31 December 2019 Net Asset Value (Unaudited)
Aberdeen Standard European Logistics Income PLC
LEI: 213800I9IYIKKNRT3G50
Strong quarterly portfolio capital value appreciation driven by continued investor demand for logistics real estate in Europe
Net Asset Value as at 31 December 2019
28 February 2020: Aberdeen Standard European Logistics Income PLC (LSE: ASLI) (the "Company" or "ASLI") announces its unaudited quarterly Net Asset Value ("NAV") as at 31 December 2019.
Highlights
· NAV per Ordinary share of €1.11 (GBp - 94.21p) as at 31 December 2019 (30 September 2019: €1.07 (GBp - 94.95p)). Exchange rate £1 : €1.18 (30 September 2019: £1 : €1.13).
· Portfolio capital value has increased by 4.0% since 30 September 2019 (on a like for like basis including capital expenditure). The Company's well located and diversified European logistics portfolio of 13 assets was valued at €350.1 million as at 31 December 2019.
· A third interim distribution of 1.27 pence per Ordinary share in respect of the year ended 31 December 2019 was paid on 20 December 2019.
· Fourth interim distribution of 1.27 pence per Ordinary share declared on 24 February 2020, payable on 27 March 2020.
Full Deployment of Equity and Associated Debt
During the quarter the Company completed two acquisitions. In October, the Company completed the purchase of a newly built, fully income producing logistics warehouse in Warsaw, Poland, for a purchase price of €27.5 million providing a net initial yield of 5.64%, with rental payments in euros. This asset incorporates a cross-dock facility leased to DHL who have selected this area for city distribution operations due to its proximity to the city centre. The warehouse is located in an established logistics location along the A2 motorway which is one of the arterial routes for Warsaw and there are also two international airports within easy access. These factors make this an ideal location for urban logistics and e-commerce related delivery.
The Company also acquired an urban located cross-dock logistics warehouse in Coslada, Madrid, for a value of €9.2 million, providing a net initial yield of 5.0%. This is considered by the Manager to be one of the best locations for last-mile logistics in Spain due to its location directly adjacent to Barajas airport and at the fringe of residential areas close to the city centre, together with the population size of the Madrid metropolitan area of over 6 million which this building serves. The property has an attractive income profile and is fully leased to DHL Freight Spain S.L.U. on a recently renewed ten year CPI indexed lease. DHL is a strong tenant being one of the largest logistics operators in the world and has operated in this area for 20 years.
Since the quarter end, the Company completed the acquisition of the freehold logistics warehouse in Den Hoorn, the Netherlands, for a net value of €49.9 million, providing a net initial yield of 4.5%. This is a newly built warehouse 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 the 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 for a total value of €35.7 million and fixed for an eight year term at an attractive all-in interest rate.
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 around 35 per cent. of gross assets.
Evert Castelein, Aberdeen Standard Investments, commented:
"It is particularly pleasing to see the strong uplift in the portfolio valuation over the final quarter of 2019. This 4% quarterly valuation increase illustrates the continued supply demand imbalance for quality real estate within key European logistics hubs and highlights the level of investor demand within this growing sector. While largely driven by a contraction in yields, an increase in market rents, particularly in Germany, was also a key driver in this portfolio valuation uplift. Our strategy has been to focus on what we believe to be the most liquid part of the market, with warehouse sizes up to around 40,000 square metres, where we see the best dynamics in terms of leasing transactions and tenant availability. The portfolio is now well-diversified with 14 investments located across five countries in Europe. Coupled with a strong covenant tenant base and an all-in average fixed cost of debt of approximately 1.3%, I believe we have built a robust inflation linked income stream, with potential for further capital appreciation. In addition, our local teams remain focussed on adding value to our portfolio through active asset management initiatives.
Subsequent to the quarter end, I was very pleased to complete the acquisition of the newly built Den Hoorn asset and following this acquisition, alongside the Madrid and Warsaw assets acquired in Q4, all funds raised in July 2019 have now been fully deployed. Notably, all acquisitions made since this fundraise, have been for assets with an urban logistics angle. As the proportion of online European retail sales continues to rise, these smaller sized, urban focused logistics assets are expected to become increasingly valuable. Our team of transaction managers, based locally in key logistics markets throughout Europe, continue to source a strong pipeline of interesting investment opportunities, particularly in this urban logistics space".
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 October 2019 to 31 December 2019. The unaudited net asset value has been prepared under International Financial Reporting Standards ("IFRS").
|
Aberdeen Standard European Logistics Income |
Per Share (€cents) |
Attributable Assets (€m) |
Comment |
|
Net assets as at 30 September 2019 |
107.3 |
251.7 |
|
|
Unrealised increase in valuation of property portfolio |
5.9 |
13.8 |
Portfolio of 13 assets, capital value increased 3.96% on a like for like basis excluding the acquisitions in Warsaw and Madrid. Acquisition costs incurred in the period relate to these two properties. |
|
Acquisition costs during the period |
(0.3) |
(0.7) |
|
|
Income earned for the period |
1.8 |
4.2 |
Income from the property portfolio and associated running costs. |
|
Expenses for the period |
(0.4) |
(0.9) |
|
|
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 19 to fix the EUR:GBP conversion of the annual dividend. |
|
Dividend paid on: 20 December 2019 |
(1.4) |
(3.3) |
Third interim dividend of 1.27p per Ordinary Share |
|
Deferred tax movements |
(1.8) |
(4.1) |
Deferred tax liability on the difference between book cost and fair value of the portfolio, including the Warsaw asset, which was acquired via an SPV acquisition in the period. |
|
Foreign currency gain |
0.2 |
0.2 |
|
|
Net assets as at 31 December 2019 |
111.2 |
260.7 |
|
The EPRA NAV per share is 113.2 Euro cents, which excludes deferred tax liability and fair value of the FX derivative.
Net Asset Value analysis as at 31 December 2019 (unaudited)
|
|
m |
% of net assets |
|
Total Property Portfolio |
350.1 |
134.3% |
|
Adjustment for lease incentives |
(1.6) |
(0.6)% |
|
Fair value of Property Portfolio |
348.5 |
133.7% |
|
Cash |
24.6 |
9.4% |
|
Other Assets |
10.6 |
4.1% |
|
Total Assets |
383.7 |
147.2% |
|
Bank Loans |
(108.9) |
(41.8)% |
|
Current liabilities |
(8.7) |
(3.3)% |
|
Deferred tax liability |
(5.4) |
(2.1)% |
|
Total Net Assets |
260.7 |
100% |
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 December 2019 is based on 234 ,500,001 shares of 1 pence each, being the total number of shares in issue at that time.
Tony Roper, Chairman of the Company, commented:
"The Board and the Investment Manager continue to believe that the European market offers attractive opportunities as the logistics segment continues to grow. The sector increasingly benefits from the rapid take-up of logistics facilities, largely helped by the growth in e-commerce, and the long inflation-linked leases that tenants are prepared to sign up to in many parts of Europe. As we have previously stated, it is this strategy which is focused on investments on the Continent with attractive pricing, indexation of leases as standard and lower financing costs that underpins our investment policy.
We see the size segment that we are invested into as the most attractive and liquid part of the logistics sector with the urbanisation trend across Europe driving demand and growth. Our Investment Manager continues to work on behalf of shareholders to find value and promote ESG principles through the addition of green leases and the installation of solar panels. Such ESG initiatives can only help drive a better understanding of our tenants and their requirements and enhance the working and surrounding environment to further develop relationships.
With close to 10% of retail sales on average in the EU now resulting from online transactions and with a double digit growth rate, the economic pressures on the demand side of the logistics sector should remain strong and focused, particularly on urban freight infrastructure. Our tenants continue to adapt to the speed, frequency and complexity of their clients demands and the increasing use of technology and requirements for modern, well-located and flexible buildings should serve us very well for the future.
This continued demand led growth gives confidence that we are positioned in an expanding area of the real estate market and with a pipeline of interesting assets the Company will continue to grow as markets allow".
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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