AEW UK's Portfolio Reshuffle Yields Strong Dividend Coverage and Expansion Ambitions

Strategic Insights -

AEW UK's real estate investment trust (Reit) has achieved a fully covered dividend and is planning to expand its strategy as the UK property market nears rock bottom. Manager Laura Elkin has been reshuffling the portfolio of smaller UK commercial property, prioritizing higher-yielding assets. The trust's full-year results revealed a 9p EPRA earnings per share, resulting in dividend cover of 112.5 times, with a 7.6% current yield.

Key Takeaways:

  • AEW UK's Reit has achieved a fully covered dividend, with a 9p EPRA earnings per share resulting in dividend cover of 112.5 times.
  • The trust paid a current yield of 7.6% and plans to expand its strategy as UK property valuations reach their nadir.
  • Laura Elkin, manager of the PS167m Reit, has been reshuffling the portfolio of smaller UK commercial property to prioritize higher-yielding assets.
  • The trust increased its net asset value (NAV) by 7.2% over the year to end of March, with a 8.58p increase in the portfolio valuation reflecting a 5.9% like-for-like gain.
  • Dividends included, the NAV total return for the year was an impressive 15.29% and shareholder total return, 28.68%.
  • Elkin disposed of two assets over the period, achieving an aggregate sales price of PS32m that was used to fund acquisitions.
  • The trust is scaling up its strategy, including asking shareholder permission to issue equity, as Elkin views now as 'an ideal time to deploy capital'.
  • Retail rewards have been a significant contributor to the trust's performance, with a 'significantly greater capital return' from retail, driven by the disposal of Central Six Retail Park in Coventry.

Statistics:

  • Full-year results: a 9p EPRA earnings per share, resulting in dividend cover of 112.5 times.
  • Current yield: 7.6%
  • Net asset value (NAV) increase: 7.2% over the year to end of March.
  • Portfolio valuation increase: 8.58p, reflecting a 5.9% like-for-like gain.
  • Dividends included NAV total return: 15.29%
  • Shareholder total return: 28.68%
  • Aggregate sales price of disposed assets: PS32m
  • Yearly increase in shares: 35.3% (over the past year), 14% over three years.

Sources:

  • Association of Investment Companies
  • Laura Elkin, manager of AEW UK's Reit