AEW UK REIT PLC MAY 2019 www.aewukreit.com FOCUSED ON THE FUTURE OF REAL ESTATE
SECTION 1 AEW CORPORATE OVERVIEW 2 Focused on the Future of Real Estate
AEW NORTH AMERICA, EUROPE AND ASIA PACIFIC Paris Luxembourg NORTH AMERICA Boston EUROPE Over 30 years’ real estate Milan London Los Angeles • 401 staff • 275 staff investment management Düsseldorf Madrid • 2 offices • 9 offices Prague Frankfurt experience Warsaw One of the largest real estate investment managers in the world with € 65.4bn in assets under management € 31.4bn € 31.8bn Over 700 staff located in AUM 15 offices across North AUM America, Europe and Asia Pacific € 2.3bn Broad experience across AUM all major real estate markets and investment strategies Research driven approach Singapore ASIA PACIFIC to investment strategy and Hong Kong • 29 staff Sydney underwriting • 4 offices Tokyo Figures as at 31 December 2018. Total AEW Global AUM includes $39.7 billion in assets managed by AEW Capital Management and its affiliates, of this $603 million in advisory/subadvisory securities wrap accounts for which AEW Capital Management provides only a model portfolio. 3 Focused on the Future of Real Estate Focused on the Future of Real Estate
AEW UK: FUNDS AND SEPARATE ACCOUNTS ASSETS UNDER MANAGEMENT AND CAPITAL RAISED Total Assets Under Management Institutional Funds Separate Accounts £1.8bn £766m £1.0bn EXPECTED RETURN/ AEW UK Urban Real Estate Fund (Value Add 2) VOLITILITY Closed-ended, value add 6 year life Target IRR 12% AEW Logistics UK AEW Senior Living • Build to core • Closed-ended, build/refurb to core • Separate Account • C£300 – 500m target equity • Cornerstone investor c € 290m AEW UK Core Property Fund AEW UK REIT • Open-ended • Listed on LSE • Diversified • Diversified • GAV £202m • GAV £311m • Distribution yield 5.5 % • Dividend 8p/share p.a. AEW UK Real Return Fund • Open-ended • Alternative real estate • GAV £137m • Distribution yield 5.3 % AEW UK Long Lease REIT • IPO 31 May 2017 • Listed on LSE • GAV £116m* EXPECTED RISK RISK FREE AEW UK South East Office Fund (Value Add 1) RATE • Closed-ended Proposed new launch • Portfolio sold October 2018 • Expected IRR of 12% Source: AEW UK, CPF and RRF on GAV basis as at 31 March 2019 Source: AEW Long Lease on GAV basis as at 31 December 2018 4 Focused on the Future of Real Estate
SECTION 2 ABOUT AEW UK REIT 5 Focused on the Future of Real Estate
AEW UK REIT PLC Highest yielding dividend in peer group Highly experienced team with over 25 years track record of outperformance A highly diversified portfolio with defensive characteristics Over 12 months to December 2018, AEWU has out performed the MSCI/IPD Total RETURN Benchmark by 5.48% VANTAGE POINT, HEMEL HEMPSTEAD SARUS COURT, RUNCORN Source: AEW UK as at 31 March 2019 6 6 Focused on the Future of Real Estate
AEW UK REIT PLC PORTFOLIO OVERVIEW AS AT 31 MARCH 2019 PORTFOLIO OVERVIEW REGIONAL EXPOSURE SECTOR EXPOSURE NAV £149.5m Standard retail Rest of London 11.918 15.194 4.352 6.073 NAV PPS 98.61p 7.502 South East 3.391 Retail Warehouse 15.106 South West Number of 35 Eastern 17.813 properties Offices West Midlands 21.964 11.462 East Midlands Net Initial Yield 7.63% Industrial North West 7.996 47.633 Yorkshire and Humberside 11.591 WAULT (to break) 4.87 years 9.046 Other Wales 9.058 Scotland Dividend declared 28.8 pps to date CREDIT QUALITY* INCOME TYPE AA- TO AAA Debt £50m 4% A- TO A+ 8% 8% 7% RPI 17% 9% BBB+ LTV 25.30% BBB OMRV 9% BBB- Fixed Uplifts Vacancy 2.99% BB+ 15% 6% BB- TO BB B- TO B+ Total expense ratio 1.26% 9% 23% CC 85% Management fees 0.9% of NAV * Assessed by Coface as at September 2018 and represents 60% of portfolio income 7 7 Focused on the Future of Real Estate
SECTION 3 AEW UK REIT PERFORMANCE 8 Focused on the Future of Real Estate
AEW UK REIT PLC – COMPANY PERFORMANCE Share price, total return and dividends paid 130 2.5 Over 12 months to December 120 2018, AEWU has out 2 performed the MSCI/IPD Total Pence per Quarter 110 1.5 RETURN Benchmark by 5.48% Index value 100 1 90 Highest yielding dividend in Change of accounting period 0.5 80 peer group 70 0 Out performance of EPRA UK EPRA UK Total Return AEWU Total Return AEWU Dividend Paid (RHS) Annualised NAV movement + dividend paid 14.0 12.0 11.5 10.6 10.0 10.0 9.9 9.8 9.7 8.9 8.0 8.1 7.1 6.8 6.0 5.9 5.6 5.2 4.6 4.0 2.0 0.6 0.0 -2.0 -4.0 -6.0 Dividend NAV Growth NAV Total Return Source: Bloomberg, *Total Return assumes dividend reinvested into the security 9 9 Focused on the Future of Real Estate
AEW UK REIT PLC – DIRECT ASSET LEVEL PERFORMANCE Annualised Direct Property Including Transaction Costs 12.0 11.0 10.5 10.4 10.0 10.1 9.6 On like for like direct 10.0 9.7 10.3 9.1 8.3 basis the portfolio 7.5 9.6 9.3 8.4 8.0 total return since 7.0 6.9 6.0 inception is 11.2% 6.0 5.6 6.7 6.2 4.4 4.6 4.6 4.0 3.6 Excluding transaction 2.0 costs the portfolio has 0.0 out performed the (2.0) MSCI benchmark year on year (4.0) (6.0) Initial property Annualised Direct Property Excluding Transaction Costs acquisition costs no longer dilutive 14.0 12.8 12.6 12.8 12.1 12.9 12.0 12.3 12.0 11.6 10.0 9.4 10.9 10.3 10.0 10.2 8.2 8.9 9.5 9.3 8.0 7.0 6.9 6.0 5.5 6.0 4.2 4.6 4.0 3.5 2.0 0.0 (2.0) Source: MSCI 10 10 Focused on the Future of Real Estate
AEW UK REIT PERFORMANCE COMPARISON STRONG DIVIDEND YIELD 10.0 9.0 8.6 8.0 7.7 7.0 6.6 6.0 5.7 5.3 5.3 5.3 DIVIDEND YIELD % 5.0 5.0 4.6 4.2 4.0 4.0 3.0 2.0 1.0 0.0 AEW UK REIT Regional REIT Drum Income Custodian REIT Ediston Standard Life F&C UK Real F&C Schroder Real UK Commercial Picton Property Ord Ltd Plus REIT Ord Ord Property Investments Estate Commercial Estate Property REIT Income Limited Investment Property Investments Property Trust Investment Limited Company Income Trust Ltd Ltd Trust Source: Morningstar. As at 25 April 2019. Yield is based on most recent quarterly or monthly dividend. 11 11 Focused on the Future of Real Estate
SECTION 5 CASE STUDIES 12 Focused on the Future of Real Estate
INDICATIVE RECENT ACQUISITION PARKSIDE INDUSTRIAL ESTATE, LEEDS PROPERTY TYPE Industrial PROPERTY SIZE 187,794 sq ft ACQUIRED February 2019 CURRENT VALUE £7.0m PRICE PER SQ FT £38 TRIPLE NET YIELD 7.7% REVERSIONARY YIELD 8.0 % INVESTMENT ATTRIBUTES Attractive income yield Established industrial location with good motorway access. Low passing rent and shortage of supply, creates strong potential for future rental growth Fully let to LWS, a storage and logistics provider for Harrogate Spring Water, on a lease expiring in 2028 Purchase price in line with vacant possession values Long term redevelopment potential, subject to planning Source: AEW as at 31 March 2019 13 Focused on the Future of Real Estate
SIGNIFICANT RENTAL GROWTH FROM SECONDARY WAREHOUSING PARTICULARL Y FOR ASSETS WITH LOW PASSING RENTS AND IN AREAS WITH CONSTRAINED SUPPL Y UNIT 1005, SARUS COURT, RUNCORN APOLLO BUSINESS PARK, PAYCOCK ROAD, AEW UK REIT BASILDON weighting to low Passing rent at acquisition of £4.50 psf Passing rent of £4.60 psf rented industrial: Current passing rent £5.04 psf New letting completed - £7.00 psf Market rent - £5.50 psf 47% Rental uplift of 27% achieved Rental uplift of 22% expected over hold period DIAMOND BUSINESS PARK, THORNES MOOR ROAD, MAGHAM ROAD, ROTHERHAM WAKEFIELD AEW UK REIT industrial average passing rent: Passing rent at acquisition of £2.40 psf Average passing rent at acquisition of £2.50 psf £3.22 psf Renewal completed - £3.36 psf Average market rent- £3.30 psf Rental uplift of 40% achieved Rental uplift of 32% expected SARUS COURT, RUNCORN MAGHAM ROAD, ROTHERHAM APOLLO BUSINESS PARK, BASILDON DIAMOND BUSINESS PARK, WAKEFIELD Source : AEW, March 2019 14 Focused on the Future of Real Estate
INDICATIVE RECENT ACQUISITION GEDDINGTON ROAD, CORBY PROPERTY TYPE Industrial PROPERTY SIZE 35 Acres ACQUIRED February 2018 CURRENT VALUE £12.9m PRICE PER ACRE £350k TRIPLE NET YIELD 9.6% REVERSIONARY YIELD 7.0% INVESTMENT ATTRIBUTES Attractive income yield at circa 10% Long term redevelopment opportunities for warehousing or residential. Both uses adjoining. Vacant industrial land values in the region are circa £350,000 per acre Let to GEFCO UK Ltd, a global logistics specialist, for a further term of 2.5 years (Coface score of 6/10. Annual turnover in excess of £150m) Potential to add value in the short term via an extension of the current lease Source: AEW as at 31 March 2019 15 Focused on the Future of Real Estate
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