sectors and look forward to raising 
additional capital under our placing programme to pursue those opportunities 
          as and when market conditions allow." 
 
          Net Asset Value 
 
     The Company's unaudited NAV as at 31 March 2019 was GBP149.46 million, or 
  98.61 pence per share. This reflects a decrease of 1.75% compared with the 
  NAV as at 31 December 2018. The Company's NAV total return, which includes 
 the interim dividend for the period from 1 January 2019 to 31 March 2019 of 
    2.00 pence per share, is 0.24% for the three month period ended 31 March 
   2019. As at 31 March 2019, the Company owned investment properties with a 
           fair value of GBP197.61 million. 
 
                                      Pence per share  GBP million 
               NAV at 1 January 2019           100.37     152.12 
         Portfolio acquisition costs           (0.29)     (0.44) 
    Profit on disposal of investment             0.06       0.09 
                          properties 
                 Capital expenditure           (0.01)     (0.01) 
        Valuation change in property           (1.35)     (2.04) 
                           portfolio 
     Valuation change in derivatives           (0.16)     (0.24) 
        Income earned for the period             2.86       4.32 
  Expenses and net finance costs for           (0.87)     (1.32) 
                          the period 
               Interim dividend paid           (2.00)     (3.03) 
                NAV at 31 March 2019            98.61     149.46 
 
       The NAV attributable to the ordinary shares has been calculated under 
International Financial Reporting Standards and incorporates the independent 
 portfolio valuation as at 31 March 2019 and income for the period, but does 
 not include a provision for the interim dividend for the three month period 
          to 31 March 2019. 
 
          Dividend 
 
 The Company today announces an interim dividend of 2.00 pence per share for 
  the period from 1 January 2019 to 31 March 2019. The dividend payment will 
   be made on 31 May 2019 to shareholders on the register as at 10 May 2019. 
          The ex-dividend date will be 9 May 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 1.99 pence 
     (31 December 2018: 1.98 pence). Excluding one-off costs relating to the 
   issue of the Company's Prospectus, the underlying EPRA EPS was 2.11 pence 
 per share, compared with an underlying EPRA EPS of 2.05 pence per share for 
          the quarter to 31 December 2018. 
 
   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 
          2020. 
 
   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 March 2019, the Company was geared at a gross loan to value of 
          25.30% and a net loan to value of 24.37%. 
 

     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. 
 
         The loan term runs to October 2023 and the Company has entered into 
      additional interest rate caps covering the period from October 2020 to 
   October 2023, capping a notional value of GBP46.51 million at LIBOR of 2.0% 
 per annum, which represents 90% of the current GBP50.00 million loan balance. 
 
          Portfolio activity and asset management 
 
          Lockwood Court, Leeds 
 
 In February 2019, the Company acquired an industrial asset, Lockwood Court, 
   Parkside Industrial Estate, Leeds, for a purchase price of GBP6.93 million. 
      The 187,794 sq ft warehouse asset is fully let to LWS Yorkshire Ltd, a 
     logistics and storage provider for Harrogate Spring Water on a ten year 
 lease from October 2018. The lease provides a low passing rent of GBP3.22 per 
     sq ft which, together with tight supply, forms a strong base for future 
          potential rental growth. 
 
Located two miles south of Leeds City Centre and close to J25 of the M62 and 
  J40 of the M1, Parkside Industrial Estate is a well-established industrial 
      and commercial area with a history of attracting regional and national 
          occupiers. 
 
          Waggon Road, Mossley 
 
  In March 2018, the Company completed the disposal of Waggon Road, Mossley, 
    for a price of GBP450,000, ahead of the most recent valuation of GBP350,000. 
 
LEI: 21380073LDXHV2LP5K50 
 
                   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/Owen Matthews        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 26 
 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 EUR65.4bn of assets under management globally as at 31 
     December 2018. The AEW Group comprises AEW SA in Europe and AEW Capital 
  Management L.P. in the US and their respective subsidiaries as well as AEW 
  UK Investment Management LLP. In Europe, as at 31 December 2018, AEW Group 
         managed EUR31.4bn in value in properties of all types located in 16 
 countries, with over 400 staff located in 9 offices. 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.:   8365 
EQS News ID:    803661 
 
End of Announcement EQS News Service 
 
 
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(END) Dow Jones Newswires

April 26, 2019 02:01 ET (06:01 GMT)