AEW UK REIT has warned of the effect of a “fragile economic backdrop” on occupational markets, hoarding cash even as it posts rising valuations across parts of its portfolio.
In a stock exchange update covering the three months to 31 March, the REIT said NAV dipped to £162.7m from £164m at the start of the year, with a 0.41% valuation lift to £210.7m and a NAV total return of 1.16%.
Offices posted a valuation fall but were offset by rises from industrial and retail warehouse assets. The sole deal during the quarter was the £2.2m sale of the Pricebusters Building in Blackpool.
Assistant portfolio manager Henry Butt said: “We are pleased to report higher earnings this quarter, buoyed by the invoicing of Sports Direct’s annual turnover rent at Central Six Retail Park, Coventry. After adjusting for this, earnings are consistent with prior quarters, demonstrating that the company’s programme of ongoing asset management initiatives continue to sustain income streams and mitigate void costs. Earnings have also been bolstered by numerous rent reviews settled during the quarter, several new lettings and a lease regear, most notably at the company’s retail warehousing asset in Coventry.”
Butt added: “The company remains cognisant of the fragile economic backdrop and its cumulative effect on occupational markets and, as a result, retains a cautious cash holding, amounting to £11.4m at quarter end, much of which is held in an interest-bearing bank account. These funds, as well as sales proceeds from the disposal of the Pricebusters Building, have been committed to future asset management initiatives, which continue to progress well and are advancing their related property valuations.”
Photo by Latsalomao/iStock
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