AEW UK REIT plc (AEWU) 
AEW UK REIT plc: NAV Update and Dividend Declaration 
 
16-Jan-2020 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
          16 January 2020 
 
NAV Update and Dividend Declaration for the three months to 31 December 2019 
 
  AEW UK REIT plc (LSE: AEWU) ("the Company"), which, as at 15 January 2020, 
 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 2019. 
 
          Highlights 
 
  · At 31 December 2019, the fair value independent valuation of the 
  property portfolio was GBP195.80 million (30 September 2019: GBP196.05 
  million). On a like-for-like basis the valuation of the property portfolio 
  decreased by GBP0.25 million (0.13%) over the quarter (30 September 2019: 
  decrease of GBP0.51 million and 0.26%). 
 
  · NAV of GBP147.38 million or 97.24 pence per share (30 September 2019: 
  GBP147.55 million or 97.36 pence per share). 
 
  · EPRA earnings per share ("EPRA EPS") for the quarter of 2.18 pence per 
  share (30 September 2019: 2.13 pence per share). 
 
  · EPRA occupancy 96.14%. The Manager's active asset management approach 
  has led to 12 lettings being completed during the year to 31 December 2019 
  with annual headline income totalling GBP1.63m against an estimated rental 
  value from independent valuers on these units of GBP1.49m. 
 
  · The Company today announces an interim dividend of 2.00 pence per share 
  for the three months ended 31 December 2019, in line with the targeted 
  annual dividend of 8.00 pence per share. 
 
  · NAV total return of 1.93% for the three months ended 31 December 2019 
  (three months ended 30 September 2019: 1.52%). 
 
  · The Company remains conservatively geared with a gross loan to value 
  ratio of 26.30% (30 September 2019: 25.50%). 
 
  · Share price total return of 20.67% for the 12 months ended 31 December 
  2019. 
 
          Alex Short, Portfolio Manager, AEW UK REIT, commented: 
 
         "The result of the UK general election on 13th December delivered a 
   significant majority to the UK government for the first time in a decade, 
removing some of the political uncertainty which has prevailed for some time 
and leading to improved sentiment across the market. This is encouraging for 
 the sector as a whole and positive for the Company. The Company's portfolio 
     is well-positioned as we move into 2020 and we are seeing many exciting 
          opportunities. 
 
  As manager, AEW UK Investment Management LLP is successfully executing the 
  investment strategy, which has seen the Company's assets generate property 
 level total returns of 6.69% over the 12 months to 30 September 2019 (being 
   the most recent date for which benchmark data is available) from standing 
 investments, an outperformance of 3.80% relative to the market (as measured 
 by the MSCI/AREF UK PFI Balanced Funds Quarterly Index). Over the 12 months 
  to 31 December 2019 the Company has generated total shareholder returns of 
   20.67% and, as noted above, has achieved a significant number of lettings 
          ahead of estimated rental values. 
 
The REIT has consistently paid out dividends of 8 pence per share per annum, 
  making it one of the highest dividend yields among UK listed REITs. It has 
paid total dividends of 32.8 pence per share since IPO, in addition to those 
  announced below. Annualised total property returns since the Company's May 
  2015 IPO have been 10.89% up to 30 September 2019 on standing investments, 
          an outperformance of 3.42% relative to the benchmark. 
 
   We are actively working on an exciting pipeline of potential acquisitions 
      with a particular focus on the industrial and office sectors, which we 
  believe will be accretive to the strategy both in terms of income but also 
   in terms of long term value retention and creation opportunities. To that 
     end, the Company intends to raise additional capital under its existing 
          Placing Programme in the near future. 
 
   Through the December quarter valuation, the portfolio maintained value on 
the whole with a marginal decrease of 0.13%. Industrial and office performed 
 well increasing by 1.01% and 2.03% respectively, however this was offset by 
 a decrease in retail assets. Whilst the headwinds experienced by the retail 
  sector are well publicised, the portfolio has a low vacancy rate (at 3.9%) 
  amongst its assets and we have identified certain potential value creation 
          opportunities which we are actively pursuing." 
 
       The like-for-like valuation decrease for the quarter of GBP0.25 million 
          (0.13%) is detailed as follows by sector: 
 
    Sector      Valuation 31         Valuation         Valuation 
               December 2019  movement for the  movement for the 
                                       quarter           quarter 
                   GBP million         GBP million                 % 
Industrial             94.88              0.95              1.01 
    Office             45.25              0.90              2.03 
     Other             29.67            (0.35)            (1.17) 
    Retail             26.00            (1.75)            (6.31) 
     Total            195.80            (0.25)            (0.13) 
 
Strong valuation uplift for the quarter came from the Company's office asset 
          in Solihull where the Secretary of State for Communities and Local 
    Government has agreed to take a new 15 year lease at an increased rental 
       level with very limited capital cost to the REIT. This transaction is 
     currently in solicitors' hands and is due to complete within the coming 
          quarters, at which point we expect further valuation uplift. 
 
          Net Asset Value 
 
  The Company's unaudited NAV as at 31 December 2019 was GBP147.38 million, or 
  97.24 pence per share. This reflects a decrease of 0.12% compared with the 
 NAV as at 30 September 2019. The Company's NAV total return, which includes 
the interim dividend for the period from 1 July 2019 to 30 September 2019 of 
 2.00 pence per share, is 1.93% for the three-month period ended 31 December 
2019. As at 31 December 2019, the Company owned investment properties with a 
           fair value of GBP195.80 million. 
 
                                      Pence per share  GBP million 
               NAV at 1 October 2019            97.36     147.55 
                 Capital expenditure           (0.07)     (0.10) 
        Valuation change in property           (0.23)     (0.35) 
                           portfolio 
     Valuation change in derivatives           (0.00)     (0.00) 
        Income earned for the period             2.95       4.47 
  Expenses and net finance costs for           (0.77)     (1.16) 
                          the period 
               Interim dividend paid           (2.00)     (3.03) 
             NAV at 31 December 2019            97.24     147.38 
 
       The NAV attributable to the ordinary shares has been calculated under 
International Financial Reporting Standards. It incorporates the independent 
   portfolio valuation as at 31 December 2019 and income for the period, but 
   does not include a provision for the interim dividend for the three month 
          period to 31 December 2019. 
 
          Dividend 
 
 The Company today announces an interim dividend of 2.00 pence per share for 
    the period from 1 October 2019 to 31 December 2019. The dividend payment 
   will be made on 28 February 2020 to shareholders on the register as at 24 
          January 2020. The ex-dividend date will be 23 January 2020. 
 
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 2019 was 2.18 pence 
          (30 September 2019: 2.13 pence). 
 
   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. 
 
     The Company has a strong pipeline of opportunities which it is actively 
pursuing. Accordingly, the Company intends to raise additional capital under 
 its existing Placing Programme in the near future. Further announcements of 
        any potential equity fundraise will be made as and when appropriate. 
 
          Debt 
 
 During the quarter, the Company drew GBP1.50 million of its loan facility, to 
  bring the total borrowings to GBP51.50 million and producing a gross loan to 
          value of 26.30% and a net loan to value of 24.74%. 
 
     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 71% hedged. 
 
         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 GBP51.50 million loan balance. 
  The Investment Manager and the Company will keep the levels of gearing and 
          hedging under review. 
 
                   Enquiries 
                      AEW UK 
                  Alex Short          alex.short@eu.aew.com 
                                        +44(0) 20 7016 4848 
                 Laura Elkin         Laura.elkin@eu.aew.com 
 
                                        +44(0) 20 7016 4869 
             Nicki Gladstone nicki.gladstone-ext@eu.aew.com 
                                        +44(0) 7711 401 021 
           Company Secretary 
Link Company Matters Limited     aewu.cosec@linkgroup.co.uk 
                                        +44(0) 1392 477 500 
 
                   TB Cardew               AEW@tbcardew.com 
                  Ed Orlebar           +44 (0) 7738 724 630 
              Lucas Bramwell           +44 (0) 7939 694 437 
 
             Liberum Capital 
Gillian Martin/Owen Matthews           +44 (0) 20 3100 2000 
 
          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 GBP15 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 EUR70.2bn of assets under management as at 30 September 2019. 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 2019, AEW Group managed EUR32.3bn of real estate assets on behalf 
 of a number of funds and separate accounts 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. In May 2019, AEW UK Investment 
 Management LLP was awarded Property Manager of the Year at the Pensions and 
          Investment Provider Awards. 
 
          www.aewuk.co.uk [3] 
 
LEI: 21380073LDXHV2LP5K50 
 
ISIN:           GB00BWD24154 
Category Code:  MSCM 
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.:   40858 
EQS News ID:    954517 
 
End of Announcement EQS News Service 
 
 
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2: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=9220892e63355ca6947a3a3423a3bac8&application_id=954517&site_id=vwd&application_name=news 
3: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=c3ab986d9b746ee23c3523d74649f8db&application_id=954517&site_id=vwd&application_name=news 
 

(END) Dow Jones Newswires

January 16, 2020 02:00 ET (07:00 GMT)

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