1st Interim Dividend and 31 March 2020 NAV
Aberdeen Standard European Logistics Income PLC
LEI: 213800I9IYIKKNRT3G50
Net Asset Value as at 31 March 2020 and Dividend Declaration
26 May 2020: Aberdeen Standard European Logistics Income PLC (LSE: ASLI) (the "Company") announces its unaudited quarterly Net Asset Value ("NAV") as at 31 March 2020 and declares its first interim dividend for 2020.
Highlights
· NAV per Ordinary share of 112.7c (GBp - 99.92p) as at 31 March 2020 (31 December 2019: 111.0c (GBp - 94.21p)). Exchange rate £1 : €1.13 (31 December 2019: £1 : €1.18).
· Portfolio capital value has increased by 0.7% since 31 December 2019 (on a like-for-like basis including capital expenditure). The Company's well located and diversified European logistics portfolio of 14 assets was valued at €404.9 million as at 31 March 2020.
· A fourth interim distribution of 1.27 pence (equivalent to 1.41 euro cents) per Ordinary share in respect of the year ended 31 December 2019 was paid on 27 March 2020.
· First interim distribution of 1.41 euro cents (equivalent to 1.24 pence) per Ordinary share in respect of the year ending 31 December 2020 declared.
At the valuation date of 31 March 2020 Europe was in the early stages of lockdown due to COVID-19 and the investment market had come to a near standstill. There was a lack of relevant transactional evidence and so, in line with market practice, the independent valuers report from CBRE has noted "material uncertainty" relating to property valuations.
Q1 Investment Activity
During the first quarter of 2020, the Company completed the acquisition of the logistics warehouse in Den Hoorn, the Netherlands, for a net value of €49.9 million, providing a net initial yield of 4.5%. This newly built warehouse is located in the most densely populated area of the Netherlands between the cities of the Hague and Rotterdam. Built to a modern specification, it is a quality warehouse providing office and mezzanine space of over 43,000 square metres. Both LED lighting and solar roof panels add sustainable credentials to the investment. The warehouse has an attractive income profile and is fully leased to logistics operator Van der Helm, a Dutch family company founded in 1936, as its headquarters on a ten year CPI indexed lease.
As part of this acquisition, the Company also finalised and drew down long term financing secured on its properties at Den Hoorn and Zeewolde, the Netherlands. This secured loan facility was arranged with Berlin HYP AG for a total value of €35.7 million and fixed for an eight year term at an attractive all-in interest rate of 1.25% per annum.
The Company has now fully deployed the funds raised in July 2019 and, following draw down of this fixed term loan facility, the overall asset level gearing sits at 34 per cent. of gross 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 January 2020 to 31 March 2020. 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 December 2019 |
111.0 |
260.3 |
|
|
Unrealised increase in valuation of property portfolio |
3.7 |
8.8 |
Portfolio of 14 assets: Capital values increased 0.7% on a like-for-like basis from the prior quarter. Acquisition costs incurred in the period relate to the acquisition of properties in Warsaw and Den Hoorn |
|
Acquisition costs incurred during the period |
(0.4) |
(1.0) |
|
|
Income earned for the period |
2.1 |
4.9 |
Income from the property portfolio and associated running costs |
|
Expenses for the period |
(0.8) |
(1.8) |
|
|
Deferred tax liability |
(1.2) |
(2.7) |
Net deferred tax liability on the difference between book cost and fair value of the portfolio, including the Den Hoorn asset, which was acquired via an SPV acquisition during the quarter |
|
FX hedge mark to market revaluation |
(0.1) |
(0.2) |
Movement in the mark to market value of a dividend hedge entered into in Q1 2020 to fix the EUR:GBP conversion of the 2020 dividend |
|
Dividend paid 27 March 2020 |
(1.4) |
(3.3) |
Fourth interim dividend of 1.27 pence (1.41 euro cents) per Ordinary Share |
|
Foreign currency loss |
(0.0) |
(0.1) |
|
|
Other movements in reserves |
(0.2) |
(0.6) |
Movement in lease incentives in the quarter |
|
Net assets as at 31 March 2020 |
112.7 |
264.3 |
|
The EPRA NAV per share is 116.4 Euro cents, which excludes deferred tax liability and fair value of the FX derivative.
Net Asset Value analysis as at 31 March 2020 (unaudited)
|
|
€m |
% of net assets |
|
Fair value of Property Portfolio |
404.9 |
153.2% |
|
Cash |
11.8 |
4.5% |
|
Other Assets |
9.5 |
3.6% |
|
Total Assets |
426.2 |
161.3% |
|
Bank Loans |
(143.4) |
(54.3)% |
|
Other Liabilities |
(10.1) |
(3.8)% |
|
Deferred Tax Liability |
(8.4) |
(3.2)% |
|
Total Net Assets |
264.3 |
100.0% |
The NAV per share is based on the external valuation of the Company's direct property portfolio undertaken by CBRE.
The NAV per share at 31 March 2020 is based on 234 ,500,001 shares of 1 pence each, being the total number of Ordinary shares in issue at that time.
Q2 Rental Collection Update
At the time of the last COVID-19 update, the Company announced that all rents had been collected for Q1 2020 and 67% of those due for Q2 had then been received, with twelve tenants requesting discussions around their short term financial positions. This collection figure has now increased to 75% with an expectation that this will shortly rise to 82%.
Of the remaining 18% currently unpaid, representing approximately €1 million in monthly and quarterly rental payments, it has been agreed in principle that approximately €820,000 of this will be deferred, with €720,000 of this deferred rent due for payment by December 2020 and €100,000 of this due prior to June 2022.
The remaining €180,000 of unpaid rent relates to six tenants who have requested rent free periods. It is expected that this rent will be forgiven for Q2, along with an additional €210,000 for the remainder of 2020 and €130,000 in respect of 2021/22, in exchange for material lease extensions. The manager is in the final stages of negotiations with these tenants and lease extensions are expected to be agreed for up to five years.
As a result, the Company currently expects that it will collect approximately 95% of Q2 rental income by December 2020, with an additional 2% payable in the period to June 2022 and the remaining 3% forgiven, in exchange for material lease extensions. The Investment Manager considers this to be a positive result for shareholders and expects to conclude all of these discussions shortly.
Dividends
Following a thorough review of the latest rent collection statistics and the recent tenant discussions, the Board has today declared a first interim dividend in respect of the year ending 31 December 2020 of 1.41 euro cents per Ordinary share (equivalent to 1.24 pence). This will be paid in sterling on 26 June 2020 to Ordinary shareholders on the register on 5 June 2020 (ex-dividend date of 4 June 2020). Of this first interim dividend declared of 1.24 pence per Ordinary share, 1.05 pence is declared as dividend income with 0.19 pence treated as qualifying interest income.
The Board, through the Investment Manager, continues to monitor the situation and the impact this is having on all of our tenants. While it remains the Board's intention to pay quarterly interim dividends in line with the dividend policy, the quantum of these distributions will ultimately depend on the ability of our tenants to maintain rental payments in line with the expected agreed terms. The Board views these terms to be favourable to both shareholders and the impacted tenants, while permitting the Company to maintain quarterly dividend payments in line with policy.
Evert Castelein, Aberdeen Standard Investments, commented:
"It was pleasing to see a further uplift in the portfolio valuation as we reached the March 2020 quarter end date. This valuation uplift reflects the fact that, notwithstanding the severe short-term negative impact suffered by a number of our tenants, the outlook for European logistics real estate remains compelling, perhaps even more so following the impact this crisis will likely have on consumer behaviour and supply chain logistics.
As previously noted, while a number of our tenants are experiencing unprecedented levels of demand, a number of tenants have inevitably been negatively affected by the COVID-19 pandemic. Following a period of negotiation with these tenants, the previously announced level of rental collection for Q2 of 67% is now expected to increase significantly. Lease extensions are being agreed where rental income has been forgiven and we are very pleased with how these discussions have progressed.
The recent increased level of tenant interaction has further highlighted the importance of having local offices and, in particular, local asset managers, based in close proximity to our tenants. The relationships our asset managers have built with tenants, coupled with a deep understanding of their local logistics markets, ensured that tenant discussions have been highly productive from the start. Aberdeen Standard Investments has 25 offices across Europe and employs over 250 real estate professionals, including over 80 real estate asset managers and 29 transaction managers.
As the European logistics market evolves in response to this crisis, our local managers expect to see increased levels of interesting investment opportunities, particularly in the urban logistics space, as the importance of e-commerce becomes more prevalent".
Tony Roper, Chairman of the Company, commented:
"The Board and the Investment Manager continue to work safely from home during these difficult times, remaining in close contact with our tenants and service providers to ensure the efficient functioning of the Company.
While the majority of our tenants remain in a strong financial position and are fully operational, a number of tenants have required short-term assistance. Following a period of negotiation with these tenants, we are now in a position where we expect to agree certain rent deferrals and a limited amount of rent forgiveness, in exchange for lease extensions.
The Board believes these agreements strike a satisfactory balance between assisting our tenants through this difficult period and protecting the interests of our shareholders, particularly in relation to the payment of quarterly dividends.
Acknowledging the importance of income to our shareholders, the Board has declared an interim dividend of 1.41 euro cents per share, in line with our dividend policy. While it is the Board's intention to maintain the level of dividend throughout 2020, the Board recognises the unpredictability of this situation and will therefore keep this under review as the year progresses".
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014). Upon the publication of this announcement via a Regulatory Information Service this inside information is now considered to be in the public domain.
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:
Luke Mason / Gary Jones
Aberdeen Asset Management PLC
0207 463 6000
The above information is unaudited.
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