AEW has announced a change in investment strategy for its top performing UK Core Property Fund, which includes increasing the maximum leverage capacity of the fund to 30% of the value of the Fund’s assets. The Fund will also be renamed the AEW UK Core Plus Property Fund (the Fund). As part of the migration, a significant new investor has committed to the Fund.
The Fund will seek to capitalise on market inefficiencies and acquire attractively priced and high-quality multi-sector commercial real estate at the margins of prime locations across the UK, with the aim of achieving superior investment returns over the long term. The strategy focuses on strong stock selection and draws on AEW’s strengths of identifying properties with a high income stream and the potential for active asset management in order to increase capital value.
Following the change in strategy, four assets have been acquired:
- Barton Court, in Bath, a mixed use island site corner block in the heart of historic Bath and provides 54,074 sq ft over basement, ground and 3 upper floors with a mix of retail and offices. The purchase price was £8.25m reflecting a NIY of 12%. The retail anchor is Anthropolgie and the office is anchored by Stone King LLP
- Following the acquisition of Armourers House in Bristol in February 2022, the Fund has acquired the adjoining interest to the property, 3 Queens Square, for £705,000 which will assist in delivering high quality refurbished office accommodation in line with the business plan
- Harbour Island, a well located, office and retail asset in Canary Wharf for £18.2m, reflecting a NIY of 8.2%
- Hythe Marine Park in Southampton, a 12.6 acre freehold marine services industrial estate, with an additional 33 acres of foreshore held on a long leasehold basis. The purchase price was £14m reflecting a NIY of 9.2%
The Fund’s investment objective is to provide a return from capital appreciation and income over the longer term and to deliver, over time, a total return in excess of 8% per annum and outperformance of the benchmark, the All Balanced Property Funds Index – MSCI/AREF UK Quarterly Fund Index – weighted average.
Richard Tanner, Senior Portfolio Manager said: “We are very excited about the evolution of what is now called the AEW UK Core Plus Property Fund, which will allow us to take advantage of the price dislocations we are seeing in the commercial property market. The high yielding acquisitions recently completed are evidence of our commitment to seeking out attractively priced properties where we can leverage our proven active management capabilities and deliver value for both investors and tenants.”
Lewis and Partners acted for AEW at Canary Wharf whilst Cyril Leonard represented the vendor. In Hythe HSP acted for AEW whilst Lambert Smith Hampton represented the vendor and in Bath AEW were represented by Savills whilst Jackson Criss acted for the vendor.
