AEW UK REIT profit halves but NAV steady amid falling property values

(Alliance News) - AEW UK REIT PLC on Friday said interim profit and revenue fell due to a swing to a loss from in the fair value of investment properties.

The London-based real estate investment trust said pretax profit for the six months ended September 30 sank 72% to GBP4.7 million from GBP16.6 million.

This was driven by a swing to a loss in the fair value of investment properties of GBP1.5 million, from a gain of GBP7.0 million the year before.

Further hurting the bottom line, there was a realised loss on disposal of investment properties of GBP21,000, swinging from a gain of GBP1.5 million.

Revenue fell 21% to GBP8.4 million from GBP10.4 million.

Net asset value stood at 109.09 pence per share on September 30, which was largely flat compared to 109.05p on the same day a year ago. When compared to March 31, NAV per share was down 0.9% from 110.11p.

AEW UK said it will continue to pay a quarterly dividend of 2p per share, which it noted "it has done now for 40 consecutive quarters".

Industrial comprises the largest part of the company's property portfolio at 37%, a segment in which the company said "investors are facing challenging conditions [in] due to ongoing geopolitical uncertainty."

Retail is the company's second biggest division, which it said "presented a mixed bag of messages", with "strong trading" in April followed by a downturn in May.

"The retail investment markets remain constrained by a lack of stock, primarily driven by ongoing geopolitical uncertainty rather than negative sentiment," said the company.

The company noted its Office division continued to struggle in the first half. Transaction volumes totalled GBP373.5 million - a figure 25% lower than at the same point in 2024.

Looking ahead, AEW UK said it "has conviction in UK commercial real estate market buying opportunities", pointing to UK property valuations being at their lowest in 10 years.

"With a proven track record of stock selection, the investment manager expects that any acquisitions made in the near-term would yield strong performance and shareholder returns in the future," the company added.

Chair Robin Archibald said: "As a result, the board is actively considering ways to scale the strategy and capitalise on AEWU's proven track record of value creation through careful stock selection and disciplined asset management."

Shares in AEW UK REIT were up 1.0% at 105.39p on Friday afternoon in London.

By Roya Shahidi, Alliance News reporter

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