AEW UK REIT (AEWU) has published its full year results for the year ended 31 March 2023. To summarise, AEWU’s investment manager has continued to actively manage the portfolio, outperforming the benchmark in all sectors and, according to its chairman, Mark Burton, AEWU has traded at the narrowest discount of all UK diversified REITs. The manager’s asset management initiatives and timely disposal of five properties during the period maximised the value of key assets and has crystallised capital growth, with the sale proceeds being reinvested into more attractive, higher yielding properties.
Key financial highlights from the report are as follows:
- Net Asset Value (‘NAV’) of £167.10m and 105.48 pence per share (pps) as at 31 March 2023 (31 March 2022: £191.10m and 120.63 pps).
- Operating profit before fair value changes of £11.10m for the year (year ended 31 March 2022: £11.75m).
- Loss before tax (‘LBT’)* of £11.33m and earnings per share (‘EPS’) of -7.15 pps for the year (year ended 31 March 2022: profit before tax of £46.70m and EPS of 29.47 pps). LBT includes a £30.00m loss arising from changes to the fair values of investment properties in the period (year ended 31 March 2022: £32.32m gain).
- EPRA Earnings Per Share (‘EPRA EPS’)* for the year of 5.70 pps (year ended 31 March 2022: 6.79 pps). See page 104 in the full Annual Report for the calculation of EPRA EPS.
- Total dividends of 8.00 pps declared for the year (year ended 31 March 2022: 8.00 pps).
- Shareholder total return* for the year of -16.44% (year ended 31 March 2022: 53.61%).
- The price of the company’s ordinary shares on the Main Market of the London Stock Exchange was 92.10 pps as at 31 March 2023 (31 March 2022: 119.80 pps).
- The company secured a new £60.00m, five-year term loan facility with AgFe, a leading independent asset manager specialising in debt-based investments. The loan is priced as a fixed rate loan with a total interest cost of 2.959%.
- As at 31 March 2023, the company had drawn £60.00m (31 March 2022: £54.00m) of a £60.00m (31 March 2022: £60.00m) term credit facility with AgFe and was geared to 28.06% of GAV (31 March 2022: 22.48%) (see note 15 on pages 113 and 114 in the full Annual Report for further details).
- The company held cash balances totalling £14.32m as at 31 March 2023 (31 March 2022: £6.77m).
Key portfolio highlights as follows:
- As at 31 March 2023, the company’s property portfolio had a valuation of £213.83m across 36 properties (31 March 2022: £240.18m across 36 properties) as assessed by the Valuer1 and a historical cost of £224.03m (31 March 2022: £207.96m).
- Over the period, the company’s portfolio delivered outperformance against the MSCI/AREF PFI Balanced Funds Quarterly Property Index of 10.9%. Outperformance of the company’s assets against the benchmark was also seen in each main property sector.
- The company won four awards during the period. The company received gold and silver awards from EPRA for its high standard of financial reporting and for standards of sustainability reporting, respectively. The company also won the Citywire Investment Trust Award in the ‘UK Property’ category, and was named ‘Best REIT’ at the AJ Bell Shares Magazine Awards.
- The company acquired five properties during the year for a total purchase price of £32.05m, excluding acquisition costs (year ended 31 March 2022: four properties for a purchase price of £38.23m).
- The company made five disposals during the year with total gross sale proceeds of £44.41m (year ended 31 March 2022: two disposals with total gross sale proceeds of £16.71m).
- The portfolio had an EPRA Vacancy Rate of 7.83% as at 31 March 2023 (31 March 2022: 10.69%).
- Rental income generated in the year under review was £17.71m (year ended 31 March 2022: £15.92m). The number of tenants as at 31 March 2023 was 145 (31 March 2022: 131).
- EPRA Net Initial Yield (‘NIY’)** of 7.65% as at 31 March 2023 (31 March 2022: 5.87%).
- Weighted Average Unexpired Lease Term (‘WAULT’)* of 3.05 years to break (31 March 2022: 3.94 years) and 4.33 years to expiry (31 March 2022: 5.78 years).
- The company has achieved very high rent collection levels, which stand at over 99% for each quarter since March 2022 (excluding current quarter where rent continues to be collected).