Unaudited Q4 2020 Portfolio Valuation Update
20 January 2021
Aberdeen Standard European Logistics Income PLC
LEI: 213800I9IYIKKNRT3G50
Unaudited Property Portfolio Valuation and Rent Collection Update
Aberdeen Standard European Logistics Income PLC ( the "Company" or "ASLI") today provides an update on the unaudited quarterly independent valuation of the property portfolio as at 31 December 2020 and its rent collection for the fourth quarter of 2020 .
- As at 31 December 2020, the property portfolio was independently valued by CBRE GmbH at €430.2 million, an increase of 6.0%, or €24.5 million, on the 30 September 2020 valuation of €405.7 million on a like for like basis.
- 100% of rent due for the quarter ended 31 December 2020 has been collected.
- Total rent collection for the calendar year 2020 is 97% of rent due under original tenant agreements, as previously reported, with the balance consisting of agreed rent deferrals and rent free periods granted in exchange for material lease extensions.
- The Company remains prudently geared with a loan to value ratio of approximately 31% of gross assets, with no debt maturity before June 2025 and an average remaining loan duration of 5.7 years.
The Company expects its unaudited 31 December 2020 net asset value per share to have increased materially since the third quarter (30 September 2020: 112.7 euro cents, equivalent to 102.9 pence per share).
The Company plans to announce the 31 December 2020 unaudited NAV and its fourth interim distribution in respect of the year ended 31 December 2020 on or around 19 February 2021.
Portfolio Valuation
As at 31 December 2020, the Company's property portfolio was independently valued at €430.2 million (£386.7 million) and consists of 14 assets located across five European countries. This unaudited valuation represents a strong 6.0% uplift of €24.5 million over the previous Q3 2020 property valuation of €405.7 million. The valuation increase was predominantly the result of 25 basis points of yield compression across the entire portfolio, driven by the strength of the European logistics real estate market alongside the high-quality nature of ASLI's portfolio as demonstrated through consistently high levels of rent collection.
The last part of 2020 saw a significant increase in the value of prime European logistics real estate assets let to high calibre tenants on long leases. The supply of such quality assets remains constrained and occupier demand for mid-size logistics buildings continues to strengthen. When combined with the buoyant investment market witnessed, this has driven tighter pricing in transactions, accelerating yield compression and increasing valuations for good quality assets in the logistics real estate market.
Rental Collection and Dividend
All rental income due in respect of Q4 2020 has been collected resulting in total rent collection of 97% for the full 2020 calendar year. No new requests for support from tenants have been received in the fourth quarter with the majority of tenant discussions having taken place during Q2, when the Company successfully concluded negotiations with certain tenants negatively impacted by the COVID-19 pandemic. As previously disclosed at the time, for the remaining outstanding rental income, the Investment Manager agreed short-term rent deferrals and a small number of rent-free periods, in exchange for material lease extensions.
A third interim distribution in respect of the year ended 31 December 2020, amounting to 1.24 pence (equivalent to 1.41 euro cents) per Ordinary share was paid in sterling on 30 December 2020 to Ordinary shareholders on the register on 4 December 2020 (ex-dividend date of 3 December 2020).
The Company continues to declare quarterly interim dividends to Shareholders, with dividends declared in respect of the quarters ending on the following dates: 31 March, 30 June, 30 September and 31 December in each year.
The Board, through the Investment Manager, monitors the performance of the Company's tenants as many European countries still struggle with COVID-19 and differing forms of enforced lockdowns. In light of the continued strong rental collection outcome, it remains the Board's intention to pay quarterly dividends in line with the Company's dividend policy. The Q4 dividend is expected to be declared on or around 19 February 2021.
Outlook
The Board and the Investment Manager continue to observe the strong structural tailwinds benefiting the European logistics sector which were reinforced by the impact of the COVID-19 pandemic. The Company's portfolio of 14 assets is diversified across five European countries, with 34 underlying tenants.
Evert Castelein and the wider European-based support team that he has around him continues to originate interesting opportunities to expand ASLI's portfolio of quality assets despite the yield compression witnessed over 2020. The Board supports the team's efforts to grow and increase the value of the Company through both the purchase of new assets and through asset management initiatives as seen within the current portfolio. Discussions with tenants regarding extensions to two properties are at varying stages which together with ESG initiatives like solar panel installation should give shareholders confidence that the Company's portfolio is well placed for the future.
The Investment Manager sees an active pipeline of well-located "mid-box" and urban logistics assets throughout Europe. Advanced due diligence on the recently announced Polish asset continues with an expected closing of the transaction in late Q1 2021. This 34,000 sqm warehouse is expected to provide a net initial yield of 5.5%, is well located and will be leased to six tenants with an average WAULT of more than seven years. The Company will provide further detail as and when it is appropriate to do so.
Evert Castelein, Aberdeen Standard Investments, commented:
"It is very gratifying to see our latest portfolio valuation deliver such an uplift for the December 2020 quarter end which is a reflection of the quality and locations of the asset base that we have built up. Individual valuations have benefited from more recent deals witnessed in the strong market for European logistics real estate. Increased online retail sales and an obvious focus on supply chains and their resilience has led to an increased demand for space and well specified buildings in locations linked easily to supply routes and close to major centres.
We have seen strong levels of rent collection, but nonetheless we continue to monitor the situation closely for any possible impacts on our tenant base. We remain, through ASI's local network, in contact with our tenants and available to support them where and when required.
There are continued attractive opportunities across Europe to invest in high-quality, modern and well-located assets. We believe that the outlook for European logistics real estate remains compelling, supported by a level of income which is inflation proofed through long indexed leases.
As the European logistics market evolves, ASI's locally-based transaction managers expect to see increased levels of interesting investment opportunities as companies seek to bring certain operations back to their home territories and the importance of e-commerce focuses attention."
Tony Roper, Chairman of the Company, commented:
"Our 100% Q4 rent collection figures together with such a strong quarter's portfolio valuation uplift gives the Board confidence for the future and continues to underpin the distribution policy of the Company. We, via our Investment Manager, remain in close contact with our tenants as we track the pandemic's continued impact on people's lives and the businesses that provide necessary goods.
Whilst noting the Tritax deal announced recently by Standard Life Aberdeen plc and the advantages that this may bring in the form of added resource to the Manager and the possibility of an enhanced pipeline, it remains very much business as usual for our investment team who continue to work on the recently announced Polish deal, valued at approximately €26 million, to add a fifteenth asset to the portfolio. It remains the Board's intention to grow the Company, further diversifying the asset and tenant base.
We are confident that the portfolio can deliver solid returns for our shareholders and this latest update shows the increasing value of the assets sourced by our Investment Manager and the value also of long term indexed income.
There is no doubt that the quality, location and age of our assets together with improving sustainable credentials witnessed by our recent GRESB (Global Real Estate Sustainability Benchmark) award of four Green Stars out of a maximum of five should give confidence for the future as we look to build on the continuing European logistics story."
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.
Further details on 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 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
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