REG - Alternative Inc REIT - Results for the year ended 30 June 2025
06/10/2025 07:00
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RNS Number : 0622C Alternative Income REIT PLC 06 October 2025
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6 October 2025
ALTERNATIVE INCOME REIT PLC
(the "Company" or the "Group")
Annual Report and Financial Statements for the year ended 30 June 2025
The Board of Directors of Alternative Income REIT PLC (ticker: AIRE), the
owner of a diversified portfolio of UK commercial property assets
predominantly let on long leases with index-linked reviews, is pleased to
announce its annual report and financial statements for the year ended 30 June
2025.
Financial Highlights
At 30 June
2025 2024 Change
Net Asset Value ('NAV') £67.3 million £65.1 million 3.4%
NAV per share 83.64p 80.90p 3.4%
Share price 74.00p 66.00p 12.1%
Share price discount to NAV (A) 11.5% 18.4% -6.9%
Investment property fair value £107.4 million £102.7 million 4.6%
(based on external valuation)
Loan to gross asset value ('GAV') (A) 36.9% 37.7% -0.8%
Loan facility £41.0 million £41.0 million -
For the year ended 30 June
2025 2024 Change
Dividends per share 6.20p 5.90p 5.1%
Earnings per share ('EPS') 9.02p 2.93p 207.8%
EPRA EPS (A) 6.57p 5.89p 11.5%
Operating profit £6.7 million £6.2 million 8.1%
Dividend cover (A) 108.4% 101.5% 6.8%
Share price total return (A) 21.6% 11.6% 10.0%
Gross passing rental income £8.1 million £7.7 million 5.2%
Adjusted EPS (A) 6.72p 5.99p 12.2%
Profit before tax £7.3 million £2.4 million 204.2%
Dividend yield (A) 8.4% 8.9% -0.5%
NAV total return (A) 11.1% 3.5% 7.6%
Ongoing charges (A) 1.57% 1.46% 11bps
(A) Alternative Performance Measure, please see the Annual Report for further
details.
Financial Highlights
· At the year end the Group is fully invested in 20 properties having
acquired one property in the year.
· The net asset value ('NAV') increased 3.4% from 80.90 pence per share
('pps') to 83.64pps, mainly due to the increase in property values as a result
of uplifts in rents following rent reviews.
· The dividend for the year of 6.2pps is in line with the Board's
target annual dividend, and is a 5.1% increase on prior year's dividend of
5.9pps.
· Profit before tax of £7.3 million, equivalent to 9.02pps, is after a
£2.0 million increase in the Group's property portfolio.
· The Group's portfolio benefits from having a strong tenant profile,
being fully let, with all rent due from its tenants collected as it falls due
and with over 90% of rent reviews being index linked.
· Loan to GAV of 36.9% and interest cover ratio ('ICR') of 599.8%
give significant headroom on the lender's loan covenants.
Group Operational Overview
At the year end of 30 June 2025:
· The property portfolio had a fair value of £107.4 million across 20
properties (2024: £102.7 million across 19 properties).
· The European Public Real Estate Association ('EPRA') Net Initial
Yield (A) ('NIY') was 7.1% (2024: 6.9%).
· 92.3% (2024: 95.8%) of rental income is inflation linked to the
Retail Price Index or the Consumer Price Index.
· The property portfolio was fully let at both the current and previous
year end.
· The weighted average unexpired lease term ('WAULT') was:
- 15.6 years to the earlier of break and expiry (2024: 16.5 years);
and
- 17.2 years to expiry (2024: 18.4 years).
(A) Alternative Performance Measure, please see Annual Report for further
details.
Income and expense during the year
· Rent recognised amounted to £7.9 million (2024: £7.4 million).
· A total of ten rent reviews took place during the year, which
resulted in a combined rental uplift of £167,000, which represents a 2.2%
increase on contracted rent across the portfolio.
Property transactions during the year
· One property was purchased during the year, namely Champneys Beauty
School, part of the Champneys Tring Spa Resort in Tring, in December 2024 for
a consideration of £2.5 million. The price reflects a net initial yield of
6.5% and, at purchase, had a weighted unexpired lease term of 14.9 years.
Significant changes to leases
· BGEN, one of the tenants at our St Helens industrial asset, has
agreed to continue in occupation of their building for a further two years. In
addition, a new five year lease, with annual RPI linked rent reviews was
agreed at £63,750 per annum with BGEN for the adjacent land at St Helens on
expiry of their previous lease.
· Active management continues with Pure Gym in London, re-gearing their
lease to remove the tenant's break in 2027 with the lease extending to 2032.
In Crawley, the lease to Petrogas Group UK Limited was assigned to Rontec
Properties No 4 Limited, guaranteed by Rontec Roadside Retail Limited, one of
the leading players in the UK forecourt industry.
Events after the reporting date
· The Group currently has borrowings of £41 million under a loan
facility repayable on 20 October 2025 (the 'Loan') with Canada Life. The Board
has secured long-term debt facilities with HSBC UK Bank plc (the 'New HSBC
Bank Facilities'), as announced on 3 September 2025. The New HSBC Bank
Facilities consist of both a fixed term loan of £31 million and a £10
million revolving credit facility, both on floating rates for a fixed term of
five years with an option to extend by two years if mutually acceptable.
Further details of the New HSBC Bank Facilities are contained in both the
Chairman's Statement and Note 20 to the Consolidated Financial Statements -
Events after the reporting date.
· Over the past few years the Group has maintained an enviable record
of collecting 100% of its rent. Provided this remains the case and in the
absence of any unforeseen circumstances, the Board has announced that it is
targeting a dividend of no less than 5.6pps for the year ending 30 June
2026(†). The resetting of this dividend target, which is lower than the
previous year, is entirely due to increase in financing costs of the new
facilities, which will rise significantly to approximately £2.2 million, as
compared with £1.4 million in previous financial years.
† This is a target and not a formal dividend forecast or a profit forecast.
Simon Bennett, non-executive chairman of Alternative Income REIT PLC,
comments:
"During the year under review, the portfolio value has increased by £4.7
million (2024: £4.3 million reduction) and at 30 June 2025 was valued at
£107.4 million (2024: £102.7 million). On a like-for-like basis, the value
of the Group's properties increased to £104.9 million from £102.7 million.
Over the past few years the Group has maintained an enviable record of
collecting 100% of its rent. Provided this remains the case and in the absence
of any unforeseen circumstances, the Board has announced that it is targeting
a dividend of no less than 5.6pps for the year ending 30 June 2026† . The
resetting of this dividend target, which is lower than the previous year, is
entirely due to increase in financing costs of the new facilities.
The Group currently has borrowings of £41 million under a loan facility
repayable on 20 October 2025 (the 'Loan') with Canada Life. As previously
announced, the Board has secured new long-term debt facilities with HSBC UK
Bank plc (the 'New HSBC Bank Facilities'). The New HSBC Bank Facilities
consist of both a fixed term loan of £31 million and a £10 million revolving
credit facility, both on floating rates for a fixed term of five years with an
option to extend by two years, if mutually acceptable to both parties. The
Group will use the amount drawn down under its New HSBC Bank Facilities to
simultaneously repay its existing debt facilities in full.
The Group's index-linked portfolio, with its properties let on predominantly
long dated and high yielding leases, has continued to perform relatively well,
when compared with its peer group. On a macro level, it appears that the
pathway for interest rates continues to be downwards. This should benefit the
property market in general. This, in conjunction with the active asset
management initiatives being undertaken by the Group and the successful
refinancing of AIRE's banking facilities, give the Board confidence that the
portfolio will continue to deliver an attractive yield as a result of its
secure and growing rental income."
ENQUIRIES
Alternative Income REIT PLC Via AIRE's Company Secretary, Hanway Advisory: 0207 409 0181 or by email:
Simon Bennett - Chairman Aire.Cosec@jtcgroup.com
Martley Capital Real Estate Investment Management Ltd 020 4551 1240
Richard Croft
Jane Blore
Panmure Liberum Limited 020 3100 2000
Alex Collins
Tom Scrivens
The Company's LEI is 213800MPBIJS12Q88F71.
Further information on Alternative Income REIT PLC is available
at www.alternativeincomereit.com (about%3Ablank) (1)
1 Neither the content of the Company's website, nor the content of
any website accessible from hyperlinks on its website or any other website, is
incorporated into, or forms part of, this announcement nor, unless previously
published on a Regulatory Information Service, should any such content be
relied upon in reaching a decision as to whether or not to acquire, continue
to hold, or dispose of, securities in the Company.
NOTES
Alternative Income REIT PLC aims to generate a sustainable, secure and
attractive income return for shareholders from a diversified portfolio of UK
property investments, predominately in alternative and specialist sectors. The
majority of the assets in the Group's portfolio are let on long leases which
contain index-linked rent review provisions.
Chairman's Statement
Overview
I am pleased to present the annual audited results of Alternative Income REIT
PLC (the 'Company') together with its subsidiaries (the 'Group') for the
financial year ended 30 June 2025.
The year under review was one characterised by a fall in consumer and business
confidence, declining inflation, low rental growth and falling interest rates.
These factors were reflected in the real estate sector, where transactions
have been scarce, with both investors and occupiers cautiously playing a
waiting game. This has proved to be beneficial for the Group. From an income
standpoint, the economic environment has seen our portfolio continuing to
perform well, benefiting from its long dated and high yielding leases with
index-linked rental increases. The portfolio value has increased by £4.7
million (2024: £4.3 million reduction) and at 30 June 2025 was valued at
£107.4 million (2024: £102.7 million). On a like-for-like basis, the value
of the Group's properties increased to £104.9 million from £102.7 million.
The portfolio should continue to perform relatively well during a period of
higher inflation, as 92.3% of its rental income is subject to index-linked
reviews and 25.6% of rental income is not subject to any cap on rental
increases. During the financial year, a total of 10 rent reviews took place,
resulting in a combined rental uplift of £167,000, that represents a 2.2%
increase on contracted rent across the Company's portfolio.
During the year, one property transaction completed, being the purchase of
Champneys Beauty College in Tring, for a consideration of £2.5 million (net
of acquisition costs).
The Board has been working, in conjunction with its debt adviser, to refinance
the Group's existing debt. Largely as a result of AIRE's excellent track
record in recent years, its outstanding record on rent collection and the very
low Loan To Value ('LTV') of its portfolio, AIRE secured separate offers of
long-term finance from several different lending institutions, all on a
competitive basis.
Consequently, the Board announced on 3 September 2025 that the Group has
secured new long-term debt facilities with HSBC UK Bank plc ('HSBC'). The
facilities consisting of both a fixed term loan of £31 million and a £10
million revolving credit facility.
Together with the active asset management initiatives being undertaken, the
Board considers that the portfolio will continue to deliver an attractive
yield as a result of its secure and improving rental income. These, together
with less volatile inflation and the anticipated continued downward trajectory
of UK interest rates provides a stabilising background for the property
market.
At the year end, the portfolio has maintained the net initial yield at 7.1%
and a WAULT to the first break of 15.6 years and 17.2 years to expiry (30 June
2024: 16.5 and 18.4 years, respectively).
Refinancing of the Group's Debt
The Group today has a fully utilised £41.0 million loan facility with Canada
Life, with a weighted average interest cost of 3.19%. This facility will be
repaid on its due date of 20 October 2025. There are currently no penalties
projected for repaying this existing loan facility.
As mentioned above, the Group has now secured new long term-debt facilities
with HSBC ('New HSBC Bank Facilities') totalling £41 million, which are for a
fixed term of five years from the date of drawdown, which can be extended on
request by a further two years, should this be mutually acceptable to both
parties. The New HSBC Bank Facilities consist of a fixed term loan of £31
million and a £10 revolving credit facility ('RCF').
Whilst there is no present intention, AIRE have the right, through an
accordion mechanism, to request an increase in the size of the RCF by up to a
further £10 million, over the course of the facility.
The Board is also pleased to report that the margin on the New HSBC Bank
Facilities of 170 basis points (1.7% per annum) over SONIA (sterling overnight
index average rate), represents a significant reduction in margin when
compared with the Group's existing debt facilities, albeit against a backdrop
of higher base interest rates, as set out below. In addition, the financial
covenants in the New HSBC Bank Facilities represent improved terms to the
Group, being based on a Loan to Value covenant which is not to exceed 60% and
an Interest Cover Ratio to be greater than 160%.
The Board intend to take advantage of the lower interest rates on AIRE's
existing debt facilities, until these facilities are repaid on 20 October
2025. The Group will use the amount drawn down under its New HSBC Bank
Facilities to simultaneously repay its existing debt facilities in full.
Dividends and Earnings
During this financial year, the Company declared four interim dividends
totalling 6.2 pence per share ('pps') (30 June 2024: 5.9pps), which is in line
with the previously announced dividend target of 6.2pps (30 June 2024:
5.9pps), representing a 5.1% increase on the previous year. I am pleased to
report that these dividends were covered by cash earnings.
As set out in Note 8 to the Consolidated Financial Statements, dividends were
covered by the Group's Adjusted EPS (representing cash) of 6.72pps (2024:
5.99pps). All dividends were paid as Property Income Distributions ('PIDs').
Historically the Board has paid dividends in four instalments each financial
year. The Board intends to continue with this practice by making dividend
payments in November, February, May and August each year. In order to do this,
all dividends need to be declared and paid as interim dividends. The Board,
however, recognises that this precludes shareholders from having the
opportunity to vote on a final dividend. Recognising this, and although not
required to do so, Resolution 8 in the AGM notice gives shareholders the
opportunity to vote on this dividend policy.
Over the past few years, including during the global COVID pandemic, AIRE has
maintained an enviable record of collecting 100% of its rent. Provided this
remains the case, and in the absence of any other unforeseen circumstances,
the Board is targeting a dividend of no less than 5.6† pps for the year
ending 30 June 2026. The resetting of this dividend target, which is lower
than the previous year, is entirely due to the increase in financing costs on
the new facilities, which will rise significantly to approximately £2.2
million, compared with £1.4 million in previous financial years.
† This is a target and not a formal dividend forecast or a profit forecast.
Discount
The discount of the share price to NAV at 30 June 2025 narrowed to 11.5% (30
June 2024: 18.4%). The Board monitors the discount level throughout the year
and has the authority to both issue and buy back shares. Although these powers
have not been used to date, the Board believes these authorities are important
powers for it to have available, if required, and therefore recommends that
shareholders vote in favour of their continuance at the forthcoming AGM.
Investment Policy
The change in the Group's Investment Policy was approved by shareholders at
the November 2024 AGM and all references to the Group Investment Policy within
this Annual Report relate to the updated policy, which included revised sector
allocation limits and minimum portfolio targets (including WAULT and
inflation-linked rent thresholds). Investors
should refer to the changes outlined in the 2024 Annual Report for full
details.
AGM
The Company will hold its AGM at 10:00am on Monday 10 November 2025 at the
offices of JTC, The Scalpel 18th Floor, 52 Lime Street, London EC3M 7AF. As
usual, the Investment Adviser will give a presentation on the Group prior to
proceeding with the formal business of the AGM.
I always welcome engagement with shareholders, who should be aware that, if
they are unable to attend in person, they can submit questions to the Board by
emailing the Company Secretary at AIRE.Cosec@jtcgroup.com
(mailto:AIRE.Cosec@jtcgroup.com) or by writing to me at the Group's registered
office, namely, Alternative Income REIT PLC, The Scalpel 18th Floor, 52 Lime
Street, London EC3M 7AF.
Outlook
The Group's index-linked portfolio, with its properties let on predominantly
long dated and high yielding leases, has continued to perform relatively well,
when compared with its peer group. In the coming financial year, approximately
44.6% of the Group's income will be subject to rent reviews (36.4% as annual
index-linked rent reviews and the remaining 8.2% being periodic three or five
yearly index-linked rent reviews).
On a macro level, it appears that the pathway for interest rates continues to
be downwards. This should benefit the property market and in conjunction with
the active asset management initiatives being undertaken by the Group and the
successful refinancing of AIRE's banking facilities. These factors give the
Board confidence that the portfolio will continue to deliver an attractive
yield as a result of its secure and growing rental income.
I would like to take this opportunity to thank my colleagues on the Board, the
Investment Adviser, the Company Secretary and our other advisers and service
providers, who have provided professional support and services to the Group
during this financial year. The Group has a good team, to whom a large
proportion of the Company's success can be attributed.
Simon Bennett
Chairman
3 October 2025
Business Model and Strategy
Business Model
Alternative Income REIT PLC is a real estate investment trust listed on the
closed-ended investment funds category of the Official List of the Financial
Conduct Authority ('FCA') and traded on the Main Market of the London Stock
Exchange. As part of its business model and strategy, the Group has maintained
and intends to maintain its UK REIT status.
The Company is governed by a Board of non-executive directors (the 'Board')
and has no employees. The Board is responsible for determining the Company's
investment objective and investment policy. Like many other REITs and
investment companies, the day-to-day management and administration of the
Company is outsourced by the Board to third party providers, including Martley
Capital Real Estate Investment Management Limited ('Martley Capital') as
Investment Adviser, Langham Hall Fund Management LLP as AIFM and JTC Limited
as Company Secretary.
Investment Objective
The investment objective of the Group is to generate a secure and predictable
income return, sustainable in real terms, whilst at least maintaining capital
values, in real terms, through investment in a diversified portfolio of UK
properties, predominantly within the alternative and specialist sectors.
Investment Policy
In order to achieve the investment objective, the Group invests in freehold
and long leasehold properties across the whole spectrum of the UK property
sector. The Group's emphasis is on alternative and specialist property sectors
in order to access the attractive value and capital preservation qualities
which such sectors offer.
The Group invests in properties that can generate predictable income streams
through long leases which have contractual exposure to inflation rates,
focussing on properties which have the ability to deliver secure income and
preserve capital value, with an attractive entry yield.
The Group will supplement this with active asset management initiatives for
certain properties.
Permitted sectors include, but are not limited to the following, subject at
all times to the assessment of their appeal and specific asset investment
opportunities: healthcare; leisure; hotels and serviced apartments; education;
automotive; car parks; residential; supported living; student accommodation;
logistics; storage; communications; supermarkets (within the alternative and
specialist real estate sectors). In addition, permitted sectors include:
offices; shopping centres; retail and retail warehouses; and industrial (being
defined as 'Traditional' real estate sectors), subject to the limitations on
sector exposure below.
The Group is not permitted to invest in land assets, including development
land which does not have a development agreement attached, agriculture or
timber.
Each investment must enable the portfolio to comply with the following minimum
targets at the time of investment:
· a weighted average unexpired lease term ('WAULT') in excess of ten
years;
· at least 75% of the gross passing rent being from leases with rent
reviews linked to a commonly used measure of inflation (typically RPI or CPI);
· at least 50% of the gross asset value ('GAV') of properties being
in alternative and specialist sectors; and
· over 90% of properties being freehold or very long leasehold
(over 100 years).
Whilst each acquisition is made on a case-by-case basis, properties typically
offer the following characteristics:
· a value of between £2 million and £30 million;
· existing tenants with strong business fundamentals and profitable
operations;
· depth of tenant/operator demand;
· alternative use value;
· current passing rent close to or below rental value; and
· long-term demand drivers, including demographics, use of
technology or built-for-purpose real estate.
The Group may invest in commercial properties or portfolios of commercial
property assets which, in addition, include ancillary or secondary
utilisations.
The Group may invest in corporate and other entities that hold property and
the Group may also invest in conjunction with third-party investors.
The Group may engage in full or partial interest rate hedging or use
derivatives to seek to mitigate the risk of interest rate increases as part of
the Group's portfolio management.
Investment limits
The Group will invest and manage its assets with the objective of spreading
investment risk through the following:
· Investment in a single property limited to 15% of GAV (measured
at the time of investment).
· Exposure to a single tenant covenant will be limited to 15% of
GAV.
· The Group may commit up to a maximum of 10% of its GAV (measured
at the point of capital commitment) in development activities.
· Investment in unoccupied and non-income producing assets will, at
the time of investment, not exceed 5% of Estimated Rental Value ('ERV').
The Group will not invest in other closed-ended investment companies.
If the Group invests in derivatives for the purposes of efficient portfolio
and cash management, the total notional value of the derivatives at the time
of investment will not exceed, in aggregate, 20% of GAV.
Borrowings
The Group may utilise borrowings with a view to enhancing returns over the
medium term. Borrowings, where utilised will be on a limited recourse basis
for each investment on all or part of the total portfolio and will not exceed
40% of GAV (measured at drawdown) of each relevant investment or of the
portfolio.
Dividend Policy
It is the directors' intention to pay dividends in line with the Company's
investment objective with interim dividends payable by four instalments
quarterly in November, February, May and August in respect of each financial
year to June. Additionally, the dividend policy allows for the payment of
further interim dividends should compliance with the REIT rules require.
Key Performance Indicators
KPI AND DEFINITION RELEVANCE TO STRATEGY PERFORMANCE
Adjusted EPS 6.72pps
Adjusted EPS from core operational activities, as adjusted for non-cash items. This reflects the Group's ability to generate earnings from the portfolio For the year ended 30 June 2025
A key measure of a company's underlying operating results from its property which underpins dividends.
rental business and an indication of the extent to which current dividend (2024: 5.99pps)
payments are supported by earnings. See Note 8 to the financial statements.
Dividend per share 6.20pps
Dividends declared in relation to the period are in line with the stated The Group seeks to deliver a sustainable income stream from its portfolio, For the year ended 30 June 2025
dividend target as set out in the Prospectus at IPO. Having achieved the which it distributes as dividends.
target dividend of 5.70 pence per Ordinary Share per annum, the aim now is to (2024: 5.90pps)
ensure an increasing dividend in line with the Company's Investment Objective.
Net Asset Value ('NAV') per share £67.33 million / 83.64pps
NAV is the value of an entity's assets minus the value of its liabilities. Provides stakeholders with the most relevant information on the fair value of At 30 June 2025
the assets and liabilities of the Group.
(2024: £65.12 million/ 80.90pps)
Leverage (Loan-to-GAV) 36.88%
The proportion of the Group's assets that is funded by borrowings. The Group utilises borrowings to enhance returns over the medium term. At 30 June 2025
Borrowings will not exceed 40% of GAV (measured at drawdown).
(2024: 37.67%)
Net Initial Yield ('NIY') 7.07%
Annualised rental income based on the cash rents passing at the balance sheet The NIY is an indicator of the ability of the Group to meet its target At 30 June 2025
date, less non-recoverable property operating expenses, divided by the market dividend after adjusting for the impacts of leverage and deducting operating
value of the property, increased with purchasers' costs estimated by the costs. (2024: 7.06%)
Group's External Valuers.
Key Performance Indicators (continued)
KPI AND DEFINITION RELEVANCE TO STRATEGY PERFORMANCE
Weighted Average Unexpired Lease Term ('WAULT') to break and expiry 15.6 years to break and 17.2 years to expiry
The average lease term remaining to expiry across the portfolio, weighted by The WAULT is a key measure of the quality of the portfolio. Long leases At 30 June 2025
contracted rent. underpin the security of our future income.
(2024: 16.5 years to break and 18.4 years to expiry)
EPRA Performance Measures
The EPRA performance measures of the Group follow. All are Alternative
Performance Measures.
MEASURE AND DEFINITION PURPOSE PERFORMANCE
EPRA Net Tangible Assets1 £67.33 million/ 83.64pps
The EPRA NTA deducts the break cost of bank borrowings from the EPRA NAV. A measure that assumes entities buy and sell assets, thereby crystallising At 30 June 2025
certain levels of deferred tax liability. The Group has UK REIT status and as
such no deferred tax is required to be recognised in the accounts. (2024: £65.12 million/ 80.90pps)
EPRA Net Reinstatement Value1 £74.31 million/ 92.30pps
The EPRA NRV adds back the purchasers' costs deducted from the EPRA NAV and A measure that highlights the value of net assets on a long-term basis. At 30 June 2025
deducts the break cost of bank borrowings.
(2024: £71.79 million/ 89.18pps)
EPRA Net Disposal Value1 £67.33 million / 83.64pps
The EPRA NDV deducts the break cost of bank borrowings from the EPRA NAV. A measure that shows the shareholder value if assets and liabilities are not At 30 June 2025
held until maturity.
(2024: £65.12 million/ 80.90pps)
EPRA LTV2 34.82%
Debt (net of cash balances) divided by the market value of properties A key (shareholder-gearing) metric to determine the percentage of debt At 30 June 2025
(including net receivables). comparing to the appraised value of the properties.
(2024: 35.50%)
EPRA Earnings/EPS1 £5.29 million/ 6.57pps
Earnings from operational activities. A key measure of a company's underlying operating results and an indication of For the year ended 30 June 2025
the extent to which current dividend payments are supported by earnings.
(2024: £4.74 million/ 5.89pps)
EPRA NIY2 - unaudited 7.07%
Annualised rental income based on the cash rents passing at the balance sheet A comparable measure for portfolio valuations. This measure should make it At 30 June 2025
date, less non-recoverable property operating expenses, divided by the market easier for investors to judge themselves, how the valuation of two portfolios
value of the property, increased with (estimated) purchasers' costs. compare. (2024: 6.94%)
EPRA 'Topped-up' NIY2 - unaudited 7.25%
This measure incorporates an adjustment to the EPRA NIY in respect of the A comparable measure for portfolio valuations. This measure should make it At 30 June 2025
expiration of rent-free periods (or other unexpired lease incentives such as easier for investors to judge themselves, how the valuation of two portfolios
discounted rent periods and step rents). compare. (2024: 7.29%)
EPRA Vacancy2 - unaudited 0.00%
Estimated Rental Value ('ERV') of vacant space divided by ERV of the whole A 'pure' percentage measure of investment property space that is vacant, based At 30 June 2025
portfolio. on ERV.
(2024: 0.00%)
EPRA Cost Ratio2 - unaudited 15.14%
Administrative and operating costs (including and excluding costs of direct A key measure to enable meaningful measurement of the changes in a company's For the year ended 30 June 2025
vacancy) divided by gross rental income. operating costs.
(2024: 16.36%)
1 The reconciliation of this APM is set out in Note 8 of the Notes
to the Consolidated Financial Statements.
2 The reconciliation of this APM is set out in the EPRA Performance
Measures Calculations section following the Notes to the Consolidated
Financial Statements.
Investment Adviser's Report
Market Outlook
UK Economic Outlook
The UK economy, after a strong 0.7% growth in Q1 2025, has faced consecutive
monthly contractions in Q2 2025 which caused growth to reduce by 0.3% in the
quarter, driven by reductions in production and construction, and the onset of
a US-driven trade war(A). Though Q1 GDP was 4.2% above pre-pandemic levels
(placing 5th in the G7)(B), the Office of Budget Responsibility ('OBR') halved
its 2025 GDP growth forecast to 1.0%, and independent forecasts reduced to
1.1%(C). Despite this, the OBR remains optimistic, upgrading longer-term
growth forecasts from 2026-2029.
UK unemployment continued its upward trend, reaching 4.7% in the three months
to June 2025 - the highest level since August 2021(D). This rise follows sharp
increases in payroll taxes and a 6.7% increase to the national minimum wage.
Despite, wages continuing to outpace inflation, unemployment is nearing a
four-year high which is reducing wage growth to 5.0% in Q2 2025(E); this rate
is predicted to fall further to 4.2% for the entirety of 2025(F). Reflecting
these concerns, the British Chambers of Commerce raised their 2025
unemployment forecast to 4.7% in September, citing rising employment costs and
worries about youth unemployment.
UK inflation, as measured by the Consumer Price Index ('CPI'), rose sharply to
3.8% in July, being the greatest increase since January 2024 and significantly
exceeding the 2% target. This increase, more than double that seen in
September 2024 of 1.7%, was anticipated by the OBR for mid-2025, primarily due
to Ofgem's price cap increase amid higher energy costs and increases in food
costs. Despite concerns, the OBR predicts this uplift will be temporary, with
the rate falling to 3.1% by December 2025 and returning to target in Q2 2026.
Interest rates have been on a gradual downward trajectory since the August
2023 peak of 5.25%, with the Bank of England implementing three cuts so far in
2025, bringing the base rate down to 4.00%. This rate was cut at the August
meeting despite signs that UK inflation might be persisting. ING forecasts an
additional rate cut in November, which would further cut the rate to 3.75% by
year-end, with a further two cuts expected in 2026, bringing the rate to
3.25%.
Economic sentiment among both businesses and consumers has seen modest, albeit
notable, improvements throughout the first half of 2025. An Office for
National Statistics ('ONS') survey in June 2025 revealed that the proportion
of businesses anticipating a performance decline over the next year edged down
to 11%, a positive shift from 12% in January(G). Consumer confidence, as
measured by the GfK(H) index, also experienced an uplift, rising encouragingly
from -22 in January 2025 to -18 in June 2025(I).
All of the above reflect a challenging environment, further complicated by a
US-sparked trade war and rising employment costs. Despite this, consumer
confidence has shown modest improvements. Through global geopolitical events
and domestic policy decisions remain crucial factors shaping the UK's economic
trajectory.
Sources:(A)ONS (2025), Gross Domestic Product (GDP); (B)UK Parliament (2025),
GDP international comparisons: Economic indicators; (C)HM Treasury (2025),
Forecasts for the UK economy;(D)ONS (2025), Unemployment rate (aged 16 and
over, seasonally adjusted);(E)ONS (2025), Average weekly earnings in Great
Britain: June 2025;(F)British Chambers of Commerce, BCC Economic Forecast;
(G)ONS (2025), Business Insights and Conditions Survey (BICS); (H)Growth from
Knowledge Index; (I)UK Parliament (2025), Business and consumer confidence:
Economic indicators
UK Real Estate Outlook
The UK real estate market showed mixed signals in the first half of 2025.
While the latter half of 2024 saw transaction volumes recover to a two-year
high, H1 2025 experienced a 28% drop in deal volume, reaching only £18.1
billion and falling below the long-term trend(A). This decline was primarily
due to a shortage of large-scale transactions, even though the number of deals
remained relatively stable. An exception was Blackstone's acquisition of the
Arch Co portfolio, the UK's largest transaction since mid-2022. The "flight to
quality" continues to dominate the occupier market, with businesses
prioritizing properties that boast strong Environmental, Social and Governance
('ESG') credentials and high energy efficiency. This, coupled with reduced
speculative development, is fuelling increases in prime rents. Despite ongoing
challenges like high operating costs and economic uncertainty, which are
leading to cautious investment, the availability of flexible leases is
offering occupiers crucial adaptability.
Despite ongoing economic uncertainty and market volatility, the outlook for
real estate has significantly improved over the past year. CBRE's European
Investor Intentions survey reveals that three-quarters of investors anticipate
a market rebound by year-end, and 90% expect their purchasing activity to
either increase or remain stable, injecting crucial liquidity and bolstering
confidence(B). This positive sentiment is supported by a 0.9% increase in
capital value across all property types in H1 2025, alongside a 12bps inwards
shift for yields(C). The improved market conditions, coupled with the ING's
prediction of two further rate cuts, is likely to drive further yield
compression, intensifying competition for assets and pushing prices higher in
the transaction market. Investors saw a total return of 4.2% in H1, and
Colliers forecasts a strong 9.8% total return for the year(D). Considering the
relative stability of real estate compared to equities, particularly given
potential global trade tariffs, this outlook presents a highly attractive
proposition for global investment.
The UK real estate investment landscape shifted significantly in 2024, with
the living sector leading the way by attracting £18.26 billion. Even with a
slower first half, its appeal held strong, seeing a surge in deal activity,
largely driven by overseas buyers. Investors are increasingly eyeing
operational and alternative asset classes, with 75% actively exploring areas
like real estate debt, purpose-built student accommodation, data centres, and
life science assets. Despite strong investor preference for the industrial and
logistics sector, its H1 2025 volume plummeted to £2.9 billion, well below
trend, mirroring the broader market's decline in large-scale transactions.
Interestingly, retail emerged as the top-performing sector in H1 2025 and is
expected to maintain this over the next five years. Shopping centres and
retail warehouses are forecast to generate impressive total annual returns of
10.9% and 9.4% respectively. This growth is fuelled by evolving retail
concepts that cater to experiential consumer demand, coupled with limited new
development due to the structural shift away from traditional retail,
resulting in low vacancy rates and strong rental growth potential.
The UK REIT market experienced a strong recovery in the first six months of
2025, with the FTSE EPRA Nareit UK Index rising by 11.8%, a significant
rebound from the 11.7% decline in 2024(E). This positive trend saw over 76% of
listed UK REITs realise share price gains. Investments in the Living space
performed exceptionally well, dominating the top performers. KCR Residential
REIT led the way, and key players in the care home market also contributed
strongly, with Assura REIT and Target Healthcare REIT placed amongst the top
five performers. AIRE also saw a positive movement, increasing by 5% to
74.0pps in the first half of the year
The UK commercial property market is undergoing a significant transformation,
requiring resilience and innovation for future success. Recent challenges have
necessitated a fundamental reassessment of industry practices, demanding
creative investment strategies, bold occupier choices, and the agility to
adapt to rapidly evolving market demands. Moving forward, interdisciplinary
collaboration will be essential to unlocking value and fostering sustainable
growth within the sector.
Sources:(A)LSH (2025), UKIT Q2 2025; (B)CBRE (2025), European Investor
Intentions Survey 2025;(C)MSCI (2025), UK Monthly Data;(D)Colliers (2025),
Real Estate Investment Forecasts Quarter 2 2025;(E)FTSE Russell Factsheet
(2025), FTSE EPRA Nareit UK Index
Portfolio Activity During the Year
The following asset management initiatives were undertaken during the year:
· The acquisition of Champneys Beauty School, part of the Champneys
Tring Spa Resort in Tring, in December 2024 for £2.5 million completed the
investment of the net proceeds of previous Group asset disposals. The price
reflects a net initial yield of 6.5% and, at purchase, had a weighted
unexpired lease term of 14.9 years.
· BGEN, one of the tenants of our St Helens industrial asset, has
agreed to continue in occupation of their building for a further two years. In
addition, a new five year lease, with annual RPI linked rent reviews was
agreed at £63,750 per annum with BGEN for the adjacent land at St Helens on
expiry of their previous lease.
· Active management continues with Pure Gym in London, re-gearing their
lease to remove the tenant's break in 2027. Their lease now extends to 2032.
In Crawley, the lease to Petrogas Group UK Limited was assigned to Rontec
Properties No 4 Limited, guaranteed by Rontec Roadside Retail Limited, one of
the leading players in the UK forecourt industry.
NAV Movements
For the year ended 30 June 2025 2024
Pence per Pence per £ million
share £ million share
NAV at beginning of year 80.90 65.12 84.16 67.75
Change in fair value of investment property 2.45 1.97 (3.71) (2.98)
Income earned for the year 10.64 8.57 9.82 7.90
Gain on disposal of property - - 0.74 0.60
Finance costs for the year (1.78) (1.44) (1.75) (1.41)
Other expenses for the year (2.29) (1.84) (2.17) (1.75)
Dividends paid during the year (6.28) (5.05) (6.19) (4.99)
NAV at the end of the year 83.64 67.33 80.90 65.12
Valuation
At 30 June 2025 the Group owned 20 property assets (2024: 19) and the
portfolio was valued at £107.4 million (2024: £102.7 million).
Summary by Sector at 30 June 2025
Gross
WAULT Passing
Market Occupancy to Rental
Number of Valuation Value by ERV break Income ERV ERV (1)
Sector Properties (£m) (%) (%) (years) (£m) (£m) (%)
Industrial Warehouse 4 26.6 24.8 100.0 22.9 1.9 1.8 24.7
Healthcare 3 17.1 15.9 100.0 23.5 1.3 1.1 15.6
Automotive & Petroleum 3 15.5 14.4 100.0 11.0 1.1 1.0 13.4
Hotel 2 12.4 11.6 100.0 12.0 0.9 0.8 11.4
Residential 1 10.9 10.1 100.0 16.1 0.8 0.8 11.3
Leisure 3 10.4 9.7 100.0 8.5 1.0 0.8 10.4
Retail Warehouse 1 5.6 5.2 100.0 3.8 0.5 0.4 5.3
Power Station 1 4.6 4.3 100.0 6.7 0.3 0.3 4.5
Education 2 4.3 4.0 100.0 16.0 0.3 0.3 3.4
Total/Average 20 107.4 100.0 100.0 15.6 8.1 7.3 100.0
Summary by Geographical Area at 30 June 2025
Gross
WAULT Passing
Market Occupancy to Rental
Geographical Number of Valuation Value by ERV break Income ERV ERV (1)
Area Properties (£m) (%) (%) (years) (£m) (£m) (%)
West Midlands 4 27.2 25.3 100.0 9.6 2.1 1.9 26.7
The North West & Merseyside 2 22.7 21.1 100.0 33.9 1.6 1.4 19.2
Rest of South East 5 21.6 20.1 100.0 8.3 1.5 1.4 19.2
South West 2 12.2 11.4 100.0 21.0 0.9 0.9 11.8
London 3 10.4 9.7 100.0 8.5 1.0 0.8 10.4
Eastern 2 7.1 6.6 100.0 9.1 0.5 0.4 6.1
Yorkshire and the Humber 2 6.2 5.8 100.0 16.5 0.5 0.5 6.5
Total/Average 20 107.4 100.0 100.00 15.6 8.1 7.3 100.0
1 The ERV (%) in the summary by sector and geographical area is
calculated using the precise unrounded ERV figures, not the rounded ERV (£m).
The table below illustrates the weighting of the Group's contracted rental
income, based on the type of rent review associated with each lease.
Income Allocation by Type
Inflation linked - RPI 64.2% (2024: 69.0%)
Inflation linked - CPI 28.1% (2024: 26.9%)
Expiry or Open Market Value Reviews 7.7% (2024: 4.1%)
% of Passing Rent by Rent Review Type
% of Passing Rent by Review Frequency
% of Passing Rent by Cap Band
Property Portfolio at 30 June 2025
Property Sector Region Market
Value
1. Pocket Nook Industrial Estate, St Helens Industrial Warehouse The North West & Merseyside £11.85m
2. Bramall Court, Salford Residential The North West & Merseyside £10.85m
3. Grazebrook Industrial Estate, Works 1 & 2, Dudley Industrial Warehouse West Midlands £8.05m
4. Motorpoint, Birmingham Automotive & Petroleum West Midlands £7.35m
5. Premier Inn, Camberley Hotel Rest of South East £7.00m
6. Silver Trees, Bristol Healthcare South West £6.83m
7. Prime Life Care Home, Solihull Healthcare West Midlands £6.15m
8. Droitwich Spa Retail Park, Droitwich Retail Warehouse West Midlands £5.60m
9. Duke House, Swindon Hotel South West £5.40m
10. Virgin Active, London Leisure London £5.15m
11. Hoddesdon Energy, Hoddesdon Power Station Eastern £4.63m
12. Unit 2, Dolphin Park, Sittingbourne Industrial Warehouse Rest of South East £4.60m
13. Volvo Slough, Slough Automotive & Petroleum Rest of South East £4.15m
14. Prime Life Care Home, Brough Healthcare Yorkshire and the Humber £4.10m
15. Applegreen Petrol Station, Crawley Automotive & Petroleum Rest of South East £4.00m
16. Pure Gym, London Leisure London £3.57m
17. Champneys Beauty College, Tring Education Eastern £2.50m
18. Unit 14, Provincial Park, Sheffield Industrial Warehouse Yorkshire and the Humber £2.10m
19. YMCA Nursery, Southampton Education Rest of South East £1.82m
20. Snap Fitness, London Leisure London £1.65m
Total £107.4m
Top Ten Tenants at 30 June 2025
% of
Annual Portfolio
Contracted Total
Rental Passing WAULT to break
Income Rental (Years)
(£'000) Income
Tenants Property
Mears Group Plc Bramall Court, Salford 809 10.0% 16.1
Meridian Steel Ltd Grazebrook Industrial Estate, Dudley & Sheffield 799 9.9% 1.9
Prime Life Ltd Prime Life Care Home, Brough & Solihull 781 9.7% 23.4
Motorpoint Ltd Motorpoint, Birmingham 568 7.0% 12.0
Virgin Active Health Clubs Ltd Virgin Active, London 521 6.5% 9.3
Premier Inn Hotels Ltd Premier Inn, Camberley 504 6.2% 6.7
Handsale Ltd Silver Trees, Bristol 491 6.1% 23.6
Travelodge Hotels Ltd Duke House, Swindon 403 5.0% 18.9
B&M Bargains Droitwich Spa Retail Park, Droitwich 364 4.5% 4.2
Biffa Waste Services Ltd Pocket Nook Industrial Estate, St Helens 353 4.4% 108.2
Total 5,593 69.3% 19.1**
*The WAULT calculations includes an additional three years reflecting a
landlord's option to extend until 31 May 2044.
**This WAULT calculation, which considers income solely from the top ten
tenants, differs from the portfolio-wide WAULT of 15.6 years.
Tenancy Schedule
Tenant Property Annual Break Date Expiry Date
Contracted
Rental
Income
(£ '000)
Mears Group Plc Bramall Court 809 16/08/2041
Motorpoint Ltd Motorpoint 568 24/06/2037
Virgin Active Health Clubs Ltd Virgin Active 521 28/09/2034
Premier Inn Hotels Ltd Premier Inn 504 25/03/2032 24/03/2037
Handsale Ltd Silver Trees 491 14/01/2049
Prime Life Ltd Prime Life Care Home 457 21/11/2048
Travelodge Hotels Ltd Duke House 403 31/05/2044
Meridian Steel Ltd Grazebrook Industrial Estate, Works 1 & 2 388 21/05/2027
B&M Bargains Droitwich Spa Retail Park 364 31/08/2029
Hoddesdon Energy Ltd Hoddesdon Energy 333 27/02/2032 26/02/2050
Prime Life Ltd Prime Life Care Home 324 21/11/2048
Doré Metal Services Southern Ltd Unit 2, Dolphin Park 307 13/09/2028 12/09/2033
Pure Gym Ltd Pure Gym 287 10/12/2032
Volvo Car UK Ltd Volvo Slough 281 16/03/2037
Meridian Steel Ltd Grazebrook Industrial Estate, Works 1 & 2 259 21/05/2027
Rontec Properties No 4 Ltd Applegreen Petrol Station 256 16/07/2033
Biffa Waste Services Ltd Pocket Nook Industrial Estate 203 24/02/2133
Secretary of State for Communities & Local Government Pocket Nook Industrial Estate 200 30/01/2033 29/01/2048
Champneys Tring Champneys Beauty College 175 18/04/2039
MSG Life Realty Ltd Snap Fitness 158 28/03/2033
Meridian Steel Ltd Unit 14, Provincial Park 152 21/05/2027
Biffa Waste Services Ltd Pocket Nook Industrial Estate 150 31/03/2134
YMCA Fairthorne Group YMCA Nursery 145 17/02/2044
BGEN Ltd Pocket Nook Industrial Estate 145 04/04/2027
Pets at Home Droitwich Spa Retail Park 113 13/01/2028
BGEN Ltd Pocket Nook Industrial Estate 64 04/04/2030
The Salvation Army Trustee Company Duke House 27 17/07/2032
Kingscrown Land & Commercial Ltd Pocket Nook Industrial Estate - 28/09/2045
Camberley Properties Ltd Premier Inn - 23/06/3010
Southern Electric Parcel Distribution Plc Premier Inn - 20/02/2111
*Ground rents less than £150 per annum.
Environmental, Social and Governance Report
The Group recognises that Environmental, Social and Governance ('ESG') matters
are of utmost importance to sustainable investment and a focus for the
business and investor community. The Group is committed to understanding how
best to consider ESG factors in all facets of its business, from business
strategy to investment decisions and company operations.
In order to meet investors' expectations, the Group and its advisers adopt
both financial and non-financial strategies to drive long-term value with an
innovative yet disciplined and conscientious approach to ESG in respect of the
property portfolio management including but not limited to:
Environmental
· A proactive approach to procurement of Energy Performance Certificate ('EPC')
reassessments ahead of Minimum Energy Efficiency Standards 2023, maintaining
quarterly reviews of EPC schedules, identification of opportunities to improve
energy efficiency, and working closely with tenants who occupy under full
repairing and insuring leases.
· Ongoing environmental reviews and audits as part of regular due diligence,
including regular asset inspections to avoid any breach in environmental
legislation.
· Responsible refurbishment in respect of all works to assets with consideration
of the best approach to improving the EPC rating against potential spend,
liaising with tenants in respect of any fit-out or alterations to reuse
existing materials where feasible to reduce waste.
· Leverage technology for data management being used to monitor and drive
efficiency.
Social
· Commitment to occupier engagement.
· Encourage improvements to each asset such as installing
defibrillators & electrical charging points.
· Provision of regular training and awareness to all managers on issues,
such as wellbeing and mental health.
Governance
· Client checks being completed on all tenants as well as new
suppliers and contractors.
· Regular tenant engagement and inspections to ensure assets are
used as agreed within leases.
· Effective tracking of legislative requirements to assess and
monitor risks and opportunities.
The Group is limited in its ability to influence ESG factors for the Group's
properties as the properties are fully let on commercial full repairing leases
in accordance with the Group's strategy to hold long leases.
Diversity
As an externally managed business, the Company does not have any employees or
office space. As such, the Group does not operate a diversity policy with
regards to any administrative, management and supervisory functions. A
description of the Board's policy on director diversity can be found in the
Corporate Governance Report of the Annual Report.
Employees
The Group has no employees and accordingly no requirement to report separately
in this area as the management of the portfolio has been delegated to the AIFM
and Investment Adviser.
The AIFM and Investment Adviser are equal opportunities employers who respect
and seek to empower each individual and the diverse cultures, perspectives,
skills and experiences within their workforce.
Human Rights
The Group is not within the scope of the Modern Slavery Act 2015 because it
has not exceeded the turnover threshold and therefore no further disclosure is
required in this regard.
Business Relationships
As well as the critical day-to-day portfolio management, the Group has service
providers that ensure the smooth running of the Group's activities. The
Group's key service providers are listed in the Annual Report, and the
Management Engagement Committee ('MEC') annually review the effectiveness and
performance of these service providers, taking into account any feedback
received.
The Group, AIFM and Investment Adviser and other third-party service providers
maintain high standards of business conduct by acting in a collaborative and
responsible manner with all business partners that protects the reputation of
the Group as a whole.
Greenhouse Gas Emissions
As an investment company, the Group's own direct environmental impact is
minimal and greenhouse gas ('GHG') emissions are negligible. The GHG emissions
in relation to the Group's property portfolio is disclosed below.
The Group has followed UK Government environmental reporting guidelines and
used the UK Government 2025 greenhouse gas reporting conversion factors for
company reporting to identify and report relevant GHG emissions over which it
has Operational Control (where data is available) for the 12-month period to
30 June 2025.
An independent consultancy specialising in the application of sustainability
in commercial real estate was appointed to calculate the GHG statement and
provide verification on the approach used.
Scopes
GHG emissions have been reported against the following 'Scopes', as defined by
the GHG Protocol and where relevant:
Scope 1 (not relevant to AIRE): Direct emissions from owned vehicles,
controlled boilers and fugitive emissions from air conditioning systems under
landlord control.
Scope 2: Indirect emissions from electricity purchased by the Company and
consumed within real estate assets owned by the Company.
Scope 3: Indirect emissions from electricity and gas purchased/consumed within
AIRE assets, by tenants, where the tenant is counterparty to the energy
supply.
Statement of GHG Emissions
The table below sets out the emissions per sector and for the Group overall in
the year ended 30 June 2025. The approach taken follows guidance provided by
the GHG Reporting Guidelines and EPRA Best Practice Recommendations of
Sustainability Reporting 2024.
Sector Scope Absolute tonnes of carbon dioxide equivalent (tCO(2)e) Like-for-like comparison of carbon dioxide equivalent (tCO(2)e)* Tonnes of
Carbon dioxide equivalent per m(2) (tCO(2)e)
2024/25 2023/24 Difference (tCO(2)e) % change 2024/25 2023/24
Retail Park Scope 2 1.43 0.43 1.00 232% n/a n/a
Industrial warehouse Scope 3 - Elec. 72.95 84.43 -11.48 -14% 0.012 0.013
Total Scope 2 & 3 74.38 84.86 -10.48 -12% 0.012 0.013
*Like-for-like requires 24 months of data for the current and previous
reporting year (July 2023 - June 2025). Both assets provided 24 months of data
therefore like-for-like calculations were possible.
Statement of Energy Usage
The table below sets out the energy use per sector and for the Group overall.
The approach follows guidance provided by the GHG Reporting Guidelines (DESNZ,
2025) and the EPRA Best Practice Recommendations on Sustainability Reporting
2024.
Sector Energy Source Absolute energy usage (kWh) Like-for-like energy usage (kWh)
2024/25 2023/24 Difference (kWh) % change
Retail park Electricity 8,085 2,100 5,985 285%*
Industrial warehouse Electricity 412,171 407,792 4,379 1%
Total Electricity 420,256 409,892 10,364 3%
*Whilst the kWh usage is low, the high increase in usage reflects
rectifications to faults in specific lights in the common parts of the retail
park. All the lights are now working and usage is expected to be stable in
future.
Intensity Ratios
In addition to reporting relevant absolute GHG emissions (per scope and per
sector), the Group has chosen to report intensity ratios, where appropriate.
An intensity measure is reported for assets within the like-for-like
portfolio, where:
- No major renovation or refurbishment has taken place i.e. affecting
more than 50% of the building by area or number of occupants
- Occupancy is at least 75%
- At least 24 months data is available
- Emissions reported relate to an indoor area
Whilst no landlord meters reflect the above criteria for an intensity metric,
the Group has applied an intensity figure for one asset, Pocket Nook, where
the landlord procures the energy and directly recharges this to the tenant. An
intensity metric has not been produced for Droitwich Spa retail park on the
basis that the landlord-controlled meter does not reflect the above criteria
(emissions reported relate to an indoor area).
No normalisation factors have been considered for this annual report.
Assurance Statement
The Group's GHG emissions have been calculated and verified by an independent
third-party in accordance with the principles of ISO 14064. A full copy of the
methodology used, including scope, source or data and conversion factors, is
available on request.
Property Portfolio ESG Activity
During the year ended 30 June 2025, the Group has worked closely with its
tenants to encourage improvements in ESG activities within the property
portfolio.
Two new EPC's ratings have been carried out for BGEN in St Helens which fell
from C68 to E121 due to changes in EPC grading for gas heating and for
Salvation Army, Swindon which improved from D93 to B31 as a result of tenant's
internal refurbishment works.
Following inspections by EPC assessors, works identified at four properties to
improve EPC levels are due for completion in the year to 30 June 2026
including new LED lighting, replacement of an oil-fired boiler, solar panels
and installation of secondary glazing. The costs of other enhancements will be
also be borne by the occupiers. EPCs will be updated once works have been
concluded.
Other than the changes for BGEN's and Salvation Army's EPC rating and the
introduction of the new acquisition at Tring (C) the changes within the graph
above are as a result of changes to relative ERV levels particularly in rating
D where ERVs for assets in Salford and Dudley have seen increases.
In the histogram above, the highest EPC rating of E applies to Unit 14
Provincial Park, Sheffield where the tenant is considering the cost efficiency
of replacing their oil-fired boiler to electric and Unit 2 Pocket Nook, St
Helens. Here the nature of the open-ended industrial process does not conform
to EPC standard assessment, an exemption can be sought. The remaining
properties in the portfolio have an EPC rating of D or above. More than half
of the portfolio, at 52.8%, fall between A and B.
Section 172(1) statement
The following disclosure describes how the directors have had regard to the
matters set out in section 172(1)(a) to (f) of the Companies Act 2006, in
promoting the success of the Company for the benefit of members as a whole.
This section describes how the Board has regard to the likely consequences of
any decision in the long term, the need to foster the Company's business
relationships with suppliers, customers and others, the desirability of the
Company maintaining a reputation for high standards of business conduct, and
the need to act fairly as between members of the Company. The Company does not
have any employees and therefore s172(1)(b) is not applicable to the Company.
The impact of the Company's operations on the community and the environment is
set out more fully in the Environmental, Social and Governance section above.
Stakeholder Issues of importance Engagement Effect of engagement on key decisions
Shareholders · Attractive and sustainable level of income, earnings and dividends. · Shareholder engagement is set out in the Corporate Governance The effect of shareholder engagement has fed into each aspect of the Board's
Report in the Annual Report. decision-making. The total aggregate dividends for the year have increased
The Group's investment objective is to deliver an attractive total return to · Long-term income stream linked to inflationary growth.
compared to the prior year and the Board has also worked to keep expenses
shareholders. Shareholders are directly impacted by changes to the Company's
· As a publicly listed Company, the Company is subject to Listing under control.
NAV and thus the share price and dividends. · Robust corporate governance structure and well-performing service Rules and other regulatory disclosure requirements which the Board abides by
providers. with the assistance of the Company Secretary and Corporate Broker.
· Strategic direction of the Company.
· Execution of investment objective.
· Value for money - low ongoing charges.
Service Providers · Reputation of the Company and maintaining high standards of · Effective and consistent engagement both through formal Board meetings Clear and effective strategic oversight and culture by the Board has been
business conduct. and regularly outside the meetings. crucial to enhancing the effectiveness of the Company's key service providers.
As an externally managed REIT, the Company conducts all its business through
The Board has worked closely with its service providers to maintain and
its service providers, the key ones being the Investment Adviser, Property · Productive working relationships with the Company. · Annual evaluation of key service providers. continually improve processes and to ensure that the Company's values are
Manager, Company Secretary, AIFM, depositary and corporate broker.
aligned with them.
· Fair and transparent service agreements. · Culture set by the Board and communicated to all providers.
· Collaboration.
Tenants · Positive working relationship with the Board, Investment Adviser and · To ensure the Investment Adviser and Property Manager generate and There is regular contact between the Property Manager and all the Group's
Property Manager. foster good relationships with our tenants. tenants. Rent reviews have all been completed on time and collection of rent
Tenants with strong business fundamentals and profitable operations are one of
at 100% is indicative of good tenant relations.
the key components to ensure a consistent income stream and ability to pay · Rent reviews. · Focus on asset management initiatives to assist our tenants where
dividends to the Company's shareholders.
applicable.
· Fair lease terms.
· Long-term strategy and alignment with the tenant's business operations.
· Financial stability of tenants.
Debt provider · Compliance with loan covenants. · Ongoing engagement by the Investment Adviser throughout the year In addition to the Board and the Investment Adviser's engagement with the
and by the Board. Company's current lender, the Board has established a good relationship and
The Board and the Investment Adviser maintain a positive working relationship · Responsible portfolio management. communications with the Group's new debt provider.
with its current debt provider, Canada Life, and intends to continue this with
the Group's new debt provider, HSBC UK Bank plc.
Society and the environment · Responsible investing together with sustainability. · Starting regular engagement with tenants in respect of EPC The Board has encouraged both the Investment Adviser and Property Manager to
requirements. consider ESG on investment and on an ongoing basis.
As an investor in real estate, the Company's assets have an impact on the · Long-term strategy to take account of ESG considerations without
built environment. Environmental, Social and Governance ('ESG') factors negatively impacting financial returns. · Ensuring shareholder engagement covers ESG.
increasingly apply alongside of financial returns.
Principal Decisions
Principal decisions are those that have a material impact to the Group and its
key stakeholders. In taking these decisions, the directors considered their
duties under section 172 of the Act.
Dividend and Dividend Policy
Given the Company's Investment Objective, dividends are a key matter for the
Board to consider and have a material impact on shareholders, as a key
stakeholder. For the year ended 30 June 2025, the Board declared four interim
dividends totalling 6.2pps (2024: 5.9pps), representing a 5.1% increase on the
previous year.
Subsequent to the year end, further to the securing of refinancing of the
Group's £41 million debt, the Board has announced a year ending 30 June 2026
target dividend of at least 5.6 pps(†). This reflects the increased
financing costs of the new debt, whilst being set at a level that meets the
Group's investment objective, and was declared following consultation with the
Group's major shareholders.
As last year, the Board paid four interim dividends at quarterly intervals to
provide shareholders with a consistent and timely income stream. However, this
dividend policy means shareholders do not have the opportunity to vote on a
final dividend. Consequently, the Board is once again inviting shareholders to
vote on the Company's dividend policy at the Annual General Meeting.
Property Transactions
In the year the Group acquired the Champneys Beauty School, part of the
Champneys Tring Spa Resort in Wigginton, Tring for £2.5 million (net of
acquisition costs to the Company). The price reflects a net initial yield of
6.5% and was acquired with a weighted unexpired lease term of 14.9 years. The
acquisition reinvested the remaining proceeds from the Group's last property
disposal.
Debt Refinancing
The Board considered the Company's financing and its available routes for
refinancing its debt, with the Canada Life £41 million senior loan due to
mature on 20 October 2025. In Q4 2025 the Board appointed Panmure Liberum as
its debt adviser to assist with the refinancing. Subsequent to the year end
the Board announced that it has secured £41 million of long term debt
facilities with HSBC UK Bank Plc. Details of the new debt facilities are
contained in both the Chairman's Statement and Note 20 to these financial
statements.
† This is a target and not a formal dividend forecast or a profit forecast
Principal Risks and Uncertainties
The Group's assets consist of UK commercial property. Its principal risks are
therefore related to the commercial property market in general, but also to
the particular circumstances of the individual properties and the tenants
within the properties.
The Board has overall responsibility for reviewing the effectiveness of the
system of risk management and internal control which is operated by the AIFM
and, where relevant, the Investment Adviser. The Group's ongoing risk
management process is designed to identify, evaluate and mitigate the risks
the Group faces.
The Board undertakes a semi-annual risk review with the assistance of the
Audit Committee, to assess the adequacy and effectiveness of the AIFM's, and
where relevant the Investment Adviser's, risk management and internal control
systems.
The Board has carried out a robust assessment of the principal and emerging
risks facing the Group, including those that would threaten its business
model, future performance, solvency or liquidity.
An analysis of the principal risks and uncertainties is set out in the table
below. This does not purport to be exhaustive as some risks are not yet known
and some risks are currently not deemed material but could turn out to be
material in the future.
PRINCIPAL RISKS AND THEIR POTENTIAL IMPACT HOW RISK IS MANAGED RISK ASSESSMENT
REAL ESTATE RISKS
1. Tenant default Probability: Moderate to high
Failure by tenants to comply with their rental obligations could affect the The Group's investment policy limits its exposure to any one tenant to 15% of
income that the properties earn and the ability of the Group to pay dividends Gross Asset Value. The maximum exposure to any one tenant (calculated by GAV)
to its shareholders. is 10.1% at 30 June 2025. The Group benefits from a balanced portfolio with a Impact: High
diversified tenant base and is therefore not reliant on a single tenant or
sector.
Macroeconomic trends discussed through the report, including rising interest Movement: No change
rates, higher inflation and the possibility of recession have the ability to
materially impact on a tenant's business. This could result in tenants being In the due diligence process prior to acquiring a property, covenant checks
unable to comply with their rental obligations. are carried out on tenants which are repeated on a regular basis.
The Investment Adviser and Property Manager conduct ongoing monitoring and
liaise with tenants to manage potential bad debt risk.
2. Portfolio concentration Probability: Low to moderate
Any downturn in the UK and its economy or regulatory changes in the UK could The Group has investment restrictions in place to invest and manage its assets
have a material adverse effect on the Group's operations or financial with the objective of spreading and mitigating risk.
condition. Greater concentration of investments in any sector or exposure to
Impact: Low to moderate
the creditworthiness of any one tenant or tenants may lead to greater
volatility in the value of the Group's investments, NAV and the Company's
share price. Having a diversified portfolio in respect of both sector and tenants provides
reduced potential volatility in the portfolio and the impact rating for this Movement: No change
risk is accordingly set at low to moderate.
3. Property defects Probability: Low to Moderate
Due diligence may not identify all the risks and liabilities in respect of an The Group's due diligence relies on the work (such as legal reports on title,
acquisition (including any environmental, structural or operational defects) property valuations, environmental, building surveys) outsourced to third
that may lead to a material adverse effect on the Group's profitability, the parties that have appropriate Professional Indemnity cover in place. Impact: Moderate
NAV and the Company's share price.
Both the AIFM and Board review the report produced by the Investment Manager
for each prospective acquisition and will challenge accordingly.
Movement: No change
4. Rate of inflation Probability: Moderate
Rent review provisions may have contractual limits to the increases that may The inflation linked (RPI/CPI) leases in the portfolio have contractual rent
be made as a result of the rate of inflation. If inflation is in excess of review collars, with the lowest floor being 0%, and caps that range from 3% to
such contractual limits, the Group may not be able to deliver targeted returns no cap. The majority of caps are in excess of RPI and CPI forecasts during the Impact: Moderate
to shareholders. next five-year rent review cycle. Specifically:
- Majority of caps are 4.00% or above, including a number with no
caps Movement: No change
- RPI forecast for next five years of 2.9%
- CPI forecast for next five years of 2.0%
The risk of inflation is somewhat mitigated by the leases that have no cap. In
addition, a total of eight leases undergo reviews annually which will allow
inflation changes to be reflected expeditiously.
5. Property market Probability: Moderate to high
Any recession or future deterioration in the property market could, inter The Group has investment restrictions in place to invest and manage its assets
alia, (i) lead to an increase in tenant defaults, (ii) make it difficult to with the objective of spreading and mitigating risk.
attract new tenants for its properties, (iii) lead to a lack of finance
Impact: Moderate to high
available to the Group, (iv) cause the Group to realise its investments at
lower valuations; and (v) delay the timings of the Group's realisations.
Most of the leases provide a relatively long unexpired term and contain upward
only rent reviews which are linked to either RPI or CPI. Because of these Movement: No change.
factors, the Group expects that the assets will show less volatile valuation
Any of these factors could have a material adverse effect on the ability of movement over the long term.
the Group to achieve its investment objective.
6. Property valuation Probability: Low to moderate
Property is inherently difficult to value due to the individual nature of each The Group uses an independent valuer (Knight Frank LLP) to value the
property. properties on a quarterly basis at fair value in accordance with the accepted
Royal Institution of Chartered Surveyors ('RICS') appraisal and valuation Impact: Moderate to high
standards.
There may be an adverse effect on the Group's profitability, the NAV and the
Company's share price in cases where properties are sold whose valuations have
Movement: No change
previously been materially overstated.
7. Investments are illiquid Probability: Low
The Group invests in commercial properties. Such investments are illiquid; The Group aims to hold the properties for long-term income and all property
they may be difficult for the Group to sell and the price achieved on any investment/ disinvestment is managed carefully to ensure there is no undue
realisation may be at a discount to the prevailing valuation of the relevant pressure on cash flow that would require a quick sale of assets. Impact: Moderate
property.
The Company's dividend is funded from net revenue and is not affected by the Movement: No change
portfolio's (il)liquidity.
8. Environment Probability: Moderate
The Group is subject to environmental regulations. In addition to regulatory The current regulations require annual mandatory Green House Gas (GHG)
risk, there is a growing importance being placed on ESG credentials by reporting, which will be carried out as part of the annual report and will
tenants, which could lead to difficulty in letting vacant space. result in minimal expenditure for the Group. Impact: Moderate
Properties could be impacted by extreme environment events such as flooding. Furthermore, the Investment Adviser has prepared an ESG strategy to ensure it Movement: No change
Climate change could accelerate more quickly leading to adverse physical meets legal requirements and remains attractive to current and future
impacts as well as regulatory change. tenants. Please see the 'Environmental, Social and Governance' section for
further information.
Failure by the Group to meet current or future environmental targets could
result in penalties, increased costs, a reduction in asset values and have an In depth research is undertaken on each property at acquisition. The
adverse effect on the Company's reputation, leading to loss of good quality Investment Adviser has adopted an environmental policy which it is in the
tenants. process of applying to all properties within the portfolio.
BORROWING RISKS
9. Breach of borrowing covenants Probability: Low to moderate
The Group has a £41 million fixed rate loan facility, maturing 20 October The Group monitors the borrowing covenants on a regular ongoing basis by cash
2025. Subsequent to the year end the Board has secured the refinancing of the flow forecasting, quarterly risk reports and a quarterly compliance
Group's debt facilities for a minimum of five years at a floating rate of certificate. Impact: High
SONIA plus a margin of 1.7%. The covenants for the current and new loan
facilities are shown in Notes 18 and 20, respectively.
The Group's gearing at 30 June 2025 was 36.9%, materially below the default Movement: No change
LTV maximum of 60%. On the same date the Group's Interest Cover Ratio ICR was
Material adverse changes in valuations and net income, and material increases 592.4%, materially above the default ICR minimum of 250%.
in interest rates, may lead to breaches in the LTV and interest cover ratio
covenants.
Borrowing is carefully monitored by the Group, and action will be taken to
conserve cash where necessary to ensure that this risk is mitigated.
If the Group is unable to operate within its debt covenants, this could lead
to default and the loan facility being recalled. This could result in the
Group being forced to sell properties to repay the loan facility, possibly
resulting in a substantial fall in the NAV. It is ensured that there is significant headroom in the LTV and interest cover
covenants as part of the monitoring process.
Diversification of both the portfolio and tenants limit the risk to the Group
of any one geographic or sector property event and any one tenant default.
10. Inability to refinance the current loan facility
The inability of the Group to obtain new borrowings - of the amount required The Board appointed Panmure Liberum an independent third-party debt specialist Probability: Low to moderate
at an aggregate finance cost and on acceptable terms - to refinance the firm, to advise and facilitate the refinancing of the Company's borrowing
current £41million loan facility on 20 October 2025 will have a significant facility in Q4 2024. The Board has been working, in conjunction with its debt
impact on the ability of the Group to generate rental income and thus returns adviser, to refinance the Group's existing debt. Subsequent to the year end,
to shareholders. the Board has secured £41 million of long term debt facilities with HSBC. Impact: High
Details of the new debt facilities are contained in both the Chairman's
Statement and Note 20.
Movement:
Probability has moved downwards from Moderate to High to Low to Moderate
(†).
(†) This risk rating applies at 30 June 2025 prior to the successful
refinancing of the Group
CORPORATE RISKS
11. Failure of service providers The Board meets regularly with, and monitors, all of its key service Probability: Low
providers, including the Investment Adviser. The MEC reviews annually the
The Group has no employees and is reliant upon the performance of third-party performance of key service providers in conjunction with their service level
service providers. agreements, and makes use of Key Performance Indicators where relevant.
Impact: Moderate
Failure by any service provider to carry out its obligations to the Group in In addition, the Audit Committee's robust and ongoing review of risk
accordance with the terms of its appointment could have a materially management and internal controls covers key service providers. Movement: No change
detrimental impact on the operation of the Group.
Should the Group pursue litigation against service providers, there is a risk
that the Company may incur costs that are irrecoverable if litigation is
unsuccessful.
12. Dependence on the Investment Adviser The MEC performs a formal annual review of the Investment Adviser which covers Probability: Moderate
the performance of the portfolio (both capital and income returns) and the
The future ability of the Group to successfully pursue its investment performance of and engagement with the Martley Capital fund manager and other
objective and investment policy may, among other things, depend on the ability supporting staff.
of the service providers to retain its existing staff and/or to recruit
Impact: Moderate
individuals of similar experience and calibre, and effectively carry out its
services.
In addition, the Board meets regularly with Martley Capital and directors
engage with them not only in Board meetings but also by email, telephone and Movement: No change
ad hoc meetings. This helps to maintain a good working relationship.
The Group relies on the Investment Adviser to manage the assets and
termination of the Investment Adviser agreement could severely affect the
Group's ability to effectively manage its operations.
The dependence on Martley Capital is managed through segregating the roles of
AIFM and Investment Adviser.
13. Ability to meet objectives The Group has an investment policy to achieve a balanced portfolio with a Probability: Moderate
diversified tenant base. This is reviewed by the Board at each scheduled Board
The Group may not meet its investment objective to generate a secure and meeting.
predictable income, that is sustainable in real terms, and at least maintain
capital values in real terms, from investing predominantly in a portfolio of Impact: High
smaller commercial properties in the UK.
The Group's property portfolio has a WAULT to break of 15.6 years and a WAULT
to expiry of 17.2 years. Further, over 95.8% of leases have inflation-linked
upwards only rent reviews, representing a secure income stream on which to Movement: No change
Poor relative total return performance may lead to an adverse reputational deliver attractive total returns to shareholders.
impact that affects the Group's ability to raise new capital and new funds.
The maturity of the Canade Life loan facility and its refinancing was a
An inability to maintain attractive costs of financing following the refinance standing item on the Board agenda. Risk 10 addresses this in more detail.
of the Company's term loan which will impact the sustainability of rental
returns and therefore the income available for distribution to shareholders,
as set out in the Company's investment objective.
TAXATION RISK
14. Group REIT status The Company monitors REIT compliance through the Investment Adviser and Probability: Low
Administrator on acquisitions and disposals and distribution levels; the
The Group has UK REIT status that provides a tax-efficient corporate Registrar and Broker on shareholdings; and third-party tax advisors to monitor
structure. REIT compliance requirements.
Impact: High
If the Group fails to remain a REIT for UK tax purposes, its profits and gains Processes are in place to ensure ongoing compliance with REIT regulations.
will be subject to UK corporation tax.
Movement: No change
POLITICAL/ ECONOMIC RISK
15. Political and macroeconomic events. Probability: High
Such events present risks to the real estate and financial markets that affect The Group only invests in UK properties with strong alternative use values and
the Group and the business of our tenants. long leases, so the portfolio is well positioned to withstand an economic
downturn. Tenant default risk arising from political and macroeconomic events Impact: High
is managed as described above.
The negative economic effects from the deterioration of the global economy,
higher inflation and interest rates and the ongoing long-term effects of
Movement: No change
various armed conflicts could impact the portfolio, tenants and the ability of The Investment Adviser monitors both the macro and micro economy with special
the Group to raise capital. attention to those factors potentially impacting the Group, and reports to the
Board on a regular basis.
REGULATORY RISK
16. Disclosure Risk Probability: Low to moderate
Failure to properly disclose information to investors or regulators in Service providers including AIFM, Investment Adviser, Company Secretary and
accordance with various disclosure rules and regulations. Examples include corporate broker monitor disclosure obligations and liaise with the Board to
AIFMD investor disclosures, annual reporting requirements, marketing/promotion ensure requirements are met. Impact: Moderate
disclaimers, data protection regulations etc.
Movement: No change
17. Regulatory Change Probability: Low
New regulations or changes to existing regulations (particularly in relation The Board receives regular updates on relevant regulatory changes (and
to climate change) could result in sub-optimal performance of the Group or, in prospective changes) from its professional advisers.
worst case, inability to continue as a viable business.
Impact: High
The Investment Adviser monitors the impact of emerging legislation across all
aspects of property investment and ESG has a particularly high profile at this Movement: No change
time. The Investment Adviser uses an ESG pre-acquisition checklist to review
purchases and also to ensure that the current portfolio is monitored, and that
works are carried out as appropriate, with tenant's agreement, to prevent
asset depreciation.
Emerging Risks
The Board takes account of and considers emerging risks as part of its risk
management assessment.
Going Concern
The Group has considered its cash flows, financial position, liquidity
position and borrowing facilities.
In particular, the Group's unrestricted cash balance at the year end was £3.1
million (2024: £3.3 million). The Group has no capital commitments or
contingent liabilities. However, the Group has borrowings of £41 million
under a loan facility repayable on 20 October 2025 (the 'Loan'). The Board has
been working, in conjunction with its debt advisers, to refinance the Group's
existing borrowings and subsequent to the year end the Board announced that it
has secured long term debt facilities with HSBC (the 'New HSBC Bank
Facilities'). The New HSBC Bank Facilities consist of both a fixed term loan
of £31 million and a £10 million revolving credit facility, both on floating
rates and on a fixed term of five years with an option to extend by two years
if mutually acceptable. Details of the new debt facilities are contained in
both the Chairman's Statement and Note 20 to these financial statements. The
latter includes covenant details, all of which will be carefully monitored in
accordance with the Group's risk management procedures and policies.
In respect of the Loan, the Group is permitted to utilise up to 40% of GAV
measured at drawdown with a Loan to GAV of 36.9% at 30 June 2025. Therefore,
the Group had headroom against its borrowing covenant. The lender's loan to
value covenant of 60% is significantly higher than the Group's Loan to GAV. In
addition, if agreed by the current lender, two properties not secured against
the Loan and valued at £8.65 million are available as additional security for
the Loan.
The Loan also has a lender's interest cover covenant of 250%. At 30 June 2025
the Group's interest cover ratio was 592.4%, giving significant headroom. A
'severe but plausible downside' scenario has been projected. While rent
collections have been strong, this scenario projects rent deferrals and
write-offs for tenants with difficulty paying rents from operational cash
flows. In this scenario the Group still has adequate headroom against the
interest cover covenant and positive cash balances. Further detail of the
assumptions made in assessing the adoption of Group's going concern basis can
be found in Note 2.4.
The Group benefits from a secure, diversified income stream from leases which
are not overly reliant on any one tenant or sector, with the Group generating
net cash flows from operating activities for the year being reported of £9.0
million. As a result, the directors believe that the Group is well placed to
manage its financing and other business risks.
The going concern statement is based on the reporting requirement that the
Group and the Company has adequate resources to continue in operational
existence for the foreseeable future, being a period of at least 12 months
from the date of these financial statements. For the reasons explained above,
the Board is satisfied that the Group and the Company has adequate resources
to continue in operational existence for the foreseeable future and is of the
opinion that the going concern basis adopted in the preparation of the
financial statements is appropriate.
Viability Statement
In accordance with provision 30 of the UK Code, the Board has assessed the
prospects of the Group for at least the 12-month period from the date the
financial statements are approved as required by the 'Going Concern'
provisions.
The Board has considered the nature of the Group's assets and liabilities and
associated cash flows and has determined that three years, from the balance
sheet date up to 30 June 2028, is an appropriate and realistic timescale over
which the performance of the Group can be forecast with a degree of accuracy.
Even though the Group's contractual income extends beyond three years, the
Board considers this period (the 'Period') to be appropriate, given:
· A major proportion of the leases contain an annual, three- or five-year rent
review pattern and therefore three years allow for the forecasts to include
the reversion arising from most rent reviews;
· It is the period over which the Group's medium-term business plan and cash
flows are based; and
· It is often factors beyond the Board's control, such as market uncertainty and
unknown tenant issues, that reduce the reliability of forecasting over a
longer period.
In performing its viability review, the Board considers the Group's cash flows
(noting that the Group's property portfolio had a WAULT to break of 15.6 years
and a WAULT to expiry of 17.2 years at 30 June 2025, representing a secure
income stream for the Period), future dividends and dividend cover, REIT
compliance and relevant key financial ratios over the Period. The Board
carried out a thorough review of the Group's business model, including future
performance, liquidity and banking covenant tests for the Period and with
various debt finance cost scenarios based on refinancing the £41 million debt
(see below) in full at its maturity. The Board has assessed the extent of any
operational disruption; potential curtailment of rental receipts; potential
liquidity and working capital shortfalls; and diminished demand for the
Group's assets going forward, in adopting a going concern preparation basis
and in assessing the Group's longer-term viability.
These assessments are subject to sensitivity analysis, which involves flexing
a number of key assumptions and judgements included in the financial
projections:
· Tenant default;
· Dividend payments;
· Financing and refinancing; and
· Property portfolio valuation movements.
The Group's debt:
The Group has borrowings of £41 million under a loan facility repayable on 20
October 2025 (the 'Loan'). Subsequent to the year end the Board announced that
it has secured long-term debt facilities with HSBC. The New HSBC Bank
Facilities consist of both a fixed term loan of £31 million and a £10
million revolving credit facility, both on floating rates and on a fixed term
of five years with an option to extend by two years if mutually acceptable.
Details of the New HSBC Bank Facilities are contained in both the Chairman's
Statement and Note 20 to these financial statements. Specifically with respect
to viability and the Group's debt:
· the Loan covenants - at 30 June 2025, the asset valuations and
rental income of the properties secured to Canada Life would need to fall by
16.9% and 40.8%, respectively, before breaching the Loan to Value and Income
Cover Cash Trap covenants; and
· the cash flow modelling has taken account of the New HSBC Bank
Facilities and its covenants, and future interest rate predictions (assuming
interest rate hedging is not put in place). The Group is in compliance with
the New HSBC Bank Facilities covenants throughout the cash flow period to 30
June 2028.
Based on the prudent assumptions within the Group's forecasts including the
rent deferrals, tenant default, void rates, property valuation movements and
the successful refinancing of the debt, the Board has a reasonable expectation
that for the Period:
· all current and future loan covenants will be complied with
throughout the Period;
· REIT tests will similarly be complied with; and
· the Group and the Company will be able to continue in operation and
meet its liabilities as they fall due over the Period.
Board Approval of the Strategic Report
The Strategic Report has been approved and signed on behalf of the Board by:
Simon Bennett
Chairman
3 October 2025
Statement of Directors' Responsibilities
in respect of the Annual Report and the Financial Statements
The directors are responsible for preparing the Annual Report and the Group
and parent Company Financial Statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare Group and parent Company
financial statements for each financial year. Under that law they are required
to prepare the Group financial statements in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006 and in accordance with the UK adopted international accounting standards.
The directors have elected to prepare the parent Company financial statements
in accordance with UK accounting standards, including FRS 101 Reduced
Disclosure Framework and applicable law.
Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and parent Company and of their profit or loss for that
period. In preparing each of the Group and parent Company financial
statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable, relevant, reliable and
prudent;
· for the Group financial statements, state whether they have been prepared in
accordance with Companies Act 2006 and in accordance with UK adopted
international accounting standards;
· for the parent Company financial statements, state whether applicable UK
accounting standards have been followed, subject to any material departures
disclosed and explained in the parent Company financial statements;
· assess the Group and parent Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
· use the going concern basis of accounting unless they either intend to
liquidate the Group or the parent Company, or to cease operations, or have no
realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and the parent Company's
transactions and disclose with reasonable accuracy at any time the financial
position of the Group and the parent Company and enable them to ensure that
its financial statements comply with the Companies Act 2006. They are
responsible for such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general responsibility
for taking such steps as are reasonably open to them to safeguard the assets
of the Group and the parent Company and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration
Report and Corporate Governance Statement that complies with that law and
those regulations.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge:
· the Consolidated Financial Statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and
the undertakings included in the consolidation taken as a whole;
· the Strategic Report and Directors' Report include a fair review of the
development and performance of the business and the position of the issuer and
the undertakings included in the consolidation taken as a whole, together with
a description of the principal risks and uncertainties that they face; and
· that the Annual Report and the Consolidated Financial Statements, taken as a
whole, are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Group's position and performance,
business model and strategy.
On behalf of the Board
Simon Bennett
Chairman
3 October 2025
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2025
2025 2024
Notes £'000 £'000
Income
Rental and other income 3 8,570 7,900
Property operating expense 4 (781) (680)
Net rental and other income 7,789 7,220
Other operating expenses 4 (1,066) (1,066)
Operating profit before fair value changes and gain on disposal 6,723 6,154
Change in fair value of investment properties 10 1,970 (2,983)
Gain on disposal of investment property 10 - 598
Operating profit 8,693 3,769
Finance expenses 6 (1,435) (1,412)
Profit before tax 7,258 2,357
Taxation 7 - -
Profit and total comprehensive income attributable to shareholders 7,258 2,357
Earnings per share (basic and diluted) 8 9.02p 2.93p
EPRA EPS (basic and diluted) 8 6.57p 5.89p
Adjusted EPS (basic and diluted) 8 6.72p 5.99p
All items in the above statement are derived from continuing and total
operations. No operations were acquired or disposed of during the year.
The accompanying Notes 1 to 20 form part of these consolidated financial
statements.
Consolidated Statement of Financial Position
At 30 June 2025
2025 2024
Notes £'000 £'000
Non-current Assets
Investment properties 10 103,777 99,083
Current Assets
Trade and other receivables 11 4,236 6,464
Cash and cash equivalents 3,148 3,292
Total current assets 7,384 9,756
Total Assets 111,161 108,839
Current Liabilities
Trade and other payables 12 (2,878) (2,890)
Interest bearing loans and borrowings 13 (40,956) -
Total current liabilities (43,834) (2,890)
Non-current Liabilities
Interest bearing loans and borrowings 13 - (40,828)
Total non-current liabilities - (40,828)
Total Liabilities (43,834) (43,718)
Net Assets 67,327 65,121
Equity
Share capital 16 805 805
Capital reserve 2 65,379 70,431
Retained earnings 1,143 (6,115)
Total capital and reserves attributable to equity holders of the Company 67,327 65,121
Net Asset Value per share (basic and diluted) 8 83.64p 80.90p
8 83.64p 80.90p
EPRA Net Tangible Asset per share (basic and diluted)
The accompanying Notes 1 to 20 form part of these Consolidated Financial
Statements.
The Consolidated Financial Statements were approved by the Board of Directors
on 3 October 2025 and were signed on its behalf by:
Simon Bennett
Chairman
Company number: 10727886
Consolidated Statement of Changes in Equity
For the year ended 30 June 2025
Share capital Capital reserve Retained earnings Total
equity
Notes £'000 £'000 £'000 £'000
For the year ended 30 June 2025
Balance at 30 June 2024 805 70,431 (6,115) 65,121
Total comprehensive income attributable to shareholders - - 7,258 7,258
Dividends paid 9 - (5,052) - (5,052)
Balance at 30 June 2025 805 65,379 1,143 67,327
For the year ended 30 June 2024
Balance at 30 June 2023 805 75,417 (8,472) 67,750
Total comprehensive income attributable to shareholders - - 2,357 2,357
Dividends paid 9 - (4,986) - (4,986)
Balance at 30 June 2024 805 70,431 (6,115) 65,121
Consolidated Statement of Cash Flows
For the year ended 30 June 2025
Notes 2025 2024
£'000 £'000
Cash flows from operating activities
Profit before tax 7,258 2,357
Adjustment for:
Finance expenses 6 1,435 1,412
Gain on disposal of investment property 10 - (598)
Change in fair value of investment properties 10 (1,970) 2,983
Operating results before working capital changes 6,723 6,154
Change in working capital
Decrease/(increase) in receivables and prepayments 2,228 (2,271)
(Decrease)/Increase in other payables and accrued expenses (12) 139
Net cash flow generated from operating activities 8,939 4,022
Cash flows from investing activities
Purchase of investment property 10 (2,724) (5,304)
Net proceeds from disposal of investment property 10 - 7,382
Net cash (used in)/generated from investing activities (2,724) 2,078
Cash flows from financing activities
Finance costs paid (1,307) (1,306)
Dividends paid 9 (5,052) (4,986)
Net cash used in financing activities (6,359) (6,292)
Net decrease in cash and cash equivalents (144) (192)
Cash and cash equivalents at beginning of year 3,292 3,484
Cash and cash equivalents at end of year 3,148 3,292
The accompanying Notes 1 to 20 form part of these consolidated financial
statements.
Notes to the Consolidated Financial Statements
for the year ended 30 June 2025
1. Corporate Information
Alternative Income REIT PLC (the 'Company') is a public limited company and a
closed ended Real Estate Investment Trust ('REIT') incorporated on 18 April
2017 and domiciled in the UK and registered in England and Wales. The
registered office of the Company is The Scalpel, 18th Floor, 52 Lime Street,
London, United Kingdom, EC3M 7AF.
The Company's Ordinary Shares are listed on the closed-ended investment funds
category of the Official List of the Financial Conduct Authority ('FCA') and
have been traded on the Main Market of the London Stock Exchange since the
Company's IPO on 6 June 2017.
The nature of the Group's operations and its principal activities are set out
in the Strategic Report.
2. Accounting policies
2.1 Basis of preparation
These consolidated financial statements (the 'financial statements') are
prepared and approved by the directors in accordance with UK adopted
International Accounting Standards ('IFRS') and in accordance with the
Companies Act 2006 as applicable to companies reporting under those standards
and Article 4 of the UK adopted International Accounting Standards ('IAS')
Regulations.
These financial statements have been prepared under the historical cost
convention, except for investment properties that have been measured at fair
value.
The financial statements are presented in Sterling and all values are rounded
to the nearest thousand pounds (£'000), except where otherwise indicated.
Basis of consolidation
The financial statements incorporate the financial statements of the Company
and its subsidiaries (the 'Group').
Subsidiaries are the entities controlled by the Company, being Alternative
Income Limited and Alternative Income REIT Holdco Limited.
New standards, amendments and interpretations, and forthcoming requirements
The Group has applied the following new standards and amendments in this set
of condensed consolidated financial statements:
· Lack of Exchangeability - Amendments to IAS 21 The Effects of
Changes in Foreign Exchange Rates (Effective 1 January 2025)
The new standards and amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to significantly
affect the current or future periods.
Certain new accounting standards and interpretations have been published that
are not mandatory for annual periods beginning after 1 July 2025 and early
application is permitted; however the Group has not early adopted the new or
amended standards in preparing these consolidated financial statements:
· Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture (Amendments to IFRS 10 and IAS 28) (effective date deferred
indefinitely)
· Presentation and Disclosure in Financial Statements - IFRS 18
(effective 1 January 2027)
· Subsidiaries without Public Accountability: Disclosures - IFRS 19
(effective 1 January 2027)
The new standards and amendments listed above are not expected to
significantly affect the current or future periods.
2.2 Significant accounting judgements and estimates
In the application of the Group's accounting policies the directors are
required to make judgements, estimates and assumptions that affect the
reported amounts recognised in the financial statements. However, uncertainty
about these assumptions and estimates could result in outcomes that require a
material adjustment to the carrying amount of the asset or liability in the
future. The estimates and associated assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are outlined below:
Valuation of investment properties
The fair value of investment properties is determined by external property
valuation experts to be the estimated amount for which a property should
exchange on the date of the valuation in an arm's length transaction. The
Group's properties have been valued on an individual basis. The valuation
experts use recognised valuation techniques, applying the principles of both
IAS 40 and IFRS 13.
The valuations have been prepared in accordance with the Royal Institution of
Chartered Surveyors ('RICS') Valuation. Factors include current market
conditions, annual rentals, the contractual terms of the leases and their
lengths and location. The significant methods and assumptions used by valuers
in estimating the fair value of investment properties are set out in Note 10.
Provision for expected credit losses ('ECL') of trade receivables
Rent collection rates since the start of the Group are in the region of 100%.
As a result, the Group does not have the data to establish historical loss
rates for the expected credit loss analysis.
In determining the provision on a tenant by tenant basis, the Group considers
both recent payment history and future expectations of the tenant's ability to
pay or possible default, in order to recognise an expected credit loss
allowance. The Group also considers the risk factors associated by sector in
which the tenant operates and the nature of the debt. Based on sector and
rent receivable type a provision is provided in addition to full provision for
maximum risk tenants or known issues.
Principal versus agent considerations - services to tenants
The Group arranges for certain services to be provided to tenants. These
arrangements are included in the contract the Group enters into as a lessor.
The Group has determined that it controls the services before they are
transferred to tenants, because it has the ability to direct the use of these
services and obtain the benefits from them. The Group has determined that it
is primarily responsible for fulfilling these services as it directly deals
with tenants' complaints and is primarily responsible for the quality or
sustainability of the services. In addition, the Group has discretion in
establishing the price that it charges to the tenants for the specified
services.
Therefore, the Group has concluded that it is the principal in these
contracts. In addition, the Group has concluded that it transfers control of
these services over time, as services are rendered by the third-party service
providers, because this is when tenants receive and, at the same time, consume
the benefits from these services.
REIT status
The Group is a REIT and does not pay tax on its property income or gains on
property sales, provided that at least 90% of the Group's property income is
distributed as a dividend to shareholders, which becomes taxable in their
hands. In addition, the Group has to meet certain conditions such as ensuring
the property rental business represents more than 75% of total profits and
assets. Any potential or proposed changes to the REIT legislation are
monitored and discussed with HMRC. It is the Board's intention that the Group
will continue as a REIT for the foreseeable future.
2.3 Segmental information
Each property held by the Group is reported to the chief operating decision
maker. In the case of the Group, the chief operating decision maker is
considered to be the Board of Directors. The review process for segmental
information includes the monitoring of key performance indicators applicable
across all properties. These key performance indicators include Net Asset
Value, Earnings per Share and valuation of properties. All asset cost and
rental allocations are also reported by property. The internal financial
reports received by the directors cover the Group and all its properties and
do not differ from amounts reported in the financial statements. The directors
have considered that each property has similar economic characteristics and
have therefore aggregated the portfolio into one reportable segment under the
provisions of IFRS 8.
2.4 Going concern
The financial statements have been prepared on a going concern basis.
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Strategic
Report. The robust financial position of the Group, its net asset and current
asset positions, its cash flows, liquidity position and borrowing facilities
are described in the financial statements and the accompanying notes. The
financial statements also include the Group's objectives, policies and
processes for managing its capital, its financial risk management objective
and its exposures to market price risk, real estate risk, credit risk and
liquidity risk.
The Investment Adviser on behalf of the Board has projected the Group's cash
flows for the period up to 30 September 2026, challenging and sensitising
inputs and assumptions to ensure that the cash forecast reflects a realistic
outcome given the uncertainties associated with the current economic
environment. A longer-term projection had also been carried out up to 30 June
2029. The scenarios applied were designed to be severe but plausible, and to
take account of the availability of mitigating actions that could be taken to
avoid or reduce the impact or probability of the underlying risks.
The Group's debt of £41 million matures on 20 October 2025 and the Group has
reported full compliance with its loan covenants to date. Based on cash flow
projections, the directors expect the Group to continue to remain compliant.
The headroom of the loan to value covenant is significant and any reduction in
property values that would cause a breach would be significantly more than any
reduction currently envisaged.
The Board has been working, in conjunction with its debt advisers, to
refinance the Group's existing borrowings and subsequent to the year end the
Board announced that it has secured long-term debt facilities with HSBC UK
Bank plc. The New HSBC Bank Facilities consist of both a fixed term loan of
£31 million and a £10 million revolving credit facility, both on floating
rates and on a fixed term of five years with an option to extend by two years
if mutually acceptable. Details of the new debt facilities are contained in
both the Chairman's Statement and Note 20 - Events after the reporting date.
The latter includes covenant details, all of which will be carefully monitored
in accordance with the Group's risk management procedures and policies.
Based on the above, the Board believes that the Group has the ability and
resources to continue in operational existence for the foreseeable future,
being at least 12 months from the date of approval of the financial
statements.
2.5
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these
financial statements are set out below.
a) Functional and presentational currency
These financial statements are presented in Pound Sterling, which is the
functional and presentational currency of the Group and its subsidiary
undertakings. The functional currency of the Group and its subsidiaries is
principally determined by the primary economic environment in which it
operates. The Group did not enter into any transactions in foreign currencies
during the period.
b) Revenue recognition
i) Rental income
Rental income under operating leases is recognised on a straight-line basis
over the term of the lease, except for contingent rental income, which is
recognised when it arises. For leases, which contain fixed or minimum uplifts,
the rental income arising from such uplifts is recognised on a straight-line
basis over the lease term.
Incentives for lessees to enter into lease agreements are spread evenly over
the lease term, even if the payments are not made on such a basis. The lease
term is the non-cancellable period of the lease together with any further term
for which the tenant has the option to continue the lease, where, at the
inception of the lease, the directors are reasonably certain that the tenant
will exercise that option.
Lease modifications, such as lease extensions and rent reductions, are
accounted for either as a separate lease or not as a separate lease.
A modification will only be treated as a separate lease if it involves the
addition of one or more underlying assets at a price that is commensurate with
the standalone price of the increase in scope. All other modifications are not
treated as a separate lease.
If a modification is a separate lease, a lessee applies the requirements of
IFRS 16 to the newly added asset, due as a result of the modification,
independently of the original lease. The accounting for the original lease
continues unchanged.
If a modification is not a separate lease, the accounting reflects that there
is a linkage between the original lease and the modified lease. The existing
lease liability is remeasured with a corresponding adjustment to the
right-of-use asset on the effective date of the modification.
ii) Service charges and direct recharges
Revenue from service charges is recognised in the accounting period in which
the service is rendered. For certain service contracts, revenue is recognised
based on the actual service provided to the end of the reporting period as a
proportion of the total services to be provided because the customer receives
and uses the benefits simultaneously.
iii) Deferred income
Deferred income is rental income received in respect of future accounting
periods.
(iv) Dilapidation and lease surrender premium
Amounts received from tenants to terminate leases or to compensate for
dilapidations are recognised in the Consolidated Statement of Comprehensive
Income when the right to receive them arises.
c) Financing income and expenses
Financing income comprises interest receivable on funds invested. Financing
expenses comprise interest and other costs incurred in connection with the
borrowing of funds. Interest income and interest payable are recognised in
profit or loss as they accrue, using the effective interest method which is
significantly the same as the contracted interest.
d) Investment property
Property is classified as investment property when it is held to earn rentals
or for capital appreciation or both. Investment property is measured initially
at cost including transaction costs. Transaction costs include transfer taxes
and professional fees to bring the property to the condition necessary for it
to be capable of operating. The carrying amount also includes the cost of
replacing part of an existing investment property at the time that cost is
incurred if the replacement of that part will prolong or improve the life of
the asset.
Subsequent to initial recognition, investment property is stated at fair
value. Gains or losses arising from changes in the fair values are included in
profit or loss, included as part of operating profit under change in fair
value of investment properties.
Additions to properties include costs of a capital nature only. Expenditure is
classified as capital when it results in identifiable future economic
benefits, which are expected to accrue to the Group. All other property
expenditure is expensed in the Group profit or loss as incurred.
Investment properties are valued by the external valuer. Any valuation of
investment properties by the external valuer must be undertaken in accordance
with the current issue of RICS Valuation - Professional Standards (the 'Red
Book').
The determination of the fair value of investment property requires the use of
estimates such as future cash flows from assets (such as lettings, tenants'
profiles, future revenue streams, capital values of fixtures and fittings,
plant and machinery, any environmental matters and the overall repair and
condition of the property) and yield applicable to those cash flows.
For the purposes of the financial statements, the assessed fair value is:
- reduced by the carrying amount of any accrued income resulting from
the spreading of lease incentives; and
- increased by the carrying amount of leasehold obligations.
Investment property is derecognised when it has been disposed of or
permanently withdrawn from use and no future economic benefit is expected
after its disposal or withdrawal.
The profit on disposal is determined as the difference between the net sales
proceeds and the carrying amount of the asset at the commencement of the
accounting period plus capital expenditure in the period. Any gains or losses
on the retirement or disposal of investment property are recognised in profit
or loss in the year of retirement or disposal.
e) Cash and cash equivalents
Cash and short-term deposits in the Consolidated Statement of Financial
Position comprise cash at bank and short-term deposits with an original
maturity of three months or less.
f) Receivables and prepayments
Rent and other receivables are initially recognised at fair value and
subsequently at amortised cost. Impairment provisions are recognised based on
the process as described in Note 2.2. Any adjustment is recognised in profit
or loss as an impairment gain or loss.
g) Other payables and accrued expenses
Other payables and accrued expenses are initially recognised at fair value and
subsequently held at amortised cost.
h) Interest bearing loans and borrowings
All loans and borrowings are initially recognised at fair value less directly
attributable transaction costs. After initial recognition, interest bearing
loans and borrowings are subsequently measured at amortised cost using the
effective interest method. Borrowing costs are amortised over the lifetime of
the facilities through profit or loss.
i) Provisions
A provision is recognised in the Consolidated Statement of Financial Position
when the Group has a present legal or constructive obligation as a result of a
past event that can be reliably measured and is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate
that reflects risks specific to the liability.
j) Dividend payable to shareholders
Dividends due to the Company's Shareholders are recognised when they become
legally payable, as a reduction in the Consolidated Statement of Changes in
Equity. Interim equity dividends are recognised when paid. Final equity
dividends will be recognised when approved by Shareholders at an AGM. The
Directors consider the aggregate of distributable reserves in considering the
recommendation and payment of a dividend.
k) Share issue costs
The costs of issuing or reacquiring equity instruments (other than in a
business combination) are accounted for as a deduction from equity.
l) Lease obligations
Lease obligations relate to the head rent of investment property and are
capitalised at the lease commencement, at the lower of fair value of the
property and present value of the minimum lease payments and held as a
liability within the Consolidated Statement of Financial Position. The lease
payments are discounted using the interest rate implicit in the lease. Where
the Group is exposed to potential future increases in variable lease payments
based on an index or rate, these are not included in the lease liability until
they take effect. Lease payments are allocated between principal and finance
cost. The finance cost is charged to profit or loss over the lease period so
as to produce a constant periodic rate of interest on the remaining balance of
the liability for each period.
m) Taxes
Corporation tax is recognised in profit or loss except to the extent that it
relates to items recognised directly in equity, in which case it is recognised
in equity.
As a REIT, the Group is exempt from corporation tax on the profits and gains
from its investments, provided it continues to meet certain conditions as per
REIT regulations.
Taxation on the profit or loss for the period which is not exempted under UK
REIT regulations comprises current and deferred tax. Current tax is expected
tax payable on any non-REIT taxable income for the year, using tax rates
applicable in the year.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The amount of deferred tax that is provided is
based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantially
enacted at the period end date.
n) Non-current assets held for sale
Non-current assets are classified as assets held for sale when their carrying
amount is to be recovered principally through a sale transaction and a sale is
considered highly probable. Investment properties classified as such are
measured at fair value.
o) European Public Real Estate Association ('EPRA')
The Group has adopted the EPRA best practice recommendations, which it expects
to broaden the range of potential institutional investors able to invest in
the Company's Ordinary Shares. For the year ended 30 June 2025, audited EPS
and NAV calculations under EPRA's methodology are included in Note 8 and
further unaudited measures are included following the financial statements.
p) Capital and reserves
Share capital
Share capital is the nominal amount of the Company's ordinary shares in issue
and is non-distributable.
Capital reserve
The capital reserve represents the cancelled share premium less dividends paid
from this reserve. It is a distributable reserve. The share premium account
was cancelled in 2017 by Court Order and distributions can be made from this
reserve in accordance with the Companies Act 2006, including by way of
dividends or share buy backs.
Retained earnings
Retained earnings represent the cumulative net gains and losses recognised in
the Consolidated Statement of Comprehensive Income less dividends paid from
this reserve. This reserve is distributable, except for any unrealised gains
on investment properties.
2.6 Fair value measurement
The Group measures financial and non-financial assets such as investment
properties at fair value at each reporting date.
A number of the Group's accounting policies and disclosures require the
determination of fair value, for both financial and non-financial assets and
liabilities. Fair value is defined in IFRS 13 Fair Value Measurement as the
price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date.
Fair values have been determined for measurement and/or disclosure purposes
based on methods described below. Where applicable, further information about
the assumptions made in determining fair values is disclosed in the notes
specific to that asset or liability.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximising
the use of relevant observable inputs and minimising the use of unobservable
inputs significant to fair value measurement as a whole:
Fair value hierarchy:
Level 1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
For assets and liabilities that are recognised in the financial statements at
fair value on a recurring basis, the Group determines whether transfers have
occurred between levels in the hierarchy by re-assessing categorisation (based
on the lowest level input that is significant to the fair value measurement as
a whole) at the end of each reporting period.
There were no transfers between any of the levels during the year.
Investment property
The valuation of investment property by valuers engaged by the Group who are
independently appointed and have the relevant professional qualifications and
with recent experience in the location and category of the investment property
being valued. Further information in relation to the valuers is provided in
Note 10.
Property valuations are inherently subjective as they are made on the basis of
assumptions made by the valuer which may not prove to be accurate. For these
reasons, and consistent with EPRA's guidance, the valuations of the property
portfolio have been classified as Level 3 as defined by IFRS 13. The inputs to
the valuations are defined as 'unobservable' by IFRS 13 and these are analysed
in Note 10.
3. Rental and other income
2025 2024
£'000 £'000
Gross rental income 7,916 7,331
Spreading of minimum contracted future rent - indexation 220 74
Spreading of tenant incentives - rent free periods (214) (49)
Other property income - 2
Gross rental income (adjusted) 7,922 7,358
Service charges and direct recharges (see Note 4) 648 542
Total rental and other income 8,570 7,900
All rental, service charges, direct recharges and other income are derived
from the United
Kingdom.
4. Expenses
2025 2024
£'000 £'000
Property operating expenses 133 138
Service charges and direct recharges (see Note 3) 648 542
Property operating expenses 781 680
Investment Adviser fee 360 360
Auditor's remuneration 104 85
Operating costs* 484 508
Directors' remuneration (Note 5) 118 113
Other operating expenses 1,066 1,066
Total operating expenses 1,847 1,746
Total operating expenses (excluding service charges and direct recharges) 1,199 1,204
* Included in the Operating Costs were abortive costs of £2,000 (2024:
£61,500).
2025 2024
£'000 £'000
Audit
Statutory audit of Annual Report and Accounts 84 73
Statutory audit of Subsidiary Accounts 13 12
Statutory audit of Annual Report and Accounts ( additional fee on data 7 -
migration)
Total fees due to auditor 104 85
5. Directors' remuneration
2025 2024
£'000 £'000
Directors' fees 105 102
Tax and social security 13 11
Total fees 118 113
A summary of the director's remuneration is set out in the Directors'
Remuneration Report in the Annual Report.
The Group had no employees during the year.
6. Finance expenses
2025 2024
£'000 £'000
Interest payable on loan (Note 13) 1,307 1,304
Amortisation of finance costs (Note 13) 128 104
Other finance costs - 4
Total 1,435 1,412
7. Taxation
2025 2024
£'000 £'000
Tax charge comprises:
Analysis of tax charge in the year
Profit before tax 7,258 2,357
Theoretical tax charge at UK corporation tax standard rate of 25.00% (2024: 1,815 589
25.00%)
Effects of tax-exempt items under the REIT regime (1,815) (589)
Total - -
The Group maintained its REIT status and as such, no deferred tax asset or
liability has been recognised in the current year.
Factors that may affect future tax charges
Due to the Group's status as a REIT and the intention to continue meeting the
conditions required to retain approval as a REIT in the foreseeable future,
the Group has not provided deferred tax on any capital gains or losses arising
on the revaluation or disposal of investments.
8. Earnings per share ('EPS') and Net Asset Value ('NAV') per share
2025 2024
EPS:
Total comprehensive income (£'000) 7,258 2,357
Weighted average number of shares (number) 80,500,000 80,500,000
EPS (basic and diluted) 9.02p 2.93p
EPRA EPS:
Total comprehensive income (£'000) 7,258 2,357
Adjustment to total comprehensive income (£'000):
Change in fair value of investment properties (1,970) 2,983
Gain on disposal of investment property - (598)
EPRA earnings (basic and diluted) (£'000) 5,288 4,742
EPRA EPS (basic and diluted) 6.57p 5.89p
Adjusted EPS:
EPRA earnings (basic and diluted) (£'000) - as above 5,288 4,742
Adjustments (£'000):
Rental income recognised in respect of guaranteed fixed rental uplifts (Note (220) (74)
3)
Rental income recognised in respect of rent free periods (Note 3) 214 49
Amortisation of loan finance costs (Note 6) 128 104
Adjusted earnings (basic and diluted) (£'000) 5,410 4,821
Adjusted EPS (basic and diluted)* 6.72p 5.99p
* Adjusted EPS is a measure used by the Board to assess the level of the
Group's dividend payments. This metric adjusts EPRA earnings for non-cash
items in arriving at an adjusted EPS as supported by cash flows.
Earnings per share are calculated by dividing profit/(loss) for the year
attributable to ordinary equity holders of the Company by the weighted average
number of Ordinary Shares in issue during the year. As at 30 June 2025 and
2024, there are no dilutive or potentially dilutive equity arrangements in
existence.
2025 2024
NAV per share:
Net assets (£'000) 67,327 65,121
Ordinary Shares (Number) 80,500,000 80,500,000
NAV per share 83.64p 80.90p
EPRA Net Reinvestment Value ('NRV'), EPRA Net Tangible Assets ('NTA') and EPRA
Net Disposal Value ('NDV')
EPRA NRV EPRA NTA and EPRA NDV
At 30 June 2025
Net assets value (£'000) 67,327 67,327
Estimated purchasers' cost (£'000) 6,978 -
74,305 67,327
Ordinary Shares (Number) 80,500,000 80,500,000
Per share measure 92.30p 83.64p
At 30 June 2024
Net assets value (£'000) 65,121 65,121
Estimated purchasers' cost (£'000) 6,672 -
71,793 65,121
Ordinary Shares (Number) 80,500,000 80,500,000
Per share measure 89.18p 80.90p
9. Dividends
All dividends were paid as PIDs Quarter 2025 2024
Ended Rate £'000 £'000
Dividends in respect of year ended 30 June 2023
4th dividend 30-Jun-23 1.920p - 1,545
Dividends in respect of year ended 30 June 2024
1st dividend 30-Sep-23 1.425p - 1,147
2nd dividend 31-Dec-23 1.425p - 1,147
3rd dividend 31-Mar-24 1.425p - 1,147
4th dividend 30-Jun-24 1.625p 1,308 -
Dividends in respect of year ended 30 June 2025
1st dividend 30-Sep-24 1.550p 1,248 -
2nd dividend 31-Dec-24 1.550p 1,248 -
3rd dividend 31-Mar-25 1.550p 1,248 -
Total dividends paid 5,052 4,986
4th dividend* 30-Jun-23 1.920p - (1,545)
4th dividend* 30-Jun-24 1.625p (1,308) 1,308
4th dividend* 30-Jun-25 1.550p 1,248 -
Total dividends payable in respect of the year 4,992 4,749
Total dividends payable per share in respect of the year 6.20p 5.90p
* Dividends declared after the year end are not included in the financial
statements as a liability.
10. Investment properties
Freehold Leasehold 2025 2024
Investment
Investment
Total
Total
properties
properties
£'000 £'000 £'000 £'000
At the beginning of the year 71,050 31,600 102,650 107,025
Acquisition during the year 2,724 - 2,724 5,304
Disposal during the year - - - (6,784)
Change in value of investment properties 1,476 500 1,976 (2,895)
Valuation provided by Knight Frank LLP 75,250 32,100 107,350 102,650
Adjustment to fair value for minimum rent indexation of lease income (Note 11) (3,573) (3,567)
Total investment properties 103,777 99,083
Change in fair value of investment properties
Change in fair value before adjustments for lease incentives and lease 1,976 (2,895)
obligations
Movement in lease obligations - (63)
Adjustment to spreading of contracted future rent indexation and tenant (6) (25)
incentives
1,970 (2,983)
Disposal and acquisition of investment property
On 2 December 2024, the Group completed the acquisition of Champneys Beauty
College in Tring for a total cost of £2.7 million, including acquisition
costs.
The Mercure Hotel in Glasgow was disposed on 8 August 2023 for £7.5 million.
The gain on disposal was recognised in the Consolidated Statement of
Comprehensive Income in 2024.
2025 2024
£'000 £'000
Gross proceeds on disposal - 7,500
Selling costs - (118)
Net proceeds on disposal - 7,382
Carrying value - (6,784)
Gain on disposal of investment property - 598
Valuation of investment properties
Valuation of investment properties is performed by Knight Frank LLP, an
accredited external valuer with recognised and relevant professional
qualifications and recent experience of the location and category of the
investment property being valued. The valuation of the Group's investment
properties at fair value is determined by the external valuer on the basis of
market value in accordance with the internationally accepted RICS Valuation -
Professional Standards (incorporating the International Valuation Standards).
The determination of the fair value of investment properties requires the use
of estimates such as future cash flows from assets (such as lettings, tenants'
profiles, future revenue streams, capital values of fixtures and fittings,
plant and machinery, any environmental matters and the overall repair and
condition of the property) and yield applicable to those cash flows.
The right of use asset is valued at future lease payments discounted using the
net equivalent yield on the relevant asset.
Sensitivity analysis to significant changes in unobservable inputs within
Level 3 of the fair value hierarchy
The significant unobservable inputs used in the fair value measurement
categorised within Level 3 of the fair value hierarchy of the entity's
portfolios of investment properties are:
1) Estimated Rental Value ('ERV')
2) Net Initial Yield
Increases/(decreases) in the ERV (per sq. ft per annum) in isolation would
result in a higher/(lower) fair value measurement. Increases/(decreases) in
the yield in isolation would result in a lower/(higher) fair value
measurement.
The significant unobservable inputs used in the fair value measurement,
categorised within Level 3 of the fair value hierarchy of the portfolio of
investment property and investments are:
Class Fair value Valuation technique Significant unobservable inputs Range
£'000
30 June 2025
Investment Properties* 107,350 Income capitalisation ERV £4.00 - £21.96
Net Initial yield
4.87% - 8.70%**
30 June 2024
Investment Properties* 102,650 Income capitalisation ERV £4.50 - £21.96
Net Initial yield
3.59% - 8.64%**
* Valuation per Knight Frank LLP
**Hotels, petrol stations, residential and healthcare are excluded from this
range
Sensitivity analysis below:
2025
Change in ERV Change in net initial yield
£'000 £'000 £'000 £'000
Sensitivity Analysis +10% -10% +10% -10%
Resulting fair value of investment properties 109,634 104,628 100,661 115,042
2024
Change in ERV Change in net initial yield
£'000 £'000 £'000 £'000
Sensitivity Analysis +10% -10% +10% -10%
Resulting fair value of investment properties 105,152 100,042 97,041 109,391
11. Trade and other receivables
2025 2024
£'000 £'000
Receivables
Trade debtor 290 252
Less: Provision for impairment of trade debtors (2) (2)
Other debtors* 192 2,428
480 2,678
Spreading of minimum contracted future rent indexation 3,426 3,205
Spreading of tenant incentives - rent free periods 147 362
3,573 3,567
Tenant deposit asset (Note 12) 118 118
Other prepayments 65 101
183 219
Trade and other receivables 4,236 6,464
* Other debtors at 30 June 2025 includes £nil (2024: £2,155,000) of net
proceeds from the sale of properties. This was held by the external lender,
Canada Life Investments.
The aged debtor analysis of receivables which are past due but not impaired is
as follows:
2025 2024
£'000 £'000
Less than three months due 476 2,672
Between three and six months due 4 6
480 2,678
12. Trade and other payables
2025 2024
£'000 £'000
Deferred income 1,654 1,665
Trade creditors 55 21
Accruals 439 401
Tenant deposit liability (Note 11) 118 118
Loan interest payable (Note 13) 256 256
Other creditors 356 429
Total trade and other payables 2,878 2,890
13. Interest bearing loans and borrowings
2025 2024
£'000 £'000
Facility drawn 41,000 41,000
Unamortised finance costs brought forward (172) (276)
Amortisation of finance costs (Note 6) 128 104
At end of year 40,956 40,828
Repayable less than one year 41,000 -
Repayable between one and two years - 41,000
Total at end of the year 41,000 41,000
At the year end, the Group had utilised all of its £41 million fixed interest
loan facility with Canada Life Investments and was geared at a loan to GAV of
36.9% (2024: 37.7%). The weighted average interest cost of the Group's
facility is 3.19% and the facility is repayable on 20 October 2025. Interest
expense incurred during the year amounted to £1.31 million (2024: £1.31
million), £0.26 million of which is accrued at the year end (2024: £0.26
million). The Group has secured a new long-term facility with HSBC UK Bank plc
which is described in Note 20.
2025 2024
£'000 £'000
Reconciliation to cash flows from financing activities
At beginning of the year 40,828 40,724
Non-cash changes
Amortisation of loan issue costs 128 104
Total at end of the year 40,956 40,828
14. Commitments
14.1. Operating lease commitments - as lessor
The Group has 20 commercial properties with 34 units in its investment
property portfolio. These non-cancellable leases have a remaining term of
between 21 months and 109 years (2024: 10 months to 110 years), excluding
ground leases.
Future minimum rentals receivable under non-cancellable operating leases as at
the year end are as follows:
2025 2024
£'000 £'000
Within one year 8,878 6,839
After one year, but not more than two years 6,182 6,528
After two years, but not more than three years 5,938 6,331
After three years, but not more than four years 6,017 5,746
After four years, but not more than five years 6,060 5,826
After five years, but not more than ten years 26,703 27,129
After ten years, but not more than fifteen years 20,668 20,398
More than fifteen years 44,326 47,712
124,772 126,509
During the year ended 30 June 2025 there were no material contingent rents
recognised as income (2024: nil).
14.2. Capital and financial commitments
There were no capital or financial commitments at the year end (2024: nil).
15. Investments in subsidiaries
The Company has two wholly owned subsidiaries as disclosed below:
Name and company number Country of registration and incorporation Date Principal activity Ordinary Shares held
of incorporation
Alternative Income REIT Holdco Limited (Company number 11052186) England and 7 Nov 2017 Real Estate Company 73,158,502*
Wales
Alternative Income Limited (Company number 10754641) England and 4 May 2017 Real Estate Company 73,158,501*
Wales
* Ordinary shares of £1.00 each.
Alternative Income REIT PLC owns 100% of Alternative Income REIT Holdco
Limited.
Alternative Income REIT Holdco Limited owns 100% of Alternative Income
Limited.
Both Alternative Income REIT Holdco Limited and Alternative Income Limited are
registered at The Scalpel, 18th Floor, 52 Lime Street, London, United Kingdom,
EC3M 7AF.
16. Issued share capital and reserves
2025 2024
Number of Number of
Ordinary Shares
Ordinary Shares
£'000 £'000
Ordinary Shares of £0.01 each issued and fully paid
At the beginning and end of the year 805 80,500,000 805 80,500,000
17. Financial risk management and policies
The Group's activities expose it to a variety of financial risks: market risk,
credit risk, liquidity risk and further risks inherent to investing in
investment property. The Group has limited exposure to foreign currency risk
as most of its transaction is in Sterling. The Group's objective in managing
risk is the creation and protection of shareholder value. Risk is inherent in
the Group's activities, but it is managed through a process of ongoing
identification, measurement and monitoring, subject to risk limits and other
controls. The principal risks facing the Group in the management of its
portfolio follows.
17.1 Market price risk
Market price risk is the risk that future values of investments in property
will fluctuate due to changes in market prices. To manage market price risk,
the Group diversifies its portfolio geographically in the UK and across
property sectors.
The disciplined approach to the purchase, sale and asset management ensures
that the value is maintained to its maximum potential. Prior to any property
acquisition or sale, detailed research is undertaken to assess expected future
cash flow. The Board and the Investment Adviser meet regularly and are
responsible for recommending investment purchases or sales to the AIFM which
makes the ultimate decision. In order to monitor property valuation
fluctuations, the Investment Adviser meets with the independent external
valuer on a regular basis. The valuer provides a property portfolio valuation
quarterly, so any movements in the value can be accounted for in a timely
manner and reflected in the NAV every quarter.
17.2 Real estate risk
Property investments are illiquid assets and can be difficult to sell,
especially if local market conditions are poor. Illiquidity may also result
from the absence of an established market for investments, as well as legal or
contractual restrictions on resale of such investments.
There can be no certainty regarding the future performance of any of the
properties acquired for the Group. The value of any property can go down as
well as up.
Real property investments are subject to varying degrees of risk. The yields
available from investments in real estate depend on the amount of income
generated and expenses incurred from such investments.
There are additional risks in vacant, part vacant, redevelopment and
refurbishment situations, although these are not prospective investments for
the Group.
These aspects, and their effect on the Group from a going concern perspective
are discussed in more detail in the Going Concern policy note.
17.3 Credit risk
Credit risk is the risk that the counterparty (to a financial instrument) or
tenant (of a property) will cause a financial loss to the Group by failing to
meet a commitment it has entered into with the Group.
It is the Group's policy to enter into financial instruments with reputable
counterparties. All cash deposits are placed with an approved counterparty,
Barclays International.
In respect of property investments, in the event of a default by a tenant, the
Group will suffer a rental shortfall and additional costs concerning
re-letting the property. The Investment Adviser monitors tenant arrears in
order to anticipate and minimise the impact of defaults by occupational
tenants.
The table below shows the Group's exposure to credit risk:
2025 2024
£'000 £'000
Debtors 482 2,680
Cash and cash equivalents 3,148 3,292
Total 3,630 5,972
17.4 Liquidity risk
Liquidity risk arises from the Group's management of working capital and the
finance charges and principal repayments on its borrowings. It is the risk the
Group will encounter difficulty in meeting its financial obligations as they
fall due as the majority of the Group's assets are investment properties and
therefore not readily realisable. The Group's objective is to ensure it has
sufficient available funds for its operations and to fund its capital
expenditure. This is achieved by quarterly review/ monitoring of forecast and
actual cash flows by the Investment Adviser and Board.
The below table summarises the maturity profile of the Group's financial
liabilities based on contractual undiscounted payments.
2025 On < 3 3-12 1-5 Total
demand £'000 months months years £'000
£'000 £'000 £'000
Interest bearing loans and borrowings - - 41,000 - 41,000
Interest payable - 327 327 - 654
Payables and accrued expenses 55 727 - - 782
Total 55 1,054 41,327 - 42,436
2024 On < 3 3-12 1-5 Total
demand £'000 months months years £'000
£'000 £'000 £'000
Interest bearing loans and borrowings - - - 41,000 41,000
Interest payable - 327 980 652 1,959
Payables and accrued expenses 21 676 - - 697
Total 21 1,003 980 41,652 43,656
17.5 Fair value of financial instruments
There is no material difference between the carrying amount and fair value of
the Group's financial instruments.
17.6 Interest rate risk
Interest rate risk is the risk that future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The
Group's exposure to the risk of changes in market interest rates is minimal
because the Group's loan is at a fixed rate of 3.19% (Note 13). The Group
has secured a new long-term facility with HSBCUK Bank plc which is described
in Note 20.
18. Capital management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and to maintain an optimal capital structure to reduce the cost
of capital.
To enhance returns over the medium term, the Group utilises borrowings on a
limited recourse basis for each investment or all or part of the total
portfolio. The Group's policy is to borrow up to a maximum of 40% loan to GAV
(measured at drawdown). Alongside the Group's borrowing policy, the directors
intend, at all times, to conduct the affairs of the Group so as to enable the
Group to qualify as a REIT for the purposes of Part 12 of the Corporation Tax
Act 2010 (and the regulations made thereunder). The REIT status compliance
requirements include 90% distribution test, interest cover ratio, 75% assets
test and the substantial shareholder rule, all of which the Group remained
compliant in both this and the prior year.
The monitoring of the Group's level of borrowing is performed primarily using
a Loan to GAV ratio. The Loan to GAV ratio is an alternative performance
measure and its calculation is shown below. The Group Loan to GAV ratio at the
year-end was 36.9% (2024: 37.7%)
Breaches in meeting the financial covenants would permit the lender to
immediately call loans and borrowings. During the year, the Group did not
breach any of its loan covenants, nor did it default on any other of its
obligations under its loan agreements.
19. Transactions with related parties and the Investment Adviser
Parties are considered to be related if one party has the ability to control
the other party or exercise significant influence over the other party in
making financial or operational decisions.
Directors
Directors are considered to be related parties. Their fees and interests in
shares are disclosed in the Remuneration Report in the Annual Report.
Investment Adviser
The Group's Investment Adviser was changed on 15 March 2024 from M7 Real
Estate Limited ('M7') to Martley Capital Real Estate Investment Management Ltd
('Martley Capital'). The appointment of Martley Capital was by way of a deed
of novation of the Group's Interim Investment Advisory agreement dated 14
March 2020 (as amended with Deed of Variation dated 21 February 2021) with
minor changes thereto but leaving the parties on substantially the same terms
and at an unchanged fee.
The annual management fee is calculated at a rate equivalent of 0.50% per
annum of NAV (subject to a minimum fee of £90,000 per quarter), payable
quarterly in advance. During the year the Group incurred £360,000 in respect
of investment advisory fees to Martley Capital (2024: a total of £360,000
with £253,000 to M7 and the rest to Martley Capital). No amounts were accrued
at the year end (2024: £nil).
20. Events after the reporting date
As announced on 3 September 2025, the Group has secured long term debt
facilities with HSBC UK Bank plc. The facilities consist of both a fixed term
loan of £31 million and a £10 million RCF collectively known as the New HSBC
Bank Facilities. The term of the New HSBC Bank Facilities is a fixed term of
five years from the date of drawdown, being 20 October 2025. The New HSBC
Facilities can be extended on request by a further two years, should this be
mutually acceptable to both parties.
The Group intends to take advantage of the lower interest rates on AIRE's
existing debt facilities until these facilities are due for repayment on 20
October 2025. The Group will use the amount drawn down under its New HSBC Bank
Facilities to simultaneously repay its existing debt facilities in full.
The margin on the New HSBC Bank Facilities is 170 basis points (1.7% per
annum) over SONIA (Sterling overnight index average rate). The loan covenant
tests in the New HSBC Facilities are more favourable than those in the current
Canada Life facility. The LTV covenant is not to exceed 60% (the current
Canada Life loan should not exceed 50%) and the ICR to be greater than 160%
(ICR to be greater than 330% under the current Canada Life loan).
Whilst there is no present intention, AIRE has the right, through an accordion
mechanism, to request an increase in the size of the RCF by up to a further
£10 million (subject to HSBC credit committee approval), over the course of
the facility.
Company Statement of Financial Position
As at 30 June 2025
Notes 2025 2024
£'000 £'000
Assets
Non-current Assets
Investments in subsidiary companies 2 73,158 73,158
Investment property 2 1,746 1,803
Total non-current assets 74,904 74,961
Current Assets
Receivables and prepayments 3 121 132
Cash and cash equivalents 128 475
Total current assets 249 607
Total Assets 75,153 75,568
Current Liabilities
Payables and accrued expenses 4 (7,307) (14,721)
Net Assets 67,846 60,847
Equity
Share capital 6 805 805
Capital reserve 2 65,379 70,431
Retained earnings 1,662 (10,389)
Total capital and reserves attributable to equity holders of the Company 67,846 60,847
Net Asset Value per share 84.28p 75.59p
As permitted by s408 Companies Act 2006, the Company's profit and loss account
has not been presented in these financial statements.
The Company's profit for the year was £12,051,000 (2024: loss of £854,000).
The financial statements were approved by the Board on 3 October 2025 and were
signed on its behalf by:
Simon Bennett
Chairman
Company number: 10727886
The accompanying Notes 1 to 7 form an integral part of these financial
statements.
Company Statement of Changes in Equity
For the year ended 30 June 2025
Share Capital Reserve Retained Total
capital earnings equity
£'000 £'000 £'000 £'000
For the year ended 30 June 2024
Balance at 30 June 2024 805 70,431 (10,389) 60,847
Total comprehensive income - - 12,051 12,051
Dividends paid - (5,052) - (5,052)
Balance at 30 June 2025 805 65,379 1,662 67,846
For the year ended 30 June 2024
Balance at 30 June 2023 805 75,417 (9,535) 66,687
Total comprehensive loss - - (854) (854)
Dividends paid - (4,986) - (4,986)
Balance at 30 June 2024 805 70,431 (10,389) 60,847
The accompanying Notes 1 to 7 form an integral part of these financial
statements.
Notes to the Company Financial Statements
for the year ended 30 June 2025
1. Accounting policies
Basis of preparation
These financial statements are prepared and approved by the directors in
accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(FRS 101) and in accordance with applicable accounting standards.
As permitted by FRS 101, the Company has taken advantage of the following
disclosure exemptions which are permissible under FRS 101 as the equivalent
disclosures are contained within the Group's consolidated financial
statements.
- a cash flow statement and related notes;
- disclosures in respect of capital management;
- the effects of new but not yet effective FRSs;
- the disclosures of the remuneration of key management personnel;
- disclosure of related party transactions with other wholly owned members of
the Ultimate Parent;
- the disclosure of financial instruments and other fair value measurements.
The financial statements are presented in Pound Sterling and all values are
rounded to the nearest thousand pounds (£'000), except when otherwise
indicated. They have been prepared on the historical cost basis.
The principal accounting policies adopted in the preparation of the Company's
financial statements are consistent with the Group which are described in Note
2.5 of the Consolidated Financial Statements but makes amendments where
necessary in order to comply with the Companies Act 2006 and taking advantage
of the FRS 101 exemptions mentioned above.
New standards effective for the current accounting period do not have a
material impact on the financial statements of the Company.
The accounting policies used are otherwise consistent with those contained in
the Company financial statements for the year ended 30 June 2025.
Going concern
The financial statements have been prepared on a going concern basis.
For an assessment of going concern refer to the accounting policy 2.4 of the
Consolidated Financial Statements.
Investments in subsidiary companies
Investments in subsidiary companies which are all 100% owned by the Company
are included in the statement of financial position at cost less provision for
impairment.
Impairment of non-financial assets
The carrying amounts of the Company's investment in subsidiaries are reviewed
at each reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the asset's recoverable amount
is estimated. The recoverable amount of an asset is the greater of its value
in use and its fair value less costs to sell.
An impairment loss is recognised if the carrying amount of an asset exceeds
its estimated recoverable amount. Impairment losses are recognised in profit
or loss.
Impairment losses recognised in prior periods are assessed at each reporting
date for any indications that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the estimates used
to determine the recoverable amount. An impairment loss is reversed only to
the extent that the asset's carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation,
if no impairment loss had been recognised.
Deferred income
Deferred income is rental income received in respect of future accounting
periods.
2. Investments
2a. Investments in Subsidiary Companies
2025 2024
£'000 £'000
At the beginning and end of the year 73,158 73,158
A list of subsidiary undertakings at 30 June 2025 is included on Note 15 of
the Consolidated Financial Statements.
The directors have considered the recoverability of the investment in
subsidiary companies by comparing the carrying value of the investment to the
net asset value of the subsidiaries. The directors consider the net asset
value of the subsidiary to be a reliable proxy to the recoverable amount as
the properties held by the Company are carried at fair value. The net asset
value of the subsidiary companies exceed the carrying amount of the investment
in subsidiaries and the directors have concluded that no impairment is
necessary.
2b. Investment property
2025 2024
£'000 £'000
At the beginning of the year 1,803 1,814
Revaluation of investment property (50) -
Adjustment to fair value for minimum rent indexation of lease income (7) (11)
1,746 1,803
3. Receivables and prepayments
2025 2024
£'000 £'000
Spreading of contracted future - rent indexation 82 72
VAT receivable - 23
82 95
Other prepayments 39 37
121 132
4. Payables and accrued expenses
2025 2024
£'000 £'000
Due to subsidiaries 6,830 14,357
Deferred income 34 34
Trade creditors 4 -
Accruals 358 328
Other creditors 81 2
7,307 14,721
Amounts due to subsidiaries are unsecured, interest free and repayable on
demand.
5. Dividends paid and payable
Details of dividends paid and payable in respect of the year are set out in
Note 9 of the consolidated financial statements.
6. Issued share capital
2025 2024
Number of Number of
Ordinary Shares
Ordinary Shares
£'000 £'000
Ordinary Shares of £0.01 each issued and fully paid
At the beginning and end of the year 805 80,500,000 805 80,500,000
7. Contingent liabilities, capital commitments and related party transactions
As at 30 June 2025 the Company had no contingent liabilities or capital
commitments (2024: nil).
Related party transactions are the same for the Company as for the Group. For
details refer to Note 20 of the Consolidated Financial Statements.
EPRA Performance Measures (Unaudited)
EPRA Yield calculations 2025 2024
£'000 £'000
Investment properties wholly owned:
- by Company 1,825 1,875
- by Alternative Income Limited 105,525 100,775
Total (Note 10) 107,350 102,650
Allowance for estimated purchasers' costs (Note 8) 6,978 6,672
Gross up completed property portfolio valuation B 114,328 109,322
Annualised cash passing rental income 8,084 7,596
Annualised property outgoings (5) (5)
Annualised net rents A 8,079 7,591
Add: notional rent expiration of rent-free periods or other lease incentives 212 379
Topped-up net annualised rent C 8,291 7,970
EPRA NIY A/B 7.07% 6.94%
EPRA topped-up NIY C/B 7.25% 7.29%
EPRA Cost Ratios 2025 2024
£'000 £'000
Include:
EPRA Costs (including direct vacancy costs) (Note 4) A 1,199 1,204
Direct vacancy costs - -
EPRA Costs (excluding direct vacancy costs) B 1,199 1,204
Gross rental income (adjusted) (Note 3) C 7,922 7,358
EPRA Cost Ratio (including direct vacancy costs) A/C 15.14% 16.36%
EPRA Cost Ratio (excluding direct vacancy costs) B/C 15.14% 16.36%
There were no overheads nor operating expenses capitalised in the year in line
with IFRS (2024: nil).
EPRA Vacancy rate 2025 2024
£'000 £'000
Annualised potential rental value of vacant premises A - -
Annualised potential rental value for the completed property portfolio B 7,337 6,948
EPRA Vacancy rate A/B 0.00% 0.00%
The Group has not incurred any direct vacancy costs in both the current or
prior years.
EPRA LTV 2025 2024
£'000 £'000
Gross debt drawn 41,000 41,000
Less: cash and cash equivalents (3,148) (3,292)
Net debt A 37,852 37,708
Investment property at fair value (Note 10) 107,350 102,650
Trade and other receivables (Note 11) 4,236 6,464
Less: Trade and other payables (Note 12) (2,878) (2,890)
Total Property Value B 108,708 106,224
EPRA LTV A/B 34.82% 35.50%
EPRA Property-related Capital Expenditure 2025 2024
£'000 £'000
Acquisitions including incidental costs of purchase and tenant incentives 2,724 5,304
(Note 10)
Total capital expenditure 2,724 5,304
Conversion from accruals to cash basis - -
Total capital expenditure on a cash basis 2,724 5,304
EPRA Property-related Capital Expenditure 2025 2024
£'000 £'000
Acquisitions including incidental costs of purchase and tenant incentives 2,724 5,304
(Note 10)
Total capital expenditure 2,724 5,304
Conversion from accruals to cash basis - -
Total capital expenditure on a cash basis 2,724 5,304
Group has no Joint Ventures so there is no joint venture property to disclose
in the above.
Alternative Performance Measures (APMs) (Unaudited)
APMs are numerical measures of the Group's current, historical or future
performance, financial position or cash flows, other than financial measures
defined or specified in the applicable financial framework. The Group's
applicable financial framework is IFRS. The directors assess the Group's
performance against a range of criteria which are reviewed by investors as
particularly relevant for a closed-end REIT.
Discount
The discount is the amount by which the share price is lower than the net
asset value per share, expressed as a percentage of the net asset value per
share.
2025 2024
NAV per Ordinary Share A 83.64p 80.90p
Share price B 74.00p 66.00p
Discount (A-B)/A 11.52% 18.42%
Dividend Cover
The ratio of Group's Adjusted EPS divided by the Group's dividends payable for
the relevant year.
2025 2024
Adjusted EPS A 6.72p 5.99p
Dividend per share B 6.20p 5.90p
Dividend cover A/B 108.37% 101.53%
Dividend Yield
The ratio of Group's annual dividends per share divided by the Group's share
price for the relevant year.
2025 2024
Annual dividends paid A 6.20p 5.90p
Share price B 74.00 66.00p
Dividend yield A/B 8.38% 8.94%
Loan to GAV
Loan to GAV measures the value of loans and borrowings utilised (excluding
amounts held as restricted cash and before adjustments for issue costs)
expressed as a percentage of the combined valuation of the property portfolio
(as provided by the valuer) and the fair value of other assets.
2025 2024
Borrowings (£'000) A 41,000 41,000
Total assets (£'000) B 111,161 108,839
Loan to GAV A/B 36.88% 37.67%
Dividend Cover
The ratio of Group's Adjusted EPS divided by the Group's dividends payable for
the relevant year.
2025 2024
Adjusted EPS A 6.72p 5.99p
Dividend per share B 6.20p 5.90p
Dividend cover A/B 108.37% 101.53%
Dividend Yield
The ratio of Group's annual dividends per share divided by the Group's share
price for the relevant year.
2025 2024
Annual dividends paid A 6.20p 5.90p
Share price B 74.00 66.00p
Dividend yield A/B 8.38% 8.94%
Loan to GAV
Loan to GAV measures the value of loans and borrowings utilised (excluding
amounts held as restricted cash and before adjustments for issue costs)
expressed as a percentage of the combined valuation of the property portfolio
(as provided by the valuer) and the fair value of other assets.
2025
2024
Borrowings (£'000)
A
41,000
41,000
Total assets (£'000)
B
111,161
108,839
Loan to GAV
A/B
36.88%
37.67%
Ongoing Charges
The ongoing charges ratio is the total for all operating costs expected to be
regularly incurred expressed as a percentage of the average quarterly NAVs of
the Group for the financial year.
2025 2024
Other operating expenses for the year (£'000) A 1,066 1,066
One-off website costs (£'000) B - (16)
One-off legal fees (£'000) C (26) (20)
Abortive property acquisition costs (£'000) D (2) (62)
E=A+B+C+D 1,038 968
Average net assets (£'000) F 66,139 66,436
Ongoing charges ratio E/F 1.57% 1.46%
Share Price and Net Asset Value (NAV) Total Return
Share price and NAV total returns show how the NAV and share price has
performed over a period of time in percentage terms, taking into account both
capital returns and dividends paid to shareholders. Share price and NAV total
returns are monitored against FTSE EPRA Nareit UK and FTSE Small Cap,
respectively.
Share price NAV
Opening at 30 June 2024 A 66.00 80.90p
Closing at 30 June 2025 B 74.00 83.64p
Return C=(B/A)-1 12.12% 3.38%
Dividend reinvestment* D 9.51% 7.76%
Total return for the year ended 30 June 2025 C+D 21.63% 11.14%
Opening at 30 June 2023 A 64.70 84.16p
Closing at 30 June 2024 B 66.00 80.90p
Return C=(B/A)-1 2.01% (3.87%)
Dividend reinvestment* D 9.58% 7.36%
Total return for the year ended 30 June 2024 C+D 11.59% 3.49%
*Share price total return involves reinvesting the net dividend in the share
price of the Company on the date on which that dividend goes ex-dividend. NAV
total return involves investing the net dividend in the NAV of the Company
with debt at fair value on the date on which that dividend goes ex-dividend.
Glossary
Alternative Investment Fund Manager or AIFM or Investment Manager Langham Hall Fund Management LLP.
Company Alternative Income REIT PLC.
Contracted rent The annualised rent adjusting for the inclusion of rent subject to rent-free
periods.
Earnings Per Share ('EPS') Profit for the period attributable to equity shareholders divided by the
weighted average number of Ordinary Shares in issue during the period.
EPRA European Public Real Estate Association, the industry body representing listed
companies in the real estate sector.
Estimated Rental Value ('ERV') The external valuer's opinion as to the open market rent which, on the date of
the valuation, could reasonably be expected to be obtained on a new letting or
rent review of a property.
External Valuer An independent external valuer of a property. The Group's External Valuer is
Knight Frank LLP.
Fair value The estimated amount for which a property should exchange on the valuation
date between a willing buyer and a willing seller in an arm's length
transaction after proper marketing and where parties had each acted
knowledgeably, prudently and without compulsion.
Fair value movement An accounting adjustment to change the book value of an asset or liability to
its fair value.
FCA The Financial Conduct Authority.
Gross Asset Value ('GAV') The aggregate value of the total assets of the Group as determined in
accordance with IFRS.
Gross Passing Rental Income The gross passing rent is the rent roll at the reporting date, taking account
of any in-place rent free incentives or step rents on a straight-line basis
over the following 12-month period.
IASB International Accounting Standards Board.
IFRS International financial reporting standards. On 31 December 2020 EU-adopted
IFRS was brought into UK law and became UK-adopted international accounting
standards, with future changes to IFRS being subject to endorsement by the UK
Endorsement Board.
Investment Adviser or Martley Capital Martley Capital Real Estate Investment Management Limited.
IPO The admission to trading on the London Stock Exchange's Main Market of the
share capital of the Company and admission of Ordinary Shares to the premium
listing segment (now the Closed-ended investment funds category) of the
Official List on 6 June 2017.
Lease incentives Incentives offered to occupiers to enter into a lease. Typically, this will be
an initial rent-free period, or a cash contribution to fit-out. Under
accounting rules, the value of the lease incentive is amortised through the
Consolidated Statement of Comprehensive Income on a straight-line basis until
the lease expiry.
Loan to Value ('LTV') The value of loans and borrowings utilised (excluding amounts held as
restricted cash and before adjustments for issue costs) expressed as a
percentage of the combined valuation of the property portfolio (as provided by
the valuer) and the fair value of other investments.
Net Asset Value ('NAV') Net Asset Value is the equity attributable to shareholders calculated under
IFRS.
Net Asset Value per share Equity shareholders' funds divided by the number of Ordinary Shares in issue.
Net equivalent yield Calculated by the Group's External Valuers, net equivalent yield is the
internal rate of return from an investment property, based on the gross
outlays for the purchase of a property (including purchase costs), reflecting
reversions to current market rent and items as voids and non-recoverable
expenditure but ignoring future changes in capital value. The calculation
assumes rent is received annually in arrears.
Net Initial Yield ('NIY') The initial net rental income from a property at the date of purchase,
expressed as a percentage of the gross purchase price including the costs of
purchase.
Initial yield does not include cost of purchase.
Net rental income Rental income receivable in the period after payment of ground rents and net
property outgoings.
Ordinary Shares The main type of equity capital issued by conventional Investment Companies.
Shareholders are entitled to their share of both income, in the form of
dividends paid by the Company, and any capital growth.
REIT A Real Estate Investment Trust. A company which complies with Part 12 of the
Corporation Tax Act 2010. Subject to the continuing relevant UK REIT criteria
being met, the profits from the property business of a REIT, arising from both
income and capital gains, are exempt from corporation tax.
Reversion Increase in rent estimated by the Company's External Valuers, where the
passing rent is below the ERV.
Share price The value of a share at a point in time as quoted on a stock exchange. The
Company's Ordinary Shares are quoted on the Main Market of the London Stock
Exchange.
Weighted Average Unexpired Lease Term ('WAULT') The average lease term remaining for first break, or expiry, across the
portfolio weighted by contracted rental income (including rent-frees).
Company Information
Share Register Enquiries
The register for the Ordinary Shares is maintained by Computershare Investor
Services PLC. In the event of queries regarding your holding, please contact
the Registrar on 0370 707 1874 or email: web.queries@computershare.co.uk.
Changes of name and/or address must be notified in writing to the Registrar,
at the address shown below. You can check your shareholding and find practical
help on transferring shares or updating your details at
www.investorcentre.co.uk. Shareholders eligible to receive dividend payments
gross of tax may also download declaration forms from that website.
Share Information
Ordinary £0.01 shares 80,500,000
SEDOL Number BDVK708
ISIN Number GB00BDVK7088
Ticker/TIDM AIRE
Share Prices
The Company's Ordinary Shares are traded on the Main Market of the London
Stock Exchange.
Frequency of NAV publication
The Group's NAV is released to the London Stock Exchange on a quarterly basis
and is published on the Company's website www.alternativeincomereit.com
(http://www.alternativeincomereit.com) .
Annual and Interim Reports
Copies of the Annual and Half-Yearly Reports are available from the Group's
website.
Financial Calendar
30 June Year end
September Announcement of annual results
November Annual General Meeting
31 December Half year end
March Announcement of interim results
Quarterly dividends are paid in November, February, May and August for each
financial year.
Shareholder Information
Directors Property Manager
Simon Bennett (independent non-executive chairman) Mason Owen and Partners Limited
Stephanie Eastment (independent non-executive director) 7(th) Floor
Adam Smith (non-executive director) 20 Chapel Street
Liverpool
Registered Office Valuer
The Scalpel 18(th) Floor Knight Frank LLP
52 Lime Street 55 Baker Street
London London
EC3M 7AF W1U 8AN
https://www.alternativeincomereit.com/ (http://www.aewukllreit.com)
Registered in England and Wales No. 10727886
Company Secretary Registrar
Hanway Advisory Limited Computershare Investor Services PLC
The Scalpel 18(th) Floor The Pavilions
52 Lime Street Bridgwater Road
London Bristol
EC3M 7AF BS13 8AE
AIFM Auditor
Langham Hall Fund Management LLP Moore Kingston Smith LLP
1 Fleet Place 9 Appold Street
8(th) Floor London
London EC2A 2AP
EC4M 7RA
Depositary Corporate Broker
Langham Hall UK Depositary LLP Panmure Liberum Ltd
8th Floor Ropemaker Place, Level 12
1 Fleet Place 25 Ropemaker Street
London London
EC4M 7RA EC2Y 9LY
Investment Adviser and Administrator
Martley Capital Real Estate Investment Management Ltd
The Rookery, 4(th) Floor
Dyott Street
London
WC1A 1DE
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. END FR EASEDEEPSFFARecent news on Alternative Income REIT
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