Abrdn European Logistics... Share Discussion Threads

[giltedge1] 26/10/2023 09:54

Hello Skyship,

From Quoted Data Research note June 23 on RNS

"The manager is in advanced discussions with a party to lease the group’s Meung-sur-Loire property in France, which has been vacant since Office Depot France fell into administration in February 2021 (although ASLI collected rent from the administrator up to the end of the first quarter of 2022). The manager says that it is confident in re-letting the building, due to the location of the property close to Orleans, which can serve Paris as well as central and southern France, making it suitable as a national distribution centre. A sale of the asset is not off the table, if the right offer came in, the manager adds."

[skyship] 26/10/2023 06:31

giltedge - "...So why has vacant French unit taken over a year to rent?"

Well spotted, strange that indeed. Is it stated thus in one of their reports? If so, could you provide a link. Thanks.

[giltedge1] 25/10/2023 20:43

Hello Wiganpunter, you mentioned you visited top 10 sites, quite a lot of travelling, from Madrid to Germany & France, by car?. Can you give me your thoughts on biggest & most expensive purchase in Madrid, bought at top of cycle & one tenant already not paying Should have picked this help in due diligence or at least a guarantee from vendor? Also as a holder can you reassure me on a couple of other items The CPI rents are lauded by mgt but seem painfully slow at coming through, why is this so?. Also mgt also states low vacancy in Europe 3% or so, So why has vacant French unit taken over a year to rent? Would like to add, but need to also know is new mgt aligned?, are they holders. Many thanks if you can help.

[wiganpunter] 24/10/2023 16:58

july - October 25 are the first refinancings. there are new buildings remember and esg ratings hep rates too. I think they will use some of the 20m cash to pay debt down , refocus the div to 6% and maybe get acquired. this is prime stuff and in the large zone for pension funds and pe . the assets at my calc are 30% sub rebuild costs so its an appreciation play here for me as much as income . mispriced and I've been to the top 10 personally .

[williamcooper104] 24/10/2023 16:18

Agreed: so why not just whack the divi Rip of the bandage

[spectoacc] 24/10/2023 15:34

Thanks @wiganpunter. The difficulty is, it's far from alone atm. Also if that debt is 2025 expiry, it'll need dealing with in 2024.

But otherwise agree - got eye on ASLI.

[wiganpunter] 24/10/2023 15:08

I have done extensive modelling on this . the recent nav is 93p . the esg ratings are superb. the vacancy rate is low single digit. like all these reits they try to boost the div with asset management but with a passing rent of 34m you can do the maths and quickly get to a 6% covered div with index linking at these prices. if anyone can show me how well tenanted European industrial real estate ( 8.7 year average lease ) is trading anywhere at 50% in the euro ill wait because there isn't any - in fact what transactions there are in industrial are at or around premiums to nav. I have spoken extensively to management and they are totally aligned. any debt issues which lets be clear aren't until 2025 and then involved 50% of the total borrowings which are going to happen at euro rates not uk or us rates . if you hold rents in general for income like I do you have these moments but equally you rarely get such capital opportunities which this is now one.

[skyship] 24/10/2023 13:49

ASLI plummeting new lows. They have an uncovered dividend and debt issues, but 50.5p does seem rather harsh.

[wiganpunter] 20/10/2023 10:07

ebox sorry mate !!

[skyship] 20/10/2023 10:01

wp - is that EBOX or BBOX?

[skyship] 19/10/2023 19:28

Getting to the crunch:

"Food for thought - my sense is here they are liquidated at nav or taken out at around nav"

Clearly liquidation wouldn't deliver NAV - not even close. Perhaps 12%-15% discount to get the assets away.

Taken out - yes, that would be the most likely solution - perhaps a 20% discount to provide a clear profit for the bidder.

Only problem is that any bidder would go For EBOX - not ASLI!

[wiganpunter] 19/10/2023 16:20

Pro-active asset management initiatives to underpin portfolio occupancy and indexation-led earnings growth, leveraging embedded pan-European platform
· Portfolio value as at 30 June 2023 was €693 million (31 December 2022: €759 million), reflecting the disposal of Leon; the like-for-like portfolio valuation decreased by 6.4%, largely driven by outward yield movement
· Completed the disposal of a warehouse in Leon, Northern Spain, for €18.5 million, reflecting a small premium to the 31 March 2023 valuation
· Attractive WAULT to expiry of 8.7 years and inflation linked lease profile, with c. two thirds of current portfolio income subject to full uncapped indexation
· Headline passing rent of €33.7 million at 30 June 2023 (30 June 2022: €28.3 million)
· Completed income enhancing asset management successes across 80,819 sqm, generating €5 million of annualised rent:
o 9.5 year lease with Dachser France at its La Creche, Niort, property, 3% ahead of previous annual rent payable
o 12-year lease extension agreed with Biocoop on 28,500 sqm at its highly sustainable warehouse near Avignon, France, generating an annual contracted rent of €2.5 million
o Five-year lease extension with Kruidvat at its 39,840 sqm single-tenant warehouse in Ede, the Netherlands, reflecting a 4% increase on the previous passing rent
· The Company maintained its four stars out of five awarded in the Global Real Estate Sustainability Benchmark ('GRESB') survey with expectations for further improvement this year.

The Company's rent collection remained robust, despite the continued economic pressures, with 96% of the expected rental income for the half year ended 30 June 2023 collected.

Following the planned lease surrender in August, the Investment Manager is now actively seeking a tenant for the smaller, modern unit in Madrid previously occupied by Amazon, with interested parties in active discussions with agents. Talks are also ongoing with Arrival as we seek agreement on their proposed surrender of two leases in Madrid. The warehouses in question provide good optionality for splitting into up to five smaller units, which could help to satisfy local occupier demand.

During the period the Company completed four leasing transactions, in three countries, across 80,819 sq m extending the WAULT to expiry to 8.7 years.

It also completed the disposal of the warehouse in Leon, Northern Spain, for €18.5 million, reflecting a small premium to the 31 March 2023 valuation.

We remain positive on the long-term demand drivers from e-commerce, near-shoring, supply chain diversification and modernisation. The reconfiguration of supply chains, driven by the need to adapt in the face of pressures such as technological change, e-commerce and deglobalisation, is a process that should drive strong demand for modern logistics properties for some time to come.

Following the 20% decline in All Property (according to abrdn research) values since June 2022, the yield revaluation phase appears to be closer to the end than the beginning, although risks of another step down are elevated because of the weakening economic outlook and the ongoing difficulties in debt refinancing. We continue to monitor loan covenants, which are seeing pressure from continued yield movement, but mitigants including loan repayment and additional security remain options if required.

Logistics is expected to outperform the EU average All Property total return with 7.8% per annum over the next three years and 7.6% per annum over five years. This is mainly driven by income returns and modest capital growth prompted by a balance of yield compression and income growth. The use of financial leverage today is not particularly attractive given elevated interest rates and persistent downside risks to the market.

We think that interest rates more widely should peak in late H2 2023, before falling back gradually in 2024. Our all-in fixed debt at 2% per annum stands us in good stead and our earliest refinancing is only required in June 2025. However, we remain alive to the fact that rates may not stabilise back to previous low levels, and we are working with the Board to use all levers available to us to improve dividend cover. We continue to expect a three-phase outlook:

- Yield revaluation - we believe that the yield correction is roughly three-quarters of the way through, although price discovery will take more time as liquidity remains low.
- Economic recovery - Eurozone recession expected in Q4 2023/H1 2024, followed by a recovery; interest rate expectations have fallen back and a cutting cycle is expected in 2024.
- Supply-driven rental rebound - lack of supply to support rental growth prospects while sticky inflation is supporting real income growth.

Given the elevated risk levels and the delay in the turning point in 2024, we currently believe in a low-risk approach. We believe that attractive opportunities will arise for investors over the next six to twelve months, and so being ready to take advantage of better pricing entry points will be crucial.

We expect logistics to be one of the best performing sectors over the medium term, given the structural pressures behind demand. Units of between 20,000 to 40,000 square metres in fringe city locations currently represent the most 'liquid' part of the logistics market from both a leasing and investment perspective and offer robust performance prospects in the long run.

A fully covered dividend pre any of above initiatives would be c 3p a share annually. 60% of rents are uncapped inflation linked so even at 60p ( 20% ) higher you would have a 5-6% yield which is target range but a tonne of capital upside.

Food for thought - my sense is here they are liquidated at nav or taken out at around nav.

[skyship] 19/10/2023 14:14

Agreed - EBOX far better value; also now on a 50% discount and crazy 9.6% covered yield. Surely a likely target for a PE fund overflowing with cash looking for a home.

[williamcooper104] 19/10/2023 11:53

The divi the last I looked wasn't remotely covered by EPRA Earnings (excluding FV movements) And the most recent paid for research i read didn't once mention dividend cover Remember material debt needs to be refinanced at least a year before legal maturity So while this could indeed get taken over - the assets are cheap - the dividend is highly unlikely to stay if it's not taken over I prefer EBOX which at least has a fighting chance of not cutting their dividend as they currently cover it

[wiganpunter] 19/10/2023 11:19

hi right now we know the nav is 93p with the sterling translation so today we have a 45% discount . Price per square metre at nav is roughly 80 euros per square foot so you are getting a massive discount to that - sub replacement cost in fact. if you really look at this the dividend cover is 60% but thats driven by accounting given the property revaluation more than the rent cashflow which is 96% collected and several renewals recently with inflation linkage. the window to refinance is 2025 so lets assume that happens at 3.5-3.75 percent versus 2 currently but progressively. the arrival lease issue is relatively minor and can be reworked / relet . Taking a step back here you have high msg compliant mid and big boxes trading at less than it would cost them to build with a good tenancy roll. they will either sell assets like they did at Leon or increase the rents in line with the contracts . to answer your question on liquidation these assets would fetch close to nav - why ? they are esg complaint which is huge for buyers, under 5 years old and with a great tenancy book ex part of Spain which they believe they can further sub divide . this is a crazy level . you will get 5 year capital gain here and income at 6-7% or it will get bought out. look at what Blackstone and bigger pe houses are doing they are all buying mid and big box . this weeks move has been electronic trading correlated to rates but either it recovers / fresh money comes in ( note none of the bigger shareholders have Done anything so far ) or they announce an asset sale / buyback / dividend rework but you are still buying top class industrial for almost 50% off which is madness if you can have the duration on it. I bought today and yesterday its a gift imho .

[catch007] 19/10/2023 10:01

An award for ESG!!! - what an absolute waste of time ESG is to investors!

[giltedge1] 18/10/2023 11:12

Hello can any REIT investor answer this query?, there is a continuation vote in AGM 2024, there is no large shareholder I can see, what is the chances of success?. & if so what % of current NAV would you expect to be returned? in what timeframe.

[cwa1] 25/9/2023 09:09

RBC cuts abrdn European Logistics Income target to 76 (80) pence - 'sector perform'

[williamcooper104] 06/9/2023 10:34

Big drop today

[speedsgh] 22/8/2023 18:09

Valuation pressures ease but Abrdn Euro Logistics needs dividend cover -

Abrdn European Logistics (ASLI) has enjoyed an easing in the macroeconomic pressures that have plagued the real estate investment trust (Reit) and its peers, but with an uncovered dividend and a tenant in Madrid withholding rent, its worries are far from over...

[speedsgh] 22/8/2023 09:57

NAV decreased by 2.6% in euros to 108.3c (31/3/2023: 111.2c). Down by 4.9% in pounds sterling to 92.9p (31/3/2023: 97.7p).

Looks like Arrival, tenant of 2 units in Madrid, have not paid their latest rent.

"As at the date of this announcement, 94% of the expected rental income for the quarter ended 30 June 2023 has been collected. As a result of Arrival's publicly stated intention to consolidate operations in the US, negotiations with the EV manufacturer remain ongoing regarding the two units it leases in Madrid. Rent continues to accrue and is expected to be paid on the conclusion of discussions and the Investment Manager is confident of reaching a satisfactory agreement."

Portfolio Update and Unaudited Net Asset Value as at 30 June 2023 -

[giltedge1] 08/7/2023 14:53

Due for a discontinuation vote in AGM 2024, no majority shareholder, any thoughts on success of vote?. I can only remember one previous property trust being liquidated, AXA European from memory I think sold most holdings, quite quickly 1 or 2 took a while, depends on market & interest rates dropping hopefully. I know which way I will be voting!.

[skyship] 05/7/2023 12:35

Trundling along the bottom at 66.4p. Discount at 32%; Yield at 7.4%.

Looks value; however not so much when you compare with EBOX on a 42% discount & an 8.2% yield.

Money again to be made in this sector when interest rates fall; but they sure don't seem to be in any hurry!

Personally holding API, EBOX, EPIC & SREI - ALL yielding in excess of 8% on covered or promised to be held dividends - these last due to monies needing reinvesting.