AEW UK REIT (AEWU) has announced its annual results for the year ended 31 March 2019, during which it achieved its target income returns of 8p per share. Dividends were fully covered by EPRA EPS of 8.07 pps. Mark says that this reflects the high yielding nature of the portfolio. . The chairman, Mark Burton, says that, on a like-for-like basis, the portfolio valuation increased by 2.80% over the year. As at 31 March 2019, the Company had a diversified portfolio of 35 commercial investment properties throughout the UK with a value of £197.61 million.
The results also say that, over the year, the portfolio achieved total returns of 10.5%, an outperformance of 4.7% relative to the Benchmark (MSCI/AREF UK PFI Balanced Funds Quarterly Property Index). This performance was driven by income returns of 8.1% and the portfolio also achieved capital growth of 2.3%. The results announcement provides the following key highlights:
Financial Highlights – including 8p income target
- Net Asset Value (‘NAV’)* of £149.46 million and of 98.61 pps as at 31 March 2019 (31 March 2018: £146.03 million and 96.36 pps).
- Operating profit before fair value changes of £13.52 million for the year (11 months ended 31 March 2018: £9.60 million).
- Unadjusted profit before tax (‘PBT’)* of £15.54 million and earnings of 10.26 pps for the year (11 months ended 31 March 2018: £9.82 million and of 7.17 pps).
- EPRA Earnings Per Share (‘EPRA EPS’)* for the year of 8.07 pence (11 months ended 31 March 2018: 6.56 pence).
- Total dividends of 8.00 pps have been declared for the year (11 months ended 31 March 2018: 7.33 pps, equating to an annualised dividend of 8.00 pps).
- Shareholder Total Return* for the year of 5.44% (11 months ended 31 March 2018: 3.65%).
- The price of the Company’s Ordinary Shares on the Main Market of the London Stock Exchange was 92.80 pps as at 31 March 2019 (31 March 2018: 95.60 pps).
- As at 31 March 2019, the Company had drawn £50.00 million (31 March 2018: £50.00 million) of a £60.00 million (31 March 2018: £60.00 million) term credit facility with the Royal Bank of Scotland International Limited (‘RBSi’) and was geared to 25.30% of the Gross Asset Value (‘GAV’)* (31 March 2018: 26.00%) (see note 21 below for further details).
- The Company held cash balances totalling £2.13 million as at 31 March 2019 (31 March 2018: £4.71 million). Under the terms of its loan facility, the Company can draw a further £2.31 million (31 March 2018: £1.11 million) to the maximum 35% loan to NAV at drawdown.
- On 1 March 2019, the Company published its Prospectus in relation to a Share Issuance Programme of up to 250 million new Ordinary shares and up to 250 million convertible redeemable preference shares (“C shares”). No shares have been issued, to date, under the programme.
Property Highlights
- The Company acquired one property during the year for a purchase price of £6.93 million, excluding acquisition costs (11 months ended 31 March 2018: 10 properties for £60.11 million). The Company made two full disposals and two part disposals during the year for gross sales proceeds of £6.80 million (11 month period ended 31 March 2018: one disposal for gross sales proceeds of £11.05 million).
- As at 31 March 2019, the Company’s property portfolio had a fair value of £197.61 million across 35 properties (31 March 2018: £192.34 million across 36 properties) and a historical cost of £196.86 million (31 March 2018: £196.64 million).
- The majority of assets that have been acquired are fully let and the portfolio had an EPRA Vacancy Rate** of 2.99% as at 31 March 2019 (31 March 2018: 7.10%).
- Rental income generated in the year under review was £17.18 million (11 months ended 31 March 2018: £12.33 million). The number of tenants as at 31 March 2019 was 95 (31 March 2018: 104).
- EPRA Net Initial Yield (‘NIY’)** of 7.62% as at 31 March 2019 (31 March 2018: 7.73%).
- Weighted Average Unexpired Lease Term (‘WAULT’)* of 4.87 years to break (31 March 2018: 5.08 years) and 6.10 years to expiry (31 March 2018: 6.16 years).
About AEW UK REIT
AEW UK REIT (LSE: AEWU) aims to deliver an attractive total return to shareholders by investing predominantly in smaller commercial properties (typically less than £10 million), on shorter occupational leases in strong commercial locations across the United Kingdom. It invests in freehold and leasehold properties across the whole spectrum of the commercial property sector (office properties, retail warehouses, high street retail and industrial/warehouse properties) to achieve a balanced portfolio with a diversified tenant base. The Company has a focus on active asset management, repositioning the properties and improving the quality of the income stream.
About AEW UK Investment Management LLP
AEW UK Investment Management LLP employs a well-resourced team comprising 23 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 EUR63.5bn of assets under management as at 30 September 2018. In Europe, as at 30 September 2018, AEW Group managed nearly EUR30bn in value in properties of all types, with close to 400 staff located in 9 offices.