abrdn European Logistics Income saw its EPRA net tangible assets (NTA) reduce 8.1% to €1.25 per share in the year to 31 December 2022, due to the market-wide outward yield movements as a result of rising interest rates.
The group’s portfolio value fell 4% on a like-for-like basis, but increased 14% to €759m (31 December 2021: €666m) including new acquisitions. During the year it acquired four assets for €44.7m (following a £38m (€45.6m) equity issuance completed in February 2022), taking the portfolio to 27 assets across five countries and increasing the portfolio weighting towards the urban logistics sector to 51%.
Dividend distributions of 5.64 euro cents per share were paid in respect of the year.
The company has a loan to value of 34% and low all-in cost of fixed term debt of 2.01%, with no major refinancings due until mid-2025.
Annualised passing rent increased by 18% to €34.7m (2021: €29.4m). Income enhancing asset management initiatives included:
- Five year lease agreed with ADER on 7,375 sqm of previously vacant space at Madrid Phase II, earlier than forecast and ahead of rental estimate
- Completion of Amazon hub in Madrid at a cost of €80.3m, with Amazon commencing a 25 year lease
- Delivery of warehouse extension at Waddinxveen, in the Netherlands
- Post-period, a new 9.5 year lease with Dachser France at its La Creche, Niort, property, 3% ahead of previous annual rent payable
The portfolio has a WAULT of 8.9 years (31 December 2021: 8 years) and inflation linked lease profile, with 65% of current portfolio income subject to full indexation.
Tony Roper, chairman, commented: “Our core focus over the coming months will be on optimising the current portfolio in terms of both occupancy and earnings growth. We retain a strong conviction in our investment strategy and during this period of inflationary pressure, the Company’s indexation characteristics should provide a level of inflation protection alongside our attractive dividend yield. Furthermore, we believe a combination of the portfolio valuation resilience versus other commercial real estate funds and the growth prospects in our key markets versus the UK provides an attractive differentiator for investors.”
Troels Andersen, lead fund manager, added: “Continental European logistics real estate is well placed to navigate the current high inflationary environment due to its CPI indexation characteristics and robust market fundamentals. Backed by the tailwinds of record-low vacancies and structural demand drivers, rental growth is expected to retain its momentum in most European logistics hotspots.
“While lingering economic, political, and financial market uncertainties may disrupt investment trends and present select occupational challenges in the short-term, the favourable underlying trends including growing e-commerce penetration, onshoring and supply chain reconfiguration/ modernisation should remain important drivers for the sector.”
ASLI : abrdn European Logistics Income sees NAV fall 8.1%