TIDMAEWL
RNS Number : 7832F
AEW UK Long Lease REIT PLC
31 October 2018
AEW UK Long Lease REIT plc ("AEWL" or "the Group")
LEI: 213800MPBIJS12Q88F71
31 October 2018
NAV Update and Dividend Declaration for the quarter ended 30
September 2018
AEW UK Long Lease REIT plc (LSE: AEWL) (the "Group"), which
directly owns a diversified portfolio of 17 regional UK commercial
property assets, announces its unaudited Net Asset Value ('NAV')
and interim dividend for the quarter ended 30 September 2018.
Alex Short, Portfolio Manager, AEW UK Long Lease REIT,
commented: "Across the portfolio, we have now seen two consecutive
quarters of valuation growth, reflecting the strength of the
individual assets that have been acquired and the favourable levels
of pricing that we have been able to acquire them at. We currently
see interesting purchasing opportunities in the market and are
tracking a healthy pipeline across alternative and industrial
property sectors."
Highlights
-- EPRA earnings per share ("EPRA EPS") for the quarter of 1.27
pence per share (quarter to 30 June 2018: 1.25 pence per
share).
-- The Group today declares an interim dividend of 1.375 pence
per share for the quarter ended 30 September 2018 bringing the
total since IPO to 4.625) pence per share. This dividend is to be
paid on 30 November 2018 to shareholders on the register on 9
November 2018. The Company targets an annual dividend of 5.5 pence
per Share, with an ambition to grow in future years by the rate of
inflation.
-- At 30 September 2018, the fair value independent valuation of
the property portfolio was GBP103.98 million (30 June 2018:
GBP99.09 million), following one acquisition during the quarter
which cost GBP3.94 million (see below). On a like-for-like basis,
the valuation of the property portfolio increased by GBP0.95
million (0.96%) over the quarter (quarter to 30 June 2018: GBP3.43
million or 3.67%)
-- Unaudited NAV increased to GBP76.94 million or 95.58 pence
per share (30 June 2018: GBP76.42 million or 94.94 pence per
share), an increase of 0.68%
-- The IPO proceeds have now been fully invested, along with the
GBP30 million of debt utilised. The Company has increased the
available debt facility in order to make further acquisitions.
-- Portfolio activity during the period included the acquisition
of Eurolink Industrial Estate, Sittingbourne for GBP3.94 million on
13 September 2018. This property comprises two warehouse buildings
totalling 43,636 sq ft let to Dore Metals Services Southern Ltd,
which has had its headquarters on the site since 2007. The lease
provides a new 15 year term expiring in September 2033 and has 5
yearly RPI linked rent reviews. The transaction reflects a net
initial yield of 6.3%.
Alex Short, Portfolio Manager, AEW UK Long Lease REIT,
commented
Across the portfolio, we have now seen two consecutive quarters
of valuation growth which reflects the strength of the individual
assets that have been acquired by the Company and the favourable
levels of pricing that we have been able to acquire them at. Rents
received from the portfolio have grown by 1% on a like for like
basis over the quarter which is line with income growth
expectations that were set out to investors at the time of IPO.
This growth also shows the assets in the portfolio performing in
line with the Company's strategy, key to which is the stable income
stream, growing in line with inflation.
With the acquisition of the Sittingbourne industrial during
September, the Company's portfolio is now fully invested and geared
with exposure also gained to this strong south east sub-market.
Across the assets that we manage we have been seeing, and continue
to see, very strong performance from industrial assets both in
terms of capital and rental growth, and as such have chosen to
include this exposure up to the permitted level alongside the
portfolios focus on alternative real estate sectors. Our outlook is
positive in relation to the Company's ability to more fully cover
its dividend in future quarters given the level of earnings that
will be received from this new acquisition.
We currently see interesting purchasing opportunities in the
market and are tracking a healthy pipeline of attractively priced
assets across alternative and industrial property sectors. As such,
we have agreed terms with our existing debt provider Canada Life to
extend the current facility to provide additional funds for
investment. We expect that these funds will be invested quickly in
opportunities that will provide accretive performance to the
existing portfolio.
Net Asset Value
The Group's unaudited NAV as at 30 September 2018 was GBP76.94
million, or 95.58 pence per share. This reflects an increase of
0.68% per share compared with the NAV as at 30 June 2018. This
increase is largely due to the valuation uplift during the quarter.
As at 30 September 2018, the Group owned 17 investment properties
with a fair value of GBP103.98 million.
Pence per GBP
share million
NAV at 30 June 2018 94.94 76.42
Portfolio acquisition costs (0.56) (0.45)
Valuation change in property portfolio 1.18 0.95
Income earned for the period 1.97 1.58
Expenses and net finance costs for
the period (0.70) (0.55)
Interim dividend paid (1.25) (1.01)
NAV at 30 September 2018 95.58 76.94
The NAV attributable to the ordinary shares has been calculated
under International Financial Reporting Standards as adopted by the
European Union and incorporates the Group's individually valued
property portfolio as at 30 September 2018 and income for the
quarter, but does not include a provision for the interim dividend
for the quarter ended 30 September 2018.
The income earned for the period includes an accrual for the
minimum contractual uplifts defined within the index linked lease
agreements. In the event that inflation is greater than these
minimum contractual uplifts, the income realised will be greater
than that currently accrued.
Dividend
The Board has today declared an interim dividend of 1.375 pence
per share for the period from 1 July 2018 to 30 September 2018. The
dividend payment will be made on 30 November 2018 to shareholders
on the register as at 9 November 2018. The ex-dividend date will be
8 November 2018.
The dividend of 1.375 pence per share will all be designated as
a property income distribution ("PID").
The EPRA EPS for the quarter ended 30 September 2018 was 1.27
pence (quarter ended 30 June 2018: 1.25 pence).
Based on target dividends as set out within the Group's
Prospectus, the Board is targeting an aggregate dividend of 5.50
pence per share per annum.
Investors should note that any dividend targets are for
illustrative purposes only, based on current market conditions and
is not intended to be, and should not be taken as, a profit
forecast or estimate. Actual returns cannot be predicted and may
differ materially from this illustrative figure. There can be no
assurance that the target will be met or that any dividend or total
return will be achieved.
Debt
As at 30 September 2018, the Group had utilised all of its GBP30
million fixed interest loan facility with Canada Life Investments
and at that date was geared at a loan to Gross Asset Value ('GAV')
of 28.1 %. The facility has a fixed interest cost of 3.05% per
annum and is repayable on the 20 October 2025.
The Board has agreed terms to increase the Group's loan facility
with Canada Life Investments by GBP11 million to GBP41 million. The
additional GBP11 million will bear interest at a margin of 2.65%,
and on a weighted basis with the 1.9% margin paid on the existing
GBP30 million loan, the whole loan bears interest at a margin of
2.1%.
Portfolio Activity
Eurolink Industrial Estate, Sittingbourne
In September, the Group announced the acquisition of two
industrial buildings on the Eurolink Industrial Estate,
Sittingbourne, for GBP3.94 million. This property comprises two
warehouse buildings totalling 43,636 sq ft let to Dore Metals
Services Southern Ltd, which has had its headquarters on the site
since 2007. The lease provides a new 15 year term expiring in
September 2033 and has 5 yearly RPI linked rent reviews. The
transaction reflects a net initial yield of 6.3%.
The site is located on the established Eurolink Industrial
Estate in central Sittingbourne, with excellent access to the M2
and M20 and one mile from Sittingbourne station. Other occupiers in
the vicinity include Everest and B+M Steel. The surrounding area
comprises a mix of residential, industrial and commercial uses.
Following this transaction, the Equity raised at IPO has been
fully invested and the Group has utilised the entirety of its
GBP30m debt facility.
Inflation linked rent reviews
91% of the portfolio's income stream is reviewed periodically,
on an upward only basis, in line with inflation. Of this inflation
linked income, 75% is grown in line with the Retail Price Index and
25% in line with the Consumer Price Index. The Board consider this
to be a strong position for the Group as the Retail Price Index has
shown, on average, a 1% per annum premium over the Consumer Price
Index over the past 12 months.
Sector weightings
The sector weighting, by value, of the property portfolio as at
30 September 2018 was: Hotels 23.2%; Industrial 23.0%; Car
showrooms 14.0%; Student accommodation 11.3%; Residential care
homes 10.6%; Leisure 9.3%; Power station 4.7%; and Petrol station
3.9%.
Future publications
The Group's September 2018 Quarterly Investment Report will be
available on the Group's website on 1 November 2018.
About AEW UK Long Lease REIT
AEW UK Long Lease REIT plc (LSE: AEWL) aims to generate secure
and predictable income return in sustainable real terms, whilst at
least maintaining capital values in real terms. AEWL invests in a
diversified portfolio of UK properties, with an attractive entry
yield, predominately in alternative and specialist sectors. It
invests in a diverse range of sectors that are underrepresented in
institutional portfolios including leisure, healthcare, education,
hotels, student accommodation, supported living and automotive. At
its IPO on June 6 2017, AEWL raised GBP80.5m from institutional and
retail investors. At least 85% of the gross passing rent from the
portfolio's leases contain inflation linked rent reviews, and
average initial unexpired leases in excess of 18 years at the time
of investment. AEWL's investment manager is AEW UK Investment
Management LLP. Further information on the AEWL is available at:
www.aewukllreit.com.
About AEW UK Investment Management LLP
AEW UK Investment Management LLP employs a well-resourced team
comprising 25 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 EUR62bn of
assets under management as at 30 June 2018. AEW Group comprises AEW
SA and AEW Capital Management L.P., a U.S. registered investment
manager and their respective subsidiaries. In Europe, as at 30 June
2018, AEW Group managed nearly EUR30bn in value in properties of
all types located in 14 countries, with close to 400 staff. The
Investment Manager is a 50:50 joint venture between the principals
of the Investment Manager and AEW.
For further information contact:
AEW UK
Alex Short alex.short@eu.aew.com
+44(0) 207 016 4880
Laura Elkin laura.elkin@eu.aew.com
+44(0) 207 016 4869
Nicki Gladstone nicki.gladstone-ext@eu.aew.com
+44(0) 771 140 1021
Cenkos Securities plc
Tom Scrivens +44(0) 207 397 1915
Sapna Shah +44(0) 207 397 1922
aewl-cosec@linkgroup.co.uk
Company Secretary +44(0) 139 247 7509
Link Company Matters Limited
TB Cardew aew@tbcardew.com
Ed Orlebar +44(0) 7738 724 630
Tom Allison +44(0) 7789 998 020
Lucy Featherstone +44(0) 7789 374 663
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END
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