Earnings Release • May 3, 2019
Earnings Release
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Dissemination of a RegulatoryAnnouncement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
AEW UK REIT plc (LSE: AEWU) ("the Company"), which, as at 26 April 2019, directly owns a diversified por0olio 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.
"The first quarter of 2019 has seen the Company's EPRA EPS figure increase slightly to 1.99 pence per share, as the por0olio'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 polical 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 negave impact on the UK property market. We think that the por0olio is well posioned to migate 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 por0olio has seen a like-for-like decrease in valuaon over the quarter, albeit the overall impact is relavely low given the Company's limited exposure to the retail market.
The like-for-like valuaon decrease for the quarter of £1.75 million (0.91%) is detailed as follows by sector:
| Sector | Valuaon 31 March 2019 | Valuaon movement for the quarter | Valuaon movement for the quarter |
|---|---|---|---|
| £ million | £ 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 connue to perform relavely well and make up 47.6% of the por0olio valuaon as at 31 March 2019. We connue to see aHracve opportunies in the industrial sector, as evidenced by the acquision of Lockwood Court, Leeds, during the quarter. We hope to take advantage of further opportunies 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 aucon for gross proceeds of £450,000 compared with its most recent valuaon of £350,000.
Although the Company's retail assets have reduced in valuaon, we believe that our downside risk is limited by the strong alternave use values and asset management opons, as most of these assets are located in town and city centre locaons with large catchment populaons.This is in addion to the fact that the Company has relavely low overall exposure to retail, as it makes up 15.3% of the por0olio valuaon.
Whilst we have a low level of vacancy in the por0olio, we expect to connue adding value through an acve approach to asset management. The por0olio has a weighted average unexpired lease term of 4.9 years to break and over £2 million of passing rent reaching a lease event within the next 12 months. This will allow the opportunity to negoate higher rents and boost the income profile of the por0olio. We connue to see aHracve opportunies across our target sectors and look forward to raising addional capital under our placing programme to pursue those opportunies as and when market condions allow."
The Company's unaudited NAV as at 31 March 2019 was £149.46 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 3 1 March 2019. As at 3 1 March 2019, the Company owned investment properes with a fair value of £197.61 million.
| Pence per share | £ million | |
|---|---|---|
| NAV at 1 January 2019 | 100.37 | 152.12 |
| Porolio acquisi6on costs | (0.29) | (0.44) |
| Profit on disposal of investment proper6es | 0.06 | 0.09 |
| Capital expenditure | (0.01) | (0.01) |
| Valua6on change in property porolio | (1.35) | (2.04) |
| Valua6on change in deriva6ves | (0.16) | (0.24) |
| Income earned for the period | 2.86 | 4.32 |
|---|---|---|
| Expenses and net finance costs for the period | (0.87) | (1.32) |
| Interim dividend paid | (2.00) | (3.03) |
| NAV at 31 March 2019 | 98.61 | 149.46 |
The NAV aHributable to the ordinary shares has been calculated under Internaonal Financial Reporng Standards and incorporates the independent por0olio valuaon 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.
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 distribuon ("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 relang 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 condions, 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 illustrave purposes only, based on current market condions and is not intended to be, and should not be taken as, a profit forecast or esmate. Actual returns cannot be predicted and may differ materially from this illustrave figure. There can be no assurance that the target will be met or that any dividend or total return will be achieved.
The Company's issued share capital consists of 151,558,251 Ordinary Shares and there was no movement during the quarter.
The Company's borrowings remained at £50.00 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 connues to aHract interest at LIBOR + 1.4%. To migate 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 £36.51 million of the total value of the loan (£26.51 million at 2.5% cap rate and £10.00 million at 2.0% cap rate) up to October 2020, resulng 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 addional interest rate caps covering the period from October 2020 to October 2023, capping a noonal value of £46.51 million at LIBOR of 2.0% per annum, which represents 90% of the current £50.00 million loan balance.
In February 2019, the Company acquired an industrial asset, Lockwood Court, Parkside Industrial Estate, Leeds, for a purchase price of £6.93 million. The 187,794 sq B warehouse asset is fully let to LWS Yorkshire Ltd, a logiscs and storage provider for Harrogate Spring Water on a ten year lease from October 2018. The lease provides a low passing rent of £3.22 per sq B which, together with ght supply, forms a strong base for future potenal 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 aHracng regional and naonal occupiers.
In March 2018, the Company completed the disposal of Waggon Road, Mossley, for a price of £450,000, ahead of the most recent valuaon of £350,000.
| AEW UK | |
|---|---|
| Alex Short | [email protected] |
| +44(0) 20 7016 4848 | |
| Nicki Gladstone | [email protected] |
| +44(0) 7711 401 021 | |
| Company Secretary | |
| Link Company MaHers Limited | [email protected] |
| T: +44(0) 1392 477500 | |
| TB Cardew | |
| Ed Orlebar | [email protected] |
| Lucy Featherstone | T: 07738 724 630 [email protected] |
| T: +44 (0) 20 7002 1482 M: +44 (0) 7789 374 663 |
|
| Liberum Capital Gillian Marn/Owen MaHhews |
T: +44 (0) 20 3100 2000 |
AEW UK REIT plc (LSE: AEWU) aims to deliver an aHracve total return to shareholders by invesng predominantly in smaller commercial properes (typically less than £10 million), on shorter occupaonal leases in strong commercial locaons across the United Kingdom. The Company was listed on the Official List of the UK Lisng Authority and admiHed to trading on the Main Market of the London Stock Exchange on 12 May 2015, raising £100.5m. Since IPO it has raised a further £51m.
The Company is currently invested in office, retail, industrial and leisure assets, with a focus on acve asset management, reposioning the properes and improving the quality of the income stream.
AEW UK Investment Management LLP employs a well-resourced team comprising 26 individuals covering investment, asset management, operaons 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 respecve subsidiaries as well as AEW UK Investment Management LLP. In Europe, as at 31 December 2018, AEW Group managed EUR31.4bn in value in properes 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 LEICode: 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 ofAnnouncementEQS News Service
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