AEW UK talks up post-Brexit stability

Real estate investment trust AEW UK posted its unaudited interim report and financial statements for the six months to 31 October on Friday, with a net asset value of £118.05m and of 95.47p per share as at period end.

The AIM-traded firm posted operating profit before investment property and investment revaluations of £4.99m, and unadjusted profit before tax of £0.49m - or 0.42p per share - for the period.

Total dividends of 4p per share were declared for the six months.

AEW UK raised total gross proceeds of £6m during the period, and held a five year £40m term credit facility with the Royal Bank of Scotland International Limited.

The company, having utilised the facility to invest in properties, was geared to 19.6% of its gross asset value as at 31 October.

It held cash balances totalling £10.16m at period end, of which £7.33m was held for the purpose of capital acquisitions.

The firm's NAV Total Return for the period was 3.13%.

“The company's strategy is aligned to delivering strong relative returns for shareholders through the diversified and high income yielding property portfolio that has been established to date,” said chairman Mark Burton.

“This is further strengthened by active asset management initiatives to provide opportunities for further capital value enhancement and preservation.”

Burton said the board has now seen two valuation dates since the EU referendum result in June, and was encouraged by how the value of the portfolio has stabilised and by its resilience to market uncertainty.

“In the period between May [and] July the portfolio valuation fell by 1.81%.

“In comparison, the capital values of direct properties as measured by MSCI fell by 3% over the same period.”

Since July, Burton said the company’s valuers removed their caveat reflecting a lack of post-Brexit transactional evidence from its valuations and applied a modest level of post-Brexit capital growth of 0.33% in the period between August and October.

“This compares favourably to a fall of 0.8% in capital values of direct properties as measured by MSCI over the same three-month period.”

“There has been a varying range of views amongst market commentators evaluating the potential impacts of the recent EU referendum result on the UK economy, which in turn has caused great market volatility.”

Burton said that although that outcome represented an initial shock to the financial markets, intervention by the Bank of England and government action somewhat stabilised the event.

“The board and investment manager are confident that opportunities available to the company will continue to present themselves to enable the company to execute the strategy successfully to deliver profitable growth.”