AEW UK REIT plc : Annual Financial Report

AEW UK REIT plc (AEWU) 
AEW UK REIT plc: Annual Financial Report 
24-Jun-2021 / 07:00 GMT/BST 
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The issuer is solely responsible for the content of this announcement. 
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AEW UK REIT PLC 
 
Announcement of Full Year Results for the year ended 31 March 2021 
 
 
 
AEW UK REIT PLC (the 'Company') which holds a diversified portfolio of 34 commercial investment properties throughout 
the UK, is pleased to publish its full year results for the year ended 31 March 2021. 
 
 
 
Mark Burton, Chairman of AEW UK REIT,?commented: "I am pleased to report a strong set of results for a year that began 
at the start of a period of unprecedented economic uncertainty due to the outbreak of COVID-19. NAV, pre-tax profit, 
and EPS all increased and we delivered strong returns to shareholders, demonstrating the resilience of the Company's 
approach and our active asset management strategy. We are also pleased to maintain a dividend of 8.00 pence per share 
('pps'). Our cautious approach to cash management, and the significant gains realised on the disposal of two assets 
enabled the Company to meet these payments, while maintaining a comfortable cash and gearing position. 
 
We have been assiduous in our pursuit of rent from tenants that have been able but unwilling to pay, while pursuing a 
prudent policy for provision against expected credit losses. Although this contributed to the fall in EPRA EPS, we are 
pleased with the successful outcome of the legal action to recover unpaid rent and the overall rent collection levels, 
which reached 94% for each quarter since the start of the pandemic. We continue to believe the Company's assets are 
strategically placed to provide investors with robust performance over the medium and long term." 
 
 
 
Financial Highlights 
 
* Net Asset Value ('NAV') of GBP157.08 million and of 99.15 pps as at 31 March 2021 (31 March 2020: GBP147.86 million and 
of 93.13 pps). 
 
* Operating profit before fair value changes of GBP10.73 million for the year (year ended 31 March 2020: GBP14.47 million). 
 
* Profit before tax ('PBT')* of GBP22.17 million and earnings per share ('EPS') of 13.98 pps for the year (year ended 31 
March 2020: GBP3.65 million and of 2.40 pps). 
 
* EPRA Earnings Per Share ('EPRA EPS')* for the year of 6.19 pps (year ended 31 March 2020: 8.67 pps). 
 
* Total dividends of 8.00 pps declared for the year (year ended 31 March 2020: 8.00 pps). 
 
* Shareholder Total Return* for the year of 33.72% (year ended 31 March 2020: -17.89%). 
 
* NAV Total Return* for the year of 15.06% (year ended 31 March 2020: 2.55%). 
 
* The price of the Company's Ordinary Shares on the Main Market of the London Stock Exchange was 83.20 pps as at 31 
March 2021 (31 March 2020: 68.20 pps). 
 
* As at 31 March 2021, the Company had drawn GBP39.50 million (31 March 2020: GBP51.50 million) of a GBP60.00 million (31 
March 2020: GBP60.00 million) term credit facility with the Royal Bank of Scotland International Limited ('RBSi') and was 
geared to 25.15% of NAV (31 March 2020: 34.83%) (see note 14 below for further details). 
 
* The Company held cash balances totalling GBP17.45 million as at 31 March 2020 (31 March 2020: GBP9.87 million). 
* The Company received three EPRA awards during the year: EPRA Gold Medal for Financial Reporting; EPRA Silver Medal 
for Sustainability Reporting and EPRA Most Improved Award for Sustainability Reporting. The Company has also been named 
Best UK Real Estate Investment Trust in the Citywire Investment Trust Awards based upon its strong three year track 
record. 
 
 
Property Highlights 
 
* As at 31 March 2021, the Company's property portfolio had a valuation of GBP179.00 million across 34 properties (31 
March 2020: GBP189.30 million across 35 properties) as assessed by the valuer1 and a historical cost of GBP173.28 million 
(31 March 2020: GBP197.12 million). 
 
* The Company acquired one property during the year for a purchase price of GBP5.40 million, excluding acquisition costs 
(year ended 31 March 2020: none). The Company made two disposals during the year with total gross sale proceeds of 
GBP29.30 million (year ended 31 March 2020: none). 
 
* The portfolio had an EPRA Vacancy Rate** of 8.96% as at 31 March 2021 (31 March 2020: 3.68%). Excluding vacancy 
contributed by Bath Street, Glasgow, which was exchanged to be sold with the condition of vacant possession, the 
vacancy rate was 5.58% (31 March 2020: 3.68%). 
 
* Rental income generated in the year under review was GBP15.71 million (year ended 31 March 2020: GBP17.42 million). The 
number of tenants as at 31 March 2021 was 99 (31 March 2020: 91). 
 
* EPRA Net Initial Yield ('NIY')** of 7.37% as at 31 March 2021 (31 March 2020: 8.26%). 
 
* Weighted Average Unexpired Lease Term ('WAULT')* of 4.43 years to break (31 March 2020: 4.26 years) and 6.71 years to 
expiry (31 March 2020: 5.55 years). 
 
* As at the date of this report, rent collection statistics for 2020 rental quarters and March 2021 quarter were as 
follows: 
 
 
 
 
Quarter         % 
March 2020      98 
June 2020       98 
September 2020  97 
December 2020   97 
March 2021      94 

* See KPIs below for definition of alternative performance measures.

** See Glossary in the full Annual Report and Financial Statements for definition of alternative performance measures.

1 The valuation figure is reconciled to the fair value under IFRS in note 11.

 
Enquiries 
 
AEW UK 
Alex Short       [e-mail] 
                 [e-mail] 
Nicki Gladstone 
                 [phone] 
 
Liberum Capital  [e-mail] 
Darren Vickers   [phone] 
 
TB Cardew         [e-mail] 
Ed Orlebar       [phone] 
Tania Wild       [phone] 
Lucas Bramwell   [phone] 

Chairman's Statement

Overview

I am pleased to present the audited annual results of AEW UK REIT plc for the year ended 31 March 2021. As at 31 March 2021, the Company owned a diversified portfolio of 34 commercial investment properties throughout the UK with a value of GBP179.00 million.

The financial year began with a period of unprecedented economic uncertainty due to the outbreak of COVID-19 and the associated measures to contain the spread of the virus. These measures continued throughout the year to varying degrees and have had a profound impact on certain sectors, most notably retail and leisure. To mitigate the increased risk posed by the uncertainty in the wider economic environment, the Company adopted a cautious approach to cash and debt management. Despite this, the Company has maintained its quarterly dividend payments at the target level of 8.00 pps per annum throughout the year and increased its NAV per share by 6.46%, providing a NAV total return of 15.06% (year ended 31 March 2020: 2.55%).

In May 2020, the Company disposed of 2 Geddington Road, Corby, for gross proceeds of GBP18.80 million, delivering an internal rate of return ('IRR') of 27%. This disposal allowed the effective management of the Company's risk profile, and in July 2020, GBP12.00 million of its RBSi loan facility was repaid in order to provide appropriate headroom against its borrowing covenants. Since the repayment, the Loan to NAV ratio has remained below 27% and was 25.15% as at 31 March 2021, against a soft covenant of 40% (triggering an increase in the margin) and a hard covenant of 55%.

This disposal, and the loss of the Company's largest tenant at the time, also resulted in a fall in rental income. The income profile from the remainder of the portfolio remained largely intact, with rent collection rates reaching at least 94% for all quarters since the onset of the pandemic. The majority of rents outstanding as at 31 March 2021 were attributable to tenants who were financially able, but unwilling, to pay. Post year-end, the Company announced the successful outcome of the legal action against two well-funded national tenants to recover unpaid rent. GBP0.52 million has been provided for as expected credit loss relating to these tenants in these financial statements and subsequent to the court ruling all rent arrears of these tenants have been received. The prudent policy for provision against expected credit losses contributed to a fall in EPRA EPS for the year to 6.19 pps (year ended 31 March 2020: 8.67 pps), providing a dividend cover of 77.4% (year ended 31 March 2020: 108.4%). Certain asset management initiatives are also temporarily reducing earnings potential. Remedial works are ongoing at Bank Hey Street, Blackpool, including the reinstatement of its cathodic protection system and comprehensive repairs to faience elevations and windows. The nature of these repair works means that costs are expensed to profit or loss as they are incurred, with a corresponding increase expected to be seen in the revaluation of the property. The Company has also exchanged to sell its property at Bath Street, Glasgow, with the condition of vacant possession, and this property will continue to operate at a high level of vacancy until the sale has completed.

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