Key AEW UK Long Lease REIT tenant enters administration – It has been announced today that AEW UK Long Lease REIT’s (AEWL) largest tenant by rental income, Meridian Metal Trading (Meridian), has fallen into administration. Meridian occupies two industrial assets within the AEWL portfolio located in Dudley, West Midlands and Sheffield. The annual passing rental income of £659k from Meridian, represented just under 10 per cent. of the group’s rental income in 2018. All rent owed by Meridian has been paid fully.
The fine print
As at 31 December 2018, the two properties were valued at £10.75m, representing approximately 9.4%. of AEWL’s portfolio. The vacant value of the two properties as assessed by the trust’s independent valuers, Knight Frank, is approximately £6.8m. AEWL is awaiting further news in relation to whether a buyer of the business can be found with the joint administrators advising that interested parties come forward before close of business this Friday. If not, then the vacant value position indicates an expected negative impact on AEWL’s NAV from this news of approximately 4p per share. If the properties do become vacant, the impact on AEWL earnings will also be negative.
Hope for the future
Allan Graham and Matthew Ingram, both of Duff and Phelps, have been appointed as administrators. They have released a statement saying they will continue to trade the business until a buyer is found and they have already seen a number of expressions of interest in the company.
About AEWL
The trust has been listed on the London Stock Exchange since 6 June 2017 and has a premium main market listing. It is managed by AEW UK Investment Management LLP and aims to generate a sustainable, secure and predictable income return, whilst at least maintaining capital values in real terms, by investing in a diversified portfolio of UK properties, with an attractive entry yield, predominately in alternative and specialist sectors. It has been fairly acquisitive so far in 2019. Click here and here to read more on these stories.
AEWL invests in a diverse range of sectors that are underrepresented in institutional portfolios including leisure, healthcare, education, hotels, student accommodation, supported living and automotive. At least 85% of the gross passing rent from the portfolio’s leases will contain inflation linked rent reviews, and average initial unexpired leases in excess of 18 years at the time of investment.
AEWL: Key AEW UK Long Lease REIT tenant enters administration