AEW UK REIT plc (AEWU) 
AEW UK REIT plc: Annual Financial Report 
24-Jun-2021 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
=---------------------------------------------------------------------------------------------------------------------- 
AEW UK REIT PLC 
 
Announcement of Full Year Results for the year ended 31 March 2021 
 
 
 
AEW UK REIT PLC (the 'Company') which holds a diversified portfolio of 34 commercial investment properties throughout 
the UK, is pleased to publish its full year results for the year ended 31 March 2021. 
 
 
 
Mark Burton, Chairman of AEW UK REIT,?commented: "I am pleased to report a strong set of results for a year that began 
at the start of a period of unprecedented economic uncertainty due to the outbreak of COVID-19. NAV, pre-tax profit, 
and EPS all increased and we delivered strong returns to shareholders, demonstrating the resilience of the Company's 
approach and our active asset management strategy. We are also pleased to maintain a dividend of 8.00 pence per share 
('pps'). Our cautious approach to cash management, and the significant gains realised on the disposal of two assets 
enabled the Company to meet these payments, while maintaining a comfortable cash and gearing position. 
 
We have been assiduous in our pursuit of rent from tenants that have been able but unwilling to pay, while pursuing a 
prudent policy for provision against expected credit losses. Although this contributed to the fall in EPRA EPS, we are 
pleased with the successful outcome of the legal action to recover unpaid rent and the overall rent collection levels, 
which reached 94% for each quarter since the start of the pandemic. We continue to believe the Company's assets are 
strategically placed to provide investors with robust performance over the medium and long term." 
 
 
 
Financial Highlights 
 
* Net Asset Value ('NAV') of GBP157.08 million and of 99.15 pps as at 31 March 2021 (31 March 2020: GBP147.86 million and 
of 93.13 pps). 
 
* Operating profit before fair value changes of GBP10.73 million for the year (year ended 31 March 2020: GBP14.47 million). 
 
* Profit before tax ('PBT')* of GBP22.17 million and earnings per share ('EPS') of 13.98 pps for the year (year ended 31 
March 2020: GBP3.65 million and of 2.40 pps). 
 
* EPRA Earnings Per Share ('EPRA EPS')* for the year of 6.19 pps (year ended 31 March 2020: 8.67 pps). 
 
* Total dividends of 8.00 pps declared for the year (year ended 31 March 2020: 8.00 pps). 
 
* Shareholder Total Return* for the year of 33.72% (year ended 31 March 2020: -17.89%). 
 
* NAV Total Return* for the year of 15.06% (year ended 31 March 2020: 2.55%). 
 
* The price of the Company's Ordinary Shares on the Main Market of the London Stock Exchange was 83.20 pps as at 31 
March 2021 (31 March 2020: 68.20 pps). 
 
* As at 31 March 2021, the Company had drawn GBP39.50 million (31 March 2020: GBP51.50 million) of a GBP60.00 million (31 
March 2020: GBP60.00 million) term credit facility with the Royal Bank of Scotland International Limited ('RBSi') and was 
geared to 25.15% of NAV (31 March 2020: 34.83%) (see note 14 below for further details). 
 
* The Company held cash balances totalling GBP17.45 million as at 31 March 2020 (31 March 2020: GBP9.87 million). 
* The Company received three EPRA awards during the year: EPRA Gold Medal for Financial Reporting; EPRA Silver Medal 
for Sustainability Reporting and EPRA Most Improved Award for Sustainability Reporting. The Company has also been named 
Best UK Real Estate Investment Trust in the Citywire Investment Trust Awards based upon its strong three year track 
record. 
 
 
Property Highlights 
 
* As at 31 March 2021, the Company's property portfolio had a valuation of GBP179.00 million across 34 properties (31 
March 2020: GBP189.30 million across 35 properties) as assessed by the valuer1 and a historical cost of GBP173.28 million 
(31 March 2020: GBP197.12 million). 
 
* The Company acquired one property during the year for a purchase price of GBP5.40 million, excluding acquisition costs 
(year ended 31 March 2020: none). The Company made two disposals during the year with total gross sale proceeds of 
GBP29.30 million (year ended 31 March 2020: none). 
 
* The portfolio had an EPRA Vacancy Rate** of 8.96% as at 31 March 2021 (31 March 2020: 3.68%). Excluding vacancy 
contributed by Bath Street, Glasgow, which was exchanged to be sold with the condition of vacant possession, the 
vacancy rate was 5.58% (31 March 2020: 3.68%). 
 
* Rental income generated in the year under review was GBP15.71 million (year ended 31 March 2020: GBP17.42 million). The 
number of tenants as at 31 March 2021 was 99 (31 March 2020: 91). 
 
* EPRA Net Initial Yield ('NIY')** of 7.37% as at 31 March 2021 (31 March 2020: 8.26%). 
 
* Weighted Average Unexpired Lease Term ('WAULT')* of 4.43 years to break (31 March 2020: 4.26 years) and 6.71 years to 
expiry (31 March 2020: 5.55 years). 
 
* As at the date of this report, rent collection statistics for 2020 rental quarters and March 2021 quarter were as 
follows: 
 
 
 
 
Quarter         % 
March 2020      98 
June 2020       98 
September 2020  97 
December 2020   97 
March 2021      94 

* See KPIs below for definition of alternative performance measures.

** See Glossary in the full Annual Report and Financial Statements for definition of alternative performance measures.

1 The valuation figure is reconciled to the fair value under IFRS in note 11.

 
Enquiries 
 
AEW UK 
Alex Short       Alex.Short@eu.aew.com 
                 Nicki.Gladstone-ext@eu.aew.com 
Nicki Gladstone 
                 +44(0) 771 140 1021 
 
Liberum Capital  Darren.Vickers@liberum.com 
Darren Vickers   +44 (0)20 3100 2218 
 
TB Cardew         AEW@tbcardew.com 
Ed Orlebar       +44(0) 7738 724 630 
Tania Wild       +44(0) 7425 536 903 
Lucas Bramwell   +44(0) 7939 694 437 

Chairman's Statement

Overview

I am pleased to present the audited annual results of AEW UK REIT plc for the year ended 31 March 2021. As at 31 March 2021, the Company owned a diversified portfolio of 34 commercial investment properties throughout the UK with a value of GBP179.00 million.

The financial year began with a period of unprecedented economic uncertainty due to the outbreak of COVID-19 and the associated measures to contain the spread of the virus. These measures continued throughout the year to varying degrees and have had a profound impact on certain sectors, most notably retail and leisure. To mitigate the increased risk posed by the uncertainty in the wider economic environment, the Company adopted a cautious approach to cash and debt management. Despite this, the Company has maintained its quarterly dividend payments at the target level of 8.00 pps per annum throughout the year and increased its NAV per share by 6.46%, providing a NAV total return of 15.06% (year ended 31 March 2020: 2.55%).

In May 2020, the Company disposed of 2 Geddington Road, Corby, for gross proceeds of GBP18.80 million, delivering an internal rate of return ('IRR') of 27%. This disposal allowed the effective management of the Company's risk profile, and in July 2020, GBP12.00 million of its RBSi loan facility was repaid in order to provide appropriate headroom against its borrowing covenants. Since the repayment, the Loan to NAV ratio has remained below 27% and was 25.15% as at 31 March 2021, against a soft covenant of 40% (triggering an increase in the margin) and a hard covenant of 55%.

This disposal, and the loss of the Company's largest tenant at the time, also resulted in a fall in rental income. The income profile from the remainder of the portfolio remained largely intact, with rent collection rates reaching at least 94% for all quarters since the onset of the pandemic. The majority of rents outstanding as at 31 March 2021 were attributable to tenants who were financially able, but unwilling, to pay. Post year-end, the Company announced the successful outcome of the legal action against two well-funded national tenants to recover unpaid rent. GBP0.52 million has been provided for as expected credit loss relating to these tenants in these financial statements and subsequent to the court ruling all rent arrears of these tenants have been received. The prudent policy for provision against expected credit losses contributed to a fall in EPRA EPS for the year to 6.19 pps (year ended 31 March 2020: 8.67 pps), providing a dividend cover of 77.4% (year ended 31 March 2020: 108.4%). Certain asset management initiatives are also temporarily reducing earnings potential. Remedial works are ongoing at Bank Hey Street, Blackpool, including the reinstatement of its cathodic protection system and comprehensive repairs to faience elevations and windows. The nature of these repair works means that costs are expensed to profit or loss as they are incurred, with a corresponding increase expected to be seen in the revaluation of the property. The Company has also exchanged to sell its property at Bath Street, Glasgow, with the condition of vacant possession, and this property will continue to operate at a high level of vacancy until the sale has completed.

The Company has benefitted from its defensively positioned portfolio, which achieved a total return of 14.8% over the year - an outperformance of 10.7% relative to the Benchmark. Relatively small lot sizes, geographical diversification and valuations that are underpinned by alternative use value have all contributed to limiting the downside during the period of unprecedented economic uncertainty in the first half of the financial year. The improved economic outlook in the second half of the year saw valuations recover and the Company generated an increase in fair value of its investment property of GBP5.32 million for the year, which has largely been driven by the strong performance of the Company's industrial assets. The pandemic has accelerated the trend towards online retail, and consequently sentiment towards the industrial and warehousing sector has improved. The Company benefits from a high weighting towards industrials, which made up 60.8% of the portfolio valuation as at 31 March 2021. Weightings in the retail and leisure sectors, which have been most negatively affected by the pandemic, remain low at 11.6% and 7.0% respectively.

Stock selection and active asset management continue to be key features of the Company's strategy and drivers of performance. This was evidenced in February 2021 by the completion of the sale of Sandford House, Solihull, for gross proceeds of GBP10.50 million. The asset was acquired in August 2015 for GBP5.40 million and the Company invested no further capital in the asset during its hold period. Significant value was gained from the completion of a 15-year lease in July 2020, with the existing tenant, the Secretary of State for Communities and Local Government, and the asset delivered an IRR in excess of 20% over the hold period. This demonstrates how shorter income assets in strong locations can be used to create value for shareholders.

As the economic outlook improves, the Investment Manager is seeing more attractive investment opportunities coming to the market, which the Company is well positioned to take advantage of with its available cash and debt. In October 2020, the Company acquired Westlands Distribution Park in Weston Super Mare for a purchase price of GBP5.40 million and post year-end acquired Arrow Point Retail Park, Shrewsbury, for a gross purchase price of GBP8.35 million and 15-33 Union Street, Bristol, for a gross purchase price of GBP10.19 million. The Company aims to make further acquisitions in order to increase its earnings and dividend cover.

The Company's share price was 83.20 pps as at 31 March 2021 (31 March 2020: 68.20 pps), representing a 16.1% discount to NAV. During the year, the Company experienced periods of significant discount in share price to NAV as a result of the conditions in the wider market. In light of this, during October and November 2020, the Company bought back 350,000 of its own shares for gross consideration of GBP262,995, which had a positive impact on the Company's NAV and EPRA EPS. Since the year end, the Company's share price has increased to 95.00 pps as at the date of approval of this report, representing a 4.19% discount to NAV.

We are delighted to announce that the Company has received three EPRA awards during the year: EPRA Gold Medal for Financial Reporting; EPRA Silver Medal for Sustainability Reporting and EPRA Most Improved Award for Sustainability Reporting. The Company has also been named Best UK Real Estate Investment Trust in the Citywire Investment Trust Awards based upon its strong three-year track record. These awards are a reflection of much hard work committed to the Company by the Investment Manager and the Board would like to thank the team at AEW and express its positivity and confidence in the Investment Manager's ongoing ability to implement the Company's strategy.

In September 2020, the Company passed a continuation vote at the Annual General Meeting ('AGM'), and shareholders voted in favour of an ordinary resolution to continue the Company's business as currently constituted. We are pleased shareholders support our belief in the Company's strategy and prospects for future performance.

Financial Results Summary

 
                                                                   Year ended 
                                                     Year ended 
                                                                   31 March 2020 
                                                     31 March 2021 
Operating profit before fair value changes (GBP'000)   10,735        14,472 
Operating profit (GBP'000)                             23,102        5,072 
Profit before tax (GBP'000)                            22,172        3,652 
Earnings Per Share (basic and diluted) (pence)*      13.98         2.40 
EPRA Earnings Per Share (basic and diluted) (pence)* 6.19          8.67 
Ongoing Charges (%)                                  1.36          1.34 
Net Asset Value per share (pence)                    99.15         93.13 

*See note 9 of the Financial Statements for calculation.

Financing

The Company has a GBP60.00 million loan facility, of which it had drawn a balance of GBP39.50 million as at 31 March 2021 (31 March 2020: GBP60.00 million facility; GBP51.50 million drawn), producing the following measures of gearing:

                                                                       Year ended    Year ended 
                                                                       31 March 2021 31 March 2020 
                                                                       %             % 
Loan to NAV                                                            25.15         34.83 
Gross Loan to GAV                                                      22.07         27.21 
Net Loan to GAV (deducts cash balance from the outstanding loan value)  12.32        21.99 

The unexpired term of the facility was 2.6 years as at 31 March 2021 (31 March 2020: 3.6 years). The loan incurs interest at 3 month LIBOR +1.4%, which equated to an all-in rate of 1.44% as at 31 March 2021 (31 March 2020: 2.10%).

The Company is protected from a significant rise in interest rates and, as at the year end, had interest rate caps in effect with a notional value of GBP51.00 million (31 March 2020: GBP36.51 million), resulting in the loan being 130% hedged (31 March 2020: 71%). These interest rate caps are effective for the remaining period of the loan.

In June 2020, the Company completed an amendment to its loan facility allowing the part repayment of the loan without reducing the availability of the full GBP60.00 million facility, akin to a revolving credit facility. The Company subsequently repaid GBP12.00 million of the facility in July 2020. As at 31 March 2021, the Company had GBP15.48 million of the facility available up to the maximum 35.00% Loan to NAV at drawdown.

Dividends

The Company has continued to deliver on its target of paying dividends of 8.00 pps per annum. During the year, the Company declared and paid four quarterly dividends of 2.00 pence per Ordinary Share, in line with its target, which were 77.4% covered by the Company's EPRA EPS of 6.19 pence. It remains the Company's longer-term intention to continue to pay dividends in line with its dividend policy and this will be kept under review given the current COVID-19 situation. In determining future dividend payments, regard will be given to the 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, which will remain a key consideration.

Outlook

The Board and Investment Manager are pleased with the strong returns delivered to shareholders to date and with the resilience demonstrated under stressed conditions following the onset of the COVID-19 pandemic. The Company met its target dividends of 8.00 pps for the year and, although these were only 77.4% covered by EPRA EPS, significant gains were realised on the disposal of two assets during the year. These gains supplemented cash flows from its operating activities and allowed the dividend payments to be met while maintaining a comfortable cash and gearing position and without suffering an overall decline in NAV.

The lockdown period at the start of 2021 has reversed some of the UK's economic recovery seen in the second half of 2020. However, the general economic outlook is brighter for the second half of 2021, following the effective rollout of the vaccination programme and further easing of lockdown restrictions. We expect this to be reflected in the real estate market in terms of improved rent collection levels and the recovery of rental values and property valuations. However, many tenants will have benefitted from a range of government support schemes over the past year. As these protective measures are removed, we may yet see a significant surge in the number of corporate insolvencies, and so an element of caution should be retained.

The pandemic has accelerated certain structural shifts in the real estate market. We expect that this will present new challenges and opportunities in certain sectors. We believe that the Company is well placed to take advantage of these with its existing liquid resources available. Growth of the Company also remains a key objective and we hope that improved economic conditions and a return of the share price to trading at a premium to NAV, will enable this in the near future.

Mark Burton

Chairman

23 June 2021

Business Model and Strategy

Introduction

The Company is a real estate investment company listed on the premium segment of the Official List of the FCA and traded on the London Stock Exchange's Main Market. As part of its business model and strategy, the Company has, and intends to maintain, UK REIT status. HM Revenue and Customs has acknowledged that the Company has met the necessary qualifying conditions to conduct its affairs as a UK REIT and the Company intends to continue to do so.

Investment Objective

The investment objective of the Company is to deliver an attractive total return to shareholders from investing predominantly in a portfolio of smaller commercial properties in the United Kingdom.

Investment Policy

In order to achieve its investment objective, the Company invests in freehold and leasehold properties across the whole spectrum of the commercial property sector (office properties, industrial/warehouse properties, retail warehouses and high street retail) resulting in a diversified tenant base.

Investment Restrictions

The Company invests and manages its assets with the objective of spreading risk through the following investment restrictions: ? the value of no single property, at the time of investment, will represent more than 15.00% of GAV; ? the Company may commit up to a maximum of 10.00% of its NAV (measured at the commencement of the relevant project)

to development activities; ? the value of properties, measured at the time of each investment, in any one of the following sectors: office

properties, retail warehouses, high street retail and industrial/warehouse properties will not exceed 60.00% of

GAV; ? investment in unoccupied and non-income producing assets will, at the time of investment, not exceed 20.00% of NAV; ? the Company may commit up to a maximum of 10.00% of the NAV (at the time of investment) in the AEW UK Core Property

Fund (the 'Core Fund'). The Company disposed of its last remaining units in the Core Fund in May 2017 and it is not

the current intention of the Directors to invest in the Core Fund; ? the Company will not invest in other closed-ended investment companies; and ? if the Company invests in derivatives for the purposes of efficient portfolio and cash management, the total

notional value of the derivatives at the time of investment will not exceed, in aggregate, 35.00% of GAV.

The Directors currently intend, at all times, to conduct the affairs of the Company so as to enable the Group to qualify as a REIT for the purposes of Part 12 of the Corporation Tax Act 2010 ('CTA') (and the regulations made thereunder).

The Company will at all times invest and manage its assets in a way that is consistent with its objective of spreading investment risk and in accordance with its published investment policy and will not, at any time, conduct any trading activity which is significant in the context of the business of the Company as a whole.

In the event of a breach of the investment policy and investment restrictions set out above, the Directors upon becoming aware of such breach will consider whether the breach is material, and if it is, notification will be made to a Regulatory Information Service.

Any material change to the investment policy or investment restrictions of the Company may only be made with the prior approval of shareholders.

Our Strategy

The Company exploits what it believes to be the compelling relative value opportunities currently offered by pricing inefficiencies in smaller commercial properties let on shorter occupational leases. The Company supplements this core strategy with asset management initiatives to upgrade buildings and thereby improve the quality of income streams. In the current market environment, the focus is to invest in properties which: ? typically have a value, on investment, of between GBP2.50 million and GBP15.00 million; ? have initial net yields, on investment, of typically between 7.5-10%; ? achieve across the whole portfolio an average weighted lease term of between three to six years remaining; ? achieve, across the whole portfolio, a diverse and broad spread of tenants; and ? have potential for asset management initiatives to include refurbishment and re-lettings.

How we add value

An Experienced Team

The investment management team averages 20 years working together, reflecting stability and continuity.

Value Investing

The Investment Manager's investment philosophy is based on the principle of value investing. The Investment Manager looks to acquire assets with an income profile coupled with underlying characteristics that underpin long-term capital preservation. As value managers, the Investment Manager looks for assets where today's pricing may not correspond to long-term fundamentals.

Active Asset Management

The Investment Manager has an in-house team of dedicated asset managers with a strong focus on active asset management to enhance income and add value to commercial properties.

Strategy in Action

Extending income streams and realising gains

Sandford House, Solihull ? The asset was acquired in August 2015 for GBP5.4 million and has been fully let to the Secretary of State for

Communities and Local Government since this time, producing a net income yield against the purchase price of 9.6%.

No further capital expenditure was spent on the asset during the hold period. ? A 15-year lease agreement was signed with the tenant in June 2020, increasing the rental income from the asset by

30%. ? The asset was sold in February 2021 for GBP10.5 million, crystallising significant gains both against acquisition

price and against the valuation pre-letting.

Driving rental growth

Storeys Bar Road, Peterborough ? In November 2020 the Company agreed a 15-year lease renewal with the existing tenant, Wyndeham Peterborough Ltd. ? The renewal achieved an uplift in rent from GBP2.95 per sq ft to GBP3.50 per sq ft, equating to an increase of GBP115,000

per annum. ? The like-for-like valuation as provided by the valuer increased by 20% over the year.

Seeking high-yielding assets supported by land and alternative use value

2 Geddington Road, Corby ? The asset was acquired in February 2018 for GBP12.4 million and was fully let to Gefco UK Ltd during the hold period,

producing a net income yield against the purchase price of 10%. ? The Company completed the sale of the asset in May 2020 for gross proceeds of GBP18.8 million, generating an IRR of

27.2%.

Acquiring assets with low capital value and potential to add value through asset management initiatives Westlands Distribution Park, Weston-super-Mare ? In November 2020, the Company completed the acquisition of the multi-let distribution park for a price of GBP5.4

million. ? This reflects a capital value of GBP175,000 per acre compared with nearby comparable land transactions which have

ranged between GBP350,000 and GBP500,000 per acre for other commercial and residential uses. ? Short-term opportunities to add value through lettings and renewals.

Key Performance Indicators

KPI AND DEFINITION 
                                         RELEVANCE TO STRATEGY                                     TARGET   PERFORMANCE 
 
                                                                                                            7.37% 
 
1. EPRA NIY                                                                                                 at 31 March 
                                                                                                            2021 
A representation to the investor of what 
their initial net yield would be at a    The Company's EPRA NIY demonstrates the ability to 
predetermined purchase price after       generate income from its portfolio in the short-term in   7.50 - 
taking account of all associated costs,  order to meet its target dividend.                        10.00%   (31 March 
e.g. void costs and rent free periods.                                                                      2020: 
                                                                                                            8.26%) 
 
 
 
2. True Equivalent Yield                                                                                    8.15% 
The average weighted return a property                                                                      at 31 March 
will produce according                                                                                      2021 
 
to the present income and estimated 
rental value ('ERV')  assumptions,       The Company's True Equivalent Yield demonstrates the      7.50 - 
assuming the income is                   Company's ability to generate income, both from its       10.00%   (31 March 
                                         existing leases and its ERVs, in order to meet its target          2020: 
received quarterly in advance.           dividend.                                                          8.04%) 
 
                                                                                                            8.18% 
3. Reversionary Yield                                                                                       at 31 March 
                                                                                                            2021 
The expected return the property will    A Reversionary Yield profile shows a potentially 
                                         sustainable income stream that can be used to meet        7.50 - 
provide once rack-rented.                dividends past the expiry of a property's current leasing 10.00% 
                                         arrangements.                                                      (31 March 
                                                                                                            2020: 
                                                                                                            7.90%) 
 
                                                                                                            6.71 years 
4. WAULT to Expiry 
                                         The Investment Manager believes that current market                at 31 March 
The average lease term remaining to      conditions present an opportunity whereby assets with a            2021 
                                         shorter unexpired lease term are often mispriced. It is 
expiry across the portfolio, weighted    also the Investment Manager's view that a shorter WAULT   > 3 
                                         is useful for active asset management as it allows the    years 
by contracted rent.                      Investment Manager to engage in direct negotiation with            (31 March 
                                         tenants rather than via rent-review mechanisms.                    2020: 5.55 
                                                                                                            years) 
 
 
 
                                                                                                            4.43 years 
5. WAULT to Break                        The Investment Manager believes that current market 
                                         conditions present an opportunity whereby assets with a            at 31 March 
The average lease term remaining to      shorter unexpired lease term are often mispriced. As               2021 
                                         such, it is in line with the Investment Manager's 
break, across the portfolio weighted     strategy to acquire properties with a WAULT that is       > 3 
                                         generally shorter than the benchmark. It is also the      years 
by contracted rent.                      Investment Manager's view that a shorter WAULT is useful           (31 March 
                                         for active asset management as it allows the Investment            2020: 4.26 
                                         Manager to engage in direct negotiation with tenants               years) 
                                         rather than via rent-review mechanisms. 
 
 
                                                                                                            GBP157.08 
                                                                                                            million 
6. NAV                                                                                                      at 31 March 
                                                                                                            2021 
NAV is the value of an entity's assets   Provides stakeholders with the most relevant information  Increase 
                                         on the fair value of the assets and liabilities of the    year 
minus the value of its liabilities.      Company. 
                                                                                                   on year  (31 March 
                                                                                                            2020: 
                                                                                                            GBP147.86 
                                                                                                            million) 
 
 
                                                                                                            25.15% 
                                         The Company has changed the measure of its Leverage KPI            at 31 March 
                                         from 'Loan to Gross Asset Value ('GAV')' to 'Loan to               2021 
7. Leverage (Loan to NAV)                NAV'. This is in line with the measure used in its 
                                         banking covenants and so is considered to be more 
The proportion of the Company's net      relevant to the Company's position. The target of 35% 
assets that is funded by borrowings.     Loan to NAV, which is the gearing limit at drawdown under          (31 March 
                                         the RBSi facility, approximates to the previous target of 35%      2020: 
                                         25% Loan to GAV, which is the measure used in the                  34.83%) 
                                         Company's Investment Guidelines. Gearing will continue to 
                                         be monitored using both measures, but will be reported on 
                                         the Loan to NAV basis. 
 
                                                                                                            8.96%/5.58% 
                                                                                                            excluding 
                                                                                                            vacancy 
8. Vacant ERV                                                                                               contributed 
                                                                                                            by Glasgow* 
The space in the property portfolio 
which is currently unlet, as a           The Company's aim is to minimise vacancy of the                    at 31 March 
                                         properties. A low level of structural vacancy provides an < 10.00% 2021 
percentage of the total ERV of the       opportunity for the Company to capture rental uplifts and 
portfolio.                               manage the mix of tenants within a property. 
                                                                                                            (31 March 
                                                                                                            2020: 
                                                                                                            3.68%) 
 
                                                                                                            8.00 pps 
9. Dividend 
                                                                                                            for the 
Dividends declared in relation to the                                                                       year ended 
year. The Company targets a dividend of                                                                     31 March 
8.00 pence per Ordinary Share per                                                                           2021 
                                         The dividend reflects the Company's ability to deliver a 
annum. However, given the current        sustainable income stream from its portfolio.             8.00 pps 
COVID-19 situation, regard will be had 
to the circumstances prevailing at the                                                                      (year ended 
relevant time in determining dividend                                                                       31 March 
payments.                                                                                                   2020: 8.00 
                                                                                                            pps) 
 
 
                                                                                                            1.36% 
                                                                                                            for the 
10. Ongoing Charges                                                                                         year ended 
                                         The Ongoing Charges ratio provides a measure of total              31 March 
The ratio of total administration and    costs associated with managing and operating the Company,          2021 
operating costs expressed as a           which includes the management fees due to the Investment 
percentage of average NAV throughout the Manager. The Investment Manager presents this measure to  < 1.50% 
year.                                    provide investors with a clear picture of operational 
                                         costs involved in running the Company.                             (year ended 
                                                                                                            31 March 
                                                                                                            2020: 
                                                                                                            1.34%) 
 
                                                                                                            GBP22.17 
                                                                                                            million/ 
                                                                                                            13.98 pps 
                                                                                                            for the 
11. Profit Before Tax ('PBT')                                                                               year ended 
                                                                                                            31 March 
PBT is a profitability measure which                                                                        2021 
considers the Company's profit before 
the payment of income tax.               The PBT is an indication of the Company's financial 
                                         performance for the year in which its strategy is         8.00 pps 
                                         exercised.                                                         (year ended 
                                                                                                            31 March 
                                                                                                            2020: GBP3.65 
                                                                                                            million/ 
                                                                                                            2.40 pps) 
 
                                                                                                            33.72% 
                                                                                                            for the 
                                                                                                            year ended 
12. Shareholder Total Return                                                                                31 March 
                                                                                                            2021 
The percentage change in the share price 
assuming dividends are reinvested to     This reflects the return seen by shareholders on their 
purchase additional Ordinary Shares.     shareholdings through share price movements and dividends 8.00% 
                                         received.                                                          (year ended 
                                                                                                            31 March 
                                                                                                            2020: 
                                                                                                            -17.89%) 
 
                                                                                                            6.19 pps 
13. EPRA EPS 
                                                                                                            for the 
Earnings from core operational                                                                              year ended 
activities. A key measure of a company's                                                                    31 March 
underlying operating results from its                                                                       2021 
property rental business and an          This reflects the Company's ability to generate earnings 
indication of the extent to which        from the portfolio which underpins dividends.             8.00 pps 
current dividend payments are supported 
by earnings. See note 9 of the financial                                                                    (year ended 
statements.                                                                                                 31 March 
                                                                                                            2020: 8.67 
                                                                                                            pps) 
 

*Glasgow has exchanged to be sold with the condition of vacant possession.

Investment Manager's Report

Economic Review

A prolonged period of lockdown during Q1 2021 caused a contraction of 1.5% in UK economic growth for the quarter. However, the continued easing of restrictions throughout Q2 and a rapid rollout of the vaccination programme is expected to bring about relatively strong growth in the second half of 2021, with KPMG's Economic Outlook published in March 2021 forecasting UK GDP growth to be 4.6% for the whole year, compared with a 9.9% contraction in 2020. While rises in inflation rates are expected to accelerate along with the economic recovery, inflation is forecast to be lower than the Bank of England's 2% target by next year, allowing for a continued period of low interest rates. KPMG forecast the economic recovery to continue into 2022 with UK GDP growth of 5.6%.

Property Market Review

We take the view that UK real estate provides an attractive risk-adjusted reward longer term, compared with the very low risk-free rates on offer. Investors have largely held off from property investment over the last 12 months, partly due to disruption and changes to occupier behaviour due to the pandemic. However, as the occupier market recovers, the number of transactions is expected to increase. The pandemic has amplified the polarisation in performance between individual sectors, which was already in evidence beforehand.

Sector Review

Industrial

The sector has been continuing to grow for a number of years due to the trend towards online shopping. Growth of this trend has continued at an even faster pace than predicted prior to the pandemic as social distancing has forced a change in shoppers' habits. Changes in shoppers' behaviour are expected to lead to increased take up of online sales, as a percentage of total sales, over the medium to long term in all retail sectors.

In terms of emerging trends, there is some expectation that the UK will begin to see an increase in localised production as a result of supply chain disruption experienced during the pandemic. If seen, this could further increase demand for industrial accommodation and would lead to increased take up outside of the currently favoured logistics sector instead being focused more on traditional manufacturing accommodation which has seen a decline in total stock over recent years.

The industrial sector represents the portfolio's largest sector holding, with 60.8% of the valuation, which leaves the Company well-placed to benefit from structural changes going forward. Our focus is on assets with low capital values in locations with good accessibility from the national motorway network.

The Company's industrial holding outperformed the Benchmark both in terms of income return, with a relative outperformance of 3.4%, and capital growth, with a relative outperformance of 0.8%.

Office

Nationwide lockdowns have brought about substantial increases in remote working, with many companies indicating that they will move towards a more flexible working model in the future, which suggests that the physical office could become less important for some. KPMG forecasts the unemployment rate to increase in 2021 and again in 2022 as government support schemes are wound down. As such, the recovery in office demand and rental values in the sector are expected to remain subdued. We anticipate an acceleration in demand for offices with strong amenities post-pandemic as businesses try to entice workers back.

Our office assets represent the second largest sector holding, with 20.6% of the valuation. The focus has been on strong, regional centres and a preference for town or city centres rather than business park locations with weak surrounding amenity where demand has generally not kept up. This was the strongest performing sector relative to the Benchmark, achieving an outperformance of 12.5%, which was largely driven by capital growth of 5.4% resulting from key asset management transactions. In contrast, the office sector suffered capital losses of 5.1% across the Benchmark.

Alternatives

This is a sector in which AEW as Investment Manager has significant expertise and has seen a number of compelling opportunities in the market. The Company's current alternatives holding comprises assets within the leisure sector that have been selected due to their defensive, value protection characteristics as well as their high-income yield. As such, even though the income streams and valuations have suffered from the impact of the pandemic on this sector, the value of these assets is expected to be below their long-term value assessment when considering their value for alternative uses.

Assets held in alternative sectors comprise 7.0% of the 31 March 2021 valuation, all of which is within the leisure sector. The Company's high yielding alternatives generated an income return which outperformed by 3.0% relative to the Benchmark. Gains realised on the disposal of 2 Geddington Road, Corby, offset capital losses seen in the Company's leisure assets, meaning that capital returns achieved outperformance of 8.0% relative to the Benchmark.

Retail

The retail sector has suffered greatly due to the pandemic and experienced an acceleration of trends already present in consumer habits prior to the onset. The rise in online retail is expected to continue, as retailers invest further in their online platforms and move a larger proportion of their sales online. Yields are expected to rise and changes in pricing are bringing about more opportunities for the repurposing of retail assets for alternative uses.

Retail represents 11.6% of the valuation and our retail assets have performed slightly weaker than the Benchmark, as Central London retail props up the Benchmark performance to some extent. The Company's strictly regional holdings have suffered valuation losses associated with the negative sentiment in the sector and issues caused by the pandemic.

Property Portfolio

The Company made one acquisition during the year:

Westlands Distribution Park, Weston-super-Mare

In November 2020, the Company completed the acquisition of the multi-let Westlands Distribution Park in Weston-super-Mare for a purchase price of GBP5.4 million. The purchase price reflects a low capital value of GBP175,000 per acre, providing potential for future capital value growth based upon comparable land transactions for other commercial and residential uses. The established 323,437 sq ft estate is let to 15 tenants including North Somerset District Council who make up 30% of the income stream. It is located three miles from the M5 Motorway and 20 miles south of Bristol city centre.

The Company made the following acquisitions after the year end:

Arrow Point Retail Park, Shrewsbury

In May 2021, the Company acquired Arrow Point Retail Park in Shewsbury for a purchase price of GBP8.35 million. The established retail park is located on a busy commercial estate and is fully let. The estate provides a net initial yield of 8.7%, with low passing rents compared with competing locations. It comprises a modern purpose-built retail park constructed in 2007, arranged across nine units with 176 car parking spaces, and is prominently located within the main retail warehouse provision of Shrewsbury, approximately 2.5 miles north east of the town centre.

Bristol

In June 2021, the Company acquired 15-33 Union Street for a purchase price of GBP10.19 million. 15-33 Union Street occupies a prominent location in Bristol city centre, opposite The Galleries Shopping Centre and near Cabot Circus, Bristol's premier retail destination. Located on a busy thoroughfare for pedestrians, the 65,238 sq ft site experiences high footfall and is ideally suited for retail or leisure units. Constructed in 2001, the property currently comprises five purpose built split-level retail or leisure units over four floors and road access to both Union Street and Fairfax Street. Four of the five units are let to three household names and a successful local retailer. The remaining unit is currently vacant, with the vendor providing a 12 month guarantee. We are currently in discussions with a number of parties who are keen to occupy this space. The location of the site has been identified as a major regeneration area and it offers the ability for further growth through development.

The Company made two disposals during the year:

2 Geddington Road, Corby

In May 2020, the Company completed the sale of 2 Geddington Road, Corby, for a price of GBP18.8 million, achieving an IRR of 27.2%. The asset was acquired in February 2018 for GBP12.4 million and had been fully let to Gefco UK Limited during the hold period, producing a net income yield against the purchase price of 10%.

Sandford House, Solihull

In February 2021, the Company completed the sale of Sandford House, Solihull, for a price of GBP10.5 million, achieving an IRR of 19.5%. The asset was acquired in August 2015 for GBP5.4 million and had been fully let to the Secretary of State for Communities and Local Government since this time, producing a net income yield against the purchase price of 9.6%. The Company had invested no further capital in the asset during its hold period. A 15-year lease agreement was signed with the tenant in July 2020, which increased the asset's rental income by 30%.

Asset Management

The Company completed the following material asset management transactions during the period: ? Bank Hey Street, Blackpool - In May 2020, the Company signed a reversionary lease with existing tenant, JD

Wetherspoon. This documents the removal of the tenant's break option in 2025 and provides an additional 10-year

lease term taking the earliest expiry from 2025 to 2050. The annual rent payable by the tenant has reduced from

GBP96,750 to GBP90,000 but the lease now provides five-yearly fixed increases reflecting 1% per annum.

The Company is also continuing remedial works to its property in Blackpool, which include the overhaul and reinstatement of its cathodic protection system, and comprehensive repairs to faience elevations and windows. Works have been budgeted at a total cost to the Company of GBP1.7 million over two years. The nature of these repair works means that as the costs are incurred, they will be expensed to the Company's profit or loss, with a corresponding increase expected to be seen in the revaluation of the property, all else being equal. The works are expected to be completed by the end of 2021. ? Bessemer Road, Basingstoke - In July 2020, the Company completed a five-year lease renewal at its 58,000 sq ft

industrial premises in Basingstoke. The lease has been granted with no rent free incentive given to the tenant and

secures a rental income to the Company 6% ahead of independent valuer's estimated levels. The tenant has the

benefit of a break option in year three. ? Langthwaite Grange Industrial Estate, South Kirkby - During August 2020, a lease renewal was signed with the

Company's third largest tenant, Ardagh Glass. Rent payable under the new lease has been agreed 13% ahead of both

independent valuer's estimated levels and the previous level of passing rent. The lease is for a five-year term and

the tenant will benefit from four months' rent free and a tenant break option after three years. ? Apollo Business Park, Basildon - During September 2020, the Company completed a 5-year lease renewal on 35,300 sq

ft of these multi-let industrial premises in Basildon. The lease secures a rental income to the Company 4% ahead of

the independent valuer's estimated levels and 30% ahead of the previous rental level. The tenant will benefit from

six months' rent free. ? Wheeler Gate, Nottingham - In September 2020, a five-year renewal lease was completed with Costa Coffee on a 1,400

sq ft retail unit located in central Nottingham. The reversionary lease documents the rebasing of Costa's rent from

GBP110,000 to GBP52,000 per annum in line with its estimated rental value. The tenant benefits from nine months' rent

free. ? Bath Street, Glasgow - During October 2020, the Company exchanged contracts to sell its 85,000 sq ft office holding

at 225 Bath Street in Glasgow city centre to a subsidiary company of IQ Student Accommodation. The transaction is

conditional upon various matters including the grant of planning permission for the development of a 480 bedroom

student housing development and achieving vacant possession. Sale pricing will be determined following the approval

of all conditions according to an agreed matrix ranging from GBP8.55 million to GBP9.30 million. Transaction pricing

reflects 98% of pricing levels being discussed by the parties prior to the onset of the COVID-19 pandemic. ? Moorside Road, Swinton - Following the administration of the previous tenant, Nationwide Crash Repair Centres Ltd.,

a new letting was completed to HB Accident Repair Network Ltd. during November 2020. The lease is for a 10-year

term and the starting rent of GBP122,500 per annum exceeds the rental level of the previous tenants by GBP11,000 per

annum. The lease also provides for an RPI-linked review at year five if the tenant remains in occupation. ? Storeys Bar Road, Peterborough - In November 2020, the Company completed a 15-year lease renewal with its existing

tenants, Wyndeham, achieving a net effective rental uplift from GBP2.95 per sq ft to GBP3.50 per sq ft, increasing the

annual rent received from the asset by GBP115,000. The lease provides for tenant break options at the end of years

three, six and nine and no incentives were granted to the tenant. ? Sarus Court, Runcorn - A new letting to Di-tec Power Ltd. was completed during December 2020 on 14,000 sq ft at

this multi-let industrial estate. The new lease is for a 10-year term and includes an incentive of seven months'

rent free. The rental level of GBP5.65 per sq ft proves a new high tone for the estate and exceeds the asset's

previous estimated rental value level of GBP5.50 per sq ft. ? Gresford Industrial Estate, Wrexham - In March 2021, the Company exchanged contracts on the acquisition of a 2.76

acre plot of land adjacent to its industrial holding at Wrexham for a price of GBP60,200 and completed the purchase

post year-end in April 2021. The freehold vacant land, being sold by administrators in auction, has rights over the

Company's existing ownership. Therefore, the purchase of this land prevents any risks from third parties demanding

access. Plastipak, the tenant of the existing property is potentially interested in expanding into this newly

acquired piece of land.

Vacancy

The portfolio's overall vacancy level now sits at 5.58%, excluding vacancy contributed by the asset at 225 Bath Street, Glasgow which, as discussed above, has now been exchanged for sale for alternative use redevelopment. As a condition of the sale agreement, full vacancy must be achieved in the building before the sale can be completed. Including this asset, overall vacancy is 8.96%.

Financial Results

The Company's NAV as at 31 March 2021 was GBP157.08 million or 99.15 pps (31 March 2020: GBP147.86 million or 93.13 pps). This is an increase of 6.02 pps or 6.46% over the year, with the underlying movement in NAV set out in the table below:

                                                  pps 
NAV as at 1 April 2020                            93.13 
Change in fair value of investment property       3.36 
Gains realised on disposal of investment property 4.44 
Change in fair value of derivatives               (0.01) 
Income earned for the period                                    10.07 
Expenses and net finance costs for the period     (3.88) 
Dividends paid                                    (8.00) 
Share buybacks                                                    0.04 
NAV as at 31 March 2021                           99.15 

EPRA earnings per share for the year was 6.19 pps which, based on dividends paid of 8.00 pps, reflects a dividend cover of 77.4%.

Financing

As at 31 March 2021, the Company has a GBP60.0 million loan facility with RBSi, in place until October 2023, the details of which are presented below:

                                       31 March 2021  31 March 2020 
Facility                               GBP60.00 million GBP60.00 million 
Drawn                                  GBP39.50 million GBP51.50 million 
Gearing (Loan to NAV)                  25.15%         34.83% 
                                       1.44% all-in   2.10% all-in 
Interest rate 
                                       (LIBOR +1.4%)  (LIBOR +1.4%) 
Notional Value of Loan Balance Hedged   130.4%        70.9% 

In June 2020, the Company amended the terms of its facility, allowing the ability to make repayments and re-draw these amounts, akin to a revolving credit facility. In July 2020, the Company repaid GBP12.00 million of the facility.

Property Portfolio

Summary by Sector as at 31 March 2021

                                                                                                        Like-   Like- 
 
                                                                                                        for     for 
                                                          Gross        Gross                            like    like 
                                                          passing      passing            ERV    Rental 
                                         Vacancy  WAULT   rental       rental                           rental  rental 
                               Area               to      income (GBPm)  income             (GBPpsf) income 
              Number Valuation            by ERV  break                (GBPpsf)                           growth  growth 
              of               (sq ft)                                              ERV          (GBPm) 
              assets (GBPm)                (%)      (years)                           (GBPm)                (GBPm)    % 
Sector 
Industrial    21     108.85    2,659,440 6.52     3.93    8.52         3.21         9.72  3.65   8.33   (0.29)  (3.44) 
Offices       5      36.80     252,358   19.81    3.11    2.36         9.37         3.56  14.09  2.97   (0.38)  (13.48) 
Alternatives  2      12.55     112,355   0.00     7.35    1.50         13.31        1.23  10.99  1.73   0.00    0.00 
Standard      5      15.20     168,917   9.48     4.59    2.06         12.17        1.51  8.96   2.07   (0.41)  (16.53) 
Retail 
Retail        1      5.60      51,021    0.00     3.01    0.61         11.96        0.52  10.09  0.61   0.00    0.00 
Warehouse 
Portfolio     34     179.00    3,244,091 8.96*    4.43    15.05        4.64         16.54 5.10   15.71  (1.08)  (6.80) 

Summary by Geographical Area as at 31 March 2021

                                                                                                        Like-   Like- 
 
                                                                       Gross                            for     for 
                                                          Gross        passing            ERV    Rental like    like 
                                         Vacancy  WAULT   passing      rental 
                               Area               to      rental       income             (GBPpsf) income rental  rental 
              Number Valuation            by ERV  break   income (GBPm)  (GBPpsf) 
Geographical  of               (sq ft)                                              ERV          (GBPm)   growth  growth 
area          assets (GBPm)                (%)      (years)                           (GBPm) 
                                                                                                        (GBPm)    % 
Yorkshire and 8      38.17     1,027,801 4.93     2.84    3.23         3.14         3.64  3.53   3.20   (0.34)  (9.60) 
Humberside 
South East    5      27.68     195,545   7.63     3.83    2.02         10.35        2.18  11.14  2.29   (0.35)  (13.26) 
Eastern       5      22.05     344,885   11.57    3.04    1.85         5.36         2.05  5.94   1.66   (0.23)  (12.17) 
South West    4      25.30     448,357   9.85     2.24    2.23         4.98         2.48  5.54   1.88   0.01    0.60 
West Midlands 3      12.70     363,722   5.50     5.30    1.18         3.24         1.14  3.14   1.78   0.10    8.63 
East Midlands 1      3.90      28,219    0.00     5.57    0.39         13.64        0.39  13.80  0.58   (0.11)  (21.57) 
North West    4      16.35     302,061   0.00     4.52    1.40         4.64         1.36  4.51   1.35   (0.09)  (6.25) 
Wales         2      16.10     376,138   0.00     8.08    1.25         3.31         1.39  3.69   1.31   0.00    0.00 
Greater       1      9.25      71,720    0.00     10.62   0.96         13.40        0.75  10.45  1.01   0.00    0.00 
London 
Scotland      1      7.50      85,643    51.07    1.31    0.54         6.33         1.16  13.54  0.65   (0.07)  (9.72) 
Portfolio     34     179.00    3,244,091 8.96*    4.43    15.05        4.64         16.54 5.10   15.71  (1.08)  (6.80) 

*excluding the vacancy from 225 Bath Street Glasgow, which has exchanged to be sold with the condition of vacant possession, the vacancy rate is 5.58%.

Properties by Market Value as at 31 March 2021

Sector weighting by valuation - high industrial weighting and low exposure to retail

Sector            Percentage 
Industrial        60.8% 
Offices           20.6% 
Standard retail   8.5% 
Leisure           7.0% 
Retail Warehouse  3.1% 

Geographical weighting by valuation - highly diversified across the UK

Region                    Percentage 
Yorkshire and Humberside  21.3% 
South East                15.5% 
South West                14.1% 
Eastern                   12.3% 
North West                9.1% 
Wales                     9.0% 
West Midlands             7.1% 
Rest of London            5.2% 
Scotland                  4.2% 
East Midlands             2.2% 

Properties by Market Value as at 31 March 2021

                                                                                                     Market Value 
              Property                                           Sector     Region 
                                                                                                     Range 
                                                                                                     (GBPm) 
              Top 10: 
1.            Eastpoint Business Park, Oxford                    Offices    South East               10.0-15.0 
2.            Gresford Industrial Estate, Wrexham                Industrial Wales                    10.0-15.0 
3.            40 Queen Square, Bristol                           Offices    South West               10.0-15.0 
4.            London East Leisure Park, Dagenham                 Leisure    Rest of London           7.5-10.0 
 
5.            Langthwaite Grange Industrial Estate, South Kirkby            Yorkshire and Humberside 
                                                                 Industrial                          7.5-10.0 
 
                                                                            Yorkshire and Humberside 
6.            Lockwood Court, Leeds                              Industrial                          7.5-10.0 
7.            Storeys Bar Road, Peterborough                     Industrial Eastern                  7.5-10.0 
8.            225 Bath Street, Glasgow                           Offices    Scotland                 7.5-10.0 
9.            Sarus Court Industrial Estate, Runcorn             Industrial North West               5.0-7.5 
 
                                                                            Yorkshire and Humberside 
10.           Euroway Trading Estate, Bradford                   Industrial                          5.0-7.5 

The Company's top 10 properties listed above comprise 49.7% of the total value of the portfolio.

                                                                                               Market Value 
              Property                               Sector           Region 
                                                                                               Range 
                                                                                               (GBPm) 
11.           Apollo Business Park, Basildon         Industrial       Eastern                  5.0 - 7.5 
12.           Brockhurst Crescent, Walsall           Industrial       West Midlands            5.0 - 7.5 
13.           Barnstaple Retail Park                 Retail Warehouse South West               5.0 - 7.5 
14.           Westlands Distribution Park, Weston    Industrial       South West               5.0 - 7.5 
15.           Walkers Lane, St. Helens               Industrial       North West               <5.0 
 
                                                                      Yorkshire and Humberside 
16.           Diamond Business Park, Wakefield       Industrial                                <5.0 
17.           Excel 95, Deeside                      Industrial       Wales                    <5.0 
18.           Cranbourne House, Basingstoke          Industrial       South East               <5.0 
19.           Oak Park, Droitwich                    Industrial       West Midlands            <5.0 
20.           Pearl Assurance House, Nottingham      Standard Retail  East Midlands            <5.0 
 
                                                                      Yorkshire and Humberside 
21.           Brightside Lane, Sheffield             Industrial                                <5.0 
22.           Above Bar Street, Southampton          Standard Retail  South East               <5.0 
23.           Commercial Road, Portsmouth            Standard Retail  South East               <5.0 
24.           Cedar House, Gloucester                Offices          South West               <5.0 
 
                                                                      Yorkshire and Humberside 
25.           Magham Road, Rotherham                 Industrial                                <5.0 
26.           Odeon Cinema, Southend                 Leisure          Eastern                  <5.0 
27.           Pipps Hill Industrial Estate, Basildon Industrial       Eastern                  <5.0 
28.           Bank Hey Street, Blackpool             Standard Retail  North West               <5.0 
29.           Eagle Road, Redditch                   Industrial       West Midlands            <5.0 
 30.          Clarke Road, Milton Keynes             Industrial       South East               <5.0 
 
                                                                      Yorkshire and Humberside 
31.           Knowles Lane, Bradford                 Industrial                                <5.0 
32.           Vantage Point, Hemel Hempstead         Offices          Eastern                  <5.0 
33.           Moorside Road, Salford                 Industrial       North West               <5.0 
 
                                                                      Yorkshire and Humberside 
34.           Fargate and Chapel Walk, Sheffield     Standard Retail                           <5.0 

Top 10 Tenants as at 31 March 2021

                                                                                                              % of 
                                                                                                              Portfolio 
                                                                                                      Passing Total 
                                                                                                      Rental  Passing 
                                                                                                      Income  Rental 
              Tenant                      Sector     Property                                         (GBP'000) Income 
 
1.            Plastipak UK Limited        Industrial Gresford Industrial Estate, Wrexham              883     5.7 
2.            Ardagh Glass Limited        Industrial Langthwaite Industrial Estate, South Kirkby      763     4.9 
 
3.            Wyndeham Peterborough                  Storeys Bar Road, Peterborough                   644     4.2 
              Limited                     Industrial 
                                                                                                      625     4.0 
4.            Mecca Bingo Limited         Leisure    London East Leisure Park, Dagenham 
 
5.            Harrogate Spring Water      Industrial                                                  603     3.9 
                                                     Lockwood Court, Leeds 
 
                                          Leisure                                                     535     3.5 
6.            Odeon Cinemas                          Odeon Cinema, Southend 
 
                                          Retail     Barnstaple Retail Park and Bank Hey Street,      525     3.4 
7.            Sports Direct                          Blackpool 
 
              Egbert H Taylor & Co Ltd    Industrial Oak Park, Droitwich                              500     3.2 
8. 
 
              Advance Supply Chain (BFD)             Euroway Trading Estate, Bradford                 467     3.0 
9.            Ltd                         Industrial 
                                                                                                      460     3.0 
10.           HFC Prestige Manufacturing  Industrial Cranbourne House, Basingstoke 

The Company's top 10 tenants, listed above, represent 38.8% of the total passing rental income of the portfolio.

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 2021                  31 March 2020 
                                   Commitment    Gross     Commitment 
Leverage Exposure Gross Method 
                                    Method       Method    Method 
Maximum Limit     140%             140%          140%      140% 
Actual            114%             125%          128%      135% 

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 1. promoting sound risk management; 2. supporting sustainable business plans; 3. remuneration being linked to non-financial criteria for Control Function staff; 4. incentivising staff performance over long periods of time; 5. awarding guaranteed variable remuneration only in exceptional circumstances; and 6. 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 31 December 2020.

                                                                                          Year ended 
 
                                                                                          31 December 2020 
Total remuneration paid to employees during financial year: 
a) remuneration, including, where relevant, any carried interest paid by the AIFM         GBP2,893,979 
b) the number of beneficiaries                                                            25 
 
The aggregate amount of remuneration of the AIFM Remuneration Code staff, broken down by: 
a) senior management                                                                      GBP767,350 
b) members of staff                                                                       GBP2,126,629 
                   Fixed        Variable     Total 
 
                   remuneration remuneration remuneration 
 
Senior management  GBP677,350     GBP90,000      GBP767,350 
Staff              GBP1,590,629   GBP536,000     GBP2,126,629 
Total              GBP2,267,979   GBP626,000     GBP2,893,979 

Fixed remuneration comprises basic salaries and variable remuneration comprises bonuses.

AEW UK Investment Management LLP

23 June 2021

Principal Risks and Uncertainties

The Company's assets consist primarily 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 with the assistance of the Audit Committee, to assess the adequacy and effectiveness of the Investment Manager and other service providers' risk management and internal control processes.

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.

Principal risks and their potential impact                                                                 Risk 
                                                         How risk is managed                               assessment 
 
REAL ESTATE RISKS 
 
 
1. Property market 
Any property market recession or future deterioration in                                                   Probability: 
the property market could, inter alia, (i) cause the                                                       Moderate to 
Company to realise its investments at lower valuations;  The Company has investment restrictions in place  High 
and (ii) delay the timings of the Company's              to invest and manage its assets with the 
realisations. These risks could have a material adverse  objective of spreading and mitigating risk.       Impact: High 
effect on the ability of the Company to achieve its 
investment objective.                                                                                      Movement: 
                                                                                                           Decrease 
 
2. Property valuation 
Property and property-related assets are inherently 
difficult to value due to the individual nature of each 
property.                                                                                                  Probability: 
                                                         The Company uses an independent external valuer   Moderate 
                                                         (Knight Frank LLP) to value the properties at 
                                                         fair value in accordance with accepted RICS       Impact: Low 
There may be an adverse effect on the Company's          appraisal and valuation standards.                to Moderate 
profitability, the NAV and the price of Ordinary Shares 
in cases where properties are sold whose valuations have                                                   Movement: 
previously been materially overstated.                                                                     Decrease 
 
 
                                                         Comprehensive due diligence is undertaken on all 
                                                         new tenants. Tenant covenant checks are carried 
3. Tenant default                                        out on all new tenants where a default would have 
                                                         a significant impact.                             Probability: 
Failure by tenants to fulfil their rental                                                                  High 
 
obligations could affect the income that the properties                                                    Impact: High 
earn and the ability of the Company to pay dividends to  Asset management team conducts 
its shareholders.                                                                                          Movement: 
                                                         ongoing monitoring and liaison with tenants to    Decrease 
                                                         manage potential bad debt risk. 
 
 
4. Asset management initiatives 
                                                                                                           Probability: 
Asset management initiatives, such as refurbishment      Costs incurred on asset management initiatives    Low to 
works, may prove to be more extensive, expensive and     are closely monitored against budgets and         Moderate 
take longer than anticipated. Cost overruns may have a   reviewed in regular presentations to the 
material adverse effect on the Company's profitability,  Investment Management Committee of the Investment Impact: Low 
the NAV and the share price.                             Manager.                                          to Moderate 
                                                                                                           Movement: No 
                                                                                                           change 
5. Due diligence 
 
Due diligence may not identify all the risks and                                                           Probability: 
liabilities in respect of an acquisition (including any  The Company's due diligence relies on work (such  Low 
environmental, structural or operational defects) that   as legal reports on title, property valuations, 
may lead to a material adverse effect on the Company's   environmental and building surveys) outsourced to Impact: 
profitability, the NAV and the price of the Company's    third parties who have expertise in their areas.  Moderate 
Ordinary Shares.                                         Such third parties have professional indemnity 
                                                         cover in place.                                   Movement: No 
                                                                                                           change 
6. Fall in rental rates 
Rental rates may be adversely affected by general UK     The Company builds a diversified property and 
economic conditions and other factors that depress       tenant base with subsequent monitoring of 
rental rates, including local factors relating to        concentration to individual occupiers (top 10     Probability: 
particular properties/locations (such as increased       tenants) and sectors (geographical and sector     Moderate to 
competition).                                            exposure).                                        High 
                                                                                                           Impact: 
                                                                                                           Moderate to 
Any fall in the rental rates for the Company's           The Investment Manager holds quarterly meetings   High 
properties may have a material adverse effect on the     with its Investment Strategy Committee and 
Company's profitability, the NAV, the price of the       regularly meets the Board of Directors to assess  Movement: No 
Ordinary Shares and the Company's ability to meet        whether any changes in the market present risks   change 
interest and capital repayments on any debt facilities.  that should be addressed in the Company's 
                                                         strategy. 
 
FINANCIAL RISKS 
 
 
7. Breach of borrowing covenants 
The Company has entered into a term credit facility.                                                       Probability: 
                                                                                                           Low to 
                                                         The Company monitors the use of borrowings on an  Moderate 
                                                         ongoing basis through weekly cash flow 
Material adverse changes in valuations and net income    forecasting and quarterly risk monitoring to      Impact: High 
may lead to breaches in the LTV and interest cover ratio monitor financial covenants. 
covenants.                                                                                                 Movement: 
                                                                                                           Decrease 
 
 
                                                         The Company uses interest caps on a significant 
8. Interest rate rises (short term)                      notional value of the loan to mitigate the 
                                                         adverse impact of possible interest rate rises.   Probability: 
The Company's borrowings through a term credit facility                                                    Low to 
are subject to interest rate risk through changing LIBOR                                                   Moderate 
rates. Any increases in LIBOR rates may have an adverse 
effect on the Company's ability to pay dividends.        The Investment Manager and Board of Directors     Impact: Low 
                                                         monitor the level of hedging and interest rate 
                                                         movements to ensure that the risk is managed      Movement: No 
                                                         appropriately.                                    change 
 
 
                                                         The Company uses interest rate caps on a 
9. Interest rate rises (long term)                       significant notional value of the loan to 
                                                         mitigate the adverse impact of possible interest  Probability: 
The Company's borrowings through a term credit facility  rate rises.                                       High 
are subject to interest rate risk through changing LIBOR 
rates. Any increases in LIBOR rates may have an adverse                                                    Impact: Low 
effect on the Company's ability to pay dividends.                                                          to Moderate 
                                                         The Investment Manager and Board of Directors 
                                                         monitor the level of hedging and interest rate    Movement: No 
                                                         movements to ensure that the risk is managed      change 
                                                         appropriately. 
 
 
 
10. Availability and cost of debt                        The Company maintains a good relationship with 
                                                         the bank providing the term credit facility.      Probability: 
The term credit facility expires in October 2023. In the                                                   Low to 
event that RBSi does not renew the facility, the Company                                                   Moderate 
may need to sell assets to repay the outstanding loan. 
Any increase in the financing costs of the facility on   The Company monitors the projected usage and      Impact: High 
renewal would adversely impact on the Company's          covenants of the credit facility on a quarterly 
profitability.                                           basis.                                            Movement: No 
                                                                                                           change 
 
CORPORATE RISKS 
 
 
11. Use of service providers 
 
The Company has no employees and is reliant upon the 
performance of third party service providers.                                                              Probability: 
                                                         The performance of service providers in           Moderate to 
                                                         conjunction with their service level agreements   High 
                                                         is monitored via regular calls and face-to-face 
Failure by any service provider to carry out its         meetings and the use of key performance           Impact: 
obligations to the Company in accordance with the terms  indicators, where relevant.                       Moderate 
of its appointment could have a materially detrimental 
impact on the operation of the Company.                                                                    Movement: No 
                                                                                                           change 
 
12. Dependence on the Investment Manager 
The Investment Manager is responsible for providing 
investment management services to the Company. 
                                                                                                           Probability: 
                                                                                                           Moderate 
                                                         The Investment Manager has endeavoured to ensure  Impact: 
The future ability of the Company to successfully pursue that the principal members of its management team Moderate to 
its investment objective and investment policy may,      are suitably incentivised.                        High 
among other things, depend on the ability of the 
Investment Manager to retain its existing staff and/or                                                     Movement: No 
to recruit individuals of similar experience and                                                           change 
calibre. 
 
13. Ability to meet objectives 
The Company may not meet its investment objective to 
deliver an attractive total return to shareholders from 
investing predominantly in a portfolio of smaller        The Company has an investment policy to achieve a Probability: 
commercial properties in the United Kingdom.             balanced portfolio with a diversified asset and   High 
                                                         tenant base. The Company also has investment 
                                                         restrictions in place to limit exposure to        Impact: High 
                                                         potential risk factors. These factors mitigate 
Poor relative total return performance may lead to an    the risk of fluctuations in returns.              Movement: No 
adverse reputational impact that affects the Company's                                                     change 
ability to raise new capital. 
 
TAXATION RISKS 
 
 
14. Company REIT status 
The Company has a UK REIT status that provides a 
tax-efficient corporate structure. 
 
 
                                                         The Company monitors REIT compliance through the 
If the Company fails to remain a REIT for UK tax         Investment Manager on acquisitions; the           Probability: 
purposes, its profits and gains will be subject to UK    Administrator on asset and distribution levels;   Low 
corporation tax.                                         the Registrar and Broker on shareholdings and the 
                                                         use of third-party tax advisers to monitor REIT   Impact: High 
                                                         compliance requirements. 
                                                                                                           Movement: No 
Any change to the tax status or UK tax legislation could                                                   change 
impact on the Company's ability to achieve its 
investment objectives and provide attractive returns to 
shareholders. 
 
POLITICAL/ECONOMIC RISKS 
 
 
15. General political/economic environment               The Board considers the impact of political and 
                                                         macroeconomic events when reviewing strategy. 
Political and macroeconomic events present risks to the                                                    Probability: 
real estate and financial markets that affect the                                                          High 
Company and the business of its tenants. The level of 
uncertainty that such events bring has been highlighted  The UK's exit from the EU is not considered to    Impact: High 
in recent times, most pertinently the effects of the     generate any risks specific to the Company and is 
UK's exit from the EU in January 2021.                   not considered to have any material effect on the Movement: No 
                                                         financial statements.                             change 
 
 
 
16. COVID-19                                             The Manager is in close contact with tenants. The Probability: 
                                                         Investment Manager has put in place social        High 
The economic disruption arising from the COVID-19 virus  distancing measures as advised by the UK 
could impact rental income receipts from tenants, the    government. The Manager has maintained a close    Impact: High 
ability to access funding at competitive rates, maintain relationship with RBSi to ensure continuing 
the Company's dividend policy and its adherence to the   dialogue around covenants.                        Movement: 
HMRC REIT regime, particularly if the UK government                                                        Decreasing 
restrictions are in place for a prolonged period. 

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 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 or 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 
 
 
 
                                                                       - Sustainable growth of 
                                                                       the Company and 
Investors                                                              achieving target returns 
 
 
                                                                                                - AGM, Annual Report, 
Our shareholders are impacted directly by the financial performance of - Good relationship with regulatory 
the Company                                                            the Company and Board    announcements 
through dividends and share price movements. 
                                                                       - Effective structure    - Quarterly update 
                                                                       and control Framework    report and other key 
They also play an important role in monitoring the governance of the                            information published 
Company.                                                                                        on the website 
                                                                       - Impact of the Company 
                                                                       on the wider community 
                                                                       and environment          - Roadshows, meetings 
                                                                                                and presentations via 
                                                                                                the Investment Manager 
                                                                       - Reputation of the 
                                                                       Company 
 
 
 
 
                                                                       - Relationship with the 
Service providers                                                      Company and Board 
                                                                                                - Effective and regular 
                                                                                                communication 
Key functions of the Company are outsourced to third-party suppliers,  - Fair contract terms 
including investment management, property management, administration,  and service-level 
company secretarial, registrar, depositary and legal services. It is   agreements 
important to develop strong long-term working relationships with these                          - Service-level 
providers to enhance the efficiency of the Company's operations, as                             agreements 
well as that of the providers themselves. 
                                                                       - Reputation of the 
                                                                       Company 
                                                                                                - Formal tender 
                                                                                                processes where 
                                                                                                appropriate 
                                                                       - The Company's 
                                                                       performance and 
                                                                       long-terms prospects 
 
 
 
 
                                                                       - Good communication and 
                                                                       relationship with the    - Site visits and face 
                                                                       Company as landlord      to face meetings 
Tenants                                                                                         through the Investment 
                                                                                                Manager 
 
                                                                       - Fair lease terms 
The Company's strategy in relation to its individual assets will 
directly affect the tenants in occupation of those assets.                                      - Formal negotiations 
                                                                       - Long term strategy for 
                                                                       the asset in line with 
                                                                       the objectives of the    - Ongoing communication 
                                                                       tenant's activities      through the property 
                                                                                                manager 
 
 
 
 
 
 
 
                                                                       - Impact of properties 
                                                                       and their business plans - Publishing of 
The wider community and environment                                    on the local economy     Sustainability 
                                                                                                Disclosure Report and 
                                                                                                Greenhouse Gas 
                                                                                                Emissions Statement 
The Company's physical real estate assets have a direct impact on      - Impact of properties 
their local communities depending on their primary use and on the      on the attractiveness 
environment through their emissions and energy usage.                  and appeal of the local 
                                                                       area                     - GRESB reporting 
 
                                                                       - Energy efficiency and  - Communication with 
                                                                       greenhouse gas emissions local authorities via 
                                                                                                Investment Manager 
 

Principal decisions made by the Board

The principal decisions made by the Board during the year are summarised below.

                        The Board sought approval from shareholders for an amendment to the Company's investment 
                        policy, increasing the single sector limit from 50% to 60% of GAV, to enable the Company to 
Amendment to Investment acquire further assets in the industrial/warehouse sector should attractive opportunities 
Policy                  arise. 
 
                        In accordance with the Company's Articles of Association, the Board considered continuation of 
                        the Company to be in the best interests of shareholders as a whole. The Company's strong 
                        portfolio of high-yielding assets, which have outperformed the Benchmark for the current year, 
Continuation vote       has enabled the Company to consistently meet its dividend target, and deliver total returns to 
                        shareholders towards the top of its peer group. 
 
                        The Board is committed to delivering on its target of paying dividends of 8.00 pps per annum, 
Dividends               continuing the Company's track record in paying dividends at this level. 
 
                        The Board approved a share buyback programme utilising cash available for this purpose. Details 
                        of shares bought back during the year can be found in the Directors' Report in the full Annual 
Share buybacks          Report and Financial Statements. 
 
                        The Board has continued its focus on responsible business practices. More details can be found 
                        in the Directors' Report in the full Annual Report and Financial Statements. 
Continued focus on 
sustainability impact 
and GRESB score 
                        The Investment Manager meets regularly with its ESG consultant, Evora, to consider initiatives 
                        to improve the Company's Global Real Estate Sustainability Benchmark ("GRESB") score. 
 
                        Following completion of a competitive tender process, the Board made the decision to appoint 
Appointment of new      BDO LLP as Auditor of the Company for the year ending 31 March 2022 and for the period ending 
Auditor                 30 September 2021. 
 
                        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 approved by the Board: 
 
                          ? the disposal of 2 Geddington Road, Corby; 
 
                          ? the amendment to the Company's loan facility to allow drawdown and subsequent repayment 
                            without penalty, akin to a revolving credit facility; 
Oversight of Investment 
Manager and Review of 
Investment Activities     ? the acquisition of Westlands Distribution Park, Weston-super-Mare; 
 
                          ? the disposal of Sandford House, Solihull; and 
 
                          ? litigation strategy regarding tenants' arrears. 
 
                        Further details of the property transactions can be found in the 'Property Portfolio' section 
                        of the Investment Manager's Report. 

Approval

The Strategic Report has been approved and signed on behalf of the Board by:

Mark Burton

Chairman

23 June 2021

Extract from the Directors Report

Directors

Mark Burton, non-executive Chairman

Bimaljit ("Bim") Sandhu, non-executive Director

Katrina Hart, non-executive Director

Going Concern

The Directors have made an assessment of the Company's ability to continue as a going concern, which takes into consideration the uncertainty caused by the COVID-19 pandemic, as well as the Company's cash flows, financial position, liquidity and borrowing facilities.

As at 31 March 2021, the Company had a cash balance of GBP17.45 million and has subsequently acquired two properties, Arrow Point Retail Park, Shrewsbury, for a gross purchase price of GBP8.35 million and 15-33 Union Street, Bristol, for a gross purchase price of GBP10.19 million. The Company has also subsequently drawn GBP11.00 million of its loan facility.

The Company had sufficient headroom against its borrowing covenants when last reported in April 2020. The Company reported a Loan to NAV of 25.15%, so had room for a GBP69.17 million fall in NAV before reaching the maximum Loan to NAV of 45% per the covenant. This limit can be increased to 55% when the option is exercised by the Company and certain conditions are met, which would allow for a further GBP15.96 million fall in NAV i.e. a total fall of GBP85.13 million. The Company also passed its most recent interest cover ratio ('ICR') tests in April 2021, reporting more than double the cover required on both a historical and projected basis.

The Company benefits from a secure, diversified income stream from a tenancy profile which is not overly reliant on any one tenant or sector. The Company has now collected over 90% of rents for each collection quarter since the onset of the COVID-19 pandemic.

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: ? failure of 30-35% of tenants (by passing rent); ? collection of 75-80% of remaining rents, with remaining collection deferred for two quarters; ? no new lettings or renewals, other than those where terms have already been agreed; ? a 10% fall in valuations; and ? no new acquisitions or disposals other than those which have completed since the year end (Arrow Point Retail Park,

Shrewsbury, and 15-33 Union Street, Bristol, as above).

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. If no further drawdowns of the loan facility were made, the Company would maintain a gearing of 37% throughout the forecast period, meaning a headroom of over GBP43 million up to the 55% covenant with the option exercised. The Company's cash could be managed through the reduction and/or suspension of dividend payments, which would allow the existing cash resources of c. GBP7 million at the date of approval of the financial statements to be maintained.

In the above scenario, the Company is forecast to pass its ICR tests during the 12 month forecast period with a minimum cover of 7.6:1, compared with the lower limit of 5:1. assuming that no drawdowns or repayments of the facility were to be made. In the unlikely event that the Company were to breach its ICR covenant, it has the ability to cure the breach by placing cash on account with the bank. In the extremely unlikely event that the full balance of the facility was called in, the Company has certain liquid assets which could be realised quickly at, or close to, valuation. The Company could then continue to operate un-geared until it was able to refinance.

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, including those associated with COVID-19, and 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.

Viability Statement

The Directors have also 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 2026 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 current unexpired term under the Company's debt facility stands at 2.6 years, meaning that financing is secure

for the majority of the period under consideration; ? the Company's property portfolio has a WAULT of 6.71 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; ? 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, 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, which might reasonably be expected to arise as a result of the outbreak of COVID-19, amongst other factors: ? reduced rent collection; ? portion of rent written off completely; ? 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 subsidiary, AEW UK REIT 2015 Limited, can be found in note 18 to the financial statements.

Financial Risk Management

The financial risk management objectives and policies can be found in note 21 to the financial statements.

Requirements of the Listing Rules

Listing Rule 9.8.4 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 9.8.4.

Related Party Transactions

Related party transactions during the year ended 31 March 2021 can be found in note 23 to the financial statements.

Post Balance Sheet Events

Post balance sheet events can be found in note 25 to the financial statements.

The Directors' Report has been approved by the Board of Directors and signed on its behalf by:

Mark Burton

Chairman

23 June 2021

Statement of Directors' Responsibilities in respect of the Annual Report and Financial Statements

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006/UK-adopted international accounting standards and applicable law.

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 its profit or loss 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 estimates that are reasonable, relevant and reliable; ? state whether they have been prepared in accordance with international accounting standards in conformity with the

requirements of the Companies Act 2006/UK-adopted international accounting standards; ? assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going

concern; and ? use the going concern basis of accounting unless they either intend to liquidate the Company or to cease

operations, or have no realistic alternative but to do so.

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 its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

We confirm that to the best of our knowledge: ? the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and

fair view of the assets, liabilities, financial position and profit of the Company; and ? the Directors' Report includes a fair review of the development and performance of the business and the position of

the Company, together with a description of the principal risks and uncertainties that it faces.

We consider 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 position and performance, business model and strategy.

On behalf of the Board

Mark Burton

Chairman

23 June 2021

Non-statutory Accounts

The financial information set out below does not constitute the Company's statutory accounts for the year ended 31 March 2021 but is derived from those accounts. Statutory accounts for the year ended 31 March 2021 will be delivered to the Registrar of Companies in due course. The Independent Auditor has reported on those accounts; its report was (i) unqualified, (ii) did not include a reference to any matters to which the Independent Auditor drew attention by way of emphasis without qualifying its report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Independent Auditor's Report can be found in the Company's full Annual Report and Financial Statements on the Company's website.

Financial Statements

Statement of Comprehensive Income

for the year ended 31 March 2021

                                                         Year ended  Year ended 
                                                         31 March    31 March 
                                                   Notes 
                                                         2021        2020 
                                                         GBP'000       GBP'000 
Income 
Rental and other income                            3     17,491      17,790 
Property operating expenses                        4     (3,754)     (1,324) 
Impairment loss on trade receivables                     (944)       (2) 
Net rental and other income                              12,793      16,464 
 
Other operating expenses                           5     (1,958)     (1,877) 
Directors' remuneration                            6     (100)       (115) 
Operating profit before fair value changes               10,735      14,472 
 
Change in fair value of investment properties      11    5,324       (9,444) 
Realised gain on disposal of investment properties 11    7,043       44 
Operating profit                                         23,102      5,072 
 
Finance expense                                    7     (930)       (1,420) 
Profit before tax                                        22,172      3,652 
Taxation                                           8     -           - 
Profit after tax                                         22,172      3,652 
Other comprehensive income                               -           - 
Total comprehensive income for the year                  22,172      3,652 
Earnings per share (pps) (basic and diluted)       9     13.98       2.40 

The notes below form an integral part of these financial statements.

Statement of Changes in Equity

for the year ended 31 March 2021

 
 
                                                                Capital                    Total capital 
 
                                                Share           reserve                    and reserves 
 
For the year ended                Share capital premium          and                       attributable to 
                            Notes 
31 March 2021                     GBP'000         account         retained                   owners of the 
 
                                                GBP'000           earnings*                  Company 
 
                                                                GBP'000                      GBP'000 
                                                                           Buyback reserve 
                                                                           GBP'000 
 
Balance at 1 April 2020           1,587         56,578          89,698     -               147,863 
 
Total comprehensive income        -             -               22,172     -               22,172 
Ordinary Shares bought back 19    -             -               -          (263)           (263) 
Share buyback costs         19    -             -               -          (2)             (2) 
Dividends paid              10    -             -               (12,691)   -               (12,691) 
Balance at 31 March 2021          1,587         56,578          99,179     (265)           157,079 
 
                                                                Capital                    Total capital 
                                                Share           reserve                    and reserves 
For the year ended                Share capital premium          and                       attributable to 
                            Notes 
31 March 2020                     GBP'000         account         retained                   owners of the 
                                                GBP'000           earnings*  Buyback reserve Company 
                                                                GBP'000      GBP'000           GBP'000 
 
Balance at 1 April 2019           1,515         49,770          98,171     -               149,456 
 
Total comprehensive income        -             -               3,652      -               3,652 
Ordinary Shares issued      19/20 72                 6,928      -          -               7,000 
Share issue costs           20    -             (120)           -          -               (120) 
Dividends paid              10    -                          -  (12,125)   -               (12,125) 
Balance at 31 March 2020          1,587         56,578          89,698     -               147,863 

* The capital reserve has arisen from the cancellation of part of the Company's share premium account and is a distributable reserve.

The notes below form an integral part of these financial statements.

Statement of Financial Position

as at 31 March 2021

                                                                31 March 2021  31 March 2020 
                                                          Notes 
                                                                GBP'000          GBP'000 
 
Assets 
Non-Current Assets 
Investment property                                       11    169,092        187,042 
                                                                169,092        187,042 
Current Assets 
Investment property held for sale                         11    7,251                                - 
Receivables and prepayments                               12    6,977          7,351 
Cash and cash equivalents                                       17,450         9,873 
Other financial assets held at fair value                 13    61             14 
                                                                31,739         17,238 
Non-Current Liabilities 
Interest bearing loans and borrowings                     14    (39,131)       (51,047) 
Lease obligations                                         16    (635)          (635) 
                                                                (39,766)       (51,682) 
Current Liabilities 
Payables and accrued expenses                             15    (3,938)        (4,687) 
Lease obligations                                         16    (48)           (48) 
                                                                (3,986)        (4,735) 
Total Liabilities                                               (43,752)       (56,417) 
Net Assets                                                      157,079        147,863 
Equity 
Share capital                                             19    1,587          1,587 
Buyback reserve                                           19    (265)                                - 
Share premium account                                     20    56,578         56,578 
Capital reserve and retained earnings                           99,179         89,698 
Total capital and reserves attributable to equity holders       157,079        147,863 
Net Asset Value per share (pps)                           9     99.15          93.13 
EPRA Net Tangible Assets per share (pps)                  9     99.11          93.12 

The financial statements were approved by the Board on 23 June 2021 and signed on its behalf by:

Mark Burton

Chairman

AEW UK REIT plc (Company number: 09522515)

The notes below form an integral part of these financial statements.

Statement of Cash Flows

for the year ended 31 March 2021

                                                             Year ended     Year ended 
                                                             31 March 2021  31 March 2020 
                                                             GBP'000          GBP'000 
Cash flows from operating activities 
Profit before tax                                            22,172         3,652 
 
Adjustment for non-cash items: 
Finance expenses                                             930            1,420 
(Gain)/loss from change in fair value of investment property (5,324)        9,444 
Realised gain on disposal of investment properties           (7,043)        (44) 
Decrease/(increase) in other receivables and prepayments     374            (2,882) 
(Decrease)/increase in other payables and accrued expenses   (647)          1,424 
Net cash flow generated from operating activities            10,462         13,014 
Cash flows from investing activities 
Purchase of and additions to investment properties           (5,983)        (358) 
Disposal of investment properties                            29,049         44 
Net cash used in investing activities                        23,066         (314) 
Cash flows from financing activities 
Proceeds from issue of Ordinary Share capital                -              7,000 
Share buyback cash paid                                      (263)                                 - 
Share issue costs                                            -              (120) 
Share buyback costs                                          (2)                                   - 
Loan (repayment)/drawdown                                    (12,000)       1,500 
Arrangement loan facility fee paid                           (13)           (39) 
Premium for interest rate caps                               (63)           - 
Finance costs                                                (919)          (1,174) 
Dividends paid                                               (12,691)       (12,125) 
Net cash used in financing activities                        (25,951)       (4,958) 
Net increase in cash and cash equivalents                    7,577          7,742 
Cash and cash equivalents at start of the year               9,873          2,131 
Cash and cash equivalents at end of the year                 17,450         9,873 
 

The notes below form an integral part of these financial statements.

Notes to the Financial Statements

for the year ended 31 March 2021

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 6th Floor, 65 Gresham Street, London, EC2V 7NQ.

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 above.

2. Accounting policies

2.1 Basis of preparation

These financial statements are prepared and approved by the Directors in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 ('Adopted IFRSs'). Following Brexit, the Company is required to use the UK adopted international accounting standards for financial years beginning after the 1 January 2021. These standards were identical as of the 1 January 2021 and for the remainder of the accounting period.

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 (GBP'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 Company has considered and applied the following new standards and amendments to existing

standards which are required for the accounting period beginning on 1 April 2020: ? Amendments to IFRS 16 COVID-19 Related Rent Concessions, the amendments provide relief to lessees from applying

IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the

COVID-19 pandemic. The Company has not received any concessions for its ground rent costs and therefore accounting

treatment has not been affected.

The following standards and amendments have been considered, but have had no impact on the Company for the reporting period: ? Amendments to IFRS 3: Definition of a Business, the amendment to IFRS 3 Business Combinations clarifies that to be

considered a business, an integrated set of activities and assets must include, at a minimum, an input and a

substantive process that, together, significantly contribute to the ability to create output. Furthermore, it

clarifies that a business can exist without including all the inputs and processes needed to create outputs. ? Amendments to IAS 1 and IAS 8 Definition of Material, the amendments provide a new definition of material, the

amendments clarify that materiality will depend on the nature or magnitude of information, either individually or

in combination with other information, in the context of the financial statements. A misstatement of information is

material if it could reasonably be expected to influence decisions made by the primary users. ? Revised Conceptual Framework for Financial Reporting, the Conceptual Framework is not a standard, and none of the

concepts contained therein override the concepts or requirements in any standard. The revised Conceptual Framework

includes some new concepts, updated definitions and recognition criteria for assets and liabilities and clarifies

some important concepts.

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 2021 or later. The Company is not adopting these standards early. The following are the most relevant to the Company: ? Interest Rate Benchmark Reform - Phase 2 (Amendments to various standards: IFRS 9 'Financial Instruments', IAS 39

'Financial Instruments; Recognition and Measurement', IFRS 7 'Financial Instruments: Disclosures', IFRS 4

'Insurance Contracts' and IFRS 16 'Leases') ? Amendments to IAS 1 'Presentation of Financial Statements (effective 1 January 2022) ? Amendments to IFRS 3 'Business Combinations' (effective 1 January 2022)

The Company does not expect the adoption of the new accounting standards issued but not yet effective to have a significant impact on its financial statements.

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 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 11.

2.3 Segmental information

In accordance with IFRS 8, the Company considers each of its properties to be an individual operating segment, which are aggregated into one reporting segment, being investment in property in the UK.

2.4 Going concern

The Directors have made an assessment of the Company's ability to continue as a going concern, which takes into consideration the uncertainty caused by the COVID-19 pandemic, as well as the Company's cash flows, financial position, liquidity and borrowing facilities.

As at 31 March 2021, the Company had a cash balance of GBP17.45 million and has subsequently acquired two properties, Arrow Point Retail Park, Shrewsbury, for a gross purchase price of GBP8.35 million and 15-33 Union Street, Bristol, for a gross purchase price of GBP10.19 million. The Company has also subsequently drawn GBP11.00 million of its loan facility.

The Company had sufficient headroom against its borrowing covenants when last reported in April 2020. The Company reported a Loan to NAV of 25.15%, so had room for a GBP69.17 million fall in NAV before reaching the maximum Loan to NAV of 45% per the covenant. This limit can be increased to 55% when the option is exercised by the Company and certain conditions are met, which would allow for a further GBP15.96 million fall in NAV i.e. a total fall of GBP85.13 million. The Company also passed its most recent interest cover ratio ('ICR') tests in April 2021, reporting more than double the cover required on both a historical and projected basis.

The Company benefits from a secure, diversified income stream from a tenancy profile which is not overly reliant on any one tenant or sector. The Company has now collected over 90% of rents for each collection quarter since the onset of the COVID-19 pandemic.

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: ? failure of 30-35% of tenants (by passing rent); ? collection of 75-80% of remaining rents, with remaining collection deferred for two quarters; ? no new lettings or renewals, other than those where terms have already been agreed; ? a 10% fall in valuations; and ? no new acquisitions or disposals other than those which have completed since the year end (Arrow Point Retail Park,

Shrewsbury, and 15-33 Union Street, Bristol, as above).

In the above scenario, the Company is forecast to generate a positive cash flow before dividend payments, however would generate a cash flow much lower than its target dividend of 8 pps per annum. If no further drawdowns of the loan facility were made, the Company would maintain a gearing of 37% throughout the forecast period, meaning a headroom of over GBP43 million up to the 55% covenant with the option exercised. The Company's cash could be managed through the reduction and/or suspension of dividend payments, which would allow the existing cash resources of c. GBP7 million at the date of approval of the financial statements to be maintained.

In the above scenario, the Company is forecast to pass its ICR tests during the 12 month forecast period with a minimum cover of 7.6:1, compared with the lower limit of 5:1. assuming that no drawdowns or repayments of the facility were to be made. In the unlikely event that the Company were to breach its ICR covenant, it has the ability to cure the breach by placing cash on account with the bank. In the extremely unlikely event that the full balance of the facility was called in, the Company has certain liquid assets which could be realised quickly at, or close to, valuation. The Company could then continue to operate un-geared until it was able to refinance.

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, including those associated with COVID-19, and 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 the approval of the financial statements have been prepared on a going concern basis.

2.5 Summary of significant 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.

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.

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 actual turnover and is recognised when it is 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.

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) Dividend income

Dividend income is recognised in profit or loss on the date the entity's right to receive a dividend is established.

d) 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.

e) 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 include 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 valuer on the basis of a full valuation with physical inspection at least once a year. Any valuation of an immovable by the independent valuer must be undertaken 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.

f) 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 18.

The Company has taken advantage of the exemption as permitted by Section 405 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.

g) 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.

h) 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 finance expenses in profit or loss in the period in which they occur.

i) 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.

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 always 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) Rent deposits

Rent deposits represent cash received from tenants at inception of a lease and are subsequently transferred to the rent agent to hold on behalf of the Company.

n) 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.

o) Provisions

A provision is recognised in the Statement of Financial Position when the Company has a present legal or constructive obligation as a result of a past event, that can be reliably measured and is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.

p) Dividend payable to shareholders

Equity dividends are recognised when they become legally payable.

q) 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.

r) Leases

Leases where the Company is lessee are capitalised at the lease commencement, at present value of the minimum lease payments, and held as both a right-to-use asset and a liability within the Statement of Financial Position.

s) 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.

t) 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 2021, audited EPS and NAV calculations under EPRA's methodology are included in note 9 and further unaudited measures are included below.

u) 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.

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 losses contained within this reserve at 31 March 2020 is GBP5.44 million (31 March 2020: GBP10.76 million). 3. Revenue

                              Year ended      Year ended 
                              31 March 2021   31 March 2020 
                              GBP'000           GBP'000 
Rental income                 15,714          17,418 
Service charge income         1,535*          - 
Dilapidation income received  197             372 
Lease surrender income        45              - 
Total revenue                 17,491          17,790 
 

*For the current year, service charge income has been presented gross to reflect the Company's role as principal in its agreements with tenants whereas in comparative years they have been presented net. The gross service charge income for the year ended 31 March 2020 was GBP1.82 million. The difference in presentation is considered to be immaterial and has no impact on profit. 4. Property operating expenses

                                        Year ended     Year ended 
                                        31 March 2021  31 March 2020 
                                        GBP'000          GBP'000 
Recoverable service charge expense      1,5351         - 
Non-recoverable service charge expense  1,1662         436 
Other property operating expenses       1,053          888 
Total property operating expenses       3,754          1,324 

1 For the current year, recoverable service charge expenditure has been presented gross to reflect the Company's role as principal in its agreements with tenants whereas in comparative years they have been presented net. The gross service charge expenditure for the year ended 31 March 2020 was GBP1.82 million. The difference in presentation is considered to be immaterial and has no impact on profit.

2 Of the c. GBP1,166,000 non-recoverable service charge expenditure, c. GBP768,000 relates to Bank Hey Street, Blackpool which includes costs relating to the remedial works as detailed in the Investment Manager's Report. 5. Other operating expenses

                                Year ended    Year ended 
                                31 March 2021 31 March 2020 
                                GBP'000         GBP'000 
Investment management fee       1,229         1,308 
Operating costs                 594           463 
Auditor remuneration            135           106 
Total other operating expenses  1,958         1,877 
                                                          Year ended       Year ended 
                                                          31 March 2021    31 March 2020 
                                                          GBP'000            GBP'000 
Audit 
Statutory audit of Annual Report and Financial Statements 110              82 
                                                          110              82 
Non-audit 
ISRE 2410 review (interim review fee)                     25               24 
                                                          25                  24 
Total fees paid to KPMG LLP                               135              106 
Percentage of total fees attributed to non-audit services 19%              23%  6. Directors' remuneration 
                         Year ended    Year ended 
                         31 March 2021 31 March 2020 
                         GBP'000         GBP'000 
Directors' fees          95            107 
Tax and social security  5             8 
Total remuneration       100           115 
 

A summary of the Directors' remuneration is set out in the Directors' Remuneration Report in the Full Annual Report and Financial Statements.

There are no other members of key management personnel other than the Directors. 7. Finance expenses

                                                  Year ended    Year ended 
                                                  31 March 2021 31 March 2020 
                                                  GBP'000         GBP'000 
Interest payable on loan borrowings               722           1,108 
Amortisation of loan arrangement fee              97            110 
Commitment fees payable on loan borrowings        95            54 
                                                  914           1,272 
Charge in fair value of interest rate derivatives 16            148 
Total                                             930           1,420 
  8. Taxation 
                                                                           Year ended     Year ended 
                                                                           31 March 2021  31 March 2020 
                                                                           GBP'000          GBP'000 
Tax charge reconciliation: 
 
Analysis of tax charge in the year 
Profit before tax                                                          22,172         3,652 
 
Theoretical tax at UK corporation tax standard rate of 19% (2020: 19.00%)1                694 
                                                                           4,213 
Adjusted for: 
Exempt REIT income                                                         (1,863)        (2,488) 
Non-taxable investment profit                                              (2,350)        1,786 
Unrealised management expenses not recognised                              -              8 
Total tax charge                                                           -              - 
 

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. 1 The Corporation Tax rate will remain at 19% for the next financial year. As announced by the Chancellor in the 2021 budget the tax rate will increase to 25% from April 2023. 9. Earnings per share and NAV per share

                                                           Year ended     Year ended 
 
                                                           31 March 2021  31 March 2020 
Earnings per share: 
Total comprehensive income (GBP'000)                         22,172         3,652 
Weighted average number of shares                          158,620,910    152,208,919 
Earnings per share (basic and diluted) (pence)             13.98          2.40 
 
EPRA earnings per share: 
Total comprehensive income (GBP'000)                         22,172         3,652 
Adjustment to total comprehensive income: 
Change in fair value of investment properties (GBP'000)      (5,324)        9,444 
Realised gain on disposal of investment properties (GBP'000) (7,043)        (44) 
Change in fair value of interest rate derivatives (GBP'000)  16             148 
Total EPRA Earnings (GBP'000)                                9,821          13,200 
EPRA earnings per share (basic and diluted) (pence)        6.19           8.67 
 
Net assets (GBP'000)                                         157,079        147,863 
Ordinary Shares in issue                                   158,424,746    158,774,746 
NAV per share (pence)                                      99.15          93.13 

Earnings per share ('EPS') amounts are calculated by dividing profit for the period attributable to ordinary equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.

                                                      Current measures                      Previous measures 
 
 
 
 
                                                      EPRA         EPRA         EPRA        EPRA         EPRA 
 
                                                      NTA          NRV          NDV         NAV          NNNAV 
As at 31 March 2021 
                                                      GBP'000        GBP'000         GBP'000      GBP'000        GBP'000 
IFRS NAV attributable to shareholders                 157,079      157,079      157,079     157,709      157,709 
Mark-to-market adjustment of derivatives              (61)         (61)         -           (61)         - 
Real estate transfer tax and other purchasers' costs1 -            11,814       -           -            - 
At 31 March 2021                                      157,018      168,832      157,079     157,018      157,079 
Number of Ordinary Shares                             158,424,746  158,424,746  158,424,746 158,424,746  158,424,746 
NAV per share                                         99.11p       106.57p      99.15p      99.11p       99.15p 
                                                      Current measures                      Previous measures 
 
 
 
 
                                                      EPRA         EPRA         EPRA        EPRA         EPRA 
 
                                                      NTA          NRV          NDV         NAV          NNNAV 
As at 31 March 2020 
                                                      GBP'000        GBP'000         GBP'000      GBP'000        GBP'000 
IFRS NAV attributable to shareholders                 147,863      147,863      147,863     147,863      147,863 
Mark-to-market adjustment of derivatives              (14)         (14)         -           (14)         - 
Real estate transfer tax and other purchasers' costs1 -            12,494       -           -            - 
At 31 March 2020                                      147,849      160,343      147,863     147,849      147,863 
Number of Ordinary Shares                             158,774,746  158,774,746  158,774,746 158,774,746  158,774,746 
NAV per share                                         93.12p       100.99p      93.13p      93.12p       93.13p 

1 EPRA Net Tangible Assets ('EPRA NTA') and EPRA Net Disposal Value ('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 Net Reinstatement Value ('EPRA NRV') and have been estimated at 6.6% of the net valuation provided by Knight Frank. 10. Dividends paid

                                                   Year ended    Year ended 
                                                   31 March 2021 31 March 2020 
Dividends paid during the year                     GBP'000         GBP'000 
Represents four interim dividends of 2.00 pps each 12,691        12,125 
                                                   Year ended    Year ended 
                                                   31 March 2021 31 March 2020 
Dividends relating to the year 
                                                   GBP'000         GBP'000 
Represents four interim dividends of 2.00 pps each 12,684        12,269 

Dividends paid during the year relate to Ordinary Shares only. 11. Investments

11.a) Investment property

                                                                   31 March 2021 
                                                                   Investment  Investment           31 March 
                                                                   property    property    Total    2020 
 
                                                                   freehold    leasehold   GBP'000    Total 
                                                                   GBP'000       GBP'000                GBP'000 
UK investment property 
As at beginning of the year                                        147,400     41,900      189,300  197,605 
Purchases and capital expenditure in the year                      5,977       6           5,983    358 
Disposals in the year                                              -           (22,006)    (22,006) - 
Revaluation of investment properties                               7,373       (1,650)     5,723    (8,663) 
Valuation provided by Knight Frank                                 160,750     18,250      179,000  189,300 
Adjustment to carrying value for lease incentive debtor                                    (3,340)  (2,941) 
Adjustment for lease obligations*                                                          683      683 
Total investment property                                                                  176,343  187,042 
Classified as: 
Investment property held for sale#                                                         7,251    - 
Investment property                                                                        169,092  187,042 
                                                                                           176,343  187,042 
 
Change in fair value of investment property 
Change in fair value before adjustments for lease incentives                               5,723    (8,663) 
Adjustment for movement in the year: 
in value of lease incentive debtor                                                         (399)    (781) 
                                                                                           5,324    (9,444) 
 
Gains realised on disposal of investment property 
Net proceeds from disposals of investment property during the year                         29,049   44 
Fair value at beginning of period                                                          (22,006)              - 
                                                                                           (7,043)  44 
 

* Adjustment in respect of minimum payment under head leases separately included as a liability within the Statement of Financial Position.

# 225 Bath Street, Glasgow, has been classified as held-for-sale as contracts to sell the property were exchanged in October 2020 and it is expected that the transaction will be completed within the next 12 months.

Valuation of investment property

Valuation of investment property is performed by Knight Frank LLP, an accredited external 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.

11.b) Fair value measurement hierarchy

The following table provides the fair value measurement hierarchy for investments:

                                                            Significant observable   Significant unobservable 
                         Quoted prices in active markets    inputs                   inputs                     Total 
                         (Level 1) 
                                                            (Level 2)                (Level 3)                  GBP'000 
                         GBP'000 
                                                            GBP'000                    GBP'000 
Assets measured at fair 
value 
 
31 March 2021 
                         -                                  - 
Investment property 
                                                                                     176,343                    176,343 
31 March 2020 
                         -                                  -                        187,042                    187,042 
Investment property 

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 period, nor have there been any transfers in or out of Level 3.

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:

                     Fair Value Valuation             Significant 
                                                                          Range 
Class                GBP'000      Technique             Unobservable Inputs 
31 March 2021 
                                                      ERV                 GBP0.50 - GBP75.00 
                     179,000    Income capitalisation 
Investment property*                                  Equivalent yield    5.76% - 10.37% 
 
31 March 2020 
                                                      ERV                 GBP0.50 - GBP105.00 
                     189,300    Income capitalisation 
Investment Property*                                  Equivalent yield    5.71% - 10.54% 

* 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.

Gains and losses recorded in profit or loss 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 period.

With regards to investment property, gains and losses for recurring fair value measurements categorised within Level 3 of the fair value hierarchy, prior to adjustment for rent free debtor and rent guarantee debtor where applicable, are recorded in profit or loss.

                                            Change in ERV   Change in equivalent yield 
                                            GBP'000   GBP'000   GBP'000         GBP'000 
Sensitivity analysis                        +5%     -5%     +5%           -5% 
 
31 March 2021 
 
Resulting fair value of investment property 
                                            183,818 168,394 170,487       187,847 
31 March 2020 
                                            197,146 180,075 179,906       199,956 
Resulting fair value of investment property 
                                            Change in ERV   Change in equivalent yield 
                                            GBP'000   GBP'000   GBP'000         GBP'000 
 
 
Sensitivity analysis                        +10%    -10%    +10%          -10% 
 
31 March 2021 
 
Resulting fair value of investment property 
                                            191,699 160,864 162,986       197,965 
31 March 2020 
                                            205,933 171,723 171,241       211,640 
Resulting fair value of investment property 
                                            Change in ERV   Change in equivalent yield 
                                            GBP'000   GBP'000   GBP'000         GBP'000 
Sensitivity analysis                        +15%    -15%    +15%          -15% 
 
31 March 2021 
 
Resulting fair value of investment property 
                                            199,642 153,345 156,136       209,264 
31 March 2020 
                                            214,777 163,364 163,327       224,687 
Resulting fair value of investment property 

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. Receivables and prepayments

                                     31 March 2021  31 March 2020 
 
                                     GBP'000          GBP'000 
Receivables 
Rent debtor                          3,252          2,579 
Allowance for expected credit losses (995)          (190) 
Rent agent float account             724            1,486 
Other receivables                    627                                115 
Dilapidations receivable             -              372 
                                     3,608          4,362 
Lease incentive debtor               3,340                           2,941 
                                     6,948          7,303 
 
Prepayments 
Property related prepayments         4              16 
Other prepayments                    25             32 
                                     29             48 
Total                                6,977          7,351 
 

The aged debtor analysis of receivables is as follows:

                               31 March 2021 31 March 2020 
 
                               GBP'000         GBP'000 
Less than three months         3,416         4,317 
Between three and six months   192           45 
Between six and twelve months  -             - 
Total                          3,608         4,362 

Expected credit losses have been assessed on receivables balances 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.

This assessment identified a number of receivables balances due from tenants known to be in financial difficulty or having already entered into a Company Voluntary Arrangement ('CVA') or administration. In these instances, a provision against the full balance of the receivable has been applied.

The assessment also identified receivables balances subject to dispute by tenants who are financially stable but unwilling to pay. The recoverability of these balances was subject to a decision by the Court, and as such, an assessment of the probability of a positive decision was made, and an appropriate provision rate was applied against these balances and other receivables balances which would have also been subject to application of the Court ruling. Post year-end, the Court ruled in favour of the Company and these balances were recovered in full.

The below table presents the exposure to these classes of identified credit risk and the associated provision made against the receivables balances:

 
                                                                          Provision     Provision 
                                                                     Rate 
                                                   Receivables GBP'000      31 March 2021 31 March 2020 
                                                                     % 
                                                                          GBP'000         GBP'000 
 
Identified financial difficulties    415                             100  415           190 
Subject to Court ruling              972                             60   580           - 
No identified financial difficulties 
                                     6,556                           -     -            - 
Total                                7,943                           -    995           190 

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

                                 31 March 2021 31 March 2020 
 
                                 GBP'000         GBP'000 
At the beginning of the year     190           39 
Remeasurement of loss allowance  805           151 
At the end of the year           995           4,362 13. Interest rate derivatives 
                                                   31 March 2021  31 March 2020 
 
                                                   GBP'000          GBP'000 
At the beginning of the year                       14             162 
Interest rate cap premium paid                     63             - 
Changes in fair value of interest rate derivatives (16)           (148) 
At the end of the year                             61             14 

The Company is protected from a significant rise in interest rates as it currently has interest rate caps in effect which cap the interest rate at 1.00% on a notional value of GBP51.50 million. As a result, the loan was 130% hedged as at 31 March 2021 (31 March 2020: 71%).

Fair value hierarchy

The following table provides the fair value measurement hierarchy for interest rate derivatives:

                                                 Significant 
               Quoted prices in Significant 
                                                 unobservable 
               active markets   observable input              Total 
                                                 inputs 
               (Level 1)        (Level 2)                     GBP'000 
                                                 (Level 3) 
               GBP'000            GBP'000 
Valuation date                                   GBP'000 
31 March 2021  -                61               -            61 
31 March 2020  -                14               -            14 

The fair value of these contracts are recorded in the Statement of Financial Position as at the year end.

There have been no transfers between Level 1 and Level 2 during the year, nor have there been any transfers between Level 2 and Level 3 during the year.

The carrying amount of all assets and liabilities, detailed within the Statement of Financial Position, is considered to be the same as their fair value. 14. Interest bearing loans and borrowings

                                      31 March 2021  31 March 2020 
 
                                      GBP'000          GBP'000 
At the beginning of the year          51,500         50,000 
Bank borrowings drawn in the year     -              1,500 
Bank borrowings repaid in the year    (12,000)                               - 
Interest bearing loans and borrowings 39,500         51,500 
 
Unamortised loan arrangement fees     (369)          (453) 
At the end of the year                39,131         51,047 
Repayable between 2 and 5 years       39,500         51,500 
Undrawn facility at the year end      20,500         8,500 
Total facility                        60,000         60,000 
 

The Company has a GBP60.00 million (31 March 2020: GBP60.00 million) credit facility with RBSi of which GBP39.50 million (31 March 2020: GBP51.50 million) has been utilised as at 31 March 2021.

Under the terms of the Prospectus, the Company has a target gearing equivalent to 35.00% Loan to NAV. As at 31 March 2021, the Company's gearing was 25.15% Loan to NAV (31 March 2020: 34.83%).

Under the terms of the loan facility, the Company can draw up to 35.00% Loan to NAV at drawdown. As at 31 March 2021, the Company could draw a further GBP15.48 million up to the maximum 35.00% (31 March 2020: GBP0.25 million)

Borrowing costs associated with the credit facility are shown as finance costs in note 7 to these financial statements.

                                      31 March 2021                       31 March 2020 
Facility                                                   GBP60.00 million GBP60.00 million 
Drawn                                                      GBP39.50 million GBP51.50 million 
Gearing (Loan to GAV)                 22.07%                              27.21% 
Gearing (Loan to NAV)                 25.15%                              34.83% 
                                      1.44% all-in                        2.10% all-in 
Interest rate                         (LIBOR + 1.4%)                      (LIBOR + 1.4%) 
 
Notional value of Loan Balance Hedged                                     70.9% 
                                      130.4% 

In line with recent announcements from the Bank of England and the FCA, UK borrowings will be transitioning from the London Interbank Offer Rate ('LIBOR') benchmark to Sterling Overnight Index Average ('SONIA') benchmark in due course. There is expected to be negligible cost involved in the borrowing facility transition.

Reconciliation to cash flows from financing activities

                                        31 March 2021  31 March 2020 
 
                                        GBP'000          GBP'000 
 
Balance at the beginning of the year    51,047         49,476 
 
Changes from financing cash flows 
Loan drawdown                           -              1,500 
Loan repaid                             (12,000)                                     - 
Loan arrangement fees                   (13)           (39) 
Total changes from financing cash flows (12,013)       1,461 
 
Other changes 
Amortisation of loan arrangement fees   97             110 
Interest expense                        722            1,108 
Interest paid                           (824)          (1,120) 
Changes in loan interest payable        102                                         12 
Total other changes                     97             110 
Balance at the end of the year          39,131         51,047 
 15. Payables and accrued expenses 
                 31 March 2021 31 March 2020 
 
                 GBP'000         GBP'000 
Deferred income  2,567         2,906 
Accruals         783           814 
Other creditors  588           967 
Total            3,938         4,687 
 16. 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 2021 31 March 2020 
 
                                                  GBP'000         GBP'000 
Not later than one year                           48            48 
Later than one year but not later than five years 159           159 
Later than five years                             476           476 
                                                  635           635 
Total                                             683           683 
 

17. Guarantees and commitments

As at 31 March 2021, there were capital commitments of GBP67,667 (31 March 2020: GBPnil) relating to the

purchase of land adjacent to the Company's existing holding at Gresford Industrial Estate, Wrexham.

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 2021 are as follows:

                                            31 March 2021 31 March 2020 
 
                                            GBP'000         GBP'000 
Within one year                             14,492        15,325 
After one year but not more than five years 32,750        37,828 
More than five years                        22,726        24,596 
Total                                       69,968        77,749 

During the year ended 31 March 2021, there were contingent rents totalling GBP204,623 (year ended 31 March 2020: GBP188,872) recognised as income.

18. Investment in subsidiary

The Company has a wholly-owned subsidiary, AEW UK REIT 2015 Limited:

                          Country of registration 
Name and company number                           Principal activity Ordinary Shares held 
                          and incorporation 
AEW UK REIT 2015 Limited 
                          England and Wales       Dormant            100% 
(Company number 09524699) 

AEW UK REIT 2015 Limited is a subsidiary of the Company incorporated in the UK on 2 April 2015. At 31 March 2021, 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 GBP0.01 (31 March 2020: GBP0.01). The registered office of AEW UK REIT 2015 Limited is 6th Floor, 65 Gresham Street, London, EC2V 7NQ.

19. Issued share capital

                                                                 31 March 2021               31 March 2020 
                                                                 GBP'000  Number of Ordinary   GBP'000 Number of Ordinary 
                                                                        Shares                     Shares 
Ordinary Shares (nominal value GBP0.01 per share) authorised, 
issued and fully paid 
At the beginning of the year                                     1,587  158,774,746          1,515 151,558,251 
 
Issued on admission to trading on the London Stock Exchange on 
28 February 2020 
                                                                 -      -                    72    7,216,495 
At the end of the year                                           1,587  158,774,746          1,587 158,774,746 
 
Treasury Shares 
At the beginning of the year                                     -      -                    -     - 
Share buybacks on 14 October 2020                                (154)  200,000              -     - 
Share buybacks on 3 November 2020                                (111)  150,000              -     - 
At the end of the year                                           (265)  350,000              -     - 
 
Total Ordinary Share capital excluding treasury shares 
                                                                 1,587  158,424,746          1,587 158,774,746 

During the year, 350,000 (31 March 2020: nil) Ordinary Shares with a nominal value of GBP0.01 (31 March 2020: GBPnil) and representing 0.22% of the issued share capital, were bought back and placed in treasury for an aggregate consideration of GBP265,000 (31 March 2020: GBPnil). No Ordinary Shares were bought back for cancellation (31 March 2020: nil). No Ordinary Shares were cancelled from treasury during the year (31 March 2020: nil).

The allotted, called up and fully paid shares at 31 March 2021 consisted of 158,774,746 Ordinary Shares.

20. Share premium account

                                                                                              31 March 31 March 
                                                                                              2021     2020 
                                                                                              GBP'000    GBP'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   49,770 
Issued on admission to trading on the London Stock Exchange on 
                                                                                              -        6,928 
28 February 2020 
Share issue cost                                                                              -        (120) 
Balance at the end of the year                                                                56,578   56,578 

21. Financial risk management objectives and policies

21.1 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 2021         31 March 2020 
                                          Book Value Fair Value Book Value Fair Value 
 
                                          GBP'000      GBP'000      GBP'000      GBP'000 
Financial assets 
Receivables1                              3,608      3,608      4,362      4,362 
Cash and cash equivalents                 17,450     17,450     9,873      9,873 
Other financial assets held at fair value 61         61         14         14 
 
Financial liabilities 
Interest bearing loans and borrowings     39,131     39,500     51,047     51,500 
Payables and accrued expenses2            1,064      1,064      1,532      1,532 
Financial lease obligations               683        683        683        683 

1 Excludes lease incentive debtor and prepayments.

2 Excludes tax, VAT liabilities and deferred income.

Interest rate derivatives are the only financial instruments classified as fair value through profit and loss. 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.

21.2 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 price 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.

Real estate risk

The Company is exposed to the following risks specific to its investment property:

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.

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 an approved counterparty, The Royal Bank of Scotland International Limited.

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         As at 
                                                   31 March 2021 31 March 2020 
                                                   GBP'000         GBP'000 
Receivables (excluding incentives and prepayments) 3,608         4,362 
Cash and cash equivalents                          17,450        9,873 
Total                                              21,058        14,235 

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:

                                      On     < 3    3-12   1-5    > 5 
                                                                        Total 
31 March 2021                         demand months months years  years 
                                                                        GBP'000 
                                      GBP'000  GBP'000  GBP'000  GBP'000  GBP'000 
Interest bearing loans and borrowings -      142    427    40,388 -     40,957 
Payables and accrued expenses         -      1,064  -      -      -     1,064 
Lease obligation                      -      -      51     205    4,205 4,461 
                                      -      1,206  478    40,593 4,205 46,482 
 
                                      On     <3     3-12   1-5    > 5 
                                                                        Total 
31 March 2020                         demand months months years  years 
                                                                        GBP'000 
                                      GBP'000  GBP'000  GBP'000  GBP'000  GBP'000 
Interest bearing loans and borrowings -      270    811    54,203 -     55,284 
Payables and accrued expenses         -      1,532  -      -      -     1,532 
Lease obligation                      -      -      51     205    4,256 4,512 
                                      -      1,802  862    54,408 4,256 61,328 

22. 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 and this is the maximum gearing permitted at drawdown under the terms of the facility.

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, 75% assets test and the substantial shareholder rule, 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 NAV 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 NAV ratio of 25.15% (31 March 2020: 34.83%).

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.

23. 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 2021, 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 in the Full Annual Report and Financial Statements.

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 GBP1,228,849 (31 March 2020: GBP1,308,301) in respect of investment management fees and expenses, of which GBP315,825 (31 March 2020: GBP311,683) was outstanding as at 31 March 2021.

24. 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.

25. Events after reporting date

Dividend

On 28 April 2021, the Board declared its fourth interim dividend of 2.00pps in respect of the period from 1 January 2021 to 31 March 2021. This was paid on 28 May 2021, to shareholders on the register as at 1 May 2021. The ex-dividend date was 29 April 2021.

Property acquisitions

In May 2021, the Company acquired Arrow Point Retail Park in Shrewsbury for a purchase price of GBP8.35 million. The established retail park is located on a busy commercial estate and is fully let. The estate provides a net initial yield of 8.7%.

In June 2021, the Company acquired 15-33 Union Street for a purchase price of GBP10.19 million. 15-33 Union Street occupies a prominent location in Bristol city centre, opposite The Galleries Shopping Centre and near Cabot Circus, Bristol's premier retail destination. Located on a busy thoroughfare for pedestrians, the 65,238 sq ft site experiences high footfall and is ideally suited for retail or leisure units. Constructed in 2001, the property currently comprises five purpose built split-level retail or leisure units over four floors and road access to both Union Street and Fairfax Street. Four of the five units are let to three household names and a successful local retailer. The remaining unit is currently vacant, with the vendor providing a 12 month guarantee. We are currently in discussions with a number of parties who are keen to occupy this space. The location of the site has been identified as a major regeneration area and it offers the ability for further growth through development.

Court ruling

Post year-end, the Company announced the successful outcome of the legal action against two well-funded national tenants to recover unpaid rent. GBP0.52 million has been provided for as expected credit loss relating to these tenants in these financial statements and subsequent to the court ruling all rent arrears of these tenants have been received.

EPRA Unaudited Performance Measures

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 
 
                                                                                                  GBP9.82 million/6.19 
                                                                                                  pps 
1. EPRA Earnings                               A key measure of a company's underlying operating 
                                               results and an indication of the extent to which 
Earnings for operational activities.           current dividend payments are supported by 
                                               earnings.                                          EPRA earnings for 
                                                                                                  year to  31 March 
                                                                                                  2021 (31 March 2020: 
                                                                                                  GBP13.20 million/8.67 
                                                                                                  pps) 
 
2. EPRA Net Tangible Assets ('NTA')                                                               GBP157.02 million/99.11 
                                                                                                  pps 
Assumes that entities buy and sell assets, 
thereby crystallising certain levels of 
unavoidable deferred tax. 
                                                                                                  EPRA NTA itas at 31 
                                                                                                  March 2021 (31 March 
                                                                                                  2020: GBP147.85 million 
                                                                                                  /93.12 pps) 
 
3. EPRA Net Reinstatement Value ('NRV')                                                           GBP168.83 million/ 
                                                                                                  106.57 pps 
Assumes that entities never sell assets and 
aims to represent the value required to 
rebuild the entity. 
                                                                                                  EPRA NRV as at 31 
                                               The EPRA NAV set of metrics make adjustments to    March 2021 (31 March 
                                               the NAV per the IFRS financial statements to       2020 GBP160.34 million/ 
                                               provide stakeholders with the most relevant        100.99 pps) 
                                               information on the fair value of the assets and 
4. EPRA Net Disposal Value                     liabilities of a real estate investment company, 
                                               under different scenarios. 
('NDV') 
                                                                                                  GBP157.08 million/ 
Represents the shareholders' value under a                                                        99.15pps 
disposal scenario, where deferred tax, 
financial instruments and certain other 
adjustments are 
                                                                                                  EPRA NDV as at 31 
calculated to the full extent of their                                                            March 2021 (31 March 
liability, net of any resulting tax.                                                              2020 GBP147.86 million/ 
                                                                                                  93.13pps) 
 
 
5. EPRA Net Initial Yield ('NIY') 
                                               A comparable measure for portfolio valuations. 
Annualised rental income based on the cash                                                        7.37% 
rents passing at the balance sheet date, less 
non-recoverable property operating expenses, 
divided by the market value of the property,   This measure should make it easier for investors 
increased with (estimated) purchasers' costs.  to judge themselves, how the valuation of          EPRA NIY as at 31 
                                               portfolio X compares with portfolio Y.             March 2021 (31 March 
                                                                                                  2020: 8.26%) 
 
 
6. EPRA 'Topped-Up' NIY                        A comparable measure for portfolio valuations. 
This measure incorporates an                                                                      8.12% 
adjustment to the EPRA NIY in                  This measure should make it easier for investors 
                                               to judge themselves, how the valuation of 
respect of the expiration of rent-free periods portfolio X compares with portfolio Y.             EPRA 'Topped-Up' NIY 
(or other unexpired lease incentives such as                                                      as at 31 March 2021 
discounted rent periods and step rents).                                                          (31 March 2020: 
                                                                                                  8.66%) 
 
 
 
 
                                               A 'pure' (%) measure of investment property space 
7. EPRA Vacancy Rate                           that is vacant, based on ERV.                      8.96% 
Estimated Market Rental Value ('ERV') of 
vacant space divided by ERV of the whole 
portfolio.                                                                                        EPRA Vacancy Rate as 
                                                                                                  at 31 March 2021 (31 
                                                                                                  March 2020: 3.68%) 
 
 
                                                                                                  32.94% 
 
                                                                                                  EPRA Cost Ratio 
                                                                                                  (including direct 
                                                                                                  vacancy costs) as at 
                                                                                                  31 March 2021 (31 
8. EPRA Cost Ratio                                                                                March 2020: 18.75%) 
                                               A key measure to enable meaningful measurement of 
Administrative and operating costs (including  the changes in a company's operating costs. 
and excluding costs of direct vacancy) divided 
by gross rental income.                                                                           22.58% 
 
                                                                                                  EPRA Cost Ratio 
                                                                                                  (excluding direct 
                                                                                                  vacancy costs) as at 
                                                                                                  31 March 2021 (31 
                                                                                                  March 2020: 13.76%) 
 
9. EPRA Capital Expenditure 
 
Property which has been held at both the                                                          GBP5.98 million for the 
current and comparative balance sheet dates    A measure used to illustrate change in comparable  year ended 
for which there has been no significant        capital values. 
development.                                                                                      31 March 2021 (31 
                                                                                                  March 2020: 
 
                                                                                                  GBP0.36 million) 
 
10. EPRA Like-for-like Rental Growth 
 
Net growth generated by assets 
                                                                                                  -GBP1.08 million/-6.80 
which were held by the Company throughout both                                                    % for the year 
the current and comparable periods which there A measure used to illustrate change in comparable 
has been no significant development which      income values.                                     ended 31 March 2021 
materially impacts upon income.                                                                   (31 March 2020: GBP0.29 
                                                                                                  million/1.71%) 
 
 

Calculation of EPRA NTA, EPRA NRV and EPRA NDV

In October 2019, EPRA issued new best practice recommendations (BPR) for financial guidelines on its definitions of NAV measures: EPRA Net Tangible Assets (NTA), EPRA Net Reinvestment Value (NRV) and EPRA Net Disposal Value (NDV). The Company has adopted these new guidelines and applies them in the Annual Report for the year ended 31 March 2021.

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.

Earnings per share (EPS) amounts are calculated by dividing profit for the period attributable to ordinary equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.

                                                      Current measures                      Previous measures 
 
 
 
 
                                                      EPRA         EPRA         EPRA        EPRA         EPRA 
 
                                                      NTA          NRV          NDV         NAV          NNNAV 
As at 31 March 2021 
                                                      GBP'000        GBP'000         GBP'000      GBP'000        GBP'000 
IFRS NAV attributable to shareholders                 157,079      157,079      157,079     157,709      157,709 
Mark-to-market adjustment of derivatives              (61)         (61)         -           (61)         - 
Real estate transfer tax and other purchasers' costs1 -            11,814       -           -            - 
At 31 March 2021                                      157,018      168,832      157,079     157,018      157,079 
Number of Ordinary Shares                             158,424,746  158,424,746  158,424,746 158,424,746  158,424,746 
NAV Per share                                         99.11p       106.57p      99.15p      99.11p       99.15p 
                                                      Current measures                      Previous measures 
 
 
 
 
                                                      EPRA         EPRA         EPRA        EPRA         EPRA 
 
                                                      NTA          NRV          NDV         NAV          NNNAV 
As at 31 March 2020 
                                                      GBP'000        GBP'000         GBP'000      GBP'000        GBP'000 
IFRS NAV attributable to shareholders                 147,863      147,863      147,863     147,863      147,863 
Mark-to-market adjustment of derivatives              (14)         (14)         -           (14)         - 
Real estate transfer tax and other purchasers' costs1 -            12,494       -           -            - 
At 31 March 2020                                      147,849      160,343      147,863     147,849      147,863 
Number of Ordinary Shares                             158,774,746  158,774,746  158,774,746 158,774,746  158,774,746 
NAV Per share                                         93.12p       100.99p      93.13p      93.12p       93.13p 

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.

                                                         Year ended Year ended 
                                                         31 March   31 March 
                                                         2021        2020 
                                                         GBP'000      GBP'000 
Investment property - wholly-owned                       179,000    189,300 
Allowance for estimated purchasers' costs at 6.6%        11,814     12,872 
Grossed-up completed property portfolio valuation (B)    190,814    202,172 
 
Annualised cash passing rental income                    15,051     17,361 
Property outgoings                                       (993)      (670) 
Annualised net rents (A)                                 14,058     16,691 
 
Rent from expiry of rent-free periods and fixed uplifts* 1,439      826 
 
'Topped-up' net annualised rent (C)                      15,497     17,517 
 
EPRA NIY (A/B)                                           7.37%      8.26% 
EPRA 'topped-up' NIY (C/B)                               8.12%      8.66% 

* rent-free periods expire by July 2021.

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 2021, 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       Year ended 
                                                                          31 March 2021    31 March 2020 
                                                                          GBP'000            GBP'000 
 
 
                                                                                           641 
Annualised potential rental value of vacant premises  (A) 
                                                                          1,482 
 
                                                                                           17,420 
Annualised potential rental value for the complete property portfolio (B) 
                                                                          16,538 
 
EPRA Vacancy Rate (A/B)                                                   8.96%            3.68% 

Calculation of EPRA Cost Ratios

                                                                                                          Year ended 
                                                                                 Year ended               31 March 
                                                                                 31 March 2021            2020 
                                                                                 GBP'000                    GBP'000 
 
 
Administrative/operating expense per IFRS income statement                                                3,319 
                                                                                 5,221 
Less: ground rent costs                                                          (66)                     (66) 
EPRA costs (including direct vacancy costs) (A)                                  5,155                    3,253 
 
Direct vacancy costs (see Glossary in full Annual Report and Financial 
Statements for further details)                                                                           (865) 
                                                                                 (1,622) 
EPRA costs (excluding direct vacancy costs) (B)                                                           2,388 
                                                                                 3,533 
 
Gross rental income less ground rent costs (C)                                                            17,352 
                                                                                 15,648 
 
 
EPRA Cost Ratio (including direct vacancy costs) (A/C)                                                    18.75% 
                                                                                 32.94% 
 
EPRA Cost Ratio (excluding direct vacancy costs) (B/C)                                                    13.76% 
                                                                                 22.58% 

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.

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.

                 Rental income                 Rental income                 Like-for-like  Like-for-like 
                  from like-for-like portfolio  from like-for-like portfolio  rental         rental 
Sector 
                 2021                          2020                           growth        growth 
                 GBPm                            GBPm                            GBPm             % 
Industrial       8.14                          8.43                          (0.29)         (3.44) 
Office           2.44                          2.82                          (0.38)         (13.48) 
Leisure          1.55                          1.55                          -              - 
Standard Retail  2.07                          2.48                          (0.41)         (16.53) 
Retail Warehouse 0.61                          0.61                          -              - 
Total            14.81                         15.89                         (1.08)         (6.80) 

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 prior reporting years. This represents a portfolio valuation, as assessed by the valuer, of GBP173.60 million (year ended 31 March 2020: GBP181.95 million).

Capital Expenditure

The table below sets out the capital expenditure of the portfolio in accordance with EPRA Best Practice Recommendations.

                                                      2021     2020 
Sector 
                                                      GBP'000    GBP'000 
Acquisitions                                          5,778    - 
Investment properties - no incremental lettable space 205      358 
Total purchases and capital expenditure               5,983    358 

Company Information

Share Register Enquiries

The register for the Ordinary Shares is maintained by Computershare Investor Services PLC. In the event of queries regarding your holding, please contact the Registrar on +44 (0)370 707 1341 or email: web.queries@computershare.co.uk. Please note that from 19 July 2021, the Company's Registrar will change to Link Group. Further information and details will be communicated at the appropriate time.

Changes of name and/or address must be notified in writing to the Registrar, at the address shown below. You can check your shareholding and find practical help on transferring shares or updating your details at www.investorcentre.co.uk. Shareholders eligible to receive dividend payments gross of tax may also download declaration forms from that website.

Share Information 
Ordinary GBP0.01 Shares  158,424,746 
SEDOL Number           BWD2415 
ISIN Number            GB00BWD24154 
Ticker/TIDM            AEWU 

Share Prices

The Company's Ordinary Shares are traded on the premium segment of the Main Market of the London Stock Exchange.

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

8 September 2021  Annual General Meeting 
30 September 2021 Half-year end 
November 2021     Announcement of half-yearly results 
31 March 2022     Year end 
June 2022         Announcement of annual results 

Dividends

The following table summarises the amounts distributed to equity shareholders in respect of the period:

                                                                                                    GBP 
Interim dividend for the period 1 April 2020 to 30 June 2020 
(payment made on 28 August 2020)                                                                    3,175,495 
 
Interim dividend for the period 1 July 2020 to 30 September 2020 (payment made on 30 November 2020) 
                                                                                                    3,171,495 
Interim dividend for the period 1 October 2020 to 31 December 2020 
(payment made on 28 February 2021)                                                                  3,168,495 
Interim dividend for the period 1 January 2021 to 31 March 2021 
(payment made on 28 May 2021)                                                                       3,168,495 
 
Total                                                                                               12,683,980 
 

Directors

Mark Burton (Non-executive Chairman)

Katrina Hart (Non-executive Director)

Bimaljit ("Bim") Sandhu (Non-executive Director)

Registered Office

6th Floor

65 Gresham Street

London

EC2V 7NQ

Company Website

www.aewukreit.com

Investment Manager and AIFM

AEW UK Investment Management LLP

33 Jermyn Street

London

SW1Y 6DN

Tel: 020 7016 4880

Website: www.aewuk.co.uk

Property Manager

Mapp

180 Great Portland Street

London

W1W 5QZ

Corporate Broker

Liberum

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

8th Floor

1 Fleet Place

London

EC4M 7RA

Administrator

Link Alternative Fund Administrators Limited

Beaufort House

51 New North Road

Exeter

EX4 4EP

Company Secretary

Link Company Matters Limited

6th Floor

65 Gresham Street

London

EC2V 7NQ

Current Registrar (until 18 July 2021)

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS13 8AE

Registrar from 19 July 2021

Link Group

10th Floor

Central Square

29 Wellington Street

Leeds LS1 4DL

Current Auditor

KPMG LLP

15 Canada Square

Canary Wharf

London

E14 5GL

Valuer

Knight Frank LLP

55 Baker Street

London

W1U 8AN

Copies of the Annual Report and Financial Statements

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://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/ national-storage-mechanism.

LEI: 21380073LDXHV2LP5K50

END -----------------------------------------------------------------------------------------------------------------------

ISIN:           GB00BWD24154 
Category Code:  ACS 
TIDM:           AEWU 
LEI Code:       21380073LDXHV2LP5K50 
OAM Categories: 1.1. Annual financial and audit reports 
Sequence No.:   113200 
EQS News ID:    1210782 
 
End of Announcement  EQS News Service 
=------------------------------------------------------------------------------------
 
Image link: 
https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=show_t_gif&application_id=1210782&application_name=news 
 

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