Q3 2024 Net Asset Value and 3rd Interim Dividend

abrdn European Logistics Income plc

28 November 2024

 

28 November 2024

abrdn European Logistics Income plc

Unaudited Net Asset Value as at 30 September 2024 and declaration of a Third Interim Dividend

28 November 2024 - abrdn European Logistics Income plc (the "Company" or "ASLI"), the Company which is invested in a diversified portfolio of European logistics real estate, announces its unaudited Net Asset Value ("NAV") for the quarter ended 30 September 2024. The NAV is presented both including and excluding estimated property disposal and SPV liquidation costs providing enhanced disclosure. Further details can be found below.

Summary

-        NAV per Ordinary share on a like-for-like basis, including full provision of portfolio disposal and structure liquidation costs, decreased by 0.3% to 87.6c (GBp - 73.2p) (30 June 2024: 87.9c (GBp - 74.4p))

-        IFRS NAV per Ordinary share, excluding disposal and liquidation costs, increased 3.4% to 90.9c (GBp - 76.0p) (30 June 2024: 87.9c (GBp - 74.4p))

-        In line with the IFRS NAV, EPRA Net Tangible Assets increased by 4.2% to 93.5c per Ordinary share (30 June 2024 - 89.7c)

-        The portfolio valuation remained stable at €607.45 million (30 June 2024: €607.35 million)

-        The Company partially repaid €2.9 million of its variable loan with ING Spain and reduced hedging exposure by the same amount. Loan to Value ('LTV') is 38.2% with fixed debt facilities of €245.6 million at an average all-in interest rate of 1.99%

-        Accretive leasing activity with two new lettings concluded at Getafe, Spain. Existing tenant MCR has more than doubled its space requirements relocating into a 16,500 sq metre unit for a 7 year term. Simultaneously, Molecor signed a 5 year lease for the former MCR unit.

Managed Wind-Down

Under the shareholder approved managed wind-down process, the Company's new investment objective is 'to realise all existing assets in the Company's portfolio in an orderly manner'.

During the quarter, the Company sought and received court approval to cancel the full amount standing to the credit of its share premium account. The amount of Eur 269.5 million has been applied to a special distributable reserve and will be available for capital distributions as sufficient cash is generated from asset sales.

On 22 November 2024 approval was granted by Shareholders for the Company to issue and redeem up to £300 million of B Shares. The Board believes that one of the fairest and most efficient ways of returning substantial amounts of cash to Shareholders is by means of a bonus issue of redeemable B Shares (with a nominal value of one penny each) which would then be immediately redeemed by the Company in consideration for a cash payment equal to the amount treated as paid up on the issue of the B Shares.

The quantum and timing of any return(s) of capital to Shareholders under a B Share Scheme will be at the discretion of the Board and will be dependent on the realisation of the Company's investments and its liabilities, general working capital requirements and the amount and nature (from a tax perspective) of its distributable reserves. The adoption of a B Share scheme will not limit the ability of the Company to return cash to Shareholders by using other mechanisms and, if the B Share scheme is adopted, the Board will continue to review its tax effectiveness and cost efficiency over time. An initial return of capital is expected by early 2025 at the latest.

The Manager has commenced sales processes for six assets and current indications are that there is a good level of interest across the range of quality warehouses that the Company owns. The Manager is in advanced stages regarding the disposal of three assets with letters of intent expected to be signed shortly and further details on disposals will be released as these conclude. Sales processes for a further three assets are due to commence in early-January.

Net Asset Value Calculation Methodology

Following the shareholder vote against continuation and the approval of the managed wind-down process, the financial statements in the Half Year Report published on 26 September 2024, were prepared on a basis other than going concern. As indicated in the Half Year Report, the Board and the Manager have discussed the appropriate accounting treatment with the Company's auditor in advance of the publication of the statutory financial statements for the year ending 31 December 2024. IFRS offers limited guidance on the preparation of the financial statements on a basis other than going concern and how this should differ from those prepared on a going concern basis. In seeking to provide the most prudent, relevant and reliable financial information to Shareholders, the Board made provision in the financial statements in the Half Year Report, for the estimated costs of the disposal of the property portfolio, the early repayment of bank debt and the winding up of the Company and its underlying SPVs.

The auditor has advised that, in its opinion, IFRS does not permit the Company to make provision for the above noted costs. Accordingly,  the audited financial statements for the year ending 31 December 2024 will not include a provision in relation to property disposal and SPV liquidation costs. In order to provide Shareholders with enhanced disclosure, the Company has therefore prepared its quarterly net asset value both including and excluding liquidation costs.

Performance

For Q3 2024, the portfolio valuation remained stable at €607.45 million (30 June 2024: €607.35 million).

The independent unaudited external valuation of the Company's property portfolio undertaken by Savills (UK) Limited increased by €100k, or 0.02%, in the quarter. The Dutch and Spanish assets saw small increases in aggregate valuations of 0.1% and 0.2% respectively, Polish and German assets in aggregate declined in value by 0.2% and 0.5% respectively and there was no change in the valuation of the Company's French assets.

As at 30 September 2024, the Company's share price was 61.0p, and as at the date of this announcement the share price was 57.8p.

Leasing

Effective from 15 October 2024, MCR moved from its location at the Company's Unit 2B asset (7,718 sq metres) in Getafe, Madrid, taking up the tenancy at the vacant Unit 3A with increased space of 16,500 sq metres. The agreed rent per annum is €1,039,500 and the lease is for a 7 year term with upward only CPI movements. MCR's previous lease for Unit 2B had an approaching lease break in June 2025.

Simultaneously, Molecor, an international company in solutions for infrastructure, building and waste treatment, has taken up the tenancy at Unit 2B agreeing a 5 year lease with an annual rent per annum of €509,388, with upward only CPI adjustments.

This accretive leasing activity improves the Company's WAULT and further enhances the positioning of the portfolio in Getafe, Madrid ahead of a planned disposal in 2025.

Rent Collection

As at the date of this announcement, 94% of the expected rental income for the quarter ended 30 September 2024 has been collected. Overall tenants remain stable and arrears are expected to be collected in due course as new leases are agreed and signed.

Debt Financing

At the end of the quarter, the Company's fixed rate debt facilities totalled €245.6 million at an average all-in interest rate of 1.99%, with the earliest refinancing of debt due in mid-2025. The loan-to-value at period end was 38.2%.

Interim Dividend

A second interim distribution in respect of the year ending 31 December 2024 of 0.90 euro cents (0.77 pence) was paid to shareholders on 27 September 2024.

The Board today declares a third interim distribution of 1.05 euro cents (equivalent to 0.87 pence) per Ordinary share, in respect of the year ending 31 December 2024 (2023: 1.41 euro cents), payable in sterling on 31 December 2024 to Ordinary shareholders on the register on 6 December 2024 (ex-dividend date of 5 December 2024).

Of this third interim distribution declared of 0.87 pence per Ordinary share, 0.50 pence (equivalent to 0.60 euro cents) is declared as dividend income with 0.37 pence (equivalent to 0.45 euro cents) treated as qualifying interest income.

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 2024 to 30 September 2024. To aid shareholder information, the Company has prepared its quarterly unaudited net asset value both including and excluding the estimated costs of asset disposals and liquidation of the company structure.

EPRA Net Tangible Assets per share is 93.5 euro cents, which excludes deferred tax liability.

	Per share (€ cents)	Attributable assets (€m)	Comment
Net assets at 30 June 2024 per Company announcement dated 23 August 2024 including liquidation & disposal costs	87.9	362.4
Add back Second Interim Dividend paid on 5 July 2024	1.4	5.8
Net assets as at 30 June 2024 per published Half Year Report including liquidation & disposal costs	89.3	368.2
Unrealised and realised decrease in valuation of property portfolio	-	0.1	Portfolio of 25 assets, capital values of investments remained stable during the quarter.
Income earned for the period	2.0	8.2	Income from the property portfolio and associated running costs.
Expenses for the period	(0.9)	(3.9)
Deferred tax liability	(0.3)	(1.4)	Net deferred tax liability on the difference between book cost and fair value of the portfolio and other temporary tax differences.
Interest rate swaps and caps/floors mark to market revaluation	(0.2)	(0.9)	Movement in the mark to market value of interest rate swaps.
First interim dividend paid on 5 July 2024	(1.4)	(5.8)	First interim dividend 2024 of 1.41 euro cents per Ordinary share
Second interim dividend paid on 27 September 2024	(0.9)	(3.7)	Second interim dividend 2024 of 0.90 euro cents per Ordinary share
Foreign currency gain / (loss)	-	0.3	FX translation
Net assets at 30 September 2024 including liquidation & disposal costs	87.6	361.1
Estimated costs associated with disposal of portfolio and liquidation of the Company structure	3.3	13.7
Net assets at 30 September 2024 excluding liquidation & disposal costs	90.9	374.8

Net Asset Value analysis as at 30 September 2024 (unaudited)

	€m	% of net assets
Fair value of Property Portfolio*	604.1	161.2%
Cash	20.4	5.4%
Other Assets	18.0	4.8%
Total Assets	642.5	171.4%
External Debt	(243.9)	-65.1%
Other Liabilities	(12.2)	-3.3%
Deferred tax liability	(11.6)	-3.0%
Total Net Assets excluding liquidation and disposal costs	374.8	100.0%

*After lease incentive adjustment.

The NAV per share as at 30 September 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 30 September 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                                                                              [phone]

Investec Bank plc                                                                 [phone]

David Yovichic

Denis Flanagan

FTI Consulting                                                                       [phone]

Dido Laurimore

Richard Gotla

Oliver Parsons

 

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