Portfolio Update

RNS Number : 0096L

Aberdeen Standard Eur Lgstc Inc PLC

28 April 2020

 

Aberdeen Standard European Logistics Income PLC

("ASLI" or the "Company")

LEI: 213800I9IYIKKNRT3G50

COVID-19 UPDATE

Aberdeen Standard European Logistics Income PLC today provides an update in relation to the impact of COVID-19 on the Company.

Evert Castelein, Aberdeen Standard Investments, stated:

"The Company started 2020 in a strong position, with a diversified portfolio of 14 high quality and fully income producing logistics assets located across five European countries. Following the onset of the COVID-19 pandemic, the Company's Board and Investment Manager remain fully functional in the 'working from home' environment.

Across the Company's 14 properties, we have 35 tenants and we are maintaining regular dialogue with each of these tenants. While a number of our tenants are experiencing short term operational and financial challenges, a good proportion of our tenants are experiencing greatly increased levels of trading as demand for home delivery and essential logistics services in general have risen sharply.

In addition, three of our top four tenants by income operate in the food and pharmaceutical logistics sectors and they are experiencing unprecedented levels of trading volume.

While the COVID-19 pandemic creates significant short-term market disruption, the forced lockdown and likely reduced social mobility for the foreseeable future will inevitably lead to an accelerated take up of e-commerce in European countries. Through a combination of a defensively positioned tenant base and a diversified portfolio of high quality, medium sized logistics properties located in key European locations, I believe we are well positioned to withstand this short-term market disruption."

Rent Collection  

The Company's property portfolio comprises 35 tenants within 14 assets, located across five European countries. The top five tenants by income detailed below account for approximately 46% of the Company's annual rental income:

· Van der Helm (Den Hoorn, the Netherlands) - logistics provider founded in 1936 - 12.9%

· Biocoop (Avignon, France) - French national organic food retailer - 10.4%

· Combilo (Waddinxveen, the Netherlands) - specialist fruit and vegetable distributor - 8.5%

· Kruidvat (Ede, the Netherlands) - pharmacy operator, subsidiary of A.S. Watson Group - 7.3%

· VSH Fittings (Zeewolde, the Netherlands) - piping systems and fittings manufacturer, subsidiary of Aalberts NV - 7.0%

A significant proportion of our tenants, particularly those involved in the food, pharmaceuticals and delivery businesses, continue to see high demand for their goods and services through this crisis and all rents due from all of our tenants for Q1 2020 have been paid in full.

As at the close of business on 24 April 2020, the Company had received payments reflecting 67% of rents due from tenants in respect of the Q2 payment date. Regarding the remaining rent due, the Investment Manager is in discussions with these tenants having sought to understand their short-term financial difficulties and assess where genuine challenges exist which may be alleviated by alternative rent solutions. These include short-term deferral of payments into H2 2020 and lease extensions in combination with short rent free periods rather than rent reductions. Following the conclusion of the rent deferral discussions, the level of payments in respect of Q2 is currently expected to materially increase as tenants fulfil their payment obligations.

Financial Position

In line with the Company's gearing policy, the Company's loan-to-value as at 31 March 2020 is approximately 35%, with an overall average fixed interest rate of 1.36%. Across the Company's six debt facilities, the weighted average debt maturity is 6.5 years, with the first refinancing date occurring in 2025. The Company maintains significant headroom on both its interest coverage and loan-to-value debt covenants. Interest coverage covenants range from 250% to 300% and rental income would therefore have to fall by 69% on average before a breach of covenant would occur. Loan-to-value covenants range from 45% to 65% and asset valuations would have to fall by 21% on average before a soft covenant breach would occur and 31% on average before breaching a hard covenant. The Company continues to maintain an open dialogue with its banks.

Dividends

The Board is acutely aware of the importance of quarterly dividends to shareholders and on 27 March 2020, the fourth 2019 quarterly dividend of 1.27p was paid in full to shareholders. As detailed above, the Company remains in a favourable position with a number of underlying tenants experiencing unprecedented trading demand. Despite 100% rent collection for Q1 2020, it is clear that a number of our tenants will continue to experience some trading difficulties at least in the short to medium term. The Board will continue to monitor rent collection closely and the evolution of COVID-19 and its impact on the Company's tenants. While the Board remains committed to the payment of quarterly dividends, the level of these payments over the short-term will remain under review as the Company finalises its negotiations with the tenants who have sought assistance for their short term financial challenges. The Company expects to conclude these negotiations in the coming weeks and will provide more specific dividend guidance at that time.

Year end results

The Company expects to release its results for the year ended 31 December 2019 during May 2020 as planned, including information on the timing of the company's AGM to be held in June 2020. In addition, a full quarterly net asset value statement for the quarter ended 31 March 2020 will be issued in due course.

Outlook

Notwithstanding the COVID-19 pandemic which has impacted the world greatly during the initial phases of government imposed lock downs, the Board and the Investment Manager believe that the European market will continue to offer attractive opportunities as the logistics segment grows. There will clearly be a period of time where many businesses will be severely impacted through the effective halting of trade and the shutdown of economies as governments attempt to tackle the pandemic. During this difficult period, however, we see that businesses involved in essential services and supplies like food production and supply, pharmaceuticals and parcel deliveries to homes and businesses are faring well and are often requiring additional logistics facilities or space. This crisis will likely see businesses speeding up their adoption of e-commerce use with a resultant increase in take-up of warehouse capacity. We believe that the size segment that we are invested into is the most attractive and liquid part of the logistics sector with the urbanisation trend across Europe driving demand and growth.

With previously close to 10% of retail sales on average in the EU resulting from online transactions and with a double digit growth rate, the economic pressures on the demand side of the logistics sector prior to the crisis were evident, particularly on urban freight infrastructure.

Despite what will no doubt be some short-term headwinds, we expect the current environment to accelerate this demand led growth and this gives confidence that we are well positioned in an expanding area of the real estate market.

Details of the Company and its property portfolio may be found on the Company's website which can be found at: http://www.eurologisticsincome.co.uk

For further information:

Aberdeen Standard Fund Managers Limited

0207 463 6000

Luke Mason

Gary Jones

Investec Bank plc

0207 597 4000

Will Barnett

Neil Brierley

Alice Douglas

Dominic Waters

Denis Flanagan

David Yovichic

Notes to Editors

Aberdeen Standard European Logistics Income PLC is a UK investment trust with a premium listing on the Main Market of the London Stock Exchange. The Company invests in European logistics real estate to achieve its objective of providing its shareholders with a regular and attractive level of income return together with the potential for long term income and capital growth. The Company aims to invest in a portfolio of assets diversified by both geography and tenant throughout Europe, predominantly targeting well-located assets at established distribution hubs and within population centres.

 

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