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27 Apr 2021


Company Notes

Attractive yield and path to return to full dividend cover

AEW UK REIT was launched in May 2015, when it raised £100.5m. It invests in, and actively asset manages, a diversified portfolio of smaller, high yielding commercial properties across the UK. The investment objective is to deliver an annualised 8p per share dividend and an attractive total return. The focus is on good locations with attractive supply and demand dynamics and assets with strong alternative use potential. The fund is managed by Alex Short and Laura Elkin of AEW UK Investment Management, with the latter due to return from maternity leave early next year. Henry Butt and Edward Long, who both joined AEW in 2015, are assisting in the fund’s management during Laura’s maternity leave.

On 22 April the fund published a NAV update for the three months to 31 March 2021. The fund’s NAV per share increased by 3.4% over the quarter from 95.87p to 99.15p, while the NAV total return was +5.5%. The overall portfolio valuation increased by 4.0% on a like-for-like basis over the period to £179.0m. An interim dividend of 2.00p per share has been declared for the three months ended 31 March 2021, in line with the targeted annual dividend of 8.00p per share. EPRA earnings per share for the quarter were 1.10p, down from 1.68p in the previous quarter, resulting in dividend cover of 55%. This fall in earnings is partly due to an increase in bad debt provisions, although a court ruling post the period-end should mean that 56% of this unpaid rent provided for will be received.