AEW UK REIT has reported strong annual results with a net asset value (NAV) total return of 15.1%.
The group, which has a heavy portfolio weighting to the industrial sector (60.8%), saw its NAV increase 6.5% in the year to 31 March 2021 to 99.15p per share (March 2020: 93.13p).
The group paid a dividend in the year of 8p per share, one of the biggest in the REIT sector, which was not reduced despite the impact of the pandemic on rent collection rates.
The dividend was not quite covered by EPRA earnings, which amounted to 6.19p per share. The payment of the dividend was met with the gains made from the sale of two assets.
Quarterly rent collection rates are as follows:
- Q2 2020 – 98%
- Q3 2020 – 98%
- Q4 2020 – 97%
- Q1 2021 – 97%
- Q2 2021 – 94%
The collection rate was helped by the successful legal action the group took against two national occupiers that had refused to pay rent during the pandemic.
As at 31 March 2021, the company had drawn £39.50m of a £60m term credit facility with the Royal Bank of Scotland International and was geared to 25.15% of NAV (March 2020: 34.83%).
The company held cash balances totalling £17.45m at 31 March 2020 (31 March 2020: £9.87m).
Portfolio highlights
The group’s property portfolio was valued at £179.0m across 34 properties (March 2020: £189.30m across 35 properties). It acquired one property during the year for a purchase price of £5.4m and made two disposals totalling £29.3m.
The portfolio had an EPRA vacancy rate of 8.96% as at 31 March 2021 (March 2020: 3.68%). Excluding vacancy contributed by an asset in Bath Street, Glasgow, which was exchanged to be sold with the condition of vacant possession, the vacancy rate was 5.58%.
Rental income generated in the year was £15.71m (March 2020: £17.42m) and the number of tenants was 99 (March 2020: 91).
The EPRA net initial yield of the portfolio compressed 89 basis points to 7.37% as at 31 March 2021 (March 2020: 8.26%), reflecting the strength of the industrial sector.
The portfolio’s weighted average unexpired lease term (WAULT) was 4.43 years to break (March 2020: 4.26 years) and 6.71 years to expiry (March 2020: 5.55 years).
Mark Burton, chairman, said: “We have been assiduous in our pursuit of rent from tenants that have been able but unwilling to pay, while pursuing a prudent policy for provision against expected credit losses. Although this contributed to the fall in EPRA EPS, we are pleased with the successful outcome of the legal action to recover unpaid rent and the overall rent collection levels, which reached 94% for each quarter since the start of the pandemic. We continue to believe the company’s assets are strategically placed to provide investors with robust performance over the medium and long term.”
AEWU : AEW UK REIT posts 15.1% NAV total return