Unaudited NAV as at 30 June 2022

RNS Number : 6772W

abrdn European Logistics Income plc

22 August 2022

 

LEI: 213800I9IYIKKNRT3G50

abrdn European Logistics Income plc

Unaudited Net Asset Value as at 30 June 2022, portfolio update and dividend

Increased weighting to high growth urban logistics sector and portfolio's attractive indexation characteristics underpins compelling investment proposition

22 August 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 June 2022.

Highlights

· Portfolio valuation of €680.4 million, a marginal decrease of 0.35%

· NAV per Ordinary share decreased by 0.5% to 130.9c (GBp - 112.4p 1 ) (31 March 2022: 131.6c (GBp - 111.3p 1 )), reflecting a NAV total return of 10.6% (in Euro terms) for the 12 months to 30 June 2022

· EPRA Net Tangible Assets 2 decrease by 0.5% to 138.7c per Ordinary share

· Second interim dividend for 2022 of 1.41c (GBp - 1.20p) declared, payable on 23 September 2022

· Income enhancing asset management successes including:

o  Five year lease agreed with ADER on 7,375 sqm of previously vacant space at Madrid Phase II, ahead of business plan

o  Completion of Madrid Phase IV Amazon hub

o  Delivery of highly sustainable warehouse extension at Waddinxveen, the Netherlands

· Acquisition of two well-located logistics properties, in Bordeaux and Niort, for €23 million

· Heads of Terms signed to acquire a further French logistics asset, expected to complete late September 2022, f ollowing which the portfolio will comprise 14 urban logistics warehouses and 12 mid-box logistics warehouses

· €40m three-year debt facility agreed with ING Bank, secured against Phases I to III of Spanish Madrid portfolio, at an all-in interest rate of 2.57%.

Evert Castelein, Fund Manager, abrdn, commented:

"The European logistics growth story remains highly compelling, fuelled by the dual demands of e-commerce penetration and the way companies are reconfiguring their supply chains. Importantly, vacancy rates remain at historically low levels, with urbanised areas in particular facing acute supply shortages, given the greater demand from other land uses.

" Alon gside highly selective acquisitions , our primary focus is executing on our pipeline of value-enhancing asset management initiatives, which have included adding ADER to our tenant roster in Madrid and completing the Waddinxveen extension with our tenant Combilo . We are also starting to see a material benefit from the portfolio's attractive indexation characteristics, which, in the unprecedented inflationary environment, is a clear and appealing differentiator for investors."

Performance

The unaudited portfolio valuation decreased by a marginal €2.4 million in the quarter, or 0.35%. This follows the appointment of Savills as valuation advisor for the Company's Netherlands portfolio for Q1. Under the Company's rotation policy, Savills has been engaged as sole valuer and has now valued all portfolio properties for this quarter.

For the 12 month period to 30 June 2022, the Company's net asset value total return was 10.6% in Euro terms (10.9% in sterling terms).

As at 30 June 2022, the Company's share price was 99.6p. At the close of business on 19 August 2022 the share price was 103.4p.

Dividend

The Directors have declared a second interim distribution for the year ending 31 December 2022 of 1.41 euro cents (equivalent to 1.20 pence) per Ordinary share. This second interim dividend will be paid in sterling on 23 September 2022 to Ordinary shareholders on the register on 2 September 2022 (ex-dividend date of 1 September 2022).

Rent collection

100% of the expected rental income for the quarter ended 30 June 2022 has been collected.

Madrid Portfolio

The Company announced in December 2021 the acquisition of a portfolio of newly constructed last-mile logistics warehouses with excellent sustainability credentials, located in the first ring of Madrid, Spain. Phase 4 of the portfolio, which has been developed as an exclusive hub for Amazon and benefits from a 25 year lease, was completed in July 2022.

On 10 August the Company agreed a new 5 year lease with ADER at the previously vacant Unit 3, within Phase II at its Gavilanes site, Madrid. ADER provides distribution services to companies in the freight and logistics sector and is consolidating its operations in the Gavilanes area with the leasing of this second, 7,375 sqm building. 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.

French acquisitions

On 1 August 2022 the Company announced the completion of the purchase of two well-located freehold logistics properties in Bordeaux and Niort, France. The aggregate purchase price of circa €23 million reflects a net initial yield of 4.0%.

Both 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 both leases provide for annual indexation. Site coverage is also low, at 22% and 9% respectively, providing excellent opportunities for expansion in the future.

Waddinxveen extension completion

On 10 August the Company also announced that it had signed the purchase agreement for the acquisition of the recently completed warehouse extension at Waddinxveen, the Netherlands, for a total net purchase price of €4.9 million.

The extension provides an additional c. 2,400 sqm of cooled warehouse space and 157 sqm of office space. This will allow 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 will generate additional rent of c. €250,000 per annum, reflecting a yield of 5%. 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 asset management initiative is expected to be immediately value accretive and enhances the income producing qualities of this modern, well-located asset.

Debt Financing

On 7 July 2022 the Company secured a new €40m 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 interest rate of 2.57%, effected using an interest rate swap.

Post quarter end, the Company has drawn €50 million of its €70 million RCF with Investec Bank, enabling completion of the final phase of the Madrid portfolio. This increases the LTV to 30.1% (as at 19 August 2022), comfortably below the Company's long term target of c. 35%. The Company intends to repay the RCF with the planned debt financing of the now operational Phase IV.

The new ING facility provides additional flexibility around the Company's debt strategy and the current all-in interest rate for the portfolio (excluding the RCF) now sits at 1.66%.

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 April 2022 to 30 June 2022. The unaudited net asset value has been prepared under International Financial Reporting Standards ("IFRS").

	Per Share (€cents)	Attributable Assets (€m)	Comment
Net assets as at 31 March 2022	131.6	542.2
Unrealised change in valuation of property portfolio	(0.6)	(2.4)	Portfolio of 23 assets. Capital values decreased 0.35% to €680.4m, adjusted by a true up of the Madrid Phase I-III acquisition
Acquisition and capital expenditure costs during the period	0.3	1.2
Income earned during the period	1.6	6.8	Income from the property portfolio and associated running costs
Expenses for the period	(0.9)	(3.7)
Deferred tax liability	0.1	0.5	Net deferred tax liability on the difference between book cost and fair value of the portfolio
Distribution paid on 24 June 2022	(1.4)	(5.8)	First interim dividend of 1.41 euro cents (1.19 pence) per Ordinary share
Foreign currency gain	0.2	0.7	Foreign currency gain in the period
Other movement in reserves	0.0	0.1	Movement in lease incentives in the quarter
Net assets as at 30 June 2022	130.9	539.6

EPRA Net Tangible Assets per share is 138.7 Euro cents, which excludes deferred tax liability.

Net Asset Value analysis as at 30 June 2022 (unaudited)

	€m	% of net assets
Property Portfolio	680.4	126.1
Adjustment for lease incentives	(4.7)	(0.9)
Fair value of property portfolio	675.7	125.2
Cash	44.2	8.2
Other Assets	25.2	4.7
Total Assets	745.1	138.1
Bank Loans	(160.6)	(29.8)
Other Liabilities	(13.0)	(2.4)
Deferred Tax Liability	(31.9)	(5.9)
Total Net Assets	539.6	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 June 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 June 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    [phone]

Luke Mason

Gary Jones

Investec Bank plc  [phone]

David Yovichic

Denis Flanagan

FTI Consulting  [phone]

Dido Laurimore

Richard Gotla

James McEwan

The above information is unaudited

 

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