33. Moorside Road, Salford Industrial North West <5.0 Yorkshire and Humberside 34. Fargate and Chapel Walk, Sheffield Standard Retail <5.0
Top 10 Tenants as at 31 March 2021
% of Portfolio Passing Total Rental Passing Income Rental Tenant Sector Property (GBP'000) Income 1. Plastipak UK Limited Industrial Gresford Industrial Estate, Wrexham 883 5.7 2. Ardagh Glass Limited Industrial Langthwaite Industrial Estate, South Kirkby 763 4.9 3. Wyndeham Peterborough Storeys Bar Road, Peterborough 644 4.2 Limited Industrial 625 4.0 4. Mecca Bingo Limited Leisure London East Leisure Park, Dagenham 5. Harrogate Spring Water Industrial 603 3.9 Lockwood Court, Leeds Leisure 535 3.5 6. Odeon Cinemas Odeon Cinema, Southend Retail Barnstaple Retail Park and Bank Hey Street, 525 3.4 7. Sports Direct Blackpool Egbert H Taylor & Co Ltd Industrial Oak Park, Droitwich 500 3.2 8. Advance Supply Chain (BFD) Euroway Trading Estate, Bradford 467 3.0 9. Ltd Industrial 460 3.0 10. HFC Prestige Manufacturing Industrial Cranbourne House, Basingstoke
The Company's top 10 tenants, listed above, represent 38.8% of the total passing rental income of the portfolio.
Alternative Investment Fund Manager ('AIFM')
AEW UK Investment Management LLP is authorised and regulated by the FCA as a full-scope AIFM and provides its services to the Company.
The Company has appointed Langham Hall UK Depositary LLP ('Langham Hall') to act as the depositary to the Company, responsible for cash monitoring, asset verification and oversight of the Company.
Information Disclosures under the AIFM Directive
Under the AIFM Directive, the Company is required to make disclosures in relation to its leverage under the prescribed methodology of the Directive.
Leverage
The AIFM Directive prescribes two methods for evaluating leverage, namely the 'Gross Method' and the 'Commitment Method'. The Company's maximum and actual leverage levels are as per below:
31 March 2021 31 March 2020 Commitment Gross Commitment Leverage Exposure Gross Method Method Method Method Maximum Limit 140% 140% 140% 140% Actual 114% 125% 128% 135%
In accordance with the AIFM Directive, leverage is expressed as a percentage of the Company's exposure to its NAV and adjusted in line with the prescribed 'Gross' and 'Commitment' methods. The Gross method is representative of the sum of the Company's positions after deducting cash balances and without taking into account any hedging and netting arrangements. The Commitment method is representative of the sum of the Company's positions without deducting cash balances and taking into account any hedging and netting arrangements. For the purposes of evaluating the methods above, the Company's positions primarily reflect its current borrowings and NAV.
Remuneration
The AIFM has adopted a Remuneration Policy which accords with the principles established by AIFMD. AIFMD Remuneration Code Staff includes the members of the AIFM's Management Committee, those performing Control Functions, Department Heads, Risk Takers and other members of staff that exert material influence on the AIFM's risk profile or the AIFs it manages.
Staff are remunerated in accordance with the key principles of the firm's remuneration policy, which include 1. promoting sound risk management; 2. supporting sustainable business plans; 3. remuneration being linked to non-financial criteria for Control Function staff; 4. incentivising staff performance over long periods of time; 5. awarding guaranteed variable remuneration only in exceptional circumstances; and 6. having an appropriate balance between fixed and variable remuneration.
As required under section 'Fund 3.3.5.R(5)' of the Investment Fund Sourcebook, the following information is provided in respect of remuneration paid by the AIFM to its staff for the year ended 31 December 2020.
Year ended 31 December 2020 Total remuneration paid to employees during financial year: a) remuneration, including, where relevant, any carried interest paid by the AIFM GBP2,893,979 b) the number of beneficiaries 25 The aggregate amount of remuneration of the AIFM Remuneration Code staff, broken down by: a) senior management GBP767,350 b) members of staff GBP2,126,629 Fixed Variable Total remuneration remuneration remuneration Senior management GBP677,350 GBP90,000 GBP767,350 Staff GBP1,590,629 GBP536,000 GBP2,126,629 Total GBP2,267,979 GBP626,000 GBP2,893,979
Fixed remuneration comprises basic salaries and variable remuneration comprises bonuses.
AEW UK Investment Management LLP
23 June 2021
Principal Risks and Uncertainties
The Company's assets consist primarily of UK commercial property. Its principal risks are therefore related to the commercial property market in general, but also to the particular circumstances of the individual properties and the tenants within the properties.
The Board has overall responsibility for reviewing the effectiveness of the system of risk management and internal control which is operated by the Investment Manager. The Company's ongoing risk management process is designed to identify, evaluate and mitigate the significant risks the Company faces.
At least twice a year, the Board undertakes a formal risk review with the assistance of the Audit Committee, to assess the adequacy and effectiveness of the Investment Manager and other service providers' risk management and internal control processes.
The Board has carried out a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity.
An analysis of the principal risks and uncertainties is set out below. The risks below do not purport to be exhaustive as some risks are not yet known and some risks are currently not deemed material but could turn out to be material in the future.
Principal risks and their potential impact Risk How risk is managed assessment REAL ESTATE RISKS 1. Property market Any property market recession or future deterioration in Probability: the property market could, inter alia, (i) cause the Moderate to Company to realise its investments at lower valuations; The Company has investment restrictions in place High and (ii) delay the timings of the Company's to invest and manage its assets with the realisations. These risks could have a material adverse objective of spreading and mitigating risk. Impact: High effect on the ability of the Company to achieve its investment objective. Movement: Decrease 2. Property valuation Property and property-related assets are inherently difficult to value due to the individual nature of each property. Probability: The Company uses an independent external valuer Moderate (Knight Frank LLP) to value the properties at fair value in accordance with accepted RICS Impact: Low There may be an adverse effect on the Company's appraisal and valuation standards. to Moderate profitability, the NAV and the price of Ordinary Shares
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