AEW UK REIT PLC

LSE:AEWU

Earnings Call Transcript 2024-Q1

[Paul Brotherhood]

Good morning, and welcome to the AEW U.K. REIT plc investor presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. I will review all questions submitted and publish responses where appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand over to Laura Elkin, Portfolio Manager. Before we begin, I'd like to submit the following poll.

I'd now like to hand over to Laura Elkin, Portfolio Manager. Good morning.

[Laura Elkin, executive]

Thanks very much, Paul. As Paul said, I'm Laura Elkin, I'm the Portfolio Manager. I'm joined here today by George Elliott, who is the AEWU Fund Controller and by Richard Dunling, who is one of our asset managers. Those of you who are regulars to this call will note the absence of Henry today, who usually joins me on these calls. And Henry is unfortunately had surgery a short while ago, but he is recovering well, and will be back online with us in a few weeks' time.

So to start the presentation we're, of course, today talking about AEW U.K. REIT, a strategy that we've been running here for 9 years, and we've been running the same strategy that I'll describe now. Regulars on this call will, of course, seen this slide many times before, but for the benefit of anyone who's new. We are a value investment specialist, and we use value investment principles to identify mispriced assets for purchase. So that is those that are out of line with their long-term value fundamentals such as vacant possession value or alternative use value or those that we think represent opportunity.

Once we buy an asset, we actively manage it to maximize its income stream. And as a company, we have paid out a dividend of 2p per share per quarter consistently now for the past 31 quarters. We also actively managed to unlock capital upside, and that is shown in our annual annualized 5-year property total return of just under 10%, which is the highest total return of any of the diversified REITs in the peer group over various time frames.

At AEWU, we are not sector constrained in our strategy. So we do not focus on just 1 sector. We seek value across all areas of the property market. And we think that's really important to delivering a value strategy. It allows us to seek value in the most efficient way through various market cycles.

So moving on to this slide, which shows our high-level statistics as at the 30th of June. We own 33 properties, have 136 tenants. You'll see that the share price on this page is now just slightly out of line with the market having moved up somewhat in the past week due to some better-than-expected inflation figures. I'm also going to pick out on this page, the pie charts on the bottom right-hand side, which show our sector ratings. And I think these demonstrate really well how our strategy allows us to nimbly make value shifts between sectors, depending on where we find value and where we also see risk.

Of course, that's something that sector specialist REITs cannot do. So we think that gives us a strong performance edge. So just over a year ago, we had a much higher exposure to industrials at around 50% of our portfolio. We had a higher office exposure at around 20% and today, that sits at 8%. And our combined retail exposure, so those red and blue blocks together combined only 25%, whereas today, that's around 45%. And I'm just picking out those themes because that shows how in the last just over 12 months, we have taken profits from some of our industrial assets.

We have found a lot of value in retail assets, and we have lowered our risk exposure to office assets. Just a few things to pick up from the portfolio here. So looking at where our book values sit today, we think that they still represent a significant value proposition. So our average capital value per square foot sits at GBP 67 and very low passing rents still across the whole portfolio averaging just over GBP 6 per square feet.

The reversionary opportunity in the portfolio, we think, is significant, and the 8.7% reversionary yield being higher than our initial yield is independently assessed by our value in Knight Frank. A particular theme for us in the last quarter has been the resilience in our occupational demand. This has been something that, of course, we've been talking about for some time. But I think over the past quarter, and you will perhaps have noticed this, if you will have seen our NAV announcement that we put out last week.

We have had a very busy quarter for Asset Management and really pleased to see that continuing. And quite a lot of those particular deals will be covered off by Richard today. In terms of risk on gearing, we have got significant covenants, sorry, headroom to all of our loan covenants. So our loan to value sits at just over 30%, with the covenant being around 60% and of course, the low cost of debt that we have in place for the next 4 years of just below 3%.

The next slide touch on our performance. And I'm mainly going to hand over to George for these, but I'm just going to cover the first 2 myself, which look at earnings per share and our dividend cover. Of course, this is a subject which is very dear to our hearts, and I know to many of yours. So a dividend of 2p per share per quarter has been paid since early 2016. So effectively, all of the way through the life of this company, although our dividend has been uncovered somewhat by earnings for the past couple of years.

The reason for this has mainly been due to the sale of 2 assets in particular, 2 developers, which needed to be taken to vacancy in order to maximize their sale values and then the subsequent fairly protracted reinvestment of those sale proceeds. We're in the process of building EPS back towards our target. And the chart below shows the significant progress that we've made in that over the last 12 months.

As of today, we've still got GBP 15 million divested and also, we're waiting for income to kick in from agreement for leases that we've signed with a couple of significant tenants at our retail park in Coventry. So once the benefit of those further things kick in, we do expect earnings to continue to improve over coming quarters, but we're really happy with the progress that we've made so far.

Now just speaking more generally and over the long term. In periods of underinvestments such as following a sale, we will, of course, expect earnings to dip below target. But for that reason, we're really pleased to see earnings trend upwards. It's in line with our expectations and throughout that period of dividend uncovered. It's why the Board continued to take the decision to keep paying out 2p per share per quarter to investors because they could see that earnings would at some point to recover, which leads me nicely on to the following slide, which looks at our dividend cover since IPO.

Earnings from property income being the block in red. The net gain -- net capital gain on disposals being that sort of floating blue piece, the 6% top-up to the dividends that we've used to make those 2p per share per quarter payments. So our dividend cover from income since IPO has been at 94%. So a really strong level, even though our dividend -- period of dividend uncover has been rather persistent. Thanks.

I'll hand over to George. He can talk through the next few slides.

[George Elliott, executive]

Thanks, Laura. So this first graph demonstrates the company's general approach to having 3- to 5-year business plan, 10 years on many of its properties. One can see that in 2017 and 2018, the plans put in place at that time are now coming to fruition, which has driven the outperformance from early 2020 until now. Most notably, some of our major business plans, such as far that asset that many of you will be aware of, have increased the we've outperformance in the last 6 months or so.

Next slide. And this is more numerically demonstrated on this slide, although rather complicated what it demonstrated to over all time periods. As at March 2023, we delivered the highest NAV total return. And also as at June, our long-term share price total return is also the best among our peers. Just to know the reason why the state for NAV total returns is at March just because it's not yet available for all our peers. But this shows really, really encouraging performance and is consistent with prior quarters as well.

And this next slide just purely focuses on our dividend yield. Again, we're among -- we're consistently among the highest dividend yield -- peers -- among the peer group, and this is particularly encouraging given the fact that we've maintained 1 of the lowest share price discount to that. And then subsequently, to further look at purely our total property return, again, overall time here as we outperformed benchmark. Again, MSCI data for June will be available in the next few weeks, which is why this is displayed as at March.

And then finally, further good news is that for the 12 months to March 2023, we've outperformed the benchmark in all property sectors. This highlights the benefits of its not only being not set constrained, but as well as the fact that our strategy [indiscernible]. I think particularly important to note here is that although the office sector has really struggled in recent times, although chiefly driven by offset asset, we've achieved great performance, which is by a testament to the success of our strategy.

[Laura Elkin, executive]

Thanks, George. I'll cover off some of the investment activities that we saw in the last quarter. So if you've kept up to date with some of our recent NAV announcements and communications, you will have seen us discuss a theme of recycling from lower-yielding assets into assets in our pipeline, which are high yielding and of course, then those transactions over the longer term will be accretive to the company's earnings. So we continued that during the quarter with the sale of 2 assets here together. I'm talking about them in summary here because they were sold in a single transaction to 1 purchaser.

With the combined yield on sale being 6.2%. So comparing that to most of the assets in our pipeline, we've got a slide in this coming up, but you'll see that the average yield in our pipeline asset is in excess of 8% and with some of our recent purchases having been as high as 9% or higher. So a significantly lower yield that we've achieved here.

So again, over the long term, this transaction will be accretive to the company's earnings. Another reason for selling these assets is that we felt that the pricing of both was maximized at the current time. For example, the Euroway asset, we have avoided in selling the assets, significant capital expenditure of the tenant were to have vacated. We were having discussions with that tenant about whether they want stay on site and their business plan was looking unsure. So when we received an attractive offer to acquire the asset, we looked at the figures there and analyze that a sale at this current time would be better.

And of course, those combined sale prices exceeded the previous valuation by around 12% and the acquisition price of both of the assets by around 30%. And from both of these assets, over their hold period, we have been receiving an income yield of around 8%. So 2 really strong performing assets for the company. And looking forward to getting the capital receipts from those sales reinvested into high-yielding assets.

Over the course of the quarter, we also made a similar sales. So this was a sale of a vacant asset in Deeside, which was sold to potential prospective tenants who is also open-minded to buying the building. Again, in selling that one, we avoided a capital expenditure of around GBP 1 million and again, looking forward to getting that capital reinvested into high-yielding assets.

During the quarter, we did, of course, make 1 purchase. This is very recent, having completed only last week. At the moment, we are finding a lot of attractive pipeline assets in some really exciting locations, and this is one of them. So it's continuing a theme of some recent purchases for us at the same -- along the same vein of the asset in central part that we bought at the end of last year and some further assets in our pipeline. In some very strong locations and using those strong locations is an indicator of long-term value. So here, acquired within the center of York within the city walls, so a location that's very land constrained.

In terms of tenants here, we've got 75% of the assets let to NCP who are known to trade well. We bought the asset off an initial yield of 9.3%, but with inflation-linked uplift in NCP's lease, that will take the overall running yield from the asset to a level of over 10% by 2027.

In terms of capital value, the purchase price reflecting GBP 100 per square foot, so supportive of redevelopment for alternative uses if that is needed over the long term. So an asset that we're really pleased to have acquired recently. And just touching on our pipeline here. Similar themes here in all of these assets to those which exist in the current portfolio and in our recent acquisitions.

In terms of sectors, most of this falls within retail. And most of our recent purchases have been in retail or some exposure to leisure or mixed use. But we are always when we're making those acquisitions, paying very close attention to the strength of our tenants' particular trade.

Now in this pipeline, I'm showing you 1 office building. I would say that I'm doing that very selectively. I think I've discussed before about how we have got some concerns generally about occupation, holding up in the office sector. And I think it's fair to say that we wouldn't be wanting to include offices in our pipeline in a very extensive way and we would be very selective about the locations, in which we're acquiring offices. But this one here shown on our pipeline does look interesting based on the strength of its location and also its alternative use value. Thank you.

I'll hand over to Richard now, who will touch on some of our recent asset management gains.

[Richard Dunling, executive]

Thank you, Laura. So just picking out the first one in Commercial Road in Portsmouth. This saw a new letting complete to specsavers, which completed last quarter in line with the valuers ERV. It's a key letting, which now makes the block fully let providing an income return of about 9.5%. The transaction demonstrates the change in strategy of the team from retailers to relocate in towns and cities to stronger or prime locations. High Street investment were stronger in the first half of the year and yields remain stable but are likely to repeat for the remainder of the year.

So with Portsmouth in mind, we may consider options with this asset going forward, given the asset management initiatives have now been completed. Picking up to further transactions again in the retail sector on the retail warehousing side, as a key renewal with B&Q completed, which provided the 9-year unexpired term passing rents above ERV. The key fundamental of this transaction as well as it moved EPC from a C to a B without any company's CapEx being spent is fully funded by the tenant.

And a further transaction in the asset treasury with Universal Consumer Products, completing a 3-year lease, above ERV and above passing rent. I think it just demonstrates the countercyclical nature of these assets against the rest of the portfolio, and both assets contributed to the 2% increase in like-for-like valuation movement for the quarter.

The fund remains a big fan of retail assets, particularly high-yielding reversionary high street blocks and well-located retail warehousing, where we've got strong focus or where we know tenants are trading well. Just taking a closer look at what are the assets in Coventry. We completed a [ cashless ] transaction with the freeholder, which showed the funds gain freehold over part of the site in return for a future option for the freeholder to surrender site, effectively side B. The key fundamental to this transaction is that we move the user and site restrictions on the now acquired freehold sites, which allow us to move forward with key lettings to the [indiscernible] and also discuss [indiscernible] in terms of the downsize to [indiscernible].

The fund will still maintain the income on site in the medium term. The likelihood is up by the time of surrender option is opted by the freeholder, which is anywhere between 2 and 7 years, the income capital growth on the remainder of the sizable outcome with our way the income lost in slightly.

Since quarter end, we have also completed the lease with Aldi, which provides 20-year lease at GBP 273,000 a year. And we've also, over this week been given a green light on the change of use and extend the delivery hours plan application to the food warehouse. That effectively means that, that deal will go and conditional and is now lined up to complete in November.

I think -- this asset is a good example of why, again, investing in retail warehouse is quite key for us. With this discretionary spend set to decline this year, flight to discounters or consumers you'd like to continue. This will provide key competition between the likes of Aldi, Lidl, B&M and Poundland, that's driving demand for space. Due to the strength in the occupational market and hopefully stabilizing interest rates, that will be the prospect of further yield compression in the sector.

The Coventry specifically, this may mean once the asset management initiatives have been crystallized this year, we may consider our options in the first half of next year as to a potential exposure. Just moving on to an asset -- an office asset in Bristol. So the Bristol office markets performed well fairly recently with full take-up at the highest since 2017, whilst the well talked about flight to quality is prevalent in the Bristol office market, comprehensive refurbishment to Grade B is becoming extremely attractive to small TNT and professional service businesses. This is demonstrated by the letting in December 2022, to the marketing services business at around GBP 40 per square foot, which is only GBP 2.50 per square foot lower than the top headline rents for Grade new-build office developments in the city.

This, in more recent months has created sufficient evidence to provide a 32% uplift in annual rent for the 3 existing tenant revenues, which are crystallized last quarter. The Bristol headline rents are now ahead of other major regional cities, including Birmingham and Manchester. Could see further growth. It's a sector which we have low exposure within the funds, but is a well like asset class. Good, high-quality, high-yielding reversionary offices in key regional locations similar to Bristol will be considered for potential acquisitions in the future by the fund.

[Laura Elkin, executive]

Thanks, Richard. I'll pick up now again to just cover off very quickly on -- with an update on our EPC ratings. I see that we've also had a question come in on this as well, which is exactly addressing exactly what I was going to talk about now. So I just wanted to cover this off and apologies here, I've just realized in looking at this slide that the 2 colors between the dates of the bar chart was not particularly differentiated, but I'll discuss that. So hopefully, it will become clear. We include a narrative in our recent annual report on this as well. And so I just really wanted to summarize where we've got to. The darker blue lines show where we were before we started to really undertake a very detailed review of the company's EPC ratings, which is, of course, our exposure to the Minimum Energy Efficiency Standards some time ago. And the sort of more turquoise blue lines show the position as at today.

And you can see that we have achieved significant gains in that. So with the minimum standards currently being an A. We have no registered EPCs in F and G at the moment, although we do have an exposure to around 11 units, which are expected to be rated F and G. But where we have ongoing works at the moment to improve the scores of those units. So I would say at high level, we don't have significant concerns about our ability to comply with this legislation.

Now on those 11 units, they perhaps sound more onerous than they are. They're split over 2 sites. So it's effectively 1 industrial park up in Wakefield, our asset at Diamond Business Park, where there is a small multi-let office which forms a very small part of the asset with a number of small office units in one of the units. And that is where 10 of those units sit. And the other unit is an industrial building down in Basildon. So effectively, we've got 2 assets here where we are currently working to get them to levels that they comply with the MEES legislation.

I'll start with Basildon. So we are in negotiation with that tenant at the moment to make some improvements to the building that will see the asset and comply MEES. Now if you've heard us talk before about an asset in Rotherham, where we recently did some work in connection with the letting. We were able to improve the roof of the building and using -- some dilapidation payments from an outgoing tenant. And with some CapEx that we would expect to have spent in the course of a normal letting.

So effectively, in the course of doing our usual business and letting an industrial building to a tenant, we achieved a significant MEES improvement to make that asset significantly more compliant. Now that was on an asset in Rotherham and why I'm talking about that now is because it is exactly what we are currently trying to do with the tenant -- same tenant in Basildon. Negotiations are currently underway, and we hope to conclude those very soon.

If there is CapEx that needs to be spent there, it will likely be that the tenant will potentially extend their lease. So it will be effectively a net gain on valuation to the company. Moving back to Wakefield, where there are 10 of these units that concentrated within 1 small office piece of the site. This is a very low cost that's needed to improve the MEES ratings here. So effectively, we just need to go to the units and cap for gas supply, which is currently not being used. That's under the way at the moment and is expected to be undertaken at very low cost. So thanks very much all for joining us today.

I know we've got some Q&A coming up. But before we do that, I'll just conclude with the main themes that we would like you to take away today. We have, of course, seen continued improvement in our dividend cover over the past 12 months, and we're really pleased with that. But we've got a further GBP 15 million of cash to deploy and therefore, expect to see significant further improvements in our earnings from the company going forward.

We've also seen a lot of opportunity in the portfolio and a lot of opportunity to continue to improve income and values. And I think that's highlighted in the very busy quarter for asset management that we have seen. So yes, very excited to see that continue. So I will turn now to some of the Q&A, if that's okay, Paul.

[Paul Brotherhood]

Absolutely. If you just want to have a few moments just to review those. [Operator Instructions] And just while the team take a few moments to review those questions, I'd like to remind you that recording the presentation along with a copy of the slides and the published Q&A can be accessed via your investor dashboard.

As you rightly say, we had a number of questions throughout today's presentation, Laura and the team, and we had a number of pre-submitted questions as well. So perhaps if I could just hand back to you just to read out those questions where appropriate to do so, and I will pick up from you at the end.

[Laura Elkin, executive]

Thanks very much. So turning to some of the questions. Somebody has asked who are our other tenants besides NCP in York. And what is the walls for their leases and their reversionary yield?

So we've got -- so in York, of course, I said that 75% of the income from that asset was led to NCP, the 4 other tenants being very local tenants. You would not know them by name. But the overall WAULT of the asset is 8.2, the length of the income stream to NCP being 9. Therefore, those 4 other leases have a slightly shorter length, but they are not significantly shorter than the NCP income. The reversionary yield of in excess of 10 that we have talked about is the overall yield, so inclusive of those other 4 units. And those other 4 units are rap-rented. So they do not detract from that yield and hence, why we expect to see that overall yield from the assets increased from around 9.3 in excess of 10 come 2027 when we see that rent review with NCP.

Another question is how do we determine the split between income distribution and dividend? I'm just going to hand over to George to answer that question, if that's okay. Of course, there's Fund Controller of AEWU, this is what he does every quarter.

[George Elliott, executive]

Thank you for the question. So -- you will know that as a REIT, we are required to distribute at least 90% of our property income each quarter. You'll also note on NAV announcements, we always use increments of 0.5. So you'll have 3 scenarios, either 2 and 0 split; a 1.5, 0.5 split; or a 1, 1 split. Using an increment of 0.5 and absolutely means there's some inaccuracy in the fact that we may not completely distribute all the relevant property income. As a result, each quarter, I have to make an assessment that takes into account 2 key factors for what our pit and non-pit split is. Firstly and most crucially, I must be sure that we have distributed at least 90% of property income on a cumulative basis in order to maintain our REIT status.

And also, I, therefore, aim to minimize each quarter what that overall under declaration of property income is. So those are the 2 key factors that I consider when making that calculation. And to date, obviously, we've maintained our REIT status and our degree actually has ended up being on a cumulative basis consistently pass that as [indiscernible]. So yes, those are the 2 key factors.

[Laura Elkin, executive]

Another question is, going forward, how do we see the balance changing in the composition between intercity mixed-use sites and out-of-town industrial use sites I'm assuming that question is in relation to our investment pipeline. So in a pipeline, we analyzed it very much on the basis of asset led. Each asset is analyzed based on their merit. Our approach is generally sector agnostic, but we look across all market sectors to see where we best find value at that time. We will, therefore, be led by where we see value in the future. But at the moment, we are seeing greater opportunity in city centers, I think. And as I've talked about some of the exciting locations that we have been able to acquire in the center of York and the center of [ Park ] and other exciting locations in our pipeline are, I would say, at the moment, more focused on intercity centers as compared to where they have been in the past when particularly we were buying a lot of industrial locations.

I think that sort of coincides with us for some time now having not found a lot of value in the industrial market. So we'll continue to be asset-led going forward, but would expect to see, yes, a continuing trend of any city locations or certainly urban locations.

Another question is what effect has high inflation had on our business so far?

I think in reality, and of course, this has sort of spoken sort of -- of course, we're not sort of through this period of high inflation, and it's something that our business as well as all businesses will need to continue to monitor. But so far, I feel that we have said very well compared to how perhaps we could have done. And starting with a number of factors, our cost of debt has been protected from quite early on in this period of high inflation. That is, of course, set at a level of just under 3%, and that was set in May 2022 for a 5-year period. So we have another just under 4 years left to run on that fixed period.

And I think another major impact is, of course, the impact on our tenants and on their trading businesses and on their financial positions and their ability to pay rent and meet their financial obligations. And that's something that we continue to monitor very carefully indeed. I think what I would say so far through this period of high inflation, which, of course, we're not yet out of is what we have seen is that I think a lot of our tenants have been surviving much better in this sort of difficult period than we saw during -- perhaps during COVID, particularly to pick a sector in the retail sector during that time, of course, we saw a lot of tenant CVAs and a lot of tenants going through significant struggle.

And we are seeing less of that now. And I think perhaps that is because of those tenants that are remaining, they are perhaps the better capitalized tenants, having already been through that difficult period. And of course, there are strains on their business. And I think that's perhaps an example of that is during the current quarter. In our NAV announcement last week, we talked about provision that we had to make in the accounts for concerns around the Wilko covenant who are 1 of our tenants at Union Street in Bristol.

Now of course, their struggles as a business have been widely publicized. And their plans going forward are currently not yet clear. They are, of course, an example of a tenant who has faced difficulty because of the current time. So we continue to monitor that very carefully. But so far, I think we have fared very well.

Another question is, what is the company doing to narrow the discount and bolster the share price? I'd say at a high level that, of course, a reminder, we at AEWU, our shares trade at 1 of the narrowest discounts of our peers. And in that group, I'm referring to the diversified REIT payer group. We have consistently traded at one of the narrowest discounts, not the weak content to sit there and sort of take that for granted. We would, of course, like our share price over the long term to reflect the value that we as a company see in our assets.

So what can we do to try and counter that? Of course, the share price is very much a factor of the market. So there's not that much we can do. But we will be continuing to keep the company's news flow out there and informing the market of any positive actions that we've taken and any positive performance. I think the fact that the company's performance has been very strong compared to its peers, is perhaps 1 of the reasons why our discount between our NAV and our share price has been so consistently low.

From time to time, we do analyze the prospect of share buyback. And when it's something that we have undertaken in a fairly limited way in the past, and we will analyze that on an ongoing basis going forward. And if we feel that there is a need to take action, then we, of course, will.

A question has been asked, is the peer group performance table available to investors? So yes, all of the slides that we have just presented to you will be available to download through the Investor Meet company website after this presentation has taken place. So I apologize. I know on some of these slides, the fonts are rather small. So that may help with viewing them.

And the question was asked, how well placed is the portfolio in respect of CapEx required to comply with MEES? I believe I have already fully answered that question on the EPC slide. So hopefully, that is an answer to your question.

Another question is all of our debt fixed at 2.95% for 4 years? I believe it's 2.96%. But yes, all of our -- 100% of our debt is fixed for the next -- just under 4 years, and that's up until May 2027. Sorry, I'm just reading through a couple of these other questions.

Somebody has asked, can we please comment on the potential for consolidation in the U.K. REIT sector, particularly amongst smaller REITs?

Yes, I -- so we've talked a number of times about how we would very much like to grow the company. I think a number of reasons for that are to have the ability to access a greater amount of pipeline. And often, we have a really great pipeline that we've built for the company, which only have the ability to access a small part of it, which in some ways can feel this frustrating. But of course, that's the way things are.

And in addition, I think it would help to perhaps sort of dilute some of the bumps that we tend to see in things like earnings and performance when as at the current time, we are uncovered for a period through our dividend, perhaps being through the investor having just made a sale. I think if we were slightly larger, it would help to dilute periods like that and perhaps provide just a little more consistency to investors. But I think to say that the #1 focus is certainly on our performance going forward.

The reason for talking about that ambition to grow in some way is that we do analyze all opportunities open to the company, whether that's doing a capital raise in the traditional way through the market and issuing new shares or looking at corporate opportunities. It's fair to say that together with our broker and our Board, we do that consistently. If we feel that it's in the best interest of our shareholders, we would look to take something like that forward. But of course, it would have to be in the best interest of our shareholders.

I think just time for 1 more question. Somebody has asked, how competitive has it been in this higher rate environment to bid for assets?

Yes, it's certainly been a really interesting time in investment markets over the past 12 months, really, whilst we've seen quite a lot of volatility going through property values, driven both by ongoing political activities and economic activities. And during that time, we have seen a lot -- actually a lot less competition for assets. So -- we have seen investment volumes, and I'm talking here about the sort of property investment market, commercial property investment market as a whole.

Volumes in the amount of property that's traded have been significantly lower over the past 12 months than their long-term average. So there are far less people competing in the commercial property market than there is on average over the long term.

Now we see that as a benefit. It means that there is perhaps less pricing transparency, which increases the ability for assets to be bought, we believe, at -- that we believe are mispriced. So if there are less people in the market, less transparency on pricing, vendors can perhaps be less sure of the values that they're selling their assets for. And we can try to be more opportunistic during that period on the assets that we're buying and the prices that we're paying for them. And I think that's really reflected in some of the really excellent assets that we have bought in the past 12 months and the very strong pricing that we've been able to achieve there. And hopefully, with further purchases that we expect to make over the coming weeks, that will again be proven. So we have seen less competition so far during that period of high interest rates. Back to you, Paul.

[Paul Brotherhood]

That's has been fantastic. Thank you, indeed, for covering first questions that came can from investors. Of course, the team will review all questions submitted today and will publish responses where appropriate to do so on the Investor Meet Company platform. And Laura, I know you have concluded and some of that, but perhaps just a few final comments just before we redirect the attendees to give you some feedback.

[Laura Elkin, executive]

Yes. Thanks very much. I think, yes, very excited to see what the next weeks will bring as we continue to deploy our remaining capital for investment. And I think I've already demonstrated, but the impact that, that will have on our earnings going forward. We -- yes, very pleased, hopefully to see our income levels from the company continue to grow over coming periods.

[Paul Brotherhood]

That's fantastic. Thank you, indeed, and thank you to you and the team for updating investors today. I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order the team can better understand your views and expectations. It's should only take a moment to complete and those greatly valued by the company. On behalf of the management team of AEW U.K. REIT plc, I'd like to thank you for attending today's presentation. That concludes today's session, and good morning to you all.

[Laura Elkin, executive]

Thank you very much.