abrdn Property Income Trust Limited Unaudited Net Asset Value as at 30 June 2023
August 09 2023 - 2:00AM
UK Regulatory
TIDMAPI
abrdn Property Income Trust Limited
(an authorised closed-ended investment company incorporated in Guernsey with
registration number 41352)
LEI Number: 549300HHFBWZRKC7RW84
(The "Company")
9 August 2023
Unaudited Net Asset Value as at 30 June 2023
Net Asset Value and Valuations
· Net asset value ("NAV") per ordinary share was 83.8p (Mar 2023 - 82.4p), an
increase of 1.7% for Q2 2023, resulting in a NAV total return, including
dividends, of 2.96% for the quarter;
· The portfolio valuation increased by 0.4% on a like for like basis during
the quarter, whilst the MSCI Quarterly Index fell by 0.8% over the same period.
Investment and letting activity
· Three previously reported agreements to lease completed (development funding
and agreements for lease) totaling £954,811pa, along with two new leases
completed for £199,200 and three new agreements for lease completed for
£668,090. One lease regeared securing £160,00pa (6.7% above previous rent and
ERV) and one lease renewal of £535,00pa, showing an increase of 30.2% over the
previous rent and 19% above December ERV.
· Rent received in Q2 increased by £400,000 compared to Q1 (6.3%)
Financial Position
· Robust balance sheet with financial resources available for investment of
£28.1 million (of which £30 million is currently in the form of the Company's
revolving credit facility) net of current cash after dividend and other
financial commitments.
Occupancy / Void / WAULT
The Company had a vacancy rate of 8.2% as at end Q2 2023 (Q1 9.8%). Several
substantial vacant units are subject to a binding agreement for lease, and when
those leases complete the vacancy rate based on current fund position will be
under 5%. The Company also has one speculative development project due to
complete at the end of the year that represents 2.5% of fund ERV.
The weighted average unexpired lease term of the portfolio is 6.3 years (6.5
years Q1 2023).
Debt Facility and Gearing
API currently has two facilities with RBSI, an £85m term loan (fully drawn) and
an £80m Revolving Credit Facility (RCF) of which £50m was drawn as at 30th June.
Both facilities are at a margin of 150bps over SONIA and an interest rate cap on
SONIA has been put in place at 4% over the term loan. As at 30 June 2023, the
Company had a Loan to Value (LTV) of 28.1%*.
*LTV calculated as debt less all cash divided by investment portfolio value
Dividends
Following the dividend being maintained at an annualised rate of 4p per share
since December 2021, the dividend cover for Q2 2023 is 72.7%. The Board has
provided guidance of its intention to maintain the current dividend level.
Net Asset Value ("NAV")
The unaudited net asset value per ordinary share at 30 June 2023 was 83.8p. The
net asset value is calculated under International Financial Reporting Standards
("IFRS").
The net asset value incorporates the external portfolio valuation by Knight
Frank LLP at 30 June 2023 of £445.0 million.
Breakdown of NAV movement
Set out below is a breakdown of the change in the unaudited NAV calculated under
IFRS over the period 31 March 2023 to 30 June 2023.
+-------------+-----+------------+--------------------------------------+
| |Per |Attributable|Comment |
| |Share|Assets (£m) | |
| |(p) | | |
+-------------+-----+------------+--------------------------------------+
|Net assets as|82.4 |314.0 | |
|at 31 March | | | |
|2023 | | | |
+-------------+-----+------------+--------------------------------------+
|Unrealised |2.1 |8.0 |Like for like increase of 0.4%. |
|movement in | | | |
|valuation of | | | |
|property | | | |
|portfolio | | | |
+-------------+-----+------------+--------------------------------------+
|CAPEX in the |-1.0 |-3.9 |Predominantly development spend at |
|quarter | | |Washington Rainhill Road and Knowsley.|
+-------------+-----+------------+--------------------------------------+
|Net income in|-0.3 |-1.0 |Rolling 12 month dividend cover 87.4% |
|the quarter | | |excl. one off SWAP break cost in 2022.|
|after | | | |
|dividend | | | |
+-------------+-----+------------+--------------------------------------+
|Interest rate|0.6 |2.4 |SWAP and CAP valuation movement |
|hedge mark to| | | |
|market | | | |
|revaluation | | | |
+-------------+-----+------------+--------------------------------------+
|Net assets as|83.8 |319.5 | |
|at 30 June | | | |
|2023 | | | |
+-------------+-----+------------+--------------------------------------+
+----------------------------------+------------+-----------+
|European Public Real Estate |30 June 2023|31 Mar 2023|
| | | |
|Association ("EPRA") | | |
+----------------------------------+------------+-----------+
|EPRA Net Tangible Assets |£315.2m |£311.5m |
+----------------------------------+------------+-----------+
|EPRA Net Tangible Assets per share|82.7p |81.7p |
+----------------------------------+------------+-----------+
The Net Asset Value per share is calculated using 381,218,977 shares of 1p each
being the number in issue on 30 June 2023.
Investment Manager Review and Portfolio Activity
The inflation print in May certainly caused some turmoil in the investment
market with a noticeable change in sentiment as interest rate expectations
changed. The Company was not involved in any investment transactions during the
quarter but continued to have a busy time of asset management, with encouraging
progress on lettings and securing future income.
The lease renewal of a logistics unit in Glasgow completed in early June with a
10-year lease at a rent of £535,000pa, an uplift of 30.2% from the previous
rent. As part of the renewal terms, a Photo Voltaic (PV) installation on the
roof was agreed which we are progressing and will help further improve the ESG
credentials of the unit.
An early renewal was completed on a leisure unit in London. The lease was due to
expire next year but has been extended by five years to enable us to work
towards a block date for all the leases and a potential redevelopment of the
site in the future. The increase in rent of 6.7% above the passing rent (and
above valuation assumptions) is a reflection of the strong trading at the
location where we expect to complete several other lease regears shortly.
Several new leases were signed over the quarter. The largest was with St Helens
Borough Council on our newly developed industrial facility - a 15-year lease
with indexation at a starting rent of £657,040pa. Leases were also competed on
two office floors in Crawley where we had previously signed an agreement for
lease. Completion followed landlord works and secured £297,770pa. The Company's
largest office asset is 54 Hagley Rd in Birmingham. It has seen significant
leasing activity in the quarter with two agreements for lease completing with a
future rent of £538,000pa once landlord works complete (expected in Q3 2023).
Another suite at 54 Hagley Rd was let at £56,386pa as well as the last remaining
office space at Basinghall St London for £142,800pa. It is clear that the right
office space continues to attract occupiers. As a result of this activity the
Company's vacancy rate taking account of the agreements for lease, has fallen to
under 5% from 10% at the beginning of the year.
ESG is an important part of how we approach managing the Company as we believe
it is an increasing driver of value. PV cells on building roofs is one of the
areas we have focused on as we can provide onsite renewable energy that benefits
the occupier and provides an economic return for the landlord. Installing it is
complex, with grid capacity and structural constraints often impacting on
schemes, however we are having some great successes. In July we will start on
two more projects with a total of 855kWp. We are currently on site with a scheme
of 1,160kWp due to complete in October, and have just completed two schemes
totaling 263kWp. In June we have completed two other schemes totalling 492kWp -
to date, these have helped to reduce CO2 emissions by 31.1 tonnes (as at 12
July). We have also made progress with our carbon project at Far Ralia, now
having all approvals in place and a contract agreed with Scottish Forestry to
enable planting to commence in September. This will be a major milestone for the
project, more details of which can be seen in a video on our website
www.abrdnpit.co.uk . Obviously, we also need to continue to ensure our assets
meet high standards, and we continue to improve the EPC ratings, with 43% of our
properties rated A or B as at 30 June (25% June 2022).
UK Real Estate Market Outlook - Q2 2023
· In welcome news, the June UK inflation report surprised to the downside as
the headline rate came in at 7.9%, while core inflation also declined, from 7.1%
in May to 6.9% in June 2023.
· The Bank of England increased the Bank Rate by 50 basis points (bps) to 5%
in June 2023 and subsequently by a further 25bps to 5.25% in July and in August.
· Total return performance improved during the second quarter of 2023, with
all property posting a total return of 0.4% in the three months to June 2023
according to the MSCI Quarterly Index. Real estate pricing began to stabilise in
the second quarter of 2023, particularly in those areas of the market that saw
the greatest capital declines. Modest capital value growth was also recorded in
sectors that benefit from structural tailwinds however any substantive
improvement in real estate performance is now not anticipated until early 2024,
as the path of UK monetary policy is likely to become more accommodative. The
risks to the timing of this recovery remain elevated given the strength of
underlying inflation and the consequent risk of higher interest rates.
· Transaction activity remained muted in the second quarter of 2023 as
investors took a more cautious approach to UK real estate. Transaction volumes
were £5.6 billion over the quarter, down 64% on the same period a year earlier,
and 63% below the 10-year quarterly average.
· The office sector remains under structural pressure as evolving working
habits and economic uncertainty weigh on the sector. Although office occupation
has been improving with more workers returning at least three days a week, most
requirements show a need for less space than currently occupied, with a focus on
getting location and amenity right to attract workers. Investor demand for UK
offices remains weak amid a poor outlook for the sector. Headline investment
volumes hide a lack of real liquidity in the office market, especially for
secondary assets. Headline deals on core Central London assets are not
reflective of the wider market.
· Improved sentiment returned to the industrial and logistics sector during
the second quarter of 2023, as pricing and performance demonstrated tentative
signs of stabilisation. While the longer-term outlook remains positive, short
-term caution is required as a slowing economy will impact occupier demand.
Major occupiers of logistics accommodation are certainly focussed on ESG, and
there is a noticeable change in tenant requirements for the larger assets when
looking for new space.
· The retail sector has proven to be more resilient than many had expected
over the first half of 2023. According to the Office for National Statistics
(ONS), retail sales in the UK unexpectedly expanded in May, boosted by spending
on summer clothing and outdoor goods. However, it is important to highlight the
difference between the quantity of goods purchased (volume) and the amount spent
(value). Retail volumes are now 0.8% lower than pre-Covid 19 levels, while
retail values are 17% higher. It is a clear illustration that consumers are
cutting back on the number of items being purchased, while higher inflation
means it is costing more to purchase these items.
· API has always focussed on affordable out of town retail, catering for the
discount retailers, and this has been an area on ongoing growth in demand -
driven by retailers such as B&M showing sales growth of 9.2% in its UK business
over the first quarter of 2023.
· There has been an increase in breadth of retailers taking new space, with
several brand names moving into their own stores to "own" the relationship with
clients, and although online retail continues to impact on retailer models, it
is clear that bricks and mortar stores remain an important part of most
retailers' strategies.
Net Asset analysis as at 31 March 2023 (unaudited)
+-------------------------------------------+------+---------------+
| |£m |% of net assets|
+-------------------------------------------+------+---------------+
|Industrial |240.8 |75.4 |
+-------------------------------------------+------+---------------+
|Office |85.1 |26.6 |
+-------------------------------------------+------+---------------+
|Retail |73.4 |23.0 |
+-------------------------------------------+------+---------------+
|Other Commercial |38.2 |12.0 |
+-------------------------------------------+------+---------------+
|Land |7.5 |2.3 |
+-------------------------------------------+------+---------------+
|Total Property Portfolio |445.1 |139.3 |
+-------------------------------------------+------+---------------+
|Adjustment for lease incentives |-8.2 |-2.5 |
+-------------------------------------------+------+---------------+
|Fair value of Property Portfolio |436.9 |136.8 |
+-------------------------------------------+------+---------------+
|Cash |10.0 |3.1 |
+-------------------------------------------+------+---------------+
|Other Assets |19.5 |6.1 |
+-------------------------------------------+------+---------------+
|Total Assets |466.4 |146.0 |
+-------------------------------------------+------+---------------+
|Current liabilities |-12.7 |-4.0 |
+-------------------------------------------+------+---------------+
|Non-current liabilities (bank loans & swap)|-134.2|-42.0 |
+-------------------------------------------+------+---------------+
|Total Net Assets |319.5 |100.0 |
+-------------------------------------------+------+---------------+
Breakdown in valuation movements over the period 01 April 2023 to 30 June 2023
+----------+---------+--------+---------------------------+-------------------+
| |Portfolio|Exposure|Like for Like Capital Value|Capital Value Shift|
| |Value as |as at |Shift (excl transactions & |(incl transactions |
| |at 30 Jun|30 Jun |CAPEX) |(£m) |
| |2023 (£m)|2023 (%)| | |
+----------+---------+--------+---------------------------+-------------------+
| |(%) |
+----------+---------+--------+---------------------------+-------------------+
|External | | | |437.0 |
|valuation | | | | |
|at 31 | | | | |
|Mar 23 | | | | |
+----------+---------+--------+---------------------------+-------------------+
| | | | | |
+----------+---------+--------+---------------------------+-------------------+
|Retail |73.4 |16.5 |1.0 |1.1 |
+----------+---------+--------+---------------------------+-------------------+
|South East| |1.8 |0.0 |0.0 |
|Retail | | | | |
+----------+---------+--------+---------------------------+-------------------+
|Retail | |14.7 |1.1 |1.1 |
|Warehouses| | | | |
+----------+---------+--------+---------------------------+-------------------+
| | | | | |
+----------+---------+--------+---------------------------+-------------------+
|Offices |85.1 |19.1 |(3.0) |(0.4) |
+----------+---------+--------+---------------------------+-------------------+
|London | |2.5 |0.0 |0.0 |
|City | | | | |
|Offices | | | | |
+----------+---------+--------+---------------------------+-------------------+
|London | |2.1 |(2.6) |(0.3) |
|West End | | | | |
|Offices | | | | |
+----------+---------+--------+---------------------------+-------------------+
|South East| |6.3 |(4.8) |0.9 |
|Offices | | | | |
+----------+---------+--------+---------------------------+-------------------+
|Rest of UK| |8.2 |(2.7) |(1.0) |
|Offices | | | | |
+----------+---------+--------+---------------------------+-------------------+
| | | | | |
+----------+---------+--------+---------------------------+-------------------+
|Industrial|240.8 |54.1 |1.6 |7.3 |
+----------+---------+--------+---------------------------+-------------------+
|South East| |8.7 |1.7 |0.6 |
|Industrial| | | | |
+----------+---------+--------+---------------------------+-------------------+
|Rest of UK| |45.4 |1.6 |6.7 |
|Industrial| | | | |
+----------+---------+--------+---------------------------+-------------------+
| | | | | |
+----------+---------+--------+---------------------------+-------------------+
|Other |38.2 |8.6 |0.0 |0.0 |
|Commercial| | | | |
+----------+---------+--------+---------------------------+-------------------+
| | | | | |
+----------+---------+--------+---------------------------+-------------------+
|Land |7.5 |1.7 |0.0 |0.0 |
+----------+---------+--------+---------------------------+-------------------+
| | | | | |
+----------+---------+--------+---------------------------+-------------------+
|External |445.0 |100.0 |0.4 |445.0 |
|valuation | | | | |
|at 30 | | | | |
|Jun 23 | | | | |
+----------+---------+--------+---------------------------+-------------------+
Yields
+---------+-----------------+----------+--------+
| |Initial Yield (%)|Equivalent|EPRA NIY|
| | | | |
| | |Yield (%) |(%) |
+---------+-----------------+----------+--------+
|Portfolio|5.4 |7.0 |4.8% |
+---------+-----------------+----------+--------+
Top 10 Properties
+------------------------------+--------------+
| |30 Jun 23 (£m)|
+------------------------------+--------------+
|Halesowen, B&Q |20-25 |
+------------------------------+--------------+
|Birmingham, 54 Hagley Road |20-25 |
+------------------------------+--------------+
|Rotherham, Symphony |20-25 |
+------------------------------+--------------+
|Welwyn Garden City, Morrison's|15-20 |
+------------------------------+--------------+
|Shellingford, Timbmet |15-20 |
+------------------------------+--------------+
|Birmingham, Atos Data Centre |15-20 |
+------------------------------+--------------+
|London, Hollywood Green |10-15 |
+------------------------------+--------------+
|Swadlincote, Tetron 141 |10-15 |
+------------------------------+--------------+
|Corby, CEVA Logistics |10-15 |
+------------------------------+--------------+
|Preston, Walton Summit |10-15 |
+------------------------------+--------------+
The top ten assets represent 38% of portfolio value
Top 10 tenants
+-------------------------------+------------+-----------------------+
|Tenant Name |Passing Rent|% of total Passing Rent|
+-------------------------------+------------+-----------------------+
|B&Q Plc |1,560,000 |5.8% |
+-------------------------------+------------+-----------------------+
|Public Sector |1,364,226 |5.1% |
+-------------------------------+------------+-----------------------+
|WM Morrisons Supermarkets Ltd |1,252,162 |4.7% |
+-------------------------------+------------+-----------------------+
|The Symphony Group Plc |1,225,000 |4.6% |
+-------------------------------+------------+-----------------------+
|Schlumberger Oilfield UK plc |1,138,402 |4.2% |
+-------------------------------+------------+-----------------------+
|Timbmet Limited |904,768 |3.4% |
+-------------------------------+------------+-----------------------+
|Atos IT Services UK Limited |872,466 |3.3% |
+-------------------------------+------------+-----------------------+
|CEVA Logistics Limited |840,000 |3.1% |
+-------------------------------+------------+-----------------------+
|Jenkins Shipping Co Ltd |816,390 |3.0% |
+-------------------------------+------------+-----------------------+
|ThyssenKrupp Materials (UK) Ltd|643,565 |2.4% |
+-------------------------------+------------+-----------------------+
| |10,616,979 |39.6% |
+-------------------------------+------------+-----------------------+
Regional Split
+---------------+-----+
|South East |23.9%|
+---------------+-----+
|West Midlands |19.5%|
+---------------+-----+
|North West |13.7%|
+---------------+-----+
|East Midlands |12.8%|
+---------------+-----+
|Scotland |11.6%|
+---------------+-----+
|North East |10.8%|
+---------------+-----+
|South West |3.1% |
+---------------+-----+
|City of London |2.5% |
+---------------+-----+
|London West End|2.1% |
+---------------+-----+
Except as described above, the Board is not aware of any significant events or
transactions which have occurred between 30 June 2023 and the date of
publication of this statement which would have a material impact on the
financial position of the Company.
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014). Upon the publication of this announcement via Regulatory
Information Service this inside information is now considered to be in the
public domain.
Details of the Company may also be found on the Investment Manager's website at:
www.abrdnpit.co.uk
For further information:-
For further information:-
Jason Baggaley - API Fund Manager, abrdn
Tel: 07801039463 or jason.baggaley@abrdn.com
Mark Blyth - API Fund Manager, abrdn
Tel: 07703695490 or mark.blyth@abrdn.com
Craig Gregor - Fund Controller, abrdn
Tel: 07789676852 or craig.gregor@abrdn.com (michelle.mckeown@abrdn.com)
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Ltd
Trafalgar Court
Les Banques
St Peter Port
GY1 3QL
Tel: 01481 745001
This information was brought to you by Cision http://news.cision.com
END
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