AEW UK REIT delivered a NAV total return of 29.7% for the year to 31 March 2022, helped by a large increase in the value of its portfolio.
The small cap, diversified property company posted a 21.7% uplift in NAV over the year to 120.63p per share (2021: 99.15p), as the economy re-opened following pandemic lockdowns.
The company paid dividends of 8p during the year, one of the highest among its peers, which was not covered by EPRA earnings of 6.79p per share. Earnings are likely to increase this year when the sale of a vacant office in Glasgow is sold and the proceeds invested into an income producing asset/s (manager Laura Elkin spoke at length on the fund and its investment plans on our weekly news show last Friday – click here to view it).
Operating profit before fair value changes was £11.75m for the year, while profit before tax was £46.7m.
As at 31 March 2022, the company had drawn £54.0m of a £60.0m term credit facility with the Royal Bank of Scotland International and was geared to 28.26% of NAV. It holds cash balances totalling £6.77m as at 31 March 2022.
Property highlights
The company’s property portfolio was valued at £240.18m across 36 properties (31 March 2021: £179.0m across 34 properties). It acquired four properties during the year for a total of £38.23m and sold two assets for total gross sale proceeds of £16.71m.
The portfolio had an EPRA Vacancy Rate of 10.69% as at 31 March 2022 (2021: 8.96%). Excluding vacancy contributed by the Glasgow asset, which was exchanged to be sold with the condition of vacant possession, the vacancy rate was 5.42% (2021: 5.58%).
Rental income nudged up during the year to £15.92m (2021: £15.71m), while the number of tenants in the portfolio was 131 (2021: 99). The weighted average unexpired lease term (WAULT) was of 3.94 years to break (2021: 4.43 years) and 5.78 years to expiry (2021: 6.71 years).
Rent collection levels remained high at over 98% for each quarter since March 2020.
Chairman comments
Mark Burton, chairman, said: “We are delighted with the company’s performance over the past twelve months, which has delivered strong share price total returns for the year of 53.61% to investors. NAV total returns, which increased to 29.7%, were the highest recorded by any of the UK’s diversified REITs. These returns have been driven partly by the removal of pandemic restrictions but also by our Investment Manager’s strategy which combines defensive positioning, identifying assets with shorter unexpired lease terms that are often mispriced and active asset management of the portfolio. We are also pleased the company has continued to pay its full 8.00p per share annual dividend for the sixth consecutive year and that our strong performance has been recognised by industry awards that also acknowledge the hard work and dedication of the whole AEW UK REIT team.”
AEWU : AEW UK REIT posts 29.7% total return