AEW UK REIT plc (AEWU) 
AEW UK REIT plc: NAV Update and Dividend Declaration 
25-Jan-2021 / 07:00 GMT/BST 
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25 January 2021 
 
AEW UK REIT Plc (the "Company") 
 
NAV Update and Dividend Declaration 
 
AEW UK REIT plc (LSE: AEWU) (the "Company"), which, as at 25 January 2021, 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 2020. 
 
Highlights 
 
  ? Interim dividend of 2.00 pence per share for the three months ended 31 December 2020, in line with the targeted 
    annual dividend of 8.00 pence per share. 
  ? EPRA earnings per share ("EPRA EPS") for the quarter of 1.68 pence (30 September 2020: 1.60 pence). 
  ? NAV of GBP151.88 million or 95.87 pence per share as at 31 December 2020 (30 September 2020: GBP147.24 million or 92.73 
    pence per share). 
  ? NAV total return of 5.53% for the quarter (30 September 2020: 1.46%). 
  ? During the quarter the Company completed the acquisition of the multi-let Westlands Distribution Park in Weston 
    Super Mare for a purchase price of GBP5.4m.  Contracts were also unconditionally exchanged to dispose of Sandford 
    House, Solihull for consideration 9% above its valuation at GBP10.5m. Further investment and asset management 
    activity is noted below. 
  ? The Company remains conservatively geared with a loan to NAV ratio of 26.01% (30 September 2020: 26.83%). As at 31 
    December 2020, the Company had a cash balance of GBP7.52 million and has GBP13.66 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 2020, 90% of rent has been collected or is expected to be received 
    under monthly payment plans prior to quarter end. A further 1% of income is expected to be received under agreed, 
    longer term payment plans.  The remainder of rents owed will continue to be pursued. 
 
Alex Short and Laura Elkin, Portfolio Managers, AEW UK REIT, commented: 
"We are pleased to see some NAV recovery this quarter which is due, in part, to the team's ongoing drive to maximise 
value from the assets' business plans.  Asset management has always been a key feature of AEW's strategy, and something 
we have prioritised in uncertain markets such as we experienced in 2020 where gains were more hard-fought.  We 
announced just prior to Christmas the agreed sale of the portfolio's Solihull office building following the completion 
of its business plan.  The sale has been achieved at a level 9% ahead of its prevailing valuation at the time of 
exchange and 94% ahead of its acquisition price with no capital expenditure having been incurred on the property over 
its hold period. A 15-year lease renewal was signed with the tenant in June 2020, which increased the passing rental 
income by 30%. 
Strong NAV recovery was also driven by the portfolio's weighting towards warehousing and industrials.  This sector 
comprises 56% of the portfolio's value and saw a like-for-like valuation increase during the quarter of 7.6%.  Despite 
this, we consider that the portfolio's overall valuation remains conservative when measured against alternative use 
values, at a low capital value of only GBP56 per sq ft.  This is low by design due to our stock selection criteria for 
the Company having been to seek assets whose alternative use values are expected to exceed current value since its 
initial ramp up.  We believe that this positions the portfolio both defensively and opportunistically. 
The Company's EPRA EPS for the quarter increased by 0.08 pps although it remains below the dividend level of 2.00 pps. 
This is partly due to ongoing remedial works at its property in Blackpool, which had a negative impact of 0.13 pps for 
the quarter. The expenditure is accretive to the value of the property and a corresponding positive effect is expected 
in the valuation movement. The Company's provision for doubtful debtors has also increased by GBP0.27 million, which has 
had a negative impact of 0.17 pence on the EPRA EPS for the quarter. In 2021, we expect to increase the Company's 
earnings as we look to return to full investment. Based upon our current pipeline, we expect the first half of 2021 to 
provide some very attractive investment opportunities, a number of which we are already pursuing. 
Features integral to the Company's strategy give us confidence that it is strongly positioned for the current economic 
conditions, including its conservatively managed debt exposure, its diversified portfolio and its high levels of rent 
collection." 
Valuation movement 
As at 31 December 2020, the Company owned investment properties with a fair value of GBP182.65 million. The like-for-like 
valuation increase for the quarter of GBP5.90 million (3.44%) is broken down as follows by sector: 
Sector        Valuation 31 December 2020 Like-for-like valuation movement for the quarter 
              GBP million         %        GBP million                      % 
Industrial    102.90            56.3     6.90                           7.61 
Office        45.55             24.9     (0.30)                         (0.65) 
Retail        21.65             11.9     (0.25)                         (1.14) 
Other         12.55             6.9      (0.45)                         (3.46) 
Total         182.65            100.0    5.90                           3.44

Net Asset Value

The Company's unaudited NAV as at 31 December 2020 was GBP151.88 million, or 95.87 pence per share. This reflects an increase of 3.15% compared with the NAV per share as at 30 September 2020. The Company's NAV total return, which includes the interim dividend of 2.00 pence per share for the period from 1 July 2020 to 30 September 2020, was 5.53% for the three-month period ended 31 December 2020. 


                                              Pence per share  GBP million 
NAV at 1 October 2020                         92.73            147.24 
Capital expenditure                           (0.02)           (0.03) 
Valuation change in property portfolio        3.44             5.46 
Valuation change in derivatives               (0.01)           (0.02) 
Income earned for the period                  2.62             4.15 
Expenses and net finance costs for the period (0.93)           (1.48) 
Interim dividend paid                         (2.00)           (3.17) 
Share buybacks*                               0.04             (0.27) 
NAV at 31 December 2020                       95.87            151.88

*the share buybacks reduce the Company's overall NAV as well as the total number of shares in circulation (refer to equity section below). In these instances, where the price is at a discount to the prevailing NAV per share, the effect is an increase in the Company's NAV per share.

The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards. It incorporates the independent portfolio valuation as at 31 December 2020 and income for the period, but does not include a provision for the interim dividend for the three month period to 31 December 2020.

Dividend

Dividend declaration

The Company today announces an interim dividend of 2.00 pence per share for the period from 1 October 2020 to 31 December 2020. The dividend payment will be made on 26 February 2021 to shareholders on the register as at 5 February 2021. The ex-dividend date will be 4 February 2021.

The dividend of 2.00 pence per share will be designated 1.00 pence per share as an interim property income distribution ("PID") and 1.00 pence per share as an interim ordinary dividend ("non-PID").

The EPRA EPS for the three-month period to 31 December 2020 was 1.68 pence (30 September 2020: 1.60 pence).

Dividend outlook

It remains the Company's intention to continue to pay dividends in line with its dividend policy, however the outlook remains unclear 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, which will remain a key consideration.

Financing

Equity and share buy-back

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. This reflects the following share buybacks which occurred during the quarter: 


Date            Number of Shares Price (pence) Gross consideration (GBP) 
14 October 2020 200,000          76.5          153,000 
3 November 2020 150,000          73-73.5       109,995

Debt

The Company had borrowings of GBP39.50 million as at 31 December 2020, producing a Loan to NAV ratio of 26.01% and had a total undrawn facility of GBP20.50 million of which GBP13.66 million was available as at 31 December 2020 up to the maximum 35% Loan to NAV at drawdown.

The loan continues to attract interest at LIBOR + 1.4% and as a result is currently benefitting from lower LIBOR rates. The Company's all-in interest rate as at 31 December 2020 was 1.45%.

To mitigate the risk of interest rates rising, the Company has interest rate caps effective for the remaining term of the loan, capping LIBOR at 1.0% on a notional value of GBP51.50 million.

Rent Collection

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January 25, 2021 02:00 ET (07:00 GMT)