Focused on the future of real estate

Glossary

AIFM
Alternative Investment Fund Manager. The entity that provides portfolio management and risk management services to the Company and which ensures the Company complies with the AIFMD. The Company’s AIFM is AEW UK Investment Management LLP.

Contracted rent
The annualised rent adjusting for the inclusion of rent subject to rent-free periods.

Covenant strength
The strength of a tenant’s financial status and its ability to perform the covenants in the lease.

Dividend Cover
The proportion of a dividend payment funded by the Company’s EPRA earnings.

Earnings Per Share (‘EPS’)
Profit for the period attributable to equity shareholders divided by the weighted average number of Ordinary Shares in issue during the period.

EPC
Energy Performance Certificate.

EPRA
European Public Real Estate Association, the industry body representing listed companies in the real estate sector.

EPRA Earnings Per Share
Recurring earnings from core operational activities. A key measure of a company’s underlying operating results from its property rental business and an indication of the extent to which current dividend payments are supported by earnings.

Equivalent Yield
The internal rate of return of the cash flow from the property, assuming a rise to ERV at the next review or lease expiry. No future growth is allowed for.

Estimated Rental Value (‘ERV’)
The external valuers’ opinion as to the open market rent which, on the date of the valuation, could reasonably be expected to be obtained on a new letting or rent review of a property.

External Valuer
An independent external valuer of a property. The Company’s external valuer is Knight Frank LLP.

Fair Value
The estimated amount for which a property should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where parties had each acted knowledgeably, prudently and without compulsion.

FRI lease
A lease which imposes full repairing and insuring obligations on the tenant, relieving the landlord from all liability for the cost of insurance and repairs.

Gross Asset Value
The aggregate value of the total assets of the Company as determined in accordance with IFRS.

Investment Manager
The Company’s Investment Manager is AEW UK Investment Management LLP.

IPD
Investment Property Databank. An organisation supplying independent market indices and portfolio benchmarks to the property industry.

IPO
The admission to trading on the London Stock Exchange’s Main Market of the share capital of the Company and listing of Ordinary Shares to the premium segment of the Official List of the FCA, on 12 May 2015.

Lease incentives
Incentives offered to occupiers to enter into a lease. Typically this will be an initial rent-free period, or a cash contribution to fit-out. Under accounting rules, the value of the lease incentive is amortised through the Statement of Comprehensive Income on a straight-line basis until the lease expiry.

Lease surrender
An agreement whereby the landlord and tenant bring a lease to an end other than by contractual expiry or the exercise of a break option. This will frequently involve the negotiation of a surrender premium by one party to the other.

Like-for-like
The like-for-like valuation movement compares the valuation (as provided by the external valuer and before adjustments for lease incentives) of properties at the end of the period in question with the valuation at the start of the period. This measure only compares movements for those properties which were held at both the start and end of the period, so excludes the effects of acquisitions and disposals.

Loan to NAV
The loan balance drawn expressed as a percentage of the Company’s Net Asset Value. Allows the user to assess the Company’s gearing and is relevant, as this is the measure tested the Company’s borrowing covenant.

Loan to GAV (also Gross Loan to GAV)
The loan balance drawn expressed as a percentage of the combined value of the Company’s investment property portfolio (as assessed by the valuer) and the Company’s investments. Allows the user to assess the Company’s gearing and is relevant, as this is the measure used under the Company’s Investment Guidelines.

Loan-to-Value (‘LTV’)
The value of outstanding loans and borrowings (before adjustments for issue costs) expressed as a percentage of the combined valuation of the property portfolio (as provided by the external valuer) and the fair value of other investments.

Net Asset Value (‘NAV’)
Net Asset Value is the equity attributable to shareholders calculated under IFRS.

NAV per share
Equity shareholders, funds divided by the number of Ordinary Shares in issue. This measure allows a comparison with the Company’s share price to determine whether the Company’s shares are trading at a premium or discount to its NAV calculated under IFRS.

NAV total return
The percentage change in NAV, assuming that dividends paid to shareholders are reinvested at NAV to purchase additional Ordinary Shares.

Net equivalent yield
Calculated by the Company’s External Valuers, net equivalent yield is the internal rate of return from an investment property, based on the gross outlays for the purchase of a property (including purchase costs), reflecting reversions to current market rent and items as voids and non-recoverable expenditure but ignoring future changes in capital value. The calculation assumes rent is received annually in arrears.

Net initial yield (‘NIY’)
The initial net rental income from a property at the date of purchase, expressed as a percentage of the gross purchase price including the costs of purchase.

Net Loan to GAV
Measure of gearing calculated as follows: (l-c)/v, where “l” is the loan balance drawn, “c” is the Company’s cash and cash equivalents and “v” is the combined value of the Company’s investment property portfolio (as assessed by the valuer) and the Company’s investments. Allows the user to assess the potential effect on gearing of using the Company’s cash to repay a portion of its loan balance.

Net Operating Income (‘NOI’)
The Company’s gross operating income minus its operating expenses.

Net rental income
Rental income receivable in the period after payment of ground rents and net property outgoings.

Non-PID
Non-Property Income Distribution. The dividend received by a shareholder of the Company arising from any source other than profits and gains of the Tax Exempt Business of the Company.

Ordinary Shares
Ordinary Shares of £0.01 each in the capital of the Company. Ordinary Shares are the main type of equity capital issued by conventional Investment Companies. Shareholders are entitled to their share of both income, in the form of dividends paid by the Company, and any capital growth.

Over-rented
Space where the passing rent is above the ERV.

Passing rent
The gross rent, less any ground rent payable under head leases.

PID
Property Income Distribution. A dividend received by a shareholder of the Company in respect of profits and gains of the tax exempt business of the Company.

Rack-rented
Space where passing rent is the same as the ERV.

REIT
A Real Estate Investment Trust. A company which complies with Part 12 of the Corporation tax Act 2010. Subject to the relevant UK REIT criteria being met continually, the profits from the property business of a REIT, arising from both income and capital gains, are exempt from corporation tax.

Reversion
Increase in rent estimated by the Company’s external valuer, where the passing rent is below the ERV.

Reversionary yield
The anticipated yield, which the initial yield will rise (or fall) to once the rent reaches the ERV.

Shareholder total return
The share price movement and dividends (pence per share) received during a period, expressed as a percentage of the opening share price for the period. Calculated as follows: (b - a + d)/a, where “a” is the opening share price, “b” is the closing share price and “d” is dividends per share.

Under-rented
Space where the passing rent is below the ERV.

Void rate / Vacancy
The amount of rent relating to properties which are unoccupied and generating no rental income. Stated as a percentage of ERV.

Vacancy costs
Property expenses that are directly related to the property including the following: rates/property taxes; service charge; insurance premiums; carbon tax; any other costs directly billed to the unit.

Weighted Average Unexpired Lease Term (‘WAULT’)
The average lease term remaining for first break, or expiry, across the portfolio weighted by contracted rental income.

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