REG-abrdn Property Income Trust Limited: Unaudited Net Asset Value as at 31 March 2024
02/05/2024 07:15
abrdn Property Income Trust Limited
(an authorised closed-ended investment company incorporated in Guernsey with
registration number 41352)
LEI Number: 549300HHFBWZRKC7RW84
(The “Company”)
2 May 2024
Unaudited Net Asset Value as at 31 March 2024
Net Asset Value and Valuations
· Net asset value (“NAV”) per ordinary share was 76.4p (Annual
Report and Financial Statements – 78.2p), a decrease of 2.2% for Q1 2024,
resulting in a NAV total return, including dividends, of -1.4% for the
quarter;
· The Company saw an overall fall in the value of the portfolio of 0.9%
over the quarter on a like for like basis driven mainly by the office sector.
Valuation changes and capex on the assets accounted for 1p of the 1.8p decline
in the NAV over the quarter.
· The Q1 NAV was impacted by further costs associated with the
strategic review and subsequent abortive corporate activity of 0.4p per share.
Further strategic review costs of 0.5p per share will crystallise if the
managed wind-down is voted for by shareholders.
· The portfolio capital value decline of 0.9% on a like for like basis
during the quarter was broadly in line with the MSCI Monthly Index decline of
0.8% over the same period.
· The portfolio ERV of £33.3m is £7.4m (28.8%) above the current
contracted rent, demonstrating the significant reversionary potential.
· Rent Collection remained robust with 99% collected so far for Q1.
Since the beginning of 2021 quarterly rent collection has been consistently at
or above 99%.
· EPRA Earnings excluding non-recurring items have decreased by
£300,000 in the period compared to Q4 (£132,000 increase) primarily due to
movements in lease incentives.
Investment activity.
· Two sales completed during the quarter totalling £16.55m and a
further two sales completed after the quarter end totaling £13.2m.
Financial Position
· Robust balance sheet with financial resources available for
investment of £33.2 million (from the Company’s revolving credit facility)
net of current cash after dividend and other financial commitments.
Occupancy / Void / WAULT
The Company had a vacancy rate of 7.9% as at end Q1 2024 (Q4 2023 7.6%). The
largest vacancy is of a logistics unit that became vacant in November 2023,
and had been under offer to sell to an owner occupier, but that is no longer
progressing.
Debt Facility and Gearing
API currently has two facilities with RBSI, an £85m term loan (fully drawn)
and an £80m Revolving Credit Facility (RCF) of which £44.5m was drawn as at
31st March. Both facilities are at a margin of 150bps over SONIA and an
interest rate cap on SONIA has been put in place at 4% over the term loan
(all-in rate of 5.5%). As at 31 March 2024, the Company had a Loan to Value
(LTV) of 29.0%*. The all-in cost of debt is 5.9% and the focus remains on
repaying the RCF to reduce this further.
*LTV calculated as debt less all cash divided by investment portfolio value
Dividends
A dividend of 1p will be paid for the quarter which means that the dividend is
therefore being maintained at an annualised rate of 4p per share. The dividend
cover for Q1 2024 excluding exceptional items associated with Corporate
Activity is 75.4% (Dec 23 - 83.4%). The Board has provided guidance of its
intention to maintain the current dividend level. This guidance will be
revisited after the wind-down vote.
Net Asset Value (“NAV”)
The unaudited net asset value per ordinary share at 31 March 2024 was 76.4p.
The net asset value is calculated under International Financial Reporting
Standards (“IFRS”).
The net asset value incorporates the external portfolio valuation by Knight
Frank LLP at 31 March 2024 of £420.6 million.
Breakdown of NAV movement
Set out below is a breakdown of the change in the unaudited NAV calculated
under IFRS over the period 31 December 2023 to 31 March 2024.
Per Share (p) Attributable Assets (£m) Comment
Net assets as at 31 December 2023 78.2 298.1 As per Audited Annual Report
Unrealised movement in valuation of property portfolio -0.5 -2.0 Like for like decrease of 0.9%.
Loss on sale -0.1 -0.5
CAPEX in the quarter -0.5 -2.3 Predominantly final payment at Knowsley.
Non-recurring items associated with Corporate Activity -0.4 -1.1
Net income in the quarter after dividend -0.3 -1.0 Rolling 12-month dividend cover 78% excluding non-recurring items associated with Corporate Activity.
Interest rate hedge mark to market revaluation 0.1 0.2 Interest rate cap valuation movement
Other movements in reserves -0.1 -0.2 Movements in lease incentives.
Net assets as at 31 March 2024 76.4 291.2
European Public Real Estate Association (“EPRA”) 31 Mar 2024 31 Dec 2023
EPRA Net Tangible Assets £289.8m £297.6m
EPRA Net Tangible Assets per share 76.0p 78.1p
The Net Asset Value per share is calculated using 381,218,977 shares of 1p
each being the number in issue on 31 March 2024.
Investment Manager Review and Portfolio Activity
The first quarter of the year is normally the slowest, for both occupier and
investment activity, and 2024 has felt no different. The asset management
completed in the quarter continues to demonstrate the underlying strength of
the portfolio.
Two rent reviews were completed in the quarter, an industrial unit at Sandy
where the lease has indexation and so the settlement was in line with
valuation expectations, and a retail warehouse unit where the rent was settled
4.6% above the December 2023 valuation assumption. We also completed a lease
renewal on a retail park of a fast-food drive through, where the increase in
rent was 16.7% above the December valuation assumption. Two sales were
completed in the quarter totalling £16.55m, and since the quarter end two
further sales completed for £13.2m (details of all sales have already been
reported) and a letting of two units completed at our multi let industrial
scheme in Aberdeen.
The vacancy rate has increased slightly, in part due to the sales completed.
The vacancy rate of 7.9% excludes the recently completed speculative
development which represents 2.5% of ERV. That and the logistics unit in
Swadlincote (3.3% of ERV) are key opportunities to drive value and we are
marketing the units to owner occupiers and tenants.
Following completion of several sales the RCF has reduced over the quarter,
with a drawn balance of £45.5m at quarter end (following further repayments
in April, this is £31.6m as at 2nd May) As a result, at the quarter end the
LTV was 29%. It is intended that sale proceeds will be reduced to repay the
RCF as a priority.
The Board will shortly be issuing a circular to recommend a change of
Investment Strategy to enable the Company to enter a managed winddown through
the disposal of its assets leading to a liquidation of the Company over the
next 18-36 months.
Investment Manager’s UK Real Estate Market Outlook – Q1 2024
* Although the UK economy contracted over the second half of 2023, briefly
entering a technical recession, it is expected to return to moderate growth
over the course of this year. Indeed, the monthly GDP for January was positive
at 0.2%. Housing activity is picking up, while the return of positive real
income growth has helped to boost sentiment and spending.
* The annual consumer price index (CPI) declined to 3.2% in March. We expect
headline inflation to fall well below 2% by the middle of the year, because of
base effects and lower energy prices. That said, underlying inflation
pressures are likely to remain stickier. We believe the idea of the UK being
an outlier on the upside of inflation is over, as the focus now shifts to the
Bank of England (BofE) and the timing of its cuts.
* At its March meeting, the BofE showed it was more aligned in its direction
to maintain monetary policy pressure than during prior months. The prospect of
further rate hikes has largely left investors’ minds, but expectations of
the timing and extent of cuts remain uncertain. Gilt yields have remained over
4% during the quarter, and the risk-free rate of return along with high debt
costs continues to impact on real estate pricing.
* The decline in UK real estate capital values moderated over 2023. Despite
further pressure on values, downward movements in pricing were nowhere near
those in 2022. There are signs of stabilisation in light of a brighter
macroeconomic picture, although this may be slower to materialise in
out-of-favour sectors. Capital declines continued in Q1 2024 with the MSCI
Monthly Index showing an all-property capital decline of 0.8% and total return
of 0.6%.
* Industrial (logistics) remains the favoured sector, and it appears the
period of retail being shunned is coming to an end. Offices are the out of
favour sector, apart from the best city centre assets. We expect to see
continued valuation falls in the office sector even as interest rates start to
fall, and the general market conditions improve.
* UK investment volumes remain subdued, as liquidity has become a major
limiting factor. Activity has been slow as investors await an improvement in
the macroeconomic environment. We expect a muted first half of 2024 as most
investors have little motivation to sell. Activity should pick up later in the
year as more conviction returns to the market.
* UK real estate looks poised for a modest recovery, following a collection of
positive movements in the economic landscape. With inflation seemingly under
control and the first interest rate cuts expected later in 2025, we expect to
see an increase in UK real estate performance from 2025.
* We expect any areas of distress to be quite localised as debt maturities
filter through, rather than as a result of any systemic breaches in covenants.
These pockets of stress will largely be focused on poor-quality assets with
significant capital expenditure requirements. Such assets could provide
opportunities for cash-ready investors, as the outlook for the wider market
improves.
Net Asset analysis as at 31 March 2024 (unaudited)
£m % of net assets
Industrial 244.0 83.8
Office 59.9 20.6
Retail 72.0 24.7
Other Commercial 36.5 12.5
Land 8.2 2.8
Total Property Portfolio 420.6 144.4
Adjustment for lease incentives -9.3 -3.2
Fair value of Property Portfolio 411.3 141.2
Cash 7.5 2.6
Other Assets 18.0 6.2
Total Assets 436.8 150.0
Current liabilities -16.7 -5.7
Non-current liabilities (bank loans) -128.9 -44.3
Total Net Assets 291.2 100.0
Breakdown in valuation movements over the period 01 January 2024 to 31 March
2024
Portfolio Value as at 31 Mar 2024 (£m) Exposure as at 31 Mar 2024 (%) Like for Like Capital Value Shift (excl transactions & CAPEX) Capital Value Shift (incl transactions (£m)
(%)
External valuation at 31 Dec 23 439.2
Retail 72.0 17.2 (0.7) (0.4)
South East Retail 1.8 (1.3) (0.1)
Retail Warehouses 15.4 (0.6) (0.3)
Offices 59.9 14.2 (4.5) (12.7)
London City Offices 0.0 0.0 (9.9)
London West End Offices 1.8 (3.8) (0.3)
South East Offices 5.2 (4.5) (1.0)
Rest of UK Offices 7.2 (4.7) (1.5)
Industrial 244.0 58.0 (0.5) (6.1)
South East Industrial 9.2 0.2 0.0
Rest of UK Industrial 48.8 (0.6) (6.1)
Other Commercial 36.5 8.7 1.5 0.6
Land 8.2 1.9 0.0 0.0
External valuation at 31 Mar 24 420.6 100.0 (0.9) 420.6
Yields
Initial Yield (%) Equivalent Yield (%) EPRA NIY (%)
Portfolio 5.8 7.2 4.8%
Top 10 Properties
31 Mar 24 (£m)
Halesowen, B&Q 20-25
Rotherham, Ickles Way 20-25
Birmingham, 54 Hagley Road 15-20
Welwyn Garden City, Morrison’s 15-20
Shellingford, White Horse Business Park 15-20
Swadlincote, Tetron 141 10-15
London, Hollywood Green 10-15
Washington, Rainhill Road 10-15
Corby, 3 Earlstrees Road 10-15
St Helens, Stadium Way 10-15
The top ten assets represent 39.5% of portfolio value
Top 10 tenants
Tenant Name Passing Rent % of total Passing Rent
B&Q Plc 1,560,000 6.0%
Public Sector 1,365,203 5.2%
WM Morrisons Supermarkets Ltd 1,252,162 4.8%
The Symphony Group Plc 1,225,000 4.7%
Schlumberger Oilfield UK plc 1,138,402 4.4%
Timbmet Limited 904,768 3.5%
Atos IT Services UK Limited 872,466 3.4%
CEVA Logistics Limited 840,000 3.2%
ThyssenKrupp Materials (UK) Ltd 643,565 2.5%
Hermes Parcelnet Ltd 591,500 2.3%
Top ten tenants 10,393,066 39.9%
Regional Split
South East 23.8%
West Midlands 19.4%
North West 14.8%
East Midlands 13.8%
North East 12.6%
Scotland 10.3%
South West 3.5%
London West End 1.8%
Except as described above, the Board is not aware of any significant property
events or transactions which have occurred between 31 March 2024 and the date
of publication of this statement which would have a material impact on the
financial position of the Company.
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 Regulatory
Information Service this inside information is now considered to be in the
public domain.
Details of the Company may also be found on the Investment Manager’s website
at: www.abrdnpit.co.uk
For further information:-
For further information:-
Jason Baggaley – API Fund Manager, abrdn
Tel: 07801039463 or jason.baggaley@abrdn.com
Mark Blyth – API Deputy Fund Manager, abrdn
Tel: 07703695490 or mark.blyth@abrdn.com
Craig Gregor - Fund Controller, abrdn
Tel: 07789676852 or craig.gregor@abrdn.com
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Ltd
Trafalgar Court
Les Banques
St Peter Port
GY1 3QL
Tel: 01481 745001
Copyright (c) 2024 PR Newswire Association,LLC. All Rights ReservedRecent news on abrdn Property Income Trust
See all newsREG-abrdn Property Income Trust Limited: Annual Results - December 2024
AnnouncementREG-abrdn Property Income Trust Limited: Progress Update
AnnouncementREG-abrdn Property Income Trust Limited: Holding(s) in Company
AnnouncementREG-abrdn Property Income Trust Limited: Holding(s) in Company
AnnouncementREG-abrdn Property Income Trust Limited: Holding(s) in Company
Announcement