Portfolio Reversion
abrdn Property Income Trust Limited
(an authorised closed-ended investment company incorporated in Guernsey with registration number 41352)
LEI Number: 549300HHFBWZRKC7RW84
(The "Company" or "API")
5 DECEMBER 2023
PORTFOLIO REVERSION
As at 30 September 2023 the API portfolio had a very attractive reversionary potential of c£7.6m, reflecting 29% of the portfolio income. This potential will be realised at lease expiries, rent reviews or when vacant space is let, and is a clear indicator of future performance. We are pleased to provide an update on recent asset management where some of this reversion has been captured.
Rent Reviews
Three rent reviews have been agreed within the last two months across the industrial portfolio, with significant increases in rent.
In Bristol, a rent review at Kings Business Park was agreed at £96,350 p.a. reflecting a 38.6% uplift to the previously passing rent. This was in line with the September 2023 valuation, but 28% ahead of the June valuation which more accurately reflects the pre-agreement level.
At Opus 9 in Warrington, a rent review has been settled at £245,000 p.a. which is 57.6% above the previous passing level and 16.4% ahead of the September valuation.
Lastly, we have just agreed the rent review on Elliot Way in Birmingham at £428,000 p.a. which is 8.3% ahead of the September valuation and 52.4% above the previous rent.
All three of these deals demonstrate a strong trajectory of income growth, particularly with the portfolio's very favourable structure with 56% invested in the industrial sector. These settlements also reflect a pattern of exceeding the portfolio valuation assumptions.
Lettings
Building on the rent review settlements, API is delighted to announce that a new 15-year lease to a leading parcel delivery company at Rainhill Road in Washington has completed. The c150,000 sq.ft industrial building has undergone a comprehensive refurbishment, which has repositioned the property to serve the parcel distribution market and includes a number of ESG initiatives. These include an extensive roof-mounted solar panel installation and approximately 1.2 acres of landscaping that will be seeded with wild flowers next spring to increase biodiversity. This has also resulted in an improvement to the Energy Performance Certificate with an A rating having been achieved.
As the letting terms were agreed in mid-2022, the rent of £591,500 p.a. is already estimated to be approximately 10% below the prevailing market level, providing the potential for future rental growth.
Net Zero Carbon Pathway
API's stated aim is to de-carbonise the portfolio by 2050, and we have received updated analysis from our consultants that indicates this is on track. The portfolio not only met its 2022 targets, but its absolute emissions have also fallen below the calculated Net Zero trajectory by c16%. Additionally, API has reduced its "whole building" carbon intensity by c33% which puts it in line to meet the CRREM targets for circa 2024 to 2025.
Mark Blyth, Deputy Fund Manager of API commented: "Our continued focus on ESG, and in particular the environmental performance of the portfolio, can now be evidenced by the recent carbon emission results. These reflect that our strategy to take advantage of suitable opportunities to improve API's assets is on track to meet our Net Zero commitments. We believe that these actions are not only moral obligations, but are also likely to protect future asset value.
The excellent outcomes on the letting and rent review deals are indicative of the quality of the API portfolio, and also the underlying income growth that can be unlocked through good asset management. The high sector weighting to industrial, allied to the ability to out-perform the valuation assumptions, should be a very positive driver of performance for API going forward."
All Enquiries:
Jason Baggaley - Real Estate Fund Manager, abrdn
Tel: 07801039463 or jason.baggaley@abrdn.com
Mark Blyth - Real Estate Deputy Fund Manager, abrdn
Tel: 07703695490 or mark.blyth@abrdn.com
END
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