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NAV notches up at AEW UK REIT

AEW UK REIT reports a 3.2% increase in net asset value (NAV) in the quarter to the end of December 2020.

The value of the group’s portfolio notched up 3.4% to £182.65m, which was behind the rise in NAV from 92.73p to 95.87p.

The company maintained its dividend for the quarter of 2p per share, in line with its annual dividend of 8p per share.

EPRA earnings for the quarter was 1.68p per share, up on the 1.6p per share recorded in the prior quarter.

Rent collection for the current quarter (which was billed on 25 December 2020) is at 90% (including expected agreed monthly payments).

Portfolio activity

During the quarter the company completed the acquisition of the multi-let Westlands Distribution Park in Weston Super Mare for £5.4m. It also  exchanged contracts to dispose of Sandford House, Solihull, for £10.5m – 9% above its valuation.

Financing

The company has borrowings of £39.5m as at 31 December 2020, and a loan to NAV ratio of 26%. It has total undrawn facilities of £20.5m, of which £13.66m was available as at 31 December 2020 up to the maximum 35% loan to NAV at drawdown.

The loan attracts interest at LIBOR + 1.4%. The company’s all-in interest rate as at 31 December 2020 was 1.45%.

Portfolio managers’ comments on NAV movement

Alex Short and Laura Elkin said: “We are pleased to see some NAV recovery this quarter which is due, in part, to the team’s ongoing drive to maximise value from the assets’ business plans. Asset management has always been a key feature of AEW’s strategy, and something we have prioritised in uncertain markets such as we experienced in 2020 where gains were more hard-fought.

“Strong NAV recovery was also driven by the portfolio’s weighting towards warehousing and industrials.  This sector comprises 56% of the portfolio’s value and saw a like-for-like valuation increase during the quarter of 7.6%.

On EPRA earnings

“The company’s EPRA EPS for the quarter increased by 0.08 pps although it remains below the dividend level of 2.00 pps. This is partly due to ongoing remedial works at its property in Blackpool, which had a negative impact of 0.13 pps for the quarter. The expenditure is accretive to the value of the property and a corresponding positive effect is expected in the valuation movement. The company’s provision for doubtful debtors has also increased by £0.27m, which has had a negative impact of 0.17 pence on the EPRA EPS for the quarter. In 2021, we expect to increase the company’s earnings as we look to return to full investment. Based upon our current pipeline, we expect the first half of 2021 to provide some very attractive investment opportunities, a number of which we are already pursuing.”

AEWU : NAV notches up at AEW UK REIT

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