Aberdeen Stand.Euro.

Q2 2021 NAV and Second Interim Dividend

RNS Number : 0902J
Aberdeen Standard Eur Lgstc Inc PLC
19 August 2021
 

Aberdeen Standard European Logistics Income PLC

 

LEI: 213800I9IYIKKNRT3G50

 

 

Unaudited Net Asset Value as at 30 June 2021

Declaration of Second Interim Dividend

 

GROSS ASSETS EXCEED €500 MILLION DRIVEN BY PORTFOLIO VALUATION UPLIFT AND NEW ACQUISITION

 

19 August 2021 - Aberdeen Standard European Logistics Income PLC (LSE: ASLI), the Company which invests in high quality European logistics properties, announces its unaudited quarterly Net Asset Value ("NAV") and dividend for the quarter ended 30 June 2021.

 

Highlights

· NAV per Ordinary share increased by 1.6% to 123.6c (GBp - 106.1p 1 ) (31 March 2021: 121.6c (GBp - 103.6p)), reflecting a NAV total return of 14.7% (in Euro terms) for the 12 months to 30 June 2021

· Portfolio valuation increased by 1.9%, or €8.7 million (on a like for like basis and using Lodz purchase price) to €473.9 million, reflecting further modest yield compression, and taking gross assets to over €500 million

· 100% of the rent due for the quarter ended 30 June 2021 collected

· €18.8 million acquisition of a modern urban logistics warehouse in Polinyà, Barcelona, Spain, completed in July 2021, further enhancing the Company's sustainability credentials and the portfolio's weighting to the high growth urban logistics sector

· Portfolio now comprises 16 strategically located, modern and diversified European logistics assets across 5 countries

· Long-term solar panel leases at the Company's Ede and Den Hoorn assets have delivered a capital uplift of approximately €1 million

· The Company declares a second interim dividend of 1.41 euro cents (equivalent to 1.21 pence) per Ordinary share in respect of its financial year ending 31 December 2021.

 

Acquisition of Sixteenth Asset

In July 2021, the Company announced that it had completed on the acquisition of a modern urban logistics warehouse in Barcelona, Spain's second most populous city. The purchase price of €18.8 million reflects a net initial yield of 3.7% and net reversionary yield of 4.75%.

 

This 13,907 square metre asset is located in the first ring of Barcelona, within a 25 minute drive (27km) of the city centre and is well positioned to benefit from the growth of e-commerce and the scarcity of development opportunities, which provides strong rental growth potential. The local market is characterised by a low vacancy rate of 3%, which falls to 1% for the first ring, reflecting naturally occurring land constraints, with the city surrounded by the sea and mountains.

 

The asset is located on the Polinyà Logistic Park, a strategically positioned and highly consolidated industrial area just off the AP-7 motorway that connects Barcelona with France and the wider European market in the north, and to Zaragoza, Madrid and other key cities along the Mediterranean coast of Spain.

 

The freehold asset, which was built in 2019 and meets modern specifications, is fully let to Mediapost, a subsidiary of LA POSTE Group, the French state-owned company, serving as its Spanish headquarters. The property offers a high-grade specification of c.11.5 metres clear height in the warehouse area, high quality office accommodation, 10 loading docks, LED lighting and a small solar PV installation which the Company will seek to enhance, making this a very sustainable investment. Accelerating e-commerce penetration and favourable demand supply dynamics offers rental growth potential at the first mutual break option in 2026 or at lease expiry in 2029, whilst rental income is indexed from 2023 onwards.

 

This was the Company's third investment in Spain and its first in Barcelona, providing further diversification across the portfolio. The acquisition was funded using the Company's credit facility.

 

Declaration of Second Interim Dividend

The Directors have today declared a second interim dividend of 1.41 euro cents (equivalent to 1.21 pence) per Ordinary share, in respect of the year ending 31 December 2021 (31 March 2021: 1.41 euro cents). This second interim dividend will be paid in sterling on 24 September 2021 to Ordinary shareholders on the register on 3 September 2021 (ex-dividend date of 2 September 2021).

 

In line with stated policy, the Company declares interim dividends to Shareholders in respect of the quarters ending 31 March, 30 June, 30 September and 31 December in each year.

 

Any such dividend payment to Shareholders may take the form of either dividend income or "qualifying interest income" which may be designated as an interest distribution for UK tax purposes and therefore subject to the interest streaming regime applicable to investments trusts.

 

Of this second interim distribution of 1.21 pence per Ordinary share, 0.95 pence is declared as dividend income with 0.26 pence treated as qualifying interest income.

 

Performance

As at 30 June 2021, the Company's share price stood at 119.0p.

 

For the 12 month period to 30 June 2021, the share price total return (with dividends reinvested) was 18.5% with the Company's net asset value total return over the same period 14.7% in Euro terms (8.3% in sterling terms).

 

Despite the short term impact of a reduction in the value of the Meung-sur-Loire asset of €6.5 million due to the expected temporary vacancy, the overall unaudited portfolio valuation increased by a net €8.7 million or 1.9% (like for like and using the Lodz purchase price). Excluding the Meung-sur-Loire asset, this represents a strong portfolio valuation increase of 3.5%. Yield compression and considerable demand for logistics warehousing continues to drive valuations.

 

Meung-sur-Loire Tenant Update

As previously announced, Office Dépôt France, the sole tenant occupying the Company's Meung-sur-Loire asset in France, has sought court protection and the appointment of an administrator. The Company expects the purchaser of the business will seek to terminate its tenancy of the warehouse.

 

Despite this process, the administrator has continued to pay rent per the lease agreement, with both the Q2 and Q3 2021 rent (due in advance) paid in full. In total, one month's rent plus a small element of deferred rent, amounting in aggregate to €258k, remains outstanding and is not expected to be collected. The annual passing rent on the property currently represents 5.8% of the overall portfolio's annual contracted rent, with the Company benefitting from a three month rental security deposit still held at bank.

 

The warehouse is ideally located for national distribution just south of Orleans and close to main motorways towards Bordeaux/ Northern Spain and towards Marseille/ Lyon/ Toulouse, in an area which has grown in importance due to the lack of greenfield locations in and around Paris. The Investment Manager's local transaction managers are working with agents to seek a replacement tenant and the Board  remains confident of a positive outcome for what is a highly attractive asset.

 

Debt Financing

The Company level loan to value ratio is currently 32% following the most recent acquisition in Barcelona, remaining below the long-term target of 35%. The Company also shortly expects to sign a revised revolving credit facility agreement with Investec Bank, increasing the current facility's capacity from €40 million to €70 million, providing further flexibility for the acquisition of new assets.

 

Sustainability Initiatives

The sustainability of the Company's portfolio is a key focus for the Investment Manager and this is reflected in the Company's four out of five stars GRESB rating. The Company will shortly be piloting the use of smart meters to collect tenant utility usage data, initially at its Avignon and Waddinxveen properties, with a view to identifying new initiatives to further enhance the sustainability rating of the assets. Tenant engagement thus far has been very positive.

 

As previously announced, the Company has agreed 20 year rooftop-solar leases at its Ede and Den Hoorn assets in the Netherlands. The Ede lease commenced on 1 June 2021 and the Den Hoorn lease will commence on 1 September 2021. The leases will further enhance the portfolio's sustainability credentials and have provided a capital uplift of approximately €1 million.

 

9 out of 16 assets in the portfolio now have solar panels on the roof and the Investment Manager is actively exploring the possibility of adding to or enhancing rooftop solar panels to selected assets.

 

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 2021 to 30 June 2021. 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 2021

121.6

319.8


Unrealised change in valuation of property portfolio

3.3

8.7

Capital values increased €8.7m, a net 1.9% increase.

The Lodz warehouse acquired in the quarter was valued at €29.2m, 3.9% above the €28.1m acquisition price.

Capital expenditure at the Company's Ede warehouse in the Netherlands relates to preparatory roof works to facilitate the installation of solar panels.

Capital expenditure during the period

(0.1)

(0.3)

Income earned during the period

2.2

5.7

Income from the 15 property portfolio and associated running costs.

Expenses for the period

(1.0)

(2.6)

Deferred tax liability

(1.0)

(2.7)

Net deferred tax liability on the difference between book cost and fair value of the portfolio.

FX hedge mark to market revaluation

-

-

Movement in the mark to market value of a hedge entered into in March 2021 to fix the EUR:GBP conversion of the 2021 dividend.

Dividend paid 25 June 2021

(1.4)

(3.7)

First interim dividend of 1.41 euro cents (1.21 pence) per Ordinary share.

Foreign currency loss

(0.3)

(0.7)

Foreign currency loss in the period.

Other movements in reserves

0.3

0.8

Movement in lease incentives in the quarter.

Net assets as at 30 June 2021

123.6

325.0


 

EPRA Net Tangible Assets per share is 131.2 Euro cents, which excludes deferred tax liability and fair value of the FX derivative.

 

Net Asset Value analysis as at 30 June 2021 (unaudited)


€m

% of net assets

Property Portfolio

473.9

145.8%

Adjustment for lease incentives

(4.7)

(1.4%)

Fair value of property portfolio

469.2

144.4%

Cash

30.8

9.5%

Other Assets

16.9

5.2%

Total Assets

516.9

159.1%

Bank Loans

(163.0)

(50.1%)

Other Liabilities

(8.8)

(2.7%)

Deferred Tax Liability

(20.1)

(6.3%)

Total Net Assets

325.0

100.0%

 

The property portfolio valuation is based on the independent external valuation of the Company's direct property portfolio undertaken by CBRE GmbH.

 

The NAV per share at 30 June 2021 is based on 262 ,950,001 shares of 1 pence each, being the total number of Ordinary shares in issue at that time.

 

Evert Castelein, Fund Manager, Aberdeen Standard Investments, commented:

"Reflecting the quality of our carefully constructed portfolio, it's pleasing to have delivered another consecutive quarter of portfolio valuation uplift. We also continue to take meaningful steps on our sustainability roadmap, implementing new initiatives in partnership with our tenants which will have a material impact on portfolio performance.

"The sector remains in rude health. Despite three years of strong growth, the first quarter of 2021 saw a record volume of logistics transactions in Europe, up 19% to 5.6 million sq ft versus the same period last year. The Netherlands, Poland and the UK experienced the strongest growth in leasing activity, whilst Spain also experienced strong growth as e-commerce platforms and food distributors further established themselves. Such is the need to reposition supply chains to accommodate new consumption patterns and a more competitive last mile demand story, we expect the remainder of 2021 to continue this trend. An improving economic outlook, as the vaccination programme continues at pace and consumer spending returns to 2019 levels, will also support performance."

 

Tony Roper, Chairman of the Company, added:

"This was another very good quarter for the Company with the modern, core characteristics of the portfolio further reflected in the increased valuation. The sustainability of the portfolio is an important focus for the Board and we are pleased with the new initiatives the Investment Manager has implemented in this quarter.

 

"The Investment Manager has amassed a strong pipeline of potential acquisition opportunities, which would further diversify the asset base and improve the quality and visibility of the income. Our ambition to further scale the Company remains and we look forward to the next stage of the Company's growth, in what is one of the most sought-after asset classes globally".

 

The Board is not aware of any other significant events or transactions which have occurred between 30 June 2021 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 also be found on the Company's website which can be found at: http://www.eurologisticsincome.co.uk

 

For further information please contact:

Aberdeen Standard Fund Managers Limited  +44 (0) 20 7463 6000

Luke Mason

Gary Jones

 

Investec Bank plc  +44 (0) 20 7597 4000

Dominic Waters

Neil Brierley

Will Barnett

Alice Douglas

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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