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API Abrdn Property Income Trust Limited

0.10 (0.19%)
21 May 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Stock Type
Abrdn Property Income Trust Limited API London Ordinary Share
  Price Change Price Change % Share Price Last Trade
0.10 0.19% 51.50 16:35:25
Open Price Low Price High Price Close Price Previous Close
52.50 51.00 52.50 51.50 51.40
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Industry Sector

Abrdn Property Income API Dividends History

Announcement Date Type Currency Dividend Amount Ex Date Record Date Payment Date

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Posted at 14/5/2024 09:01 by spectoacc
Circular is out:

"James Clifton-Brown, Chair of API, said:

"API has consistently sought to invest in good quality assets that produce an attractive level of income and which also have the prospect of income and capital growth, resulting in an attractive portfolio and consistent outperformance against the benchmark at the property level.

Nevertheless, API, along with other REITs and diversified investment trusts, continues to contend with the significant challenges facing the real estate sector which in API's case are compounded by the relatively small scale of the Company, resulting in a sustained and substantial trading discount to net asset value, low share liquidity and a concentrated debt structure.

Pursuant to its comprehensive review of API's strategic options, and consistent with its previous announcements, the Board believes that a Managed Wind-Down is now the best means of maximising value and unanimously recommends that API shareholders vote in favour of the proposed change to API's investment policy at the forthcoming General Meeting."
Posted at 13/5/2024 19:00 by nexusltd
Wind-up proposal docs to be published tomorrow 14/05.

Diary notes. Review of FY24Q1 RNS & RCF estimate post #753
RCF 31.6mn v. 29.745mn estimate. Significant variances:
• Capex Knowsley, and other expenses: 1.8mn not accounted for.
• Merger costs: 1.1mn v. 2mn estimate
• Uncovered FY23Q4 dividend: adding 0.94mn to RCF v. fully covered estimate

• FY24Q1 Industrial: +0.3% v. CBRE +0.1%
• FY24Q1 Office: -4.0% v. CBRE -1.7%
(Williamcooper recently posited a 10% haircut on office portfolio; on target.)
• FY24Q1 Retail: -0.6% v. CBRE +0.2%

Office 54 Hagley Rd, Birmingham
From FY23 AR. 4.5% of portfolio. Leasehold.
Note 16 “Obligations under Finance Leases” of AR informs ground rent liability. Valuation likely in right ball park.

Far Ralia, FY23 AR
Quotes. “Soft marketing commenced after the period end for the sale of Far Ralia, the Company’s natural capital asset. Timing of the exit is being influenced by changes to the grant funding submission period and strong progress on planting in order to maximise value for the Company.” “Indications suggest the capital value uplift on a sale will make this investment one of the Company’s better investments.” ” To date, the Company has completed approximately 80% of the detailed planting plans … ”
My reading & questions.
• Potentially profitable investment, testing the waters for now.
• Exit timing to maximise return unknown; paperwork problems, & hope that the exceptionally low rainfall in the Cairngorms region is not an impediment to planting saplings or a fire risk.
• FY23 AR Note 8 Land. So far we have spent 9.6mn-0.62mn grant, & written down by 1.3 mn.
• With the Greens out of the coalition will the “grant funding” be deemphasised?
• Is work progressing presently & if so how are the costs of labour, plant (digger) hire, and materials being funded?

Disposal difficulties?
• FY24Q1, 06 May 2024 “The largest vacancy is of a logistics unit that became vacant in November 2023, and had been under offer to sell to an owner occupier, but that is no longer progressing.”
• RNS, 1 February 2024 announced sales that have not completed. Odd announcements b4 cash in hand & during corporate action.
o “Sales have also been agreed of two industrial assets for a total of £24.4m (year-end valuation £22.4m. “
o “Terms were also agreed for the sale of our City of London office and Manchester Office for a combined £14.75m (year-end valuation £15.35m) reducing office exposure by 3.5% to 13%. -3.9% valuation discount” (Monck Street, London? 101 Princess Street, Manchester?)

• Expect FY24Q1 proposed dividend to still be uncovered; another c. 0.9mn added to RCF?
• “Dividend guidance will be revisited after the wind-down vote.” Since FY22Q2 total 1.2p of dividend not covered by EPS, increasing RCF by 4.5mn + compounding interest @ 6.70% p.a.
Dividend to be reduced to 2pps? Yield margin on cost of capital @4.8% v. EPRA NIY @4.8%, =0%. If dividend reduced to 2pps, cost of capital @1.4% v. EPRA NIY @4.8%, margin =3.4%, which is reasonable.
• Loan agreements, from FY23 AR P9 “The two facilities from RBSI are due to expire in April 2026 and incur no early repayment fees.” Incentive to scrub the dividend and focus on repayment. Is REIT regime terminated on a wind-up vote allowing discretion on earnings/capital allocation?

• Vacancy rate 7.9% v FY23Q4 7.6%. “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)”.
• Rent collection FY24Q1 99%
• Lease incentives increased in FY24Q1 & reduced EPRA earnings by an additional 0.3mn.
• “Further strategic review costs of 0.5p per share will crystallise if the managed wind-down is voted for by shareholders.” = 1.9mn
Posted at 30/3/2024 16:37 by skyship
Been running some numbers:

# Q4'23 NAV = 78.5p

# Disc. by, say, 2% for Q1'24 NAV = 76.9p

# Disc by, say, 7% for portfolio liquidation = 71.5p

Add back reducing EPRA earnings over the liquidation timetable, say, 3.5p (pretty conservative figure that!)

# That would deliver 75p in, say 2yrs

That delivers a GRY from Thursday's close of 49.3p of 23.33% pa

IMO the worst possible outcome might be 70p in 2.5yrs for a GRY of a still acceptable 15% pa

Now, one has to accept what the BoD stated c10days ago when trying to persuade shareholders to accept the CREI bid:

"The API Board expects that the net disposal values that would be realised in a Managed Wind-Down would be lower than those achievable on carefully selected individual assets marketed by API in the ordinary course of business - such as API's current programme of disposals to reduce floating rate debt. The API Board's expectations have the benefit of input from API's investment manager and API's independent advisers."

But IMO that was a load of fluff. Perhaps some truth in it; but my 7% discount, ie c£20m write off from accelerated sales, should be quite enough for Jason Baggaley to improve upon!

Makes API a very attractive proposition down at these levels.

Interested to read others' sliderule/back-of-envelope meanderings over the long weekend...
Posted at 30/3/2024 16:34 by stockstockham
A good deal of uncertainty ahead. The board have failed in their preferred option of merger, and should really go.

They may well fail in winning the winding-up vote too.

They made it clear future sales will likely, in sum, be below NAV, a view shared by the investment manager.

'..Input from API's investment manager as well as the API Board's financial, tax, legal and property advisers.'

'The API Board has reviewed a range of detailed disposal scenarios over an illustrative aggregate disposal period for the whole portfolio of 18-30 months, with capital being returned to API Shareholders from Q3 2024. The API Board has also considered the impact of: direct disposal costs (estimated to be 1.25-1.5% of proceeds); management fees...; certain fixed ongoing corporate costs (which would gradually increase as a proportion of NTA); the gradual pay down of the existing debt facility maturing in April 2026; and costs associated with the review and implementation of strategic options...

During the Managed Wind-Down, API Shareholders would continue to receive dividend income, but this income would diminish over time and would be materially lower than that received in the context of a merger..'.

Expect these words to change when pitching for the wind-down vote.
Posted at 22/3/2024 15:52 by pavey ark
No sensible person would assume that the worth of API's assets has even been tested.

There have been sales worth over £60m at over NAV figures and the moorland and the recently vacated industrial unit could /should achieve a price well over NAV figure.

The rest of the deal looks simple enough: take the assets that are quick and easy to sell (£100m+ total)and flog them off at above their rather harshly marked down values.

You now have 40% of your portfolio away at a 5% premium the remainder...some a little and some a have achieved 90%+

It is not that I am over simplifying things but it rather looks to me that the board are making the case that suits THEM best.

I don't think anyone expects that a rapid selloff would generate full NAV for the portfolio but it shouldn't take a very long time and it should be possible to generate 90+%

But it looks like we are heading for CREI with their large number of smaller, higher risk properties least they don't have the ABRDN board to "help" them.

As I said before I have a price set for my looming CREI shares and will sell a large proportion of my shares.

I sold out of API at the top in April 22 (pure luck as I wanted to buy elsewhere) bought back some at 52p&53p collected my dividends and sold at59p ....I think we all have "lucky" shares.

Since March 23 I have bought 8 times av 52p and 48p with dividends.

I am saying this because I now know API (and the management team).......this deal is a loss for the sector......the API portfolio was well bought and well managed and was always worth much more than the values given.
Posted at 14/3/2024 14:42 by mindthestash
I hope the API board replied book value to shed on the sheds only deal
RNS extract

Urban Logistics made a further indicative, conceptual proposal (the "ULR Alternative Proposal") involving a break-up of API, pursuant to which API's industrial and retail warehouses portfolios ("Portfolio 1") would be acquired by Urban Logistics on a share-for-share basis based on the original exchange ratio multiplied by the pro rata share of API's portfolio represented by Portfolio 1, and the remaining properties ("Portfolio 2") would remain within API, with the intention that API should dispose of the properties and return capital to API Shareholders. API's other assets and liabilities would be apportioned between the two portfolios

If I were chair I'd pull both deals.
I'd put the sheds up for sale as a single entity and incentivise current mahager on selling out the rest with a small oversight board.
MLI went for a premium to book if I remember correctly....
Posted at 14/3/2024 07:06 by spectoacc
All sensible, I'd say:

"The API Board has also updated its assessment of a potential managed wind-down ("Managed Wind-Down"), which now appears more viable than at the time of the Board's original review in light of increased visibility on property market conditions, but remains subject to risks relating to the quantum, value and timing of proceeds and associated returns of capital.

· Accordingly, and for the reasons outlined in this announcement, the API Board continues to believe that the CREI Merger represents the best outcome for API Shareholders, and reiterates its recommendation that API Shareholders vote in favour of the CREI Merger.

· Nevertheless, the API Board has decided that, while it continues to view a Managed Wind-Down as a less attractive option for API Shareholders than the CREI Merger, it intends to pursue such an option in the event that the CREI Merger is not approved by the requisite majorities of API and CREI Shareholders."
Posted at 19/2/2024 18:42 by nexusltd
@ mindthestash & nickrl Thank you for your diverting posts #361, #362 in reply to my post #356.

mindthestash Are you an API shareholder? An interested shareholder would have read the merger proposal docs to help make an informed decision and readily found the answers to the questions you listed.

In good faith I’ll reply to your post. However unless anyone offers a nugget of consequential information, useful scuttlebutt etc, this will be my final post on the topic of the API/CREI merger

Many of your post-merger queries are dealt with in the official LSE announcement & plan that CREI’s managers have set out for the merged entity.
[RECOMMENDED ALL-SHARE MERGER - 07:00:04 19 Jan 2024 - CREI News article | London Stock Exchange]

In direct reply to the post-merger stats requested.

Dividend: Page 4.
1. CREI probably maintaining the 5.5pps p.a. dividend so API shareholders will receive 5.5 * 0.78 = 4.29pps, a +7.27% uplift on the currently uncovered 4pps.
2. Dividend cover >=100%.

Debt facilities: Page 4.
1. Given that this is an official LSE announcement it is likely that the managers have done DD, and agreed terms with the lenders to retain all current term debt facilities. Is this an adequate reply to nickrl’s #362?
2. LTV 30.3%
3. Cost of debt 5.0%, maturity 3.8 yrs.

Merged NAV:
Two ways it can be looked at:
1. A reasonable estimate can be calculated from the two recent December API & CREI RNS’s taking account of the recent disposal announcements.
2. CREI’s stated longer term target LTV is 25%. Also CREI state that they intend to repay all the RCFs, retaining the two term loans; CREI 140mm+API 85mn. That would imply a NAV of 675mn. Assuming static property valuations, the implication is that over time the disposal program would be of c. 100mn. Changes in property asset valuations and borrowing facilities will alter the arithmetic.

Regarding the Drum merger in Q3 2021. As you say Drum was a much smaller target than API. The share price discount to NAV steadily narrowed in the weeks following the merger closing onto zero; however note that the BoE rate in Q3 2021 was 0.1%. First increment of 15bps on 16th December 2021. Do you not think that subsequent BoE rate increases explain the failure to fully close and then subsequent widening of the discount?
Bank Rate history and data | Bank of England Database

I have these questions regarding API, can anyone help?
1. Lease expiry/break schedule? API’s leases are chunky in value. What is the % of passing rent that needs to be negotiated in FY 2024? For example. How close is Atos, a company in financial difficulty, to lease expiry/break?
2. When a lease ends how much time and capex will be required before it can be re-leased? What incentives will be required? How long before it produces income?
3. Effect on NIY of disposals. I would expect that announced disposals will increase the NIY. By how much?
4. Both the term loan and the RCF are tied to SONIA. What is the plot of SONIA plot going to be in 2024?
5. When will API’s gross income cover its cost of capital (debt interest +dividends) + expenses + essential capex?
6. How will APIs’ shareholders benefit remaining standalone? Specifically:
a. some numbers supporting the thesis that a stand-alone API is preferable and
b. how the vexing issue of an incompetent Abrdn that seems to have lost interest in its fund management division is resolved?

I ask these very granular questions, because I believe that API’s business plan is failing. It is struggling; running hard to stand still. Taking leverage risk to increase the potential of capital growth or income is fine. When leverage becomes a liability on the cash flow account, immediate action should follow. API’s borrowings have been deployed to finance one third of the assets by value, generate an income that does not cover its interest bill. There is no margin of error left to cope with the vicissitudes of business. The assets are good, the financing broken. In my view a merger with CREI repairs the financing and will allow the assets to shine.

Further to nickrl’s comment regarding Aberdeen; I read in the FT that the well-known value investor Harris Associates, has dumped all its Abrdn stock after losing faith in its management’s ability to revive its asset management division. It looks like ASLI, whose dividend pay-out has been excessive for a long while, may soon follow the steadily expanding list of wind-downs and mergers of closed-end funds in the Abrdn stable.

Finally there seems to be much animus regarding BoD’s, which I think odd as the BoD’s of REIT’s etc. are almost exclusively NEDs. Certainly I have no intention of teaching this very knowledgeable community from which I have learned much. It ought to be known that NEDs duty is not to formulate or execute business plans; a task that executives & managers are paid to deliver. Failing plan delivery, NEDs fire the managers and appoint replacements. The one key decision that REIT NEDs take is setting the level of the dividend. On that basis my view is that API’s board are in a delusional headspace. Cutting the dividend would give Jason the financial flexibility to execute his plan.
Posted at 14/2/2024 13:30 by mindthestash
Thank you Nexus and others. However my judgement leads me to
Disagree with Nexus conclusions for the following reasons.
1. Nexus has helpfully set out how the merger could create value. However as far as I am aware Neither board nor management have set not out the results/metrics they will take responsibility to deliver and which as a shareholder I expect to see before I vote to invest my money.
Something like
"After x period
the combined nav will be x
Debt will be x%nav at Ave cost x
Free cash flow will x%cover dividend
Div est...
The board and management will perform to these metrics etc."
Its a shame Nexus you are not on either board as it's clear you have a plan you are backing. No shareholder should vote for this unless those running the future set out what exactly they will deliver and be accountable for it.
2. Much of the beneficial merger metric highlights are from combined negotiation strength in debt financing. I hope they've done a decent DD because in many cases a merger of this size will be a trigger event to renegotiate the loan terms. Breakage alternatives now look expensive compared to q3 2024. Depending on headroom in their RCF Crei might be able to take out APIs RCF?
3. The DRUM acquisition was less than 5% bite. Prior to offer crei was trading at premium to NAV and DRUM substantial discount. API and CREI are both dragging each other down. Negative marriage value. Why do this.

4. Presently in API I've got a decent portfolio mostly industrials coming with an 8+% divi. With a few unrushed disposals which I reckon wil have a covered divi and a narrowing discount as rates slowly come down. I'll get the same divi in p per share fully covered at some point 2024 and a refinance to come on decent terms (assuming finance /economists get fired).

With this merger in contrast I'm being promised" bigger is better" with no accountability.

As an API shareholder I can't see a significant benefit. I've voted no because my judgement is my API shares will be worth a lot more later this year than the custodian ones I'll inherit.
Posted at 12/2/2024 18:20 by nexusltd
I’ve reviewed the Q4 December 31 updates from both API & CREI. I have accumulated CREI @ average 71p to equal weight of my API holding. I’m voting my API & CREI shares for the proposed merger.

The reason.

Portfolio yield wrt cost of borrowings.
API. The RCF (56.9mn) and Term Loan (85.0mn) facilities are both at a margin of 150bps over SONIA. Q3 & Q4 cost of debt was 6.69%. Portfolio topped up EPRA NIY is 5.40%; a –ve spread of 129bps. It could be that the recent sale of the Cullen Square assets in Livingston, has further reduced the NIY. The numbers in detail:
• Using the topped up EPRA NIY which assumes all rent free periods and lease incentives have expired. 141.9mn debt, -ve 129bps, = -1.83mn = net payment of 0.48pps p.a. to RBS for the ownership of a third of the assets by value.
• Applying the actual EPRA NIY of 4.9%, spread -179bps, = -2.54mn = net payment of 0.67pps p.a. When I calculate the figure for my holding, it amounts to a sizeable cheque that is being written every year to RBS on my behalf.

CREI. The RCF (50.0mn SONIA+171bps = 6.90%) and Term Loan (140mn@3.4%, 6.3yrs) facilities, giving a weighted average cost of 4.3%. Portfolio topped up EPRA NIY is 6.20%; a +ve spread of 190bps.

CREI & API merged. The RCF (35.0mn SONIA+171bps = 6.90%) and Term Loan (140mn@3.4%, 6.3yrs, 85.0mn@6.69%) facilities, giving a weighted average cost of 5.0%. Estimated merged portfolio topped up EPRA NIY is 5.9%; a +ve spread of 90bps.

Dividend cover.
API: The dividend has been uncovered for seven quarters.
• Q1 2022 103.0%
• Q2 2022 94.0%
• Q3 2022 90.0%,
• Q4 2022 98.5%
• Q1 2023 88.6%.
• Q2 2023 72.7%.
• Q2 2023 79.9%
• Q4 2023 83.4%

When will it be covered? The 4p p.a. dividend costs 15.25mn p.a. Need additional c. 3mn net cash to cover. Possibilities:
1. SONIA needs to come down by =>100pbs. Four BoE 25bps cuts. My view one to three cuts in 2024.
2. Asset disposal to reduce the RCF at a NIY < cost of debt, 6.69%, will increase cover.
a. Fully occupied 6.25mn Cullen Square sale is doubtful.
b. The partially occupied offices 14.75mn, Monck Street, London + 101 Princess Street, Manchester sales, should be cover accretive.
c. What of the Q1 2024 £24.4mm sale of the two industrial fully occupied assets? I don’t know.
3. Speculative logistics new build, Villiers Road, Knowsley which is now ready for leasing will start producing income. When? Negotiation time added to possible lease incentives may not bring any net cash in 2024.

Tenant risk.
API: With its concentrated portfolio of 47 assets, is at more risk of significant void increase when a tenant departs. From API Q4 RNS. “Despite these lettings the void rate only reduced to 7.6% from the Q3 level of 8% as we had the tenant of a logistics unit leave in late November”. I note that Atos with a passing rent of £872,466 (3.3%) is in financial difficulty and retrenching. Could this be an issue for API?

CREI: Portfolio of 158 assets, 374 tenants is more diversified. Worth noting that the CREI/DRUM REIT merger was well handled and accretive to CREI; I believe that CREI will greatly benefit from a merger with API. Larger asset base = reduced fixed costs & tenant risk, additional financial flexibility for asset management initiatives, improved loan negotiating position, enhanced wealth manager awareness. CREI has the quality of management and the financial flexibility to deliver.

Long term performance.
5yr NAV total return annualised: API 3.0%, CREI 3.6%. +60bps p.a. Thank you, I’ll take that.

In my view Jason Baggaley has built a quality portfolio, and has been near the forefront for recognising a) the need to upgrade the portfolio to conform to the evolving Minimum Energy Efficiency Standards, and b) that quality-tenants are prepared to pay for more energy efficient and well configured space.

The ownership change from SLI to Abrdn has been a catastrophic failure for API. I entirely blame the Abrdn credit management team for not moving earlier to refinance API’s debt on decent terms. The debt refinancing terms have comprehensively x-shredded Jason’s long term plans. Abrdn’s BoE end of ’23 interest rate forecast was laughable. They need to go. Further, it is evident that Abrdn’s asset management division is losing its balls (APEO, UKCM, ACIC) literally and metaphorically.

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