Aew Uk REIT (LSE:AEWU) — Q3 Update

0:00 Good morning, and welcome to the AEW UK REIT PLC Q3 Update. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can view your questions submitted today and publish responses when it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to portfolio manager, Laura Elkin. Good morning. Thanks, Alex, and good morning, everyone. Apologies. We are broadcasting to you camera off today, just due to some technical problems, but hopefully, you, you'll be able to see us, back again for for next quarter.

0:52 So hi. Good morning, everyone. I'm Laura Elkin. I'm the portfolio manager for AEW UK REIT. We are going to start today with just a couple of slides, informing you about our strategy. And this is the same strategy that we've been running for the past, gosh, coming up to eleven years now for AEWU. It's a strategy that really plays to the strengths of our team. So that is as stock pickers, as asset managers, and just as real property geeks. Because all of our team here are chartered surveyors, so we very much know the ins and outs of property and how to maximize value. And and if I had to describe that strategy in one sentence, I would say that we are sector agnostic value investors.

1:42 And that means that we can look across the whole of The UK commercial property market, to find pockets of value where we see it best from time to time. And that generally sees us always buying strong locations to make sure that we, can maximize tenant demand, and investor demand for our properties going forward. We like to buy assets that offer high levels of income because we believe that that is the best starting place for outperformance. And we also like to buy assets that at the time of purchase, we are paying a price that represents a low capital value per square foot. And this is so that we can start off with not only a defensive capital starting starting point, but also have a platform for growth going forward.

2:31 Now once we own those assets, we very actively manage them to maximize income, which is hopefully demonstrated to you by our dividend, which is one of the highest in the investment company space, and has been paid now for, consistently for forty one consecutive quarters, so effectively since the completion of our initial ramp up. We also work very hard to maximize the capital value of our assets too. Now anyone who follows our news stream would see that we put out our shareholder update and dividend announcement yesterday. Another really strong quarter for the company. We've had some great asset management gains during the quarter, which Henry will come on to talk about shortly.

3:17 A slight dip in in in value, but only very small there, which was, also outweighed by a profitable sale that we made during the quarter as well. So now, slightly up. What's really positive for me announcement that we put out yesterday that we were able to announce very strong earnings for the quarter, and that follows on from having a very strong, year for earnings, during our full year ending March 25 as well. And for me, that really speaks to how we have worked very hard to grow income in the company, over that time period, but also, how we are currently in a fairly stable period for the the prop the portfolio. Sorry. Having been fully invested since last summer, we we have been fully invested for that time period, and and and that is reflected in those earnings too.

4:12 So the next slide is showing us here, just some high level statistics on the company. See that we currently own, 34 properties with just over 130 tenants. Our net initial yield at just over eight compares very favorably to our reversion re yield, at 8.84. That gap between that initial yield and reversion re yield is determined by our independent valuers and really reflective of the kind of income growth that they believe we could achieve in this portfolio. Of course, not all tomorrow, but this is what we are spending time on, our hard work, asset managing to try and close that gap really and, and and and and increase the income stream of our current portfolio.

5:07 The vacancy rate there at just under 6%, is about where I would expect to see it over the long run. It kind of, very often bounces between 510%. As as as you will hear us, talk about today and as many of you will know, we very actively manage this portfolio. So you will rarely see us with a zero vacancy rate. We like having some vacancy here because it gives us, assets to play with. It lets us talk to the tenants. It let allows us to bring units to the market and drive rental income. So that is very important for our asset management strategy, and it's just where we would like it to be. I'm just gonna touch as well on the bottom pie chart here on the right hand side of the page, which shows you our current sector weightings in the portfolio.

5:56 You'll see that we still have a very strong weighting towards industrials at 37%. We've been building up our retail exposure both on the High Street and in retail warehousing over the past couple of years. So those two retail sectors combined now total about 35%. We have always had a fairly low exposure to the office market, and that has certainly assisted our capital values in recent years. And you will see that they're at just 10% of the portfolio. I'll hand over to Henry now, who can talk through some slides on our recent performance. Thank you, Laura, and good morning, everyone. So this first slide slide looks at, our NAV total return performance, versus the peer group.

6:49 Nine point three percent ten year annualized NAV total return to September, 2025, and eleven point one five year annualized NAV total return to September 2025. Now the main point I want to draw your attention to here is where we see our performance diverge from the peer group, in 2019. Now this happened for two main reasons. One, you'll be aware, obviously, that was the time of COVID. And at that time, we had a very high weighting to industrials and greater than 55% at the time. We also had a very low, retail weighting, which was about 13% combined across high street retail and retail warehousing.

7:38 So, that really sort of, highlights the benefits of a diverse strategy. So we were overweight in industrials, underweight retailers. Obviously, we're all aware that the industrials performed very well during that period and with obviously a huge trend in e retailing and obviously the high streets and retail warehousing did suffer to an extent because obviously of people being kept in their homes. The other main point I'd like to point about is the performance moving away because of the WALT, the weighted average unexpired lease term, of the portfolio. And it's around four to five years in generally. And, that is obviously the point in time where the asset management team engage with tenants on, lease expiries or where there might be a break option, and there will be lease renewals or lease regears.

8:33 And through that asset management, mechanism, we are either sort of moving on rents or extending leases and obviously adding value. So it's not a surprise that we see our performance move away then. This next slide, looks at our property total return versus the MSCI benchmark, which is what we report to. Five year property total return performance of six point seven percent and ten year out performance of 4.7. So as you can see, this is six months, twelve months, going up to a ten year, performance. And just drawing your attention to seven years and ten years, I think what is impressive here is the consistency, of our performance and outperformance.

9:23 So over ten years, it's double of the MSCI benchmark. Over the five year period, the performance is the strongest. That is at the time when we had such a high weighted sheds. And more recently, we've been selling those sheds at yields kind of around 6% and reinvesting that into higher yielding assets in the retail sectors. At three years, you'll see obviously the performance isn't as strong, but I think what's impressive here is that our outperformance is strongest over this time period, being a 7.2% outperformance to the MSCI benchmark. And then more recently, over the six and twelve month periods, the performance a little bit muted, but that's probably because we have not been fully invested. So we sold, Coventry in December last year, and we reinvested those proceeds into Lester and Hitchin, which obviously you are aware about.

10:25 So this next slide, looks at our ten year track record. As Laura said, we we went through our ten year, track record, earlier this year. And, apologies. There's quite a lot going on on this chart. But if you sort of move your eye from left to right, this tracks, where the total, total return has been coming from from 2017 to today. And I suppose there's kind of three main themes from this chart. I think the first is the consistency of the income. So that blue bar, which is, you know, very much the meat and the sandwich on this, chart is running straight through the middle at around 8%, which is obviously not surprising bearing in mind that that's what we typically buy on properties at less initial yields of 8% plus.

11:13 It does dip off a little bit around 2022, but that was because we were looking to achieve a total return strategy on two assets, which led us to having higher vacancy, and that was Oxford and Glasgow, both which we sold, to, developers for alternative uses. But as you can see, that consistent income running right through the middle here. I think the other two themes are countercyclical buying and selling and the benefits of diversification. So with regards to countercyclical buying and selling, we were buying industrials and offices kind of in the late teens. We were selling out of the offices just before COVID, but obviously, the office sector took a bit of a hit. We crystallized lots of profits on industrials at the top of the market, and then we've been recycling those lower yielding, industrial sales into high yielding retail, purchases more recently.

12:10 In terms of benefits of diversification, I've touched on this already. You know, at COVID, we were underweight in retail. We were overweight in industrial. And more recently, when the office sector has had a a tough time, as a result of the return to the office in the post COVID, era, we've been underweight in offices. I think finally, what is kind of underpinning this total performance is alternative uses. As Laura said, we are value investors. So when we're buying assets, we're always looking at vacant possession values and alternative use angles. And I think my final point of this, you know, it's all very well and good, buying the right assets and and asset managing, but it's, you know, important to make the right decision when to sell assets and to cash in your chips and crystallize those profits to get that total return.

13:03 This, chart you've seen many times before if you've been joining these presentations over the years. We haven't included the very small Hitchin sale in this one. As I said, it was a it was a small, office which sit sat behind the main sort of retail thoroughfare in Hitchin. But as you can see, a 38% average sales purchase price premium, a statistic that we're very proud of. And as I said, we've been selling out of lower yielding assets more recently, mainly in the shared sector and reinvesting out into higher yielding assets, in the leisure and retail sectors. Handing back to Laura to talk about the investment opportunity. Thank you. Thanks, Henry. So, we believe that the current, property investment market represents a very strong buying opportunity for our company. And this slide, really sets out the backdrop for why we think that is.

14:02 So what we're showing you here is average commercial property values over the last twenty or so years. And what you can see is that, since late twenty twenty two, when, the country, experienced the LISTRAS mini budget, as part of her premiership. Commercial property values fell significantly around, 22% on average at that time, and they haven't recovered, since. Now the main reason for that is, of course, because interest rates have been, very high for that period. But another reason is that, the commercial property investment market has been seeing very low volumes during that time frame.

14:50 So, really, what we're saying is that average with average commercial property values at their lowest point now, really, since AEW's IPO, which is marked on on the center of the chart here, Now the time now, the we the opportunities that we see in our pipeline represent the strongest buying opportunity from a capital value and prospective capital value growth opportunity that we have seen. Now we don't expect, this position to persist into the long run. Of course, we have seen interest rates start to track down. We see signs that the commercial property investment market is starting to return to normal.

15:36 But, when we look at our pipeline, there's very strong opportunity step that still persist, and we would like to try and find some ways to take, take advantage of that, which as Henry has partly touched on there is sort of why, from time to time, you will see us reach the end of an asset business plan and where we feel that the income and capital value of that asset has been maximized, we will recycle recycle that into another value opportunity where we can enact our strategy. And what I'm showing you on the next slide here is really just the inverse of that. Of course, if capital values are at their lowest, then it may it sort of goes hand in hand with that that the yields that we can achieve from these properties are at their highest.

16:25 And as we've set out to you with this strategy, we are looking to buy low capital values per square foot and high yielding assets. So really, the our pipeline today does absolutely represent a very strong set for what we are looking for, and we find our pipeline currently to to to to offer many interesting high yielding opportunities. Now just a bit more detail, on that really and and and as to the particular sectors where we're seeing those opportunities. Our pipeline as a whole is yielding on average, close to 9%, which looks to be very attractive for our strategy. But but where are we finding that across the sectors?

17:13 Now, if you follow our company, you would have noticed that during the course of last year, we made two acquisitions, one in the high street sector and one in the leisure sector. And those sectors are still very much where we are seeing a strong opportunity set for AEWU. We are finding, well located, high yielding opportunities, and also seeing that those sectors are, to a certain extent, unloved by other institutional investors. And that always represents the time of opportunity for us, because where other investors are viewing a whole sector quite negatively, we can look within that sector to cherry pick the opportunities that we think, are attractive and represent sustainable income opportunities, for an advantageous price.

18:03 As value investors, this is absolutely what we're looking for. We believe that some investors are being a bit too negative on the outlook occupational outlook for for some of these assets. Now, of course, these sectors are facing a number of headwinds. So we have to be very selective about not only the location, but how those tenants are trading as well. And that is what we have done in buying, in these sectors over recent years, and we will continue to do so with opportunities that we see here as well. Turning to the industrial sector. This is one that that that we feel very positive about as well. Personally, I would feel pretty positive about the outlook for almost the entirety of the industrial sector.

18:52 But, of course, this is a sector that is being chased quite strongly by, a significant amount of of of other capital as well. It's certainly the the sector in which, most, capital that sits in the commercial property investment market is currently looking. So there's much more competition here. So we have to be more selective, about the types of assets that we're buying. We won't find the high yields that we're looking for at the prime end, and also that capital is chasing, multiletter states as well. So we see a lot of opportunity in single let industrials, and we still see opportunity there in our pipeline as well. You know, you would see, from from some of our recent announcement announcements. And if you follow our company, you would have heard Henry talk about, some really quite significant wins that he's had in recent weeks and months, with with increasing rental values on some of our single let industrials. So we are more than happy to buy those assets, because we see, an income advantage in the yield on day one, but also because we know from examples in our portfolio that we can drive the rental values going forward there as well.

20:05 Just turning to the office sector, as I've said before, this is our smallest sector exposure at the moment, and it's a sector which, of course, has been through, quite a tumultuous occupational time over recent years following the pandemic. Personally, I absolutely believe in in the office sector in big big city center locations where there's a lot of surrounding amenity and where the buildings offer sort of top level ESG credentials as well. But, really, if we look at the office stock within The UK, that's that that that, part of that sector that that offers those very strong credentials really represents part quite a small part of of that overall market.

20:51 And there were quite a lot of office opportunities out there that would concern me for their lack of amenity, or weaker location, and also would require a significant amount of capital expenditure going forward. So whilst I find it a very interesting sector, I don't think it would ever form a very significant part of this strategy. Firstly, because we are looking to distribute a high level of income, and offices are rather intensive in terms of of their, life cycle and and the capital expenditure that they require. So we we we may selectively, find some strong some strong buying opportunities here, but I think it's less likely that we are likely to build up a large sector exposure within offices.

21:38 Turning lastly to retail warehousing, also a sector that I, I I I like. But, again, there is quite a lot of capital, chasing this sector at the moment as well. So whilst we might selectively see opportunities, I would imagine that we are most likely to be net sellers in retail warehousing, perhaps as demonstrated by, our most recent, large sale of an asset. Going back to November 2024 now, when we sold out of our retail warehousing park in Coventry, for a significant capital profit. We we we may look to do that where we can maximize the the capital performance of some of our other retail warehousing assets in the portfolio as well.

22:30 So I've kind of alluded to a couple of asset management wins that we've had in the portfolio recently at lead there, but I'll hand back to Henry who can talk about that in a bit more detail. Thanks. Thanks, Laura. So, yeah, this this slide really is just a kind of summary of what myself and the asset management team at AEW are doing, as a means of adding value. I mean, what we're really trying to do is grow income streams, lengthen and improve tenant leases, and value through the planning system, whether that be a change of use or we're actually getting planning for, something else with regards to the existing use. Refurbished properties where required, that doesn't typically mean, offices. You can be refurbishing industrials, stripping out retail units to fill as shelves, to then let to new tenants.

23:24 And as a part of that process, we'll we tend to be improving an ESG credentials. And I see that there's a pre submitted question on that, which I'll, come on to in due course. Now we're delivering this sort of value add through new lettings, lease renewals, lease regears. If you don't know what that is, that is when you will be extending a lease, or surrendering a lease and doing a new lease sort of halfway through a term because you feel that there's a benefit to, obviously, the ourselves and the value. Obviously, a tenant would be willing to do that as well. And rent reviews, we've had some recently, some really good wins, in the industrial sector, particularly with regards to rent reviews. We reported a very significant increase, at ROM in Sheffield last quarter.

24:11 Lease surrenders as well, and there are instances where tenants would like to leave, early and in return are prepared to pay you a large capital sum. We don't mind that because it actually reduces our void period. It enables us to sort of get on with some asset management ahead of time. Slightly more sort of niche, asset manager opportunities. You have dilapidation settlements. We just reported a £125,000, dilapidation receipt from Sports Direct to Barnstable this quarter. And maybe taking a lease outside the landlord and tenant act, that means that as a landlord, you hold more cards, on expiry because the tenant doesn't have the right to renew. So, therefore, you can be a little bit more aggressive in your asset management angles.

24:58 A case of us being very successful with that historically was at Corby where the tenant had a lease outside the act. So, essentially, it meant that we could change their locks on the last day of their lease so we could really negotiate hard on the lease renewal. As it turns out, we sold that asset to an eight year old buyer. They were obviously willing to buy it because they knew they could get the asset for themselves without having to go down to more, sort of painful sort of procedural, L and T steps. And we also look to put the break options in or look to use break options as a means of sort of adding value and creating a point in time where we can negotiate with the temp to change things in the lease. So, I mean, the strategy sort of in a nutshell is kind of identifying assets in our pipeline. We then very much sit down, strategize, have an asset management plan so it means that we can sort of hit the ground running when we buy assets. We're growing income. We're adding value through lengthening leases or through the planning system. And then as Laura said, we're, you know, making the decision to sell these assets at the right time and crystallizing these profits and then recycling them into more yieldy assets.

26:09 So this is Bonfert Retail Park, where we've had a number of asset management wins recently. Just to recap, we bought this back in June 2018 for 6,800,000, a £133 a square foot, throwing off a 8.5% net initial yield at the time of purchase. So it's a nice income there. And if you compare that price square foot to what it would cost to build this unit, it is very favorable. It would probably cost more to build that. I'd probably say around a £150 a square foot to build these units, and, obviously, that's excluding the value of the land. It was fully let, had a nice walt of eight point six years, attractive yield, a good site, and a low site coverage. So retail warehousing tends to have a low site coverage, which means that there can be site intensification.

27:01 So that could potentially be, a drive through, coffee restaurant here, for example, or or, you know, it does benefit you in terms of alternative uses. Anyway, in terms of what we've done more recently in terms of the asset management side of things, we did a new fifteen year lease to Farm Foods at a rent of £125,000, a year. We reported that, several quarters ago. In doing that letting, we serviced the unit, and we had the dilapidation receipts from Sports Direct having obviously proved that loss by them spending that money on that unit. Last quarter, we did a letting to rent, at £98,500 a year. And then this quarter, we've had a very good asset management win. B and Q had about seven years left on their lease.

27:49 We engaged with them. We had, a little bit of competitive tension here because we had another tenant who had expressed interest in an overriding lease, which is a bit of a technical property term, but, essentially, they were prepared to take a lease longer than B and Q's, paying us a sort of a profit rent, which would have enabled them to get owner occupier possession at the expiry of B and Qs lease. We use that, as leverage on B and Q to, regain the lease, add, an additional seven and a half years of term and to move the rent on. So a good really good asset management win. And as you can see, we moved the valuation by £900,000 representing a 12% increase this quarter. So a great asset management win to report this quarter.

28:42 This is, the Hitchin assets that we bought, about well, roughly this time last year. I think it was about March time twenty twenty five. We are including this in this, presentation because as Laura said, we have recently sold off a small office which sits behind the main retail component of this asset, which sits on Bancroft, which is the prime retail area, in Hitchin, a very affluent commute to town about, 25, away on the train north of London. So we bought this asset, as said, back in March 25, £10,000,000, a low capital per square foot of £213 a square foot, so relatively cheap, often 8.3% net initial yield. Now the office had vacancy.

29:32 We did have a vendor guarantee, but that was gonna expire, in a couple of months' time. So we've now sold up that office, and it has boosted, the net running yield to 8.7%. So exactly what we want in terms of income and a nice, capital profit, for the company. Thanks very much. Handing back to Laura to conclude the presentation. Thanks, Henry, and thanks, everyone, for joining us today. Yes. So hopefully, it's clear, that we are feeling, very positive about the outlook for, our current portfolio and its performance, but also for the investment pipeline and the assets that we are able to acquire at the moment. And, hopefully, our strong ten year track record gives confidence to investors that we are able to maximize, those values, maximize that income stream, and deliver some strong performance through the company's strategy as well.

30:33 I just thought that we are, I guess, because of the the very strong pipeline that we see, and I mentioned that we are able to access that as we recycle assets. But, of course, that only really creates a fairly limited appetite for reinvestment within the company. We are working with our board to look at ways in which we can grow the equity base of our company. And this is something that we have been focusing on for quite some time, and we will very much continue to do so during the course of this year. Really just so that we can provide to investors more more liquidity in our in our shares, It reduced the cost base of the company as we grow.

31:21 So benefits to investors and also so that we can access some of that strong pipeline as well. So that is a very, clear focus that we have with our board at the moment. Now just, I can see that we've had quite a few questions submitted. Thank you very much for those during the presentation. I'll just pick up, one of these, first of all, and I can see quite a few of you asking a question certainly of this nature, but but just to to pick up one of them. Asking if we have any plans to increase the dividend payment from the company at the moment. So the answer to that question is that we don't have any live plans at the moment. But, of course, as I think one of you has pointed out in asking this question that as a REIT, we are required to distribute 90% of our income stream to our investors.

32:15 So, if we if we reach the position where we, in in distributing that that amount, that that would see us, exceeding the 2p, then, of course, we are required by regulation to do that. And, of course, our board and ourselves would see that as a a very successful position to be in. So we would welcome that, if we think that that is in the best interest of the company and if we can maximize the earnings to that stage, which, of course, we would like to work towards in the long run, but we don't have any plans to do that as of today. Henry, do you want to pick up this question on the Yep. So you yes. We've got a question here saying, what are you doing to make your portfolio more environmentally sustainable? So as I said earlier on, we have a, relatively low vault to expiry, of around five years.

33:07 Now that really benefits us in terms of environmental performance because, obviously, it is a point in time where we can look to engage with our tenants. I'm sure most of you are aware of the minimum energy efficiency standards in The UK, which is looking to improve EPCs, to c's by 2027 and b's by 2029, albeit, those time frames are being reviewed. So, yeah, at the point of where we are looking to renew leases or we take space back and bearing in mind our vacancy, yo yo, is between sort of 510%, we will be looking to improve those EPC ratings. So I think that's the kind of the that's the sort of lowest hanging fruit, the most kind of obvious, asset management angle.

33:59 With regards to the assets that we are are not single let or on full repairing and sharing leases where we have controls, say, where there are service charges, for example, which is typically more like offices and and multilets, retail warehousing parts or industrials. We can improve the environmental performance of those assets. We have asset sustainability plans for all of our assets, and we can improve biodiversity and through landscaping and trying to promote a wider variety of flora and fauna. We also are looking at, like, EV charging and PV. So it's very much a part of what, the asset managers do as their day jobs.

34:49 Thanks, Henry. I'm just gonna pick up a question. And we can't find it now, but I read it two minutes ago. It's here somewhere. Oh, from crispy here, who, very eagle eyed and noticed that in the r and s that we put out yesterday, we stated that the term of our debt facility was July 2027, whereas we previously stated that it was May 2027. Yes. Just to clarify, that isn't as a result of any changes in our debt facility that we've had now for about four years. That is really just due to a clarification between us and our lender in when that term was ending. So, no, the the there's been no changes in the facility.

35:35 And I can see other people asking some questions about that facility. So that facility, as we've just said, expires in July 2027. And we have an in house debt team here at AEW who work not only on AEW UK REIT, but other strategies, that we run here as well, or certainly run by colleagues. Henry and I, of course, work exclusively on AEWU. Now the reason why I'm mentioning that is because it means that that that debt team here, know a a variety of lenders across the market and are really always in touch with lenders, sourcing debt. And and for us, that's very advantageous because it means that they have strong relationships. They very much have their finger on the pulse in terms of where terms can be agreed, in the most favorable fashion for our company, and, of course, that relates to pricing as well.

36:29 So we are already working with that team, and having them report back to our board very frequently in terms of of that, refinancing that we have coming up. And we feel very positive about the kind of terms and also the pricing that we'll be able to secure going forward. Now we're hope hopeful that between now and and and when we have to find something there, the interest rates will continue to track down, and and fingers very much crossed for that. But fair to say that as we sit here today, the kind of pricing that's on offer for us today in order to renew that facility, doesn't look concerning, and I don't think would be negatively impactful on our dividend going forward. So, a very positive outlook on that front. I'm just going to pick up on another range of questions that quite a few of you have put forward. So I talked about the company having a, objective for growth, a very strong objective to growth, and whether or not that sees us looking at m and a opportunities. Opportunities.

37:30 Yes. It absolutely does. And we have really, yeah, done a lot of work on that, over the past couple of years, but particularly, last year and and at the current time as well. So we we are very much assessing opportunities. And if we believe that they are in the best best interest of shareholders, then we will look to pursue them. Absolutely. Someone else just asking the question about the rating of our shares versus NAV and relative to our peers. Now AEWU shares, of course, have been trading at the narrowest discount, I believe, across that peer group of diversified UK REITs.

38:18 And, of course, we've seen during q four twenty twenty five trading is premium occasionally. And and somebody's asking why why is that? I mean, I'd like to think that that is a reflection of the fact that we pay the highest dividend, that we have had the highest level of total return. I would like to think that our strategy is therefore viewed as being, one of the most successful amongst those peers, and and having delivered the strongest return. So for me, that is really why we have achieved the highest rate rating in our shares. I have a few questions I can pick up here. So we've got one from Dan.

39:03 Please, can you comment on the quality of your tenants and whether any of struggling with rent payments? We we alluded to this in the announcement, that actually we've got a very strong tenant base at the moment. It's obviously quite early, in the quarter, and we roughly have about 95% of our tenants have paid, their quarterly rent. And, obviously, some of our tenants are on monthly rents as well. So that figure is slightly sort of inflated because of that. But I would say that at this point in time, rent collection is probably as good as it has been for a number of years. So that's not something that concerns me. And I think it's we you know, we're not seeing the same level of, restructures and CVAs and administrations that we have seen, particularly in the retail sector.

39:57 Obviously, the retail sector has been through a very tough time, very much through the eye of the storm now. So I think those retailers that have survived and that, you know, they've survived a really challenging period. And, you know, there's been a lot written recently about the renaissance, of the high street. I think as long as, you have kind of the best located high street retail assets, I think it's a pretty safe place to be. And, yeah, the sort of the retail life has definitely got a bit of bit of life in it at the moment. Another question here, and we mentioned that, our industrial assets in Basildon had fallen the value this quarter because one of the two tenants there had left. We have taken the decision to go for planning to redevelop this property.

40:50 The the asset has kind of been, you know, well let since we bought it back in 2017 to two main tenants, and we've seen some nice rental growth. However, it is felt that the, the space in its existing configuration is a little bit economically obsolete. And there are, sort of ERVs that we could hit on a new build about £15 a square foot, which is almost twice as much as what, the current passing rents are. We obviously saw a a fall in value, because, the existing units around 70,000 square foot. With the industrial market today, occupier requirements are sort of very specific, and it's essential to have a 40 meter yard. So in doing that, we've had to reduce the floor and the footprint by about 10,000 square foot. You all appreciate the build costs have increased quite significantly over the last five years. I think sort of back pre COVID, you could build a small industrial warehouse about 60,000 square foot for about 80 pounds a square foot, whereas now those costs are sort of, about a 130 a square foot, so have increased quite significantly.

42:00 So, unfortunately, those higher build costs, the smaller footprint, and with exit yields being softer than they were kind of at the the pump, of the industrial market a couple of years ago prior to this trust budget has just meant that residual land values for industrials and all properties actually, are not as strong as they were historically. Another question here on the Nike and Cardiff, how's it trading? Yeah. A number of quarters ago, we, assigned the lease, to a new co, Neil thirteen, and we we based the rent, to a £150,000 a year with the turnover rent. And you'd have seen in this, recent announcement that we have just billed, £50,000 of turnover rent. So, it's good to see that we're getting that additional rent, and the nightclub has you know, is that as a is that a new stage and is trading well?

42:59 Obviously, you would all appreciate that, Cardiff is a strong university city, and, we have the six nations just around the corner, and that is the time when this nightclub trades its its its strongest. So, hopefully, some, some good performance going into trade 26. That's great, Henry. Laura, if I may just jump back in there, thank you for adjusting those questions for investors today. And, of course, the company can review your questions submitted today, and we'll polish those responses on the investment Me company platform. But Laura, before we direct investors to provide you with a feedback, which is particularly important to the company, could I please ask you for a few closing comments? Yes. Thanks all for joining us today. It's been great to, to update you again. I just say if you're looking for information on the company in the meantime, please do go on our website.

43:47 We display our full portfolio on the website. We also have these videos shown. We have sort of a range of contact details for the company and also, our news flow as well with all of all of the company's RNSs. We have also worked recently with Investor Meet company to put out a series of short videos, just providing a bit more detail on our strategy, focusing in on that and particularly asset management and also some of the other opportunity areas that we see in the portfolio. So if you haven't seen those, please check those out as well. I believe they have been released over the course of January so far, so it should be available on the platform. But otherwise, thank you very much, and look forward to catching up again next quarter.

44:34 Fantastic. Thank you very much, Laura Henry, for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. So it'll only take a few moments to complete, and I'm sure we'll greatly valued by the company. On behalf of the management team of AEW UK REIT PLC, we would like to thank you for attending today's presentation, and good morning to you all.