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