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AEW UK Long Lease REIT reports a successful first year

AEW UK Long Lease REIT reports a successful first year

AEW UK Long Lease REIT reports a successful first year – AEW UK Long Lease REIT (AEWL), which directly owns a diversified portfolio of commercial investment properties, predominately in the alternative property sectors, has published its annual report and financial statements for the period of 18 April 2017 to 30 June 2018.

On 6 June 2017, the company’s shares began trading on the London Stock Exchange, with the proceeds of £80.5 million that it raised at IPO.  The money it raised, together with £30 million of debt financing raised during the period, were invested in a diversified portfolio of commercial investment properties throughout the UK.

As at 30 June 2018, AEWL had invested £95.46 million (excluding purchase costs) in acquiring a portfolio of 16 properties. At the period end, the group’s portfolio has been independently valued by Knight Frank (in accordance with the RICS Valuations – Professional Standards) at a fair value of £99.09 million, an increase of £3.63 million or 3.80% before purchase costs.

The Group has delivered on its targets at the time of the company’s IPO, as set out in the investment strategy section below. The portfolio has a NIY of 5.29%. Rental and other income generated in the period was £3.60 million and 91% of the income is linked to inflation (RPI or CPI).

Financial Highlights

 • The company raised total gross proceeds of £80.50 million during the period.

 • NAV of £76.42 million and of 94.93 pence per share as at 30 June 2018.

• Operating profit before fair value changes is £2.45 million for the period.

• Loss before tax of £0.89 million and of 1.25 pence per share for the period, of which £6.48 million and 8.05 pence per share relate to property acquisition costs written off.

 • EPRA Earnings Per Share for the period were 2.74 pence (see below for definition).

• Total dividends of 3.25 pence per share have been declared for the period in line with the stated dividend target as set out in the Prospectus at its IPO.

 • As at 30 June 2018, the group had a £30 million loan facility with Canada Life Investments and was geared to 27.7% of the Gross Asset Value .

 Property Highlights

• The company acquired 16 properties in the period for a total of £95.46 million (excluding acquisition costs). 

 WAULT of 21.8 years to the earlier of break and expiry and 24.0 years to expiry.

 • As at 30 June 2018, the company’s property portfolio had a fair value of £99.09 million.

 • The portfolio is 99.7% let as at 30 June 2018.

 • Rental and other income generated in the period was £3.60 million. The number of tenants as at 30 June 2018 was 21.

 • The portfolio has annualised contracted rental income of £5.64 million as at 30 June 2018.

 • The portfolio has an average Net Initial Yield (NIY) of 5.29%.

Overview from the company’s chairman, Steve Smith

“During our first period, the Group has achieved its key target of declaring aggregate dividends of 3.25 pence per share.

A strong portfolio of assets has been acquired, diversified by sector, tenants and geographical location, at attractive yields, which generate predictable income streams through long leases. As at the reporting date, over 90% of this income was inflation linked, in line with our investment policy. Details of each property are set out below.

Since 30 June 2018, the Group has acquired a further property for £3.9 million (net of purchase costs) that generates a further £0.26 million per annum in passing rent. Following this acquisition, the Group has fully invested the equity raised at the IPO and its £30 million debt facility.

The current focus is to continue to grow the Group initially by increasing the Group’s borrowing facility and acquiring additional property and subject to market conditions, look to raise additional equity. Both of these will enable the Group to take advantage of economies of scale in its cost base to close the relatively small gap between Earnings per Share and our target Dividend per Share, and to allow the Investment Manager to capitalise on the attractive market opportunities it sees.

During the Group’s initial period, the Group has met its initial objectives and looks forward to reporting significant progress in the future.”

AEWL : AEW UK Long Lease REIT reports a successful first year

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