Aew Uk Reit Regulatory News (AEWU)

NAV Update and Dividend Declaration for the period 1 February 2016 to 30 April 2016

31 May 2016

AEW UK REIT plc (LSE: AEWU) (the "Company") announces its unaudited Net Asset Value ("NAV") and interim dividend for the period ended 30 April 2016.

Highlights

· 3 Properties acquired during the period for total of £9.0 million (net of acquisition costs).

· Fair value independent valuation of the property portfolio as at 30 April 2016 of £114.34 million. Acquisition costs of £5.25 million on new property purchases have been written off. The valuation of the property portfolio on a like for like basis compared with 31 January 2016 has increased by 1.90%.

· AEW UK Core Property Fund valuation of £10.11 million (31 January 2016: £10.01 million).

· As at 30 April 2016, the Company had a cash balance of £4.94 million remaining of the £17.18 million gross proceeds raised during the December 2015 share issue.

· Second interim dividend of 0.75 pence per share ('pps') declared on 3 December 2015, paid on 31 March 2016.

· Third interim dividend of 1.25 pps declared on 29 February 2016, paid on 31 March 2016.

· NAV per share at 30 April 2016 of 99.03 pence (31 January 2016: 97.67 pence).

· Earnings per share (excluding revaluation gains and losses on fair value of investments and calculated on weighted average of shares in issue) for the 3 month period ending 30 April 2016 are 2.54 pence per share.

· Subsequent to the period end, the Company has acquired a further 2 properties for a total of £13.2 million (net of acquisition costs). These properties have been financed using the balance of the available cash and a drawdown on the Company's loan facility with RBS International.

Net Asset Value

The Company's unaudited NAV as at 30 April 2016 was £116.38 million, or 99.03 pence per share. This reflects an increase of 1.39% per share compared with the NAV as at 31 January 2016, or a NAV total return, including the second interim dividend of 0.75 pps for the period from 1 November 2015 to 14 December 2015 and the third interim dividend of 1.25 pps for the period from 15 December 2015 to 31 January 2016, of 3.33%. As at 30 April 2016, the Company owned investment properties with a fair value of £114.34 million. The Company's investment in AEW UK Core Property Fund is valued at £10.11 million and the Company had cash balances of £4.94 million for capital investment.

*On a weighted average basis, based on the number of shares in issue as at 30/04/2016: second interim dividend of 0.75 pps declared on 3 December 2015 was paid to shareholders on the register as at close of business on 11 December 2015, prior to the issue of an additional 17.01m shares on 15 December 2015.

The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards and incorporates the independent portfolio valuation as at 30 April 2016 and income for the period but does not include a provision for the interim dividend, which will be paid on 30 June 2016.

Dividend

The Company announces today an interim dividend of 2.0 pps for the period from 1 February 2016 to 30 April 2016. The dividend payment will be made on 30 June 2016 to shareholders on the register as at 10 June 2016. The ex-dividend date will be 9 June 2016. The proposed dividend will be fully covered from the income earned for the period.

The dividend of 2.0 pps will be designated 2.0 pps as an interim property income distribution ('PID')

Financing

Equity

The Company's issued share capital consists of 117,510,000 Shares.

Debt

As at 30 April 2016, the Company has utilised £14.25 million of its £40 million facility with RBS International. Gearing as at 30 April 2016 is 12.5% (Loan to market value of the property portfolio). The loan attracts interest at LIBOR + 1.4%. To mitigate the interest rate risk that arises as a result of entering into a variable rate linked loan, the Company entered into an interest rate cap on £14.25 million of the loan at a strike rate of 2.5% on 4 March 2016 for 5 years.

Portfolio activity

During the 3 month period ending 30 April 2016, the Company has acquired a further 3 properties for a total of £9.0 million (net of acquisition costs) and with a weighted net initial yield of 9.1% as described below:

A portfolio of three single-let industrial warehouses located in Basingstoke, Rotherham and St Helen's comprising approximately 232,523 sq ft was purchased for £9.0 million (net of acquisition costs). The properties are fully let to Wella (UK) Holdings Ltd, Sapa Components UK Ltd and Kverneland Group UK Ltd respectively. The portfolio provides a WAULT of c.5 years to break and 6 years to expiry. The portfolio reflects a net initial yield of 9.0%, reversionary yield of 9.6% and a capital value of £39 per sq ft overall.

The sector weighting, by value, of the direct investment portfolio as at 30 April 2016 was 31.91% offices, 29.67% retail, 33.48% industrial and 4.94% other.

Notable recent asset management gains include the letting of 46,513 sq ft at the Valley Retail Park in Belfast to outdoor retailer GO Outdoors for a term of 20 years. The letting was completed in February simultaneously with the surrender of an existing lease over the space to former tenant Harvey Norman from which the Company received a surrender premium of £1m. The new letting forms a key element of the Company's plan to reposition the Park following acquisition in August last year and has also provided a catalyst for further lettings with an additional 21,560 sq ft of vacant accommodation completed to national retailer Smyths Toys who trade from over 60 stores across the UK.

Post quarter end activity

The Company made a further 2 acquisitions during May 2016 totalling £13.2 million (net of acquisition costs).

Nottingham, acquired for £8.15m, is located on Wheeler Gate with frontage to Old Market Square within the retailing core of the City Centre. The property provides a total of 71,260 sq ft and is let to 6 retail tenants and 9 office tenants including Poundland, Costa and Lakeland providing a WAULT of approximately 4.5 years to break and 5.2 years to expiry. The acquisition provides an initial yield of 9.0%, a reversionary yield of 9.9% and a capital value per sq ft of £114.

Blackpool, acquired for £5.05m, is prominently located directly adjacent to the famous Blackpool Tower. The property extends to 100,079 sq ft and provides 3 retail units at ground floor and basement let to Poundland, Sports Direct and J D Wetherspoons providing a WAULT of approximately 7.5 years to break and 10 years to expiry. The upper floors of the property are currently vacant and have been de-listed for rating purposes but provide strong potential for alternative uses which the Company is currently investigating. The acquisition provides an initial yield of 9.5%, a reversionary yield of 8.4% and a capital value per sq ft of £50.

Taking into account the above acquisition, the sector weighting by value of the direct investment portfolio as at 31 May 2016 was 28.61% offices, 36.95% retail, 30.01% industrial and 4.43% other. As at the same date, the Company has utilised £26.5 million of the facility, with gearing of 20.0% of Gross Asset Value at drawdown.

The Company completed an amendment of its existing £40 million 5 year term loan facility with RBS International on the 18 May 2016. The terms of the facility limit have increased from 20% to 30% of NAV measured at drawdown. This will enable the Company to utilise the facility up to an amount calculated as the equivalent of 25% of the Gross Asset Value (measured at drawdown).

The Board notes, however, that the maximum gearing limit and anticipated level of total borrowing for the Company remain as set out in the Prospectus dated 23 April 2015:

"The Company intends to utilise borrowings to enhance returns over the medium term. Borrowings will be utilised on a limited recourse basis for each investment or all or part of the total Portfolio and will not exceed 25 per cent. of Gross Asset Value (measured at drawdown) of each investment or Portfolio. It is currently anticipated that the level of total borrowings will typically be at the level of 20 per cent. of Gross Asset Value (measured at drawdown)."

Portfolio Manager's comment

We are delighted to announce that the Company has now fully invested its equity and is also geared at 20.0% Gross Asset Value. The Company's portfolio represents a well-balanced and diversified range of UK commercial property in line with its investment strategy and provides the Company with the ability to pay an 8p annual dividend which is fully covered by income. The past quarter has also provided us with some very profitable asset management transactions. Aside from this, we continue to see an attractive pipeline of assets across all sectors.