Abrdn European Logistics... Share Discussion Threads

[skyship] 17/12/2023 15:20

ASLI beginning to look interesting as the share price drifts back below 60p; and as other REITs continue strong recoveries.

A 732k UT trade at 59p after hours on Friday, so may well be on offer below 60p tomorrow. At 59.8p the discount is 30.7% (03'23) and the yield 8.01% - the yield now one of the highest across the board for the "sensible" players; in spite of the ongoing Strategic Review.

NB: The dividend is uncovered and would be "rebased" if the company continues; so prospective possibly just 6.75%-7.0%.

[williamcooper104] 27/11/2023 12:49

Ought to be able to get close to it especially if that's an EPRA NAV so doesn't have swap mark to markets

[clever] 27/11/2023 12:15

How likely they will be able to realise value at 86.3p NAV if all assets are to be sold?

[williamcooper104] 27/11/2023 10:30

Sale of all assets, with proceeds distributed to shareholders and the reit would down Annoyingly EPIC didn't need to cut their dividend A merger with BBOX is possible; they are both now managed by Abdrn but suspect the temptation to realise value at NAV too great

[williamcooper104] 27/11/2023 08:13

My guess is this will go same way as EPIC

[cwa1] 27/11/2023 08:08

Strategic Review



In line with its constitutional terms as set out on launch in December 2017, the Company is required to propose a continuation vote at its next Annual General Meeting, expected to be held in June 2024. With that in mind, and cognisant of the feedback received from a number of shareholders in recent meetings, the Board believes that the current point in time represents an appropriate juncture at which to consider more fully the basis on which the Company might best proceed, having regard for the best interests of shareholders as a whole.

Accordingly, the Board today announces that it is undertaking a strategic review of the options available to the Company (the "Strategic Review"). The Board will consider all options available to the Company that offer maximum value for its shareholders including, but not limited to, undertaking some form of consolidation, combination, merger or comparable corporate action, selling the entire issued share capital of the Company (which would be conducted under the framework of a "formal sale process" in accordance with the City Code on Takeovers and Mergers (the "Code")), and selling the Company's portfolio and returning monies to shareholders. There is no certainty that any changes will result from the Strategic Review and, for the avoidance of doubt, a continuation of the Company's current investment strategy with a rebased target dividend level is a potential outcome of the Strategic Review.

Tony Roper, Chairman, abrdn European Logistics Income plc, commented: "The Board's priority at all times is to act in the best interests of shareholders. Whilst we retain a strong conviction in the strategy, today's proactive decision to launch a strategic review largely reflects the unprecedented macro backdrop that real estate companies are operating against and provides greater optionality to deliver shareholder value."

The Board has appointed Investec Bank plc ("Investec") as Financial Adviser to manage the Strategic Review and formal sale process. Investec is acting as Rule 3 adviser to the Company under the Code.

The Board will make further announcements in due course.

Portfolio Update and NAV

[wiganpunter] 31/10/2023 12:39

Hi mate

I like both just make that clear but here am adding Asli because I think the ESG ratings are better and I like the Poland / Spanish exposure whereas if anything I felt ebox was a bit heavier towards Germany but I wouldn't want to get into a fight about it either way.

you make 50-60% on both here on capital appreciation .

[skyship] 27/10/2023 16:06

wiganpunter - thanks for all the detail.

As a matter of interest, is there any reason why you hold ASLI in preference to EBOX?

The latter on a higher discount (50.8% v. 43.6%) and a higher yield (9.8% v. 9.0%).

Also arguably a better and more diversified portfolio and less debt concerns.

I've obviously looked at these; but topped up EBOX as they seem demonstrably better value.

[wiganpunter] 27/10/2023 14:20

hello right now anything below 70p and id vote for an orderly wind up via a continuation vote - I think a 20% discount is fine in current climate and I have also made that clear in my correspondence. I cannot stress this enough but if you run Europe pension funds with large esg parameters which a lot of firms do then buying these assets out and running them yourself makes tonnes of sense - Pbsa and high scoring industrial assets are well bid . the meuny asset is a distraction / minor headache in that regard but resolvable either by upgrade or sale . if you look at Angelo gordon , lgim , Blackstone , people of that stature with lots of balance sheet I think if we are sub 70/75 it won't make it to a continuation vote . just to dwell on that for a moment .look at the stats , use of solar etc in the recent award.

GRESB is the largest global ESG benchmark for real estate and infrastructure investments, with c. $8.6 trillion of AUM participating in the benchmark.

The Company has delivered another year on year improvement in its annual score and reclaimed first place in its peer group, with a score of 89 points, up from 86 points in 2022. This compares to the peer group average score of 81 points and an overall GRESB average of 75 points.

In addition, the Company has attained the top-rated gold level awarded by EPRA for compliance with its 'Best Practice Recommendations' in financial reporting.

The Company has executed several sustainability-led initiatives during the past year, building on the significant progress it has made improving the credentials of its portfolio of Grade-A, modern properties. These include:

· High tenant data coverage which has helped to inform carbon performance and feed into net zero plans
· Ongoing assessment of the operational performance of the portfolio, through BREEAM In-Use assessments and sustainability audits identifying actions to improve performance
· A portfolio-wide occupier engagement programme
· 100% of landlord energy procured from renewable sources
· 34% of portfolio by floor area with solar PV with ongoing reviews across the estate
· 96% of assets by floor area with EPC's A-B

[giltedge1] 27/10/2023 13:21

Hello Wiganpunter, thanks for information ties in with my thinking, Good quality A Logistics portfolio, the sudden drop a bit offputting. There has been a mini rally today up to 53p, assume large seller has stopped now. Would like to add but out of funds till January. Finally what are your thoughts on continuation vote at next AGM?,
are you against or in favour?.

[wiganpunter] 27/10/2023 12:50

I have also written to the board to suggest that in 2 years time they issue green bonds given the strength of the bream / esg ratings in the portfolio . this will allow Tham to secure very advantageous borrowing rates. see example enclosed from prologis. the ASLI portfolio is incredibly esg rated - a huge plus also overlooked .

Ethan Gilbert, director of Global ESG at Prologis, reflects on the company’s green financing journey: “Our first step into the green bonds space was in 2018 in Europe, which is when we developed our global green bond framework. This framework was reviewed by Sustainalytics for alignment with the 2017 International Capital Market Association’s (ICMA) green bond principles.” The ICMA gives direction on how the proceeds of a green bond should be used to support green projects.

When it deploys a green bond, Prologis uses the proceeds to fund the construction or retrofitting of buildings, renewable energy and/or energy storage. Up to now, the company has concentrated on using green bond proceeds for green buildings, building to industry-leading certification standards (e.g., LEED, DGNB, BREAM and CASBEE).

“These high-quality buildings allow us to attract high-quality investors and tenants. We see many customers making decisions based on sustainable certification types,” Gilbert explains. “And our investors can know what to expect from us—they know that a new or newly redeveloped Prologis building will be a modern building, built to the highest standards and sustainably certified.”

Gilbert sees green financing as a means of attracting sustainability-focused or “dark-green221; investors willing to purchase debt. He notes, too, that it is an evolving model, and that other real estate developers have started exploring the use of green bonds to attract investors looking to build more diversified portfolios.

[wiganpunter] 27/10/2023 11:52

if useful the green street data has industrial property down 7.2% in the last 12 months. the ASLI nav is down I think 20 odd and clearly the price today implies another 45% so its just not justifiable on any analysis I can do.

[wiganpunter] 27/10/2023 11:31

morning , sorry i dont check this every day
ok I have been to the top 10 - I have a large position for my family office and we do rigorous due diligence inc site visits. its actually quite fun and we had a great weekend in Madrid.
you will be aware that the meung sur loire building is the oldest by far in the portfolio built in 2004 , unlike the rest of it which are all sub 5 years. it represents 2.7% of the rent roll and sits next to several buildings owned by prologis. I don't know a 100% but I suspect this will be sold to prologis who run the rest of the park . in the interim it has been updated but as the oldest asset given the esg focus I would sell it if I were them .
your question on Madrid ill take in 2 ways - not sure why you think Madrid is at the top of its cycle ? you will know the Leon Spanish asset was sold at a small premium to book a few months ago. Madrid last mile space ( 3rd largest city in Europe ) is very sought after and they paid using equity proceeds c 170 euros per square foot. the whole rent roll is index linked and uncapped and is adjusted annually so the lookback creates the base rent foe the next 12 months - you will note the passing rent roll at mid year was 12-15% up yoy reflecting those changes and more to come.
I find a really useful publication to be the green street indices which capture all transactions .
"London, 5 October 2023 – The Green Street Commercial Property Price Index decreased two percent in the third quarter. The index, which measures bid pricing levels across a broad swathe of B/B+ quality Pan-European commercial properties, sits 22% below its May '22 peak and is roughly on par with its ’07 peak. The retail and office sectors saw price declines of about five percent each in the three months to October 1st. The investment theme of a widening yield gap between A/A+ and B/B+ quality buildings resulted in average price declines across most geographies in both sectors. By contrast, a muted expansion in B/B+ quality yields in residential and industrial was offset by resilient fundamentals fuelling meaningful cashflow growth. Asset prices thus nudged one percent higher in each sector."
the point off all this being yes there are good and bad news in all these portfolios - we can talk about the 4 new leases signed in august too if you like but this is a super high quality book and currently is priced at 50% of its nav which makes zero sense in any scenario. longer term the capital uplift from here via a refinancing cycle in 2025 ( c4.5 rates anticipated puts you holding a modern portfolio with a 7% div at prices that are a glassy away from anything that is actually happening . I know Tony Roper the chairman bought stock and the fund managers are paid from carry in the fund so there is alignment but always nice to see more share purchases . hope that answers your questions sorry for the delay.

[giltedge1] 26/10/2023 10:54

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 07:31

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 21:43

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 17:58

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 17:18

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

[spectoacc] 24/10/2023 16:34

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 16:08

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 14:49

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

[wiganpunter] 20/10/2023 11:07

ebox sorry mate !!

[skyship] 20/10/2023 11:01

wp - is that EBOX or BBOX?