Shareholder Update and Dividend Declaration

24 July 2025

AEW UK REIT plc

Shareholder Update and Dividend Declaration

AEW UK REIT plc (LSE: AEWU) ("AEWU" or the "Company"), which directly owns a value-focused, diversified portfolio of 34 UK commercial property assets, announces its unaudited Net Asset Value ("NAV") as at 30 June 2025 and interim dividend for the three-month period ending 30 June 2025.

Highlights

· NAV of £172.47 million or 108.87 pence per share at 30 June 2025 (31 March 2025: £174.44 million or 110.11 pence per share).

· NAV total return of 0.69% for the quarter (31 March 2025 quarter: 1.90%).

· 0.05% like-for-like portfolio valuation increase for the quarter (31 March 2025 quarter: 1.42% increase).

· EPRA earnings per share ("EPRA EPS") for the quarter of 1.73 pence (31 March 2025 quarter: 1.71 pence).

· Interim dividend of 2.00 pence per share for the three months ended 30 June 2025, paid for 39 consecutive quarters and in line with the targeted annual dividend of 8.00 pence per share, representing a dividend yield of 7.4% as at quarter-end.

· Loan to GAV ratio at the quarter end was 25.21% (31 March 2025: 25.01%). Significant headroom on all loan covenants.

· Company continues to benefit from a low fixed cost of debt of 2.959% until May 2027.

· Acquisition of a leisure asset in Leicester for £11.15 million in June 2025, reflecting a NIY of 10.6%. This completes the Company's redeployment of sale proceeds from the disposal of Central Six Retail Park in Coventry.

Laura Elkin, Portfolio Manager, AEW UK REIT, commented:

"We are pleased to report a quarterly shareholder total return of 8.9%, continuing what was a year of strong share price performance to the end of March, driving a 12-month total return of 36.5%. Encouragingly, the Company's shares have returned to trade at close to NAV, and modestly above, on several occasions since the end of the quarter. This positive performance follows the sixth consecutive quarter of like-for-like valuation gains in the Company's portfolio, achieved during a period when property markets have remained subdued. The trend highlights the effectiveness of our counter-cyclical investment approach and active asset management strategy in driving income and capital growth across market cycles. The timing of the Leicester acquisition in returning the Company to full investment and completing towards the end of the period (10 June), has somewhat supressed earnings this quarter to 1.73pps. With Leicester now added to the portfolio, together with ongoing and other planned asset management initiatives across several assets, income and capital returns are anticipated to be stronger in future periods.

This quarter marks the 10-year anniversary of the Company's IPO, with a decade of excellent performance against both the MSCI Balanced Funds Quarterly Property Index and our peers in the UK diversified REIT space. The Company has achieved consistent NAV total return outperformance against its peers on a one, three and five-year annualised basis, as well as property total return outperformance of the MSCI benchmark across these same time periods, and on a seven-year annualised basis. I look forward to sharing the Portfolio's 10-year performance data in the coming weeks. The Company remains committed to maintaining its quarterly dividend of 2.00 pence per share, which has now been paid for 39 consecutive quarters.

I would like to express my gratitude to the highly supportive and dedicated members of the AEW UK team, our Board Directors, our advisers, and our valued retail and institutional shareholders."

Valuation Movement

As at 30 June 2025, the Company owned investment properties with a total fair value of £215.81 million, as assessed by the Company's new independent valuer, CBRE. The like-for-like valuation increase for the quarter of £0.11 million (0.05%) is broken down as follows by sector:

* This is the overall weighted average like-for-like valuation increase of the portfolio.

In accordance with RICS mandatory rotation cycles, and as reported in the previous quarter, the Company has changed valuer from Knight Frank to CBRE, with CBRE performing their first valuation for the June 2025 quarter.

Portfolio Manager's Review

The Company's portfolio achieved a like-for-like valuation increase of 0.05% for the quarter. The retail sector displayed the most substantial gains, with the high-street and retail warehousing sub-sectors rising by 1.51% and 1.01%, respectively. This trend highlights the recent recovery of the sector, as leading retailers reaffirm their commitment to physical locations and report strong trading updates that reflect robust occupational dynamics.

The Company's industrial assets, which represent the largest sector exposure at 36% of the portfolio, recorded another quarter of growth, increasing by 0.08%. During the period, four industrial lettings were completed, securing a combined annual rent of circa £310,000, with 50% of this amount exceeding the Company's Independent Valuer's estimated rental value. This highlights the ongoing positive momentum for rents in the industrial sector, where the Company's net initial yield and reversionary yield stand at 7.10% and 9.78%, respectively. Additionally, the average passing rent for the portfolio's industrial sector is notably low at £3.68 per sq. ft. versus an ERV of £4.72 per sq. ft.

Despite the portfolio's overall valuation increase in the quarter, the Company's Net Asset Value saw a slight decrease during the period largely due to its business plan of recycling from lower yielding assets into higher yielding opportunities and the associated costs of realignment. The Company's recently acquired higher yielding assets are expected to be accretive to income on a forward-looking basis.

During the quarter we have made notable progress on several value-add initiatives that are expected to be accretive to earnings and value in future periods. We successfully completed the refurbishment of Unit 1002 at Sarus Court in Runcorn (industrial), targeting an ERV exceeding £9.00 per sq. ft., compared to the previous passing rent of £6.50 per sq. ft. Additionally, we initiated the refurbishment of the former Candide space at Queen's Square in Bristol (office), where we settled the tenant's dilapidations for £43,000. We are well-advanced in negotiations to re-let the entire vacant space, totalling 11,681 sq. ft. within the building. Furthermore, we are currently undertaking works at the former Poundland unit at Barnstaple Retail Park, where we have recently accepted an offer from a new national retailer.

The acquisition of Freeman's Leisure Park in Leicester was completed during the quarter, restoring the Company's portfolio to a fully invested position. This property represents an attractive investment, acquired at a favourable price, with a net initial yield of 10.6% and an average unexpired lease term exceeding eight years. The park is fully leased to a variety of established national tenants known for their strong trading performance at this location.

This acquisition followed the sale of the Company's largest asset, Central Six Retail Park in Coventry, which facilitated the realisation of significant profit. This transaction and the subsequent reinvestment exemplify the Company's strategic approach, illustrating how effective asset management can enhance asset value while simultaneously delivering an attractive income stream. In this case, the sale proceeds on the relatively low-yielding Coventry asset have been reinvested into higher-yielding opportunities, which are expected to continue driving future returns.

The acquisition of Leicester, along with Hitchin acquired in the previous quarter, highlights the opportunities currently being seen in the Company's investment pipeline. With UK commercial investment volumes remaining below average and more assets trading off-market, AEW has identified an increasing prevalence of mispriced assets. Current average UK commercial property values are at their lowest levels since the Company's IPO, leading the Manager to believe that now is an opportune time to deploy capital. We would like to do so if the Company were able to raise more equity capital.

Outside of specific asset management gains and crystallised rental growth, property valuation movements for the current quarter are expected to remain subdued across the UK. However, we remain optimistic about general valuation increases in the medium term, driven by a potential easing of interest rates and a rise in investment volumes within the UK commercial property sector.

Net Asset Value

The Company's unaudited NAV at 30 June 2025 was £172.47 million, or 108.87 pence per share. This reflects a decrease of 1.13% compared with the NAV per share at 31 March 2025. The Company's NAV total return, which includes the interim dividend of 2.00 pence per share for the period from 1 January 2025 to 31 March 2025, was 0.69% for the three-month period ended 30 June 2025.

*Includes the impact of portfolio valuation change as well as property transaction costs.

The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards. It incorporates the independent portfolio valuation at 30 June 2025 and income for the period, but does not include a provision for the interim dividend declared for the three-month period to 30 June 2025.

Share Price and Discount

The closing ordinary share price at 30 June 2025 was 108.4p, an increase of 6.90% compared with the share price of 101.4p at 31 March 2025. The closing share price represents a discount to the NAV per share of 0.43%. The Company's share price total return, which includes the interim dividend of 2.00 pence per share for the period from 1 January 2025 to 31 March 2025, was 8.88% for the three-month period ended 30 June 2025.

Dividend

Dividend declaration

The Company today announces an interim dividend of 2.00 pence per share for the period from 1 April 2025 to 30 June 2025. The dividend payment will be made on 29 August 2025 to shareholders on the register as at 1 August 2025. The ex-dividend date will be 31 July 2025. The Company operates a Dividend Reinvestment Plan ("DRIP"), which is managed by its registrar, MUFG Corporate Markets Limited. For shareholders who wish to receive their dividend in the form of shares, the deadline to elect for the DRIP is 12 August 2025.

The dividend of 2.00 pence per share will be designated 2.00 pence per share as an interim property income distribution ("PID").

The Company has now paid a 2.00 pence quarterly dividend for 39 consecutive quarters1, providing consistently high levels of income to our shareholders.

1For the period 1 November 2017 to 31 December 2017, a pro rata dividend of 1.33 pence per share was paid for this two-month period, following a change in the accounting period end.

Dividend outlook

It remains the Company's intention to continue to pay dividends in line with its dividend policy. In determining future dividend payments, regard will be given to the financial circumstances prevailing at the relevant time, as well as the Company's requirement, as a UK REIT, to distribute at least 90% of its distributable income annually.

Financing

Equity:

The Company's share capital consists of 158,424,746 Ordinary Shares in issue, with 350,000 shares held in treasury.

Post quarter-end, the Company made an application to the Financial Conduct Authority and the London Stock Exchange for a block listing of 15,842,475 new ordinary shares ("Ordinary Shares") in the Company to be admitted to the Official List and to trading on the London Stock Exchange's market for listed securities.

The Ordinary Shares may be issued pursuant to the Company's existing general authority to issue shares on a non pre-emptive basis. These Ordinary Shares may be issued to satisfy market demand, as and when market conditions permit. When issued, the new Ordinary Shares will rank pari passu with the existing ordinary shares in issue.

Debt:

The Company has a £60.00 million, five-year term loan facility with AgFe, a leading independent asset manager specialising in debt-based investments. The loan is priced as a fixed rate loan with a total interest cost of 2.959% until May 2027.

The loan was fully drawn at 30 June 2025, producing a Loan to GAV ratio of 25.21%.

Headroom on the debt facility's 60% loan to value ("LTV") covenant continues to be conservative. For those properties secured under the loan, a 41.89% fall in valuation would be required before the LTV covenant were to be breached.

Investment Update

During the quarter the Company completed the following purchase:

Freemans Leisure Park, Leicester (other) - In June, the Company completed the purchase of an 8.4-acre freehold site in the centre of Leicester (the "Property"), for £11,150,000. The purchase price reflects an attractive net initial yield of 10.6% and a capital value of £103 per sq. ft.

The property occupies a prominent position on an arterial route one mile south of Leicester city centre, close to the University of Leicester's student campus, and totals 108,771 sq. ft. across five units along with service yards and 582 car parking spaces.

The property is fully let to a well-known group of national tenants including Odeon Cinemas Ltd, Mecca Bingo Ltd, Spirit Pub Company Ltd and Nando's Chickenland Ltd, providing a weighted average unexpired lease term to expiry of greater than eight years. The Property presents various short-to-medium term asset management opportunities, including rental growth prospects through upcoming rent reviews; the possibility of an EV charging letting; and appraising alternative uses, such as hotel and restaurant, for areas of the site that have not already been developed.

Leicester benefits from high levels of footfall as the largest city in the East Midlands with one of the fastest growing populations in the UK. The city is served by rail connections to London, Birmingham and Nottingham, and is situated at the midpoint between London and Leeds on the M1 motorway.

The acquisition completes the Company's redeployment of sale proceeds from the disposal of Central Six Retail Park in Coventry.

No disposals were made by the Company during the quarter.

Asset Management Update

The Company completed and exchanged on the following asset management transactions during the quarter:

11-15 Fargate, Sheffield (retail) - The Company completed a new lease to Boots Opticians Professional Services & Seven Hills Optical Ltd, trading as Boots Opticians. The tenant has entered a 10-year lease, with a tenant break option on the expiry of the fifth year, paying a rent of £62,500 per annum. There will be a five-yearly open market upwards-only rent review. The tenant has been granted a nine-month rent free period. Following completion of the letting the property is now fully let. 

Central Six Retail Park (the Triangle Site), Coventry (retail warehouse) - Following the freehold disposal of Units 1-11 for £26,250,000 in December 2024, the Freeholder (Friargate JV Projects Limited, known as Friargate) of the remaining site, known as the 'Triangle Site', which is still held on a long leasehold by the Company, has served notice to acquire the remaining site from 29 July this year for a peppercorn.

The Triangle Site consists of three purpose-built retail warehousing units let to Salvation Army, Costa Ltd and TUI UK Retail Ltd, and a drive-thru restaurant let to Caspian Food Services Ltd, trading as Burger King, producing an annual rental income of £380,000 per annum.

In June 2023, the Company completed the acquisition of the freehold interest in Units 1-11, which had previously been held by way of a long leasehold from Friargate. The acquisition of the freehold interest was in exchange for an option for Friargate to acquire the Company's long leasehold interest of the Triangle Site over a five-year period, commencing on 1 July 2025. In acquiring the freehold of Units 1-11, the liquidity of the asset was improved, as well as user restrictions removed, thus achieving the price of £26,250,000 which represented a 60% premium to the purchase price of the entire property, which was acquired in November 2021 for £16,411,000.

Diamond Business Park, Wakefield (industrial) - The Company completed a new lease of Unit 10 to Machtech Technology Ltd. The tenant has entered into a five-year lease with a tenant only break option in 2.5 years, paying a rent of £46,890 per annum (£4.50 psf) which is £0.50 per sq. ft. above ERV. No rent free or capital contribution was given as an incentive.

Westlands Distribution Park, Weston-super-Mare (industrial) - The Company has completed a three-year lease renewal of Unit 4 with MCT Rehman Ltd at a rent of £95,000 per annum (£3.61 per sq. ft.), which increases to £100,000 per annum (£3.80 per sq. ft.) at the beginning of the second year, and £110,000 (£4.18 per sq. ft for the third year.

The Company has also completed a short-term lease renewal of Unit 2 with J N Baker Ltd, extending the term by an additional 12 months with a rolling tenant-only break option that allows for termination on one month's notice after the first three months of the term. The tenant will be paying a rent of £159,500 per annum (£2.28 per sq. ft).

The Company has also completed a short-term lease of Units 2B and 2C with Colin Venn. The lease will be for a total term of one year with a rolling mutual break clause that allows termination at any time with one month's notice. The tenant will pay a rent of £6,000 per annum.

Sarus Court, Runcorn (industrial) - The Company completed a speculative refurbishment project of units 1002, formerly let to PS2 Print Ltd. 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 £426,000, including professional fees. It is anticipated that the Company will crystalise significant rental growth from the previous rent following the unit being re-let.

Glossary of Commonly Used Terms

Industry specific terms used in the Company's communications are defined in the glossary of commonly used terms which can be found on the Company's website: https://www.aewukreit.com/investors/glossary

AEW UK

Notes to Editors

About AEW UK REIT

AEW UK REIT plc (LSE: AEWU) aims to deliver an attractive total return to shareholders by investing predominantly in smaller commercial properties (typically less than £15 million), on shorter occupational leases in strong commercial locations across the United Kingdom. The Company is currently invested in office, retail, industrial and leisure assets, with a focus on active asset management, repositioning the properties and improving the quality of income streams. AEWU is currently paying an annualised dividend of 8p per share. 

The Company was listed on the Official List of the Financial Conduct Authority and admitted to trading on the Main Market of the London Stock Exchange on 12 May 2015. www.aewukreit.com

LEI: 21380073LDXHV2LP5K50

About AEW

AEW is one of the world's largest real estate asset managers, with €77.6bn of assets under management as at 31 March 2025. AEW has over 860 employees, with its main offices located in Boston, London, Paris and Singapore and offers a wide range of real estate investment products including comingled funds, separate accounts and securities mandates across the full spectrum of investment strategies. AEW represents the real estate asset management platform of Natixis Investment Managers, one of the largest asset managers in the world.

As at 31 March 2025, AEW managed €36.7bn of real estate assets in Europe on behalf of a number of strategies and separate accounts. AEW has over 520 employees based in 11 offices across Europe and has a long track record of implementing core, value-add and opportunistic investment strategies on behalf of its clients. In the last five years, AEW has invested and divested a total volume of almost €15.0bn of real estate across European markets.

www.aew.com

AEW UK Investment Management LLP is the Investment Manager. AEW is a group of companies which includes AEW Europe SA and its subsidiaries as well as affiliated company AEW Capital Management, L.P. in North America and its subsidiaries. AEW Europe SA, together with its subsidiaries AEW UK Investment Management LLP, AEW S.à.r.l., AEW Invest GmbH and AEW SAS, is a European real estate investment manager with headquarter offices in Paris and London. AEW Europe SA and AEW Capital Management, L.P. are owned by Natixis Investment Managers. Natixis Investment Managers is an international asset management group based in Paris, France, that is principally owned by Natixis, a French investment banking and financial services firm. Natixis is principally owned by BPCE, France's second largest banking group.

Disclaimer

This communication cannot be relied upon as the basis on which to make a decision to invest in AEWU. This communication does not constitute an invitation or inducement to subscribe to any particular investment. Issued by AEW UK Investment Management LLP, 8 Bishopsgate, London, EC2N 4BQ.Company number: OC367686 England. Authorised and regulated by the Financial Conduct Authority.