AEW UK REIT plc
Annual Report and
Financial Statements
for the year ended 31 March 2025
AEW UK REIT plc (“AEWU”) invests in and
actively asset manages a value-focused
portfolio of high-yielding commercial
properties across the UK.
The Company has delivered market-
leading property and NAV total returns*,
outperforming both the MSCI UK property
index and UK diversified REIT peers.
* During the year, the Company won the MSCI listed funds category for delivering the highest three-year annualised property total return to
31 December 2023. AEWU also won the Citywire award for the fifth consecutive year for achieving the highest annualised three-year NAV total
return of any UK listed property investment trust.
Contents
Strategic Report
3 Performance Summary
5 Strategy Commentary
8 Chairman’s Statement
11 Key Performance Indicators
15 Investment Manager’s Report
19 Property Portfolio
36 Principal Risks and Uncertainties
44 AIFM Statement
46 Stakeholder Engagement
Governance
51 Board of Directors
53 Corporate Governance Statement
61 Report of the Audit and Risk Committee
65 Directors’ Remuneration Report
71 Directors’ Report
91 Statement of Directors’ Responsibilities
92 Independent Auditor’s Report
Financial Statements
103 Statement of Comprehensive Income
104 Statement of Changes in Equity
105 Statement of Financial Position
106 Statement of Cash Flows
107 Notes to the Financial Statements
Additional Information
135 EPRA Unaudited Performance Measures
140 EPRA Sustainability Performance Measures
153 Company Information
155 Glossary
Strategic
Report
Bristol, 40 Queen Square
Strategic Report Governance Financial Statements Additional Information
Performance Summary
14.8% 15.3% 28.7%
8.0 pps
DIVIDEND
PAID
112.5%
EARNINGS
DIVIDEND COVER
NAV TOTAL
RETURN
SHAREHOLDER
TOTAL RETURN
PROPERTY
TOTAL RETURN
Alternative performance measures are defined on pages 11 to 14.
3
The Board and Investment Manager are pleased
to report strong performance for the year,
demonstrating the effectiveness of our strategy
and continued commitment to enhancing
shareholder value through active management.
We delivered annual NAV growth of 7.2%
and a covered dividend despite a subdued
property market backdrop, demonstrating our
active strategy’s resilience across different
market cycles.
Our proactive style drove income and minimised
void costs, while our tenant base exhibited
robust occupational performance amid ongoing
economic challenges.
We remain committed to delivering sustained
returns, as reflected in our quarterly dividend
of 2.0 pence per share, paid consistently for
38 consecutive quarters, as part of a shareholder
total return of 28.7% for the year.
Strategic Report Governance Financial Statements Additional Information
4
Strategy
Commentary
AEWU invests in and actively asset
manages a value-focused portfolio
of high-yielding commercial
properties across the UK.
The Company capitalises on
value opportunities that arise from
pricing inefficiencies in the sector.
The AEWU team have proven
their expertise in identifying these
opportunities throughout market
cycles over a 10-year period.
These mispriced opportunities
present significant potential for
income growth and value creation
through active asset management,
as evidenced by the Company's
market leading returns.
We believe that a true value
strategy is best enacted without
sector constraint. AEWU seeks
value across the entire UK
commercial property universe and
analyses investment opportunities
based on their individual merits.
Investment Criteria
We typically target properties that meet the
following criteria:
Net Initial Yields: We seek net initial yields
at purchase ranging between 7% and 10%, in
order to maintain a high level of income across
the portfolio.
Rental Growth Potential: We focus on
properties with low passing rents, which
present opportunities for income growth.
Value Investment Style: We prioritise the
acquisition of assets with low capital values at
purchase when compared to their alternative
use and vacant possession values. This
provides optionality in business plans and
protects investors’ capital throughout market
cycles.
Lot Size: We typically invest in assets at
purchase prices under £20 million as we
find less competitive appetite in this lot size
category leads to a greater propensity for
mispricing.
Strong Commercial Locations: We focus
on strong commercial locations, enabling us
to leverage tenant demand and enhance the
overall performance of our portfolio.
55
Active Asset Management
Once acquired, we employ a proactive asset
management strategy that focuses on:
Growing Income Streams: Enhancing rental
income through a dynamic approach to lease
events and expert knowledge of markets.
Extending and Improving Tenant Leases:
Negotiating longer leases and improved terms
to secure stable income.
Adding Value through Planning: Utilising the
planning system to enhance property value.
Refurbishing Properties: Undertaking
refurbishments where necessary to maintain
competitiveness and appeal of the property.
Enhancing ESG Credentials: Improving the
environmental, social, and governance (ESG)
standards of our properties.
Outcomes of Our Strategy
This comprehensive approach enables us to
achieve the following:
Maximise Income
We have consistently paid a quarterly dividend
of 2 pence per share since Q1 2016, currently
delivering one of the highest dividend yields in
the UK commercial property sector.
Unlock Capital Upside
Annualised total property return of 11.2% over
the five years ending 31 March 2025.
Outperformance of the MSCI benchmark by
7.7% over the same period.
Since inception, we have achieved an average
sale price premium of 38% over purchase price
from 20 asset sales, crystallising significant
profits for shareholders.
At times when the dividend is not fully covered
by EPRA earnings, the Company supplements
its net earnings by distributable reserves
derived from capital profits on property
disposals.
Bath, Northgate House
Strategic Report Governance Financial Statements Additional Information
6
125
120
115
110
105
100
95
90
85
NAV (PPS)
NAV as at
1 April 2024
Portfolio
acquisition
costs
Loss on sale of
investments
Capital
expenditure
Valuation
changes
in property
portfolio
Income earned
for the period
Expenses for
the period
Dividend
paid
NAV as at
31 March 2025
102.73
(1.77)
8.58
110.11
13.10
(8.00)
(4.09)
(0.03)
(0.41)
ATTRIBUTION ANALYSIS OF FINANCIAL RESULTS
The Company’s NAV as at March 2025 was £174.44 million or 110.11 pps (31 March 2024: £162.75 million or
102.73 pps). This represents an increase of 7.38 pps or 7.18% over the 12-month period, with the underlying
movement in NAV set out in the chart below:
FINANCING
As at 31 March 2025, the Company has a £60.00 million loan Facility with AgFe, in place until May 2027, the
details of which are presented below:
31 MARCH 2025 31 MARCH 2024
Facility £60.00 million £60.00 million
Drawn £60.00 million £60.00 million
Gearing (Loan to GAV) 25.01% 28.97%
Gearing (Loan to NAV) 34.40% 36.87%
Interest rate 2.959%
fixed
2.959%
fixed
Notional Value of Loan Balance Hedged N/A N/A
Shares in Issue 158,774,746* 158,774,746*
* including 350,000 treasury shares
7
Chairman’s Statement
OVERVIEW
During the year, the Company has continued its strong run of
performance, despite a challenging economic backdrop. Since its
inception ten years ago, the Company has consistently paid annualised
dividends of 8p per share and realised significant capital profits.
Earnings from the portfolio have also grown each year for the past three
years. This demonstrates how AEWU can deliver strong returns, using
its value-focused and sector-agnostic approach to acquire mispriced
assets throughout varying market conditions.
The investment style of the Company is articulated on page 5. Key to its
success has been active management of the portfolio and to maximise
both income and capital returns. In the current market environment,
the Manager believes that a significant number of attractively priced
opportunities could be pursued, should the Company have more
available cash to deploy, a subject which the Board is actively
considering.
Robin Archibald
Chairman
Strategic Report Governance Financial Statements Additional Information
8
Investment and share
price performance
The statistics on page 3 demonstrate a strong financial
return for the year to 31 March 2025. Shareholder total
return of 28.7% (2024: 1.9% and 121.7% since inception
on an annualised basis) and net asset value total return
of 15.3% (2024: 5.0% and 136.1% since inception) show
both strong portfolio performance and a significant
re-rating of the Company’s share price during the year.
AEW UK REIT plc Property Performance vs.
Benchmark for 12 months to 31 March 2025
Source: MSCI 31 March 2025
* the Benchmark refers to MSCI/AREF PFI
Balanced Funds Quarterly Property Index
20
18
16
14
12
10
8
6
4
2
0
%
AEW UK REIT
Benchmark*
Capital Growth Income Return Total Return
With a property total return of 14.8% (2024: 6.7% and
annualised 8.5% since inception) the significant benefit
of the Company’s value-driven strategy can be seen.
The Manager’s review on pages 15 to 35 provides
detail of how portfolio performance has been achieved,
including gains made on disposals, the proceeds of
which have all been deployed following the purchase
of Freemans Leisure Park, Leicester, after year-end.
The Manager has achieved total return outperformance
relative to both the MSCI Balanced Funds Quarterly
Property Index and its listed peer group, which, along
with its high annual dividend, has helped keep the
share price rating much closer to net asset value than
for many of the Company’s peers.
Dividends
The Company continues to pay quarterly dividends
of 2p per share (as it has done for 38 consecutive
quarters), which were covered by earnings for the
year. It is the sustainability of the dividend, rather than
its growth, that remains the Board’s focus. Based on a
year-end share price of 101.4p and portfolio valuation
level, this produces respective yields of 7.9% and 8.0%,
as well as a reversionary yield of 8.8%.
The Company remains committed to paying its
quarterly dividend of 2p per share predominantly
from income, but also using a total return approach. In
periods where the annual dividend of the Company is
uncovered by earnings, owing to the Manager’s active
strategy, the dividend is maintained using capital profits
from property disposals.
Gearing
The Company has a fully-drawn debt facility of £60m,
which is due to mature in May 2027, with a fixed
interest rate of 2.959%, representing a 25.0% Loan to
Gross Asset Value ratio. The loan covenants all have
significant headroom.
The use of gearing and the Company’s ability to
refinance is monitored closely by Board and Manager
alike. When practical and economical to do so, the
Company will be refinanced whilst recognising that the
expected interest cost on a future facility is unlikely to
be as competitive as it was when the current facility was
negotiated. That said, it is currently expected that this
refinancing will not create materially different earnings
performance than the Company has been able to
achieve over the previous 10 years.
Portfolio
At year-end, the Company had a diversified portfolio of
33 UK commercial properties. The average lot size was
£6.2m, with occupancy of 92.5% from 124 tenants and
cash of £27.8m.
During the year, the Company disposed of two assets:
Oak Park Industrial Estate and Units 1-11 of Central
Six Retail Park. The sale prices achieved, of £32.6m
in aggregate, reflected a blended net initial yield of
7.6%, and a respective 12% and 60% premium to their
purchase prices.
The purchase of a high-street retail asset in Hitchin
was completed in May 2025, with an attractive net
initial yield of 8.3%. Deployment of the remainder of the
disposal proceeds was completed post-year-end via the
acquisition of Freemans Leisure Park, Leicester.
9
Governance
During the year, the Board established delegated
authorities for operations of the Board, particularly
responsibilities for nominations, remuneration,
management engagement and risk, and appointed a
Senior Independent Director.
As part of the review of Board responsibilities,
Board remuneration was refined to reflect individual
responsibilities and the commitment expected of a
small and fully engaged Board. I would like to thank my
Board colleagues for their considerable efforts during
the year, and the former Chair and Audit Chair for
presiding over the excellent long-term performance of
the Company.
The Company has been adversely impacted by the
PRIIPs reporting regime, where cost disclosures are,
in the opinion of the Board, misleading for investors
in a property company, albeit a property investment
company with sub-contracted management. Both
the Board and the Manager, in common with many
other investment companies, have made detailed
submissions to the FCA to that effect.
Awards
During the year, the Company’s performance and
business practices were recognised by the receipt of
five industry awards that reflect well on the Company
and its performance.
The Company won the Citywire investment trust award
in the ‘UK Property’ category for the fifth consecutive
year, an award given to the investment company
with the highest NAV total returns over an annualised
three-year period. The Company also won the ‘Listed
Funds’ category in the 2023 MSCI UK Property
Investment Awards, an award given to the listed fund
displaying the highest annualised three-year property
total return for the three years to 31 December 2023.
Lastly, the Company won the ‘Property’ category at the
Investment Week Awards for the second consecutive
year.
The Company has also been awarded by the European
Public Real Estate Association (“EPRA”), a gold medal
for its high standard of financial reporting, and for the
first time, a gold medal for its standard of sustainability
reporting, improving on the previously awarded
silver medal.
“The resilience of the portfolio
evidences the effectiveness
of the Company’s active
strategy to deliver superior
performance, free from sector
or geographical constraints.”
Outlook
At a time of much corporate activity in the UK listed
property sector, the Board and Manager will look
to exploit growth opportunities for the Company,
including the potential issuance of equity, with the
protection of existing shareholders’ interests being
first and foremost, rather than pursuing ‘growth for
growth’s sake’. Appropriate scaling of AEWU’s strategy
is expected to bring shareholder benefits including
improved liquidity in the Company’s shares, a reduction
in the operating cost ratio and greater investment
scope in the portfolio.
The Manager is enthusiastic about the current buying
opportunities in the UK property market, believing
that now is an ideal time to deploy capital, as property
values are at their lowest point since the Company’s
IPO. With a proven track record of stock selection, the
Manager expects that acquisitions made in the near-
term would yield strong performance in the future.
Against an unpredictable economic backdrop,
fiscal and interest rate pressures, and destabilising
geo-political events, the challenge is to present the
Company’s excellent investment case, to continue to
manage the portfolio for income and capital profits and
to try and maintain a strong rating on the Company’s
shares and liquidity in the secondary market. That is our
challenge for 2025 onwards, and we are working with
AEW to build on the excellent results for this financial
year.
Robin Archibald
Chairman of the Board
26 June 2025
Strategic Report Governance Financial Statements Additional Information
10
Key Performance Indicators
NAV
TOTAL RETURN
*
PROPERTY
TOTAL RETURN
^*
SHAREHOLDER
TOTAL RETURN
^
DIVIDEND
PAID
^
DIVIDEND
COVER
*
LEVERAGE
(LOAN TO GAV)
^
OPERATING COST
RATIO (OCR)
^
KPI AND
DEFINITION
The percentage change
in NAV, assuming
that dividends paid
to shareholders are
reinvested at NAV to
purchase additional
ordinary shares.
The total property return
is the combined income
and capital return from
the property portfolio for
the year, as calculated by
MSCI.
The percentage change
in the share price
assuming dividends are
reinvested to purchase
additional Ordinary
Shares.
Dividends declared
in relation to the year.
The Company targets a
dividend of 8.00 pence
per Ordinary Share per
annum. However, given
the current general
economic uncertainty,
regard will be had to
the circumstances
prevailing at the relevant
time in determining
dividend payments.
The ratio of the Company's EPRA
earnings over the dividend paid to
shareholders.
The proportion of the Company’s
total assets that are funded by
borrowings.
The ratio of total administration
and operating costs expressed
as a percentage of average NAV
throughout the year.
KPI AND
DEFINITION
PURPOSE AND
RELEVANCE
TO STRATEGY
This is a direct indicator
of the value produced
by the Company’s
financial performance.
This shows the success
of the portfolio strategy
without the impact of
gearing and corporate
costs.
This reflects the return
for investors through
share price movements
and dividends received.
The dividend reflects
the Company’s ability
to deliver a sustainable
profit distribution for
its shareholders.
This metric indicates the ability of
the Company to cover its dividend
payments through earnings.
The Company intends to utilise
borrowings to enhance returns. A
target of 25% Loan to GAV is stated
in the Company’s Investment
Guidelines.
The OCR provides a measure
of total costs associated with
managing and operating the
Company, which includes
the management fees and
operating costs.
PURPOSE AND
RELEVANCE
TO STRATEGY
TARGET
8.00% 8.00% 8.00% 8.00 pps
100% 25% < 1.50%
TARGET
PERFORMANCE
15.29%
for the year ended
31 March 2025
( year ended 31 March
2024: 4.98%)
14.80%
for the year ended
31 March 2025
( year ended 31 March
2024: 6.65%)
28.68%
for the year ended
31 March 2025
( year ended 31 March
2024: 1.85%)
8.00 pps
for the year ended
31 March 2025
( year ended 31 March
2024: 8.00 pps)
112.5%
for the year ended
31 March 2025
( year ended 31 March
2024: 91.25%)
25.01%
at 31 March 2025
( 31 March 2024: 28.97%)
1.49%
for the year ended
31 March 2025
( year ended 31 March
2024: 1.60%)
PERFORMANCE
FINANCIAL KPIs
11
NAV
TOTAL RETURN
*
PROPERTY
TOTAL RETURN
^*
SHAREHOLDER
TOTAL RETURN
^
DIVIDEND
PAID
^
DIVIDEND
COVER
*
LEVERAGE
(LOAN TO GAV)
^
OPERATING COST
RATIO (OCR)
^
KPI AND
DEFINITION
The percentage change
in NAV, assuming
that dividends paid
to shareholders are
reinvested at NAV to
purchase additional
ordinary shares.
The total property return
is the combined income
and capital return from
the property portfolio for
the year, as calculated by
MSCI.
The percentage change
in the share price
assuming dividends are
reinvested to purchase
additional Ordinary
Shares.
Dividends declared
in relation to the year.
The Company targets a
dividend of 8.00 pence
per Ordinary Share per
annum. However, given
the current general
economic uncertainty,
regard will be had to
the circumstances
prevailing at the relevant
time in determining
dividend payments.
The ratio of the Company's EPRA
earnings over the dividend paid to
shareholders.
The proportion of the Company’s
total assets that are funded by
borrowings.
The ratio of total administration
and operating costs expressed
as a percentage of average NAV
throughout the year.
KPI AND
DEFINITION
PURPOSE AND
RELEVANCE
TO STRATEGY
This is a direct indicator
of the value produced
by the Company’s
financial performance.
This shows the success
of the portfolio strategy
without the impact of
gearing and corporate
costs.
This reflects the return
for investors through
share price movements
and dividends received.
The dividend reflects
the Company’s ability
to deliver a sustainable
profit distribution for
its shareholders.
This metric indicates the ability of
the Company to cover its dividend
payments through earnings.
The Company intends to utilise
borrowings to enhance returns. A
target of 25% Loan to GAV is stated
in the Company’s Investment
Guidelines.
The OCR provides a measure
of total costs associated with
managing and operating the
Company, which includes
the management fees and
operating costs.
PURPOSE AND
RELEVANCE
TO STRATEGY
TARGET
8.00% 8.00% 8.00% 8.00 pps
100% 25% < 1.50%
TARGET
PERFORMANCE
15.29%
for the year ended
31 March 2025
( year ended 31 March
2024: 4.98%)
14.80%
for the year ended
31 March 2025
( year ended 31 March
2024: 6.65%)
28.68%
for the year ended
31 March 2025
( year ended 31 March
2024: 1.85%)
8.00 pps
for the year ended
31 March 2025
( year ended 31 March
2024: 8.00 pps)
112.5%
for the year ended
31 March 2025
( year ended 31 March
2024: 91.25%)
25.01%
at 31 March 2025
( 31 March 2024: 28.97%)
1.49%
for the year ended
31 March 2025
( year ended 31 March
2024: 1.60%)
PERFORMANCE
^ Alternative Performance Measures
* True equivalent yield, WAULT to Break, NAV, Profit/(Loss) Before Tax have all been removed as KPIs, as these are deemed to be less strategically relevant to the
Company than the following KPIs which have been added: EPRA NTA per share, Dividend cover, NAV total return and Property total return.
Strategic Report Governance Financial Statements Additional Information
12
PROPERTY KPIs
NET INITIAL YIELD
(NIY) % REVERSIONARY YIELD (RY) %
^
VACANT ESTIMATED
RENTAL VALUE (ERV)
^
WEIGHTED AVERAGE UNEXPIRED
LEASE TERM (WAULT)
^
EPRA EARNINGS PER SHARE (EPS)
^
EPRA NET TANGIBLE ASSETS PER SHARE (PENCE)
*
KPI AND
DEFINITION
What the initial net
yield would be at a
predetermined purchase
price after taking
account of all associated
costs, e.g. void costs and
rent-free periods.
The expected return the
property will provide
once rack-rented.
The space in a property
portfolio which is
currently unlet, as a
percentage of the total
ERV of the portfolio.
The average lease term
remaining to expiry
across the portfolio,
weighted by contracted
rent.
Earnings from core operational activities. A key
measure of a company’s underlying operating results
from its property rental business and an indication of
the extent to which current dividend payments are
supported by earnings.
Measures the value of shareholders’ equity in
the business.
KPI AND
DEFINITION
PURPOSE AND
RELEVANCE
TO STRATEGY
The Company’s EPRA
NIY demonstrates the
ability to generate
income from its portfolio
in the short term in
order to meet its target
dividend.
A Reversionary Yield
profile shows a
potentially sustainable
income stream that
can be used to meet
dividends past the expiry
of a property’s current
leasing arrangements.
The Company’s aim is to
minimise vacancy of the
properties. A low level
of structural vacancy
provides an opportunity
for the Company to
capture rental uplifts
and manage the mix
of tenants within a
property.
Assets with a shorter
unexpired lease term
are often mispriced.
It is the Investment
Manager’s view that
a shorter WAULT is
useful for active asset
management as it allows
the Investment Manager
to engage in direct
negotiation with tenants
rather than via rent-
review mechanisms.
This reflects the Company’s ability to generate
earnings from the portfolio which underpins
dividends.
This measures the growth of the business over time
and the Company regards this as the most relevant
net asset metric for the business.
PURPOSE AND
RELEVANCE
TO STRATEGY
TARGET
7.50 – 10.00% 7.50 – 10.00% < 10.00% > 3 years
8.00 pps Increase year on year.
TARGET
PERFORMANCE
7.97%
at 31 March 2025
(31 March 2024: 8.02%)
8.76%
at 31 March 2025
(31 March 2024: 8.77%)
7.50%
at 31 March 2025
(31 March 2024: 6.38%)
5.73 years
at 31 March 2025
(31 March 2024:
5.60 years)
9.00 pps
for the year ended
31 March 2025
(year ended 31 March
2024: 7.29 pps)
110.11 pps
at 31 March 2025
(31 March 2024: 102.73 pps)
PERFORMANCE
13
EPRA KPIs
NET INITIAL YIELD
(NIY) % REVERSIONARY YIELD (RY) %
^
VACANT ESTIMATED
RENTAL VALUE (ERV)
^
WEIGHTED AVERAGE UNEXPIRED
LEASE TERM (WAULT)
^
EPRA EARNINGS PER SHARE (EPS)
^
EPRA NET TANGIBLE ASSETS PER SHARE (PENCE)
*
KPI AND
DEFINITION
What the initial net
yield would be at a
predetermined purchase
price after taking
account of all associated
costs, e.g. void costs and
rent-free periods.
The expected return the
property will provide
once rack-rented.
The space in a property
portfolio which is
currently unlet, as a
percentage of the total
ERV of the portfolio.
The average lease term
remaining to expiry
across the portfolio,
weighted by contracted
rent.
Earnings from core operational activities. A key
measure of a company’s underlying operating results
from its property rental business and an indication of
the extent to which current dividend payments are
supported by earnings.
Measures the value of shareholders’ equity in
the business.
KPI AND
DEFINITION
PURPOSE AND
RELEVANCE
TO STRATEGY
The Company’s EPRA
NIY demonstrates the
ability to generate
income from its portfolio
in the short term in
order to meet its target
dividend.
A Reversionary Yield
profile shows a
potentially sustainable
income stream that
can be used to meet
dividends past the expiry
of a property’s current
leasing arrangements.
The Company’s aim is to
minimise vacancy of the
properties. A low level
of structural vacancy
provides an opportunity
for the Company to
capture rental uplifts
and manage the mix
of tenants within a
property.
Assets with a shorter
unexpired lease term
are often mispriced.
It is the Investment
Manager’s view that
a shorter WAULT is
useful for active asset
management as it allows
the Investment Manager
to engage in direct
negotiation with tenants
rather than via rent-
review mechanisms.
This reflects the Company’s ability to generate
earnings from the portfolio which underpins
dividends.
This measures the growth of the business over time
and the Company regards this as the most relevant
net asset metric for the business.
PURPOSE AND
RELEVANCE
TO STRATEGY
TARGET
7.50 – 10.00% 7.50 – 10.00% < 10.00% > 3 years
8.00 pps Increase year on year.
TARGET
PERFORMANCE
7.97%
at 31 March 2025
(31 March 2024: 8.02%)
8.76%
at 31 March 2025
(31 March 2024: 8.77%)
7.50%
at 31 March 2025
(31 March 2024: 6.38%)
5.73 years
at 31 March 2025
(31 March 2024:
5.60 years)
9.00 pps
for the year ended
31 March 2025
(year ended 31 March
2024: 7.29 pps)
110.11 pps
at 31 March 2025
(31 March 2024: 102.73 pps)
PERFORMANCE
^ Alternative Performance Measures
This report provides Alternative Performance Measures (“APMs”) which are not defined or specified under the requirements of International Financial
Reporting Standards. We believe these APMs provide important information on our business. Further explanation of APMs and why we use them is set out in
EPRA unaudited performance measures.
* True equivalent yield, WAULT to Break, NAV, Profit/(Loss) Before Tax have all been removed as KPIs, as these are deemed to be less strategically relevant to the
Company than the following KPIs which have been added: EPRA NTA per share, Dividend cover, NAV total return and Property total return.
Strategic Report Governance Financial Statements Additional Information
14
INDUSTRIAL
Investment activity gathered momentum throughout
the year, with Q4 2024 marking the strongest quarter
since Q3 2022. Total industrial investment volumes
for 2024 finished at £8.4 billion, up from £6.5 billion
recorded in 2023.
During the period, the occupier market for industrial
property grew notably, with transaction volumes
increasing by 20% compared to the previous year.
Distribution companies continued to be the main driver,
representing 38% of the market. Manufacturing firms,
however, contributed the most significant increase
in take-up, with a 36% rise in 2024 compared to the
previous year.
Average market rental levels continued to grow, rising
by 5.5% during 2024, albeit a slowdown in growth
compared to 7.6% recorded in 2023. Despite increased
occupier demand, the overall vacancy rate rose,
climbing from 5.5% at the end of 2023 to 7.3% by the
close of 2024. This was principally due to higher levels
of development activity.
Industrial property remains the largest constituent of
the Company’s portfolio standing at 38%. In recent
years, several sales have decreased the Company’s
exposure to the sector. Disposals have been driven
by a decision to crystallise capital profits from asset
management gains and trade in lower-yielding assets
in favour of those offering higher yields, such as in the
retail sector. The Company’s sale of Oak Park, Droitwich
during the period was typical of this activity.
The portfolio’s outperformance of the benchmark
in this sector during the period was driven by a
high income return. With a low average passing rent of
only £3.62 per sq. ft., the sector is expected to continue
to deliver strong income growth in the future.
AEW UK REIT INDUSTRIAL
PERFORMANCE VS. BENCHMARK
Source: MSCI Year to 31 March 2025
* the Benchmark refers to MSCI/AREF PFI
Balanced Funds Quarterly Property Index.
6
5
4
3
2
1
0
%
AEW UK REIT
Benchmark*
Capital Growth Income Return Total Return
Difficult market conditions often provide opportunities for the Company’s actively managed strategy. Despite
the challenging backdrop, the Company achieved a 5.9% like-for-like valuation gain in its portfolio for the year,
testament to its value-focused strategy of investing in mispriced assets where we believe income can be grown,
and value created, through active asset management. This valuation performance has culminated in the Company
delivering 14.8% property total return for the year, double that of the MSCI index performance of 7.4%, further
building upon the outperformance achieved in previous years. Following the purchase of Freemans Leisure Park,
Leicester, subsequent to the year-end, the Company is once again fully invested.
Laura Elkin
Portfolio Manager
Henry Butt
Assistant Portfolio Manager
Investment Manager’s Report
15
RETAIL
During the period, the all-retail vacancy rate remained
stable, proving that physical retail is expected to remain
a core component of occupiers’ business strategies
going forward. This has been a trend that we have
seen across the retail warehousing sector since 2021,
however, the same can also now be said for the high
street, particularly prime locations. As such, a cautious
and location-specific sense of optimism has returned
to the high street, boosted by the first quarter of 2025,
which showed a discernible upward trend in retail
sales, despite usually being the quietest quarter of the
year. Further sales growth is anticipated throughout
2025, driven by an expected increase in real household
income and further interest rate cuts. The impact on
retailers of the National Insurance and minimum wage
hikes is expected to provide challenges, but occupier
distress is currently limited, and many national retailers
have reported strong trade, including Next, Footasylum,
DFS, and Waterstones.
Over the course of the past few years, the Company
has been counter-cyclically buying retail, increasing
its portfolio weighting to 35%. Counter-cyclical buying
has allowed the Company to access higher yields,
which has benefitted the Company’s performance in
this sector relative to the benchmark. The Company’s
portfolio also recorded a significantly greater capital
return during the period which was predominantly
driven by Central Six Retail Park in Coventry. This asset
was sold during the period crystalising an approximate
60% premium to the purchase price, having increased
the net operating income by circa 54% during its hold
period.
We are of the view that the existing retail assets in
the portfolio will continue to perform strongly. This
is evidenced by the Company’s recent acquisition
of Bancroft in Hitchin, which is fully-let to a range of
strong-performing national retailers and purchased
for a net initial yield of 8.3%. We continue to see an
attractive pipeline of retail assets in the UK’s investment
market. Our focus remains on strong locations
underwritten by alternative use values and tenants who
are known to trade profitably.
AEW UK REIT RETAIL
PERFORMANCE VS. BENCHMARK
Source: MSCI Year to 31 March 2025
* the Benchmark refers to MSCI/AREF PFI
Balanced Funds Quarterly Property Index.
8
7
6
5
4
3
2
1
0
%
AEW UK REIT
Benchmark*
Capital Growth Income Return Total Return
Barnstaple, Barnstaple Retail Park
Strategic Report Governance Financial Statements Additional Information
1616
OFFICES
Despite a recent improvement in investor sentiment,
particularly at the top end of the market, investment
activity continued to waver throughout 2024, with
transactional volumes 24% below the five-year average.
In 2024, growth in office-based employment in the UK
stagnated somewhat after a significant rise in 2023.
Nevertheless, leasing activity saw a slight uptick over
the year, reflecting tenants’ preparations for future
expansion.
Across the UK’s major regional office markets, total
leased space for 2024 surpassed the five-year average
of four million sq. ft. demonstrating occupational
momentum heading into 2025. Of particular interest to
the Company, due to its exposure at Northgate House
and Cambridge House, both in Bath, was the flexible
office market, which continued its expansion, attracting
a broader range of tenants than in previous years,
particularly from the financial and professional services
sectors.
The focus for both occupiers and investors continues
to be on the best quality space, both in terms of
specification and location. Vacancy in newly completed
and Grade A space is just 3% of the total stock, and here
rents have stabilised. In secondary locations and for
Grade B stock and worse, rents are still on a downward
trajectory. Sentiment toward secondary and tertiary
assets remains subdued, driven by concerns of future
obsolescence and refurbishment cost.
The Company holds a low exposure to the office market
at only 12% of portfolio value across three assets, one
of which has retail and leisure on the ground floor level.
These assets have been selected for their location,
with their investment values supported by alternative-
use values. As such, the portfolio’s office assets have
experienced a greater level of resilience than the
wider market in recent years as demonstrated by the
Company’s performance versus the benchmark during
the period.
AEW UK REIT Office
Performance vs. Benchmark
Source: MSCI 31 Year to 31 March 2025
* the Benchmark refers to MSCI/AREF PFI
Balanced Funds Quarterly Property Index.
1
0
-1
%
AEW UK REIT
Benchmark*
Capital Growth Income Return Total Return
Bristol, Queen Square
1717
ALTERNATIVES
In the leisure market, which constitutes 14% of the
Company’s portfolio, experiential leisure has led
the occupier recovery, with tenpin bowling and
competitive social operators reporting growing
profitability during the period. Despite the squeeze on
consumer discretionary spend, this sub-sector has, over
the past 10 years, helped fuel a significant increase in
leisure take-up across the UK’s largest cities, averaging
more than 30%. Around 75% of this growth has been
through conversion of existing units, likely former retail
and office space, rather than new development, a clear
sign of repositioning in action.
Improved box office sales will be key to regaining
widespread investor confidence in the cinema sector.
Both Odeon and Vue refinanced in H1 2024, providing
greater stability for the sector, with all operators
predicting a return to profit in 2025. The health
and fitness sector continues to experience growth,
particularly at the premium and budget end of the
market.
The Company’s portfolio outperformed the benchmark
during the period both in terms of income and capital
return. This was driven predominantly by a key letting
to Tenpin in Dewsbury. This letting was undertaken
in competition with traditional retail tenants, with the
terms secured as leisure use being considered more
lucrative than retail.
AEW UK REIT Alternatives
Performance vs. Benchmark
Source: MSCI Year to 31 March 2025
* the Benchmark refers to MSCI/AREF PFI
Balanced Funds Quarterly Property Index.
2
1
0
%
AEW UK REIT
Benchmark*
Capital Growth Income Return Total Return
Sources:
Savills UK | Market in Minutes: UK Commercial – February 2025
UK Real Estate Navigator
UK Real Estate Market Outlook 2025
Reflecting on the UK Industrial and logistics market in 2024 and looking forward to 2025
Dewsbury, The Railway Centre
Strategic Report Governance Financial Statements Additional Information
18
Property
Portfolio
19
Property Portfolio
LIKE-FOR-LIKE VALUATION MOVEMENT FOR THE YEAR
VALUATION 31 MARCH 2025 LIKE-FOR-LIKE VALUATION MOVEMENT FOR THE YEAR
SECTOR VALUATION (£M) % OF PORTFOLIO LFL MOVEMENT (£M) LFL MOVEMENT (%)
Industrial 78.60 38.42 4.63 6.26
High Street Retail 43.80 21.41 2.25 7.10
Other 28.90 14.13 0.48 1.67
Retail Warehouses 28.65 14.01 3.93 15.90
Office 24.60 12.03 (0.45) (1.80)
Total 204.55 100.00 10.84 5.89*
* This is the overall weighted average like-for-like valuation increase of the portfolio.
SECTOR WEIGHTING BY VALUATION –
HIGH INDUSTRIAL WEIGHTING AND LOW
EXPOSURE TO OFFICES
GEOGRAPHIC WEIGHTING BY
VALUATION – HIGHLY DIVERSIFIED
ACROSS THE UK
15%
4%
10%
27%
21%
8%
2%
7%
5%
1%
38%
12%
21%
14%
14%
Industrial
Offices
Other
High Street Retail
Retail Warehouse
Yorkshire and
Humberside
South East
Eastern
South West
West Midlands
East Midlands
North West
Wales
Rest of London
Scotland
15%
4%
10%
27%
21%
8%
2%
7%
5%
1%
38%
12%
21%
14%
14%
Industrial
Offices
Other
High Street Retail
Retail Warehouse
Yorkshire and
Humberside
South East
Eastern
South West
West Midlands
East Midlands
North West
Wales
Rest of London
Scotland
Strategic Report Governance Financial Statements Additional Information
20
At year-end, the portfolio’s top 10 assets constituted 50.1% of the overall
portfolio value. As detailed on the following pages, these are diversified
across both sector and geography.
AEW UK REIT Top Ten Assets
Bath
Northgate House
2
Wrexham
Gresford Industrial Estate
1
Dagenham
London East Leisure Park
Bristol
40 Queen Square
Hitchin
Bancroft
3
5
7
Shrewsbury
Arrow Retail Park
8
Bath
Cambridge House
York
25 George Hudson Street
Basildon
Apollo Business Park
4
6
Bristol
Union Street
9
10
21
SECTOR SQ FT
MARKET VALUE
RANGE (£M)
Wrexham
Gresford Industrial Estate
Industrial 279,541 10.0 – 15.0
TOP 10
ASSETS
1
TOP 10
ASSETS
2
SECTOR SQ FT
MARKET VALUE
RANGE (£M)
Bath
Northgate House
Retail 67,020 10.0 – 15.0
Strategic Report Governance Financial Statements Additional Information
22
SECTOR SQ FT
MARKET VALUE
RANGE (£M)
Dagenham
London East Leisure Park
Leisure 102,400 10.0 – 15.0
SECTOR SQ FT
MARKET VALUE
RANGE (£M)
Bath
Cambridge House
Office 51,132 10.0 – 15.0
TOP 10
ASSETS
3
TOP 10
ASSETS
4
2323
SECTOR SQ FT
MARKET VALUE
RANGE (£M)
Bristol
40 Queen Square
Office 36,433 10.0 – 15.0
SECTOR SQ FT
MARKET VALUE
RANGE (£M)
York
25 George Hudson Street
Other 19,326 10.0 – 15.0
TOP 10
ASSETS
5
TOP 10
ASSETS
6
Strategic Report Governance Financial Statements Additional Information
24
SECTOR SQ FT
MARKET VALUE
RANGE (£M)
Hitchin
Bancroft
Retail 47,118 5.0 – 10.0
SECTOR SQ FT
MARKET VALUE
RANGE (£M)
Shrewsbury
Arrow Retail Park
Retail
Warehouse
94,891 5.0 – 10.0
TOP 10
ASSETS
7
TOP 10
ASSETS
8
2525
SECTOR SQ FT
MARKET VALUE
RANGE (£M)
Bristol
Union Street
Retail 68,875 5.0 – 10.0
SECTOR SQ FT
MARKET VALUE
RANGE (£M)
Basildon
Apollo Business Park
Industrial 68,813 5.0 – 10.0
TOP 10
ASSETS
9
TOP 10
ASSETS
10
Strategic Report Governance Financial Statements Additional Information
26
39%
INDUSTRIAL
Baslidon
Apollo Business Park
Freehold
68,813
sq ft
Baslidon
1 Bentalls, Pipps Hill Industrial Estate
Freehold
32,857
sq ft
Bradford
Knowles Lane
Freehold
46,629
sq ft
Peterborough
Storey’s Bar Road
Freehold
184,114
sq ft
Redditch
Eagle Road, North Moons Industrial Estate
Freehold
37,992
sq ft
Rotherham
Barbot Hall Industrial Estate
Freehold
81,979
sq ft
Runcorn
Sarus Court
Freehold
82,379
sq ft
Sheffield
Brightside Lane
Freehold
121,733
sq ft
St Helens
Lea Green Industrial Estate
Freehold
93,588
sq ft
Wakefield
Diamond Business Park
Freehold
202,043
sq ft
Walsall
Brockhurst Cresent
Freehold
136,171
sq ft
Weston-Super-Mare
Westlands Distribution Park
Freehold
323,353
sq ft
Wrexham
Gresford Industrial Estate
Freehold
279,541
sq ft
14%
RETAIL WAREHOUSE
Barnstaple
Barnstaple Retail Park
Freehold
51,021
sq ft
Coventry
Central Six Retail Park
Mixed
15,935
sq ft
Dewsbury
The Railway Centre
Freehold
93,358
sq ft
Preston
Cuerden Way
Freehold
58,306
sq ft
Shrewsbury
Arrow Point Retail Park
Freehold
94,891
sq ft
12%
OFFICE
Bath
Cambridge House
Freehold
51,132
sq ft
Bristol
40 Queen Square
Leasehold
36,433
sq ft
Gloucester
Cedar House
Freehold
37,753
sq ft
14%
OTHER
Cardiff
Circuit Nightclub
Freehold
39,470
sq ft
Dagenham
London East Leisure Park
Freehold
102,400
sq ft
Glasgow
JD Gyms Glasgow
Freehold
26,341
sq ft
Southend
Odeon Cinema
Leasehold
40,635
sq ft
York
25 George Hudson Street
Freehold
19,326
sq ft
21%
HIGH STREET RETAIL
Bath
Northgate House
Leasehold
67,020
sq ft
Bristol
Union Street
Leasehold
68,875
sq ft
Bromley
Next
Leasehold
52,415
sq ft
Hitchin
Bancroft
Freehold
47,118
sq ft
Nottingham
Wheeler Gate
Freehold
28,219
sq ft
Sheffield
Fargate
Freehold
5,495
sq ft
Southampton
Above Bar Street
Freehold
21,936
sq ft
Hitchin, Bancroft
AEW UK REIT Property Portfolio
27
Hitchin, Bancroft
The Company made one acquisition during the year:
In March, the Company completed the purchase of a freehold,
high-street retail asset at 13/13A, 114-119, 121-123 Bancroft
and 3-4 Portmill Lane in the affluent commuter town of Hitchin
for £10,000,000. The purchase price reflects an attractive net
initial yield of 8.31% and a capital value of £213 per sq. ft.
The property provides accommodation of 47,118 sq. ft.
across 12 retail units and a standalone office building, as well
as car parking and service yards. The retail elements of the
property are fully let to a strong line-up of 14 tenants, with
recent leasing activity evidencing the strength of the location.
Major tenants include Marks & Spencer plc, Next Group plc,
Vodafone Ltd, The White Company and Holland & Barrett.
The vacant office element to the rear provides various asset
management options in the short-to-medium term, including
new lettings or residential conversion.
Investment Update
RETAIL
Strategic Report Governance Financial Statements Additional Information
28
In December 2024, the Company completed the part-disposal
of units 1-11 of Central Six Retail Park, Coventry, for
£26,250,000, reflecting a net initial yield of 7.49% and a
capital value of £213 per sq. ft. The sale price represented
a 60% premium to the purchase price of the entire property
which was acquired in November 2021 for £16,411,000
(£110 per sq. ft.), and a 6.7% premium to the 30 June 2024
valuation, being the latest valuation date prior to agreeing
sale terms.
During its ownership, the Company increased occupancy
from 24% to 100% and increased the net operating income
by circa 54% by undertaking lettings to tenants including Aldi
Stores Limited, Iceland Foods Limited, Next Group plc, Boots
UK Ltd, and TJX UK (TK Maxx).
Excluding the remaining part of the retail park (Units 12, A(1),
A(2) and B), known as the ‘triangle site’, which the Company
has retained, the sale delivered an IRR of circa 15%.
Coventry, Central Six Retail Park
RETAIL
WAREHOUSE
The Company made one disposal and one part-disposal during the year:
In July 2024, the Company completed the sale of Oak Park
Industrial Estate, Droitwich, for £6,300,000, reflecting a net
initial yield of 7.95% and a capital value of £33 per sq. ft.
A sale at this price represented a circa 33% premium to the
31 March 2024 valuation. Following the completion of three
new lettings during 2023, which added £272,000 of annual
rental income, the property was fully let. With impending
capital expenditure on refurbishment, it was believed that the
value of the asset in the medium term had been maximised.
The industrial estate was bought in December 2015 for
£5,625,000, reflecting a 10.4% net initial yield and a capital
value of £30 per sq. ft.
Droitwich, Oak Park Industrial Estate
INDUSTRIAL
29
Asset Management Update
The Company completed the following material asset management transactions during the year:
The Company completed a lease renewal with Pilkington
United Kingdom Limited at an increased rent of £265,000 per
annum. The previous rent (payable until September 2024)
was £208,000 per annum, representing a 27% increase. On
the fifth anniversary of the lease term, there is an open market
rent review, as well as a tenant-only break option.
Bradford, Knowles Lane
INDUSTRIAL
The Company settled Walstead Peterborough Limited’s three-
yearly RPI rent review (2% collar and 4% cap, compounded
annually) at £724,861 per annum (£3.94 per sq. ft.), an
£80,462 per annum (12.5%) increase on the previous passing
rent of £644,399 per annum (£3.50 per sq. ft.). Despite this
notable uplift, the single-let industrial unit is still considered
‘under-rented’ with an ERV greater than £4.00 per sq. ft.
Peterborough, Storey’s Bar Road
The Company settled Carrs Coatings Ltd’s August 2024
annual uncapped RPI rent review at £304,809 per annum
(£8.02 per sq. ft.), representing a £10,461 per annum (circa
3.6%) increase.
Redditch, Eagle Road, North Moons Industrial Estate
Strategic Report Governance Financial Statements Additional Information
30
Following a statutory demand being served on the last
remaining office tenant of Diamond House, AFI-Uplift Ltd
(“AFI”), due to service charge and insurance arrears of
£210,967, AFI has paid all of their arrears and surrendered
their lease, which was due to expire in November 2027. An
early surrender will enable demolition of the entire block,
facilitating an industrial open storage letting on the estate.
Wakefield, Diamond Business Park
The Company completed a speculative refurbishment project
of units 1001 and 1003, formerly let to CJ Services. The
works comprised roof improvements, respraying of external
elevations, internal strip-out and decoration, and replacing
M&E services to improve the EPC ratings to a B. The cost of
the works was £811,578, excluding professional fees.
Following practical completion of the project, the Company
completed a new lease of Unit 1001 to ODL Europe Ltd. The
tenant has entered a straight five-year lease paying a rent
of £137,530 per annum (£8.50 per sq. ft.). The tenant has
been granted a three-month rent-free incentive. The previous
passing rent, prior to refurbishment, was £6.50 per sq. ft. In
carrying out the refurbishment, the Company has crystalised
significant rental growth from the previous rent.
Runcorn, Sarus Court
The Company settled North Somerset District Council’s
April 2024 open market rent review at £110,000 per annum
(£3.61 per sq. ft.), representing a 14% increase on the previous
passing rent.
The Company also settled Container Team Limited’s
outstanding June 2024 open market rent review at £99,000
per annum, representing a 90% increase on the previous
passing rent of £52,000 per annum. The increase in rent
reflects the current strength of the UK’s IOS (industrial outdoor
storage) occupational market.
The Company completed a three-year lease renewal of Unit
3A with Weston & District Community Transport Ltd at a rent
of £12,000 per annum. On the first anniversary of the lease
term, there is a mutual rolling break option.
Weston-super-Mare, Westlands Distribution Park
Bristol, Union Street
Bromley, Next
Sheffield, Fargate
31
Having completed subdivision works to the former Wilko unit,
separating the ground and basement levels from the first floor,
the Company completed a new letting of the first floor to Roxy
Lanes (Bristol) Ltd (Roxy), who already occupy the second
floor of the building. Roxy entered into a new lease until 2036,
conterminous with their existing lease of the second floor.
The rent, which will be reviewed to RPI (1.50% collar and 4.0%
cap, compounded annually) in 2026 and 2031, is £95,000 per
annum (£10.55 per sq. ft.) and is guaranteed by Roxy Leisure
Holdings Ltd. Roxy was granted a 12-month rent-free period
and a £95,000 capital contribution as a letting incentive.
The Company also completed a new lease of the ground and
basement levels to Grip-UK Ltd (trading as Climbing Hanger),
who operate the space as a climbing and bouldering centre.
The tenant has entered a 12-year lease, with a tenant break
option on the expiry of the tenth year, paying a rent of £300,000
per annum. There will be a five yearly rent review in line with
annually compounded CPI (2% collar and 4% cap). The tenant
has been granted a 12-month rent-free period.
Bristol, Union Street
Bromley, Next
RETAIL
The Company agreed Next’s annual turnover top-up rent for
the year to 28 September 2024 at £200,791 in addition to the
base rent of £350,000 per annum.
The Company subsequently completed a lease regear with
Next, who will enter a five-year reversionary lease effective
from September 2025 in return for rebasing the rent at a fixed
amount of £430,000 per annum with nine months’ rent-free,
subject to Next completing a refurbishment of the store. Next
will continue to pay the existing base rent of £350,000 per
annum plus a turnover rent equal to 8% of turnover above
£3.5 million until September this year. With the lease regear
remaining outside the 1954 Act, this is advantageous to the
Company, with the property being an attractive opportunity
for a residential developer or an owner-occupier.
Sheffield, Fargate
The Company completed a new lease to fashion retailer,
Blue Banana Retail Limited. The tenant has entered into a
10-year lease, with a tenant break option on the expiry of the
fifth year, paying a rent of £55,000 per annum. There will be a
five yearly-rent review to RPI compounded annually (1% collar
and 3% cap). The tenant has been granted a seven-month
rent-free period.
Strategic Report Governance Financial Statements Additional Information
32
Following a protracted exchange of correspondence with The
Original Bowling Company Limited (trading as Hollywood
Bowl), the turnover rent equating to £276,120 (£92,040 per
annum) was billed.
Dagenham, London East Leisure Park
The Company completed an assignment of CC Stim UK
Tradeco 5 Ltd’s (in administration) lease to Neos 13 Ltd.
There was a simultaneous variation of the lease, revising the
rent from £300,000 per annum to a base rent of £175,000 per
annum, together with an additional ‘top-up’ rent equivalent to
10% of turnover where turnover exceeds £1.75m per annum,
with an aggregate of the combined base rent and turnover
rent to be capped at £300,000 per annum. The variation
also provides a mutual break clause allowing either party to
exercise a break on 1 February or 1 August in any year after
August 2026.
Cardiff, Circuit Nightclub
OTHER
33
The Company completed a letting of Unit 2 to Farmfoods
Limited, who have taken a 15-year lease, with a tenant break
option at the expiry of the tenth year, at a rent of £125,000 per
annum (£13.00 per sq. ft.). No rent-free incentive was given,
but the unit’s externals were refurbished by the Company,
with the cost recovered through a dilapidations settlement
with the former tenant.
Barnstaple, Barnstaple Retail Park
Coventry, Central Six Retail Park
RETAIL
WAREHOUSE
On 9 December 2024, the Company simultaneously
exchanged an agreement for surrender with TUI UK Retail
Limited (TUI) and an agreement for lease with Superdrug
Stores Plc (Superdrug) for Unit 10. The agreements are
conditional upon TUI carrying out works to Unit 10 and a
capital contribution of £31,000 from the Company. Once the
conditions have been satisfied, Superdrug will enter into a
new 10-year lease, with a tenant-only break option in year five,
at a rent of £158,760 per annum (£18 per sq. ft.). The letting
includes a 12-month rent-free incentive.
The Company completed a lease with new tenant, Salvation
Army Trading Company Ltd, for Unit 12. The tenant entered
a new lease expiring in November 2032, with a tenant-only
break option at the end of the fifth year, at a rent of £140,000
per annum (£13.97 per sq. ft.). The letting includes a
nine-month rent-free incentive.
The Company completed a new lease with TUI UK Retail
Limited (TUI) for Unit A (2) on a five-year term, with a tenant-
only break option at the end of year three, at a rent of £75,000
per annum (£43.55 per sq. ft.). The letting includes a six-month
rent-free incentive and a tenant break penalty equivalent to
12 months’ rent. The Company provided a £174,000 capital
contribution for strip-out and subdivision works of the former
American Golf unit.
The Company completed a new lease of Unit A (1) to Costa
Limited. The tenant has entered a lease expiring in November
2032, with a tenant break option on the expiry of the fifth year,
paying a rent of £65,000 per annum. There will be a five-yearly
open market rent review capped at 2.5%, compounded
annually. The tenant has been granted a six-month rent-free
period.
Strategic Report Governance Financial Statements Additional Information
34
A circa £200,000 refurbishment project has commenced
on the former Ramboll Whitbybird (Ramboll) space on the
first floor (north). Ramboll’s dilapidation liability was settled
at £37,888, therefore net capital expenditure equates to
approximately £162,000. Approximately £450,000 has been
spent undertaking a refurbishment project of vacant space
on the first floor (north) as well as the building’s communal
reception area. About two-thirds of the cost invested in the
building during the period has been recoverable from tenants
via service charges and dilapidations payments.
Bristol, 40 Queen Square
Bath, Cambridge House
Dewsbury, The Railway Centre
OFFICE
The Company completed a new lease on the ground and
basement floors with premium gym operator, Marchon Bath
Ltd (trading as Marchon). The tenant has entered a straight
10-year lease paying a rent of £70,000 per annum. Lease
completion was subject to the completion of circa £90,000
landlord strip-out works. There will be a five-yearly upwards
only rent review to the higher of open market or annually
compounded RPI (2% collar and 4% cap). The tenant has
been granted a 12-month rent-free period. This will be
Marchon’s fourth location, including White City and Stratford,
both in London, as well as Harpenden.
The Company completed a 25-year lease with leisure
operator, Tenpin Limited, of the former Mecca Bingo space.
The lease provides a passing rent of £378,470 per annum
(£13.59 per sq. ft.), with five-yearly compounded CPI reviews
(1% collar and 3% cap). There is a tenant break option in year
17.5. At the time of Mecca Bingo vacating, the unit had an
ERV of £8.00 per sq. ft. A £1,550,000 capital contribution was
given as a tenant incentive, with the Company carrying out
strip-out and enabling works at a cost of £383,352.
35
Principal Risks
and Uncertainties
The Company’s assets consist of UK commercial property. Its principal risks are therefore related to the commercial
property market in general, but also to the particular circumstances of the individual properties and the tenants
within the properties.
The Board has overall responsibility for reviewing the effectiveness of the system of risk management and internal
control which is operated by the Investment Manager. The Company’s ongoing risk management process is
designed to identify, evaluate and mitigate the significant risks the Company faces.
At least twice a year, the Board undertakes a formal risk review through the Audit and Risk Committee, to assess
the adequacy and effectiveness of the Investment Manager and other service providers’ risk management and
internal control processes. The Audit and Risk Committee is responsible for reviewing the principal and emerging
risks facing the Company and, in liaison with the Investment Manager, advises the Board on these risks. Stated
movements in the probability or impact of risks is in comparison to the prior year end.
The Board has carried out a robust assessment of the principal and emerging risks facing the Company, including
those that would threaten its business model, future performance, solvency or liquidity.
An analysis of the principal risks and uncertainties is set out below. The risks below do not purport to be exhaustive
as some risks are not yet known and some risks are currently not deemed material but could turn out to be material
in the future.
KEY
1. Property market
2. Property valuation
3. Tenant default
4. Asset management initiatives
5. Due diligence
6. Fall in rental rates
7. Breach of borrowing covenants
8. Availability and cost of debt
9. Dependence on the
Investment Manager and
Other Service Providers
10. Failure to meet objectives
11. Business interruption
12. Company REIT status
13. General political/economic
environment
14. Environmental transition risk
15. Physical risk to buildings
The matrix above illustrates the Company’s assessment of the impact and probability of the principal risks identified.
Principal risk impact
High
Medium Low
Probability of risk
Low
Moderate
High
POLITICAL/ECONOMIC
TAXATION
CORPORATE
REAL ESTATE
BORROWING
1
4
2
3
7
8
9
10
14
11
12
13
15
6
5
Strategic Report Governance Financial Statements Additional Information
36
1. Property Market
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
Any property market recession or future
deterioration in the property market
could, inter alia,
(i) cause the Company to realise its
investments at lower valuations;
(ii) delay the timings of the Company’s
realisations; and
(iii) cause a deterioration in the rating of
the Company’s shares as a result of
declining sentiment, thereby reducing
shareholder return.
These risks could have a material adverse
effect on the ability of the Company to
achieve its investment objective.
The Company has investment restrictions in place
to invest and manage its assets with the objective
of spreading and mitigating risk.
The Investment Manager actively monitors
net debt to mitigate the need for sub-optimal
investment disposals.
Probability:
High
Impact:
Moderate to High
Movement:
No change
2. Property valuation
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
Property and property-related assets are
inherently difficult to value due to the
individual nature of each property.
There may be an adverse effect on the
Company’s profitability, NAV and the
price of Ordinary Shares in cases where
property valuations have been materially
misstated.
The Company uses an independent external
valuer (Knight Frank LLP) to value the properties
at fair value in accordance with accepted RICS
appraisal and valuation standards.
Property valuations are subject to an independent
statutory audit on an annual basis.
The Audit and Risk Committee Chair attends
quarterly valuation meetings on a recurring basis.
Probability:
Low
Impact:
High
Movement:
No change
3. Tenant default
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
Failure by tenants to fulfil their rental
obligations could affect the income
that the properties earn and the ability
of the Company to pay dividends to its
shareholders.
Comprehensive due diligence is undertaken on all
new tenants. Tenant covenant checks are carried
out on all new tenants where a default would have
a significant impact.
The asset management team conducts ongoing
monitoring and liaison with tenants to manage
potential bad debt risk.
Tenant concentration is also monitored on an
ongoing basis to ensure that a single tenant failure
would not significantly impact the Company’s
financial performance.
Probability:
High
Impact:
Moderate to High
Movement:
No change
REAL ESTATE RISKS
6. Fall in rental rates
5. Due diligence
37
6. Fall in rental rates
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
Rental rates may be adversely affected
by general UK economic conditions
and other factors that depress rental
rates, including local factors relating to
particular properties/locations (such as
increased competition).
Any fall in the rental rates for the
Company’s properties may have a
material adverse effect on the Company’s
profitability, the NAV, the price of the
Ordinary Shares and the Company’s ability
to meet interest and capital repayments on
any debt facilities.
The Company builds a diversified property and
tenant base with subsequent monitoring of
concentration to individual occupiers and sectors
(geographical and sector exposure).
The Investment Manager holds quarterly meetings
with its Investment Strategy Committee and
regularly meets the Board of Directors to assess
whether any changes in the market present risks
that should be addressed in the Company’s
strategy.
Probability:
Moderate
Impact:
Moderate to High
Movement:
No change
5. Due diligence
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
Due diligence may not identify all the risks
and liabilities in respect of an acquisition
(including any environmental, structural
or operational defects) that may lead to a
material adverse effect on the Company’s
profitability, the NAV and the price of the
Company’s Ordinary Shares.
The Company’s due diligence benefits from work
(such as legal reports on title, property valuations,
environmental and building surveys) outsourced
to third parties who have expertise in their areas.
Such third parties have professional indemnity
cover in place.
Probability:
Low
Impact:
Moderate
Movement:
No change
4. Asset management initiatives
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
Asset management initiatives, such as
refurbishment works, may prove to be
more extensive, expensive and take
longer than anticipated. Cost overruns
may have a material adverse effect on the
Company’s profitability, the NAV and the
share price.
Costs incurred on asset management initiatives
are closely monitored against budgets and
reviewed in regular presentations to the
Investment Management Committee of the
Investment Manager.
Probability:
Low to Moderate
Impact:
High
Movement:
No change
Strategic Report Governance Financial Statements Additional Information
38
7. Breach of borrowing covenants
8. Availability and cost of debt
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
Material adverse changes in valuations
and net income may lead to breaches
in the Loan to Value (‘LTV’) and interest
cover ratio covenants.
The Company monitors the use of borrowings
on an ongoing basis through weekly cash flow
forecasting and quarterly risk monitoring to
monitor financial covenants.
Significant headroom currently exists for both
loan covenants.
The Investment Manager maintains a close
relationship with its loan finance provider, AgFe,
to ensure continuing dialogue around covenants.
Probability:
Low
Impact:
Moderate to High
Movement:
No change
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
In tandem with any future growth of the
Company, renewed and additional debt
funding is considered. It is acknowledged
that the current interest rate environment
may constrain the financial viability of
further debt funding and that renewal of
debt may be on less favourable terms.
The Company maintains a good relationship with
the lender providing the term credit facility.
The Company monitors the projected usage
and covenants of the credit facility on an
ongoing basis.
The Company actively monitors the debt markets
and loan term, engaging in loan extension
negotiations far in advance of expiry.
Probability:
Low
Impact:
Moderate
Movement:
No change
BORROWING RISKS
9. Dependence on the Investment Manager
and Other Service Providers
39
9. Dependence on the Investment Manager
and Other Service Providers
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
The Company has no employees and
is reliant upon the performance of its
Investment Manager and other third
party service providers. Failure by the
Investment Manager and/or any service
provider to carry out its obligations to the
Company in accordance with the terms
of its appointment could have a materially
detrimental impact on the operation of
the Company. The future ability of the
Company to successfully pursue its
investment objective and investment policy
may, among other things, depend on the
ability of the Investment Manager to retain
its existing staff and/or to recruit individuals
of similar experience and calibre.
The Investment Manager has endeavoured
to ensure that the principal members of its
management team are suitably incentivised.
The performance of service providers, in
conjunction with their service level agreements,
is monitored via regular calls and face-to-face
meetings and the use of key performance
indicators, where relevant.
The Investment Manager encourages a team-
based approach with the Board and its suppliers
in order to promote an effective working culture.
Probability:
Moderate to High
Impact:
Moderate
Movement:
No change
CORPORATE RISKS
Strategic Report Governance Financial Statements Additional Information
40
11. Business interruption
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
Cyber attacks on the Investment
Manager’s and/or other service providers’
IT systems could lead to operational
disruption, reputational damage,
regulatory (including GDPR) or financial
loss to the Company.
The Investment Manager’s and other service
providers’ IT systems are protected by anti-virus
software and firewalls that are updated regularly.
Fire protection and access security procedures
exist at all the Company’s managed properties,
along with the offices of its Investment Manager
and other service providers.
Probability:
Low to Moderate
Impact:
Moderate
Movement:
No change
10. Failure to meet objectives
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
The Company may not meet its
investment objective to deliver an
attractive total return to shareholders from
investing predominantly in a portfolio
of smaller commercial properties in the
United Kingdom.
Poor relative total return performance may
lead to an adverse reputational impact
that affects the Company’s ability to raise
new capital or maintain an attractive rating
in its shares.
The Company may not pay its target
dividend.
The Company has an investment policy to achieve
a balanced portfolio with a diversified asset and
tenant base. The Company also has investment
restrictions in place to limit exposure to potential
risk factors. The Investment Manager has extensive
experience in navigating market volatility.
The Company has the ability to pay dividends from
current year revenue as well as revenue reserves
and realised capital.
Probability:
High
Impact:
Moderate to High
Movement:
No change
41
13. General political/economic environment
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
Political and macroeconomic events
present risks to the real estate and
financial markets that affect the Company
and the business of its tenants.
These might damage consumer and
investor sentiment as real income and
wealth levels are challenged by these
exogenous events.
Conflicts in the Middle East and Eastern
Europe, as well as political and economic
disruptions caused by tariffs, have all
heightened the risks in the last year.
The Board considers the impact of political and
macroeconomic events when reviewing strategy.
Probability:
High
Impact:
Moderate to High
Movement:
No change
POLITICAL/ECONOMIC RISKS
12. Company REIT status
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
The Company has a UK REIT status that
provides a tax-efficient corporate structure.
If the Company fails to remain a REIT for
UK tax purposes, its profits and gains will
be subject to UK corporation tax.
Any change to the tax status or UK
tax legislation could impact on the
Company’s ability to achieve its
investment objectives and provide
attractive returns to shareholders.
The Company monitors REIT compliance through
the Investment Manager on acquisitions; the
Administrator on asset and distribution levels;
the Registrar and Broker on shareholdings; and
the use of third-party tax advisers to monitor REIT
compliance requirements.
Probability:
Low
Impact:
Moderate to High
Movement:
No change
TAXATION RISKS
Strategic Report Governance Financial Statements Additional Information
42
14. Environmental transition risk
15. Physical risk to properties
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
The risk of physical damage to properties
as a result of environmental factors such
as flooding and natural fires. In the long-
term, changes in climate and/or weather
systems may mean properties become
unviable to tenants.
The Company obtains environmental surveys for
all acquisitions, which mitigate the short-term risk
of climate-related damage to properties owned.
The Investment Manager’s asset management
team perform regular site visits to the Company’s
properties in order to continually assess the
physical risk posed to them. This includes climate
resilience assessments.
Probability:
Low
Impact:
Moderate to High
Movement:
No Change
PRINCIPAL RISKS AND THEIR
POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
Failure to identify and mitigate the
transition risk for climate change could
lead to the Company holding stranded
assets and lead to a negative impact on
its reputation. Failure by the Company to
meet required regulatory standards could
lead to increased stakeholder concern
and negative feedback.
The Company has engaged specialist
environmental consultants to advise the Board
on compliance with regulatory requirements
and adopting best practice where possible. All
prospective acquisitions and asset management
initiatives are influenced by environmental
assessments undertaken by the Company, such
as ensuring they are in conformance with the
Minimum Energy Efficiency Standard (‘MEES’)
Regulations. All assets have an Asset Sustainability
Action Plan (‘ASAP’) initiative, which tracks
environmental initiatives across the portfolio
on an asset-by-asset basis for targeted, relevant
and specific implementation of environmental
improvements.
Probability:
Moderate
Impact:
Moderate
Movement:
No Change
43
Alternative Investment
Fund Manager (‘AIFM’)
AEW UK Investment Management LLP is authorised and regulated by the FCA as a full-scope AIFM and provides its
services to the Company.
The Company has appointed Langham Hall UK Depositary LLP (‘Langham Hall’) to act as the depositary to the
Company, responsible for cash monitoring, asset verification, and oversight of the Company.
Information Disclosures under the AIFM Directive
Under the AIFM Directive, the Company is required to make disclosures in relation to its leverage under the
prescribed methodology of the Directive.
Leverage
The AIFM Directive prescribes two methods for evaluating leverage, namely the ‘Gross Method’ and the
‘Commitment Method’. The Company’s maximum and actual leverage levels are as per below:
31 MARCH 2025 31 MARCH 2024
LEVERAGE EXPOSURE GROSS METHOD
COMMITMENT
METHOD GROSS METHOD
COMMITMENT
METHOD
Maximum Limit 140% 140% 140% 140%
Actual 118% 134% 130% 137%
In accordance with the AIFM Directive, leverage is expressed as a percentage of the Company’s exposure
to its NAV and adjusted in line with the prescribed ‘Gross’ and ‘Commitment’ methods. The Gross method is
representative of the sum of the Company’s positions after deducting cash balances and without taking into
account any hedging and netting arrangements. The Commitment method is representative of the sum of
the Company’s positions without deducting cash balances and taking into account any hedging and netting
arrangements. For the purposes of evaluating the methods above, the Company’s positions primarily reflect its
current borrowings and NAV.
Remuneration
The AIFM has adopted a Remuneration Policy which accords with the principles established by AIFMD. AIFMD
Remuneration Code Staff includes the members of the AIFM’s Management Committee, those performing Control
Functions, Department Heads, Risk Takers and other members of staff that exert material influence on the AIFM’s
risk profile or the AIFs it manages.
Staff are remunerated in accordance with the key principles of the firm’s remuneration policy, which include:
– promoting sound risk management;
– supporting sustainable business plans;
– remuneration being linked to non-financial criteria for Control Function staff;
– incentivising staff performance over longer periods of time;
– awarding guaranteed variable remuneration only in exceptional circumstances; and
– having an appropriate balance between fixed and variable remuneration.
As required under section ‘Fund 3.3.5.R(5)’ of the Investment Fund Sourcebook, the following information is
provided in respect of remuneration paid by the AIFM to its staff for the year ended to 31 December 2024
Strategic Report Governance Financial Statements Additional Information
44
YEAR ENDED
31 DECEMBER 2024
Total remuneration paid to employees during the financial year:
a) remuneration, including, where relevant, any carried interest paid by the AIFM: £11,779,657
b) the number of beneficiaries 74
The aggregate amount of remuneration of the AIFM Remuneration Code staff, broken down by:
a) senior management £3,948,361
b) members of staff £7,831,296
FIXED
REMUNERATION
VARIABLE
REMUNERATION
TOTAL
REMUNERATION
Senior Management £2,129,944 £1,818,417 £3,948,361
Staff £5,553,932 £2,277,364 £7,831,296
Total £7,683,876 £4,095,781 £11,779,657
Fixed remuneration comprises basic salaries and variable remuneration comprises bonuses.
AEW UK Investment Management LLP
26 June 2025
Coventry, Central Six Retail Park
4545
Stakeholder Engagement
S172 STATEMENT
The Directors’ overarching duty is to promote the success of the Company for the benefit of its shareholders,
having regard to the interests of its other stakeholders, as set out in section 172 of the Companies Act 2006
(the ‘Act’). The Directors have considered each aspect of this section of the Act and consider that the information
set out below is particularly relevant in the context of the Company’s business as an externally managed
investment company which does not have any employees and relies on the contracted services from its key agents
and suppliers.
We set out in the table below our key stakeholders, the nature of their relationship with the Company and Board,
their key interests and how we engage with those stakeholders.
Our relationships with stakeholders are factored into Board discussions and decisions made by the Board will
consider the impact on the stakeholders, in accordance with s172 of the Act.
STAKEHOLDER INTERESTS ENGAGEMENT
Investors
Our shareholders are impacted
directly by the financial
performance of the Company
through dividends and share
price movements.
They also play an important role
in monitoring the governance of
the Company.
– Sustainable growth of the
Company and achieving
target returns
– Good relationship with the
Company and Board
– Effective structure and
control framework
– Impact of the Company on
the wider community and
environment
– Reputation of the Company
– AGM, Annual and Interim
Report, regulatory
announcements
– Quarterly update reports
and other key information
published on the website
– Roadshows, meetings
and presentations via the
Investment Manager, and
the Company’s Broker and
marketing agents
Service providers
Key functions of the Company
are outsourced to third-party
suppliers, including investment
management, property
management, administration,
company secretarial, registrar,
depositary and legal services. It
is important to develop strong
long-term working relationships
with these providers to enhance
the efficiency of the Company’s
operations, as well as that of the
providers themselves.
– Good relationship with the
Company and Board
– Fair contract terms and
service-level agreements
– Reputation of the Company
– The Company’s performance
and long-terms prospects
– Effective and regular
communication
– Service-level agreements
– Formal tender processes
where appropriate
– Management Engagement
Committee review
Strategic Report Governance Financial Statements Additional Information
46
STAKEHOLDER INTERESTS ENGAGEMENT
Tenants
The Company’s strategy in
relation to its individual assets
will directly affect the tenants in
occupation of those assets.
– Good communication
and relationship with the
Company as landlord
– Fair lease terms
– Long-term strategy for
the asset in line with the
objectives of the tenant’s
activities
– Site visits and face-to-face
meetings through the
Investment Manager
– Formal negotiations
– Ongoing communication
through the property
manager
The wider community and environment
The Company’s physical
real estate assets have a
direct impact on their local
communities depending on
their primary use and on the
environment through their
emissions and energy usage.
– Impact of properties and
their business plans on the
local economy
– Impact of properties on the
attractiveness and appeal of
the local area
– Energy efficiency and
greenhouse gas emissions
– Publishing of Sustainability
Disclosure Report and
Greenhouse Gas Emissions
Statement
– Global Real Estate
Sustainability Benchmark
(‘GRESB’) reporting
– Communication with local
authorities via Investment
Manager
Wrexham, Gresford Industrial Estate
4747
PRINCIPAL DECISIONS MADE BY THE BOARD
The principal decisions made by the Board during the year are summarised below.
Dividends The Board considered the Company’s target dividend of 8.00 pps per
annum and approved payment of it, continuing the Company’s track
record in paying dividends at this level.
Continued focus on sustainability
impact and GRESB score
The Board has continued its focus on responsible business practices.
More details on sustainability impact and GRESB score can be found in
the Directors’ Report on pages 71 to 76. The Investment Manager meets
regularly with MAPP and Evora, its ESG consultants, to consider initiatives
to improve the Company’s GRESB score.
Oversight of Investment Manager
and Review of Investment Activities
The Board is responsible for the ongoing review of investment activity and
performance and the control and supervision of the Investment Manager.
During the year, the following key investment activities were reviewed by
the Board:
– The acquisition of 13-13A, 114-123 Bancroft and 3-4 Portmill Lane,
Hitchen;
– The disposal of Oak Park Industrial Estate, Droitwich; and
– The disposal of Units 1-11, Central Six Retail Park, Coventry.
Further details of the property transactions can be found in the ‘Property
Portfolio’ section of the Investment Manager’s Report.
Corporate Initiatives The Board and Investment Manager assessed the Company’s ability to
grow through a variety of initiatives, including capital raising and M&A.
Such opportunities continue to be reviewed.
Further information on the Company’s engagement with stakeholders and its ESG policy can be found on pages
46 and 75.
Approval
The Strategic Report has been approved and signed on behalf of the Board by:
Robin Archibald
Chairman of the Board
26 June 2025
Strategic Report Governance Financial Statements Additional Information
48
Governance
Runcorn, Sarus Court
Strategic Report Governance Financial Statements Additional Information
Mark Kirkland
non-executive Director, and Chairman
of the Audit and Risk Committee
Robin Archibald
non-executive Chairman of the Board,
and Chairman of the Management
Engagement Committee
Board of Directors
Mr Kirkland qualified as a Chartered Accountant with
PricewaterhouseCoopers in London and has extensive
corporate experience gained over 30 years, having
held several senior roles in both public and private
companies. Mr Kirkland’s initial career was in corporate
finance, predominately with UBS Limited. He has been
CFO of several public and private companies and
latterly was CEO of Delin Property, a pan-European
logistics developer, investor and manager. He is
currently an Executive Director of Kelso Group
Holdings plc and Non-Executive Director of
Strix Group Holdings plc.
Appointed: 9 November 2022
Mr Archibald was formerly Head of Corporate Finance
and Broking at Winterflood until April 2014 when
he retired from his executive roles. He is a Chartered
Accountant and worked as a Corporate Financier
with a number of leading city firms, including SG
Warburg Securities and NatWest Markets. Robin has
concentrated for much of his career on advising and
managing transactions in the UK listed closed-ended
funds sector. He is currently Chairman of Shires Income
Trust, having been Chair of Albion Technology Venture
Capital Trust and former Audit Chair and SID of Ediston
Property Investment Company, Henderson European
Trust and Capital Gearing Trust, roles he retired from in
recent years.
Appointed: 1 October 2023
5151
Katrina Hart
non-executive Director, and
Chairman of the Nomination and
Remuneration Committee
Liz Peace
non-executive Director, and
Senior Independent Director
Mrs Hart spent her executive career in corporate
finance and equity research advising, analysing
and commenting on a broad range of businesses
operating in the wealth and asset management
sectors. During this period, she accumulated an
in-depth understanding of the commercial dynamics
and operational drivers of asset management and
worked very closely with some of the most respected
companies in the sector. Latterly, she was a highly rated
financials analyst at HSBC, Bridgewell Group Plc and
headed up the financials research team at Canaccord
Genuity Inc.
Mrs Hart is Chairman of BlackRock Frontiers Investment
Trust plc and JPMorgan UK Small Cap Growth and
Income plc and a non-executive Director of Montanaro
Asset Management Limited. She was formerly a
non-executive Director of Premier Miton Group Plc,
Polar Capital Global Financials Trust plc and Keystone
Positive Change Investment Trust plc.
Appointed: 5 June 2017
Mrs Peace spent her early career in Government in the
Ministry of Defence, eventually becoming a key player
in the creation of QinetiQ plc in 2001. She then moved
into the private sector, becoming Chief Executive of
the British Property Federation where she played a
significant role in the creation of the UK’s Real Estate
Investment Trust structure. She was awarded a CBE in
2008 for services to the property industry. Mrs Peace
has a non-executive portfolio career primarily focused
on real estate, including NED roles at Howard de
Walden Estates Ltd, Greencore Homes Ltd, and the
Royal Institution of Chartered Surveyors where she is
the Senior Independent Governor. She is chair of the
University of Cambridge Property Board and of Nuclear
Waste Services, an operating company of the Nuclear
Decommissioning Authority. She is also chair of the
Churches Conservation Trust, a secular organisation
looking after 358 redundant Church of England
churches.
Appointed: 1 October 2023
Strategic Report Governance Financial Statements Additional Information
5252
This Corporate Governance Statement comprises pages 53 to 60 and forms part of the Directors’ Report.
STATEMENT FROM THE CHAIRMAN OF THE BOARD
The Company is committed to maintaining high standards of corporate
governance and considers that reporting against the principles and
recommendations of the AIC Code of Corporate Governance issued in
2024 (the ‘AIC Code’), provides better information to shareholders as it
addresses all the principles set out in the UK Corporate Governance Code
issued in 2024 (the ‘UK Code’), as well as setting out additional principles
and recommendations on issues that are of specific relevance to investment
trusts, and is endorsed by the Financial Reporting Council (the ‘FRC’).
The terms of the FRC’s endorsement mean that AIC members who report
against the AIC Code fully meet their obligations under the UK Code and
the related disclosure requirements contained in the Listing Rules. The AIC
Code is available from the AIC website at theaic.co.uk. A copy of the UK
Code can be obtained at frc.org.uk.
The Board recognises the importance of a strong corporate governance culture and has established a framework
for corporate governance which it considers to be appropriate.
The UK Code includes provisions relating to:
– the role of the chief executive; and
– executive directors’ remuneration.
For the reasons set out in the AIC Code, the Board considers these provisions not relevant to the position of the
Company, being an externally managed REIT. In particular, all of the Company’s day-to-day management and
administrative functions are outsourced to third parties. As a result, the Company has no executive directors,
employees or internal operations. The Company has therefore not reported further in respect of these provisions.
The Board has reviewed the principles and recommendations of the AIC Code and considers that the Company
has complied with these throughout the year. Mrs Peace was appointed as the Board’s Senior Independent
Director, and additional Board Committees were established in January 2025 (a Nomination and Remuneration
Committee and Management Engagement Committee).
Corporate Governance
Statement
Bath, Northgate House
5353
THE BOARD OF DIRECTORS
Under the leadership of the Chairman, the Board of
Directors is collectively responsible for the long-term
sustainable success of the Company. It provides overall
leadership, sets the strategic aims of the Company
and ensures that the necessary resources are in place
for the Company to meet its objectives and fulfil its
obligations to shareholders within a framework of
high standards of corporate governance and effective
internal controls. The Directors are responsible for
determining the Company’s investment policy and
investment strategy and have overall responsibility
for the Company’s activities, including the review of
investment activity and performance and supervision of
the Investment Manager.
The Board consisted of five non-executive Directors
up to Mr Burton’s retirement at the AGM in September
2024. Mr Archibald was appointed as Chairman of
the Board following the AGM, and the Board now
consists of four independent non-executive Directors.
The Board seeks to ensure that it has an appropriate
balance of skills and experience, and considers that,
collectively, the Directors have substantial recent and
relevant experience of the property sector, investment
companies and financial and public company
management.
The terms and conditions of the appointment of
Directors are formalised in letters of appointment,
copies of which are available for inspection from the
Company’s registered office. None of the Directors
has a contract of service with the Company. On
appointment, non-executive Directors undertake that
they will have sufficient time to meet the expectations of
the role. Directors are not entitled to any compensation
for loss of office.
Chairman
The Chairman leads the Board and is responsible for
its overall effectiveness in directing the Company.
He promotes a culture of openness and debate
and facilitates constructive Board relations and the
effective contribution of all Directors. In liaison with
the Company Secretary, he ensures that the Directors
receive accurate, timely and clear information.
The Chairman was independent on appointment
and is deemed by his fellow Board members to be
independent in character and judgement and free of
any conflicts of interest. He considers himself to have
sufficient time to spend on the affairs of the Company
and no conflicting activities.
The document setting out the responsibilities of the
Chairman is available on the Company’s website. The
Board’s policy is that the Chairman will serve for a
maximum of nine years in order to be consistent with
the requirement for regular Board refreshment.
Board Operation
The Board has adopted a formal schedule of matters
reserved for decision by the Board. These matters
include:
– responsibility for the determination of the
Company’s investment objective and policy;
– overall responsibility for the Company’s activities,
including the review of investment activity, gearing,
performance and supervision of the Investment
Manager;
– approval of Annual and Half-Yearly Reports and
Financial Statements and accounting policies,
prospectuses, circulars and other shareholder
communications;
– raising new capital and approval of financing
facilities;
– approval of the valuation of the Company’s
portfolio of assets;
– approval of the periodic announcement of the NAV
of the Company;
– Board appointments and removals; and
– appointment and removal of the Investment
Manager, Auditor and the Company’s other service
providers.
Runcorn, Sarus Court
Strategic Report Governance Financial Statements Additional Information
54
Board Meetings
The Company has four scheduled Board meetings a
year, with additional meetings held to approve NAV
announcements and dividends, and other meetings
arranged as necessary. At each Board meeting, the
Directors follow a formal agenda which is circulated in
advance by the Company Secretary. The Administrator,
Investment Manager and the Company Secretary
regularly provide the Board with financial information,
together with briefing notes and papers in relation to
changes in the Company’s economic and financial
environment, statutory and regulatory changes and
corporate governance best practice. A description of
the Company’s risk management and internal control
systems is set out on page 59.
The Company’s main functions are delegated to a
number of service providers, each engaged under
separate contracts. The management of the Company’s
portfolio is delegated to the Investment Manager,
who manages the assets in accordance with the
Company’s investment objective and policy. At each
Board meeting, representatives from the Investment
Manager attend to present reports to the Directors
covering the Company’s current and future activities,
portfolio of assets and its investment performance over
the preceding period. The Board and the Investment
Manager operate in a fully supportive, co-operative and
open environment, and communication with the Board
is maintained between scheduled meetings.
Board Committees
The Company has three Committees: the Audit and
Risk Committee, the Nomination and Remuneration
Committee, and the Management Engagement
Committee (“MEC”). The Nomination and
Remuneration Committee and the Management
Engagement Committee were established in January
2025. Each Committee’s delegated responsibilities are
clearly defined in formal terms of reference, which are
available on the Company’s website.
The Audit and Risk Committee comprises all the non-
executive Directors and is chaired by Mr Kirkland, who
has recent and relevant financial experience. Given
the size and nature of the Board, it is felt appropriate
that all Directors are members of the Audit and Risk
Committee. The Board is satisfied that the combined
knowledge and experience of its members is such
that the Committee discharges its responsibilities in
an effective, informed and challenging manner. The
Committee as a whole has competence relevant to
the investment trust sector. Further details about this
Committee and its activities can be found on pages 61
to 64.
The Nomination and Remuneration Committee
comprises all the non-executive Directors and is chaired
by Mrs Hart. Further details about this Committee and
its activities can be found on pages 66 to 70.
The Management Engagement Committee comprises
all the non-executive Directors and is chaired by
Mr Archibald. The Committee is responsible for
monitoring and evaluating the Investment Manager’s
and other key service providers’ performance.
The MEC was established during the year, including
its remit as distinct from the Board, and its activities
included analysis of the services provided by all the
key agents to the Company, including AEW, the costs
of those services and how effective the agents were
in performing their services. The services of the audit
firm remains under the remit of the Audit and Risk
committee. The MEC reported to the Board that it was
satisfied with the services provided and that changes
to individuals providing the services during the course
of the year had been managed successfully. The
MEC commended the services provided by AEW in
managing the portfolio and the resultant performance
record for the Company. The MEC continues to
challenge costs, given the size of the Company, but
recognises that in order to address an ambition for
growth over the medium term, as well as providing the
service level required for a listed REIT, with gearing, the
operating costs will be higher than might be the case
for an equity investment company.
Redditch, Eagle Road, North Moons Industrial Estate
5555
MEETING ATTENDANCE
The table below sets out the number of scheduled Board and Committee meetings attended by each Director
during the year ended 31 March 2025. The Board met on a number of occasions during the year, outside the
normal cycle of board meetings, to discuss corporate issues affecting the Company.
BOARD
MEETINGS
AUDIT AND RISK COMMITTEE
MEETINGS
NOMINATION AND
REMUNERATION COMMITTEE
MEETINGS
MANAGEMENT ENGAGEMENT
COMMITTEE MEETINGS
NUMBER OF
MEETINGS
NUMBER
ATTENDED
NUMBER OF
MEETINGS
NUMBER
ATTENDED
NUMBER OF
MEETINGS
NUMBER
ATTENDED
NUMBER OF
MEETINGS
NUMBER
ATTENDED
Robin Archibald 6 6 2 2 1 1 1 1
Katrina Hart 6 6 2 2 1 1 1 1
Mark Kirkland 6 6 2 2 1 1 1 1
Liz Peace 6 6 2 2 1 1 1 1
Mark Burton* 6 3 2 1 1 – 1 –
* Retired on 4 September 2024.
PERFORMANCE EVALUATION
The Board has a formal process to evaluate its performance annually through the Nomination and Remuneration
Committee. The Chairman acts on the results of the evaluation by recognising the strengths and addressing any
weaknesses of the Board, as appropriate. The evaluation of the Chairman is carried out by the other Directors of the
Company, led by Mrs Peace as the Senior Independent Director. The evaluation covers:
– the performance of the Board and its Committees, including how Directors work together as a whole;
– the balance of diversity, skills, experience, independence and knowledge of the Directors; and
– identification of areas for improving Board performance as well as key priorities ahead.
The Board seeks to ensure that it has an appropriate balance of skills and experience, and considers that,
collectively, it has substantial recent and relevant experience of investment trusts, the UK real estate sector, and
financial and capital markets.
DIRECTORS’ INDEPENDENCE
The Board considers and reviews the independence of each non-executive Director on an annual basis as part
of the Directors’ performance evaluation. In carrying out the review, consideration is given to factors such as
their character, judgement, commitment and performance on the Board and its Committees. Following review,
all Directors are considered to be independent of the Investment Manager and free from any business or other
relationship that could materially interfere with the exercise of his or her independent judgement. The Nomination
and Remuneration Committee leads the appointment process for any new Directors through the use of an
independent search firm.
Strategic Report Governance Financial Statements Additional Information
56
DIVERSITY
Board Diversity
The Board’s policy on diversity is to ensure that the Directors on the Board have a broad range of experience, skills
and knowledge, with diversity of thinking, background and perspective. Appointments to the Board are made on
merit against objective criteria, having regard to the benefits of diversity and the current and future needs of the
business and the other factors set out in the AIC Code.
Diversity, including, but not limited to, gender, social background, ethnicity, age, sexual orientation, disability and
professional and industry-specific knowledge, is an important consideration in ensuring that the Board and its
committees have the right balance of skills, experience, independence and knowledge necessary to discharge
their responsibilities. The Board notes the FCA rules on diversity and inclusion on company boards, namely, that
from accounting periods starting on or after 1 April 2022:
a. At least 40% of individuals on the Board to be women;
b. At least one senior Board position to be held by a woman; and
c. At least one individual on the Board to be from a minority ethnic background.
The Board continues to develop its succession planning in line with these recommendations. In accordance with
Listing Rule 6 Annex 1, the tables below, in prescribed format, show the gender and ethnic background of the
Directors at the date of this Report.
The Board has complied with two out of the three recommendations and will look to address the third as part
of ongoing succession planning whilst recognising that maintaining a small, closely functioning Board is an
important requisite of the Company given its size.
NUMBER OF
BOARD MEMBERS
PERCENTAGE
ON THE
BOARD
NUMBER OF
SENIOR POSITIONS
ON THE BOARD
Men 2 50% 1
Women 2 50% 1
Not specified/prefer not to say – – –
NUMBER OF
BOARD MEMBERS
PERCENTAGE
ON THE
BOARD
NUMBER OF
SENIOR POSITIONS
ON THE BOARD
White British or other White
(including minority white groups)
4 100% 2
Mixed/Multiple ethnic groups – – –
Asian/Asian British – – –
Black/African/Caribbean/Black British – – –
Other ethnic group, including Arab – – –
Not specified/prefer not to say – – –
The data in the above tables was collected through self-reporting by the Directors.
Each Board member is also a Director of the Company’s subsidiary, AEW UK REIT 2015 Limited.
57
DIRECTOR INDUCTION AND TRAINING
All Directors receive an induction on joining the
Board and other relevant training as necessary. As the
business environment changes, it is important to ensure
the Directors’ skills and knowledge are refreshed and
updated regularly. Accordingly, the Company Secretary
ensures that updates on corporate governance,
regulatory and technical matters are provided to
Directors at Board meetings. In this way, Directors keep
their skills and knowledge relevant to enable them to
continue to fulfil their duties effectively. Each Director
has access to the advice and services of the Company
Secretary, who is responsible to the Board for ensuring
that Board procedures are followed and that applicable
rules and regulations are complied with.
DIRECTORS’ CONFLICTS OF INTEREST
Directors have a statutory duty to avoid situations in
which they have or may have interests that conflict
with those of the Company, unless that conflict is
first authorised by the Board. This includes potential
conflicts that may arise when a Director takes up
a position with another company. The Company’s
Articles of Association allow the Board to authorise
such potential conflicts, and there is a procedure in
place to deal with any actual or potential conflict of
interest. The Board deals with each appointment on its
individual merit and takes into consideration all relevant
circumstances. A register of conflicts is maintained
by the Company Secretary and is reviewed at Board
meetings to ensure that any authorised conflicts remain
appropriate. The Directors are required to confirm at
these meetings whether there has been any change to
their position.
RE-ELECTION AND TENURE OF DIRECTORS
The Board recognises the value of regular refreshment
of its composition and remains committed to ensuring
that it has the right mix of skills and experience that
are aligned with the evolution and strategic plans of
the Company, while maintaining its independence of
character and judgement.
In accordance with the requirements of the AIC Code,
the Board has adopted a policy whereby all Directors
stand for annual re-election and no Director will serve
for a period of more than nine years, unless there are
specific circumstances where it makes sense for a
Board member to continue beyond nine years.
On the basis of the performance evaluation process,
the Board considers that all Directors continue to be
effective, committed to their roles and have sufficient
time available to perform their duties. The Board
therefore believes that it is in the best interests of
shareholders that each of the Directors is re-elected at
the forthcoming AGM.
SUCCESSION PLANNING
The composition of the Board and succession planning
are kept under review by the Board and reviewed
annually as part of the Board evaluation process in
order to ensure an orderly refreshment of the Board.
Succession planning will be important for the coming
year and the next refresh will be ahead of Mrs Hart’s
retirement at the 2026 AGM.
Hitchin, Bancroft
Strategic Report Governance Financial Statements Additional Information
58
CULTURE
The Directors are aware that establishing and maintaining a healthy and constructive culture amongst the Board
and in its interaction with the Investment Manager, other service providers, shareholders and other stakeholders
will support the delivery of the Company’s purpose, values and investment strategy. The Board seeks to promote a
culture of openness, transparency and integrity through ongoing dialogue and engagement with its stakeholders,
principally the Investment Manager, as well as providing constructive challenge where required.
The Company has a number of policies and procedures in place to assist with maintaining a culture of good
governance including those relating to diversity, Directors’ conflicts of interest and Directors’ dealings in the
Company’s shares. The Board assesses and monitors compliance with these policies as well as the general culture
of the Board regularly through Board meetings and in particular during the annual evaluation process.
The Board seeks to appoint the best possible service providers and evaluates their services on a regular basis as
described on page 74. The Board considers the culture of the Investment Manager and other service providers,
including their policies, practices and behaviour, through regular reporting from these stakeholders and in
particular during the annual review of the performance and continuing appointment of all service providers by the
Management Engagement Committee.
INTERNAL CONTROL REVIEW
The Board is responsible for the systems of internal controls relating to the Company, including the reliability of
the financial reporting process, and for reviewing the systems’ effectiveness. The Directors have reviewed and
considered the guidance supplied by the FRC on risk management, internal control and related finance and
business reporting, and an ongoing process is in place for identifying, evaluating and managing the principal
and emerging risks faced by the Company. This process, together with key procedures established with a view to
providing effective financial control, was in place during the year under review and at the date of this report.
The internal control systems are designed to ensure that proper accounting records are maintained, that the
financial information on which business decisions are made and which is issued for publication is reliable, and that
the assets of the Company are safeguarded.
The risk management process and systems of internal control are designed to manage rather than eliminate the
risk of failure to achieve the Company’s objectives. It should be recognised that such systems can only provide
reasonable, not absolute, assurance against material misstatement or loss.
The Directors have carried out a review of the effectiveness of the systems of internal control as they have operated
over the period and up to the date of approval of the Annual Report and Financial Statements. There were no matters
arising from this review that required further investigation, and no significant failings or weaknesses were identified.
Bristol, Union Street
5959
Internal Control Assessment Process
Robust risk assessments and reviews of internal controls are undertaken regularly in the context of the Company’s
overall investment objective.
The following are the key internal controls which the Company has in place:
– a risk register has been maintained against which identified and emerging risks, as well as the controls in place
to mitigate those risks, can be monitored. The risks of any failure of internal controls are identified in the risk
matrix, which is regularly reviewed by the Board through the Audit and Risk Committee and the impact of such
risks is also assessed. The principal and emerging risks and uncertainties identified from the risk matrix can be
found in the Strategic Report on pages 36 to 43;
– a procedure to monitor the compliance status of the Company to ensure that it can continue to be approved as
a REIT;
– the Investment Manager and the Administrator prepare forecasts and management accounts which allow the
Board and the Audit and Risk Committee to assess performance and prospects; and
– the controls employed by the Investment Manager and other third-party service providers, as evidenced by
their ISAE 3402 or equivalent reports, are periodically reviewed by the Audit and Risk Committee, and there
are agreed and defined investment criteria, specified levels of authority and exposure limits in relation to
investments, leverage and payments.
Over and above the ongoing process, as part of the year-end reporting process, the Board and the Audit and
Risk Committee receive letters of comfort from the Investment Manager, Company Secretary, Administrator and
Registrar regarding their internal controls, accompanied by their ISAE 3402, or equivalent reports, if available.
Following the review of these submissions from service providers, the Board and the Audit and Risk Committee has
determined that the effectiveness of the systems of internal control was satisfactory.
AGM
The Company’s AGM will take place on 4 September 2025. The notice of this meeting and details of the resolutions
to be put to the AGM are contained in the circular sent to shareholders with this report and are available on the
Company’s website.
Dewsbury, The Railway Centre
Strategic Report Governance Financial Statements Additional Information
60
I am pleased to present the Report of the Audit and Risk Committee for the
year ended 31 March 2025.
The Audit Committee was renamed to the “Audit and Risk” Committee in
January 2025 to reflect the Committee’s role in overseeing the Company’s
internal controls and risk management systems. The Audit and Risk
Committee (the “Committee”) comprises all Directors of the Company.
The Directors have reviewed Mr Archibald’s ongoing membership of
the Committee given that he is Chair of the Board. Mr Archibald was
independent on his appointment as Chairman of the Board and provides
a significant contribution to the Committee as a chartered accountant and
experienced former audit chair on other investment companies, including a
REIT; as such, the Directors believe it is important for him to continue to be
a member of the Committee. The Committee as a whole has competence
relevant to the sector in which the Company operates.
Report of the Audit
and Risk Committee
Mark Kirkland
Chairman of the Audit and Risk Committee
61
MEETINGS
The Committee met formally twice during the year
and met once following the year-end. Details of the
composition of the Committee are set out in the
Corporate Governance Statement on page 55 along
with details on how the Committee’s evaluation process
was conducted. There was also regular engagement
throughout the year on individual matters as well as
input to the quarterly net asset value announcements.
ROLE OF THE AUDIT AND RISK COMMITTEE
The Committee’s terms of reference outlining its
duties can be found on the Company’s website.
The Committee assists the Board in discharging its
responsibilities concerning:
– financial reporting;
– going concern and viability;
– internal controls and risk management systems;
– principal risks and uncertainties;
– compliance, whistleblowing and fraud;
– external audit; and
– valuation.
This includes:
– monitoring the integrity of the financial statements
of the Company, including its Annual and Half-
Yearly Reports, and reviewing significant financial
reporting issues and judgements which they
contain;
– reviewing the content of the Annual Report and
Financial Statements and advising the Board on
whether, taken as a whole, it is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Company’s position and performance, prospects,
business model and strategy;
– keeping under review the adequacy and
effectiveness of the Company’s risk management
systems, reviewing the principal and emerging risks
facing the Company; and reviewing and approving
the statements to be included in the Annual Report
concerning internal controls and risk management;
– reviewing the scope and effectiveness of the audit
process undertaken by the Auditor;
– conducting the tender process and making
recommendations to the Board in relation to the
appointment, re-appointment or removal of the
Auditor and approving its remuneration and terms
of engagement;
– reviewing and monitoring the Auditor’s
independence, objectivity and effectiveness; and
– reviewing any non-audit services to be provided by
the Auditor and monitoring the level of fees payable
in that respect.
MATTERS CONSIDERED DURING THE YEAR
The Committee receives reports from external advisers
and from the Investment Manager, as required, to
enable it to discharge its duties.
The main activities undertaken during the year,
and to the date of this Annual Report, were that the
Committee:
– reviewed the internal controls and risk management
systems of the Company and its third-party service
providers;
– kept under close review the risk environment
to identify any significant emerging risks to be
addressed;
– reviewed the reporting environment for the
Company to help refresh Key Performance
Indicators, Risk Factors and Alternative Performance
Measures;
– agreed the plan and fees with the Auditor in
respect of the review of the Half-Yearly Report for
the six months ended 30 September 2024 and the
statutory audit of the Annual Report for the year
ended 31 March 2025, including the principal areas
of focus;
– received and discussed with the Auditor its report
on the results of the review of the Half-Yearly Report
and the year-end audit;
– reviewed the Annual and Half-Yearly Reports and
recommended these to the Board for approval;
– reviewed the performance and effectiveness of the
Auditor and considered its fees;
– reviewed the non-audit services provided by the
Auditor and the associated fees incurred; and
– reviewed Knight Frank’s valuation of investment
properties.
– With effect from 18 March 2025, CBRE was
appointed independent property valuer to the
Company for periods from 30 June 2025 onwards,
in accordance with RICS valuer rotation best
practice. The term of instruction for regulated
purpose valuations will commence on 30 June
2025 and expire on 29 June 2030, encompassing
quarterly valuations in respect of the properties
during that period.
Strategic Report Governance Financial Statements Additional Information
62
SIGNIFICANT ISSUES CONSIDERED
BY THE AUDIT AND RISK COMMITTEE
Valuation of Investment Properties
The Committee determined that the key area of risk
in relation to the financial statements of the Company
was the valuation of the investment properties. The 33
properties in the portfolio as at 31 March 2025 were
externally valued by qualified independent valuers,
using the internationally accepted Royal Institution of
Chartered Surveyors (‘RICS’) Valuation – Professional
Standards, and whilst comparable market transactions
provide valuation evidence, there are assumptions
which involve significant levels of judgement. The
Committee considered the quarterly and year-end
valuations of the Company’s portfolio, which were
discussed with the Investment Manager and the
Auditor during the audit of the financial statements.
Internal Controls
The Committee carefully considers the internal control
systems by regularly monitoring the services and
controls of its third-party service providers.
The Committee reviewed and, where appropriate,
updated the risk matrix during the year to take account
of principal and emerging risks. It received reports on
internal control and compliance from the Investment
Manager and the Company’s other service providers,
and no significant matters of concern were identified.
Internal Audit
The Company does not have an internal audit function.
During the year, the Committee reviewed whether
an internal audit function would be of value and
concluded that this would provide minimal additional
comfort at considerable extra cost to the Company.
While the Committee believes that the existing system
of monitoring and reporting by third parties remains
appropriate and adequate, it will actively continue, on
an annual basis, to consider possible areas within the
Company’s control environment which may need to be
reviewed in detail.
Maintenance of REIT Status
The Committee monitored the compliance status of
the Company and considered the requirements for the
maintenance of REIT status, including all applicable tax
legislation. This was the first full year where an external
review of REIT obligations was provided by a separate
accounting firm, Grant Thornton, throughout the
financial year.
Going Concern and Long-term
Viability of the Company
The Committee considered the Company’s financial
requirements for the next 12 months and concluded
that it has sufficient resources to meet its commitments.
Consequently, the financial statements have been
prepared on a going-concern basis. The Committee
also considered the longer-term viability statement
covering five years, and the underlying factors and
assumptions which contributed to the Committee
deciding that this was an appropriate length of time
to consider the Company’s long-term viability. This
included a specific examination of long-term debt
arrangements in place, and those which might be in
place in the future. The Company’s going concern
statement and the viability statement can be found on
pages 72 and 73.
AUDIT FEES AND NON-AUDIT SERVICES
The Committee has sole responsibility for agreeing the
audit fee in consultation with the Investment Manager,
based on the scope of the audit. The total audit fees for
the year ended 31 March 2025 can be found in note
5 to the Financial statements. During the year ended
31 March 2025, the Committee reviewed the policy
on the engagement of the Auditor to supply non-audit
services, taking into account the recommendations
of the FRC. All non-audit services are reviewed by the
Committee, which makes recommendations to the
Board for the provision of each non-audit service and
ensures that the statutory auditor is not engaged to
perform work that is prohibited under UK law.
The Auditor is permitted to provide non-audit related
services where the work involved is closely related to
the work performed in the audit. These include:
– reviews of interim Financial information;
– reporting on internal Financial controls when
required by law or regulation;
– reporting required by law or regulation to be
provided by the Auditor; and
– prospectus/capital markets reporting.
The policy was reviewed and its application monitored
by the Committee during the year, and it was agreed
that the policy remained appropriate for the Company.
63
YEAR ENDED
31 MARCH 2025
YEAR ENDED
31 MARCH 2024
Audit £237,000 £190,000
Statutory audit of Annual Report and Financial Statements £197,700 £190,000
Under accrual from prior year £39,300 –
Non-audit £36,000 £36,000
ISRE (UK) 2410 (interim review fee) £36,000 £36,000
Total fees paid to BDO LLP £273,000 £226,000
Percentage of total fees attributed to non-audit services 13% 16%
INDEPENDENCE AND OBJECTIVITY OF THE AUDITOR
It is the Committee’s responsibility to monitor annually the performance, objectivity and independence of the
Auditor. In evaluating BDO LLP’s (‘BDO’) performance, the Committee examined five main criteria – robustness
of the audit process, independence and objectivity, quality of delivery, quality of people and service, and value-
added advice.
Having carried out the above review, the Committee was satisfied with the Auditor’s performance and that the
engagement of BDO to provide the non-audit services was appropriate, and did not compromise its objectivity and
independence.
EXTERNAL AUDIT PROCESS
The Committee reviews the effectiveness of the external audit carried out by the Auditor on an annual basis. At
least twice a year, the Committee meets with the Auditor, once at the planning stage before the audit and once
after the audit at the reporting stage. The Auditor provides a planning report in advance of the annual audit, a
report on the annual audit and a report on its review of the interim financial statements. The Committee has an
opportunity to question and challenge the Auditor in respect of each of these reports.
During the year under review, BDO carried out the half-year review for the Company. The Chairman of the
Committee maintains regular contact with the audit partner throughout the year. In addition, at least once a year,
the Committee has an opportunity to discuss any aspect of the Auditor’s work with the Auditor in the absence of
the Investment Manager. After each audit, the Committee reviews the audit process and considers its effectiveness.
The review of the 2025 audit concluded that the audit process worked well, and no significant issues were
identified specifically in relation to the Company.
We consider that the audit team assigned to the Company by BDO has a good understanding of the Company’s
business, which enables it to produce a detailed, high-quality, in-depth audit and permits the team to scrutinise
and challenge the Company’s financial procedures and significant judgments. We asked the Auditor to explain the
key audit risks and how these have been addressed. We also considered BDO’s internal quality control procedures
and transparency report and found them to be sufficient. Overall, the Committee is satisfied that the audit process
is transparent and of good quality and that the Auditor has met the agreed audit plan.
Mark Kirkland
Chairman of the Audit and Risk Committee
26 June 2025
Strategic Report Governance Financial Statements Additional Information
64
Directors’ Remuneration Report
This report is prepared in accordance with Schedule 8 to the Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations
2008, as amended, and in accordance with the UK Listing Rules of the FCA
and the Companies Act 2006. An ordinary resolution for the approval of
this report will be put to shareholders at the forthcoming Annual General
Meeting (“AGM”).
The Company’s Remuneration Policy was last put to shareholders and
approved by ordinary resolution at the AGM held on 14 September 2023
under Section 439 of the Companies Act 2006. The Remuneration Policy will
be put to a binding shareholder vote at the 2026 AGM and, if approved, will
continue in force until the 2029 AGM. There have been no changes to the
content of the Remuneration Policy since the previous approved version.
The law requires the Company’s Auditor to audit certain of the disclosures
provided. Where disclosures have been audited, they are indicated as such.
The Auditor’s opinion is included in their report on pages 92 to 100.
Katrina Hart
Chairman of the Nomination and Remuneration Committee
65
STATEMENT FROM THE CHAIRMAN OF THE NOMINATION AND REMUNERATION COMMITTEE
I am pleased to present the Directors’ Remuneration
Report for the year ended 31 March 2025, which has
been prepared by the Nomination and Remuneration
Committee. This Committee was established in January
2025 and has since met once on 21 January 2025.
It consists entirely of non-executive Directors and is
responsible for board appraisal, succession planning
and determining and agreeing the remuneration policy
for the Directors of the Company and the Chairman of
the Board to ensure that the policy supports strategic
aims and promotes the long-term sustainable success
of the Company.
During the year under review, the Committee:
– Assessed the size, composition and structure of
the Board, the time commitment required of the
Directors and the leadership needs of the Company;
– Deliberated on the re-election of Directors at the
AGM;
– Evaluated board performance and planning;
– Examined remuneration trends across its peer
group;
– Reviewed the Directors’ expenses policy; and
– Considered the Directors’ fees, how they might be
structured and amended in line with reasonable
expectations of roles and responsibilities.
The Committee also noted the FCA’s rules on diversity
and inclusion on company boards included in Listing
Rule 6.6.6 (9-11), which are as follows:
– At least 40% of individuals on the Board to be
women;
– At least one senior Board position to be held by a
woman; and
– At least one individual on the Board to be from a
minority ethnic background.
The Board has complied with two out of the three
recommendations and will look to address the third
as part of ongoing succession planning.
The Committee believes that the current Board
possesses the necessary skills and experience to
meet the needs of the Company, while retaining a
relatively small and cohesive structure. Any succession
planning will consider diversity, additional skills and
the preservation of the collective competence and
chemistry of the Board. No changes to the Board are
anticipated during 2025.
It had been anticipated that I would need to retire at
the time of the 2025 AGM due to my promotion to the
role of Chair on another listed investment company
board. However, due to a reduction in my commitments
elsewhere since then, this is no longer necessary. It is
therefore anticipated that I will retire at the end of my
nine-year tenure in 2026, as originally envisaged.
The Committee is satisfied that all Directors remain
independent, demonstrate commitment and skill in
their roles, are not overboarded through other activities
and that there is the correct balance of skill and
experience to acquit the responsibilities of the Board.
During the year, the Committee conducted a thorough
review of the Directors’ fees in accordance with the
Remuneration Policy and the circumstances of the
Company. This review considered the Company’s
performance, the demands placed on the Directors’
skills and time, and the fees paid to non-executive
Directors in the Company’s peer group. The review
also took account of the size and cost of the Board
relative to peers. Following consultations with Panmure
Liberum (the Company’s broker) and MUFG Corporate
Governance Limited (the Company Secretary), it was
agreed that, effective 1 April 2025, fees would be
adjusted as follows:
– The base remuneration for all non-executive
Directors would be increased from £30,000 to
£32,000.
– An additional £16,000 would be added to the
base remuneration for the Chairman of the Board,
recognising the additional commitment required.
– An additional £7,500 would be added to the base
remuneration for the Chairman of the Audit and Risk
Committee.
– An additional £2,000 would be added to the
base remuneration for those Directors taking on
the role of the Chairman of the Nomination and
Remuneration Committee, the Chairman of the
Management Engagement Committee and the role
of the Senior Independent Director. Mr Archibald
agreed to take on the role of the Chair of the
Management Engagement Committee, but would
relinquish it if succession planning permitted.
Strategic Report Governance Financial Statements Additional Information
66
Chairman of the Board £38,000 to £50,000
Applying to Robin Archibald (Chairman of the Board
and Management Engagement Committee)
Chairman of the Audit
and Risk Committee
£32,500 to £40,000
Applying to Mark Kirkland (Chairman of the Audit
and Risk Committee)
Non-executive Director £30,000 to £34,000
Applying to Katrina Hart (Chairman of the Nomination
and Remuneration Committee) and Liz Peace
(Senior Independent Director)
With effect from 1 April 2025, the total aggregate fees for the Board increased from £136,500 to £158,000, and the
Board is satisfied that these changes comply with the Directors’ Remuneration Policy and are appropriate to the
increasing time commitment and expertise required to fulfil the role effectively. The Board’s review of remuneration
across the Company’s peer group highlighted that its own compensation had fallen materially out of kilter. It was
deemed necessary to address this divergence in view of the need to attract suitable talent at the time of the next
Board refreshment.
The Company’s Articles of Association permit the provision of pensions or similar benefits for Directors. However,
no pension schemes or similar arrangements have been established, and no Director is entitled to any pension
or similar benefits. Directors are not entitled to compensation for loss of office, nor are they entitled to any other
monetary payment or assets of the Company. Accordingly, the Single Total Figure table on page 68 does not
include columns for these items or their monetary equivalents.
An ordinary resolution to approve the Directors’ Remuneration Report will be put to shareholders at the
forthcoming AGM in 2025. No significant changes are proposed to the implementation of the current Directors’
Remuneration Policy, approved by shareholders in 2023, during the next financial year.
PERFORMANCE OF THE COMPANY
The chart below compares the share price total return to shareholders (assuming all dividends are reinvested)
with the total return on the FTSE 350 and FTSE 350 Real Estate indices since the inception of the Company.
These indices have been chosen as they are considered to be an appropriate benchmark against which to assess
the relative performance of the Company.
Source: Bloomberg
pence
Cumulative Share Price Total Return
AEW UK REIT plc
FTSE 350
FTSE 350 Real
Estate
50
100
150
200
250
Apr
2015
Aug
2015
Dec
2015
Apr
2016
Aug
2016
Dec
2016
Apr
2017
Aug
2017
Dec
2017
Apr
2018
Aug
2018
Dec
2018
Apr
2019
Aug
2019
Dec
2019
Apr
2020
Aug
2020
Dec
2020
Apr
2021
Aug
2021
Dec
2021
Apr
2022
Aug
2022
Dec
2022
Apr
2024
Apr
2023
Aug
2023
Aug
2024
Dec
2023
Dec
2024
67
VOTING AT AGM
The Directors’ remuneration report for the year ended 31 March 2024 and the Directors’ remuneration policy were
approved by shareholders at the AGM held on 4 September 2024 and 14 September 2023 respectively. The results
taken on a poll were as follows:
REMUNERATION REPORT 2024
NUMBER OF
VOTES CAST
PERCENTAGE OF
VOTES CAST
For 41,540,759 99.17
Against 346,954 0.83
Total votes cast 41,887,713 –
Number of votes withheld 80,941 –
REMUNERATION POLICY 2023
For 28,871,860 99.02
Against 286,268 0.98
Total votes cast 29,158,128 –
Number of votes withheld 114,384 –
DIRECTORS’ REMUNERATION FOR THE YEAR ENDED 31 MARCH 2025 (AUDITED)
FEES TOTAL
NAME OF DIRECTOR 2025 2024 2025 2024
% CHANGE IN
DIRECTORS’
FEES
Robin Archibald* £34,508 £15,000 £34,508 £15,000 N/A
Mark Kirkland £35,000 £32,500 £35,000 £32,500 7.69
Katrina Hart £30,000 £30,000 £30,000 £30,000 –
Liz Peace* £30,000 £15,000 £30,000 £15,000 N/A
Mark Burton** £16,126 £38,000 £16,126 £38,000 N/A
Bim Sandhu*** – £17,500 – £17,500 N/A
£145,634 £148,000 £145,634 £148,000
* appointed on 1 October 2023.
** retired on 4 September 2024.
*** retired on 30 September 2023.
Robin Archibald, who operates between Edinburgh and London, incurred travel expenses which were reimbursed of £725. Liz Peace
incurred travel expenses which were reimbursed of £93. Total expenses claimed £818 (2024: none).
There are no additional fees to disclose since the Company has no employees or executive directors. The figures
detailed in the Directors’ Remuneration Report pertain solely to Director remuneration, with no variable elements
payable to the Directors.
The Company is committed to ongoing dialogue with shareholders. Any views expressed by shareholders
regarding the fees paid to Directors will be taken into consideration by the Board when reviewing the Directors’
remuneration policy and during the annual review of Directors’ remuneration.
Strategic Report Governance Financial Statements Additional Information
68
ANNUAL PERCENTAGE CHANGE IN DIRECTORS’ REMUNERATION
The following table sets out the annual percentage change in Directors’ Fees for the previous four years to
31 March 2025.
DIRECTOR
YEAR ENDED
31 MARCH
2025
YEAR ENDED
31 MARCH
2024
YEAR ENDED
31 MARCH
2023
YEAR ENDED
31 MARCH
2022
% CHANGE
IN TOTAL
REMUNERATION
BETWEEN 2024
AND 2025
% CHANGE
IN TOTAL
REMUNERATION
BETWEEN 2023
AND 2024
% CHANGE
IN TOTAL
REMUNERATION
BETWEEN 2022
AND 2023
Robin Archibald* £34,508 £15,000 N/A N/A N/A N/A N/A
Mark Kirkland £35,000 £32,500 £10,894 N/A 7.69 N/A –
Katrina Hart £30,000 £30,000 £27,500 £27,500 – 9.09 –
Liz Peace* £30,000 £15,000 N/A N/A N/A N/A N/A
Mark Burton** £16,126 £38,000 £35,000 £35,000 N/A 8.57 –
Bim Sandhu*** – £17,500 £32,500 £32,500 – N/A –
* appointed on 1 October 2023.
** retired on 4 September 2024.
*** retired on 30 September 2023.
RELATIVE IMPORTANCE OF SPEND ON PAY
The table below sets out, in respect of the year ended 31 March 2025:
a. the remuneration paid to the Directors;
b. the management fee and expenses, which have been included to give shareholders a greater understanding of
the relative importance of spend on pay; and
c. distributions to shareholders by way of dividends.
YEAR ENDED
31 MARCH
2025
YEAR ENDED
31 MARCH
2024 CHANGE
Directors’ fees £145,634 £148,000 (£2,366)
Management fee and expenses £1,379,245 £1,391,335 (£12,090)
Dividends paid £12,673,980 £12,673,980 –
Note: the items listed in the table above are as required by the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013 s.20, except for the management fee and expenses, which has been included because the Directors believe that they will help
shareholders’ understanding of the relative importance of the spend on pay. The figures for these measures are the same as those shown in note 5 to
the financial statements.
69
STATEMENT OF DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS (AUDITED)
Neither the Company’s Articles of Association nor the Directors’ Letters of Appointment require a Director to own
shares in the Company. The interests of the Directors and their persons closely associated in the equity of the
Company as of 31 March 2025 are shown in the table below:
NUMBER OF ORDINARY SHARES % OF TOTAL VOTING RIGHTS
DIRECTOR 2025 2024 2025 2024
Robin Archibald 22,329 – 0.014 –
Katrina Hart 19,145 19,145 0.012 0.012
Liz Peace 15,666 – 0.009 –
Mark Kirkland – – – –
The Company has not been informed of any changes to the above interests between 31 March 2025 and the date
of this report.
Approval
The Directors’ Remuneration Report has been approved by the Board of Directors and signed on its behalf by:
Katrina Hart
Chairman of the Nomination and Remuneration Committee
26 June 2025
Strategic Report Governance Financial Statements Additional Information
70
Directors’ Report
The Directors’ Report, prepared in accordance with the requirements of the
Companies Act 2006 and the FCA’s Listing Rules and Disclosure Guidance
and Transparency Rules, comprises pages 71 to 90 and incorporates the
Corporate Governance Statement on pages 53 to 60.
DIVIDENDS
The Company pays dividends every quarter.
The interim dividends paid by the Company are set out
in note 11 of the financial statements. No final dividend
is being proposed.
DIRECTORS
The Directors of the Company are listed on pages 51
and 52. All served throughout the year under review.
POWER OF DIRECTORS
The Directors’ powers are determined by UK legislation
and the Company’s Articles of Association. The Articles
of Association may be amended by a special resolution
of the members. The Directors may exercise all of
the Company’s powers, provided that the Articles of
Association or applicable legislation do not stipulate
that any such powers must be exercised by the
members.
INDEMNITY PROVISIONS
Save for such indemnity provisions in the Company’s
Articles of Association, there are no qualifying third-
party indemnity provisions in force. The Board has
agreed to a procedure by which Directors may seek
independent professional advice, if necessary, and
at the Company’s expense. The Company has also
arranged for appropriate provision of Directors’ and
Officers’ Liability Insurance.
Bromley, Next
71
GOING CONCERN
The Directors assessed the Company’s ability to
continue as a going concern, which takes into
consideration current economic uncertainty, as well as
the Company’s cashflows, financial position, liquidity
and borrowing facilities.
As at 31 March 2025, the Company had £25.99 million
of unrestricted cash at bank. The Company’s loan is
held with AgFe and is a £60.00 million facility with a
five-year term. This is priced as a fixed rate loan with
a total interest cost of 2.959% and associated 10%
projected debt yield and 60% loan to value (“LTV”)
covenants. The Company reported an LTV of 33.87%
at year-end. This provides room for a £71.88 million fall
in portfolio valuation before breaching the 60% hard
LTV covenant. Moreover, based on the £60.00 million
of debt drawn as at year-end, the Company had a
projected debt yield of 25.11%, comfortably in excess of
the 10% covenant.
The Company benefits from a secure, diversified
income stream from a tenancy profile which is not
overly reliant on any one tenant or sector, which
reduces risk. The Directors also noted that:
– The Company’s rent collection has been strong,
with 98% of contracted rent either having been
collected, or payment plans agreed, for the March
2025 quarter.
– Based on the contracted rent as at 31 March 2025,
a reduction of 60.18% in net rental income could
be accommodated before breaching the debt
yield covenant in the Company’s re-financed debt
arrangements.
– Based on the property valuation at 31 March 2025,
the Company had room for a £71.88 million fall in
portfolio valuation before breaching the maximum
LTV hard covenant in the Company’s re-financed
debt arrangements.
– The Company’s cash flow can also be significantly
managed through the adjustment of dividend
payments, to the extent that this does not breach
the REIT regime requirements for distributions.
Taking this into consideration, the Directors have
reviewed a number of scenarios over 12 months from
the date of approval of these financial statements,
including a worst-case plausible downside scenario
which makes the following assumptions:
– a reduction in net rental income of 30%;
– no new lettings or renewals, other than those where
terms have already been agreed;
– a 20% fall in property valuations; and
– no new acquisitions or disposals.
In the above scenario, the Company is forecast
to generate a positive cash flow before dividend
payments, however it would generate a cash flow much
lower than its target dividend of 8 pps per annum.
Moreover, the Company is forecast to pass the debt
yield covenant during the 12-month period with a
minimum projected yield of 18%, compared with the
limit of 10%, assuming that no repayments of the facility
were to be made.
Given the Company’s substantial headroom against
its borrowing covenants, the Directors believe that the
Company is well placed to manage its financing and
business risks. The Directors are confident that the
Company will have sufficient funds to meet its liabilities
as they fall due for at least 12 months from the date of
approval of the financial statements and therefore the
financial statements have been prepared on a going
concern basis.
Shrewsbury, Arrowpoint Retail Park
Strategic Report Governance Financial Statements Additional Information
7272
VIABILITY STATEMENT
The Directors have assessed the prospects of the
Company over a period longer than the 12 months
required by the ‘Going Concern’ provisions. The
Board has considered the nature of the Company’s
assets, liabilities and associated cash flows, and has
determined that five years up to 31 March 2030 is the
maximum timescale over which the performance of
the Company can be forecast with a material degree of
accuracy and so is an appropriate period over which
to assess the Company’s viability. Considerations in
support of the assessment of the Company’s viability
over a five-year period include:
– the Company’s property portfolio has a WAULT of
5.73 years to expiry, representing a secure income
stream for the period under consideration;
– the Company benefits from a portfolio which
is diversified in terms of sector and location,
mitigating the risk of tenant default during the
period; and
– most leases contain a five-year rent review pattern
and therefore an assessment over five years allows
the Directors to assess the impact of the portfolio’s
reversion arising from rent reviews.
In assessing the Company’s viability, the Board has
carried out a thorough review of the Company’s
business model, including future performance,
refinancing, REIT compliance, liquidity, dividend cover
and banking covenant tests over a five-year period.
The business model is subject to annual sensitivity
analysis, which involves flexing a number of key
assumptions underlying the forecasts both individually
and in aggregate for normal and stressed conditions.
The five-year review also considers whether financing
facilities will be renewed as required.
The following scenarios were tested, both individually
and combined, in an effort to represent a severe but
plausible scenario:
– a reduction in net rental income of 30%;
– a 20% fall in portfolio valuation; and
– increased periods of vacancy.
Based on the result of this analysis, the Directors have a
reasonable expectation that the Company will be able
to continue in operation and meet its liabilities as they
fall due over the five-year period of their assessment.
SUBSIDIARY COMPANY
Details of the Company’s dormant subsidiary, AEW
UK REIT 2015 Limited, can be found in note 19 to the
financial statements.
Baslidon, 1 Bentalls, Pipps Hill Industrial Estate
7373
MANAGEMENT ARRANGEMENTS
AEW UK Investment Management LLP is the
Company’s Investment Manager and has been
appointed as the AIFM. Under the terms of the
Investment Management Agreement, the Investment
Manager is responsible for the day-to-day discretionary
management of the Company’s investments subject
to the investment objective and policy of the
Company and the overall supervision of the Directors.
The Investment Manager is entitled to receive a
quarterly management fee in respect of its services,
calculated at the rate of one-quarter of 0.9% of the
prevailing NAV (excluding uninvested proceeds
from fundraisings). There is no performance fee. Any
investment by the Company into the Core Fund is
not subject to management fees or performance fees
otherwise charged to investors in the Core Fund by the
Investment Manager. The Investment Management
Agreement may be terminated by the Company or the
Investment Manager, giving 12 months’ written notice.
CONTINUING APPOINTMENT
OF THE INVESTMENT MANAGER
The Board has reviewed the appropriateness of the
continuing appointment of the Investment Manager,
ensuring the terms and conditions of the Investment
Management Agreement align with the investment
policy and investment objective of the Company. It is
satisfied that the terms of the Investment Management
Agreement remain fair and competitive, and in the best
interests of shareholders.
In the opinion of the Directors, the continuing
appointment of the Investment Manager is in the
interests of shareholders as a whole. The Investment
Manager has and continues to manage the Company’s
portfolio and continues to apply the Company’s
investment policy and investment level.
REVIEW OF SERVICE PROVIDERS
The Management Engagement Committee and the Board
reviews the ongoing performance and the continuing
appointment of all service providers of the Company on
an annual basis. Any variation required to the terms of
all service providers’ agreements is also considered.
A review of all service providers was undertaken during
the year by the Management Engagement Committee,
which concluded that the services provided to the
Company were satisfactory and that their continued
appointments were in the best interests of the
shareholders.
FINANCIAL RISK MANAGEMENT
The financial risk management objectives and policies
can be found in note 22 to the financial statements.
SOCIAL, COMMUNITY AND
EMPLOYEE RESPONSIBILITY
The Company is an externally managed REIT and has
no direct employees. The management of the portfolio
has been delegated to the Investment Manager who
provides the employees that support the Company.
All other functions of the Company have also been
outsourced and as the Company has no employees,
there is no further reporting in respect of these
provisions.
The Investment Manager is an equal opportunities
employer who respects and seeks to empower each
individual and the diverse cultures, perspective, skills
and experiences within its workforce. For further
information on the Investment Manager’s principles
in relation to people including diversity, gender pay,
employee satisfaction surveys, wellbeing and retention,
please refer to the ESG link within the Corporate
Responsibility area at www.aewukreit.com.
The Company is not required to produce a statement
on slavery and human trafficking pursuant to the
Modern Slavery Act 2015 as it does not satisfy all
the relevant triggers under that Act that require such
a statement. The Company does, however, closely
monitor the policies of its suppliers to ensure that
proper provisions are in place.
AEW UK Investment Management LLP, the Investment
Manager to the Company, is part of the Natixis Group,
whose statement on Slavery and Human Trafficking has
been published in accordance with the Modern Slavery
Act 2015.
https://natixis.groupebpce.com/wp-content/
uploads/2022/11/Modern-Slavery-Act-statement-2024.
pdf
Strategic Report Governance Financial Statements Additional Information
74
HOW WE ENGAGE WITH STAKEHOLDERS
Investors
The Investment Manager maintains an open dialogue
with shareholders and analysts. All feedback is
provided to the Board on a regular basis.
The Company provides investors with regular updates
on its business activity and financial performance.
Quarterly factsheets are available, along with Annual/
Half Year accounts and London Stock Exchange
RNS announcements, on the Company’s website
www.aewukreit.com.
Shareholders are encouraged to contact the
Investment Manager to raise any matters of concern
and to attend the AGM, where possible, to meet and
discuss the Company’s operations with the Board.
The Chairman is available to meet with shareholders
to understand their views on governance and the
Company’s performance, where they wish to do
so. With assistance from the Investment Manager,
during the year, the Chairman sought meetings with
shareholders who wished to meet with him.
Tenants
The Investment Manager, more specifically the Asset
Management team, maintains an ongoing dialogue
with tenants either directly or through its appointed
property manager. The property manager issues an
annual satisfaction survey to all tenants, which provides
qualitative feedback on their relationship with the
property manager and Investment Manager.
Shareholder engagement and investor
meetings
During the year, the Company held 18 meetings with
approximately 23 potential and existing shareholders.
The meetings engagements were attended by the
Investment Manager and Capital Access Group.
Quarterly, the Company also engaged with its retail
investors through virtual presentations held on the
Investor Meet Company platform.
2025 AGM
The Company’s AGM will take place on 4 September
2025. The notice of this meeting and details of the
resolutions to be put to the AGM are contained in
the circular sent to shareholders with this report and
are available on the Company’s website. The voting
results of the AGM will be published on the Company’s
website www.aewukreit.com.
MIFID II
As an externally managed REIT with a listing as a
closed-ended investment fund under Chapter 11 of
the FCA’s Listing Rules, the PRIIPS (Packaged Retail
and Insurance-based Investment Products) regulation
applies to the Company. The Company is required
to publish a Key Information Document (‘KID’) that is
updated on a semi-annual basis on the Company’s
website www.aewukreit.com.
ENVIRONMENTAL, SOCIAL
AND GOVERNANCE POLICY
The Investment Manager is committed to creating
long-term value for shareholders and adhere to a
Socially Responsible Investment (‘SRI’) Policy that
can be found on AEW’s corporate website
www.aew.com/socially-responsible-investment.
Over the coming years, we believe that both occupiers
and investors will increasingly focus on how ESG
issues are managed. In turn, this is expected to impact
building obsolescence, lettability, rates of lease
renewals and ultimately the rental and capital values
for individual assets. In recognition of this, the Board
believes in open disclosure of ESG performance,
including through participation in the annual Global
Real Estate Sustainability Benchmark (‘GRESB’) survey.
GRESB is the dominant global standard for assessing
ESG performance for real estate funds and companies.
GRESB requires the Company to report against a
wide array of ESG matters and highlights areas for
improvement and opportunities for growth.
The Company uses the annual outcome from GRESB
as a benchmark to assess its own sustainability
performance. The Company was awarded two stars
from GRESB for 2024, improving its score from 67 to 68
(peer group average 69).
A large portion of the GRESB score relates to data
coverage. Due to the high percentage of single-let
assets with tenant procured utilities, the Company
does not score as well as funds with a larger holding of
managed multi-let assets.
75
Within GRESB, the Company
is benchmarked against two
dimensions:
1. Management
relating to strategy and leadership management,
policies, risk management and stakeholder
engagement completed at an entity level. The
Company achieved a score of 29 out of 30. This section
is dependent on fund level policies and initiatives
which are directly applicable to the Company (e.g.
Environmental, Governance and Employee Policies).
2. Performance
relating to the measurement of the fund’s asset
portfolio performance. The Company achieved a score
of 39 out of 70. This score is representative of the fund
composition as the Performance dimension is heavily
influenced by the level of control landlords have across
issues such as energy management, service charge
budgets and access to environmental data.
The Investment Manager is in the process of submitting
the Company’s GRESB assessment for the year from
1 April 2024 to 31 March 2025 and expects to receive
the results of the assessment in September 2025.
The Company is committed to improving its
transparency of ESG performance and has adopted the
European Public Real Estate Association (‘EPRA’) Best
Practice recommendations on Sustainability Reporting
2017.
The progress that the Company has made on ESG
issues during the period has been recognised
externally, most notably by being awarded the EPRA
Sustainability Best Practice Recommendations Silver
Award and receiving its Most Improved Award for 2020.
This was awarded in addition to the EPRA Gold Medal
for Financial Reporting received in the year.
Further information on the Company’s engagement
with stakeholders can be found on pages 46 to 47 and
the full ESG disclosures for the Company, including
Streamlined Energy and Carbon Reporting disclosures,
can be found in the EPRA Sustainability Performance
Measures on pages 140 to 152.
Our fiduciary duty to shareholders will always come
first in all investment decision-making. The Investment
Manager offers clients long-term value-based real
estate investment solutions. This is delivered via stock
selection and asset management of UK commercial real
estate. It is the Investment Manager’s belief that this
financial objective can be achieved simultaneously with
a constructive engagement with environmental and
social concerns.
The Board believes environmentally responsible fund
management means being active, on the ground every
day. As such, the Company operates an Environmental
Management Systems (‘EMS’) which is designed to
be aligned with ISO4001, to integrate sustainability
objectives into the overall business strategy. Our
property managers, MAPP, also apply their own internal
EMS to all managed assets across the portfolio. All
members of the Investment Manager’s team have a
sustainability objective within their annual performance
objectives.
Greenhouse Gas Emissions
Refer to the EPRA Sustainability Performance Measures
on pages 140 to 152 for Greenhouse Gas Emissions
disclosures.
Strategic Report Governance Financial Statements Additional Information
76
Taskforce on
Climate-Related
Financial
Disclosures
77
The Board and the Investment Manager recognise the importance of
understanding the risks and opportunities presented by climate change,
including the potential impact on its business and the value of investments
under its management. The following disclosures are intended to provide
decision-useful information in a manner consistent with the TCFD.
Accordingly, the disclosures are organised thematically, addressing
Governance, Strategy, Risk Management, Metrics and Targets. In future
reporting periods the Board and the Investment Manager will seek to
incorporate TCFD sector-specific guidance.
This is the Company’s third year of voluntary reporting against the TCFD
framework; we remain committed to further improvements, in terms of
both the quality of disclosures and degree of alignment with the TCFD
recommendations. In future reporting periods the Board and the Investment
Manager expect that the Company’s TCFD framework will demonstrate
continual refinement of climate-related assessments, as well as integrating
more sophisticated and comprehensive risk management practices in day-
to-day operations.
Barnstaple, Barnstaple Retail Park
Strategic Report Governance Financial Statements Additional Information
78
1. GOVERNANCE
Board oversight of climate-related risks and opportunities
The Board is ultimately responsible to stakeholders for the Company’s activities and for oversight of climate-related
risks and opportunities. The Board receives quarterly updates from the Investment Manager regarding climate-
related issues, activities and initiatives, and progress reports against climate related goals and targets.
As part of the Audit and Risk Committee’s review of ongoing performance and continuing appointment of key
service providers, consideration is given to key service providers’ ESG credentials and expertise. The Audit and
Risk Committee remains responsible for reviewing and approving the content of the Company’s TCFD disclosure.
Following Mark Kirkland’s appointment as non-Executive Director on 9 November 2022, the Board nominated him
as the Board’s “ESG Champion”. The ESG Champion will regularly meet with the Investment Manager to discuss
ESG issues including climate-related risks and opportunities facing the Company and will report back to the wider
Board as necessary.
The knowledge of the Board on ESG-related matters continues to be enhanced through interaction with the
Investment Manager and training. In January 2023, the Board undertook further TCFD training provided by
the Investment Manager and AEW’s Head of Sustainable Responsible Investment in Europe to support their
understanding of climate change, climate resilience assessment and other ESG risks and opportunities.
THE INVESTMENT MANAGER’S ROLE IN ASSESSING AND MANAGING CLIMATE-RELATED
RISKS AND OPPORTUNITIES
AEW Global Governance:
AEW’s approach to Environmental, Social, Governance and Resilience issues (“ESG+R”), which includes climate-
related risks and opportunities, is integrated into its broader governance practices. AEW’s governance relies on a
committee structure where responsibility for oversight of AEW’s operations has been delegated to senior
management teams that meet on a regular and formalised basis. The organisation chart below illustrates how the
AEW group integrates climate-related considerations at a UK, European and global level. managing climate-related
risks and opportunities for AEW, both at the enterprise level and within investment activities.
The Global ESG+R Steering Committee and its subcommittee structure play a central role in assessing and
managing climate-related risks and opportunities for AEW, both at the enterprise level and within investment
activities.
AEW UK REIT Board
Global ESG+R Steering Committee
European Executive Committee
European ESG+R
Committee
European Risk Committee
AEW UK Investment Management LLP (Investment Manager)*
UK ESG+R Working Group Portfolio Management Review Committee
* AIFM & Investment Manager
UK
Europe
Global
79
European Governance:
AEW’s European Executive Committee (“ExCom”)
is ultimately responsible for climate-related risks at
the European level and delegates to a number of
sub-committees including:
– European ESG+R Committee (“ESG+R Com”) –
responsible for delivering the sustainability strategy
in Europe, the coherence of policies relating to
climate risks and the implementation climate risk
policy. ESG+R Com meets every two months.
– European Risk Committee (“ERC”) – the principal
European-wide risk management forum, where all
sustainability risks can be considered according to
an established framework. ERC meets quarterly.
UK Governance (Investment Manager
Board’s oversight of climate-related risks
and opportunities)
The Investment Manager’s Board is responsible for
assessing climate-related risks and opportunities
for the Investment Manager and its fund mandates.
The Investment Manager Board includes senior level
executives as well as two independent non-executive
directors.
At each meeting the Investment Manager’s Board
receives updates on the firm’s activities, initiatives
and progress against climate- related goals from sub-
committees and working groups including:
– Portfolio Management Review Committee
(“PMRC”) – this is the principal UK-focused risk
management forum, where all sustainability risks
can be considered according to an established
framework, and climate-related issues and risks
are reviewed.
– UK ESG+R Working Group (“WG”) – which
oversees ESG+R projects and management of
climate-related risks and opportunities in the UK,
to ensure risk management objectives are met
and aligned with the overall risk management
framework.
The Investment Manager’s Board undertakes regular
training on ESG-related matters including TCFD
and climate resilience assessment to support their
understanding of climate change and other ESG risks
and opportunities.
The Investment Manager’s approach to the governance
and management of environmental impacts is outlined
within its Climate Adaptation Policy.
The Investment Manager is responsible for monitoring
trends and developments in climate related issues.
The Investment Manager reports quarterly to the
Company’s Board on ESG matters.
2. STRATEGY
Strategy – disclose the actual and
potential impacts of climate-related risks
and opportunities on the organisation’s
businesses, strategy, and financial planning
where such information is material
The Investment Manager anticipates that investors
and valuers will increasingly factor climate-related
risks into market pricing if transition and physical risks
are not appropriately managed. We will therefore
increasingly assess climate-related impacts on
liquidity and market pricing as a consequence of
environmental obsolescence and depreciation. The
Investment Manager assesses climate- related risks
and opportunities against short-term (3 years or less),
medium-term (3 to 7 years) and long-term (over 7 years)
time horizons to align with the proposed changes to
Minimum Energy Efficiency Standards (MEES).
In accordance with TCFD, the Investment Manager
identifies the two principal categories of risks
associated with climate change as:
– Transition Risk – associated with the transition
to a low carbon economy e.g. policy, legal,
technological and market changes to address
mitigation and adaptation requirements.
– Physical Risk – this includes acute (event-driven
e.g. more severe floods) and chronic (longer-term
shifts such as sustained higher temperatures
causing chronic heatwaves) risks.
1. GOVERNANCE
Board oversight of climate-related risks and opportunities
The Board is ultimately responsible to stakeholders for the Company’s activities and for oversight of climate-related
risks and opportunities. The Board receives quarterly updates from the Investment Manager regarding climate-
related issues, activities and initiatives, and progress reports against climate related goals and targets.
As part of the Audit and Risk Committee’s review of ongoing performance and continuing appointment of key
service providers, consideration is given to key service providers’ ESG credentials and expertise. The Audit and
Risk Committee remains responsible for reviewing and approving the content of the Company’s TCFD disclosure.
Following Mark Kirkland’s appointment as non-Executive Director on 9 November 2022, the Board nominated him
as the Board’s “ESG Champion”. The ESG Champion will regularly meet with the Investment Manager to discuss
ESG issues including climate-related risks and opportunities facing the Company and will report back to the wider
Board as necessary.
The knowledge of the Board on ESG-related matters continues to be enhanced through interaction with the
Investment Manager and training. In January 2023, the Board undertook further TCFD training provided by
the Investment Manager and AEW’s Head of Sustainable Responsible Investment in Europe to support their
understanding of climate change, climate resilience assessment and other ESG risks and opportunities.
THE INVESTMENT MANAGER’S ROLE IN ASSESSING AND MANAGING CLIMATE-RELATED
RISKS AND OPPORTUNITIES
AEW Global Governance:
AEW’s approach to Environmental, Social, Governance and Resilience issues (“ESG+R”), which includes climate-
related risks and opportunities, is integrated into its broader governance practices. AEW’s governance relies on a
committee structure where responsibility for oversight of AEW’s operations has been delegated to senior
management teams that meet on a regular and formalised basis. The organisation chart below illustrates how the
AEW group integrates climate-related considerations at a UK, European and global level. managing climate-related
risks and opportunities for AEW, both at the enterprise level and within investment activities.
The Global ESG+R Steering Committee and its subcommittee structure play a central role in assessing and
managing climate-related risks and opportunities for AEW, both at the enterprise level and within investment
activities.
AEW UK REIT Board
Global ESG+R Steering Committee
European Executive Committee
European ESG+R
Committee
European Risk Committee
AEW UK Investment Management LLP (Investment Manager)*
UK ESG+R Working Group Portfolio Management Review Committee
* AIFM & Investment Manager
UK
Europe
Global
Strategic Report Governance Financial Statements Additional Information
80
Climate-related risks and opportunities the organisation has identified over the short, medium and long term:
RISKS SPECIFIC RISK
POTENTIAL FINANCIAL
IMPACT STRATEGY TIME HORIZON
Policy and
Legal – EPC
Compliance
The Minimum Energy
Efficiency Standards
Regulations (“MEES”)
proposed changes to
mandate increasing
the minimum Energy
Performance Certificate
(“EPC”) rating to ‘E’ by 2023,
‘C’ by 2028 and to ‘B’ by
2030.
MEES would prevent the
Company from leasing non-
compliant space, potentially
resulting in an asset
becoming ‘stranded’ or
requiring significant capital
expenditure.
Loss of revenue for
unlettable space or
lower rental income.
Impact on valuation.
Increase in capital
expenditure to meet
minimum requirements.
Non-compliance
fines are potentially
significant.
Risk monitoring of EPC ratings
across the portfolio, contributing
to the development of Asset
Sustainability Action Plans
(“ASAPs”) quantifying capital
expenditure requirements or
the existence of relevant MEES
exemptions.
Short to medium
term risk
Policy and
Legal – Carbon
Pricing
Costs could increase as
carbon pricing is factored
into construction and
operating costs (from
embodied carbon and costs
of carbon intensive energy
for occupiers).
Direct costs associated
with emissions pricing.
Increased capex costs
during construction and
refurbishment.
Develop calculation of carbon
footprint for the portfolio and
implement action plan to reduce
GHG emissions.
Medium to long
term
Market –
Occupier
Occupiers may vacate
assets that are unable to
meet their energy efficiency
or greenhouse gas (“GHG”)
emission tolerance.
Increased void costs.
Increased capital
expenditure.
Impact on valuation.
Occupier engagement
to ascertain occupier’s
commitment to transition to low
carbon economy and net zero
targets.
EPC management, asset
sustainability action plans
(ASAPs) to improve resilience
and energy efficiency of assets.
Medium term
Market –
Energy costs
High energy and utility
consumption may increase
exposure to energy price
fluctuations exacerbated by
climate change.
Potential impact
on service charge
affordability for tenants.
Occupier engagement
particularly for assets with
energy-intensive use.
Engage regularly with occupiers
to identify low carbon solutions
which may reduce energy
consumption, costs and
improve energy performance.
Pilot on-site renewable energy
generation and storage project
with selected tenants.
Short to medium
term
81
RISKS SPECIFIC RISK
POTENTIAL FINANCIAL
IMPACT STRATEGY TIME HORIZON
Market –
Investors
Investors and valuers may
price less energy efficient
assets more conservatively
to reflect the potential cost
and risks.
Existing and prospective
Company investors may
attach onerous conditions
on the Investment Manager
and Company to meet their
own standards, regulations
and requirements.
Impact on valuation.
Impact on the
Company’s ability to
raise new or retain
existing capital.
Continual review of asset
business plans with
consideration to lease expiry,
EPC ratings and opportunity to
implement energy efficiency
solutions.
AEW will assess the additional
costs and benefits of climate-
related initiatives with respect to
liquidity and pricing.
Focus on investor
engagement, develop
improved communication and
presentation of ESG strategy.
In 2025/26 the Company will
assess further the pathway to
net zero and will report this to
investors in future reporting
periods.
Medium term
Technology
– Lower
emissions
UK Government requirement
to transition to lower GHG
emissions technology
(e.g. from natural gas boilers
to low-carbon heating
technologies such as air and
ground source heat pumps).
Potential material capital
expenditure to meet
requirements.
AEW will continue to assess
the additional costs of climate-
related issues compared to
any assessment of reduced
liquidity and market pricing due
to environmental obsolescence
and depreciation.
EPC management and asset
sustainability action plans to
improve resilience and energy
efficiency over time.
Medium term
Reputational –
Occupiers and
Investors
Fall in demand from tenants
for properties with inefficient
building performance
or concern over the
Company’s reputation with
regard to climate risks.
Increased stakeholder
concern and poor investor
relations.
Potential risk of
stranded assets, leading
to reduced valuation.
Impact on the
Company’s ability to
raise new or retain
existing capital.
Focus on key stakeholder
engagement, develop
improved communication and
presentation of ESG strategy
(and the effective delivery of it).
Medium term
Acute (floods,
windstorms,
cold weather,
heatwaves)
Increased frequency
and intensity of extreme
weather events leading to
property damage, increased
maintenance and repair
costs.
Requirement for protection
measures, e.g. flood
protection and drainage
measures.
Cost of maintaining and
repairing assets.
Increased insurance
costs.
Impact on valuation and
potential inability to sell
or lease property.
Undertake asset-level climate
resilience audits and develop
pre-investment due diligence
process to identify vulnerable
investments.
Short to medium
term
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82
RISKS SPECIFIC RISK
POTENTIAL FINANCIAL
IMPACT STRATEGY TIME HORIZON
Chronic
(sustained
higher or lower
temperatures)
Rising temperatures leading
to increased utility costs
and investment in cooling
equipment and solutions.
Reduced thermal comfort of
occupiers resulting in lack
of demand from potential
occupiers.
Potential impact
on service charge
affordability for tenants.
Cost of installing
cooling and heating
equipment and
solutions.
Loss of revenue for
unlettable space or
lower rental income.
Impact on valuation.
Incorporate climate change
scenarios within investment
framework that are suitable for
real estate investment strategies.
Medium to long
term
Chronic (rising
sea levels and
water stress)
Risk of sustained flooding
and requirement for
protection measures –
e.g. flood mitigation and
drainage projects.
Risk asset becomes
stranded.
Cost of installing,
maintaining and
repairing assets.
Increased insurance
costs or asset becoming
uninsurable.
Loss of revenue for
unlettable space or
lower rental income.
Impact on valuation.
Incorporate climate change
scenarios within investment
framework that are suitable for
real estate investment strategies.
Medium to long
term
Resource
efficiency
Reduce energy and water
use.
Reduce carbon emissions
and improve energy efficient
buildings e.g. installation of
LED lighting.
Improve occupier resilience
and efficiency alongside
comfort and well-being.
Potential material capital
expenditure.
Reduce operating
expenditure through
efficiency gains.
Reduce GHG emissions
and possible future
carbon taxes.
To commission EPC+ reports
on selected assets, energy
efficiency audits and net zero
pathway assessments on
selected assets.
Where appropriate, prepare
larger buildings to become
subject to public disclosure
framework.
Short to medium
term
Energy source Investment in lower
emissions sources of
energy and use of new
technologies.
Investment in on-site
renewable energy
generation and storage e.g.
installation of solar PV and
batteries.
Potential material capital
expenditure.
Additional revenue
through sale of
renewable energy to
customers and the grid.
Protect against energy
cost volatility for our
tenants.
Cost of improvement.
Deploy where possible
on-site renewable energy
generation and storage assets in
partnership with tenants.
In the short term this will include
pilot projects with tenants prior
to undertaking feasibility studies
on other assets.
Short to medium
term
Products and
Services
Improve building amenities
(e.g. EV charging, install LED
lights).
Improve the
marketability of a
property including
rental value and
valuation.
Continued review and
development of ASAPs.
Engagement with tenants to
understand their requirements.
Short to medium
term
Resilience The development of net zero
carbon assets could future-
proof the portfolio against
tightening regulation
e.g. MEES standards.
Increased market value
of properties through
resilience planning.
To consider further during 2025
the potential pathway to net
zero. Consider adopting net zero
target and pathway.
Medium to long
term
83
Describe the impact of climate-related risks and opportunities on the organisation’s
business, strategy and financial planning
Having identified relevant risks and opportunities, the Board and the Investment Manager describe below how
these influences are incorporated into strategic and financial planning. With respect to its business activities,
the Investment Manager is seeking to improve investment, asset management and risk monitoring processes
to avoid transition and physical risks having unforeseen impacts on real estate portfolios. During the period,
our UK efforts were focused principally on transition risk related to MEES/EPC compliance and adapting to the
physical risks of climate disruption.
With respect to the latter, climate risks are now systematically integrated into AEW UK’s investment process.
We have incorporated a comprehensive ESG+R acquisition assessment into our due diligence process
for reviewing and evaluating the potential risks and opportunities of our assets. Material ESG+R due
diligence findings, if any, will be referred back to the Investment Management Committee (“IMC”) for further
consideration.
With the exception of MEES, where an EPC provides a measurable data point, our approach in assessing
the potential impact of climate-related risks and opportunities remains qualitative. We aim to enhance our
assessment for future reporting periods to be more quantitative as more data and information becomes
available. We assess climate resilience with a climatologist, having undertaken a review of the entire portfolio
in 2022 and are undertaking climate resilience audits on selected assets where potential material risks are
present. The resilience audit findings will be used to assess the potential impact of the risk and cost to reduce
the vulnerabilities of identified buildings.
In relation to the MEES/EPC regime, during the period the Investment Manager undertook a gap analysis of
the portfolio to identify any assets posing a non-compliance risk. Those investments were then re-assessed
and action plans created where necessary.
Determining the impact of climate-related risks and opportunities on the business, strategy and financial
planning will be an iterative process over future reporting periods. We will utilise the findings of ongoing
projects and assessments, EPC improvement plans and climate resilience audits to quantify impacts on
specific assets and to inform our qualitative assessment of physical and transition risk and opportunities.
Climate-related opportunities are considered to be principally connected with resource efficiency, energy
sourcing, property services and resilience. The Investment Manager is tasked with developing these
opportunities through ongoing asset management initiatives and assessment of opportunities through Asset
Sustainability Action Plans.
Strategic Report Governance Financial Statements Additional Information
84
3. RISK MANAGEMENT
Describe the organisation’s processes for identifying and assessing
climate-related risks
AEW brings a disciplined, holistic approach to risk monitoring and control. Our risk management process is
designed to identify, evaluate, manage and mitigate (rather than eliminate) the significant risks we face.
The Investment Manager maintains a risk register which includes the principal climate-related risks of:
(i) Transition risks associated with the transition to a low or ultra-low economy; and
(ii) Physical risks associated with tangible impacts of climate change.
The ESG+R Com allocates responsibility to individual members for specific climate risks and resilience matters,
including physical risks, regulatory risk, market risk, insurance risk and reputational and liability risk. Members
assess risks at the European level through pilot studies and work with third-party specialists. The UK Risk
Manager works closely with members of the ESG+R Com and the European SRI team to identify relevant risks
and determine appropriate strategies to assess the risk UK real estate assets are exposed to.
The Portfolio Manager is supported by the Risk Manager and UK ESG Working Group in the management of
climate-related risks.
Describe the resilience of the organisation’s strategy, taking into consideration
different climate-related scenarios, including a 2 degree Celsius or lower scenario
The ESG+R Com considered various climate scenarios and determined AEW’s approach is currently to
consider the high emissions scenario of ‘Business as Usual’ Representative Concentration Pathway (“RCP”)
8.5 and assess portfolio resilience on this basis. The RCP 8.5 scenario refers to the concentration of carbon
that delivers global warming at an average of 8.5 watts per square meter across the planet.
The RCP 8.5 pathway delivers a temperature increase of about 4.3˚C by 2100, relative to pre-industrial
temperatures. It should be noted that this is not aligned with the TCFD requirement to at least model the
impact of a 2 degree Celsius or lower scenario as we have focused our efforts on the higher risk scenario
which has the greater potential impact on the portfolio.
AEW has worked with the Climate Company to qualitatively assess the climatic risks exposure of all portfolio
assets on an urban micro- scale for the next two decades. The assessment includes qualitative assessment
against various climate driven event thresholds of.
Certain assets within the portfolio exceeded one or more of the thresholds. We have selected a sample
of assets to subject to further climate resilience audits and to develop action plans and quantify costs, if
appropriate, to reduce their vulnerability. The results of these audits will be used in future reporting periods
to inform AEW and the Board of potential vulnerability of the portfolio and potential costs.
85
Describe the organisation’s processes for managing climate-related risks
The Investment Manager’s IMC approves all acquisitions and any material climate-related due diligence
findings, if any, will be referred back to the IMC for further consideration. The PMRC considers portfolio-level
assessments of environmental and energy issues and evaluates these assessments and climate-related
risks as part of the bi-annual review of the Company. Any material findings are escalated at the local level to
the Investment Manager’s UK Board and the Company’s Board. The Company’s Board and the Investment
Manager’s Board needs to be informed of all material risks and issues so as to be in a position to approve the
appropriate course of action to ensure that these risks are mitigated. Where a particular climate-related risk
is deemed to have a potentially material adverse impact then this would be further escalated to AEW’s ERC,
ESG+R Com and ExCom as well as the Company’s Board.
Describe how processes for identifying, assessing and managing climate-related risks
are integrated into the organisation’s overall risk management
AEW recognises the importance of identifying, assessing and managing climate-related risks. Indeed, as
an FCA-authorised Alternative Investment Fund Manager, it is a core regulatory requirement to engage
meaningfully with risks. Risk assessment is therefore a vital aspect of AEW’s investment operating model and
it takes place on a continuous basis.
Climate-related risk is integrated into AEW’s risk management process; this includes monitoring and
reporting to the AEW UK Board, European Committees and participation in the wider Enterprise Compliance
Programme operated by its parent company Natixis Investment Managers. This programme seeks to foster a
comprehensive risk management and control environment to limit operational and non-compliance risk, as
follows:
– First level of control where risk management controls are integrated into the operating processes of the
Investment Manager and formalised in clearly defined and documented procedures which are reviewed
by a number of committees.
– Second level of control carried out by the compliance department through the permanent control
programme.
– Third level of control carried out by the annual internal audit programme undertaken with Natixis
Investment Manager’s internal audit department and their independent external consultants.
– Fourth level of control carried out through audits undertaken by Natixis and the BPCE Group’s internal
audit teams together with independent external consultants.
The Board considers climate change a principal risk to the Company and assesses transition and physical risk
as part of the Board’s formal risk review with the assistance of the Audit and Risk Committee.
Strategic Report Governance Financial Statements Additional Information
86
4. METRICS AND TARGETS
A core requirement of TCFD is to establish and develop suitable metrics and targets. Our focus in 2024 was:
– Progressing with portfolio climate resilience assessment using a “business as usual” warming scenario.
– EPC management across the portfolio.
– Review of metrics and targets
– Climate resilience audits at selected assets.
In 2025 our focus is on:
– Climate opportunity projects at selected assets.
– Continuing to develop our assessment of the potential impact of the identified climate-related risks and
opportunities on the Fund’s business operations, strategy and financial performance.
– Continued enhancement of risk assessment as improved data and metrics enable us to move from qualitative
to quantitative assessment over time.
Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its
strategy and risk management process.
The table below summarises key metrics and targets used to assess climate-related risks and opportunities.
METRIC CATEGORY METRIC PREVIOUS TARGET 2025 DATA CURRENT TARGET
GHG emissions Absolute Scope 1 GHG
Emissions
40% reduction in Scope 1
GHG emissions within the
Managed Portfolio by 2030
as compared to the 2018
baseline
83 tonnes 40% reduction in absolute
Scope 1 GHG emissions
within the Managed
Portfolio by 2030 as
compared to the 2018
baseline
Absolute Scope 2 GHG
Emissions
40% reduction in Scope
2 GHG emissions within
the Managed Portfolio
as compared to the 2018
baseline
158 tonnes 40% reduction in absolute
Scope 2 GHG emissions
within the Managed Portfolio
by 2030 as compared to the
2018 baseline
Renewable
energy
Percentage of landlord-
controlled assets with
renewable electricity
supplies
100% (with exception of
new acquisitions during first
12 months of ownership)
100% 100% (with exception of new
acquisitions during first
12 months of ownership)
Transition risk Percentage of assets with
EPC A-C (by ERV)
N/A 69% 100% EPC to at least C grade
by 2027 and to B by 2030
(unless exempt)
Physical risks Percentage of assets
with climate resilience
assessment
100% 100% for
existing Portfolio
completed
100%
Number of assets with a
specific climate resilience
audit and plan
3 N/A 3 to be completed during
2025/26
Number of assets with a net
zero assessment pathway
6 N/A 2 assets selected for net zero
assessment pathway during
2025/26
Climate related
opportunities
On-site renewable energy
generation and storage
projects
N/A 2 2 further assets selected
subject to additional
feasibility and tenant
engagement during 2025/26
87
As a Real Estate Investment Trust, the majority of the
Company’s emissions arise through assets that are
owned and leased. At multi-let properties, the Company
(in its capacity as landlord) has control and influence
over the whole building and/or shared services
(including refrigerant leakage), external lighting and
void spaces. The position with FRI leases is significantly
different, as described in the GHG disclosure section.
These metrics, however, will evolve over time as for
example, in relation to Scope 3 GHG emissions, given a
landlord has limited operational control, the Investment
Manager will initially focus on improving data
collection. Over time the Company, via the Investment
Manager, will actively engage with tenants to reduce
their GHG emissions, with improvement plans aiming
to increase a building’s operational performance,
reduction in energy usage and feasibility of on-site
renewable energy generation or storage.
The PMRC and the UK ESG Working Group and sub-
committees monitor progress against targets.
Disclose Scope 1, Scope 2 and if
appropriate, Scope 3 greenhouse gas
emissions and the related risk
Emissions sources listed on page 142 relate to the
managed portfolio only and the following sources of
energy consumption within each sector:
– Office: whole building
– Retail, High Street: whole building, tenant space
and common areas
– Retail, Warehouse: tenant space and external
lighting
– Leisure: external lighting, tenant space and
common areas
– Industrial: tenant space, common areas and
external lighting
Emissions outside of operational control:
The Company was not responsible for emission from
gas and/or electricity use at any other owned asset or
for head office operations. The Company is not directly
responsible for any GHG emissions/energy usage at
single let/FRI assets nor at multi-let assets where the
tenant is counterparty to the energy contract. As these
emissions are outside of the Company’s direct control,
they form part of the wider value chain (i.e. ‘Scope 3’)
emission, which are not monitored at present.
Describe the targets used by the
organisation to manage climate-related
risks and opportunities and performance
against targets
The Company has reviewed the existing targets
and is in the process of setting new targets in
consultation with its external advisors. Targets are
reviewed at least annually and will be amended
where appropriate as our management of climate
related risks and opportunities evolves over future
reporting periods.
Targets are reported in table on page 87, where
no targets had previously been set this is reported
as N/A.
SHARE CAPITAL
Share Issues
At the Company’s AGM held on 4 September 2024,
the Company was granted the authority to allot
Ordinary Shares up to an aggregate nominal amount
of £158,424.74 on a non pre-emptive basis. The
Company was also granted authority to allot further
Ordinary Shares up to an aggregate nominal amount of
£158,424.74 on a non pre-emptive basis. No Ordinary
Shares have been allotted under either authority
during the year and both authorities will expire at the
conclusion of the 2025 AGM. A resolution to renew
the Company’s authority to allot Ordinary Shares up
to an aggregate nominal amount of £158,424.74 on
a non pre-emptive basis will be put to shareholders at
the 2025 AGM alongside a resolution to allot further
Ordinary Shares up to an aggregate nominal amount of
£158,424.74 on a non pre-emptive basis.
As at 31 March 2025, and the date of this report, the
Company had 158,774,746 Ordinary Shares in issue, of
which 350,000 (2024: 350,000) were held in treasury
and therefore the total voting rights attaching to
Ordinary Shares are 158,424,746.
Purchase of Own Shares
At the Company’s AGM on 4 September 2024, the
Company was granted authority to purchase up to
23,747,869 Ordinary Shares (being 14.99% of the
Company’s Ordinary Shares in issue). No shares have
been bought back under this authority during the year,
which expires at the conclusion of the Company’s 2025
AGM. A resolution to renew the Company’s authority
to purchase (either for cancellation or for placing into
treasury) up to 23,747,869 Ordinary Shares (being
14.99% of the issued Ordinary Share capital (excluding
treasury shares) as at the date of this report), will be put
Strategic Report Governance Financial Statements Additional Information
88
SHAREHOLDER
NUMBER OF
ORDINARY
SHARES HELD
% OF TOTAL
VOTING RIGHTS
Momentum Global Investment Management Limited 7,856,028 5.0
TrinityBridge Limited 7,836,451 4.9
Schroders plc 7,643,485 4.8
Investec Wealth & Investment Limited 4,813,400 3.0
Natwest Group plc 4,747,598 3.0
to shareholders at the 2025 AGM. Any purchase will be
made in the market and prices will be in accordance
with the terms laid out in the Notice of AGM (enclosed
separately and available on the Company’s website).
The authority will be used where the Directors consider
it to be in the best interests of shareholders.
RIGHTS ATTACHED TO ORDINARY SHARES
Income Entitlement
The profits of the Company (including accumulated
revenue reserves) available for distribution and
resolved to be distributed shall be distributed in
proportion to the amount paid up per share by way of
interim and, where applicable, special or final dividends
among the holders of Ordinary Shares.
Capital Entitlement
After meeting the liabilities of the Company on a
winding-up, the surplus assets shall be paid to the
holders of different classes of members and distributed
among such holders rateably according to the amounts
paid up or credited as paid up on their shares.
Voting Entitlement
Each Ordinary shareholder is entitled to one vote on
a show of hands and, on a poll, to one vote for every
Ordinary Share held. The Notice of AGM and Form of
Proxy stipulate the deadlines for the valid exercise of
voting rights and, other than with regard to Directors
not being permitted to vote their Ordinary Shares on
matters in which they have an interest, there are no
restrictions on the voting rights of Ordinary Shares.
There are no restrictions concerning the transfer of
securities in the Company or on voting rights:
– no special rights with regard to control attached
to securities; no agreements between holders of
securities regarding restrictions on the transfer of
securities or voting rights known to the Company;
and
– no agreements which the Company is party to
that might affect its control following a successful
takeover bid.
Requirements of the Listing Rules
Listing Rule 6.6.4 requires the Company to include
specified information in a single identifiable section of
the Annual Report or a cross reference table indicating
where the information is set out. The Directors confirm
that there are no disclosures required in relation to
Listing Rule 6.6.1.
SUBSTANTIAL SHAREHOLDINGS
As at 31 March 2025, the Company had been notified
under the Disclosure and Transparency Rule (“DTR”) 5
of the following significant holdings of voting rights in
its Ordinary Shares. These holdings may have changed
since notification, however, notification of any change
is not required until the next applicable threshold
is cross. The Company has not been notified of any
changes to the above interests between 31 March 2025
and the date of this report.
89
In addition to the above notified holdings under DTR 5, the Company completes its own analysis of significant
holdings of voting rights and is aware that a significant proportion of the Company’s Ordinary Shares are owned by
retail investors via platforms. In accordance with this analysis, which differs significantly to the above, the Company
notes the following additional holders of Ordinary Shares at 31 March 2025.
SHAREHOLDER
NUMBER OF
ORDINARY
SHARES HELD
% OF TOTAL
VOTING RIGHTS
Hargreaves Lansdown Asset Management 36,869,877 23.3
Interactive Investor 22,428,605 14.2
A J Bell Securities 10,941,574 6.9
Halifax Share Dealing 5,029,245 3.2
It is also the Company’s understanding that of the notified holdings listed above, only TrinityBridge Limited
continue to hold more than 3.0% of the Company’s Ordinary Shares.
RELATED PARTY TRANSACTIONS
Related party transactions during the year ended 31 March 2025 can be found in note 24 to the
financial statements.
POST BALANCE SHEET EVENTS
Post balance sheet events can be found in note 26 to the financial statements.
STATEMENT OF DISCLOSURE OF INFORMATION TO AUDITOR
So far as each Director is aware, there is no relevant audit information, which would be needed by the Company’s
Auditor in connection with preparing its audit report (on pages 92 to 100), of which the Auditor is not aware; and
each Director, in accordance with section 418(2) of the Companies Act 2006, has taken all reasonable steps that
they ought to have taken as a Director to make themselves aware of any such information and to ensure that the
Auditor is aware of such information.
AUDITOR
BDO LLP has expressed its willingness to continue as the Company’s Auditor. As outlined in the Report of the Audit
and Risk Committee on page 62, resolutions proposing the Auditor’s re-appointment and to authorise the Audit
Committee to determine its remuneration will be proposed at the forthcoming AGM.
The Directors’ Report has been approved by the Board of Directors and signed on its behalf by:
Robin Archibald
Chairman of the Board
26 June 2025
Strategic Report Governance Financial Statements Additional Information
90
Statement of Directors’
Responsibilities in respect of
the Annual Report and
Financial Statements
The Directors are responsible for preparing the Annual
Report and the Financial Statements in accordance
with UK adopted international accounting standards
and applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law,
the Directors are required to prepare the Company’s
financial statements in accordance with UK adopted
international accounting standards. Under company
law, the Directors must not approve the financial
statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Company and
of the profit or loss for the Company for that period.
In preparing these financial statements, the Directors
are required to:
– select suitable accounting policies and then apply
them consistently;
– make judgements and accounting estimates that
are reasonable and prudent;
– state whether they have been prepared in
accordance with UK adopted international
accounting standards, subject to any material
departures disclosed and explained in the financial
statements;
– prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business; and
– prepare a Directors’ Report, a Strategic Report and
Directors’ Remuneration Report which comply with
the requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the Company and enable them to ensure that the
financial statements comply with the Companies Act
2006.
They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other
irregularities. The Directors are responsible for ensuring
that the Annual Report and Financial statements, taken
as a whole, is fair, balanced, and understandable and
provides the information necessary for shareholders
to assess the Company’s performance, prospects,
business model and strategy.
WEBSITE PUBLICATION
The Directors are responsible for ensuring the Annual
Report and the Financial Statements are made available
on a website. Financial statements are published on
the Company’s website in accordance with legislation
in the United Kingdom governing the preparation
and dissemination of financial statements, which
may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company’s website
is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of
the financial statements contained therein.
DIRECTORS’ RESPONSIBILITIES
PURSUANT TO DTR4
The Directors confirm to the best of their knowledge:
– The financial statements have been prepared in
accordance with the applicable set of accounting
standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the
Company.
– The Annual Report includes a fair review of the
development and performance of the business and
the financial position of the Company, together with
a description of the principal risks and uncertainties
that it faces.
The Directors consider that this Annual Report and
Financial Statements, taken as a whole, is fair, balanced,
and understandable and provides the information
necessary for shareholders to assess the Company’s
position and performance, business model and
strategy.
This Statement of Responsibilities was approved by the
Board and signed on its behalf by:
Robin Archibald
Chairman
26 June 2025
91
Independent Auditor’s
Report to the Members
of AEW UK REIT plc
OPINION ON THE FINANCIAL STATEMENTS
In our opinion, the financial statements:
– give a true and fair view of the state of the Company’s affairs as at 31 March 2025 and of its profit for the year
then ended;
– have been properly prepared in accordance with UK adopted international accounting standards;
– have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of AEW UK REIT plc (the “Company”) for the year ended 31 March 2025
which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement
of Changes in Equity, the Statement of Cash Flows and notes to the financial statements, including a summary
of material accounting policy information. The financial reporting framework that has been applied in their
preparation is applicable law and UK adopted international accounting standards.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the
Audit and Risk Committee.
Independence
Following the recommendation of the Audit and Risk Committee, we were appointed by the board of directors on
8 September 2021 to audit the financial statements for the year ended 31 March 2022 and subsequent financial
periods. The period of total uninterrupted engagement is 4 years, covering the years ended 31 March 2022 to
31 March 2025. We remain independent of the Company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to
listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by that standard were not provided to the Company.
Strategic Report Governance Financial Statements Additional Information
92
CONCLUSIONS RELATING
TO GOING CONCERN
In auditing the financial statements, we have
concluded that the Directors’ use of the going
concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of
the Directors’ assessment of the Company’s ability
to continue to adopt the going concern basis of
accounting included:
– using our knowledge of the Company and its
market sector together with the current general
economic environment to assess the Directors’
identification of the inherent risks to the Company’s
business and how these might impact the
Company’s ability to remain a going concern for the
going concern period, being the period to 30 June
2026, which is at least 12 months from when the
financial statements are authorised for issue;
– obtaining an understanding of the Directors’
process for assessing going concern including an
understanding of the key assumptions used;
– obtaining the Directors’ going concern assessment
and:
– assessing the Company’s forecast cash flows
with reference to historic performance and
challenging the Directors’ forecast assumptions
in comparison to the current performance of the
Company;
– agreeing the key inputs into the forecasts to
supporting documentation for reasonableness
based on contractual agreements, where
available;
– agreeing the Company’s available borrowing
facilities and the related terms and covenants to
loan agreements;
– obtaining forecast covenant calculations to check
for any potential future covenant breaches;
– analysing the sensitivities applied by the Directors’
stress testing calculations and challenging the
assumptions made using our knowledge of the
business and of the current economic climate,
to assess the reasonableness of the downside
scenarios selected and the appropriateness of the
Directors’ mitigating actions;
– considering board minutes, and evidence
obtained throughout the audit and challenging the
Directors on the identification of any contradictory
information in the forecasts and the impact on the
going concern assessment;
– analysing the Directors’ stress testing calculations
and challenging the assumptions made using
our knowledge of the business and of the current
economic climate, to assess the reasonableness
of the downside scenarios selected and the
appropriateness of the Directors’ mitigating actions;
and
– reviewing the disclosures in the financial
statements relating to going concern to check that
the disclosure is consistent with the circumstances.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may
cast significant doubt on the Company’s ability to
continue as a going concern for a period of at least
twelve months from when the financial statements are
authorised for issue.
In relation to the Company’s reporting on how it has
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation
to the Directors’ statement in the financial statements
about whether the Directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the
Directors with respect to going concern are described
in the relevant sections of this report.
Bristol, Union Street
9393
OVERVIEW
COVERAGE
100% (2024: 100%) of profit before tax
100% (2024: 100%) of revenue
100% (2024: 100%) of total assets
100% (2024: 100%) of investment property
KEY AUDIT MATTERS Valuation of
investment properties
2025
2024
MATERIALITY
Company financial statements as a whole
£2.41m (2024: £2.32m) based on 1% (2024: 1%) of total assets
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our audit was scoped by obtaining an understanding
of the Company and its environment, including
the Company’s system of internal control, and
assessing the risks of material misstatement in the
financial statements. We also addressed the risk of
management override of internal controls, including
assessing whether there was evidence of bias by the
Directors that may have represented a risk of material
misstatement.
Climate change
Our work on the assessment of potential impacts on
climate-related risks on the Company’s operations and
financial statements included:
– enquiries and challenge of management to
understand the actions they have taken to identify
climate-related risks and their potential impacts on
the financial statements and adequately disclose
climate-related risks within the annual report;
– our own qualitative risk assessment taking into
consideration the sector in which the Company
operates and how climate change affects the real
estate sector; and
– review of the minutes of board and audit and risk
committee meetings and other papers related to
climate change and performed a risk assessment
as to how the impact of the Company’s
commitment as set out in pages 81 to 83 may
affect the financial statements and our audit.
We challenged the extent to which climate-related
considerations, including the expected cash flows from
the initiatives and commitments have been reflected,
where appropriate, in the Directors’ going concern
assessment and viability assessment.
We also assessed the consistency of management’s
disclosures included as “other information” on page 97
with the financial statements and with our knowledge
obtained from the audit.
Based on our risk assessment procedures, we did not
identify there to be any Key Audit Matters materially
impacted by climate-related risks and related
commitments.
Bristol, Queen Square
Strategic Report Governance Financial Statements Additional Information
94
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
KEY AUDIT MATTER
HOW THE SCOPE OF OUR AUDIT ADDRESSED
THE KEY AUDIT MATTER
Valuation of investment
properties
As detailed in note 12 to
the financial statements,
the Company owns a
portfolio of investment
properties which are held
at their fair value.
The Company’s
accounting policy for
these properties is
described in note 2.5 to
the financial statements.
The key judgements and
estimates in arriving at
the fair values are set out
in notes 2.2 and 12 to the
financial statements.
The Company has an
investment property portfolio
of commercial property across
a number of sectors in the
United Kingdom. This comprises
completed investment property
which is let, or available to
let and is valued using the
income capitalisation method,
in accordance with RICS
methodology and IFRS 13 Fair
Value Measurement.
The valuation of investment
property requires significant
judgement and estimates by the
Directors and their independent
external valuer and is therefore
considered a significant risk
due to the subjective nature of
certain assumptions inherent in
each valuation.
Our audit procedures included the following:
Experience of valuer and relevance of their
work
– We obtained the valuation report prepared
by the independent external valuer and with
the assistance of our internal RICS qualified
real estate valuation experts, discussed
the basis of the valuations with them,
read the valuation reports and confirmed
that all valuations had been prepared in
accordance with applicable valuation
guidelines and the requirements of the
applicable accounting standards (IFRS 13
Fair Value Measurement) and were therefore
appropriate for determining the carrying
value in the Company’s financial statements.
– We assessed the external valuer’s
competence and qualifications and
read their terms of engagement with the
Company, to identify any matters that could
have affected their independence and
objectivity or imposed scope limitations
upon them.
– We obtained a copy of the instructions
provided to the independent valuer and
reviewed for any limitations in scope or for
evidence of management bias.
Data provided to the valuer
– We validated the underlying data provided
to the valuer by Investment Manager.
This data included inputs such as current
rent and lease term, which we agreed
on a sample basis to the executed lease
agreements as part of our audit work.
95
KEY AUDIT MATTER
HOW THE SCOPE OF OUR AUDIT ADDRESSED
THE KEY AUDIT MATTER
Any input inaccuracies or
unreasonable bases used in the
valuation judgements (such as
in respect of estimated rental
value and yield profile applied)
could result in a material
misstatement of the Company’s
financial statements.
There is also a risk of fraud
that the Directors may
influence the judgements and
estimates in respect of property
valuations in order to achieve
property valuations and other
performance targets to meet
market expectations.
The valuation of investment
properties was therefore
considered to be a key audit
matter.
Assumptions and estimates used by the
valuer
– With assistance from our internal real
estate valuation experts, we developed
yield expectations on each property using
available independent industry data, reports
and comparable transactions in the market
around the period end. Our in-house valuers
also attended the audit meetings with the
Company’s valuers to assist us in assessing
that explanations provided were appropriate
and in line with market knowledge.
– We compared the key valuation
assumptions against our independently
formed market expectations (by reference
to market data based on the location and
specifics of each property).
– We discussed the assumptions used and the
valuation movement in the period with the
independent valuer. Where the valuation
was outside of our expected range, we
challenged the independent valuer on
specific assumptions and reasoning for
the yields applied and corroborated their
explanations where relevant, including
agreeing to third party documentation.
Key observations
– Based on the procedures performed, we
did not identify any indicators to suggest
that the judgements and estimates made in
the valuation of the Company’s investment
properties were inappropriate.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we
use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Strategic Report Governance Financial Statements Additional Information
96
Based on our professional judgement, we determined materiality for the financial statements as a whole and
performance materiality as follows:
COMPANY FINANCIAL STATEMENTS COMPANY FINANCIAL STATEMENTS
2025 2024
MATERIALITY
£2.41 million £2.32 million
BASIS FOR DETERMINING MATERIALITY
1% of Total Assets
RATIONALE FOR THE BENCHMARK
APPLIED
We determined that total assets would be the most appropriate basis
for determining overall materiality as we consider it to be one of the
principal considerations for users of the financial statements in assessing
the financial performance of the Company.
PERFORMANCE MATERIALITY
£1.81 million £1.74 million
BASIS FOR DETERMINING
PERFORMANCE MATERIALITY
75% of Materiality
RATIONALE FOR THE PERCENTAGE
APPLIED FOR PERFORMANCE
MATERIALITY
Overall performance materiality for the Company has been set at 75%
(2024: 75%) of materiality. This was on the basis of our risk assessment,
together with our assessment of the Company’s overall control environment
and the expected total value of known and likely misstatements and the
level of transactions in the year.
Specific materiality
We also determined that for other account balances and classes of transactions that impact the calculation of
European Public Real Estate Association (“EPRA”) earnings a misstatement of less than materiality for the financial
statements as a whole, specific materiality, could influence the economic decisions of users. We consider
EPRA earnings to be a key performance measure of the Company. EPRA earnings excludes the impact of the net
surplus on revaluation of investment properties, profit on disposal of investment properties and changes in the fair
value of interest rate derivatives. As a result, we determined specific materiality for these items to be £0.71m
(2024: £0.58m), based on 5% of EPRA earnings (2024: 5%). We further applied a performance materiality level
of 75% (2024: 75%) of specific materiality to ensure that the risk of errors exceeding specific materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit and Risk Committee that we would report to them all individual audit differences in
excess of £120,000 (2024: £116,000) and for those items impacting the calculation of EPRA earnings £35,000
(2024: £28,000). We also agreed to report differences below these thresholds that, in our view, warranted reporting
on qualitative grounds.
OTHER INFORMATION
The Directors are responsible for the other information. The other information comprises the information included
in the Annual Report other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
97
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability
and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of
the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained
during the audit:
GOING CONCERN AND
LONGER-TERM VIABILITY
– The Directors’ statement with regards to the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified on pages 72 and 73; and
– The Directors’ explanation as to their assessment of the Company’s
prospects, the period this assessment covers and why the period is
appropriate on page 73.
OTHER CODE PROVISIONS
– Directors’ statement on fair, balanced and understandable on page 91
– Board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks on pages 36 to 43;
– The section of the annual report that describes the review of
effectiveness of risk management and internal control systems on
page 59; and
– The section describing the work of the audit and risk committee on
pages 61 to 63.
OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below:
STRATEGIC REPORT AND
DIRECTORS’ REPORT
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the Strategic report and the Directors’ report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
– the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the Strategic report or the Directors’ report.
DIRECTORS’ REMUNERATION
In our opinion, the part of the Directors’ remuneration report to be audited has
been properly prepared in accordance with the Companies Act 2006.
MATTERS ON WHICH WE ARE
REQUIRED TO REPORT BY
EXCEPTION
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
– adequate accounting records have not been kept by the Company, or
returns adequate for our audit have not been received from branches not
visited by us; or
– the Company financial statements and the part of the Directors’
remuneration report to be audited are not in agreement with the
accounting records and returns; or
– certain disclosures of Directors’ remuneration specified by law are not
made; or
– we have not received all the information and explanations we require for
our audit.
Strategic Report Governance Financial Statements Additional Information
98
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
– our understanding of the Company and the industry in which it operates;
– discussion with management and those charged with governance; and
– obtaining an understanding of the Company’s policies and procedures regarding compliance with laws and
regulations;
we considered the significant laws and regulations to be UK company law, UK tax legislation (including the
REIT regime requirements) and the UK Listing Rules, and we considered the extent to which non-compliance
might have a material effect on the Company’s financial statements.
Our procedures in respect of the above included:
– agreeing the financial statement disclosures to underlying supporting documentation where relevant;
– reviewing legal expenditure accounts to understand the nature of expenditure incurred;
– the review of Board and Committee meeting minutes and enquiries with management and the Directors as any
known or suspected instances of non-compliance with laws and regulations; and
– in order to address the risk of non-compliance with the REIT regime, considering a report from the Company’s
external adviser, detailing the actions that the Company has undertaken to ensure compliance. This paper was
reviewed, and the assumptions challenged, with the assistance of our own internal valuations expert.
99
Irregularities including fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk
assessment procedures included:
– enquiry with Directors and those charged with governance regarding any known or suspected instances of
fraud;
– obtaining an understanding of the Company’s policies and procedures relating to:
– Detecting and responding to the risks of fraud; and
– Internal controls established to mitigate risks related to fraud.
– review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;
– discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
and
– performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud.
Based on our risk assessment, we considered the areas most susceptible to fraud to be potential manipulation of
journals affecting revenue, investment property valuations, and management override of controls.
Our procedures in response to the above included:
– analysing and substantively testing unusual journals combinations to revenue to determine if they were
appropriate;
– work performed in the investment property balance which is set out in the key audit matters section above; and
– testing a sample of journal entries processed during the year which met a defined risk criteria, agreeing
to supporting documentation and evaluating whether there was evidence of bias by management or the
Directors that represented a risk of material misstatement due to fraud.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members who were deemed to have the appropriate competence and capabilities, and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations is from the events and transactions reflected in the
financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Richard Levy (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
26 June 2025
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Strategic Report Governance Financial Statements Additional Information
100
Financial
Statements
Wrexham, Gresford Industrial Estate
Strategic Report Governance
Financial Statements Additional Information
Statement of
Comprehensive Income
for the year ended 31 March 2025
NOTES
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Income
Rental and other property income 3 22,677 24,345
Property operating expenses 4 (5,818) (6,861)
Impairment gain/(loss) on trade receivables 430 (1,208)
Other Income 3 1,082 –
Net rental and other income 18,371 16,276
Other operating expenses 5 (2,625) (2,751)
Directors’ remuneration 6 (160) (162)
Operating profit before fair value changes 15,586 13,363
Change in fair value of investment properties 12 6,861 (4,350)
Realised gains on disposal of investment properties 12 3,230 1,848
Operating profit 25,677 10,861
Change in fair value of financial assets through profit and loss – (12)
Finance income 7 624 177
Finance expense 8 (1,931) (1,936)
Profit before tax 24,370 9,090
Taxation 9 (26) (42)
Profit for the year attributable to owners of the company 24,344 9,048
Other comprehensive income – –
Total comprehensive income for the year 24,344 9,048
Earnings per share (pence per share) (basic and diluted) 10 15.37 5.71
The notes on pages 107 to 132 form an integral part of these financial statements.
103
Statement of
Changes in Equity
for the year ended 31 March 2025
FOR THE YEAR ENDED
31 MARCH 2025 NOTES
SHARE
CAPITAL
£’000
SHARE
PREMIUM
ACCOUNT
£’000
CAPITAL
RESERVE AND
RETAINED
EARNINGS*
£’000
BUYBACK
RESERVE
£’000
TOTAL
CAPITAL AND
RESERVES
ATTRIBUTABLE
TO OWNERS OF
THE COMPANY
£’000
Balance at 1 April 2024 1,587 56,578 104,852 (265) 162,752
Profit for the year and total
comprehensive income
– – 24,344 – 24,344
Other distribution – – 21 – 21
Dividends paid 11 – – (12,674) – (12,674)
Balance at
31 March 2025
1,587 56,578 116,543 (265) 174,443
FOR THE YEAR ENDED
31 MARCH 2024 NOTES
SHARE
CAPITAL
£’000
SHARE
PREMIUM
ACCOUNT
£’000
CAPITAL
RESERVE AND
RETAINED
EARNINGS*
£’000
BUYBACK
RESERVE
£’000
TOTAL
CAPITAL AND
RESERVES
ATTRIBUTABLE
TO OWNERS OF
THE COMPANY
£’000
Balance at 1 April 2023 1,587 56,578 109,201 (265) 167,101
Profit for the year and total
comprehensive income
– – 9,048 – 9,048
Other distribution – – (723) – (723)
Dividends paid 11 – – (12,674) – (12,674)
Balance at
31 March 2024
1,587 56,578 104,852 (265) 162,752
* Part of the capital reserve has arisen from the cancellation of part of the Company’s share premium account and is a distributable reserve subject to realised profits.
The notes on pages 107 to 132 form an integral part of these financial statements.
Strategic Report Governance
Financial Statements Additional Information
104
Statement of Financial Position
as at 31 March 2025
NOTES
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Assets
Non-current assets
Investment property 12 200,429 181,040
Receivables and prepayments 13 3,956 3,267
204,385 184,307
Current assets
Investment property held for sale 12 – 26,086
Receivables and prepayments 13 9,281 10,625
Cash and cash equivalents 25,993 11,397
Restricted cash 14 1,790 –
37,064 48,108
Total assets 241,449 232,415
Non-current liabilities
Interest bearing loans and borrowings 15 (59,773) (59,663)
Lease obligations 17 (174) (174)
(59,947) (59,837)
Current liabilities
Payables and accrued expenses 16 (7,046) (9,813)
Lease obligations 17 (13) (13)
(7,059) (9,826)
Total liabilities (67,006) (69,663)
Net assets 174,443 162,752
Equity
Share capital 20 1,587 1,587
Buyback reserve 20 (265) (265)
Share premium account 21 56,578 56,578
Capital reserve and retained earnings 116,543 104,852
Total capital and reserves attributable to equity
holders of the Company
174,443 162,752
Net Asset Value per share (pps) 10 110.11 102.73
EPRA Net Tangible Assets per share (pps) 10 110.11 102.73
The financial statements were approved by the Board of Directors on 26 June 2025 and were signed on its behalf
by:
Robin Archibald
Chairman
AEW UK REIT plc (Company number: 09522515)
The notes on pages 107 to 132 form an integral part of these financial statements.
105
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Cash flows from operating activities
Profit before tax 24,370 9,090
Adjustment for non-cash items:
Finance income (624) (177)
Finance costs 1,931 1,936
Loss from change in fair value of other financial assets – 12
(Gain)/loss from change in fair value of investment property (6,861) 4,350
Realised gains on disposal of investment properties (3,230) (1,848)
Increase in other receivables and prepayments (3,162) (3,458)
Increase in restricted cash (1,790) –
(Decrease)/increase in other payables and accrued expenses (1,988) 1,821
Net cash flow generated from operating activities 8,646 11,726
Cash flows from investing activities
Purchase of and additions to investment properties (13,335) (25,135)
Disposal of investment properties 33,941 24,528
Finance income 624 177
Net cash generated from/(used in) investing activities 21,230 (430)
Cash flows generated from/(used in) financing activities
Withholding tax paid on distributions (782) –
Finance costs (1,807) (1,823)
Dividends paid (12,691) (12,391)
Net cash flow used in from financing activities (15,280) (14,214)
Net increase/(decrease) in cash and cash equivalents 14,596 (2,918)
Cash and cash equivalents at start of the year 11,397 14,315
Cash and cash equivalents at end of the year 25,993 11,397
The notes on pages 107 to 132 form an integral part of these financial statements.
Statement of Cash Flows
for the year ended 31 March 2025
Strategic Report Governance
Financial Statements Additional Information
106
Notes to the Financial Statements
for the year ended 31 March 2025
1. CORPORATE INFORMATION
AEW UK REIT plc (the ‘Company’) is a closed ended Real Estate Investment Trust (‘REIT’) incorporated on 1 April 2015
and domiciled in the UK. The registered office of the Company is 19
th
Floor, 51 Lime Street, London EC3M 7DQ.
The Company’s Ordinary Shares were listed on the Official List of the FCA and admitted to trading on the Main
Market of the London Stock Exchange on 12 May 2015.
The nature of the Company’s operations and its principal activities are set out in the Strategic Report on pages 3 to
48.
2. ACCOUNTING POLICIES
2.1 Basis of preparation
These financial statements are prepared and approved by the Directors in accordance with UK adopted
international accounting standards.
These financial statements have been prepared under the historical cost convention, except for investment
property and interest rate derivatives that have been measured at fair value.
The financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds
(£’000), except when otherwise indicated.
The Company is exempt by virtue of Section 402 of the Companies Act 2006 from the requirement to prepare
group financial statements. These financial statements present information solely about the Company as an
individual undertaking.
New standards, amendments, and interpretations
The following amendments to existing standards, which are required for the Company’s accounting period
beginning on 1 April 2024, have been considered and applied:
– Amendments to IAS 1 Presentation of Financial Statements clarifies that liabilities are classified as either
current or non-current, depending on the rights that exist at the end of the reporting period and not
expectations of, or actual events after, the reporting date. The amendments also give clarification to the
definition of settlement of a liability.
– Amendments to IFRS 16 Lease Liability in a Sale and Leaseback specifies the requirements that a seller-lessee
uses in measuring the lease liability arising in a sale and leaseback transaction, to ensure the seller-lessee does
not recognise any amount of the gain or loss that relates to the right of use it retains.
There were no material effects from the adoption of the above-mentioned amendments to IFRS effective in the
period. They have no significant impact on the Company as they are either not relevant to the Company’s activities
or require accounting that is already consistent with the Company’s current accounting policies.
There are a number of new standards and amendments to existing standards, which have been published and
are mandatory for the Company’s accounting periods beginning on, or after, 1 April 2025. The Company is not
adopting these standards early.
The following are the most relevant to the Company:
– Amendments to IAS 21 Lack of Exchangeability to assist entities in determining whether a currency is
exchangeable into another currency, and the spot exchange rate to use when it is not.
– IFRS 18 Presentation and Disclosures in Financial Statements. This is the new standard on presentation and
disclosure in financial statements, which replaces IAS 1, with a focus on updates to the statement of profit or loss.
– IFRS 19 Subsidiaries without Public Accountability: Disclosures. This reduces disclosure requirements that an eligible
subsidiary entity is permitted to apply instead of the disclosure requirements in other IFRS Accounting Standards.
– Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures. The amendments
provide clarity on the date of recognition and derecognition of certain financial instruments and amends/
updates the disclosure required for some financial instruments.
The Directors have yet to assess the full outcome of these new standards, amendments and interpretations;
however, with the exception of IFRS 18, these other new standards, amendments and interpretations are not
expected to have a significant impact on the Company’s financial statements.
107
2. ACCOUNTING POLICIES (CONTINUED)
2.2 Significant accounting judgements and estimates
The preparation of financial statements in accordance with IFRS requires the Directors of the Company to make
judgements, estimates and assumptions that affect the reported amounts recognised in the financial statements.
However, uncertainty about these assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability in the future.
There are not considered to be any judgements which have a significant effect on the amounts recognised in the
financial statements, however, there is an estimate that will have a significant effect on the amounts recognised in
the financial statements:
i) Valuation of investment property
The Company’s investment property is held at fair value as determined by the independent external valuer on the
basis of fair value in accordance with the internationally accepted RICS Appraisal and Valuation Standards. Details
of the considerations made in respect of the estimation are further detailed in note 12.
2.3 Segmental information
The Board of Directors retains overall control of the Company, but the Investment Manager (AEW UK Investment
Management LLP) has certain authorities and fulfils the function of allocating resource to, and assessing the
performance of the Company’s operating segments and is therefore considered to be the Chief Operating Decision
Maker (‘CODM’). In accordance with IFRS 8, the Company considers each of its properties to be an individual
operating segment. The CODM allocates resources, and reviews the performance of, the Company’s portfolio on a
property-by-property basis and discrete financial information is available for each individual property.
These operating segments have similar economic characteristics and, as such, are aggregated into one reporting
segment, being investment in property and property-related investments in the UK.
2.4 Going concern
The Directors assessed the Company’s ability to continue as a going concern, which takes into consideration
current economic uncertainty, as well as the Company’s cashflows, financial position, liquidity and borrowing
facilities.
As at 31 March 2025, the Company had £25.99 million of unrestricted cash at bank. The Company’s loan is held
with AgFe and is a £60.00m facility with a five-year term. This is priced as a fixed rate loan with a total interest
cost of 2.959% and associated 10% projected debt yield and 60% loan to value (“LTV”) covenants. The Company
reported an LTV of 33.87% at year-end. This provides room for a £71.88 million fall in portfolio valuation before
breaching the 60% hard LTV covenant. Moreover, based on the £60.00 million of debt drawn as at year-end, the
Company had a projected debt yield of 25.11%, comfortably in excess of the 10% covenant.
The Company benefits from a secure, diversified income stream from a tenancy profile which is not overly reliant
on any one tenant or sector, which reduces risk. The Directors also noted that:
– The Company’s rent collection has been strong, with 98% of contracted rent either having been collected, or
payment plans agreed, for the March 2025 quarter.
– Based on the contracted rent as at 31 March 2025, a reduction of 60.18% in net rental income could be
accommodated before breaching the debt yield covenant in the Company’s re-financed debt arrangements.
– Based on the property valuation at 31 March 2025, the Company had room for a £71.88 million fall in portfolio
valuation before breaching the maximum LTV hard covenant in the Company’s re-financed debt arrangements.
– The Company’s cash flow can also be significantly managed through the adjustment of dividend payments, to
the extent that this does not breach the REIT regime requirements for distributions.
Strategic Report Governance
Financial Statements Additional Information
108
2. ACCOUNTING POLICIES (CONTINUED)
2.4 Going concern (continued)
Taking this into consideration, the Directors have reviewed a number of scenarios over 12 months from the date
of approval of these financial statements, including a worst-case plausible downside scenario which makes the
following assumptions:
– a reduction in net rental income of 30%;
– no new lettings or renewals, other than those where terms have already been agreed;
– a 20% fall in property valuations; and
– no new acquisitions or disposals.
In the above scenario, the Company is forecast to generate a positive cash flow before dividend payments,
however it would generate a cash flow much lower than its target dividend of 8 pps per annum. Moreover, the
Company is forecast to pass the debt yield covenant during the 12-month period with a minimum projected yield
of 18%, compared with the limit of 10%, assuming that no repayments of the facility were to be made.
Given the Company’s substantial headroom against its borrowing covenants, the Directors believe that the
Company is well placed to manage its financing and business risks. The Directors are confident that the Company
will have sufficient funds to meet its liabilities as they fall due for at least 12 months from the date of approval of the
financial statements and therefore the financial statements have been prepared on a going concern basis.
2.5 Summary of material accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below.
a) Presentation currency
These financial statements are presented in Sterling, which is the functional and presentational currency of
the Company. The functional currency of the Company is principally determined by the primary economic
environment in which it operates. The Company did not enter into any transactions in foreign currencies during the
year.
b) Revenue recognition
i) Rental income
Rental income receivable under operating leases is recognised on a straight-line basis over the lease term. A rental
adjustment is recognised from the rent review date in relation to unsettled rent reviews, whereby changes are
recognised from the effective date of the modification when the terms are agreed.
Lease incentives, including rent-free periods and payment to tenants, are also allocated to the Statement of
Comprehensive Income on a straight-line basis over the lease term. The value of resulting accrued rental income is
deducted from the valuation as provided by the valuer to arrive at the carrying value of the investment property.
A modification to an operating lease in the form of a new lease incentive is accounted for as a new lease from the
effective date of the modification. Any lease incentive existing on a modified lease will then be spread evenly over
the new remaining life of the lease.
Contingent rental income is calculated based off tenant reported actual turnover and is recognised when the
amounts are confirmed and a rental demand is then raised.
Amounts received from tenants to terminate leases or to compensate for dilapidations are recognised in the
Statement of Comprehensive Income when the right to receive them arises.
Service charge income receivable under operating leases is charged based on budgeted service charge
expenditure for a given property over a given service charge year. This income is recognised on a straight-line
basis over the service charge year and any balance credits or charges on reconciliation following the end of the
service charge year are recognised at the time they arise. Service charge expenses are recognised in the same
period as the service charge income to ensure that income and expenditure are matched.
Insurance income relates to a service cost re-charge of insurance costs incurred to the lease holder and is
recognised in the accounting period in which the services are rendered.
109
2. ACCOUNTING POLICIES (CONTINUED)
2.5 Summary of material accounting policies (continued)
ii) Deferred income
Deferred income is any rental income that has been invoiced to the tenant but relates to future periods. It is
reported as a current liability in the Statement of Financial Position.
c) Financing income and expenses
Financing income comprises interest receivable on funds invested. Financing expenses comprise interest
and other costs incurred in connection with the borrowing of funds. Interest income and interest payable are
recognised in profit or loss as they accrue, using the effective interest method.
d) Investment property
Property is classified as investment property when it is held to earn rentals or for capital appreciation or both.
Investment property is measured initially at cost including transaction costs. Transaction costs recognise transfer
taxes and professional fees to bring the property to the condition necessary for it to be capable of operating. The
carrying amount also includes the cost of replacing part of an existing investment property at the time that cost is
incurred if the recognition criteria are met.
Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in
the fair values are included in profit or loss.
Investment properties are valued by the independent external valuer on the basis of a full valuation with physical
inspection at least once a year, in accordance with the current issue of RICS Valuation – Professional Standards
(the ‘Red Book’).
The determination of the fair value is based upon the income capitalisation approach. This approach involves
applying capitalisation yields to current and future rental streams net of income voids arising from vacancies or
rent-free periods and associated running costs. These capitalisation yields and estimated rental values are based
on comparable property and leasing transactions in the market using the valuer’s professional judgement and
market observation. Other factors taken into account in the valuations include the tenure of the property, tenancy
details, capital values of fixtures and fittings, environmental matter and the overall repair and condition of the
property.
For the purposes of these financial statements, the assessed fair value is:
– reduced by the carrying amount of any accrued income resulting from the spreading of lease incentives; and
– increased by the carrying amount of leasehold obligations.
Investment property is derecognised when it has been disposed of or permanently withdrawn from use and no
future economic benefit is expected after its disposal or withdrawal.
The profit on disposal is determined as the difference between the net sales proceeds and the carrying amount of
the asset at the commencement of the accounting period plus capital expenditure in the period.
Any gains or losses on the retirement or disposal of investment property are recognised in the profit or loss in the
year of retirement or disposal.
e) Investments in subsidiaries
AEW UK REIT 2015 Limited is the subsidiary of the Company. The subsidiary was dormant during the current and
previous reporting period. The investment in the subsidiary is stated at cost less impairment and shown in note 19.
The Company has taken advantage of the exemption as permitted by Section 402 of the Companies Act 2006,
therefore the subsidiary is not consolidated as its inclusion is not material for the purposes of giving a true and fair
view.
f) Investment property held for sale
Investment property is classified as held for sale when it is being actively marketed at year-end and it is highly
probable that the carrying amount will be recovered principally through a sale transaction within 12 months.
Investment property classified as held for sale is included within current assets within the Statement of Financial
Position and measured at fair value.
Strategic Report Governance
Financial Statements Additional Information
110
2. ACCOUNTING POLICIES (CONTINUED)
2.5 Summary of material accounting policies (continued)
g) Derivative financial instruments
Derivative financial instruments, comprising interest rate caps for hedging purposes, are initially recognised at fair
value and are subsequently measured at fair value, being the estimated amount that the Company would receive
or pay to terminate the agreement at the period end date, taking into account current interest rate expectations
and the current credit rating of the Company and its counterparties. Premiums payable under such arrangements
are initially capitalised into the Statement of Financial Position.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data
is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs significant to the fair value measurement as a whole. Changes in fair value of interest rate
derivatives are recognised within operating costs in profit or loss in the period in which they occur.
h) Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and short-term deposits
with an original maturity of three months or less.
i) Restricted cash
Restricted cash is restricted as to withdrawal or usage and the Company does not have ready access to until
specific conditions are met.
j) Receivables
Rent and other receivables are initially recognised at fair value and subsequently at amortised cost. Impairment
provisions are recognised based upon an expected credit loss model. The Company has made an assessment of
expected credit losses at each period end, using the simplified approach where a lifetime expected loss allowance
is recognised over the expected life of the financial instrument. Any adjustment is recognised in profit or loss as an
impairment gain or loss.
Expected credit losses are assessed based on the Company’s historical credit loss experience, adjusted for
factors which are specific to the tenant and current and forecast economic conditions in general. If confirmation is
received that a trade receivable will not be collected, the carrying value of the asset will be written off against the
associated impairment provision.
k) Capital prepayments
Capital prepayments are made for the purpose of acquiring future property assets and held as receivables within
the Statement of Financial Position. When the asset is acquired, the prepayments are capitalised as a cost of
purchase. Where a purchase is not successful, these costs are expensed within profit or loss as abortive costs in the
period.
l) Other payables and accrued expenses
Other payables and accrued expenses are initially recognised at fair value and subsequently held at amortised
cost.
m) Interest bearing loans and borrowings
All loans and borrowings are initially recognised at fair value less directly attributable transaction costs. After
initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the
effective interest method. Borrowing costs are amortised over the lifetime of the facilities through profit or loss.
When the lifetime of a floating rate facility is extended, and this is considered to be a non-substantial modification,
the effective interest rate is revised to reflect changes in market rates of interest.
n) Dividend payable to shareholders
Equity dividends are recognised when they become legally payable.
o) Share issue costs
The costs of issuing or reacquiring equity instruments (other than in a business combination) are accounted for as
a deduction from equity.
111
2. ACCOUNTING POLICIES (CONTINUED)
2.5 Summary of material accounting policies (continued)
p) Leases
Leases where the Company is lessee are capitalised at the lease commencement, at present value of the minimum
lease payments, using the Company’s incremental borrowing rate as the discount rate, and held as both a right-of-
use asset and a liability within the Statement of Financial Position.
q) Taxes
Corporation tax is recognised in profit or loss except to the extent that it relates to items recognised directly in
equity, in which case, it is recognised in equity.
As a REIT, the Company is exempt from corporation tax on the profits and gains from its investments, provided it
continues to meet certain conditions as per REIT regulations.
Taxation on the profit or loss for the period not exempt under UK REIT regulations comprises current and deferred
tax. Current tax is expected tax payable on any non-REIT taxable income for the period, using tax rates applicable
in the period.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax that is
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the period end date.
r) European Public Real Estate Association
The Company has adopted European Public Real Estate Association (‘EPRA’) best practice recommendations,
which it expects to broaden the range of potential institutional investors able to invest in the Company’s Ordinary
Shares. For the year to 31 March 2025, audited EPS and NAV calculations under EPRA’s methodology are included
in note 10 and further unaudited measures are included on pages 135 to 152.
s) Capital and reserves
Share capital
Share capital is the nominal amount of the Company’s Ordinary Shares in issue.
Buyback reserve
Buyback reserve represents the cost of the Company’s Ordinary Shares reacquired by the Company including
directly attributable transaction costs. This reserve is not distributable.
Share premium
Share premium relates to amounts subscribed for share capital in excess of nominal value less associated issue
costs of the subscriptions.
Capital reserve
The capital reserve represents the cancelled share premium less dividends paid from this reserve. This is a
distributable reserve.
Retained earnings
Retained earnings represent the profits of the Company less dividends paid from revenue profits to date.
Unrealised gains on the revaluation of investment properties contained within this reserve are not distributable
until they crystallise on the sale of the investment property. The cumulative unrealised loss contained within this
reserve at 31 March 2025 is £0.61 million (31 March 2024: cumulative unrealised loss of £7.47 million).
Strategic Report Governance
Financial Statements Additional Information
112
3. RENTAL AND OTHER INCOME
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Rental income 18,328 19,488
Service charge income 2,436 2,899
Insurance income 1,194 1,171
Turnover rents 526 400
Dilapidation income received 180 323
Other property income 13 9
Lease surrender income – 55
Total rental and other property income 22,677 24,345
Other income* 1,082 –
Total rental and other income 23,759 24,345
* As detailed in the March 2024 Annual Report, the Company identified in the prior year that certain historic dividends had been declared as ordinary dividends
when they should have been declared as Property Income Distributions (“PIDs”). The Investment Manager had (without admission of liability) agreed to fully
indemnify the Company for any losses it incurred as a result of rectifying this, thereby ensuring that the Company’s NAV would not ultimately be impacted. This
indemnification was provided in return for an assignment of any claims the Company has against other parties. The indemnity income has been recognised in the
period as a result of the indemnity agreement being finalised and signed.
All rental and other income is derived from within the UK. No single tenant accounts for more than 10% of rental
income.
4. PROPERTY OPERATING EXPENSES
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Recoverable service charge expense 2,436 2,899
Recoverable insurance expense 1,194 1,171
Other property expenses 1,191 1,802
Non-recoverable service charge expense 997 989
Total property operating expenses 5,818 6,861
113
5. OTHER OPERATING EXPENSES
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Investment management fee 1,379 1,391
Operating costs 973 1,134
Audit remuneration 273 226
Total other operating expenses 2,625 2,751
Details on how the investment management fees are calculated are disclosed in note 24.
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Audit
Statutory audit of Annual Report and Financial Statements 198 190
Under accrual from prior year 39 –
237 190
Non-audit
ISRE (UK) 2410 review (interim review fee) 36 36
36 36
Total fees paid to BDO LLP 273 226
Percentage of total fees attributed to non-audit services 13% 16%
6. DIRECTORS’ REMUNERATION
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Directors’ remuneration 146 148
Tax and social security 14 14
Total remuneration 160 162
A summary of the Directors’ remuneration is set out in the Directors’ Remuneration Report on page 68.
There are no other members of key management personnel other than the Directors.
Strategic Report Governance
Financial Statements Additional Information
114
7. FINANCE INCOME
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Income receivable from cash and short-term deposits 624 177
Total 624 177
8. FINANCE EXPENSES
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Interest payable on loan borrowings 1,776 1,780
Amortisation of loan arrangement fee 127 127
Interest expense on lease liabilities 14 28
Other loan expenses 12 –
Bank charges 2 1
Total 1,931 1,936
9. TAXATION
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Tax charge comprises:
Corporation tax on interest allocated to the residual business 68 42
Prior year over accrual (42) –
Total tax charge 26 42
Analysis of tax charge in the year
Profit before tax 24,370 9,090
Theoretical tax at UK corporation tax standard rate of 25.00%
(31 March 2024: 25.00%)
6,093 2,273
Adjusted for:
Exempt REIT income (3,570) (2,898)
Non taxable investment (gains)/losses (2,523) 625
Corporation tax payable 68 42
Prior year over accrual (42) –
Total tax charge 26 42
Factors that may affect future tax charges
Due to the Company’s status as a REIT and the intention to continue meeting the conditions required to obtain
approval as a REIT in the foreseeable future, the Company has not provided deferred tax on any capital gains and
losses arising on the revaluation or disposal of investments.
115
10. EARNINGS PER SHARE AND NAV PER SHARE
YEAR ENDED
31 MARCH 2025
YEAR ENDED
31 MARCH 2024
Earnings per share:
Profit for the year attributable to owners of the company (£’000) 24,344 9,048
Weighted average number of shares 158,424,746 158,424,746
Earnings per share (basic and diluted) (pence) 15.37 5.71
EPRA earnings per share:
Profit for the year attributable to owners of the company (£’000) 24,344 9,048
Adjustment to total profit:
Change in fair value of investment properties (£'000) (6,861) 4,350
Realised gain on disposal of investment properties (£'000) (3,230) (1,848)
Total EPRA Earnings (£'000) 14,253 11,550
EPRA earnings per share (basic and diluted) (pence) 9.00 7.29
Net assets (£’000) 174,443 162,752
Ordinary Shares in issue 158,424,746 158,424,746
NAV per share (pence) 110.11 102.73
Earnings per share (‘EPS’) amounts are calculated by dividing profit for the year attributable to ordinary equity
holders of the Company by the weighted average number of Ordinary Shares in issue during the year.
Strategic Report Governance
Financial Statements Additional Information
116
10. EARNINGS PER SHARE AND NAV PER SHARE (CONTINUED)
AS AT 31 MARCH 2025
EPRA NTA
£’000
EPRA NRV
£’000
EPRA NDV
£’000
IFRS NAV attributable to shareholders 174,443 174,443 174,443
Real estate transfer tax and other purchasers’ costs
1
– 13,500 –
Adjustment for the fair value of bank borrowings – – (2,927)
At 31 March 2025 174,443 187,943 171,516
Number of ordinary shares (million) 158,424,746 158,424,746 158,424,746
NAV per share (pence) 110.11 118.63 108.26
AS AT 31 MARCH 2024
EPRA NTA
£’000
EPRA NRV
£’000
EPRA NDV
£’000
IFRS NAV attributable to shareholders 162,752 162,752 162,752
Real estate transfer tax and other purchasers’ costs
1
– 13,906 –
Adjustment for the fair value of bank borrowings – – (4,641)
At 31 March 2024 162,752 176,658 158,111
Number of Ordinary Shares 158,424,746 158,424,746 158,424,746
NAV per share (pence) 102.73 111.51 99.80
1 EPRA Net Tangible Assets (‘EPRA NTA’) and EPRA Net Disposal Value (‘EPRA NDV’) as calculated using property values in line with IFRS, where values are net of
Real Estate Transfer Tax (‘RETT’) and other purchasers’ costs. RETT and other purchasers’ costs are added back when calculating EPRA Net Reinstatement Value
(‘EPRA NRV’) and have been estimated at 6.6% of the net valuation provided by Knight Frank.
11. DIVIDENDS PAID
DIVIDENDS PAID DURING THE YEAR
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Represents four interim dividends of 2.00 pps each 12,674 12,674
DIVIDENDS RELATING TO THE YEAR
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Represents four interim dividends of 2.00 pps each 12,674 12,674
Dividends paid during the period relate to Ordinary Shares only. The Statement of Cash Flows for dividends paid
excludes £266,000 withholding tax which is payable as at 31 March 2025 (31 March 2024: £283,000).
117
12. INVESTMENT PROPERTY
12.a) Investment property
31 MARCH 2025 31 MARCH 2024
INVESTMENT
PROPERTY
FREEHOLD
£’000
INVESTMENT
PROPERTY
LEASEHOLD
£’000
TOTAL
£’000
INVESTMENT
PROPERTY
FREEHOLD
£’000
INVESTMENT
PROPERTY
LEASEHOLD
£’000
TOTAL
£’000
UK investment property
As at beginning of the year 154,340 56,350 210,690 156,325 57,500 213,825
Purchases in the year 10,533 – 10,533 22,984 – 22,984
Capital expenditure in the year 1,918 884 2,802 380 1,771 2,151
Disposals in the year (4,750) (22,143) (26,893) (24,300) – (24,300)
Revaluation of investment property 6,454 959 7,413 (1,049) (2,921) (3,970)
Valuation provided by Knight Frank 168,495 36,050 204,545 154,340 56,350 210,690
Adjustment to carrying value for lease
incentive debtor
(4,303) (3,751)
Adjustment for lease obligations* 187 187
Total investment property 200,429 207,126
Classified as:
Investment property held for sale – 26,086
Investment property 200,429 181,040
200,429 207,126
Change in fair value of investment
property
Change in fair value before
adjustments for lease incentives
7,413 (3,970)
Adjustment for movement in the year:
in value of lease incentive debtor (552) (380)
6,861 (4,350)
Gains on disposal of the investment
property
Net proceeds from disposals of
investment property during the year**
30,123 26,148
Fair value at the beginning of period (26,893) (24,300)
Realised gain on disposal of
investment property held for sale
3,230 1,848
* Adjustment in respect of minimum payment under head leases separately included as a liability within the Statement of Financial Position
** Net proceeds include deductions for topped up rents and rent-free periods of £1,642,000 (31 March 2024: £555,000).
Strategic Report Governance
Financial Statements Additional Information
118
12. INVESTMENT PROPERTY (CONTINUED)
12.a) Investment property (continued)
Valuation of investment property
Valuation of investment property is performed by Knight Frank LLP, an accredited external independent valuer
with recognised and relevant professional qualifications and recent experience of the location and category of the
investment property being valued.
The valuation of the Company’s investment property at fair value is determined by the external valuer on the
basis of market value in accordance with the internationally accepted RICS Valuation – Professional Standards
(incorporating the International Valuation Standards).
The determination of the fair value is based upon the income capitalisation approach. This approach involves
applying capitalisation yields to current and future rental streams net of income voids arising from vacancies or
rent-free periods and associated running costs. These capitalisation yields and estimated rental values are based
on comparable property and leasing transactions in the market using the valuer’s professional judgement and
market observation. Other factors taken into account in the valuations include the tenure of the property, tenancy
details, capital values of fixtures and fittings, environmental matter and the overall repair and condition of the
property.
12.b) Fair value measurement hierarchy
The following table provides the fair value measurement hierarchy for investments:
QUOTED PRICES IN
ACTIVE MARKETS
(LEVEL 1)
£’000
SIGNIFICANT
OBSERVABLE
INPUTS
(LEVEL 2)
£’000
SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3)
£’000
TOTAL
£’000
Assets measured at fair value
31 March 2025
Investment property
– – 200,429 200,429
31 March 2024
Investment property
– – 207,126 207,126
Explanation of the fair value hierarchy:
Level 1 – Quoted prices for an identical instrument in active markets;
Level 2 – Prices of recent transactions for identical instruments and valuation techniques using observable market
data; and
Level 3 – Valuation techniques using non-observable data.
There have been no transfers between Level 1 and Level 2 during either year, nor have there been any transfers in
or out of Level 3.
119
12. INVESTMENT PROPERTY (CONTINUED)
12.b) Fair value measurement hierarchy (continued)
Sensitivity analysis to significant changes in unobservable inputs within Level 3 of the hierarchy
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value
hierarchy of the entity’s portfolio of investment property are:
1) ERV
2) Equivalent yield
Increases/(decreases) in the ERV (per sq ft per annum) in isolation would result in a higher/(lower) fair value
measurement. Increases/(decreases) in the discount rate/yield in isolation would result in a lower/(higher) fair value
measurement.
The significant unobservable inputs used in the fair value measurement, categorised within Level 3 of the fair value
hierarchy of the portfolio of investment property are as follows:
SIGNIFICANT UNOBSERVABLE INPUTS
SECTOR
FAIR VALUE
£’000
ERV RANGE
(PER SQ FT
PER ANNUM)
WEIGHTED
AVERAGE ERV
(PER SQ FT
PER ANNUM)
EQUIVALENT
YIELD RANGE
WEIGHTED
AVERAGE
EQUIVALENT
YIELD RANGE
As at 31 March 2025
Industrial 78,600 £0.50 – £10.00 £4.60 6.83% –10.94% 8.14%
Retail 72,450 £4.00 – £94.00 £11.74 7.09% – 10.88% 8.61%
Alternatives 28,895 £8.50 – £42.43 £10.86 7.54% – 9.58% 8.43%
Office 24,600 £8.50 – £40.00 £21.93 8.60% – 8.99% 8.81%
Portfolio* 204,545 £0.50 – £94.00 £7.57 6.83% – 10.94% 8.42%
As at 31 March 2024
Industrial 78,720 £0.50 – £10.00 £4.24 6.81% – 10.94% 8.23%
Retail 78,500 £4.00 – £85.00 £11.21 6.93% – 11.34% 8.57%
Alternatives 28,420 £8.00 – £29.60 £12.53 8.57% – 8.92% 8.51%
Office 25,050 £8.50 – £40.00 £21.79 7.60% – 9.77% 8.76%
Portfolio* 210,690 £0.50 – £85.00 £7.23 6.81% – 11.34% 8.45%
* Valuation per Knight Frank LLP.
Where possible, sensitivity of the fair values of Level 3 assets are tested to changes in unobservable inputs against
reasonable alternatives.
All gains and losses recorded in the statement of comprehensive income for recurring fair value measurements
categorised within Level 3 of the fair value hierarchy, are attributable to changes in unrealised gains or losses
relating to investment property held at the end of the reporting year, prior to adjustment for rent-free debtor and
rent guarantee debtor, where applicable.
Strategic Report Governance
Financial Statements Additional Information
120
12. INVESTMENT PROPERTY (CONTINUED)
12.b) Fair value measurement hierarchy (continued)
CHANGE IN ERV CHANGE IN EQUIVALENT YIELD
£’000 £’000 £’000 £’000
Sensitivity analysis +5% -5% +5% -5%
31 March 2025
Resulting fair value of investment property
213,044 196,182 194,227 215,985
31 March 2024
Resulting fair value of investment property
219,442 202,048 199,884 222,599
CHANGE IN ERV CHANGE IN EQUIVALENT YIELD
£’000 £’000 £’000 £’000
Sensitivity analysis +10% -10% +10% -10%
31 March 2025
Resulting fair value of investment property
221,537 187,827 184,841 228,686
31 March 2024
Resulting fair value of investment property
228,232 193,461 190,083 235,859
CHANGE IN ERV CHANGE IN EQUIVALENT YIELD
£’000 £’000 £’000 £’000
Sensitivity analysis +15% -15% +15% -15%
31 March 2025
Resulting fair value of investment property
230,146 179,541 176,276 242,887
31 March 2024
Resulting fair value of investment property
237,129 184,959 181,139 250,684
Given the current volatility in the property market, the above levels of sensitivity of unobservable inputs are
considered to demonstrate plausible scenarios in the near future and a reasonable resulting range of movement in
valuation.
12.c) Real estate risk
The Company has considered the risks specific to its investment property within note 22.2 Financing Management.
121
13. RECEIVABLES AND PREPAYMENTS
Non Current
31 MARCH 2025
£’000
31 MARCH 2024
£’000
Receivables
Lease incentive debtor 3,956 3,267
Total 3,956 3,267
Current
31 MARCH 2025
£’000
31 MARCH 2024
£’000
Receivables
Rent agent float account 5,635 2,505
Rent receivable 1,287 1,956
Recoverable service charge receivable 1,156 1,427
Completion proceeds due on sale of property 350 2,175
Other receivables 251 989
Recoverable insurance receivable 166 1,408
Allowance for expected credit losses (459) (2,177)
8,386 8,283
Lease incentive debtor 347 484
8,733 8,767
Property related prepayments 495 1,818
Other prepayments 53 40
548 1,858
Total 9,281 10,625
The lease incentive debtor recognised from rent smoothing adjustments are not considered to be financial assets
as the amounts are not yet contractually due. As such, the requirements of IFRS 9 (including the expected credit
loss assessment) are not applicable to these balances. The credit risk associated with the tenant is considered in
the determination of the fair value of the related property.
The carrying value of trade and other receivables classified at amortised cost approximates fair value.
Strategic Report Governance
Financial Statements Additional Information
122
13. RECEIVABLES AND PREPAYMENTS (CONTINUED)
Current (continued)
The aged debtor analysis of receivables is as follows:
31 MARCH 2025
£’000
31 MARCH 2024
£’000
Less than three months 6,610 7,797
Between three and six months 1,776 486
Total 8,386 8,283
The Company applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime
expected credit loss provision for trade receivables. To measure expected credit losses on a collective basis, trade
receivables are assessed on an individual tenant-by-tenant basis. The risk of credit loss applied to each tenant is
assessed based on information including, but not limited to: external credit ratings; financial statements; press
information; previous experience of losses or late payment; discussions with the property manager and the tenant.
The expected loss rates are based on the Company’s historical credit losses experienced over the three-year
period prior to the year-end. The historical loss rates are then adjusted for current and forward-looking information
on macroeconomic factors affecting the Company’s customers. The expected credit loss provision as at
31 March 2025 was £0.46 million (31 March 2024: £2.2 million). The reason for the large year-on-year decrease in
the expected credit loss provision is due to the write off of the receivables impaired at 31 March 2024 on tenants
that had entered administration during the year. No reasonably possible changes in the assumptions underpinning
the expected credit loss provision would give rise to a material expected credit loss.
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
31 MARCH 2025
£’000
31 MARCH 2024
£’000
Opening provision for impairment of trade receivables 2,177 969
(Decrease)/increase during the year (338) 1,552
Unused amounts reversed (92) (13)
Receivable written off during the year as uncollectible – (331)
Movement in provision for impairment during the year (430) 1,208
Prior year receivable written off during the year as uncollectible (1,288) –
(1,718) 1,208
At the end of the year 459 2,177
14. RESTRICTED CASH
31 MARCH 2025
£’000
31 MARCH 2024
£’000
Restricted cash 1,790 –
1,790 –
Following the disposal of Units 1-11, Central Six Retail Park, Coventry, in December 2024, the Company temporarily
exceeded an LTV threshold associated with its loan facility. No covenant was breached but £1,790,000 of the
disposal proceeds was required to be maintained in a restricted account. This did not meet the policy for being
classified as cash and cash equivalents as the Company did not have ready access to utilise the funds.
123
15. INTEREST BEARING LOANS AND BORROWINGS
31 MARCH 2025
£’000
31 MARCH 2024
£’000
At the beginning of the period 60,000 60,000
Bank borrowings drawn in the period – –
Bank borrowings repaid in the period – –
Interest bearing loans and borrowings 60,000 60,000
Unamortised loan arrangement fees (227) (337)
At the end of the year 59,773 59,663
Repayable between two and five years 60,000 60,000
Undrawn facility at the end of the period – –
Total facility 60,000 60,000
The Company has a £60.00 million credit facility with AgFe, a leading independent asset manager specialising
in debt-based investments. As of 31 March 2025, the Company had utilised £60.00 million (31 March 2024:
£60.00 million). The loan is a fixed rate loan with a total interest cost of 2.959% and has a 5 year term maturing in
May 2027.
The Company has a target gearing of 35% Loan to NAV. As at 31 March 2025, the Company’s gearing was 34.40%
Loan to NAV (31 March 2024: 36.87%).
Borrowing costs associated with the credit facility are shown as finance costs in note 8 to these financial
statements.
31 MARCH 2025 31 MARCH 2024
Facility £60.00 million £60.00 million
Drawn £60.00 million £60.00 million
Loan at fair value £57.07 million £55.36 million
Gearing (Loan to GAV) 25.01% 28.97%
Gearing (Loan to NAV) 34.40% 36.87%
Interest rate
2.959%
fixed
2.959%
fixed
Notional Value of Loan Balance Hedged N/A N/A
Strategic Report Governance
Financial Statements Additional Information
124
15. INTEREST BEARING LOANS AND BORROWINGS (CONTINUED)
Reconciliation to cash flows from financing activities
31 MARCH 2025
£’000
31 MARCH 2024
£’000
Balance at beginning of year 59,663 59,553
Changes from financing cash flows
Interest paid (1,810) (1,793)
Total changes from financing cash flows (1,810) (1,793)
Other changes
Amortisation of loan arrangement fees 127 127
Interest expense 1,776 1,780
Other loan expenses 12 –
Changes in loan interest payable 5 13
Release of prepaid arrangement fee – (17)
Total other changes 1,920 1,903
Balance at the end of the year 59,773 59,663
16. PAYABLES AND ACCRUED EXPENSES
31 MARCH 2025
£’000
31 MARCH 2024
£’000
Deferred income 3,991 5,403
Other creditors 1,423 2,070
Accruals 1,257 1,199
Recoverable service charge payable 266 278
Recoverable insurance payable 109 863
Total 7,046 9,813
125
17. LEASE OBLIGATIONS AS LESSEE
Leases as lessee are capitalised at the lease’s commencement at the present value of the minimum lease
payments. The present value of the corresponding rental obligations are included as liabilities.
The following table analyses the minimum lease payments under non-cancellable leases:
31 MARCH 2025
£’000
31 MARCH 2024
£’000
Current 13 13
Non Current 174 174
Total 187 187
18. OPERATING LEASES
Operating lease commitments - as lessor
The Company has entered into commercial property leases on its investment property portfolio. These
non-cancellable leases have a remaining term of between zero and 24 years.
Future minimum rentals receivable under non-cancellable operating leases as at 31 March 2025 are as follows:
31 MARCH 2025
£’000
31 MARCH 2024
£’000*
Within one year 16,205 17,367
After one year but not more than two years 13,369 14,435
After two years but not more than three years 9,138 11,507
After three years but not more than four years 6,859 7,163
After four years but not more than five years 6,272 5,220
More than five years 21,708 20,762
Total 73,551 76,454
* The comparatives have been restated to correct the calculation of future minimum lease rental receivables.
During the year ended 31 March 2025, there were contingent rents totalling £526,000 (year ended 31 March 2024:
£400,233) recognised as income.
19. INVESTMENT IN SUBSIDIARY
The Company has a wholly-owned subsidiary, AEW UK REIT 2015 Limited:
NAME AND COMPANY NUMBER
COUNTRY OF REGISTRATION
AND INCORPORATION PRINCIPAL ACTIVITY ORDINARY SHARES HELD
AEW UK REIT 2015 Limited
(Company number 09524699)
England and Wales Dormant 100%
AEW UK REIT 2015 Limited is a subsidiary of the Company incorporated in the UK on 2 April 2015. At 31 March
2025, the Company held one share, being 100% of the issued share capital. AEW UK REIT 2015 Limited is dormant
and the cost of the subsidiary is £0.01 (31 March 2024: £0.01). The registered office of AEW UK REIT 2015 Limited
is 19
th
Floor, 51 Lime Street, London EC3M 7DQ.
Strategic Report Governance
Financial Statements Additional Information
126
20. ISSUED SHARE CAPITAL
31 MARCH 2025 31 MARCH 2024
£’000
NUMBER OF
ORDINARY
SHARES £’000
NUMBER OF
ORDINARY
SHARES
Ordinary Shares (nominal value £0.01 per
share) authorised, issued and fully paid
At the beginning of the year 1,587 158,774,746 1,587 158,774,746
At the end of the year 1,587 158,774,746 1,587 158,774,746
Treasury Shares
At the beginning of the year (265) 350,000 (265) 350,000
At the end of the year (265) 350,000 (265) 350,000
Total Ordinary Share capital
excluding treasury shares
1,587 158,424,746 1,587 158,424,746
The allotted, called up and fully paid shares at 31 March 2025 consisted of 158,424,746 Ordinary Shares.
21. SHARE PREMIUM ACCOUNT
31 MARCH 2025
£’000
31 MARCH 2024
£’000
The share premium relates to amounts subscribed for share capital in
excess of nominal value:
Balance at the beginning of the year 56,578 56,578
Balance at the end of the year 56,578 56,578
127
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
22.1 Financial assets and liabilities
The Company’s principal financial assets and liabilities are those derived from its operations: receivables and
prepayments, cash and cash equivalents and payables and accrued expenses. The Company’s other principal
financial liabilities are interest bearing loans and borrowings, the main purpose of which is to finance the
acquisition and development of the Company’s property portfolio.
Set out below is a comparison by class of the carrying amounts and fair value of the Company’s financial
instruments that are carried in the financial statements.
31 MARCH 2025 31 MARCH 2024
BOOK VALUE
£’000
FAIR VALUE
£’000
BOOK VALUE
£’000
FAIR VALUE
£’000
Financial assets
Receivables
1
8,386 8,386 8,283 8,283
Cash and cash equivalents 25,993 25,993 11,397 11,397
Other financial assets held at fair value – – – –
Financial liabilities
Interest bearing loans and borrowings 59,773 57,073 59,663 55,359
Payables and accrued expenses
2
2,530 2,530 3,886 3,886
Lease obligations 187 187 187 187
1 Excludes lease incentive debtor and prepayments.
2 Excludes tax, VAT liabilities and deferred income.
All other financial assets and financial liabilities are measured at amortised cost. All financial instruments were
designated in their current categories upon initial recognition.
Fair value measurement hierarchy has not been applied to those classes of asset and liability stated above which
are not measured at fair value in the financial statements. The difference between the fair value and book value of
these items is not considered to be material.
Strategic Report Governance
Financial Statements Additional Information
128
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
22.2 Financing management
The Company’s activities expose it to a variety of financial risks: market risk, real estate risk, credit risk and liquidity
risk.
The Company’s objective in managing risk is the creation and protection of shareholder value. Risk is inherent
in the Company’s activities but it is managed through a process of ongoing identification, measurement and
monitoring, subject to risk limits and other controls.
The principal risks facing the Company in the management of its portfolio are as follows:
Market price risk
Market risk is the risk that the fair values of financial instruments will fluctuate because of changes in market prices.
The financial instruments held by the Company that are affected by market risk are principally the Company’s cash
balances and bank borrowings.
The Company entered into a fixed rate 5 year loan with AgFe in May 2022, with a total interest cost of 2.959%
mitigating the market risk associated with bank borrowings.
Real estate risk
Real estate risk is the risk that future values of investments in direct property and related property investments
will fluctuate due to changes in market prices. To manage market price risk, the Company diversifies its portfolio
geographically in the United Kingdom and across property sectors.
The disciplined approach to the purchase, sale and asset management ensures that the value is maintained to its
maximum potential. Prior to any property acquisition or sale, detailed research is undertaken to assess expected
future cash flow. The Investment Management Committee of the Investment Manager meets twice monthly and
reserves the ultimate decision with regards to investment purchases or sales. In order to monitor property valuation
fluctuations, the Investment Manager meets with the independent external valuer on a regular basis. The valuer
provides a property portfolio valuation quarterly, so any movements in the value can be accounted for in a timely
manner and reflected in the NAV every quarter.
Property investments are illiquid assets and can be difficult to sell, especially if local market conditions are poor.
Illiquidity may also result from the absence of an established market for investments, as well as legal or contractual
restrictions on resale of such investments. In addition, property valuation is inherently subjective due to the
individual characteristics of each property, and thus, coupled with illiquidity in the markets, makes the valuation in
the investment property difficult and inexact.
No assurances can be given that the valuations of properties will be reflected in the actual sale prices even where
such sales occur shortly after the relevant valuation date.
There can be no certainty regarding the future performance of any of the properties acquired for the Company. The
value of any property can go down as well as up. Property and property-related assets are inherently subjective as
regards value due to the individual nature of each property. As a result, valuations are subject to uncertainty.
Real property investments are subject to varying degrees of risk. The yields available from investments in real
estate depend on the amount of income generated and expenses incurred from such investments.
There are additional risks in vacant, part vacant, redevelopment and refurbishment situations, although these are
not prospective investments for the Company.
129
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
22.3 Credit risk
Credit risk is the risk that the counterparty (to a financial instrument) or tenant (of a property) will cause a financial
loss to the Company by failing to meet a commitment it has entered into with the Company.
It is the Company’s policy to enter into financial instruments with reputable counterparties. All cash deposits are
placed with approved counterparties, The Royal Bank of Scotland International Limited which has an A3 long term
credit rating and MUFG Corporate Markets Treasury Limited which has an A1 long term credit rating.
In respect of property investments, in the event of a default by a tenant, the Company will suffer a rental shortfall
and additional costs concerning re-letting the property. The Investment Manager monitors tenant arrears in order
to anticipate and minimise the impact of defaults by occupational tenants.
The table below shows the Company’s exposure to credit risk:
AS AT
31 MARCH 2025
£’000
AS AT
31 MARCH 2024
£’000
Receivables (excluding incentives and prepayments) 8,386 8,283
Cash and cash equivalents 25,593 11,397
Total 33,979 19,680
Liquidity risk
Liquidity risk arises from the Company’s management of working capital, the finance charges and principal
repayments on its borrowings. It is the risk that the Company will encounter difficulty in meeting its financial
obligations as they fall due, as the majority of the Company’s assets are investment properties and therefore not
readily realisable. The Company’s objective is to ensure it has sufficient available funds for its operations and
to fund its capital expenditure. This is achieved by continuous monitoring of forecast and actual cash flows by
management.
The table below summarises the maturity profile of the Company’s financial liabilities based on contractual
undiscounted payments:
31 MARCH 2025
ON
DEMAND
£’000
< 3
MONTHS
£’000
3–12
MONTHS
£’000
1–5
YEARS
£’000
> 5
YEARS
£’000
TOTAL
£’000
Interest bearing loans and borrowings – 443 1,333 61,974 – 63,750
Payables and accrued expenses – 2,530 – – – 2,530
Lease obligation – – 14 56 1,708 1,778
– 2,973 1,347 62,030 1,708 68,058
31 MARCH 2024
ON
DEMAND
£’000
< 3
MONTHS
£’000
3–12
MONTHS
£’000
1–5
YEARS
£’000
> 5
YEARS
£’000
TOTAL
£’000
Interest bearing loans and borrowings – 443 1,333 63,750 – 65,526
Payables and accrued expenses – 3,886 – – – 3,886
Lease obligation – – 14 56 1,708 1,778
– 4,329 1,347 63,806 1,708 71,190
Strategic Report Governance
Financial Statements Additional Information
130
23. CAPITAL MANAGEMENT
The primary objectives of the Company’s capital management are to ensure that it continues to qualify for UK REIT
status and complies with its banking covenants.
To enhance returns over the medium term, the Company utilises borrowings on a limited recourse basis for each
investment or all or part of the total portfolio. The Company’s policy is to target a borrowing level of 35.00% Loan to
NAV.
Alongside the Company’s borrowing policy, the Directors intend, at all times, to conduct the affairs of the Company
so as to enable the Company to qualify as a REIT for the purposes of Part 12 of the CTA 2010 (and the regulations
made thereunder). The REIT status compliance requirements include: 90% distribution test, interest cover ratio and
75% assets test, all of which the Company remained compliant with in this reporting year.
The monitoring of the Company’s level of borrowing is performed primarily using a Loan to Value ratio and is
reported to the lender on a quarterly basis against the financial covenants of the facility. At the year-end, the
Company had a Loan to Value ratio of 33.87% (31 March 2024: 31.99%).
Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings.
During the year under review, the Company did not breach any of its loan covenants, nor did it default on any of its
other obligations under its loan agreements.
24. TRANSACTIONS WITH RELATED PARTIES
As defined by IAS 24 Related Parties Disclosures, parties are considered to be related if one party has the ability to
control the other party or exercise significant influence over the other party in making financial or operational
decisions.
For the year ended 31 March 2025, the Directors of the Company are considered to be the key management
personnel. Details of amounts paid to Directors for their services can be found within note 6, Directors’
remuneration and the Director’s remuneration report on page 68. During the year the Directors who served in the
year received £3,498 gross in dividend payments (31 March 2024: £47,765).
AEW UK Investment Management LLP is the Company’s Investment Manager and has been appointed as AIFM.
Under the terms of the Investment Management Agreement, the Investment Manager is responsible for the
day-to-day discretionary management of the Company’s investments subject to the investment objective and
investment policy of the Company and the overall supervision of the Directors.
The Investment Manager is entitled to receive a quarterly management fee in respect of its services calculated at
the rate of one-quarter of 0.9% of the prevailing NAV (excluding uninvested proceeds from fundraisings).
During the year, the Company incurred £1,379,246 (31 March 2024: £1,391,335) in respect of investment
management fees and expenses, of which £335,510 (31 March 2024: £339,647) was outstanding as at
31 March 2025.
131
25. SEGMENTAL INFORMATION
The Board of Directors retains overall control of the Company but the Investment Manager (AEW UK Investment
Management LLP) has certain authorities and fulfils the function of allocating resource to, and assessing the
performance of the Company’s operating segments and is therefore considered to be the Chief Operating Decision
Maker (‘CODM’). In accordance with IFRS 8, the Company considers each of its properties to be an individual
operating segment. The CODM allocates resources, and reviews the performance of, the Company’s portfolio on a
property-by-property basis and discrete financial information is available for each individual property.
These operating segments have similar economic characteristics and, as such, are aggregated into one reporting
segment, being investment in property and property-related investments in the UK.
26. EVENTS AFTER REPORTING DATE
Dividend
On 1 May 2025, the Board declared its fourth interim dividend of 2.00 pps in respect of the period from
1 January 2025 to 31 March 2025. This was paid on 30 May 2025, to shareholders on the register as at 9 May 2025.
The ex-dividend date was 8 May 2025.
Investment Property Purchase
In June 2025, the Company completed on the purchase of Freemans Leisure Park, Leicester, for £11.15 million.
Strategic Report Governance
Financial Statements Additional Information
132
Additional
Information
Bath, Northgate House
Strategic Report Governance Financial Statements Additional Information
EPRA disclosures are widely used across the listed property sector and, as such, have been presented below to aid
comparison with other companies in this sector.
Detailed below is a summary table showing the EPRA performance measures of the Company.
All EPRA performance measures have been calculated in line with EPRA Best Practices Recommendations
Guidelines which can be found at www.epra.com.
MEASURE AND DEFINITION PURPOSE PERFORMANCE
1. EPRA Earnings
Earnings for operational activities. A key measure of a company’s
underlying operating results and
an indication of the extent to
which current dividend payments
are supported by earnings.
£14.25 million/9.00 pps
EPRA earnings for year to
31 March 2025 (31 March 2024:
£11.55 million/7.29 pps)
2. EPRA Net Tangible Assets
(‘NTA’)
Assumes that entities buy and sell
assets, thereby crystallising certain
levels of unavoidable deferred tax.
The EPRA NAV set of metrics
make adjustments to the NAV per
the IFRS financial statements to
provide stakeholders with the most
relevant information on the fair
value of the assets and liabilities of
a real estate investment company,
under different scenarios.
£174.44 million/110.11 pps
EPRA NTA as at 31 March
2025 (31 March 2024: £162.75
million/102.73 pps)
3. EPRA Net Reinstatement
Value (‘NRV’)
Assumes that entities never sell
assets and aims to represent the
value required to rebuild the entity.
£187.94 million/118.63 pps
EPRA NRV as at 31 March
2025 (31 March 2024: £176.66
million/111.51 pps)
4. EPRA Net Disposal Value
(‘NDV’)
Represents the shareholders’
value under a disposal scenario,
where deferred tax, financial
instruments and certain other
adjustments are calculated to the
full extent of their liability, net of
any resulting tax.
£171.52 million/108.26 pps
EPRA NDV as at 31 March
2025 (31 March 2024: £158.11
million/99.80 pps)
5. EPRA Net Initial Yield (‘NIY’)
Annualised rental income based
on the cash rents passing at the
balance sheet date, less non-
recoverable property operating
expenses, divided by the market
value of the property, increased
with (estimated) purchasers’
costs.
A comparable measure for
portfolio valuations.
This measure should make it
easier for investors to judge
themselves, how the valuation
of portfolio X compares with
portfolio Y.
7.97%
EPRA NIY as at 31 March 2025
(31 March 2024: 8.02%)
6. EPRA ‘Topped-Up’ NIY
This measure incorporates an
adjustment to the EPRA NIY
in respect of the expiration
of rent-free periods (or other
unexpired lease incentives such
as discounted rent periods and
step rents).
A comparable measure for
portfolio valuations.
This measure should make it
easier for investors to judge
themselves, how the valuation
of portfolio X compares with
portfolio Y.
8.19%
EPRA ‘Topped-Up’ NIY as at
31 March 2025 (31 March 2024:
8.30%)
EPRA Unaudited
Performance Measures
135
MEASURE AND DEFINITION PURPOSE PERFORMANCE
7. EPRA Vacancy Rate
Estimated Market Rental Value
(‘ERV’) of vacant space divided
by ERV of the whole portfolio.
A ‘pure’ (%) measure of
investment property space that is
vacant, based on ERV.
7.50%
EPRA Vacancy Rate as at
31 March 2025 (31 March 2024:
6.38%)
8. EPRA Cost Ratio
Administrative and operating
costs (including and excluding
costs of direct vacancy) divided
by gross rental income.
A key measure to enable
meaningful measurement of
the changes in a company’s
operating costs.
24.05%
EPRA Cost Ratio (including direct
vacancy costs) as at 31 March
2025 (31 March 2024: 34.57%)
12.90%
EPRA Cost Ratio (excluding direct
vacancy costs) as at 31 March
2025 (31 March 2024: 26.67%)
9. EPRA Capital Expenditure
Property which has been held at
both the current and comparative
balance sheet dates for which
there has been no significant
development.
A measure used to illustrate
change in comparable capital
values.
£13.34 million for the year ended
31 March 2025 (31 March 2024:
£25.13 million)
10. EPRA Like-for-like Rental
(Reduction)/Growth
Net growth generated by assets
which were held by the Company
throughout both the current
and comparable periods which
there has been no significant
development which materially
impacts upon income.
A measure used to illustrate
change in comparable income
values.
£(0.24) million/(1.58)% for the
year ended 31 March 2025
(31 March 2024: £0.48 million/
3.39%)
11. EPRA Loan to Value
Debt divided by the market value
of property.
A measure to assess the gearing
of shareholder equity of a real
estate company.
15.29% for the year ended
31 March 2025 (31 March 2024:
22.63%)
Strategic Report Governance Financial Statements Additional Information
136
CALCULATION OF EPRA NTA, EPRA NRV AND EPRA NDV
The Company considers EPRA NTA to be the most relevant NAV measure for the Company and we are now
reporting this as our primary NAV measure, replacing our previously reported EPRA NAV and EPRA NNAV per share
metrics. EPRA NTA excludes the cumulative fair value adjustments for debt-related derivatives which are unlikely to
be realised.
AS AT 31 MARCH 2025
EPRA NTA
£’000
EPRA NRV
£’000
EPRA NDV
£’000
IFRS NAV attributable to shareholders 174,443 174,443 174,443
Real estate transfer tax and other purchasers costs
1
– 13,500 –
Adjustment for the fair value of bank borrowings – – (2,927)
At 31 March 2025 174,443 187,943 171,516
Number of ordinary shares (‘000) 158,424,746 158,424,746 158,424,746
NAV per share (pence) 110.11 118.63 108.26
AS AT 31 MARCH 2024
EPRA NTA
£’000
EPRA NRV
£’000
EPRA NDV
£’000
IFRS NAV attributable to shareholders 162,752 162,752 162,752
Real estate transfer tax and other purchasers’ costs
1
– 13,906 –
Adjustment for the fair value of bank borrowings – – (4,641)
At 31 March 2024 162,752 176,658 158,111
Number of Ordinary Shares (‘000) 158,424,746 158,424,746 158,424,746
NAV per share (pence) 102.73 111.51 99.80
1 EPRA NTA and EPRA NDV are calculated using property values in line with IFRS, where values are net of Real Estate Transfer Tax (RETT) and other purchasers’
costs. RETT and other purchasers’ costs are added back when calculating EPRA NRV, and have been estimated at 6.6% of the net valuation provided by
Knight Frank.
CALCULATION OF EPRA NET INITIAL YIELD (‘NIY’) AND EPRA ‘TOPPED-UP’ NIY
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Investment property – wholly-owned 204,545 210,690
Allowance for estimated purchasers’ costs at 6.6% 13,500 13,906
Grossed-up completed property portfolio valuation (B) 218,045 224,596
Annualised cash passing rental income 17,861 18,694
Property outgoings (475) (674)
Annualised net rents (A) 17,386 18,020
Rent from expiry of rent-free periods and fixed uplifts* 466 612
‘Topped-up’ net annualised rent (C) 17,852 18,632
EPRA NIY (A/B) 7.97% 8.02%
EPRA ‘topped-up’ NIY (C/B) 8.19% 8.30%
* Rent-free periods expire by September 2025.
137
EPRA NIY BASIS OF CALCULATION
EPRA NIY is calculated as the annualised net rent, divided by the grossed-up value of the completed property
portfolio valuation.
The valuation of the grossed-up completed property portfolio is determined by the Company’s external valuers as
at 31 March 2025, plus an allowance for estimated purchaser’s costs. Estimated purchaser’s costs are determined
by the relevant stamp duty liability, plus an estimate by our valuers of agent and legal fees on notional acquisition.
The net rent deduction allowed for property outgoings is based on the Company’s valuers’ assumptions on future
recurring non-recoverable revenue expenditure.
In calculating the EPRA ‘topped-up’ NIY, the annualised net rent is increased by the total contracted rent from
expiry of rent-free periods and future contracted rental uplifts.
CALCULATION OF EPRA VACANCY RATE
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Annualised potential rental value of vacant premises (A) 1,498 1,334
Annualised potential rental value for the complete property portfolio (B) 19,974 20,912
EPRA Vacancy Rate (A/B) 7.50% 6.38%
CALCULATION OF EPRA COST RATIOS
YEAR ENDED
31 MARCH 2025
£’000
YEAR ENDED
31 MARCH 2024
£’000
Administrative/operating expense per IFRS income statement 4,543 6,912
Less: ground rent costs (11) (56)
EPRA costs (including direct vacancy costs) (A) 4,532 6,856
Direct vacancy costs (see Glossary on page 155 for further details) (2,101) (1,567)
EPRA costs (excluding direct vacancy costs) (B) 2,431 5,289
Gross rental income less ground rent costs (C) 18,843 19,832
Gross Rental Income (C) 18,843 19,832
EPRA Cost Ratio (including direct vacancy costs) (A/C) 24.05% 34.57%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 12.90% 26.67%
The Company has not capitalised any overhead or operating expenses in the accounting years disclosed above.
Only costs directly associated with the purchase or construction of properties as well as all subsequent value-
enhancing capital expenditure are capitalised.
Strategic Report Governance Financial Statements Additional Information
138
LIKE-FOR-LIKE RENTAL GROWTH
The table below sets out the like-for-like for rental growth of the portfolio, by sector, in accordance with EPRA Best
Practices Recommendations.
SECTOR
RENTAL
INCOME FROM
LIKE-FOR-LIKE
PORTFOLIO
2025
£M
RENTAL
INCOME FROM
LIKE-FOR-LIKE
PORTFOLIO
2024
£M
LIKE-FOR-
LIKE RENTAL
GROWTH
£M
LIKE-FOR-
LIKE RENTAL
GROWTH
%
Alternatives 2.09 2.01 0.08 3.98
High Street Retail 3.33 3.71 (0.38) (10.24)
Industrial 6.05 6.22 (0.17) (2.73)
Office 1.10 1.18 (0.08) (6.78)
Retail Warehouse 2.42 2.11 0.31 14.69
Total 14.99 15.23 (0.24) (1.58)
The like-for-like rental growth is based on changes in rental income for those properties which have been held for
the duration of both the current and comparative reporting. This represents a portfolio valuation, as assessed by
the valuer of £194.70 million (31 March 2024: £183.84 million).
CAPITAL EXPENDITURE
The table below sets out the capital expenditure of the portfolio in accordance with EPRA Best Practice
Recommendations.
SECTOR
2025
£’000
2024
£’000
Acquisitions 10,533 23,214
Investment properties – no incremental lettable space 2,802 1,921
Total purchases and capital expenditure 13,335 25,135
EPRA LOAN TO VALUE
The table below sets out the loan to net value in accordance with EPRA Best Practice Recommendations:
EPRA LOAN-TO-VALUE
31 MARCH
2025
£’000
31 MARCH
2024
£’000
Borrowings from financial institutions 60,000 60,000
Cash and cash equivalents (25,993) (11,397)
Restricted cash (1,790) –
EPRA Net debt (A) 32,217 48,603
Investment properties at fair value 204,545 210,690
Net receivables 6,191 4,079
Total property value (B) 210,736 214,769
EPRA LTV (A/B) 15.29% 22.63%
Net receivables comprises
Receivables and prepayments 13,237 13,892
Payables and accrued expenses (7,046) (9,813)
Total 6,191 4,079
139
EPRA Sustainability Performance
Measures (unaudited)
The Company has chosen to disclose sustainability information where material in accordance with
EPRA Sustainability Best Practice Recommendations (4th Edition).
EPRA use the following 28 performance measures as indicated, by code, in the table below:
CODE PERFORMANCE MEASURE
ENVIRONMENTAL
Elec-Abs Total electricity consumption
Elec-LfL Like-for-like total electricity consumption
DH&C-Abs Total district heating and cooling consumption
DH&C-LfL Like-for-like district heating and cooling consumption
Fuels-Abs Total fuel consumption
Fuels-LfL Like-for-like total fuel consumption
Energy-LfL Building energy intensity
GHG-Dir-Abs Total direct greenhouse gas (GHG) emissions
GHG-Indir-Abs Total indirect greenhouse gas (GHG) emissions
GHG-Int Greenhouse gas (GHG) emissions intensity from buildings
Water-Abs Total water consumption
Water-LfL Like-for-like total water consumption
Water-Int Building water intensity
Waste-Abs Total weight of waste by disposal route
Waste-LfL Like-for-like total weight of waste by disposal route
Cert-Tot Type and number of sustainably certified assets
SOCIAL
Diversity-Emp Employee gender diversity
Diversity-Pay Gender pay ratio
Emp-Training Employee training and development
Emp-Dev Employee performance appraisals
Emp-Turnover New hires and turnover
H&S-Emp Employee Health and Safety
H&S-Asset Asset Health and Safety assessments
H&S-Comp Asset Health and Safety compliance
Comty-Eng Community engagement, impact assessment and development programs
GOVERNANCE
Gov Board Composition of the highest governance body
Gov Selec Process for nominating and selecting the highest governance body
Gov CoI Process for managing conflicts of interest
Strategic Report Governance Financial Statements Additional Information
140
SUSTAINABILITY PERFORMANCE MEASURES (ENVIRONMENTAL)
The Company has chosen to report GHG emissions using the ‘Operational Control’ approach for its reporting
boundary (as opposed to financial control’ or ‘equity share’). ‘Operational control’ has been selected as the
reporting boundary as this reflects the portion of the portfolio where the Company can influence operational
procedures and, ultimately, sustainability performance. The operational control approach is the most commonly
applied within the industry. This boundary includes owned assets where the Company, acting as the landlord, is
directly responsible for electricity and/or gas supplies and/or has control of air conditioning equipment.
The following sources of emissions have been considered as part of this review:
Scope 1
– Direct emissions from controlled gas boilers (converted from kWh usage)
– Fugitive emissions from air conditioning systems under landlord control (converted from kg refrigerant
releases). The Company’s property manager, Mapp, have confirmed that no fugitive emission (through
refrigerant gases) were reported in 2024/25
– Business travel through company owned vehicles (not relevant as the Company does not own any vehicles)
Scope 2
– Indirect emissions from electricity purchased by the Company and consumed within real estate assets owned
by the Company (converted from kWh usage)
– Greenhouse Gas (GHG) emissions from electricity (Scope 2) are reported according to the ‘location-based’
approach
As a property company, the majority of the Company’s emissions arise through assets that are owned and leased.
At multi-let properties, the Company, acting as the landlord, has control and influence over the whole building
and/or shared services (including refrigerant leakage), external lighting and void spaces. In this reporting year, the
Company was responsible for Scope 1 and/or Scope 2 emissions at the following assets:
ASSET NAME SECTOR
SCOPE 1 –
GAS
SCOPE 2 –
ELECTRICITY
INCLUDED IN
LIKE-FOR-LIKE
40 Queen Square Office Yes Yes Yes
69-75 Above Bar Street Retail Yes Yes Yes
11/15 Fargate Retail No Yes No
Barnstaple Retail Park Retail Warehouse No Yes No
Diamond Business Park Industrial Yes Yes Yes
Apollo Business Park Industrial Yes Yes Yes
London East Leisure 1 Leisure No Yes Yes
15-33 Union Street Retail No Yes No
Railway Station Centre Retail No Yes No
Central Six Retail Park Retail Warehouse Yes Yes No
Westlands Distribution Park Industrial No Yes Yes
Arrow Point Retail Park Retail Warehouse No Yes No
Northgate House Office No Yes No
13, 13a High St, 114-123 Bancroft
and 3-4 Portmill Lane, Hitchin
Retail No Yes No
25 George Hudson Street, York Retail/Office Yes Yes No
Pearl House, Nottingham Retail No Yes Yes
141
Emission sources listed in the above table relate to the managed portfolio only and the following sources of energy
consumption within each sector:
– Office; Whole building and common areas (1 asset)
– Retail; Whole building, tenant space and common areas
– Retail Warehouse; Tenant space and external lighting
– Leisure; External lighting, tenant space and common areas
– Industrial; Tenant space, common areas and external lighting
EMISSIONS OUTSIDE OF OPERATIONAL CONTROL
The Company was not responsible for emissions from gas and/or electricity use at any other owned asset or for
head office operations.
The Company is not directly responsible for any GHG emissions/energy usage at single let/FRI assets nor at multi-
let assets where the tenant is counterparty to the energy contract. As these emissions are outside of our direct
control, they form part of our wider value chain (i.e. ‘Scope 3’) emissions, which are not monitored at present.
WATER CONSUMPTION AND WASTE PRODUCTION
Alongside GHG emissions/energy usage, the Company has chosen to report water and waste consumption of
assets where the Company, acting as the landlord, is directly responsible for them.
ASSET NAME SECTOR WATER WASTE
40 Queen Square Office Yes Yes
Barnstaple Retail Park Retail Yes No
Diamond Business Park Industrial Yes Yes
London East Leisure 1 Leisure Yes No
Railway Station Centre Retail Yes No
Westlands Distribution Park Industrial Yes No
Central Six Retail Park Retail Warehouse No Yes
69-75 Above Bar Street Retail Yes Yes
Intensity Ratios
In addition to reporting relevant absolute GHG emissions (per scope and per sector), the Company has chosen to
report intensity ratios, where appropriate.
The denominator determined to be most relevant to the business is metres squared of the area served by the meter.
The intensity ratio is expressed as kilograms carbon dioxide equivalent per metre square (of area served by the
meter) per year, or, kg CO
2
e/m
2
/yr.
Like-for-like intensity ratios have only been determined on relevant emissions, where each of the following
conditions is met:
– An asset was in ownership for 24 months from 1 April 2023 to 31 March 2025
– No major renovation or refurbishment has taken place i.e. affecting more than 50% of the building by area or
number of occupants
– At least 12 months data is available at meter level in both years
Assets excluded from the like-for-like analysis include:
– Northgate House
– Units A-H Arrowpoint Retail Park
– 13, 13a High St, 114-123 Bancroft and 3-4 Portmill Lane, Hitchin
Strategic Report Governance Financial Statements Additional Information
142
Assets disposed during the 2023/2024 reporting
period and are therefore excluded from any 2024/2025
absolute and like-for-like data, but are included in
2023/2024 absolute figures:
– Pricebusters Building
– 208-220 Commercial Road and
7-13 Crasswell Street
Company Targets
GHG Reporting Guidelines recommend establishing a
target as a matter of good practice. Energy targets are
typically measured via changes to KWh usage and/
or greenhouse gas emissions (in the form of carbon
dioxide equivalent) compared to a baseline. Energy
targets help:
– Support identification of asset improvement
opportunities
– Drive improvements in operational efficiency (and
potentially lower costs)
– Futureproof asset against increased legislation and
‘brown discounting’ (on sale)
– Support overall good asset management
– Support GRESB
The Company has established absolute targets for
energy, greenhouse gas emissions and waste covering
the whole portfolio based on a 2018 baseline. The
targets are outlined below:
– Energy consumption: 40% reduction in absolute
energy by 2030 based on the 2018 baseline
– GHG emissions: 40% reduction in absolute energy
by 2030 based on the 2018 baseline
– Waste: 100% waste diverted from landfill was
achieved by 2020. The fund aims to maintain this
target
Environmental information in this report has been
provided by EVORA Global, retained sustainability and
energy management consultants to the Investment
Manager.
EVORA’s consultant statement is included below:
EVORA Global Limited has been appointed by the
Company to collate and report energy consumption
data, greenhouse gas (GHG) emissions, water and
waste data presented within this report.
METHODOLOGY
Utility data is reported to EVORA by the Company’s
property manager (MAPP) based on invoiced data.
For the first time, EVORA, acting on behalf of AEW,
has collected electricity and gas from the National
Database via Perse and Electralink.
EVORA checked the Sustainability Performance Data
using our proprietary software tool SIERA. In summary,
the following steps were applied:
Step 1: Confirmation of asset set up (data coverage and
responsibility for procurement)
Step 2: Input of asset characteristics and utility data
(e.g. energy kWh)
Step 3: Initial data reliability checks were performed in
the SIERA tool to identify:
– Consumption/tonnage data gaps
– Periods of overlapping consumption/tonnage data
– Significant consumption/tonnage variance
between comparable periods
Step 4: Check of data and results utilising the inbuilt
function of SIERA with specialist EVORA
consultant review. Like-for-like analysis was
used to assess, review and quantify year-on
year performance changes. Variances of -/+
10% were identified and reviewed by EVORA
consultants.
ABOUT EVORA
EVORA is an independent, pan-European sustainability
consultancy and software provider, specialising in the
commercial real estate sector.
Jamie Anderson
Consultant, EVORA Global Ltd
26 June 2025
143
ELECTRICITY CONSUMPTION (ELEC-ABS, ELEC-LFL)
The table below sets out the like-for-like landlord obtained energy consumption from the Company’s managed
portfolio by sector.
UNIT INDICATOR
ABSOLUTE
2023/2024
ABSOLUTE
2024/2025
LIKE-FOR-LIKE
2023/2024
LIKE-FOR-LIKE
2024/2025 % CHANGE
Office MWh Total landlord-obtained electricity 267.75 256.54 268 257 -4.19
% Proportion of landlord obtained
electricity from renewable sources
100% 100% – – –
Retail MWh Total landlord-obtained electricity 765.14 477.08 76 83 9.13
% Proportion of landlord obtained
electricity from renewable sources
36% 15% – – –
Logistics MWh Total landlord-obtained electricity 1,188.38 1,206.56 1,188 1,207 1.53
% Proportion of landlord obtained
electricity from renewable sources
100% 100% – – –
Leisure MWh Total landlord-obtained electricity 313.51 313.26 12 12 -0.10
% Proportion of landlord obtained
electricity from renewable sources
11% 11% – – –
Other MWh Total landlord-obtained electricity 259.32 291.13 113 145 28.50
% Proportion of landlord obtained
electricity from renewable sources
44% 50% – – –
Total MWh Total landlord-obtained electricity 2,794.10 2,544.57 1,657 1,703 2.78
% Proportion of landlord obtained
electricity from renewable sources
67% 67% – – –
UNIT INDICATOR 2023/2024 2024/2025
Total % Solar Photovoltaic 6% 2%
% Wind turbine 35% 9%
% Nuclear 17% 5%
% Hydroelectric technology 3% 1%
% Coal 2% 0%
For 2023/2024, 31.69% of data was estimated, and for 2024/2025 31.66% of data was estimated.
Absolute electricity disclosures account for 18 assets. 15 assets are included in LfL analysis.
The Company does not have any responsibility over any managed assets that consume energy from district
heating or district cooling sources. Therefore, the EPRA sBPR DH&C-Abs indicator is not applicable and not
presented in this report.
Strategic Report Governance Financial Statements Additional Information
144
FUEL CONSUMPTION (FUELS-ABS, FUELS-LFL)
The table below sets out the absolute, like-for-like and intensity of the GHG emissions per sector and for the
Company overall.
UNIT INDICATOR
ABSOLUTE
2023/2024
ABSOLUTE
2024/2025
LIKE-FOR-LIKE
2023/2024
LIKE-FOR-LIKE
2024/2025 % CHANGE
Office MWh Total landlord-obtained fuels 0 0 0 0 0.00%
% Natural Gas – – – – –
Retail MWh Total landlord-obtained fuels 867.60 591.31 196 121 -38.00%
% Natural Gas 100.0% 100.0% – – –
Logistics MWh Total landlord-obtained fuels 1051.14 911.69 1,051 912 -13.27%
% Natural Gas 100.0% 100.0% – – –
Leisure MWh Total landlord-obtained fuels 0 0 0 0 0.00%
% Natural Gas – – – – –
Other MWh Total landlord-obtained fuels 887.53 1551.05 0 0 0.00%
% Natural Gas 100.0% 100.0% – – –
Total MWh Total landlord-obtained fuels 2806.27 3054.05 1,247 1,033 -17.15%
% Natural Gas 100.0% 100.0% – – –
100% of landlord procured fuels are sourced from Natural Gas. The company does not consume, for example,
bioenergy such as wood pellets or bio-propane. For 2023/2024, 55.57% of data was estimated, and for 2024/2025
66.18% of data was estimated.
Absolute fuel disclosures account for 13 assets. 10 assets are included in LfL analysis.
ENERGY INTENSITY (ENERGY-INT)
The table below sets out the landlord obtained energy intensity from the Company’s managed portfolio by sector.
UNIT INDICATOR 2023/2024 2024/2025
Office kWh/m
2
/ Landlord-obtained energy 59.66 57.16
Retail kWh/m
2
/ Landlord-obtained energy 42.81 28.01
Logistics kWh/m
2
/ Landlord-obtained energy 47.71 45.13
Leisure kWh/m
2
/ Landlord-obtained energy 37.64 37.61
Other kWh/m
2
/ Landlord-obtained energy 19.19 30.83
Total kWh/m
2
/ Landlord-obtained energy 35.52 35.51
145
GREENHOUSE GAS EMISSIONS (GHG-DIR-ABS; GHG-INDIR-ABS; GHG-INT)
The table below sets out the absolute, like-for-like and intensity of the GHG emissions per sector and for the
Company overall.
UNIT INDICATOR 2023/2024 2024/2025
Office tCO
2
e Total Direct Scope 1 0.00 0.00
Total Indirect Scope 2 Location based 55.44 53.12
Total Indirect Scope 2 Market based 0.00 0.00
Retail tCO
2
e Total Direct Scope 1 158.68 108.15
Total Indirect Scope 2 Location based 158.44 98.77
Total Indirect Scope 2 Market based 0.00 0.00
Logistics tCO
2
e Total Direct Scope 1 192.25 166.75
Total Indirect Scope 2 Location based 246.07 249.82
Total Indirect Scope 2 Market based 0.00 0.00
Leisure tCO
2
e Total Direct Scope 1 0.00 0.00
Total Indirect Scope 2 Location based 64.91 64.86
Total Indirect Scope 2 Market based 0.00 0.00
Other tCO
2
e Total Direct Scope 1 162.33 283.69
Total Indirect Scope 2 Location based 53.70 60.27
Total Indirect Scope 2 Market based 0.00 0.00
Total tCO
2
e Total Direct Scope 1 513.27 558.59
Total Indirect Scope 2 Location based 578.57 526.85
Total Indirect Scope 2 Market based 0.00 0.00
The proportion of location based emissions estimated was 42.91% in 2023/2024, and 49.42% in 2024/2025.
Scope 3 emissions have not been reported.
Absolute emissions disclosures account for 18 assets. 15 assets are included in LfL analysis.
Emissions Factors
– All energy consumption and GHG emissions reported occurred at the Company’s assets all of which are
located in the UK.
– The Company’s GHG emissions are calculated according to the principles of the Greenhouse Gas (GHG)
Protocol Corporate Standard.
– The Company’s Greenhouse Gas Emissions are reported as tonnes of carbon dioxide equivalent (tCO
2
e),
which includes the following emissions covered by the GHG Protocol (where relevant and available
greenhouse gas emissions factors allow): carbon dioxide (CO
2
), methane (CH
4
), hydrofluorocarbons
(‘HFCs’), nitrous oxide (N
2
0), perfluorocarbons (‘PFCs’), sulphur hexafluoride (SF
6
) and nitrogen trifluoride
(NF
3
).
– GHG emissions from electricity (Scope 2) are reported according to the ‘location-based’ approach which
accounts for grid-based emissions and according to the ‘market-based’ approach which accounts for
contractual arrangements to procure renewable energy.
Strategic Report Governance Financial Statements Additional Information
146
– The Company has contracts in place to procure electricity from renewable sources, and as a result, the
Company produces zero tCO
2
e market-based emissions.
UNIT INDICATOR 2023/2024 2024/2025
Office kgCO
2
e/ m
2
/ year GHG emission intensity 12.35 11.84
Retail kgCO
2
e/ m
2
/ year GHG emission intensity 5.21 4.13
Logistics kgCO
2
e/ m
2
/ year GHG emission intensity 5.64 5.36
Leisure kgCO
2
e/ m
2
/ year GHG emission intensity 7.79 7.79
Other kgCO
2
e/ m
2
/ year GHG emission intensity 3.21 5.11
Total kgCO
2
e/ m
2
/ year GHG emission intensity 4.99 5.22
The following greenhouse gas emissions conversion factors and sources have been applied:
UTILITY YEAR GHG EMISSIONS FACTOR PER KWH SOURCE
Electricity 2023 0.2070742 UK BEIS, Greenhouse Gas Reporting: Conversion Factors 2023
Gas 2023 0.1829289 UK BEIS, Greenhouse Gas Reporting: Conversion Factors 2023
Electricity 2024 0.207074 UK BEIS, Greenhouse Gas Reporting: Conversion Factors 2024
Gas 2024 0.182989 UK BEIS, Greenhouse Gas Reporting: Conversion Factors 2024
WATER (WATER-ABS; WATER-LFL; WATER-INT)
The table below sets out the absolute, like-for-like and intensity value water consumption from the Company’s
managed portfolio by sector. No assets met the criteria for like-for-like analysis.
UNIT INDICATOR
ABSOLUTE
2023/2024
ABSOLUTE
2024/2025
LIKE-FOR-LIKE
2023/2024
LIKE-FOR-LIKE
2024/2025 % CHANGE
Office m
3
/year Total landlord-obtained water 792.09 761.22 – – 0%
Retail m
3
/year Total landlord-obtained water 302.84 935.64 – – 0%
Logistics m
3
/year Total landlord-obtained water 32,107.79 30,657.83 24.09 22.66 -6%
Leisure m
3
/year Total landlord-obtained water 1,927.47 1,938.69 – – 0%
Other m
3
/year Total landlord-obtained water 18,167.59 32,034.62 – – 0%
Total m
3
/year Total landlord-obtained water 53,297.76 66,328.01 24.09 22.66 -6%
All water procured by AEW is procured via municipal water supplies or other public or private utilities. To the best
of the Company’s knowledge, no water is procured or recorded from surface water, sourced from wetlands, rivers,
lakes, and oceans, from ground Water, from rainwater collection, or from waste water from another organisation.
UNIT INDICATOR
ABSOLUTE
2023/2024
ABSOLUTE
2024/2025
LIKE-FOR-LIKE
2023/2024
LIKE-FOR-LIKE
2024/2025 % CHANGE
Office m
3
/m
2
/year Water intensity 0.18 0.17 0.00 0.00 0%
Retail m
3
/m
2
/year Water intensity 0.01 0.02 0.00 0.00 0%
Logistics m
3
/m
2
/year Water intensity 0.51 0.48 0.00 0.00 -6%
Leisure m
3
/m
2
/year Water intensity 0.23 0.23 0.00 0.00 0%
Other m
3
/m
2
/year Water intensity 0.27 0.48 0.00 0.00 0%
Total m
3
/m
2
/year Water intensity 0.29 0.36 0.00 0.00 -6%
The proportion of water estimated was 52.59% in 2023/2024, and 64.59% in 2024/2025.
147
WASTE (WASTE-ABS; WASTE-LFL)
The table below sets out the waste managed (absolute waste production and like-for-like) by the Company by
disposal route and by sector. Absolute waste production figures are estimated using a bespoke waste estimation
tool that takes bin size and number of collections to calculate the amount of waste produced. The waste estimation
tool has been externally validated and is accepted as evidence for GRESB submissions. This does not include
waste disposal services procured directly by tenants. Whilst zero waste is sent directly to landfill, a residual
component of the ‘recycled’ and ‘incineration with energy recovery’ waste streams may end up in landfill.
The approach taken follows guidance provided by EPRA Best Practice Recommendations on Sustainability
Reporting 2017.
UNIT INDICATOR
ABSOLUTE
2023/2024
ABSOLUTE
2024/2025
LIKE-FOR-LIKE
2023/2024
LIKE-FOR-LIKE
2024/2025 % CHANGE
Office Tonnes Hazardous – – – – 0%
Non-Hazardous 40.71 – 40.71 – -100%
Recycled 18.19 – 18.19 – -100%
Landfill – – – – 0%
Incineration 13.52 – 13.52 – -100%
Retail Tonnes Hazardous 0.035 – – – 0%
Non-Hazardous 597.18 183.54 571.68 183.54 -68%
Recycled 30.28 82.91 27.43 82.91 202%
Landfill 514.53 12.02 514.53 12.02 -98%
Incineration 50.34 87.64 29.39 87.64 198%
Logistics Tonnes Hazardous – – – – 0%
Non-Hazardous 11.93 8.34 11.93 8.34 -30%
Recycled 6.31 0.34 6.31 0.34 -95%
Landfill – – – – 0%
Incineration 5.52 7.68 5.52 7.68 39%
Leisure Tonnes Hazardous – – – – 0%
Non-Hazardous 28.59 32.57 28.59 32.57 14%
Recycled 23.71 27.65 23.71 27.65 17%
Landfill – – – – 0%
Incineration 4.88 4.92 4.88 4.92 1%
Other Tonnes Hazardous – – – – 0%
Non-Hazardous 11.78 13.20 7.41 – -100%
Recycled 3.62 3.46 2.47 – -100%
Landfill 4.94 – 4.94 – -100%
Incineration 3.22 9.74 – – 0%
Total Tonnes Hazardous 0.04 – – – 0%
Non-Hazardous 690.19 237.65 660.32 224.45 -66%
Recycled 82.11 114.36 78.12 110.89 42%
Landfill 519.47 12.02 519.47 12.02 -98%
Incineration 77.48 109.98 53.30 100.24 88%
We present property energy, greenhouse gas (“GHG”), water and waste data on both an absolute (“abs”) and
like-for-like (“LfL”) basis, covering assets in our UK based portfolio.
Our organisational boundary for environmental disclosure is based on the principle of operational control, and therefore
includes all property assets where we are responsible for the procurement of energy, water and waste services.
A total of 14 assets in the portfolio reported GHG emissions for the 2024/2025 reporting period (year ended
31 March 2024: 14 assets). 11 assets reported water consumption for the 2024/2025 reporting period (year ended
31 March 2024: 4 assets), and 5 assets reported waste services (year ended 31 March 2024: 3 assets).
AEW has set a target to reduce absolute Scope 1 GHG emissions by 40% within the Managed Portfolio by 2030
as compared to the 2018 baseline. Additionally, a target has been set to reduce absolute Scope 2 GHG emissions
by 40% within the Managed Portfolio by 2030 as compared to the 2018 baseline. This target is inclusive of the
decarbonisation of the UK electricity grid over recent years.
Strategic Report Governance Financial Statements Additional Information
148
The reporting scope for electricity consumption covers 100% of the portfolio on a floor area basis (Gross Internal
Area) across 2023/2024 and 2024/2025. Scope 1 GHG emissions were reported for 100% of the portfolio, and
Scope 2 GHG emissions were reported for 100% of the portfolio.
During the reporting year, the company procured 2,736 MWh (year ended 31 March 2024: 2,904 MWh) of like-for-
like energy for use across the managed portfolio, which is 6% less like-for-like energy use than the prior year.
The Scope 1 and 2 GHG emissions for the year totaled 559 tonnes CO
2
e (2023: 513 tonnes CO
2
e). The absolute
Scope 1 and 2 increased by 9% from 2023/2024 to 2024/2025.
During the period, the total reported waste amounted to 238 tonnes (year ended 31 March 2024: 690 tonnes),
of which 12 tonnes (year ended 31 March 2024: 519 tonnes) was sent directly to landfill. In like-for-like terms,
the amount of waste generated decreased from 2023/2024 to 2024/2025 by 66%, and the recycling rate
increased by 42%.
SUSTAINABILITY CERTIFICATION (CERT-TOT): GREEN BUILDING CERTIFICATES
The Company has chosen not to pursue certification of any of its assets under measures such as BREEAM (the
Building Research Establishment Environmental Assessment Methodology) or Green building certification.
This decision will be reviewed periodically on an ongoing basis in the course of the Company’s usual asset
management activity.
SUSTAINABILITY CERTIFICATION (CERT-TOT): ENERGY PERFORMANCE CERTIFICATES
The Minimum Energy Efficiency Standards (MEES) Regulations stem from the Energy Act 2011, which has made
it unlawful from April 2018 to let or renew leases at non-domestic properties in England & Wales with an Energy
Performance Certificate (EPC) rating lower than an E, subject to certain exemptions. A ‘hard backstop’ which brings
into the MEES standards existing leases will be introduced from 2024, again, subject to certain exemptions.
The table below sets out the EPC rating by Estimated Rental Value (ERV). An A rating reflects the most efficient
rating with a G being the least efficient. 69% (by ERV) of the assets within the Companies portfolio have efficient
A-C EPC ratings. This represents an increase of 6% vs. the previous reporting period.
PORTFOLIO BY ERV (%)
ENERGY PERFORMANCE CERTIFICATE RATING 2024/25 2023/24
A-C 69% 63%
D 21% 25%
E 8% 8%
F – –
G – –
Exempt 2% 3.6%
No EPC/Expired 0% 0.4%
Coverage 100% 100%
SUSTAINABILITY PERFORMANCE MEASURES (SOCIAL)
EPRA’s Sustainability Best Practices Recommendations Guidelines 2017 (“EPRA’s Guidelines”) include Social and
Governance reporting measures to be disclosed for the entity i.e. the Company. The Company is an externally
managed real estate investment trust and has no direct employees. A number of these Social Performance
measures relate to entity employees and therefore these measures are not relevant for reporting at the entity
level. The Investment Manager to the Company, AEW UK Investment Management LLP has responsibility for the
employees that support the Company. The Company aims to comply with EPRA’s Guidelines and therefore has
included Social and Governance Performance Measure disclosures in this report.
149
EMPLOYEE GENDER DIVERSITY (DIVERSITY-EMP)
As of 31 March 2025, the Company’s Board comprised four members: two (50%) female and two (50%) male.
For further information on the Investment Manager’s employee gender diversity please refer to the ESG link within
the Corporate Responsibility area at www.aewukreit.com
1
.
GENDER PAY RATIO (DIVERSITY-PAY)
The remuneration of the Company Board is set out on page 68 of this Annual Report.
For further information on the Investment Manager’s gender pay ratio please refer to the ESG link within the
Corporate Responsibility area at www.aewukreit.com
1
.
TRAINING AND DEVELOPMENT (EMP-TRAINING)
Please refer to the Director Induction and Training section in the Corporate Governance Statement (page 58) for
details on training for the Company’s Board members.
The Investment Manager requires employees to complete mandatory internal training and encourage all staff with
professional qualifications to maintain the training requirements of their respective professional body.
All employees of the Investment Manager that work on the Company’s activities hold professional qualifications
and have completed the relevant CPD for their respective professional bodies.
The Investment Manager also provides training to its employees to ensure that they understand and abide by the
Anti-Bribery, Insider Trading and GDPR regulations.
EMPLOYEE PERFORMANCE APPRAISALS (EMP-DEV)
The Investment Manager’s performance appraisal process requires annual performance objective setting and
reviews for all staff.
For further information on the Investment Manager’s performance appraisal statistics please refer to the ESG link
within the Corporate Responsibility area at www.aewukreit.com
1
.
The Investment Manager confirms that performance appraisals were completed for 100% of staff relevant to the
Company in 2024.
EMPLOYEE TURNOVER AND RETENTION (EMP-TURNOVER)
For further information on the Investment Manager’s employee turnover and retention please refer to the ESG link
within the Corporate Responsibility area at www.aewukreit.com
1
.
There have been no changes in the Investment Manager’s staff that work on the Companies activities during
the year.
EMPLOYEE HEALTH AND SAFETY (H&S-EMP)
For further information on the Investment Manager’s employee health and safety (being the absenteeism rate)
please refer to the ESG link within the Corporate Responsibility area at www.aewukreit.com
1
.
ASSET HEALTH AND SAFETY ASSESSMENTS (H&S-ASSET)
All sites were inspected by MAPP’s during the reporting period and further Health and Safety audits were carried
out at those sites that are multi-let.
1 For direct link use: https://www.aewukreit.com/~/media/Files/A/AEW-UK-Reit/documents/aew-esg-flyer.pdf
Strategic Report Governance Financial Statements Additional Information
150
ASSET HEALTH AND SAFETY COMPLIANCE (H&S-COMP)
No incidents of non-compliance with regulations/and or voluntary codes were identified during the reporting
period.
COMMUNITY ENGAGEMENT, IMPACT ASSESSMENTS AND DEVELOPMENT PROGRAMMES
(COMTY-ENG)
The Company, in conjunction with Mapp, participated in the KidsOut Charity ‘Giving Tree’ initiative. This initiative
aims to provide children living in local refuge homes with a present to open on Christmas Day. To facilitate this,
decorative tags with a child’s name, age and suggested gift are placed on Christmas Trees in the receptions of
participating offices throughout the Company’s portfolio. Tenants of the offices can then use the details given on
the tags to make a donation (£5-£10) to the KidsOut charity.
SUSTAINABILITY PERFORMANCE MEASURES (GOVERNANCE)
COMPOSITION OF THE HIGHEST GOVERNANCE BODY (GOV-BOARD)
The Board of the Company comprised 4 non-executive independent Directors (no executive board members) as at
31 March 2025.
– The average tenure of the four Directors to 31 March 2025 is 3 years and 3 months (31 March 2024 average
tenure of four Directors is 3 years and 8 months);
– One Director on the Board possesses specific competencies relating to environmental and social topics. More
information is outlined on page 79 (31 March 2024: one Director).
PROCESS FOR NOMINATING AND SELECTING THE HIGHEST GOVERNANCE BODY
(GOV-SELECT)
The Company has established a Nomination and Remuneration Committee, which is responsible for board
appraisal, succession planning, and determining the remuneration policy for the Directors and the Chairman. The
Committee ensures that the remuneration framework supports the Company’s strategic objectives and promotes
its long-term sustainable success.
The Committee also reviews and makes recommendations on the composition of the Board to maintain an
appropriate balance of skills, experience, and diversity – including gender – and to support the progressive
refreshment of the Board.
Prior to the appointment of any new Director, the Committee prepares a detailed description of the role and the
capabilities required. While the Committee is committed to selecting the most suitable candidate for each role, it
also recognises the importance of promoting diversity. The Board values a broad range of experience, knowledge,
professional skills, and personal qualities, alongside the independence necessary to provide effective oversight of
the Company’s affairs.
PROCESS FOR MANAGING CONFLICTS OF INTEREST (GOV-COL)
The Company maintains a Conflicts of Interest register that is managed by the Company Secretary and is reviewed
at each quarterly Board meeting.
Please refer to the Director’s Conflicts of interest section in the Corporate Governance Statement (page 58) for
further details.
1 For direct link use: https://www.aewukreit.com/~/media/Files/A/AEW-UK-Reit/documents/aew-esg-flyer.pdf
151
TARGETS AND PROGRESS
During the period we set the following long-term targets to support our strategic ESG objectives. Each year these
will be reviewed, with progress being regularly reported to the Board by the Investment Manager.
AREA OF FOCUS TARGET METRIC OF MEASURE YEAR PROGRESS
Health and
Safety
To ensure all incidents are
resolved within the required
timeframe.
Number of incidents per year. Yearly MAPP track all instances via ‘risk
wise’ with priority 1 issues being
closed immediately.
Wellbeing To promote health and
wellbeing initiatives across all
managed assets.
100% of managed assets to
have a health and wellbeing
tracker in year 1.
Yearly Wellbeing tracker in place.
Social Value To develop a tenant and
community engagement
programme.
Number of managed assets to
have community engagement
programmes per year.
Yearly AEW initiatives working towards
giving up to 2 working days for
community engagement for
each AEW staff member.
ESG
Disclosure and
Transparency
To achieve a Gold award for
disclosure in line with EPRA
sBPR.
Gold Rating EPRA. Yearly Achieved a gold rating in 2024.
To continuously improve the
GRESB rating year on year.
GRESB star rating and score. Yearly Achieved two stars in 2024
GRESB assessment and
improved score from 67 in
2023 to 68.
To strengthen alignment with
the TCFD recommendations.
Align the TCFD by 2023 and
provide full publication by 2024.
2024 Updated in this Annual Report
in alignment with TCFD
recommendations. See pages
77 to 88.
Managing
environmental
impacts
To develop sustainability action
plans for all managed assets.
100% of all managed assets to
have a sustainability action plan.
Yearly Completed for all existing
assets and new assets within six
months of acquisition.
To maintain renewable
electricity for all landlord-
controlled areas.
100% of all procured electricity
to be from renewable sources.
Yearly Achieved, all suppliers providing
electricity from renewable
sources.
Energy consumption:
To achieve a 40% reduction in
absolute energy by 2030 based
on the 2018 baseline.
40% reduction 2030 See page 144.
GHG emissions:
To achieve a 40% reduction in
absolute energy by 2030 based
on the 2018 baseline.
40% reduction 2030 See page 146.
To improve the recycling rates
on all managed assets.
Sum of waste recycled as
opposed to incinerated with
energy recovery.
Yearly 67% recycling rates on all
office managed assets (2024:
65%). 78% recycling rates on
all industrial managed assets
(2024: 74%).
To maintain zero waste to
landfill on all waste managed.
100% of waste diverted from
landfill on all waste managed
assets.
Yearly Currently 100%.
To ensure there are no
properties in the portfolio with
an EPC below an E rating.
All non-compliant EPCs to be
improved to a minimum E rating.
Yearly See page 149.
Strategic Report Governance Financial Statements Additional Information
152
Company Information
Share Register Enquiries
The register for the Ordinary Shares is maintained by MUFG Corporate Markets. In the event of
queries regarding your holding, please contact the Registrar on +44 (0)371 664 0391 or email:
shareholderenquiries@cm.mpms.mufg.com.
Changes of name and/or address must be notified in writing to the Registrar at the address shown on page
154. You can check your shareholding and find practical help on transferring shares or updating your
details at www.signalshares.com. Shareholders eligible to receive dividend payments gross of tax may also
download declaration forms from that website.
Share Information
Total Voting Rights 158,424,746
SEDOL Number BWD2415
ISIN Number GB00BWD24154
Ticker/TIDM AEWU
Share Prices
The Company’s Ordinary Shares are traded on the Main Market of the London Stock Exchange, which now
operates under the FCA’s listing category of a closed-ended investment fund.
Frequency of NAV publication:
The Company’s NAV is released to the London Stock Exchange on a quarterly basis and is published on the
Company’s website.
Annual and Half-Yearly Reports
Copies of the Annual and Half-Yearly Reports are available from the Company’s website.
Financial Calendar
4 September 2025 Annual General Meeting
30 September 2025 Half-year end
December 2025 Announcement of half-yearly results
31 March 2026 Year-end
June 2026 Announcement of annual results
Dividends
The following table summarises the amounts distributed to equity shareholders in respect of the period:
£
Interim dividend for the period 1 April 2024 to 30 June 2024
(payment made on 23 August 2024) 3,168,495
Interim dividend for the period 1 July 2024 to 30 September 2024
(payment made on 29 November 2024) 3,168,495
Interim dividend for the period 1 October 2024 to 31 December 2024
(payment made on 7 March 2025) 3,168,495
Interim dividend for the period 1 January 2025 to 31 March 2025
(payment made on 30 May 2025) 3,168,495
Total 12,673,980
153
Directors
Robin Archibald (Non-executive Chairman of
the Board and Chairman of the Management
Engagement Committee)
Katrina Hart (Non-executive Director and Chairman
of the Nomination and Remuneration Committee)
Mark Kirkland (Non-executive Director and
Chairman of the Audit and Risk Committee)
Liz Peace (Non-executive Director and Senior
Independent Director)
Registered Office
19
th
Floor
51 Lime Street
London EC3M 7DQ
Company Website
www.aewukreit.com
Investment Manager and AIFM
AEW UK Investment Management LLP
8 Bishopsgate
London EC2N 4BQ
Tel: 020 7016 4801
Website: www.aew.com
Property Manager
MAPP (Property Management) Limited
180 Great Portland Street
London W1W 5QZ
Corporate Broker
Panmure Liberum Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Legal Adviser
Gowling WLG (UK) LLP
4 More London Riverside
London SE1 2AU
Depositary
Langham Hall UK LLP
8
th
Floor
1 Fleet Place
London EC4M 7RA
Administrator
Waystone Administration Solutions (UK) Limited
Broadwalk House
Southernhay West
Exeter EX1 1TS
Company Secretary
MUFG Corporate Governance Limited
Central Square
29 Wellington Street
Leeds LS1 4DL
Registrar
MUFG Corporate Markets IR Limited
Central Square
29 Wellington Street
Leeds LS1 4DL
Auditor
BDO LLP
55 Baker Street
London W1U 7EU
Valuer
Knight Frank LLP
55 Baker Street
London W1U 8AN
Copies of the Annual Report and
Financial Statements
Upon request, printed copies of the Annual Report
will be sent to shareholders shortly, and will be
available on the Company’s website.
National Storage Mechanism
A copy of the Annual Report and Financial
Statements will be submitted shortly to the National
Storage Mechanism (‘NSM’) and will be available
for inspection at https://data.fca.org.uk/#/nsm/
nationalstoragemechanism.
Strategic Report Governance Financial Statements Additional Information
154
Glossary
AIC Association of Investment Companies. This is the trade body for closed-ended
Investment companies (www.theaic.co.uk).
AIC Code The AIC Code of Corporate Governance, as published in January 2024. A framework
of best practice guidance for investment companies.
AIFMD Alternative Investment Fund Managers Directive.
AIFM Alternative Investment Fund Manager. The entity that provides portfolio
management and risk management services to the Company and which ensures the
Company complies with the AIFMD. The Company’s AIFM is AEW UK Investment
Management LLP.
AIF Alternative Investment Fund. Alternative Investment Funds are funds that are not
regulated at EU level by the UCITS Directive.
Annualised total
property return
The average annual growth of an investment, including capital appreciation and
income, calculated over a specific period.
Company AEW UK REIT plc.
Company Secretary MUFG Corporate Governance Limited
Company website www.aewukreit.com
Contracted rent The annualised rent, adjusting for the inclusion of rent subject to rent-free periods.
Direct vacancy costs Property expenses that are directly related to the property including the following:
rates/property taxes; service charge; insurance premiums; carbon tax; any other
costs directly billed to the unit.
Dividend cover The Company’s ability to pay dividends to Shareholders based on net earnings.
DTR Disclosure Guidance and Transparency Rules, issued by the FCA.
Earnings Per Share (‘EPS’) Profit for the period attributable to equity shareholders divided by the weighted
average number of Ordinary Shares in issue during the period.
EPC Energy Performance Certificate.
EPRA European Public Real Estate Association, the industry body representing listed
companies in the real estate sector.
EPRA cost ratio (including
direct vacancy costs)
The ratio of net overheads and operating expenses against gross rental income
(with both amounts) excluding ground rents payable. Net overheads and operating
expenses relate to all administrative and operating expenses.
EPRA cost ratio (excluding
direct vacancy costs)
The ratio calculated above, but with direct vacancy costs removed from net
overheads and operating) expenses balance.
EPRA Earnings Per Share Recurring earnings from core operational activities. A key measure of a company’s
underlying operating results from its property rental business and an indication of
the extent to which current dividend payments are supported by earnings.
EPRA Loan to Value
(‘EPRA LTV’)
The ratio of net debt (including net payables) divided by the market value of
property operating (including net receivables).
EPRA NAV Net Asset Value adjusted to include properties and other investment interests at
fair value and to exclude certain items not expected to crystallise in a long-term
investment property business.
EPRA Net Initial Yield
(‘EPRA NIY’)
Annualised rental income based on the cash rents passing at the balance sheet date,
less non-recoverable property operating expenses, divided by the fair value of the
property, increased with (estimated) purchasers’ costs.
EPRA Net Disposal Value
(‘EPRA NDV’)
This measure represents the shareholders’ value under a disposal scenario, where
deferred tax, financial instruments and certain other adjustments are calculated to
the full extent of their liability, net of any resulting tax.
155
EPRA Net Reinstatement
Value (‘EPRA NRV’)
NAV adjusted to assume that entities never sell assets and aims to represent the
value required to rebuild the entity.
EPRA Net Tangible Asset
(‘EPRA NTA’)
NAV adjusted to assume that entities buy and sell their assets, thereby crystallising
certain levels of unavoidable deferred tax.
EPRA Topped-Up Net
Initial Yield
This measure incorporates an adjustment to the EPRA NIY in respect of the expiration
of rent-free periods (or other unexpired lease incentives such as discounted rent
periods and step rents).
EPRA Vacancy Rate Estimated Rental Value (‘ERV’) of vacant space as a percentage of the ERV of the
whole portfolio.
Equivalent Yield The internal rate of return of the cash flow from the property, assuming a rise to ERV
at the next review or lease expiry. No future growth is allowed for.
ESG Environmental Social and Governance
Estimated Rental Value
(‘ERV’)
The external valuers’ opinion as to the open market rent which, on the date of the
valuation, could reasonably be expected to be obtained on a new letting or rent
review of a property.
External Valuer An independent external valuer of a property. The Company’s external valuer is
CBRE, having previously been Knight Frank LLP.
Fair Value The estimated amount for which a property should exchange on the valuation date
between a willing buyer and a willing seller in an arm’s length transaction after
proper marketing and where parties had each acted knowledgeably, prudently and
without compulsion.
Fair value movement An accounting adjustment to change the book value of an asset or liability to its fair
value.
FCA The Financial Conduct Authority.
FRI lease A lease which imposes full repairing and insuring obligations on the tenant, relieving
the landlord from all liability for the cost of insurance and repairs.
GRESB Global Real Estate Sustainability Benchmark.
Gross Asset Value The aggregate value of the total assets of the Company as determined in
accordance with IFRS.
Gross passing rental
income
The rent receivable from the portfolio’s leases at a particular reporting date. Allows
the user to assess the cash receipts the Company is entitled to receive.
IFRS - UK UK adopted International accounting standards in accordance with the
requirements of the Companies Act 2006.
Investment Manager The Company’s Investment Manager, is AEW UK Investment Management LLP.
IPO The admission to trading on the London Stock Exchange’s Main Market of the share
capital of the Company and listing of Ordinary Shares to the premium segment of the
Official List of the FCA, on 12 May 2015.
Lease incentives Incentives offered to occupiers to enter into a lease. Typically, this will be an initial
rent-free period, or a cash contribution to fit-out. Under accounting rules, the value of
the lease incentive is amortised through the Statement of Comprehensive Income on
a straight-line basis until the lease expiry.
Lease surrender An agreement whereby the landlord and tenant bring a lease to an end other than by
contractual expiry or the exercise of a break option. This will frequently involve the
negotiation of a surrender premium by one party to the other.
Leverage The ratio of the loan balance to the value of the Company’s Ordinary shares.
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156
Like-for-like The like-for-like valuation movement compares the valuation (as provided by the
external valuer and before adjustments for lease incentives) of properties at the end
of the period in question with the valuation at the start of the period. This measure
only compares movements for those properties which were held at both the start
and end of the period, so excludes the effects of acquisitions and disposals.
Loan to NAV The loan balance drawn expressed as a percentage of the Company’s Net Asset
Value. Allows the user to assess the Company’s gearing and is relevant, as this is the
measure tested the Company’s borrowing covenant.
Loan to GAV
(also Gross Loan to GAV)
The loan balance drawn expressed as a percentage of the combined value of
the Company’s investment property portfolio (as assessed by the valuer) and the
Company’s other assets. Allows the user to assess the Company’s gearing and is
relevant, as this is the measure used under the Company’s Investment Guidelines.
Loan-to-Value (‘LTV’) The value of outstanding loans and borrowings (before adjustments for issue costs)
expressed as a percentage of the combined valuation of the property portfolio (as
provided by the external valuer) and the fair value of other investments.
MEES Minimum Energy Efficiency Standard.
Net Asset Value (‘NAV’) Net Asset Value is the equity attributable to shareholders calculated under IFRS.
NAV per share Equity shareholders, funds divided by the number of Ordinary Shares in issue. This
measure allows a comparison with the Company’s share price to determine whether
the Company’s shares are trading at a premium or discount to its NAV calculated
under IFRS.
NAV total return The percentage change in NAV, assuming that dividends paid to shareholders are
reinvested at the prevailing NAV to purchase additional Ordinary Shares. This is an
alternative performance measure that the Company tracks, as it is a direct indicator
of the value produced by the Company's operations.
Net equivalent yield Calculated by the Company’s External Valuers, net equivalent yield is the internal
rate of return from an investment property, based on the gross outlays for the
purchase of a property (including purchase costs), reflecting reversions to current
market rent and items as voids and non-recoverable expenditure but ignoring
future changes in capital value. The calculation assumes rent is received annually in
arrears.
Net initial yield (‘NIY’) The initial net rental income from a property at the date of purchase, expressed as a
percentage of the gross purchase price including the costs of purchase.
Net Loan to GAV Measure of gearing calculated as follows: (l-c)/v, where “l” is the loan balance drawn,
“c” is the Company’s cash and cash equivalents and “v” is the combined value of
the Company’s investment property portfolio (as assessed by the valuer) and the
Company’s investments. Allows the user to assess the potential effect on gearing of
using the Company’s cash to repay a portion of its loan balance.
Net Operating Income
(‘NOI’)
The Company’s gross operating income minus its operating expenses.
Net rental income Rental income receivable in the period after payment of ground rents and net
property outgoings.
Non-PID Non-Property Income Distribution. The dividend received by a shareholder of the
Company arising from any source other than profits and gains of the Tax Exempt
Business of the Company.
Ongoing charges A measure, expressed as a percentage of NAV, of the regular, recurring costs of
running an investment company which is calculated in line with AIC methodology.
Ordinary Shares Ordinary Shares of £0.01 each in the capital of the Company. Ordinary Shares are
the main type of equity capital issued by conventional Investment Companies.
Shareholders are entitled to their share of both income, in the form of dividends paid
by the Company, and any capital growth.
157
Over-rented Space where the passing rent is above the ERV.
Passing rent The gross rent, less any ground rent payable under head leases.
PID Property Income Distribution. A dividend received by a shareholder of the Company
in respect of profits and gains of the tax exempt business of the Company.
Projected debt yield Measure of risk, calculated by dividing the projected 12 month net operating income
by the outstanding principal balance of the debt secured by the Company.
Property Total Return The overall profit from a property investment, including capital appreciation and
income.
Rack-rented Space where passing rent is the same as the ERV.
REIT A Real Estate Investment Trust. A company which complies with Part 12 of the
Corporation tax Act 2010. Subject to the relevant UK REIT criteria being met
continually, the profits from the property business of a REIT, arising from both
income and capital gains, are exempt from corporation tax.
RETT Real Estate Transfer Tax. The tax payable by the buyer on the purchase of a property.
The RETT payable is calculated at a rate depending on the consideration paid for
the property.
Reversion Increase in rent estimated by the Company’s external valuer, where the passing rent
is below the ERV.
Reversionary yield The anticipated yield, which the initial yield will rise (or fall) to once the rent reaches
the ERV.
Share price The value of a share at a point in time as quoted on a stock exchange. The
Company’s Ordinary Shares are quoted on the Main Market of the London Stock
Exchange.
Shareholder total return The share price movement and dividends (pence per share) received during
a period, expressed as a percentage of the opening share price for the period.
Calculated as follows: (b - a + d)/a, where “a” is the opening share price, “b” is the
closing share price and “d” is dividends per share.
SRI Socially Responsible Investment.
Total returns The returns to shareholders calculated on a per share basis by adding dividends
paid in the period to the increase or decrease in the share price or NAV. The
dividends are assumed to have been reinvested in the form of Ordinary Shares or net
assets.
Under-rented Space where the passing rent is below the ERV.
UK Corporate Governance
Code
A code issued by the Financial Reporting Council which sets out standards of
good practice in relation to board leadership and effectiveness, remuneration,
accountability and relations with shareholders. All companies with a premium listing
of equity shares in the UK are required under the Listing Rules to report on how they
have applied the Code in their annual report and accounts.
Vacant ERV Estimated Rental Value of a property that is currently unoccupied or vacant.
Void costs Expenses incurred by the Company during periods when their rental property is vacant.
Voids The amount of rent relating to properties which are unoccupied and generating no
rental income. Stated as a percentage of ERV.
Weighted Average
Unexpired Lease Term
(‘WAULT’)
The average lease term remaining for first break, or expiry, across the portfolio
weighted by contracted rental income.
Yield compression Occurs when the net equivalent yield of a property decreases, measured in basis
points.
Strategic Report Governance Financial Statements Additional Information
158
Notes
159
AEW Offices
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www.aew.com
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United States
+1 617 261 9334
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