abrdn Euro Logistics - Half-year Report
28/09/2022 07:00
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RNS Number : 9133A abrdn European Logistics Income plc 28 September 2022
28 September 2022
LEI: 213800I9IYIKKNRT3G50
abrdn European Logistics Income plc (LSE: ASLI) (the "Company" or "ASLI")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2022
Diversified portfolio of modern, sustainable and structurally supported
Continental Europe mid box and urban logistics assets benefitting from high
indexation and continued occupier demand
abrdn European Logistics Income plc, the investor in modern Continental
European warehouses, which is managed by abrdn, today announces its interim
results for the six months to 30 June 2022.
Stable NAV and earnings underpinned by portfolio's diversified European
exposure and lease indexation:
· Net asset value per ordinary share increased by 1.4% to 130.9
cents (31 December 2021: 129.1 cents)
· NAV total return of 3.6% for the period
· EPRA net tangible assets 138.7 cents (31 December 2021: 136.4
cents)
· IFRS earnings per share of 4.82 cents (30 June 2021: 6.37 cents),
following equity issuance
· Loan to Value of 21.7% at 30 June 2022, rising to 25.7% with ING
asset level loan. All in cost of debt 1.66%, with an average term to maturity
of 4 years
· Dividend distributions of 2.82 cents (2.39 pence) per share paid
in respect of the period
· Attractive inflation linked lease profile, with 68% of current
portfolio income subject to full uncapped indexation
· A £38 million (€45.6 million) equity issuance completed in
February 2022, deployed into recent acquisitions
· €40 million three-year debt facility agreed with ING Bank,
secured against Phases I to III of Spanish Madrid portfolio, at an all-in
interest rate of 2.57%, post period end
Acquisitions further enhance portfolio's diversification with asset management
supporting income growth:
· Strong rent collection with 100% of expected rent due for the
period collected
· Portfolio value increased 2.2% to €680.4 million (31 December
2021: €660.8 million), reflecting continued yield compression
· Acquisition of two well-located logistics properties, in Bordeaux
and Niort, totalling €23 million, with Heads of Terms signed to acquire a
further French logistics asset, following which the portfolio will comprise 14
urban logistics warehouses and 12 mid-box logistics warehouses
· Annualised passing rent increased by 26% to €28.3 million (30
June 2021: €22.4 million)
· Income enhancing asset management successes including:
o Five year lease agreed with ADER on 7,375 sqm of previously vacant space
at Madrid Phase II, ahead of business plan
o Completion of Madrid Phase IV Amazon hub
o Delivery of highly sustainable warehouse extension at Waddinxveen, the
Netherlands
· Weighted average unexpired lease term ("WAULT") (excluding
breaks) of 8.0 years (31 December 2021: 8.0 years)
Tony Roper, Chairman, abrdn European Logistics Income, commented:
"Given the evolving geopolitical and economic environment, it is
understandable that market expectations are being downgraded and an element of
de-risking in portfolios is taking place.
"However, the European logistics occupier market is characterised by record
low vacancy and high activity, with strong leasing momentum reflecting that
Europe is at a much earlier stage of its supply chain reconfiguration and
e-commerce penetration is still some way behind the UK. The incontrovertible
shift in the way consumers shop and the infrastructure required to service
that demand close to population centres is a source of greater certainty."
Evert Castelein, Lead Fund Manager, abrdn European Logistics Income, added:
"The proven resilience of the logistics sector throughout challenging market
conditions maintains its justification as being the most compelling commercial
real estate sector to hold. We have put together a high-quality,
geographically diverse and tenant critical portfolio. With the reach of our
pan-European teams on the ground, we are well placed to engage and collaborate
with our tenants as we look to optimise our assets to support their
operations.
"Being underpinned by robust index-linked income streams to good covenant
tenants will, in addition to the aforementioned factors, help support
valuations and continue to deliver value for our shareholders."
-Ends-
For further information please contact:
Aberdeen Asset Management PLC
+44 (0) 20 7463 6000
Luke Mason
Gary Jones
Investec Bank
plc
+44 (0) 20 7597 4000
Dominic Waters
Neil Brierley
Will Barnett
David Yovichic
Denis Flanagan
FTI
Consulting
+44 (0) 20 3727 1000
Dido Laurimore
Richard Gotla
James McEwan
Highlights
Financial Highlights
30 June 2022 31 December 2021
Total assets (€'000) 767,802 728,386
Equity shareholders' funds (€'000) 539,609 487,505
Share price - Ordinary share (pence) 99.60 117.00
Net asset value per Ordinary share (€) 1.31 1.29
Share price (discount)/premium to sterling net asset value (11.4)% 7.8%
Performance (total return)
Six months ended 30 June 2022 Year ended 31 December 2021 Since Launch return
Share price1 (12.9)% 12.4% 19.9%
Net Asset Value (EUR)1 3.6% 12.4% 39.1%
1 Considered to be an Alternative Performance Measure (see Glossary below for
more information).
Overview
Company Overview
abrdn European Logistics Income plc (the "Company" or "ASLI") is an investment trust investing in high quality European logistics real estate to achieve its objective of providing its Shareholders with a regular and attractive level of income and capital growth. The Company invests in a portfolio of assets diversified by both geography and tenant throughout Europe, predominantly targeting well located assets at established distribution hubs and within population centres.
Financial Highlights as at 30 June 2022
Net asset value total return for the 6 months to 30 June 20221 Net Asset Value Net Asset Value
(€'000)
per share (€)1
3.6%
539,609 1.31
For the 12 months to 31 December 2021: 12.4%
31 December 2021: 487,505 31 December 2021: 1.29
Share price total return for the 6 months to (Discount)/ Ordinary distribution per share declared for the 6 months to
Premium to
30 June 2022
30 June 20221
Net Asset Value1 2.82¢
(12.9)%
(11.4)% Declared for the 12 months to 31 December 2021: 5.64¢2
For the 12 months to 31 December 2021: 12.4%
31 December 2021: 7.8%
EPRA Net Tangible Assets IFRS Earnings Per Share for the Portfolio valuation
per share (€)1
6 months to 30 June 2022
(€'000)
1.39 4.82¢ 675,692
31 December 2021: 1.36 For the 12 months to 31 December 2021: 15.43¢ 31 December 2021: 660,973
Number of Average lease length excluding breaks in years Loan-To-Value
assets
(%)3
8.0
23
21.7%
31 December 2021: 8.0
31 December 2021: 23 31 December 2021: 25.1%
Average building size Rent collection
(sqm)
23,403
100%
31 December 2021: 23,403
31 December 2021: 100%
1 Alternative Performance Measurements - see glossary.
2 Total dividend paid in respect of year ended 31 December 2021.
3 25.7% including €40m ING loan drawn after period end.
Interim Board Report
Chairman's Statement
Overview
I am pleased to be presenting the Company's half yearly report for the six
months ended 30 June 2022.
The Company's investment objective remains solely focused on investing in
logistics real estate in Europe, with our strategy targeting both medium sized
"mid box" assets and smaller format "urban logistics" that will serve 'last
mile' functions for Europe's growing e-commerce activities.
The current diversified portfolio of 26 modern logistics warehouses in
established locations across five countries (including the soon to be acquired
French asset near Dijon) has been carefully stock picked by our Investment
Manager, with an increasing weighting towards urban assets. Whilst we are
starting to see some pockets of outward yield movement in the portfolio,
valuations are generally stable, reflecting occupier demand for our high
specification buildings, which are located close to population hubs with
excellent road, rail and port links. Our assets typically benefit from durable
and growing income streams with long index- linked leases secured against a
diversified range of tenants.
The prospective growth of the Company will follow the existing investment
strategy, targeting a range of logistics real estate assets that the
Investment Manager believes are well located, close to established
distribution hubs and population centres that will provide the Company with
increased asset and tenant diversification and enable it to meet its
investment objective. A greater focus on such assets in a market with low
vacancy rates, new development constraints and with CPI rent increases feeding
through convinces us of the positioning of our portfolio.
We are facing a period of global economic uncertainty and concerns over
increasing energy costs and the almost unprecedented inflationary pressures
being witnessed.
However, the underlying premise of income and capital growth, generated from
in-demand assets buoyed by continuing e-commerce penetration, the near shoring
of operations, land scarcity and rapidly rising construction costs, remains
compelling. Added to this, we are starting to see higher inflation feeding
through into annual lease reviews, which is a major benefit of many European
lease agreements which are predominantly linked to CPI or its equivalent.
Investors continue to support the Company, recognising the qualities of the
GRESB rated portfolio underpinned by the changing nature of both tenants and
their customers in the desire for reliable and fast delivery lines and
supported by indexed income-producing assets and competitive fees. It was good
to finally be able to hold an in-person AGM on 6th June and to be able to
present and meet shareholders again after the pandemic- induced closed
meetings. The Board was also able to visit the Company's acquisitions in
Madrid with the Investment Manager and to fully appreciate the quality and
scale of these assets. The local transaction and asset management team based
in central Madrid gave the Directors a great deal of comfort around the
knowledge and expertise that helps manage our Spanish portfolio.
Much of the early part of H1 was spent bedding down the Madrid portfolio. The
purchase of which was completed in December 2021. In July, as planned, the
Company saw the completion of the construction and handover of the dedicated
Amazon hub and its associated car parking deck for its fleet of delivery vans
in Phase IV at Gavilanes. This was a milestone with Amazon now one of the
largest tenants within the portfolio and occupying this newly-constructed
last-mile warehouse on a 25 year indexed lease.
We have continued to acquire assets that meet our strict investment criteria.
On 1 August 2022, the Company announced completion of the acquisition of two
logistics properties, in Bordeaux and Niort, France. The aggregate purchase
price of circa €23 million reflects a net initial yield of 4.0%.
Both buildings are leased to the same German-owned global third party
logistics provider, operating as Dachser France. This long-standing 3PL
operator has a strong financial covenant and both leases provide for annual
indexation. Site coverage is also low, at 22% and 9% respectively, providing
excellent opportunities for expansion in the future. We expect to announce the
acquisition of a third French warehouse in Dijon shortly.
Further details on the Company's portfolio are provided in the Investment
Manager's Report that follows.
Results
The unaudited Net Asset Value ("NAV") per share as at 30 June 2022 was 130.9
euro cents (GBp - 112.4p), compared with the NAV per share of 129.1 cents (GBp
- 108.5p) at the end of 2021, reflecting, with the interim dividends declared,
a NAV total return of 3.6% for the six month period under review, in euro
terms. Over the 12 months ended 30 June 2022, the NAV total return was 10.6%,
reflecting continued strength in the sector.
The closing Ordinary share price at 30 June 2022 was 99.6p (31 December 2021 -
108.5p), representing a discount to the NAV per share of 11.4%.
Rent collection
Despite economic headwinds, the Company's rent collection remains strong with
100% of the expected rental income for the half year ended 30 June 2022
collected.
Dividend
On 18 February 2022 the Board declared a fourth interim distribution of 1.41
euro cents (equivalent to 1.21 pence) per Ordinary share in respect of the
year ended 31 December 2021. In aggregate a total dividend of 5.64 euro cents
was paid in respect of the 2021 financial year. The equivalent sterling rate
paid was 4.84 pence.
First and second interim distributions of 1.41 euro cents (equivalent to 1.19
pence and 1.20 pence respectively) have been declared in respect of the year
ending 31 December 2022.
Fund raising and share issuance
In January, the Company raised £38 million (€45.6 million) in aggregate via
a Placing under the Company's Share Issuance Programme which included a retail
offer.
A total of 34,545,455 new Ordinary Shares were issued at a price of 110 pence
per new Ordinary Share and the Company's issued share capital now consists of
412,174,356 Ordinary Shares with voting rights.
Revolving credit facility/ financing
The Company's €70 million Revolving Credit Facility ("RCF") at the parent
Company level provided by Investec Bank provides flexibility in the
acquisition of new properties and can help to avoid immediate cash drag on
investment returns. At the time of writing we have drawn €50 million against
this to finance the Amazon leased Phase IV Madrid hub before fixing longer
term debt on this asset.
On 7 July 2022 the Company secured a new €40m debt facility against Phases I
to III of its Spanish Madrid portfolio. A three-year term was agreed with ING
Bank at an all-in interest rate of 2.57%, effected using an interest rate
swap.
At 30 June 2022 the asset level LTV was 21.7%. The ING loan saw this rise to
25.7%. The Company's non-recourse loans , including the ING loan, range in
maturities between 2.9 and 6.6 years with interest rates ranging between 1.10%
and 2.57% per annum.
The current average interest rate on the total fixed term debt arrangements of
€201.6 million (excluding the RCF) is 1.66%. The Board continues to keep the
level of borrowings under review, calculated at the time of drawdown for a
property purchase. The actual level of gearing may fluctuate over the
Company's life as and when new assets are acquired or whilst short term asset
management initiatives are being undertaken. Banking covenants are reviewed by
the Manager and the Board on a regular basis.
ESG and Asset Management
The Company believes that comprehensive assessment of ESG factors leads to
better outcomes for shareholders and adopts the Manager's policy and approach
to integrating ESG.
The current portfolio has strong ESG credentials having been awarded Sector
Leader status and being placed first in the Listed European Industrial -
Distribution Warehouse segment in the 2021 GRESB survey (Global Real Estate
Sustainability Benchmark). We cannot rest on our laurels here and a programme
of works continues to enhance areas where improvements can be made, including
solar panel projects, LED lighting, analysis of energy and water consumption,
partly informed by our tenant satisfaction survey.
The Investment Manager continues to focus on asset management initiatives,
leveraging its network of locally based asset managers to enhance the value of
the portfolio's assets. This includes initiatives around building extensions
and improvements to sites both internally and externally for the benefit of
tenants and their workforces and to enhance the future value of the assets.
The now completed extension alongside our Waddinxveen asset is a very good
example of this and allows our tenant Combilo to accommodate its growing
client base and is accretive to returns.
Outlook
Given the evolving geopolitical and economic environment, it is understandable
that market expectations are being downgraded and an element of de-risking in
portfolios is taking place. Increasing interest rates may well translate into
some of the 'hot' money that has chased logistics assets globally, whilst
using high leverage, re-assessing the situation, leading
to some softening of valuations. That said, the European logistics occupier
market remains very active with strong leasing momentum, reflecting that
Europe is at a much earlier stage of its supply chain reconfiguration and
e-commerce penetration still some way behind the UK. The incontrovertible
shift in the way consumers shop and the infrastructure required to service
that demand close to population centres is a source of greater certainty.
With the majority of our tenants leases subject to uncapped CPI increases we
should see attractive increases in income in the coming years. Whilst always
mindful of tenant affordability the Company is in a strong position and early
stage discussions may lead to lease extensions helping underpin the long term
nature of our income generation.
The Investment Manager believes that our logistics assets remain relatively
defensive against the downturns in economic activity being witnessed. The
Company's portfolio is characterised by carefully selected assets in
well-located areas close to population hubs with good transport links
underpinned by low vacancy rates across Europe. The increasing construction
costs for developers being witnessed will impact supply and long indexed
leases secured against a financially robust and increasingly diverse tenants
base, for whom rent remains a small percentage of revenues, for us underpins
returns. We have seen an increasing focus on sustainability from investors and
tenants alike and are working together with our advisers on an early plan and
costings towards carbon neutrality. New regulations combined with evolving
valuation guidance will drive a wider gap between future- fit assets and those
facing obsolescence.
To date we have built a diversified portfolio of 26 modern, high quality
logistics warehouses with long term, inflation linked income characteristics,
which has underpinned the valuation gains we have witnessed and delivered
attractive returns for Shareholders. We will seek to add to the portfolio at
the opportune time, especially as we see attractive opportunities in the
market as interest rate increases start to impact what has been a very buoyant
market to date.
Tony Roper
Chairman
27 September 2022
Interim Board Report
Investment Manager's Review
Overview
The resilience of the logistics market is again being put to the test with the
focus of the world in the first half of 2022 shifting towards the impact from
the Russian invasion of Ukraine. European sanctions, rapidly rising inflation
and increasing interest rates are impacting European economies leading to
uncertainty and the risk of recession. Notwithstanding the cyclicality of
financial markets, logistics has remained resilient thanks to its strong
fundamentals with demand for good quality warehouse stock structurally
exceeding new supply, especially with new developments looking increasingly
constrained due to rising construction costs.
One of the key themes today for many is without doubt inflation. With our
focus on Continental Europe, our CPI- indexed rents are a great benefit and
will help to grow our income stream. With rents which increase annually
predominantly in line with increasing inflation and our focus on what we
believe is the most attractive part of the market and buildings which have
every opportunity of a 'second-life' when leases end, we believe the Company
is well positioned. Having options is key. Urban logistics and mid-sized boxes
with modern specifications are highly sought after thanks to the continued
growth in online sales and with companies seeking to move closer to end-
customers in order to reduce transportation costs and delivery times. The
limited supply witnessed in the market will support stronger rental growth
especially for these assets, which is key for our income driven strategy.
Despite the market challenges, 100% of expected rental income was collected in
2021 and H1 2022 reflecting the strong and diverse tenant base. Property
valuations increased by 2.16% (+€14.4m) over the first six months of the
year resulting in further NAV growth.
With the support of our local real estate teams located across Europe we have
been able to build a well-diversified portfolio with 23 buildings as at 30
June, of which 16 were brand-new at the time of purchase. These assets have
modern specifications and are situated in easily accessible locations with 12
located on the urban fringes of major cities . The development of the Amazon
hub in Madrid, our largest warehouse, was completed in July and is urban
located as well. Two further warehouses in France were purchased in July 2022
and we are working to complete a third shortly, two of these are urban
located.
Given the uncertain market situation, we have taken a more cautious approach
over the early part of 2022 with a focus on optimising the existing portfolio
and closing pipeline deals. We believe a cautious approach is prudent in
today's market with gearing at a level below target, giving us the flexibility
to act quickly when there is more clarity on the direction of travel of
markets.
The main achievements over the six months have been the signing of the
purchase agreements in France with global logistics operator Dachser as
tenant, the delivery of the Amazon development in Madrid, completion of a
small extension project in Waddinxveen in the Netherlands and the signing of a
new lease for a vacant unit in Spain, all of which closed early Q3 2022. A
further priority is in seeking to keep the portfolio future-fit by focusing on
sustainability and defining a carbon strategy whilst closely monitoring the
market looking for attractive new investment opportunities.
Strong fundamentals will drive performance in the logistics sector
Each real estate sector has its own challenges. Clearly, the pandemic changed
the way we work and how we use office space and accelerated growth in online
sales affecting the retail market to a large extent. For logistics, the
challenge is different and this is reflected in the supply-demand imbalance
with logistics being business critical and essential for companies to operate.
During the pandemic, demand for warehouse space held up well, benefiting from
the growth in online sales with goods delivered directly from a warehouse to
the consumer and with supermarkets embracing this business model rapidly. We
have all witnessed supply chain disruptions and these have led to companies
holding larger inventories in warehouses or even considering near-shoring some
of their production facilities to Europe in order to make their supply chains
more resilient. These trends have resulted in an increased take-up of
logistics space leading to historic low vacancy rates with the development of
modern warehouse space unable to keep up with demand. Costs for building
materials such as timber, steel and concrete and also land scarcity have
increased significantly making it hard for developers to undertake profitable
projects, thus driving rents further upwards. So, despite economic turmoil in
the short-term we strongly believe logistics will continue to outperform with
rents growing especially in urban locations where demand is highest.
Attractive assets with growth potential
Our portfolio strategy is defined by the assets that we have invested in and
their locations, where we think growth will be strongest. The ability to more
easily let a warehouse to another company (liquidity) is hugely important and
an element of the drivers for growth in the future. Diversification is another
important consideration.
With 26 assets (including July transactions and post completion of the next
French purchase) spread across 5 European countries and leased to 47 tenants
the Company is well positioned in this regard.
In July 2022, the Company exchanged contracts in Madrid on a state-of-the-art
last mile Amazon hub of 16,500 sqm together with a 20,000 sqm decked Electric
Vehicle van hub capable of accommodating 530 vehicles. This prime asset was
the fourth and final phase of the Sky Gavilanes portfolio purchase, a deal
which was closed in December 2021 with seven existing warehouses and this one
forward commitment. Amazon has committed to a 25-year lease until March 2047,
subject to a break option in March 2037. Net purchase price was €80.3
million reflecting a net initial yield of 3.4%, as agreed in Q4 2021.
In July, the Company also exchanged contracts on a French portfolio of two
warehouses for a net purchase price of €23.0 million reflecting a net
initial yield of 4.0%. Both properties are leased out to Dachser, an
international provider of transport and logistics solutions, and provide
annual indexation, whilst they also offer medium term asset management
opportunities due to their low site coverage. One building is located in
Bordeaux, one of France's more populated cities, located just a few kilometres
from the city centre. Total size of the asset is 6,504 sqm with a site cover
of only 22% providing the option to expand the building further if required by
the tenant. The second building is located in Niort with a site cover of only
9%. The Company expects to complete on the purchase of a third freehold
building in France in Q3.
At the end of June 2022, the portfolio was tilted towards the Netherlands (35%
of portfolio value) and Spain (29%), followed by Poland (14%), France and
Germany (each 11%). The allocation to Spain grew to almost 36% with the
addition of the Amazon warehouse in July and in France to 13% with the
addition of the Dachser portfolio, with exposure to the other countries
decreasing proportionally.
Spain now represents our largest country exposure with one urban logistic
warehouse in Barcelona, a mid-sized building in Leon and nine warehouses in
Madrid. Madrid is the third largest city in Europe after London and Paris. The
urban profile of these warehouses is exactly in line with our strategy and we
are pleased to have Amazon in the portfolio. The Netherlands is our second
largest market. The Gateway function with Rotterdam, the largest seaport in
Europe, gives the Netherlands a strategic location in Europe and starting
point for large transport corridors leading to Belgium, Germany and beyond.
This is reflected in the second highest logistics stock per capita just behind
Belgium. The combination of a densely populated country and a fierce debate
around the impact of further construction on the environment and biodiversity
makes it even harder to find locations for new logistics developments. This
leaves us well positioned with the six Dutch assets in the portfolio.
Including the two recent additions, we now have four warehouses in France with
another in the pipeline providing further diversification to this large
economy. The three warehouses in Poland provide higher yields over certain
other regions. The Polish market has been amongst the strongest growing
European logistics market benefiting from low labour costs. Its proximity to
the neighbouring Ukraine has not impacted the portfolio. With Poland a member
of NATO, its historically strong link to Ukraine has led to increased take-up
as some Ukrainian companies have required extra storage. The two multi-let
assets in Germany are located in the densely populated Frankfurt Rhine-Main
region and have performed very well since being acquired.
Property portfolio
WAULT incl breaks in yrs WAULT excluding breaks in yrs
Country Location Built % of Portfolio
France Avignon 2018 5.1 9.3 6.9
France Meung sur Loire 2004 - - 2.9
Germany Erlensee 2018 5.5 7.6 5.7
Germany Flörsheim 2015 2.6 6.3 3.6
Netherlands Den Hoorn 2020 7.8 7.8 7.7
Netherlands Ede 1999/2005 5.5 5.5 4.3
Netherlands Oss 2019 12.0 12.0 2.3
Netherlands 's Heerenberg 2009/2011 9.4 9.4 4.3
Netherlands Waddinxveen 1983 - 2018 11.4 11.4 6.4
Netherlands Zeewolde 2019 12.0 12.0 4.9
Poland Krakow 2018 3.3 3.3 4.0
Poland Lodz 2020 5.8 5.8 4.1
Poland Warsaw 2019 5.3 5.3 4.1
Spain Barcelona 2019 4.0 7.0 2.5
Spain Leon 2019 6.7 6.7 2.5
Spain Madrid 1999 4.5 7.5 1.6
Spain Madrid - Gavilanes 1.1 2019 7.2 7.2 4.8
Spain Madrid - Gavilanes 1.2 2019 1.1 8.1 2.7
Spain Madrid - Gavilanes 2.1 2020 4.1 14.1 2.1
Spain Madrid - Gavilanes 2.2 2020 2.0 4.0 1.7
Spain Madrid - Gavilanes 2.3 2020 - - 1.6
Spain Madrid - Gavilanes 3 (2 assets) 2019 4.9 8.9 6.1
Total at 30 June 2022 (1) 6.6 8.0 86.8
Spain (July 2022) Madrid - Gavilanes 4 2022 10.2
France (July 2022) Bordeaux 2005 1.5
France (July 2022) Niort 2014 1.5
Total (2) 13.2
Total (1+2) 100.0
Asset loans as at 30 June 2022
Existing loan Remaining Interest (incl margin)
Country Property Bank €million End date Years
Germany Erlensee DZ Hyp 17.8 January 2029 6.6 1.62%
Germany Florsheim DZ Hyp 12.4 January 2026 3.6 1.54%
France Avignon + Meung sur Loire BayernLB 33.0 February 2026 3.6 1.57%
Netherlands Ede + Oss + Waddinxveen Berlin Hyp 44.2 June 2025 2.9 1.35%
Netherlands s Heerenberg Berlin Hyp 11.0 June 2025 3.0 1.10%
Netherlands Den Hoorn + Zeewolde Berlin Hyp 43.2 January 2028 5.5 1.38%
Total as at 30 June 2022 161.6 4.2 1.43%
Spain Madrid, Gavilanes 1-3 ING 40.0 July 2025 4.0 2.57%
Total including ING loan 201.6 1.66%
Indexed rental income
2022 has experienced unprecedented levels of inflation driven by the impact
from the pandemic and the war in Ukraine with increased costs of energy one of
the main drivers. In June inflation in the Eurozone was 8.6% (year-on-year)2.
One of the key benefits of the Continent, compared to the UK, is the
relatively standard annual indexation clause seen in leases. The majority of
our contracts have upward only indexation clauses, sometimes with a cap. In
the portfolio, a total of 68% of rent is fully indexed with no cap, 24% has a
cap between 2% and 5%, whilst 7% attracts German threshold indexation.
The affordability of rents for our tenants with this increasingly high
indexation is an important consideration. As a landlord at this stage we feel
our position is strong with the logistics business of many tenants critical to
their success. Overall, rent may often be a smaller portion of overall
operating expenses for companies meaning the impact may be limited for them,
especially where companies have pricing power in their particular market. Our
local asset managers will enable us to manage this process well, as with the
challenges of the pandemic.
ESG
Environmental, Social and Governance (ESG) is one of the key strategic goals
where the Investment Manager is distinguishing itself from its peer group. The
Company was awarded Sector Leader Status in the 2021 GRESB survey and was
first in its peer group of six listed logistics strategies in Europe. GRESB is
the Global Real Estate Sustainability Benchmark assessment and a leading
indicator worldwide for measuring green performance. The Company received 84
out of 100 points resulting in four out of five green stars.
Our starting point is strong thanks to the younger age of the portfolio, the
installation of solar panels on ten of our buildings and a dedicated ESG Team
helping to optimise the sustainability credentials.
As a next step, the Investment Manager is working on defining a Net Zero
Carbon strategy with the Board with clear reduction targets for the future. We
have undertaken a first stage pathway analysis with a third party specialist
in this field. Knowing the carbon footprint of each building in the portfolio
will help guide to creating a real structure to our ambitions for both the
near and long term.
Outlook
We should not underestimate the challenges that markets face in the short
term. Tighter yield spreads and looming recession will present challenges for
sections of the real estate market. Longer term we are confident that the
structural drivers of supply chain evolution are deeply embedded -
particularly on the Continent. Europe is at a much earlier stage of the growth
in e-commerce penetration and substantial investment in modern warehousing is
required to make this a profitable model for occupiers. In a global context,
Europe is a large logistics market and should continue to grow further due to
supply chain diversification/near-shoring, as political risks and the costs of
running long distance global supply chains have escalated.
Construction costs, lead times and development financing margins have also
increased sharply, which is likely to restrict development pipelines,
suppressing future supply. This should support the strength of cash flows and
the potential for structurally higher market rents in the sector.
Furthermore, it is much more typical in Europe for rents to contractually
increase through indexation to annual inflation, which is a key point of
differentiation compared to most UK lease structures. This gives cash flows
from European logistics assets a stronger direct link to inflation, boosting
our revenue earning capabilities. That said we are always cognisant of the
possible impact that such increases may have on our tenants businesses. The
high levels of inflation being witnessed as lease renewal negotiations come up
means that there may well be options to help limit increases for certain
tenants whilst agreeing longer lease terms, to the benefit of both sides.
We have recently seen examples of reduced indexation agreed in exchange for
lease extensions or the removal of breaks, which is a positive for investors
looking for longer term cash flows.
We still hold strong conviction in our strategy to focus on urban and mid-box
assets as supported by the continued structural demographic trends such as
urbanisation and suburbanisation, automation and digitalisation. Combine this
with a post-pandemic emergence across the Continent to implement improved
public health guidance and a wider recognition of the huge change needed to
deliver a pathway to net zero and this only serves to underline our robust
investment philosophy in targeting best in class assets, in the strongest
locations, underpinned by excellent fundamentals.
The proven resilience of the logistics sector throughout challenging market
conditions maintains its justification as being the most compelling commercial
real estate sector to hold. We have built a high-quality, diverse, tenant and
geographical mix across the portfolio. With the reach of our pan-European
teams on the ground, we are well- placed to engage and collaborate with our
tenants as we look to optimise our assets to support their operations.
Fundamentally for an income fund, being underpinned by robust index-linked
income streams to good covenants will, in addition to the aforementioned
factors, help support valuations and continue to deliver for our shareholders.
Evert Castelein
Fund Manager
abrdn Investments Ireland Limited
27 September 2022
Interim Board Report
Disclosures
Principal risks and uncertainties
The principal risks and uncertainties affecting the Company are set out on
pages 12 to 16 of the Annual Report and Financial Statements for the year
ended 31 December 2021 (the "2021 Annual Report") together with details of the
management of the risks and the Company's internal controls. Notwithstanding
the risk of recession, higher inflation and tenant rental negotiations
discussed in the Chairman's Statement and Investment Manager's Review, these
risks have not changed materially and can be summarised as follows:
. Strategic Risk: Strategic Objectives and Performance;
. Investment and Asset Management Risk: Investment Strategy;
. Investment and Asset Management Risk: Developing and Refurbishing Property;
. Investment and Asset Management Risk: Health and Safety;
. Investment and Asset Management Risk: Environment;
. Financial Risks: Macroeconomic;
. Financial Risks: Gearing;
. Financial Risks: Liquidity and FX Risk;
. Financial Risks: Credit Risk;
. Financial Risks: Insufficient Income Generation;
. Regulatory Risks: Compliance;
. Operational Risks: Service Providers; and
. Operational Risks: Business Continuity.
The Board also has a process in place to identify emerging risks. If any of
these are deemed to be significant, these risks are categorised, rated and
added to the Company's risk matrix.
The Board has reviewed the risks related to the Covid-19 pandemic and the
on-going conflict in Ukraine which has impacted the underlying tenants in the
Company's warehouse portfolio in varying degrees due to the disruption of
supply chains and demand for products
and services, increased costs and potential issues around changes in cash flow
forecasts. However, the Board notes the Investment Manager's robust and
disciplined investment process which continues to focus on high quality
warehouses located across Europe and prudent
cash flow management. The Board, through the Manager, closely monitors all
third party service arrangements and has not suffered any interruption to
service. The Board therefore believes that the Manager and all other key third
party service providers have in place appropriate business interruption plans
and are able to maintain their service levels to the Company.
Related party transactions
abrdn Fund Managers Limited ("aFML") acts as Alternative Investment Fund
Manager, abrdn Investments Ireland Limited acts as Investment Manager and
Aberdeen Asset Management PLC acts as Company Secretary to the Company;
details of the service and fee arrangements can be found in the 2021 Annual
Report, a copy of which is available on the Company's website. Details of the
transactions with the Manager including the fees payable to abrdn plc group
companies are disclosed in note 16 of this Half Yearly Report.
Going concern
In accordance with the Financial Reporting Council's Guidance on Risk
Management, Internal Control and Related Financial and Business Reporting, the
Directors have undertaken a rigorous review and consider that there are no
material uncertainties and that the adoption of the going concern basis of
accounting is appropriate. This review included the additional risks relating
to the ongoing Covid-19 pandemic and conflict in Ukraine and, where
appropriate, action taken by the Manager and Company's service providers in
relation to those risks. An analysis of the level of rental payments from
tenants together with operational and other Company costs has been modelled
covering a range of potential risk scenarios. In addition, the Company
maintains an overdraft facility which allows the Company to draw down
additional funds if unexpected short term liquidity issues were to arise. The
Board notes that the Investment Manager remains in regular contact with
tenants and third party suppliers and continues to have a constructive
dialogue with all parties. Accordingly, the Directors believe that the Company
has adequate financial resources to continue in operational existence for the
foreseeable future and at least 12 months from the date of this Half Yearly
Report. Accordingly, the Directors continue to adopt the going concern basis
in preparing these financial statements.
Directors' Responsibility Statement
The Directors are responsible for preparing this half-yearly financial report
in accordance with applicable law and regulations. The Directors confirm that
to the best of their knowledge:
. the condensed set of financial statements contained within the half-yearly
financial report has been prepared in accordance with International Accounting
Standard 34 'Interim Financial Reporting' and gives a true and fair view of
the assets, liabilities, financial position and net return of the Company as
at 30 June 2022; and
. the Interim Board Report (constituting the interim management report)
includes a fair review of the information required by rule 4.2.7R of the UK
Listing Authority Disclosure Guidance and Transparency Rules (being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements and a description of the principal risks and uncertainties for the
remaining six months of the financial year) and 4.2.8R (being related party
transactions that have taken place during the first six months of the
financial year and that have materially affected the financial position of the
Company during that period).
Tony Roper
Chairman
27 September 2022
Property Portfolio
Property Portfolio as at 30 June 2022
Property Tenure Principal Tenant
1 France, Avignon (Noves) Freehold Biocoop
2 France, Meung sur Loire Freehold Vacated - agents appointed
3 Germany, Erlensee Freehold Bergler
4 Germany, Flörsheim Freehold Ernst Schmitz
5 Poland, Krakow Freehold Lynka
6 Poland, Warsaw Freehold DHL
7 Poland, Lodz Freehold Compal
8 Spain, Barcelona Freehold Mediapost
9 Spain, Leon Freehold Decathlon
10 Spain, Madrid (Coslada) Freehold DHL
11 Spain, Madrid 1.1 Freehold Talentum
12 Spain, Madrid 1.2 Freehold Amazon
13 Spain, Madrid 2.1 Freehold Carrefour
14 Spain, Madrid 2.2 Freehold MCR
15 Spain, Madrid 2.3 Freehold ADER1
16/17 Spain, Madrid 3 (2 buildings) Freehold Arrival
18 the Netherlands, Ede Freehold AS Watson (Kruidvat)
19 the Netherlands, Oss Freehold Orangeworks
20 the Netherlands, 's Heerenberg Freehold JCL Logistics
21 the Netherlands, Waddinxveeen Freehold Combilo International
22 the Netherlands, Zeewolde Freehold VSH Fittings
23 the Netherlands, Den Hoorn Leasehold Van der Helm
Acquired after 30 June 2022
24 France, Bordeaux Freehold Dachser
25 France, Niort Freehold Dachser
26 Spain, Madrid 4 Freehold Amazon
1 ADER occupation post period end.
Condensed Consolidated Statement of Comprehensive Income
1 January to 30 June 2022 1 January to 30 June 2021 1 January to 31 December 2021
Unaudited Unaudited Audited
Notes
Revenue Capital Total Revenue Capital Total Revenue Capital Total
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
REVENUE
Rental income 13,593 - 13,593 11,121 - 11,121 23,283 - 23,283
Property service charge income 2,777 - 2,777 1,648 - 1,648 3,435 - 3,435
Other operating income 383 - 383 201 - 201 219 - 219
Total Revenue 2 16,753 - 16,753 12,970 - 12,970 26,937 - 26,937
GAINS ON INVESTMENTS
Gains on revaluation of investment properties
8 - 15,676 15,676 - 15,290 15,290 - 41,031 41,031
Total Income and gains on investments - 15,676 15,676 12,970 15,290 28,260 26,937 41,031 67,968
EXPENDITURE
Investment management fee (2,017) - (2,017) (1,201) - (1,201) (2,756) - (2,756)
Direct property expenses (981) - (981) (1,123) - (1,123) (1,851) - (1,851)
Property service charge exposure (2,777) - (2,777) (1,648) - (1,648) (3,435) - (3,435)
SPV property management fee (89) - (89) (93) - (93) (371) - (371)
Other expenses (1,169) - (1,169) (882) - (882) (1,735) - (1,735)
Total expenditure (7,033) - (7,033) (4,947) - (4,947) (10,148) - (10,148)
Net operating return before finance costs 9,720 15,676 25,396 8,023 15,290 23,313 16,789 41,031 57,820
FINANCE COSTS
Finance costs
3 (1,687) - (1,687) (1,373) - (1,373) (3,449) - (3,449)
Effect of foreign exchange differences 516 48 564 53 (507) (454) 264 753 1,017
Net return before taxation 8,549 15,724 24,273 6,703 14,783 21,486 13,604 41,784 55,388
Taxation 4 (367) (4,363) (4,730) (391) (4,832) (5,223) (651) (10,294) (10,945)
Net return for the period 8,182 11,361 19,543 6,312 9,951 16,263 12,953 31,490 44,443
Total comprehensive return for the period 8,182 11,361 19,543 6,312 9,951 16,263 12,953 31,490 44,443
Basic and diluted earnings per share 6 2.02¢ 2.80¢ 4.82¢ 2.47¢ 3.90¢ 6.37¢ 4.50¢ 10.93¢ 15.43¢
The accompanying notes are an integral part of the Financial Statements.
The total column of the Condensed Consolidated Statement of Comprehensive
Income is the profit and loss account of the Company. All revenue and capital
items in the above statement derive from continuing operations. No operations
were acquired or discontinued during the period.
Condensed Consolidated Balance Sheet
30 June 2022 Unaudited 30 June 2021 Unaudited 31 December 2021
€'000 €'000 Audited
Notes €'000
NON-CURRENT ASSETS
Investment 698,463 492,280 683,878
properties
8 2,993 1,081 2,978
Deferred tax
asset
4
Total non-current assets 701,456 493,361 686,856
CURRENT ASSETS
Trade and other receivables 9 12,705 15,522 11,175
Cash and cash equivalents 10 44,189 30,832 23,280
Other assets 9,452 200 6,966
Derivative financial assets - 77 109
Total current assets 66,346 46,631 41,530
Total assets 767,802 539,992 728,386
CURRENT LIABILITIES
Bank loans 13 - 19,500 15,500
Lease liability 11 550 550 550
Trade and other payables 12 12,929 8,780 14,466
Total current liabilities 13,479 28,830 30,516
NON-CURRENT LIABILITIES
Bank loans 13 160,552 143,453 160,447
Lease liability 11 22,221 22,487 22,355
Deferred tax liability 4 31,941 20,204 27,563
Total non-current liabilities 214,714 186,144 210,365
Total liabilities 228,193 214,974 240,881
Net assets 539,609 325,018 487,505
SHARE CAPITAL AND RESERVES
Share capital 14 4,717 2,970 4,309
Share premium 269,569 83,791 225,792
Special distributable reserve 178,207 182,368 178,207
Capital reserve 74,619 41,719 63,258
Revenue reserve 12,497 14,170 15,939
Equity shareholders' funds 539,609 325,018 487,505
Net asset value per share 7 €1.31 €1.24 €1.29
Company number: 11032222
The accompanying notes are an integral part of the Financial Statements.
Condensed Consolidated Statement of Changes in Equity
Special distributable
Share premium reserve Capital reserve Revenue reserve
Six months ended 30 June 2022 Share capital €'000 €'000 €'000 €'000 Total
(unaudited) €'000 €'000
Notes
Balance at 31 December 2021 4,309 225,792 178,207 63,258 15,939 487,505
Share issue 408 44,513 - - - 44,921
Share issue costs - (736) - - - (736)
Total comprehensive return for the period - - - 11,361 8,182 19,543
Interim distributions paid - - - - (11,624) (11,624)
Balance at 30 June 2022 4,717 269,569 178,207 74,619 12,497 539,609
Six months ended 30 June 2021 (unaudited)
Balance at 31 December 2020 2,756 61,691 185,661 31,768 11,720 293,596
Share Issue 214 22,325 - - - 22,539
Share Issue costs - (225) - - - (225)
Total comprehensive return for the period - - - 9,951 6,312 16,263
Interim distributions paid - - (3,293) - (3,862) (7,155)
Balance at 30 June 2021 2,970 83,791 182,368 41,719 14,170 325,018
Year ended 31 December 2021 (audited)
Balance at 31 December 2020 2,756 61,691 185,661 31,768 11,720 293,596
Share Issue 1,553 166,924 - - - 168,477
Share Issue costs - (2,823) - - - (2,823)
Total comprehensive return for the year - - - 31,490 12,953 44,443
Dividends paid - - (7,454) - (8,734) (16,188)
Balance at 31 December 2021 4,309 225,792 178,207 63,258 15,939 487,505
The accompanying notes are an integral part of the Financial Statements.
Condensed Consolidated Cash Flow Statement
1 January to 1 January to 1 January to
30 June 2022 30 June 2021 31 December 2021
Unaudited
Unaudited
Notes
Audited
€'000 €'000
€'000
CASH FLOWS FROM OPERATING ACTIVITIES
Net gain for the period before taxation 24,273 21,486 55,388
Adjustments for:
Gains on investment properties 8 (15,676) (15,290) (41,031)
Land leasehold liability decreases 134 132 265
Increase in operating trade and other receivables (1,669) (6,534) (9,088)
(Decrease)/increase in operating trade and other payables (4,503) (207) 2,939
Finance costs 3 1,687 1,373 3,449
Tax paid (361) (314) (473)
Cash generated by operations 3,885 646 11,449
Net cash inflow from operating activities 3,885 646 11,449
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment properties 962 (28,490) (193,475)
Derivative financial instruments 109 (51) (83)
Net cash inflow/(outflow) from investing activities 1,071 (28,541) (193,558)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (11,624) (7,155) (16,188)
Bank loans interest paid (1,108) (806) (1,311)
Bank loans drawn - 19,500 68,860
Bank loans repaid (15,500) - (36,500)
Proceeds from share issue 44,921 22,539 168,477
Issue costs relating to share issue (736) (225) (2,823)
Net cash inflow from financing activities 15,953 33,853 180,515
Net increase/(decrease) in cash and cash equivalents 20,909 5,958 (1,594)
Opening balance 23,280 24,874 24,874
Closing cash and cash equivalents 10 44,189 30,832 23,280
REPRESENTED BY
Cash at bank 44,189 30,832 23,280
The accompanying notes are an integral part of the Financial Statements.
Notes to the Financial Statements
1. Accounting Policies
The Unaudited Condensed Consolidated Financial Statements have been prepared
in accordance with International Financial Reporting Standard ("IFRS") IAS 34
'Interim Financial Reporting' and are consistent with the accounting policies
set out in the statutory accounts of the Group for the year ended 31 December
2021.
The Unaudited Condensed Consolidated Financial Statements for the six months
ended 30 June 2022 do not include all of the information required for a
complete set of IFRS financial statements and should be read in conjunction
with the Consolidated Financial Statements of the Group for the year ended 31
December 2021. These were prepared in accordance with IFRS, which comprises
standards and interpretations approved by the International Accounting
Standards Board ('IASB'), and International Accounting Standards and Standing
Interpretations Committee interpretations approved by the International
Accounting Standards Committee ('IASC') that remain in effect, and to the
extent that they have been adopted by the United Kingdom, and the Listing
Rules of the UK Listing Authority.. The financial information in this Report
does not comprise statutory accounts within the meaning of Section 434 - 436
of the Companies Act 2006. Those financial statements have been delivered to
the Registrar of Companies and included the report of the auditor which was
unqualified and did not contain a statement under either section 498(2) or
498(3) of the Companies Act 2006. The financial information for the six months
ended 30 June 2022 and 30 June 2021 has not been audited or reviewed by the
Company's auditor.
2. Revenue
Half year ended 30 June 2022 Half year ended 30 June 2021 Year ended 31 December 2021
Unaudited
Unaudited
Audited
€'000 €'000
€'000
Rental income 13,593 11,121 23,283
Property service charge income 2,777 1,648 3,435
Other income 383 201 219
Total revenue 16,753 12,970 26,937
Included within rental income is amortisation of rent free periods granted.
3. Finance Costs
Half year ended 30 June 2022 Half year ended 30 June 2021 Year ended 31 December 2021
Unaudited
Unaudited
Audited
€'000 €'000
€'000
Interest on bank loans 1,342 1,046 2,587
Bank interest 195 205 606
Amortisation of loan costs 150 122 256
Total finance costs 1,687 1,373 3,449
4. Taxation
(a) Tax charge in the Group Statement of Comprehensive Income
Half year ended Half year ended Year ended
30 June 2022
30 June 2021
Unaudited
31 December 2021
Unaudited
Audited
Revenue Capital Total Revenue Capital Total Revenue Capital Total
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Current taxation:
Overseas taxation 367 - 367 391 - 391 651 - 651
Deferred taxation:
Overseas taxation - 4,363 4,363 - 4,832 4,832 - 10,294 10,294
Total taxation 367 4,363 4,730 391 4,832 5,223 651 10,294 10,945
(b) Tax in the Group Balance Sheet
As at 30 June 2022 As at 30 June 2021 As at 31 December 2021
Unaudited Unaudited Audited
Total Total Total
€'000 €'000 €'000
Deferred tax assets:
On tax losses 2,655 712 2,828
On other temporary differences 338 369 150
2,993 1,081 2,978
As at 30 June 2022 As at 30 June 2021 As at 31 December 2021
Unaudited Unaudited Audited
Total Total Total
€'000 €'000 €'000
Deferred tax liabilities:
Differences between tax and property revaluation
31,941 20,204 27,563
Total taxation on return 31,941 20,204 27,563
5. Distributions
30 June 2022 Unaudited
€'000
2021 Fourth interim dividend of 1.21p per Share paid 25 March 2022 5,812
2022 First interim dividend of 1.19p per Share paid 24 June 2022 5,812
Total dividend paid 11,624
A fourth quarterly interim dividend for 2021 of 1.21p per share was paid on 25
March 2022 to shareholders on the register on 4 March 2022. The distribution
was split 1.01p dividend income and 0.20p qualifying interest income.
A first quarterly interim dividend for 2022 of 1.19p per share was paid on 24
June 2022 to shareholders on the register on 6 June 2022. The distribution was
split 0.86p dividend income and 0.33p qualifying interest income.
6. Earnings Per Share (Basic and Diluted)
30 June 2022 Unaudited 30 June 2021 Unaudited 31 December 2021
Audited
Revenue net return attributable to ordinary shareholders (€'000) 8,182 6,312 12,953
Weighted average number of shares in issue during the period
405,685,155 255,406,907 288,114,820
Total revenue return per ordinary share 2.02¢ 2.47¢ 4.50¢
Capital return attributable to ordinary shareholders (€'000)
11,361 9,951 31,490
Weighted average number of shares in issue during the period
405,685,155 255,406,907 288,114,820
Total capital return per ordinary share 2.80¢ 3.90¢ 10.93¢
Total return per ordinary share 4.82¢ 6.37¢ 15.43¢
Earnings per Share is calculated on the revenue and capital return for the
period and is calculated using the weighted average number of Shares in the
period.
7. Net Asset Value Per Share
30 June 2022 Unaudited 30 June 2021 31 December 2021
Unaudited Audited
Net assets attributable to shareholders (€'000) 539,609 325,018 487,505
Number of shares in issue 412,174,356 262,950,001 377,628,901
Net asset value per share (€) 1.31 1.24 1.29
8. Investment Properties
30 June 2022 Unaudited 30 June 2021 Unaudited 31 December 2021
€'000 €'000 Audited
€'000
Opening carrying value 683,878 448,418 448,418
Purchase at cost and capital expenditure (1,091) 28,572 194,429
Gains on revaluation to fair value 15,676 15,290 41,031
Total carrying value 698,463 492,280 683,878
The fair value of investment properties amounted to €680,391,000. The
difference between the fair value and the value per the Consolidated Balance
Sheet at 30 June 2022 consists of accrued income relating to the pre-payment
for rent-free periods recognised over the life of the lease, and a lease asset
relating to future use of the leasehold at Den Hoorn. These total €4,699,000
and €22,771,000 respectively. The rent incentive balance is recorded
separately in the financial statements as a current asset, and the lease asset
is offset by an equal and opposite lease liability.
The purchase cost of €1,091,000 includes a true up receipt of €1,210,000
in the purchase price of Madrid Phase 1 to 3 and capitalised expenses of
€119,000.
9. Trade and Other Receivables
30 June 2022 Unaudited 30 June 2021 Unaudited 31 December 2021
€'000 €'000 Audited
€'000
Trade debtors 7,718 4,274 5,549
VAT receivable 265 6,590 591
Lease incentives 4,699 4,658 5,035
Other receivables 23 - -
Total receivables 12,705 15,522 11,175
10. Cash and Cash Equivalents
30 June 2022 Unaudited 30 June 2021 Unaudited 31 December 2021
€'000 €'000 Audited
€'000
Cash at bank 44,189 30,832 23,280
Total cash and cash equivalents 44,189 30,832 23,280
11. Leasehold Liability
30 June 2022 Unaudited 30 June 2021 Unaudited 31 December 2021
€'000 €'000 Audited
€'000
Maturity analysis - contractual undiscounted cash flows
Less than one year 550 550 550
One to five years 2,201 2,201 2,201
More than five years 25,339 25,753 25,615
Total undiscounted lease liabilities 28,090 28,504 28,366
Lease liability included in the Consolidated Balance Sheet
Current 550 550 550
Non - Current 22,221 22,487 22,355
Total lease liability included in the Consolidated Balance Sheet
22,771 23,037 22,905
12. Trade and Other Payables
30 June 2022 Unaudited 30 June 2021 Unaudited 31 December 2021
€'000 €'000 Audited
€'000
Rental income received in advance 2,700 1,517 1,964
Accrued acquisition and development costs 146 147 41
Management fee payable 2,023 622 931
VAT payable 761 972 643
Accruals 1,146 1,346 2,850
Trade creditors 3,423 2,711 5,164
Tenant deposits 2,730 1,465 2,873
Total payables 12,929 8,780 14,466
13. Bank Loans
30 June 2022 Unaudited 30 June 2021 31 December 2021
€'000 Unaudited Audited
€'000 €'000
External bank loans payable in less than 12 months
- 19,500 15,500
External bank loans payable in greater than 12 months
160,552 143,453 160,447
Total payables 160,552 162,953 175,947
The total drawdown of the bank loans amounted to €161,600,000. The
difference between the external loans drawdowns and the value per the
condensed consolidated balance sheet consists of financing fees and their
amortised portion related to the external bank loans totaling €1,048,000. It
is recorded in the financial statements in the same line as bank loans.
14. Share Capital
30 June 2022 Unaudited 30 June 2021 31 December 2021
€'000 Unaudited Audited
€'000 €'000
Opening balance 4,309 2,756 2,756
Ordinary shares issued 408 214 1,553
Closing balance 4,717 2,970 4,309
Ordinary Shareholders participate in all general meetings of the Company on
the basis of one vote for each Share held. Each Ordinary share has equal
rights to dividends and equal rights to participate in a distribution arising
from a winding up of the Company. The Ordinary Shares are not redeemable.
The group commenced the year with 377,628,901 Ordinary shares in issue. On 4
February 2022, the Group increased its share capital by the issue of
34,545,455 new shares at £1.10 per share. The number of Ordinary shares in
issue at 30 June 2022 was 412,174,356. The nominal value of each share is
£0.01.
15. Financial Instruments and Investment Properties
Fair value hierarchy
IFRS 13 requires the Group to classify its financial instruments held at fair
value using a hierarchy that reflects the significance of the inputs used in
the valuation methodologies. These are as follows:
Level 1 - quoted prices in active markets for identical investments;
Level 2 - other significant observable inputs (including quoted prices for
similar investments, interest rates, prepayments, credit risk, etc.); and
Level 3 - significant unobservable inputs.
The following table shows an analysis of the fair values of investment
properties recognised in the balance sheet by level of the fair value
hierarchy:
Level 1 Level 2 Level 3 Total fair value
€'000 €'000 €'000 €'000
30 June 2022 Investment properties
- - 698,463 698,463
30 June 2021 Investment properties
- - 492,280 492,280
31 December 2021 Investment properties
- - 683,878 683,878
The lowest level of input is the underlying yields on each property which is
an input not based on observable market data.
The following table shows an analysis of the fair values of derivative
financial instruments recognised in the balance sheet by level of the fair
value hierarchy:
Level 1 Level 2 Level 3 Total fair value
€'000 €'000 €'000 €'000
30 June 2022
Derivative financial instruments - - - -
30 June 2021
Derivative financial instruments - 77 - 77
31 December 2021
Derivative financial instruments - 109 - 109
The lowest level of input is EUR:GBP exchange rate.
The Company used forward foreign exchange contracts to mitigate potential
volatility of income returns and to provide greater certainty as to the level
of Sterling distributions expected to be paid in respect of the period covered
by the relevant currency hedging instrument. Derivatives are measured at fair
value calculated by reference to forward exchange rates for contracts with
similar maturity profiles.
16. Related Party Transactions
The Company's Alternative Investment Fund Manager ('AIFM') throughout the
period was abrdn Fund Managers Limited ('aFML'). Under the terms of a
Management Agreement dated 17 November 2017 the AIFM is appointed to provide
investment management, risk management and general administrative services
including acting as the Company Secretary. The agreement is terminable by
either the Company or aFML on not less than 12 months' written notice.
Under the terms of the agreement portfolio management services are delegated
by aFML to abrdn Investments Ireland Limited ("aIIL"). The total management
fees charged to the Consolidated Statement of Comprehensive Income during the
period were €2,017,000 and €2,023,000 was payable at the period end. Under
the terms of a Global Secretarial Agreement between aFML and Aberdeen Asset
Management PLC ("AAM PLC"), company secretarial services are provided to the
Company by AAM PLC.
The Directors of the Company received fees for their services totaling
€94,000.
17. Post Balance Sheet Events
On 7 July 2022 , the Group entered into an agreement with ING Bank N.V for a
loan facility of €40 million secured against Phases 1 to 3 of its Spanish
Madrid portfolio for a three year term at an all-in interest rate of 2.57%.
On 28 July 2022, the Group acquired two logistics properties, in Bordeaux and
Niort, France. The aggregate purchase price of €23 million reflects a net
initial yield of 4%.
On 10 August 2022, the Group signed the purchase agreement for the acquisition
of the recently completed warehouse extension at Waddinxveen, the Netherlands,
for a total net purchase price of €4.9 million and a yield of 5%.
A second quarterly interim dividend for 2022 of 1.20p per Share was paid on 23
September 2022 to shareholders on the register on 2 September 2022. The
distribution was split 0.95p dividend income and 0.25p qualifying interest
income.
18. Ultimate Parent Company
In the opinion of the Directors on the basis of shareholdings advised to them,
the Company has no immediate or ultimate controlling party.
19. Half Yearly Report
This Half Yearly Report was approved by the Board and authorised for issue on
27 September 2022.
The Half Yearly Report will be printed and issued to shareholders and further
copies will be available at Bow Bells House, 1 Bread Street, London EC4M 9HH
and on the Company's website eurologisticsincome.co.uk*
* Neither the Company's website nor the content of any website accessible from
hyperlinks on it (or any other website) is (or is deemed to be) incorporated
into, or forms (or is deemed to form) part of this announcement.
By order of the Board
ABERDEEN ASSET MANAGEMENT PLC, SECRETARY
27 September 2022
Glossary of Terms and Definitions and Alternative Performance Measures
abrdn The brand of the investment businesses of abrdn plc
abrdn plc group The abrdn plc group of companies
AIC Association of Investment Companies
AIC SORP Association of Investment Companies Statement of Recommended Practice:
Financial Statements of Investment Trust Companies and Venture Capital Trusts,
issued November 2014 and updated February 2018
AIFMD The Alternative Investment Fund Managers Directive
AIFM The alternative investment fund manager, being aFML
Alternative Performance Measures Alternative performance measures are numerical measures of the
Company's current, historical or future performance, financial position or
cash flows, other than financial measures defined or specified in the
applicable financial framework. The Company's applicable financial framework
includes IFRS and the AIC SORP
Annual Rental Income Cash rents passing at the Balance Sheet date
aFML or AIFM or Manager abrdn Fund Managers Limited
aIIL or the Investment Manager abrdn Investments Ireland Limited is a wholly owned subsidiary of abrdn plc
and acts as the Company's investment manager
Asset Cover The value of a company's net assets available to repay a certain security.
Asset cover is usually expressed as a multiple and calculated by dividing the
net assets available by the amount required to repay the specific security
Contracted Rent The contracted gross rent receivable which becomes payable after all the
occupier incentives in the letting have expired
Covenant Strength This refers to the quality of a tenant's financial status and its ability to
perform the covenants in a lease
Dividend Cover (Defined as an Alternative Performance Measure) The ratio of the Company's net profit after tax (excluding the below items) to
the dividends paid
1 January to 1 January to
30 June 2022 31 December 2021
Earnings per IFRS income statement 19,543 44,443
Adjustments to calculate dividend cover:
Net changes in the value of investment property (15,676) (41,031)
Deferred Taxation 4,363 10,294
Effects of foreign exchange differences (564) (1,017)
Profits (A) 7,666 12,689
Dividend (B) 11,624 16,188
Dividend Cover (A)/(B) 65.9% 78.4%
Discount The amount by which the market price per share of an investment trust is lower
than the net asset value per share. The discount is normally expressed as a
percentage of the NAV per share. The opposite of a discount is a premium.
Half year ended 30 June 2022 Year ended 31 December 2021
Share price (A) 99.6p 117.0p
NAV (B) 112.4p 108.5p
(Discount)/Premium (A-B)/B (11.4)% 7.8%
Discount
The amount by which the market price per share of an investment trust is lower
than the net asset value per share. The discount is normally expressed as a
percentage of the NAV per share. The opposite of a discount is a premium.
Half year ended 30 June 2022
Year ended 31 December 2021
Share price (A)
99.6p
117.0p
NAV (B)
112.4p
108.5p
(Discount)/Premium (A-B)/B
(11.4)%
7.8%
Earnings Per Share Profit for the period attributable to shareholders divided by the average
number of shares in issue during the period
EPRA European Public Real Estate Association
EPRA Earnings per Share Earnings per share calculated in line with EPRA best practice recommendations
30 June 2022 31 December 2021
€'000 €'000
Earnings per IFRS income statement 19,543 44,443
Adjustments to calculate EPRA Earnings, exclude:
Net changes in value of investment properties (15,676) (41,031)
Deferred tax 4,378 11,847
Changes in fair value of financial instruments 109 (83)
EPRA Earnings 8,354 15,176
Weighted average basic number of shares ('000) 405,685 288,115
EPRA Earnings per share (euro cents per share) 2.06c 5.27c
EPRA Net Asset Value Metrics A set of standardised NAV metrics prepared in compliance with EPRA best
practice recommendations
30 June 2022 31 December 2021
€'000 €'000
IFRS NAV 539,609 487,505
Exclude:
Fair value of financial - 109
instruments
Deferred tax adjustment in 31,941 27,563
relation to fair value gain on investment property
571,550 515,177
Shares in issue at period
end ('000) 412,174 377,629
EPRA NAV (Net Tangible Assets) per share 138.7c 136.4c
(euro cents per share)
ERV The estimated rental value of a property, provided by the property valuers
Europe The member states of the European Union, the European Economic Area ("EEA")
and the members of the European Free Trade Association ("EFTA") (and including
always the United Kingdom, whether or not it is a member state of the European
Union, the EEA or a member of EFTA)
Green Leases Agreements between a landlord and a tenant as to how a building is to be
occupied, operated and managed in a sustainable way
Group The Company and its subsidiaries
Gross Assets The aggregate value of the total assets of the Company as determined in
accordance with the accounting principles adopted by the Company from time to
time
FRC Financial Reporting Council
IFRS International Financial Reporting Standards
Index Linked The practice of linking the review of a tenant's payments under a lease to a
published index, most commonly the Retail Price Index (RPI) but also the
Consumer Price Index (CPI) and French Tertiary Activities Rent Index (ILAT)
Key Information Document or KID The Packaged Retail and Insurance-based Investment Products (PRIIPS)
Regulation requires the Manager, as the Company's PRIIP "manufacturer," to
prepare a key information document ("KID") in respect of the Company.
This KID must be made available by the AIFM to retail investors prior to them
making any investment decision and is available via the Company's website. The
Company is not responsible for the information contained in the KID and
investors should note that the procedures for calculating the risks, costs and
potential returns are prescribed by law. The figures in the KID may not
reflect the expected returns for the Company and anticipated performance
returns cannot be guaranteed
Lease incentive A payment used to encourage a tenant to take on a new lease, for example by a
landlord paying a tenant a sum of money to contribute to the cost of a
tenant's fit-out of a property or by allowing a rent free period
Leverage For the purposes of the Alternative Investment Fund Managers Directive,
leverage is any method which increases the Company's exposure, including the
borrowing of cash and the use of derivatives. It is expressed as a ratio
between the Company's exposure and its net asset value and can be calculated
on a gross and a commitment method. Under the gross method, exposure
represents the sum of the Company's positions after the deduction of sterling
cash balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is calculated without the
deduction of sterling cash balances and after certain hedging and netting
positions are offset against each other . At period end the loan to value was
21.7%
Loan to Value Calculated as gross external bank borrowings dividend by total assets
As at 30 June 2022 As at 31 December 2021
Bank Loans €161.6m €177.1m
Gross Assets €767.8m €728.4m
Exclude IFRS 16 right of use asset (€22.8m) (€22.9m)
€745.0m €705.5m
Gearing 21.7% 25.1%
NAV Total Return The return to shareholders, expressed as a percentage of opening NAV,
calculated on a per share basis by adding dividends paid in the period to the
increase or decrease in NAV. Dividends are assumed to have been reinvested on
the ex dividend date, excluding transaction costs
Half year ended 30 June 2022 Year ended 31 December 2021
Opening NAV 129.1c 120.1c
Movement in NAV 1.8c 9.0c
Closing NAV 130.9c 129.1c
% increase in NAV 1.4% 7.5%
Impact of reinvested dividends 2.2% 4.9%
NAV total return 3.6% 12.4%
Net Asset Value or NAV The value of total assets less liabilities. Liabilities for this purpose
include current and long-term liabilities. The net asset value divided by the
number of shares in issue produces the net asset value per share
Ongoing Charges Ratio of expenses as a percentage of average daily shareholders' funds
calculated as per the industry standard
Passing Rent The rent payable at a particular point in time
PIDD The pre-investment disclosure document made available by the AIFM in relation
to the Company
Premium The amount by which the market price per share of an investment trust exceeds
the net asset value per share. The premium is normally expressed as a
percentage of the net asset value per share. The opposite of a premium is a
discount
Prior Charges The name given to all borrowings including long and short term loans and
overdrafts that are to be used for investment purposes, reciprocal foreign
currency loans, currency facilities to the extent that they are drawn down,
index-linked securities, and all types of preference or preferred capital,
irrespective of the time until repayment
Portfolio fair value The market value of the company's property portfolio, which is based on the
external valuation provided by Savills (UK) Limited
The Royal Institution of The global professional body promoting and enforcing the highest international
standards in the valuation, management and development of land, real estate
Chartered Surveyors (RICS) construction and infrastructure
Share Price Total Return The return to shareholders, expressed as a percentage of opening share price,
calculated on a per share basis by adding dividends paid in the period to the
increase or decrease in share price. Dividends are assumed to have been
reinvested on the ex dividend date, excluding transaction costs
Half year ended 30 June 2022 Year ended 31 December 2021
Opening Share Price 117.0p 108.5p
Movement in share price (17.4)p 8.5p
Closing share price 99.6p 117.0p
%(decrease)/increase in share price (14.9)% 7.8%
Impact of reinvested dividends 2.0% 4.6%
Share price total return (12.9)% 12.4%
SPA Sale and purchase agreement
SPV Special purpose vehicle
Total Assets Total assets less current liabilities (before deducting prior charges as
defined above)
WAULT Weighted Average Unexpired Lease Term. The average time remaining until the
next lease expiry or break date
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. END IR BCGDCIUDDGDR
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