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AEW UK REIT plc: NAV Update and Dividend Declaration

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20-Jan-2022 / 07:00 GMT/BST
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20 January 2022




NAV Update and Dividend Declaration


AEW UK REIT plc (LSE: AEWU) (the "Company"), which directly owns a diversified portfolio of 35 regional UK commercial property assets, announces its unaudited Net Asset Value ("NAV") and interim dividend for the three-month period ended 31 December 2021.




  • NAV of £180.94 million or 114.21 pence per share as at 31 December 2021 (30 September 2021: £174.29 million or 110.01 pence per share).

  • NAV total return of 5.63% for the quarter (30 September 2021 quarter: 4.58%).

  • 3.49% like-for-like valuation increase for the quarter (30 September 2021 quarter: 3.11%), driven by retail warehousing (like-for-like increase of 6.73%) and industrial (like-for-like increase of 5.16%) sectors.

  • EPRA earnings per share ("EPRA EPS") for the quarter of 1.80 pence (30 September 2021 quarter: 1.30 pence).

  • Interim dividend of 2.00 pence per share for the three months ended 31 December 2021, in line with the targeted annual dividend of 8.00 pence per share. 

  • Disposal of Wella Warehouse, Basingstoke, for gross proceeds of £5.86 million, which was 1.7x its purchase price.

  • Purchase of Central Six Retail Park in Coventry for a purchase price of £16.41 million / £110 per sq ft. The purchase price reflects a net initial yield of circa 11%, with an anticipated reversionary yield of 12.5%. 

  • The Company remains conservatively geared with a loan to NAV ratio of 29.84% (30 September 2021: 28.97%). At the quarter end, the Company had a cash balance of £7.39 million and £6.0 million of its loan facility available to draw up to the maximum 35% Loan to NAV at drawdown.

  • For the rental quarter commencing on 25 December 2021, approximately 98% of rent has been collected or is expected to be received prior to quarter end. The remainder of rents owed will continue to be pursued.

  • We remain encouraged by the consistent rent collection levels, which stand at over 98% for each quarter since the onset of the pandemic (excluding current quarter).

  • The continued improvement in economic conditions has brought about the return of a share price premium to NAV. We hope the Company will be in a position to take advantage of continued strong demand for its shares to grow our capital base in due course.



Alex Short, Portfolio Manager, AEW UK REIT, commented:

"The portfolio continues to generate strong capital growth, largely driven by yield compression of the industrial assets and strong performance of our retail warehousing assets. We have also seen our ERVs move on as a result of continued strong occupier demand, supported by a compelling asset management story. We are pleased to be paying a dividend of 2p for the 25th consecutive quarter.

Following the sale of the two strongly performing industrial assets in Q3, we invested a significant portion of the proceeds in a multi let retail warehouse park purchased at Central Six, Coventry. At the point of purchase this acquisition is accretive to EPS with an expectation of further growth to come in 2022 as the asset's business plan is implemented.

The expected sale of our Glasgow office, which has a high level of vacancy, and the completion of ongoing works at our Blackpool asset in the coming months will support a reduction in costs and the rebuilding of our EPS in line with expectations."


Portfolio Manager's report

The portfolio continues to generate strong capital growth, with valuations increasing by 3.49% on a like-for-like basis (30 September 2021 quarter: 3.11%). As with the previous quarter, this was largely driven by the performance of the industrial assets in the portfolio which saw a like-for-like increase of 5.16% and make up 51.1% of the portfolio as at 31 December 2021.


Although valuations have again partly been driven by yield compression, we have also seen our ERVs move on as a result of continued strong occupier demand, supported by a strong asset management story. We have again seen good performance at our office holding in Bristol, with recent lettings at above ERV moving the valuation higher. We are likely to implement a programme of refurbishment works at this asset in the expectation of achieving further rental growth in an ever-improving market. Our office park at Oxford has also continued to perform well with its transition to life sciences/medical use, a sector which is proving particularly popular with both tenants and investors.


It continues to be a challenging period for the high street retail sector, but with valuations in the portfolio stable again this quarter, we are starting to see cause for selective optimism. We are often seeing divergence between high street retail and retail warehousing assets, in terms of both tenant and investor demand, with this being evident in our retail warehousing valuations, which have seen a 6.73% like-for-like valuation increase this quarter (30 September 2021 quarter: 5.69%). This is reflected in our recent purchase of a 94,891 sq ft retail warehouse at Shrewsbury, offering an 8.7% NIY on purchase, where we are seeing robust tenant commitment to the scheme at rents in excess of ERVs. This is also true at our newly purchased asset at Central Six, Coventry, where we expect tenant demand to support successful asset management deals and, in time, rental growth. We will continue to appraise buying opportunities and our existing portfolio with this noticeable divergence in mind.  


The proceeds from the sale of two of the Company's strongly performing industrial holdings during Q3 2021 are now almost fully invested. The multi-let retail warehouse park purchased at Central Six, Coventry, is accretive to EPRA EPS at the point of purchase and with the ongoing implementation of the business plan, there is an expectation of further growth to come during the course of 2022. Tenants at the Park include Next, Boots and Burger King and it is located in a prime position near the city centre, immediately adjacent to the train station. We have one further asset under offer to buy and the completion of this purchase will take us back to full investment and gearing in line with our target of a 35% Loan to NAV ratio. It is anticipated that the sale of our office asset in Glasgow, where we have a high level of vacancy, will complete in the first half of 2022 (subject to planning consent), and the ongoing service charge works at our Blackpool asset will also conclude. Each of these events will lead to the cost overheads falling, supporting the rebuilding of EPS, with the aim of returning to full dividend cover in due course.


The Company's EPRA EPS was 1.80 pence for the quarter, providing a dividend cover of 90% (30 September 2021: 1.30 pence and 65%).


Valuation movement

As at 31 December 2021, the Company owned investment properties with a fair value of £225.84 million. The like-for-like valuation increase for the quarter of £7.05 million (3.49%) is broken down as follows by sector:



Valuation 31 December 2021

Like-for-like valuation movement for the quarter


£ million


£ million 












High Street Retail





Retail Warehouses
















* This is the overall weighted average like-for-like valuation increase of the portfolio.


Net Asset Value

The Company's unaudited NAV at 31 December 2021 was £180.94 million, or 114.21 pence per share. This reflects an increase of 3.82% compared with the NAV per share at 30 September 2021. The Company's NAV total return, which includes the interim dividend of 2.00 pence per share for the period from 1 July 2021 to 30 September 2021, was 5.63% for the three-month period ended 31 December 2021.




Pence per share 

£ million 

NAV at 1 October 2021



Portfolio acquisition costs



Profit on sale of investments



Capital expenditure



Valuation change in property portfolio



Valuation change in derivatives



Income earned for the period



Expenses and net finance costs for the period



Interim dividend paid



NAV at 31 December 2021





The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards. It incorporates the independent portfolio valuation at 31 December 2021 and income for the period, but does not include a provision for the interim dividend for the three-month period to 31 December 2021.





Dividend declaration

The Company today announces an interim dividend of 2.00 pence per share for the period from 1 October 2021 to 31 December 2021. The dividend payment will be made on 28 February 2022 to shareholders on the register as at 28 January 2022.  The ex-dividend date will be 27 January 2022.


The dividend of 2.00 pence per share will be designated 2.00 pence per share as an interim property income distribution ("PID") and 0.00 pence per share as an interim ordinary dividend ("non-PID").


The Company has now paid a 2.00 pence quarterly dividend for 25 consecutive quarters1, demonstrating consistency to our investors.


1For the period 1 November 2017 to 31 December 2017, a pro rata dividend of 1.33 pence per share was paid for this two month period, following a change in the accounting period end.


The EPRA EPS for the three-month period to 31 December 2021 was 1.80 pence (30 September 2021: 1.30 pence).


Dividend outlook

It remains the Company's intention to continue to pay dividends in line with its dividend policy and this will be kept under review given the current COVID-19 situation. In determining future dividend payments, regard will be given to the circumstances prevailing at the relevant time, as well as the Company's requirement, as a UK REIT, to distribute at least 90% of its distributable income annually.






The Company's share capital consists of 158,774,746 Ordinary Shares, of which 350,000 are currently held by the Company as treasury shares.



The Company had borrowings of £54.0 million at 31 December 2021, producing a Loan to NAV ratio of 29.84% and allowing a further £6.0 million of the remaining facility to be drawn up to the maximum 35% Loan to Value at drawdown.


The loan attracts interest at SONIA + 1.4% and the Company's all-in interest rate as at 31 December 2021 was 1.48%.


To mitigate the risk of interest rates rising, the Company has interest rate caps effective for the remaining term of the loan to 23 October 2023, capping SONIA interest rate costs at 1.0% on a notional value of £51.50 million. The interest rate caps transitioned to SONIA on 31 December 2021.



Rent Collection

As at 17 January 2022, the Company had collected the following rental payments for the rental quarter commencing 25 December 2021 and for previous quarters since the onset of the COVID-19 pandemic, expressed as a percentage of the quarter's total rental income:


Current Position as at 17 January 2022

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021










Monthly Payments Expected Prior to Quarter End






















Under Negotiation



















































It should be noted that this is an evolving picture with further payments being received each week. For any amounts that remain outstanding that are owed by tenant companies who are known to have the ability to pay, the Company is pursuing these tenants.


Asset Management Update

During the quarter the Company completed the following asset management transactions in addition to the aforementioned acquisition and disposal, as well as the ongoing service change works at Blackpool:

15-33 Union Street, Bristol (high street retail) - We have completed a new 15-year lease to Roxy Leisure Limited, a "competitive social" leisure occupier, at a rent of £181,000 pa / £10 psf with five yearly RPI reviews, collared and capped at 1.5% and 4% respectively. We granted the tenant a 12-month rent free incentive and made a £300,000 capital contribution to the tenant's fit out. On acquisition (June 2021), the 18,122 sq ft of upper-floor space was vacant, with the Company benefiting from a 12-month rental guarantee of £190,000.

Pearl House, Nottingham (high street retail) - Having held over since April 2021, we have completed the renewal of Cancer Research's lease on a 5-year term with a tenant break in year three, subject to a break penalty equivalent to three months' rent. The rent agreed is £21,000 pa. Three months' rent-free incentive was given. This letting secures an established and financially robust high street retailer for a minimum of three years.

69-75 Above Bar Street, Southampton (high street retail) - We have completed a new 5-year lease to Shoe Zone at a gross rent of £80,000 pa in exchange for a 12-month rent free period and circa £40,000 landlord works. The unit has been vacant since Waterstone's lease expired in July 2019, so we are delighted to have secured this letting to a well-known high street retailer for a 5-year term with no tenant break option.

Walkers Lane, St Helens (industrial) - After protracted negotiations, we have settled Kverneland's October 2020 open market rent review at £389,000 pa / £4.16 psf, representing a £89,000 pa increase. Rental evidence suggested the passing rent was reversionary at review, targeting £4.00 psf. The tenant's lease expires in October 2025. 

Westlands Distribution Park, Weston-Super-Mare (industrial) - We have completed a new letting to North Somerset District Council at £20,000 pa, rising to £30,000 pa in April 2022. There are five yearly upwards-only rent reviews to the higher of open market or RPI (capped at 1.5%) in 2027 and 2032. The lease expires in April 2037 with mutual rolling break options in 2024, 2027 and 2032.

Saurus Court, Runcorn (industrial) - We have completed a new 10-year lease to KMS (Europe) Ltd at a headline rent of £6 psf (£95,000 pa) vs. the previous passing rent of £4.83 psf (£76,100 pa). The tenant has the benefit of a 12-month rent free period spread out over the first three years of the lease (four months' rent free per annum). In doing so, we have set a new rental tone at £6 psf for the estate.  






Alex Short


+44(0) 20 7016 4848

Henry Butt

+44(0) 20 7016 4855

Nicki Gladstone


+44(0) 7711 401 021

Company Secretary


Link Company Matters Limited


+44(0) 1392 477 500



TB Cardew

Ed Orlebar

Tania Wild

+44 (0) 7738 724 630

+44 (0) 7425 536 903

Lucas Bramwell

+44 (0) 7939 694 437



Liberum Capital


Darren Vickers / Owen Matthews

+44 (0) 20 3100 2000



Notes to Editors




AEW UK REIT plc (LSE: AEWU) aims to deliver an attractive total return to shareholders by investing predominantly in smaller commercial properties (typically less than £15 million), on shorter occupational leases in strong commercial locations across the United Kingdom. The Company is currently invested in office, retail, industrial and leisure assets, with a focus on active asset management, repositioning the properties and improving the quality of income streams.  AEWU is currently paying an annualised dividend of 8p per share. 


The Company was listed on the Official List of the UK Listing Authority and admitted to trading on the Main Market of the London Stock Exchange on 12 May 2015.


LEI: 21380073LDXHV2LP5K50


About AEW UK Investment Management LLP


AEW UK Investment Management LLP employs a well-resourced team comprising 27 individuals covering investment, asset management, operations and strategy. It is part of AEW Group, one of the world's largest real estate managers, with €77.4bn of assets under management as at 30 September 2021. 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 September 2021, AEW Group managed €36.9bn of real estate assets on behalf of a number of funds and separate accounts with over 440 staff located in 12 offices. In May 2019, AEW UK Investment Management LLP was awarded Property Manager of the Year at the Pensions and Investment Provider Awards.



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