AEW UK Long Lease REIT announces capital raise

By Paul Norman - Monday, January 08, 2018 11:12

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AEW UK Long Lease REIT has announced plans to raise £35m by way of a placing, offer for subscription and intermediaries offer.

It raised £80.5m from institutional and retail investors at its IPO in June 2017 via an Initial Placing, Offer for Subscription and Intermediaries Offer, under a Share Issuance Programme of up to £300m.

At the time, the company stated its expectation to invest substantially all the net proceeds of the IPO within nine months of listing by investing in alternative and specialist real estate sectors in the UK to offer a secure, diversified and inflation-linked income return, while at least maintaining capital values in real terms. The company said today that £76m (which includes the acquisition costs) has now been deployed.

The company has also entered into a new £30m eight-year fixed loan (to 20 October 2025) with Canada Life Investments. The term facility is up to 35% loan to property value, provided on a portfolio basis.

AEW UK Investment Management has seven properties totalling circa £30m under offer on behalf of the company, which are expected to complete by the end of January 2018. Completing on these properties (including the acquisition costs) will result in full deployment of the net IPO proceeds, and £30m  drawn under the company's new loan facility.

In addition, the Investment Manager has a further pipeline of four properties totalling £16.3m under offer on behalf of the company in the leisure, pub and hotel sectors, which are expected to complete during February and March 2018. The Investment Manager is also engaged in active due diligence on a pipeline of assets in excess of £50m.

In light of the above pipeline of acquisitions, the company is now seeking to raise a target amount of £35m by way of a placing, offer for subscription and intermediaries offer under its Share Issuance Programme.

The amount of the Issue may be increased if the cirectors are satisfied that the net proceeds can be deployed with a view to minimising the effect of cash drag on the existing shares. In addition, the cirectors may reduce the size of the issue if the pipeline of investments changes prior to the closing of the issue. The directors expect the issue to close in early February 2018, subject to prevailing market conditions.

The net proceeds from the issue will be used to buy a diversified portfolio of long lease properties predominantly in alternative and specialist real estate sectors in line with the company's investment policy. Based on the pipeline of deals, the Investment Manager expects to place further assets under offer over the coming weeks with an expectation of fully investing the net proceeds of the Issue by the end of April 2018.

The company is targeting an annual dividend of 5.5p per share, paid quarterly, with effect from the financial year commencing 1 July 2018, with an ambition to grow this in line with UK inflation thereafter. New shares will not be eligible for the dividend payable in respect of the period from 1 October 2017 to 31 December 2017.

The price of the new shares to be issued pursuant to the Issue will be set by reference to the net asset value per share as at 31 December 2017 and the share price at the last practicable date prior to the publication of the Securities Note in relation to the Issue.

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