TIDMASLI
RNS Number : 1525I
abrdn European Logistics Income plc
01 December 2022
LEI: 213800I9IYIKKNRT3G50
abrdn European Logistics Income plc
Portfolio Update and Unaudited Net Asset Value as at 30
September 2022
Further diversification and portfolio indexation characteristics
underpinning valuation resilience
1 December 2022 - abrdn European Logistics Income plc (LSE:
ASLI), the Company which invests in high quality European logistics
real estate, announces its unaudited quarterly Net Asset Value
("NAV") for the quarter ended 30 September 2022.
Highlights
-- The portfolio valuation increased to EUR807.4 million;
excluding new acquisitions during the period, the portfolio
like-for-like valuation fell marginally by 1.0%
-- NAV per Ordinary share decreased by 1.3% to 129.2c (GBp -
114.1p 1 ) (30 June 2022: 130.9c (GBp - 112.4p 1 )), reflecting a
NAV total return of 6.5% (in Euro terms) for the 12 months to 30
September 2022
-- EPRA Net Tangible Assets 2 decreased by 0.9% to 137.4c per
Ordinary share (30 June 2022 - 138.7c)
-- Third interim dividend for 2022 of 1.41c (GBp - 1.20p)
declared, payable on 30 December 2022
-- Four acquisitions completed for a total net consideration of
EUR44.6 million, taking the portfolio to 27 assets across five
countries:
o Three freehold French properties, leased to Dachser Logistics,
for an aggregate EUR32.5 million (excl acquisition costs)
o 6,900 sqm warehouse (including office space) in Horst, the
Netherlands, for EUR12.1 million
-- EUR100 million of new debt agreed with ING Bank, via two
facilities, secured against the portfolio's Spanish assets, at a
blended all-in interest rate of 2.88%. The Company's Loan to Value
remains within the stated target range at 35%
-- Further improvement in the Company's Global Real Estate
Sustainability Benchmark ('GRESB') score to 86/100, whilst
maintaining its high Green Star rating with 4 out of a maximum 5
stars
-- In October, Troels Andersen was appointed as Lead Fund Manager, replacing Evert Castelein
Troels Andersen, Fund Manager, abrdn, commented:
"The European logistics market continues to be characterised by
record low supply and robust demand from a breadth of businesses,
allowing landlords to capture strong rental growth . This limited
supply of good quality buildings with increasing construction costs
and higher interest rates, together with strong occupier demand for
urban locations together with long indexed linked leases underpins
our strategy.
"Whilst forecasters are expecting outward yield movement over
the coming quarters, the Company's focus on tenant critical,
quality, sustainable buildings, means it is well placed to
withstand the impact of wider market volatility. Despite the well
documented headwinds in relation to inflation and policy rates, the
diverse nature of our well-located portfolio, spread across 27
assets over 5 countries, together with indexed long income should
ameliorate any valuation softening we witness over the next twelve
months.
"With rent remaining a smaller percentage of tenant's overall
operating costs and vacancy rates at historical lows, we are
already seeing, and are confident moving forward, that the CPI
indexation applied to leases will be accepted by tenants even
through periods of high inflation. The portfolio's attractive
indexation characteristics are a clear and appealing differentiator
for investors and will be a key driver for future earnings
growth."
Performance
The unaudited portfolio valuation decreased by EUR6.8 million in
the quarter, or 1.0%, on a like-for-like basis excluding new
purchases in the quarter. The valuations of acquisitions in the
quarter bolstered by the Waddinxveen extension were c.EUR4 million
or 3% ahead of net purchase prices, bringing the net impact on
capital values over the quarter for the whole portfolio down to
-0.35%.
For the 12 month period to 30 September 2022, the Company's net
asset value total return was 6.5% in Euro terms (4.5% in sterling
terms). The Company has delivered 7.1% per annum since launch in
Euro terms.
As at 30 September 2022, the Company's share price was
88.4p.
Dividend
The Directors have declared a third interim distribution for the
year ending 31 December 2022 of 1.41 euro cents (equivalent to 1.20
pence) per Ordinary share. This third interim dividend will be paid
in sterling on 30 December 2022 to Ordinary shareholders on the
register on 2 December 2022 (ex-dividend date of 1 December
2022).
Rent collection & Asset management
100% of the expected rental income for the quarter ended 30
September 2022 has been collected.
During the quarter the Company delivered on a number of asset
management initiatives. Highlights included:
-- In August, the 7,375 sqm vacant unit at Phase II Gavilanes
was leased to ADER on a 5-year term. ADER provides distribution
services to companies in the freight and logistics sector and has
consolidated its operations in the Gavilanes area. The letting is
fully CPI indexed and accretive to performance having completed
well in advance of the guarantee timing assumptions and at a rental
level ahead of underwriting.
-- In Lodz, Poland, Tabiplast recently signed an 8-year lease
across 1,600 sqm ahead of expectations and the previous tenant's 3
year option.
-- In Krakow, a recently vacant unit has been let on a new
3-year term to Gebrüder Weiss ahead of previous rent and ERV,
whilst packaging company DS Smith has extended its lease by four
years at the same asset.
After staged incentives, these leases will generate c.
EUR778,000 of additional annual income in aggregate.
French acquisitions
During the quarter the Company completed the purchase of three
well-located freehold logistics properties in Bordeaux, Dijon and
Niort, France. The aggregate net purchase price of EUR32.5 million
reflects a net initial yield of 4.0% with Q3 valuations currently
9% ahead of negotiated prices.
All three buildings are leased to the same German-owned global
third-party logistics provider, operating as Dachser France. This
long standing 3PL operator has a strong financial covenant and the
leases provide for annual indexation. Site coverage is also very
low, providing excellent opportunities for expansion in the
future.
Dutch sale and leaseback
The Company also completed the purchase of a small unit in
Horst, the Netherlands, totalling c. 6,900 sqm, including office
space of 1,831 sqm, for EUR12.1 million as part of a sale and
leaseback deal with Limax, a producer, packager and distributor of
soft fruits and mushrooms. Serving as its headquarters, the tenant
critical asset with cold storage lies between Venlo and Venray, an
area which is well known for its agrifood and agricultural
businesses.
The freehold property, which covers a total land plot of c.
40,500 sqm, provides ample scope for future expansion and benefits
from a ten-year lease term subject to annual CPI capped indexation,
with the price reflecting a net initial yield of 3.8%. The property
features rooftop solar panels which enhance the portfolio's
sustainability credentials, in line with the Company's
strategy.
Waddinxveen extension completion
In August the Company also completed the acquisition of the
warehouse extension at Waddinxveen, the Netherlands, for a total
net purchase price of EUR4.9 million. This provides an essential c.
2,400 sqm of cooled warehouse space and 157 sqm of office space,
allowing Combilo to service its growing client base, including a
Swedish supermarket chain. The lease runs concurrent with the
original, with over 11 years remaining, and generates additional
rent of c. EUR250,000 per annum, reflecting a yield of 5%. The Q3
valuation sits 5% ahead of the agreed price. The extension complies
with the latest energy neutrality standards in the Netherlands and
includes 16 rooftop solar panels, resulting in an A+++ energy
rating.
This initiative is value accretive and enhances the income
producing qualities of this modern, well-located asset.
GRESB 2022 Survey results
During the period, the Company received the results of the 2022
GRESB (the 'Global Real Estate Sustainability Benchmark') survey
achieving a score of 86/100, representing continued improvement and
an uplift on its 2021 GRESB survey score of 84/100. It also
compares favourably versus the 79/100 average peer score and 74/100
overall average 2022 GRESB score.
The Company has maintained its high Green Star rating with 4 out
of a maximum 5 stars and outperformed the benchmark average score
in most categories. The latest GRESB scoring recognises the
fundamental importance the Investment Manager places on
sustainability when acquiring and subsequently enhancing the
Company's portfolio. The Investment Manager continues to actively
implement green leases and work closely with tenants, bolstered by
an annual tenant satisfaction survey, and collects energy usage
data on all of the portfolio assets and regularly reviews this to
identify potential areas for improvement. The improved GRESB
scoring also recognises the strong energy efficiency credentials
across the portfolio.
Debt Financing
In July 2022 the Company secured a new EUR40m debt facility
against Phases I to III of its Spanish Madrid portfolio. A
three-year term was agreed with ING Bank at an all-in fixed
interest rate of 2.57%, effected using an interest rate swap. In
September, the planned EUR60 million financing with ING Spain
secured against further Spanish assets was completed at an all-in
fixed interest rate of 3.09%.
At the end of the quarter, the Company's fixed debt facilities
totalled EUR261.6 million at an average all-in interest rate of
2.0% and with a loan to value of 35%.
Breakdown of NAV movement
Set out below is a breakdown of the change to the unaudited net
asset value per Ordinary Share over the period from 1 July 2022 to
30 September 2022. The unaudited net asset value has been prepared
under International Financial Reporting Standards ("IFRS").
Per Share Attributable Comment
(EURcents) Assets (EURm)
Net assets as at
30 June 2022 130.9 539.6
------------ --------------- -----------------------------
Unrealised change Portfolio of 27 assets.
in valuation of Capital values decreased
property portfolio (0.7) (2.9) by a net 0.35% or EUR2.9m
------------ --------------- -----------------------------
Acquisition and
capital expenditure
costs during the
period (1.0) (4.0)
------------ --------------- -----------------------------
Income from the property
Income earned during portfolio and associated
the period 1.9 7.9 running costs
------------ --------------- -----------------------------
Expenses for the
period (1.1) (4.5)
------------ --------------- -----------------------------
Net deferred tax liability
on the difference between
book cost and fair value
Deferred tax liability 0.0 0.2 of the portfolio
------------ --------------- -----------------------------
Movement in the mark
to market value of a
dividend hedge in Q3
2022 to fix the EUR:GBP
FX hedge mark to conversion of the 2022
market revaluation (0.0) (0.2) dividend
------------ --------------- -----------------------------
Movement in the mark
to market value of a
swap interest rate hedge
maturing in 2025 to
Interest rate swaps fix interest rates of
mark to market bank loans drawn by
Revaluation 0.7 2.7 Spanish SPV's
------------ --------------- -----------------------------
Second interim dividend
Distribution paid 2022 of 1.20 pence (1.41
on 23 September euro cents) per
2022 (1.4) (5.8) Ordinary Share .
------------ --------------- -----------------------------
Foreign currency Foreign currency loss
loss (0.2) (0.8) in the period
------------ --------------- -----------------------------
Other movement Movement in lease incentives
in reserves 0.1 0.3 in the quarter
------------ --------------- -----------------------------
Net assets as at
30 September 2022 129.2 532.5
------------ --------------- -----------------------------
EPRA Net Tangible Assets per share is 137.4 Euro cents, which
excludes deferred tax liability.
Net Asset Value analysis as at 30 September 2022 (unaudited)
EURm % of net assets
Property Portfolio 807.4 151.6
-------- ----------------
Adjustment for lease incentives (4.5) (0.8)
-------- ----------------
Fair value of property
portfolio 802.9 150.8
-------- ----------------
Cash 60.7 11.4
-------- ----------------
Other Assets 22.0 4.1
-------- ----------------
Total Assets 885.6 166.3
-------- ----------------
Bank Loans (307.0) (57.6)
-------- ----------------
Other Liabilities (14.2) (2.7)
-------- ----------------
Deferred Tax Liability (31.9) (6.0)
-------- ----------------
Total Net Assets 532.5 100.0
-------- ----------------
The property portfolio valuation is based on the independent
external valuation of the Company's direct property portfolio now
undertaken wholly by Savills (UK) Limited.
The NAV per share at 30 September 2022 is based on 412,174,356
shares of 1 pence each, being the total number of Ordinary shares
in issue at that time. As at the date of this announcement, the
Company's share capital consists of 412,174,356 Ordinary shares
with voting rights.
The Board is not aware of any other significant events or
transactions which have occurred between 30 September 2022 and the
date of publication of this statement which would have a material
impact on the financial position of the Company.
Details of the Company and its property portfolio may be found
on the Company's website at:
http://www.eurologisticsincome.co.uk
For further information please contact:
abrdn Fund Managers Limited +44 (0) 20 7463 6000
Luke Mason
Gary Jones
Investec Bank plc +44 (0) 20 7597 4000
David Yovichic
Denis Flanagan
FTI Consulting +44 (0) 20 3727 1000
Dido Laurimore
Richard Gotla
James McEwan
The above information is unaudited
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