AEW UK REIT plc (LSE:AEWU) reported a net asset value (NAV) of £170.50 million, equivalent to 107.45 pence per share, for the quarter ended 30 September 2026, compared with £171.05 million, or 107.80 pence per share, at the end of June.
The commercial property investment company delivered a quarterly NAV total return of 1.53%, including dividends, despite a 0.09% like-for-like decline in its property portfolio valuation.
AEW UK REIT also declared an interim dividend of 2.00 pence per share, maintaining its quarterly distribution for the 44th consecutive quarter. The dividend is consistent with the company’s annual target of 8.00 pence per share.
The company’s portfolio of 33 UK commercial properties was independently valued at £214.02 million at the quarter-end, with valuation gains in retail warehousing and high street retail offset by declines in offices and leisure properties.
Net Asset Value Declines 0.32% During Quarter
AEW UK REIT reported an unaudited NAV of 107.45 pence per share at 30 September 2026, representing a decline of 0.32% from 107.80 pence at 30 June.
Total NAV decreased by £550,000 to £170.50 million.
The quarterly movement reflected property valuation changes, income generation, operating expenses, financing costs and the payment of the previous quarterly dividend.
The company recorded £4.73 million of income during the period, alongside £2.00 million of expenses and net finance costs.
Property valuation movements reduced NAV by £850,000, while changes in the value of derivatives added approximately £420,000.
The company also recognised a £410,000 gain on the sale of investments.
An interim dividend payment of £3.17 million was reflected in the quarterly NAV calculation.
Including the dividend, the company reported a NAV total return of 1.53%, compared with 1.31% in the preceding quarter.
Quarterly Dividend Maintained at 2 Pence Per Share
AEW UK REIT declared an interim dividend of 2.00 pence per share for the three months ended 30 September 2026.
The distribution represents the company’s 44th consecutive quarterly dividend at that level.
The dividend will be paid on 4 December 2026 to shareholders on the register at 6 November 2026.
The ex-dividend date is 5 November 2026.
Shareholders participating in the company’s Dividend Reinvestment Plan must make their election by 13 November 2026.
The entire distribution will be designated as a property income distribution.
AEW UK REIT continues to target an annual dividend of 8.00 pence per share, equivalent to a dividend yield of approximately 7.8% based on the share price at 30 September 2026.
The company said future dividends will remain subject to its financial circumstances and the distribution requirements applicable to UK real estate investment trusts.
Property Portfolio Valued at £214 Million
AEW UK REIT’s 33-property portfolio was valued at £214.02 million at the end of September, according to an independent assessment by CBRE.
The portfolio recorded a like-for-like valuation decline of £190,000, equivalent to 0.09%, during the quarter.
The performance varied across property sectors.
Industrial assets, representing 37.41% of the portfolio, were valued at £80.06 million and recorded a marginal decline of 0.01%.
High street retail properties increased in value by 1.01% to £44.70 million, while retail warehouses recorded a 1.97% increase to £30.87 million.
Office properties declined by 2.93% to £22.54 million.
The remaining assets, including leisure properties, a gym and a mixed-use car park, declined by 1.48% to £35.85 million.
Over the same quarter, the CBRE UK Index recorded a capital value decline of 0.9%.
Retail Warehousing and High Street Assets Record Valuation Gains
Retail warehousing was the portfolio’s largest source of valuation growth during the quarter.
The sector recorded a £600,000 like-for-like increase, equivalent to 1.97%.
Valuation gains were reported at Arrow Retail Park in Shrewsbury and The Railway Centre in Dewsbury, reflecting changes in estimated rental values following leasing activity.
AEW UK REIT said three transactions involving these properties had progressed to the legal documentation stage and were expected to complete over subsequent quarters.
High street retail assets recorded a £450,000 valuation increase, equivalent to 1.01%.
The company reported valuation gains at Northgate House in Bath and Above Bar Street in Southampton, reflecting leasing activity and reductions in anticipated landlord capital expenditure.
At Northgate House, AEW UK REIT completed a new letting of 28 High Street to Loake Brothers Limited.
The 10-year lease carries annual rent of £65,000, compared with an estimated rental value of £50,000, and includes a tenant break option after five years.
Office Portfolio Records 2.93% Valuation Decline
AEW UK REIT’s office properties recorded a £680,000 valuation reduction during the quarter.
The decline was entirely attributable to Queen Square in Bristol.
The company said the movement reflected planned refurbishment work involving 4,589 square feet of space and the continuing development of a managed office offering operated by IWG.
The managed office space was approximately 31% occupied at the reporting date.
The portfolio manager expects occupancy to reach 80% by the third year of operation, although this remains a projection.
At that occupancy level, management anticipates annual revenue above the property’s current estimated rental value of £418,500.
Office properties represented 10.53% of the company’s total portfolio valuation at 30 September.
The sector’s net initial yield was 5.32%, while its reversionary yield was 12.15%.
Cardiff Leisure Property Sold for £1.475 Million
During the quarter, AEW UK REIT completed the sale of the Circuit nightclub property on Greyfriars Road in Cardiff.
The disposal, completed on 23 July 2026, generated proceeds of £1.475 million.
The sale price represented a premium of approximately 42% to the property’s valuation of £1.035 million at 31 March 2026.
The property had originally been acquired in February 2022 for £3.625 million.
AEW UK REIT said the disposal reflected conditions affecting the nightclub sector, including changes in consumer spending, rising operating costs and lease arrangements.
Following the transaction, the tenant served notice to terminate its lease in August 2027.
The company continues to evaluate its leisure holdings as part of its wider asset management and capital recycling strategy.
Industrial Redevelopment Plans Advance at Basildon
AEW UK REIT received planning consent in September for the redevelopment of Apollo Business Park in Basildon.
The proposal involves demolishing the existing 68,813-square-foot buildings and constructing a new warehouse extending to 58,588 square feet.
The planned development includes a 12.5-metre internal eaves height, an EPC A+ rating and a 40-metre-deep service yard.
The existing buildings are occupied by two remaining tenants whose leases expire in March 2027.
Together, the tenants currently generate annual rent of £257,720.
The portfolio manager intends to pursue a sale of the site to a developer following the planning approval.
The company has not disclosed an expected disposal price or completion timetable.
Further Asset Management Transactions Completed
AEW UK REIT reported several additional leasing and rent review transactions during the quarter.
At North Moons Industrial Estate in Redditch, the annual rent payable by Carrs Coatings increased by approximately 2.5% to £327,621 following an inflation-linked review.
At Westlands Distribution Park in Weston-super-Mare, the company completed a three-year letting of Plot 7B to North Somerset Environment Company at £25,000 per annum.
A separate lease renewal with Ford Fuels was completed at £35,000 per annum.
At London East Leisure Park in Dagenham, Hollywood Bowl’s turnover rent was confirmed at £122,720, in addition to contracted annual rent of £287,922.
These transactions form part of the company’s ongoing programme to manage occupancy, rental income and property values.
York Car Park Included in NCP Acquisition
AEW UK REIT confirmed that the Tanner Row car park in York was included in Martin Property Group’s acquisition of the NCP business and 93 sites from administration.
The acquisition took place after the reporting period.
The property remained operational during NCP’s administration, with rental payments continuing on a monthly basis.
NCP pays annual rent of £733,057 at Tanner Row, representing approximately 4.1% of AEW UK REIT’s total contracted rental income.
The property was acquired in July 2023 for £10.02 million.
AEW UK REIT said the site’s valuation remained unchanged during the September quarter.
The centrally located property occupies approximately 0.8 acres within York’s city walls and has potential for alternative uses.
Borrowing Ratio Remains at 25.42%
AEW UK REIT reported a loan-to-gross-asset-value ratio of 25.42% at 30 September 2026, compared with 25.33% at the end of June.
The company has a £60 million loan facility with AgFe, which was fully drawn at the reporting date.
The facility carries a fixed interest cost of 2.959% until July 2027.
AEW UK REIT said it remained within its borrowing covenants, including a maximum loan-to-value ratio of 60% for the secured property portfolio.
According to the company, the valuation of properties securing the loan would need to decline by approximately 52.86% before the loan-to-value covenant was breached.
Management has begun discussions with potential lenders, including AgFe, ahead of the facility’s expiry in July 2027.
Interest Rate Cap Provides Partial Refinancing Protection
AEW UK REIT has acquired an interest rate cap covering £30 million of borrowings, equivalent to half of its current debt.
The arrangement will operate from 20 July 2027 to 20 July 2030.
It limits the SONIA reference rate on the covered borrowings to a maximum of 4.064% during that period.
The company paid a one-off premium of £638,000 for the arrangement.
During the September quarter, the derivative recorded a positive fair value movement of approximately £422,500, contributing to the company’s NAV.
The interest rate cap is intended to reduce exposure to higher reference rates when the existing fixed-rate borrowing facility expires.
The company has not announced the terms of any replacement borrowing facility.
Share Price Trades at Discount to NAV
AEW UK REIT’s shares closed at 103.00 pence on 30 September 2026, compared with 104.40 pence at the end of June.
The quarter-end share price represented a 4.18% discount to NAV per share.
Including the quarterly dividend, shareholder total return was 0.57%, compared with 7.47% in the preceding quarter.
The company subsequently reported a closing share price of 104.40 pence on 27 October 2026.
At that level, the discount to the September NAV narrowed to approximately 2.84%.
The share price figures reflect the dates specified in the company’s announcement and do not represent current market quotations.
Portfolio Manager Comments on Quarterly Performance
Laura Elkin, Portfolio Manager of AEW UK REIT, said the portfolio’s valuation had declined during the quarter but remained positive over the first half of the financial year.
She noted that retail warehousing and high street retail contributed valuation gains, while the company continued to pursue asset management opportunities across its holdings.
Elkin also identified potential acquisitions as part of the company’s investment strategy.
The manager intends to pursue capital recycling, selling properties where it considers value has been realised and reinvesting proceeds into assets expected to contribute to earnings.
The company is also continuing to examine opportunities to expand its equity base where the board considers this appropriate for shareholders.
Outlook and Investment Strategy
AEW UK REIT intends to continue managing its commercial property portfolio through leasing activity, rent reviews, refurbishment projects and selective disposals.
The company is assessing potential acquisitions across several property sectors, with capital recycling expected to remain part of its investment approach.
Management is also preparing for the refinancing of its £60 million borrowing facility in July 2027.
The company continues to target an annual dividend of 8.00 pence per share, subject to financial conditions and its distribution policy.
Future portfolio returns will depend on rental income, property valuations, financing costs and the outcome of planned asset management transactions.
More About AEW UK REIT
AEW UK REIT plc is a London-listed real estate investment trust that invests in a diversified portfolio of UK commercial properties.
The company owns assets across industrial, retail warehousing, high street retail, office and other commercial property sectors.
Its investment strategy focuses on generating rental income and managing property assets to support shareholder distributions and capital returns.
The portfolio comprised 33 properties with a combined valuation of £214.02 million at 30 September 2026.
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