3 February 2022

Alternative Income REIT PLC

(the "Company" or "Group")

RENT COLLECTION, DIVIDEND DECLARATION, NAV AND BUSINESS UPDATE

The Board of Directors of Alternative Income REIT PLC (ticker: AIRE), the owner of a diversified portfolio of UK commercial property assets, predominantly let on long leases with inflation-linked rent reviews, provides a trading and business update and declares an interim dividend for the quarter ended 31 December 2021.

Alan Sippetts, Non-Executive Chairman of Alternative Income REIT plc, comments:

"Our resilient portfolio provides secure, long dated and indexed-linked income and remains well placed to deliver further value. This is demonstrated by the strong increases in our like-for-like property valuation and unaudited NAV, growing income and continuing very strong rent collection figures, with 100% of rent due expected to be collected in the current quarter.

Further enhanced income and capital growth are expected to be delivered to shareholders from our portfolio with 93% of our leases linked to inflation, with the potential for further enhancement from asset management initiatives, opportunistic transactions and as the market continues to improve. Together with the Company's modest overhead and strong balance sheet, the Company is increasingly well positioned to deliver attractive, inflation protected fully covered dividends and capital growth to our shareholders."

Rent collection

The rents for the current quarter ending March 2022 are split 83% quarterly and 17% monthly, and to date, the Group has collected 93.3% of the total due in the current quarter and this increases to 99.0% when account is taken for the tenants who are contracted to pay monthly. The remaining 1.0% is expected to be recovered during the remainder of Q1 2022. Overall, for the current quarter, the Group expects to collect 100% of rent due.

Dividend declaration and update on Earnings per Share

The Board is pleased to declare an interim quarterly dividend of 1.30 pence per share for the quarter ended 31 December 2021 (quarter ended 30 September 2021: 1.30 pence per share; quarter ended 31 December 2020: 1.00 pence per share). This quarter's interim dividend will be paid as a Property Income Distribution ("PID") and will be paid on 28 February 2022 to shareholders on the register on 11 February 2022. The ex-dividend date will be 10 February 2022. 

As previously announced in the Company's AGM statement on 30 November 2021, the Board confirms that the Company remains on track to deliver on its target annual dividend of 5.5 pence per share with full dividend cover expected, all else being equal, by September 2022¹. 

Unaudited EPRA EPS for the quarter ended 31 December 2021 were 1.68 pence per share, representing dividend cover for the quarter of 129% (quarter ended 30 September 2021: 1.59 pence per share, 122% cover; year ended 30 June 2021: 5.55 pence per share; 108% cover).

The EPRA EPS includes accruals to reflect both the minimum contracted uplifts and the amortisation of loan arrangement fees and movements in the provision for impairment of trade receivables. Excluding these items from the Group's EPRA EPS, the unaudited adjusted cash earnings were 1.37 pence per share, reflecting 105% cash dividend cover for the quarter (quarter ended 30 September 2021: 1.43 pence per share, 110% cash dividend cover; year ended 30 June 2021: 5.07 pence per share, 99% cash dividend cover).

Property Valuation

As at 31 December 2021, the Group's property portfolio had a fair value of £107.73 million across 18 properties (31 December 2020: £108.53 million across 19 properties).  To compare the valuation of the Group's 18 properties on a like-for-like basis (i.e. excluding the Audi showroom in Huddersfield sold on 1 December 2021), the fair value of the Group's property portfolio as at 31 December 2021 was £107.73 million (31 December 2020: £103.03 million), resulting in a 4.6% like-for-like increase year on year. On a like-for-like basis, the fair value of the Group's property portfolio as at 30 September 2021 was £105.93 million, resulting in a 1.7% like-for-like increase over the quarter.

As at 31 December 2021, the net initial yield on the Company's portfolio was 5.71%, compared with 5.84% on 30 September 2021.

Following the easing of Covid-19 related lockdown restrictions, the Group has experienced valuation increases during 2021 for its leisure and hotel assets, two asset classes that were hit hard by the pandemic, and increases more widely across its retail warehousing, industrial and student housing assets, with the portfolio benefiting from rental uplifts. There is further potential for yield compression as trading and the market generally improves, and opportunities from rental increases as 93% of the portfolio's leases are linked to inflation.

Net Asset Value

At 31 December 2021, the Company's unaudited net asset value ("NAV") was £72.75 million, 90.38 pence per share, (30 September 2021: £70.68 million, 87.80 pence per share) reflecting growth of approximately 2.94% over the period due to increases during the quarter in portfolio valuation and income earned.  

The table below sets out for the movement in NAV during the quarter.

*    The quarter's increase in the independent fair valuation of £1.80 million has been reduced by £0.13 million to reflect the minimum contracted rental uplifts, resulting in a net valuation increase of £1.67 million.

The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards as adopted by United Kingdom and incorporates both the Group's property portfolio individually valued on a 'Red Book' valuation basis as at 31 December 2021 and net income for the quarter, but does not include a provision for the interim dividend declared today (see above) for the quarter ended 31 December 2021.

The income earned for the period includes an accrual for the minimum contractual uplifts contained in the index linked leases. In the event that inflation is greater than these minimum contractual uplifts, the actual income will be greater than the income currently accrued.

Portfolio update

As at 31 December 2021, the Group's assets were 99.7% let (31 December 2020: 100% let) with final terms on the remaining 0.3% agreed with Bgen Ltd for a higher rent in respect of an area of land at St Helens, which was vacated during Q4 2021.

The weighted average unexpired lease term ("WAULT") as at 31 December 2021 was 18.2 years to the earlier of break and expiry (31 December 2020: 18.3 years) and 20.2 years to expiry (31 December 2020: 20.3 years).

93% (30 September 2021: 87%) of the portfolio's income stream is reviewed periodically, on an upward only basis, in line with inflation; with 70% and 23% of the portfolio indexed (subject to floors and caps) to RPI and CPI, respectively.

As announced on 31 January 2022, the Company completed the acquisition of the Volvo car showroom in a prime location on the A4 Bath Road, Slough for £5 million, in an off-market transaction. The price reflects a net initial yield of 5.00% and a discount to replacement costs. This acquisition redeploys the net proceeds from the Group's disposal, announced on 30 November 2021, of its Audi car showroom in Huddersfield for £5.5 million, with a materially longer lease term.

ENQUIRIES

The Company's LEI is 213800MPBIJS12Q88F71.

Further information on Alternative Income REIT plc is available at www.alternativeincomereit.com².

1   This is a target only and not a profit forecast. There can be no assurance that the target will be met and it should not be taken as an indicator of the Company's expected or actual results.

2   Neither the content of the Company's website, nor the content on any website accessible from hyperlinks on its website or any other website, is incorporated into, or forms part of, this announcement nor, unless previously published on a Regulatory Information Service, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company.

NOTES

Alternative Income REIT PLC aims to generate a sustainable, secure and attractive income return for shareholders from a diversified portfolio of UK property investments, predominately in alternative and specialist sectors. The majority of the assets in the Group's portfolio are let on long leases which contain inflation linked rent review provisions.

The Company's investment adviser is M7 Real Estate Limited ("M7"). M7 is a leading specialist in the pan-European, regional, multi-tenanted real estate market. It has over 220 employees in 15 countries across Europe. The team manages over 570 properties with a value of circa €4.3 billion.