AEW UK Long Lease REIT plc (LSE: AEWL) (the “Company”) has announced its Net Asset Value for the period ended 30 September 2017.
Net Asset Value
The Company’s unaudited NAV as at 30 September 2017 was £77.69 million, or 96.51 pence per share. This is the first NAV announcement since launch on 6 June 2017. As at 30 September 2017, the Company owned three investment properties with a Fair Value of £17.72 million and the Company had cash balances of £60.21 million.
The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards and incorporates the independent portfolio valuation as at 30 September 2017 and net expense for the period but does not include a provision for the first interim dividend, which will be paid in November 2017.
Dividend
The Company announces an interim dividend of 0.50 pps for the period from the inception of the Company to 30 September 2017. The dividend payment will be made on 30 November 2017 to shareholders on the register as at 10 November 2017. The ex-dividend date will be 9 November 2017.
The dividend of 0.50 pps will be designated 0.50 pps as an interim ordinary dividend (‘non-PID’)
Portfolio activity
The Company acquired its first property, Princes Street, Swindon on 6 September 2017. Purchased for £6.3 million and providing a 5.5% net initial yield, the property comprises a Travelodge Hotel and Salvation Army retail store. The lease to Travelodge, which accounts for 95% of the income stream, provides a weighted average unexpired lease term (“WAULT”) of 23 years to expiry, with 5 yearly rental uplifts linked to RPI. This property has an ERV of £388,358 and a reversionary yield of 5.8%.
The Company acquired its second property, the Premier Inn Hotel at 12-16 Park Street, Camberley on 15 September 2017. Purchased for £8.5 million with a 5.0% net initial yield, the hotel is fully let to Premier Inn and provides an unexpired lease term of 15 years to break and 20 years to expiry, with five yearly CPI-linked reviews. This property has an ERV of £448,767 and a reversionary yield of 5.0%.
The acquisition of Wet ‘n’ Wild Water Park in Royal Quays, Newcastle-upon-Tyne completed on 22 September 2017 for a purchase price of £2.9 million. This property comprises a purpose built indoor water park totalling 37,131, sq ft and is let to Serco Leisure Operating Ltd, a wholly owned subsidiary of Serco Plc, for an unexpired term of 22 years, with annual rental uplifts linked to RPI. The acquisition reflects a net initial yield of 6.1%, has an ERV of £187,960 and a reversionary yield of 6.05%.
All purchase prices are net of acquisition costs.
Post quarter end activity
The Company made three further acquisitions during October 2017.
212 Wandsworth Road, London was purchased on 11 October 2017 for £4.4m. The property, which is fully let to Pure Gym Limited at a low passing rent of £11.60 per sq ft, provides an unexpired lease term of 10.2 years to break and 15.1 years to expiry, with five yearly RPI linked reviews. The acquisition price reflects a net initial yield of 5.1%. The property, constructed in 2012, is situated within close proximity to the new Nine Elms Northern Line London Underground station which is planned to open in 2020.
Pocket Nook Industrial Estate, St Helens was purchased on 25 October 2017 for £9.0m. The 16.1 acre site is let to three tenants and provides a weighted average unexpired lease term of 66 years to expiry, with 49% of the income let to Biffa Waste Services Ltd until 2134. The acquisition price reflects a net initial yield of 5.4%. The estate comprises two industrial units, a small office with a large yard and an area of storage land, with an additional unit currently under construction by the vendor and pre-let to Biffa. 76% of the income is backed by the strong covenants of Biffa and the Driving Standards Agency on uncapped RPI linked leases that are reviewed 5 yearly. The Merseyside site is located 0.8 miles away from St Helens town centre and benefits from its proximity to the M57, M6 and M62.
The Company acquired two residential care home properties in the West Midlands and East Riding for £10.3m on 30 October 2017. Both were acquired from 90 North Real Estate Partners LLP (“90 North”) and are let to Prime Life Limited, a care services provider operating a total of 57 care homes, based mainly in Lincolnshire and the East Midlands.
The Lyndon Croft Care Centre, located on Ulleries Road, Solihull, was acquired for £6.2m. It provides 52 beds for those with needs associated to old age and dementia. The property provides an unexpired lease term of 31 years. The acquisition price reflects a net initial yield of 5.5%.
Westerlands Care Village, located on Elloughton Road, Brough, was purchased for £4.1m and comprises 62 beds in two adjacent homes. Elloughton House provides residential and nursing care as well as care of those with dementia needs. Brough House provides specialist memory care for high dependency residents. The acquisition price reflects a net initial yield of 6.0% and the properties have an unexpired lease term of 31 years.
These transactions increase the total amount invested by AEW UK Long Lease REIT plc since June to £41m. In addition to this, the Investment Manager has a further four assets under offer and expects to make additional announcements in the coming weeks.
The Company will publish the unaudited half yearly report for the period ended 31 December 2017 during February 2018.
The Company entered the REIT regime with effect from 13 October 2017 following the submission of the application to HM Revenue & Customs.
Portfolio Manager’s comment
Alex Short, of AEW UK Investment Management LLP, the Company’s Investment Manager, commented “We are pleased to have now completed six acquisitions for the Company and are working in line with our proposed timetable as set out to investors prior to the Company’s launch. The Company is currently under offer on, or is actively pursuing, a varied pipeline of interesting transactions across a range of geographical locations and sectors, both alternative and traditional, that will create a diversified portfolio of long, inflation linked income in line with our strategy. Across the group of assets that are currently under offer the average weighted unexpired lease term is greater than 25 years with over 85% of the income linked to inflation and in all cases, the expected investment value paid is well underpinned by our assessment of alternative use or vacant possession value. With this pipeline in mind, the Company expects to be able to make further announcements over the coming weeks.