29 May 2024
LEI: 213800I9IYIKKNRT3G50
abrdn European Logistics
Income plc
Portfolio Update and
Unaudited Net Asset Value as at 31 March 2024
29 May 2024 - abrdn European Logistics Income
plc (the
"Company" or "ASLI"), the Company which invests in a diversified
portfolio of European logistics real estate, announces its
unaudited Net Asset Value ("NAV") for the quarter ended 31 March
2024.
Summary
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Post period end, the Board announced
the outcome of the Strategic Review on 20 May 2024, concluding that
it would be in the best interests of Shareholders as a whole to put
forward a proposal for a managed wind-down of the
Company
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The portfolio value declined 1.6% on
a like-for-like basis to €606.29 million (31 December 2023: €633.81
million), driven by continued, albeit slowing, outward yield
movement, predominantly related to the assets in France and
Germany
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NAV per Ordinary share decreased by
1.7% to 91.8c (GBp - 78.5p) (31 December 2023: 93.4c (GBp -
81.2p))
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EPRA Net Tangible
Assets decreased by 2.1% to 93.7c per Ordinary share (30
December 2023 - 95.7c*)
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Interim dividend for 2024 of 1.41c
(GBP - 1.21p) declared, payable on 5 July 2024
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Completed the sale of the vacant
French warehouse in Meung sur Loire, for €17.5 million, in line
with the 31 December 2023 valuation and reflecting a modest
discount to the 30 September 2023 valuation
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Proceeds from the sale of Meung sur
Loire were used to pay down €11 million of a securitised loan with
Bayern LB, reducing Loan to Value ('LTV') to 38.2% - fixed debt
facilities totalled €248.5 million at an average all-in interest
rate of 2.0%, with no major refinancings until mid-2025
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Completed a new three plus two year
lease for 5,131 sqm of highly sustainable logistics space in
Gavilanes, Madrid, 8.7% above the previous passing rent, with
Spanish transportation company METHOD Advanced Logistics
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*Based
on revised figures following 2023 audit
Troels Andersen, Lead Fund Manager, abrdn,
commented:
"Market expectation is mounting that
the ECB will start cutting interest rates at its next monetary
policy meeting in June, and despite a small valuation decrease this
last quarter, economic indicators are more positive for the second
half of this year. With the improving backdrop, and key long-term
structural drivers underpinning the logistics sector's rental and
capital growth prospects, we expect to see increasing investment
activity for this high conviction asset class. In the near-term, we
are focused on letting up the remaining vacant space in Madrid and
leveraging our local expertise to deliver indexation-driven rental
uplifts, which reflect the strength of sub markets where the
portfolio is located."
Performance
The independent unaudited external
valuation of the Company's property portfolio undertaken by Savills
(UK) Limited decreased on a like-for-like basis by €10 million, or
1.6%, in the quarter. The French and German assets witnessed the
biggest declines (-5.2% and -4.2% respectively) with the balance of
the portfolio broadly flat.
For the year ended 31 March 2024,
the Company's net asset value total return with quarterly
distributions reinvested was -13.9% in Euro terms (-16.2% in
sterling terms). As at 31 March 2024, the Company's share price was
60.8p, and as at the date of this announcement the share price was
62.8p.
Rent Collection & Portfolio Update
As at the date of this announcement,
96% of the expected rental income for the quarter ended 31 March
2024 has been collected.
During the quarter, the Company
concluded discussions and agreed a surrender of the lease agreement
with Arrival, taking full possession of Units 3A, B and C,
Gavilanes, Madrid. As previously indicated, both the Investment
Manager and the Board believe that this was the best outcome, due
to persistent non-payment of rent and Arrival's financial
situation, allowing the Company to take full control of these units
and progress an active leasing programme.
Reflecting the demand for Grade-A,
sustainable logistics space in Spain, the Company signed a new
lease for 5,131 sqm of space, at Unit 3B with Spanish
transportation company METHOD Advanced Logistics ("METHOD"),
completed 8.7% above the previous passing rent. METHOD operates a
fully flexible shipment operation including large, complex bulky
goods, as well as smaller, nimble, last mile options. The new lease
provides for a three plus two year agreement. METHOD is
implementing a capex programme at its own expense to deliver four
new docks in the façade of the building. The Investment Manager's
locally-based team continues to actively market the remaining units
with strong interest in the adjoining c. 6,000 sqm and c. 16,500
sqm units at Phase 3, Gavilanes.
During the quarter, the Company also
completed the sale of its 30,180 sqm vacant warehouse in Meung sur
Loire, France, to Castignac. The €17.5 million disposal price was
in line with the 31 December 2023 valuation and reflected a c. 7%
discount to the 30 September 2023 valuation. The transaction
increased the portfolio occupancy rate and represented the
Company's second disposal in the last 12 months. The proceeds from
the sale and associated repayment of an €11 million securitised
loan with Bayern LB reduced the Company's LTV to 38.2%, with an
all-in interest rate of 2.0%, as well as improving the Company's
cash position.
The weighted average unexpired lease
term (to break) now stands at 6.8 years with the weighted average
lease term (to expiry) now 8.1 years.
Debt Financing
At the end of the quarter, the
Company's fixed rate debt facilities totalled €248.5 million at an
average all-in interest rate of 2.0%, the earliest refinancing of
debt is required in mid-2025. The current loan-to-value of 38.2% is
marginally above the Company's target of c. 35%.
Interim Dividend
Following the conclusion of the
Strategic Review, the Company announced an interim dividend for
2024 of 1.41c (GBP - 1.21p), payable on 5 July 2024 to shareholders
on the register on 7 June 2024 (ex-date of 6 June 2024).
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 January 2024 to 31 March 2024. The unaudited net
asset value has been prepared under International Financial
Reporting Standards ("IFRS").
EPRA Net Tangible Assets per share
is 93.7 euro cents, which excludes deferred tax
liability.
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Per Share (€
cents)
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Attributable Assets
(€m)
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Comment
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Net assets as at 31 December
2023
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93.4
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384.9
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Unrealised and realised decrease in
valuation of property portfolio
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(2.5)
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(10.0)
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Portfolio of 25 assets - capital
values decreased by 1.6% over the quarter
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Realised loss on disposal of
property
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(0.2)
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Realised loss on sale of
Meung sur Loire
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Income earned for the
period
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1.8
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7.4
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Income from the property portfolio
and associated running costs
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Expenses for the period
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(1.2)
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(4.7)
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Deferred tax liability
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(0.2)
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Net deferred tax liability on the
difference between book cost and fair value of the
portfolio
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Interest rate swaps and caps/floors
mark to market revaluation
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0.1
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0.3
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Movement in the mark-to-market value
of interest rate swap and options hedge maturing in 2025 to fix
interest rates of bank loans drawn by Spanish SPV's
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Other movements in
reserves
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0.2
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0.9
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Movement in lease incentives in the
quarter
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Net
assets as at 31 March 2024
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91.8
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378.4
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Net
Asset Value analysis as at 31 March 2024
(unaudited)
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€m
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% of net
assets
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Fair value of Property Portfolio*
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602.7
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159.3%
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Cash
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28.4
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7.5%
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Other Assets
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18.8
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5.0%
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Total Assets
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649.9
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171.8%
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External Debt
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(246.0)
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-65.0%
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Other Liabilities
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(15.2)
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-4.0%
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Deferred tax liability
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(10.3)
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-2.8%
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Total Net Assets
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378.4
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100.0%
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*After lease incentive
adjustment
The NAV per share at 31 March 2024
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 31
March 2024 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
Ben
Heatley
+44 (0) 20 7156
2382
Investec Bank
plc
+44 (0) 20 7597 4000
David Yovichic
Denis Flanagan
FTI
Consulting
+44 (0) 20 3727 1000
Dido Laurimore
Richard Gotla
Oliver Parsons