Half-year Financial Report

THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA, CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA.

3 March 2026

Alternative Income REIT plc

(the "Company" or the "Group")

INTERIM REPORT AND FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2025 (the "Period")

NAV increased 1.0% over the Period

For the Period: Share price total return of +2.7% and unaudited NAV total return of +3.8%

On track to deliver target annual dividend of no less than 5.6 pence per share[A] ("pps") for the financial year ending 30 June 2026

Resilient portfolio, well placed to continue to provide secure, index-linked income with the potential for capital growth

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 index-linked rent reviews, is pleased to announce its interim report and financial statements for the half year ended 31 December 2025 (the "Period").

Simon Bennett, Non-Executive Chair of Alternative Income REIT plc, comments:

"The Company is on track to deliver an annual dividend target of no less than 5.6 pence per share^A ("pps") for the year ending 30 June 2026 (year ended 30 June 2025: 6.2 pps), which is expected to be fully covered subject to the continued collection of rent from the Group's property portfolio as it falls due. The resetting of the dividend target this year, which is lower than the previous year, is entirely due to increase in financing costs of the new long-term debt facilities.

On a like-for-like basis, contracted annualised rent grew by 0.7% in the Period, predominantly because of the index-linked rent reviews in Salford, Brough and Solihull. 92.1% of the leases within the portfolio are index-linked, with 38.0% of contracted rental income being reviewed annually.

Following the sale of the Group's petrol filling station in Crawley ("Crawley") in October 2025, at 31 December 2025, the Group owned 19 properties valued at £103.5 million (30 June 2025: 20 properties: £107.4 million). 

At 31 December 2025, the Group's unaudited Net Asset Value was £68.0 million, or 84.48 pps (30 June 2025: £67.3 million, or 83.64 pps), representing a 1.0% increase over the Period. When combined with the two interim dividends paid in the Period of 2.95 pps, this produced an unaudited NAV total return for the Period of 3.84%.

On 20 October 2025 the Group completed new long-term debt facilities with HSBC UK Bank plc (the 'New HSBC Bank Facilities') of £41 million, when the previous senior loan matured. The New HSBC Bank Facilities consist of a term loan of £31 million and a £10 million revolving credit facility, both on floating rates for a fixed term of five years with an option to extend by two years if mutually acceptable. 

The Board remain confident that the Company is well-positioned for the future, with a portfolio that continues to deliver secure, index-linked income and which has the potential for capital growth as the property market recovers."

Financial Highlights

At 31 December 2025 (the "Period End")

For the half year ended 31 December 2025

Financial Highlights Overview

Operational Highlights

At the Group's Period End of 31 December 2025:

Income and expense during the Period

Post balance sheet highlights

ENQUIRIES

The Company's LEI is 213800MPBIJS12Q88F71.

Further information on Alternative Income REIT plc is available at www.alternativeincomereit.com[E]

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, with a particular focus on alternative and specialist real estate sectors. The majority of the assets in the Group's portfolio are let on long leases which contain index linked rent review provisions.

The Company's asset manager is Martley Capital Real Estate Investment Management Limited ("Martley Capital"). Martley Capital is a full-service real estate investment management platform whose activities cover real estate investing, lending, asset management and fund management. It has circa 40 employees across five offices in the UK and Europe. The team manages assets with a value of circa £1 billion across 30 mandates (at 31 December 2025). 

Chairman's Statement

Overview

I am pleased to present the unaudited half-yearly report of Alternative Income REIT plc (the "Company" or the "Group") together with its subsidiaries for the half year ended 31 December 2025.

During the period under review, the Company's portfolio increased in value with the Group's net asset value rising by £0.7 million to £68.0 million (30 June 2025: £67.3 million), an increase on a par with both the benchmark property indices and the Company's peer group.

92.1% of the Group's portfolio benefits from index-linked rent reviews, 38.0% on an annual basis based on contracted rent. The Group has a strong balance sheet, modest overheads and competitive borrowing costs and is thus well placed to continue to deliver attractive and secure income to our shareholders. The biggest risk factor for the Group remains tenant default, although in recent years the Group has an excellent record of rent collection.

Portfolio Performance

The fair value of the Group's property portfolio amounted to £103.5 million across 19 properties (30 June 2025: £107.4 million across 20 properties), the decrease reflecting the sale of the Group's petrol filling station in Crawley. At the Period end, the portfolio had a net initial yield of 7.1% (30 June 2025: 7.1%), and a WAULT to the first break of 15.4 years (30 June 2025: 15.6 years) and a WAULT to expiry of 17.1 years (30 June 2025: 17.2 years).

Property Transactions

In October 2025, the sale of the Group's petrol filling station for £4.5 million (gross of disposal costs), was completed.

Dividends and Earnings

The Company declared interim dividends totalling 2.80 pps in respect of the half year ended 31 December 2025 (half year ended 31 December 2024: 3.10 pps). Dividends declared for the Period are in line with the Board's target annual dividend of no less than 5.6 pps^A, which is expected to be fully covered.

As set out in Note 8 to the Condensed Consolidated Financial Statements, these dividends were covered by both the Group's EPRA Earnings^B of 3.23 pps (31 December 2024: 3.28 pps), and by the Group's Adjusted EPS^B (representing cash) of 3.32 pps (31 December 2024: 3.26 pps). All dividends were paid as Property Income Distributions.

Financing

The Group refinanced its long-term loan facility on 20 October 2025 with HSBC UK Bank Plc. The new HSBC Bank Facilities consist of a term loan of £31 million and a £10 million revolving credit facility ('RCF'), both on floating rates for a fixed term of five years with an option to extend by two years if mutually acceptable.

At 31 December 2025, the Group had partially utilised its £41 million facility with HSBC, with the term loan of £31 million fully drawn and a drawn down RCF of £5.6 million, following the use of the proceeds from the disposal of Crawley to reduce the RCF by £4.4 million. Total borrowings at 31 December 2025 were £36.6 million (31 December 2024: £41.0 million).

Both the HSBC loan and RCF have a margin of 1.7% per annum plus SONIA (sterling overnight index average rate). This represents an improvement in terms on the previous debt facilities, but total finance costs will increase as a result of the higher prevailing base interest rates. The loan and the RCF are aggregated for the purposes of the aggregate debt's financial covenants and, being based on a Loan to Value covenant which is not to exceed 60% and an Interest Cover Ratio to be greater than 160%, an improvement in terms.

Discount

The discount of the Company's share price to NAV at 31 December 2025 increased to 12.9%. Since that date the share price has increased and the discount has narrowed substantially. The Board monitored the discount level throughout the Period and has the requisite authority from shareholders to both issue and buy back shares.

Future Growth and Outlook

The Board remains confident that the Company is well-positioned for the future, with a resilient portfolio well-placed to continue to provide secure, index-linked income with the potential for capital growth.

The Board has set an annual dividend target of no less than 5.6 pps^A for the year ending 30 June 2026 (year ended 30 June 2025: 6.2 pps), which is expected to be fully covered, subject to the continued collection of rent from the Group's property portfolio as it falls due. During the six months until the end of the current financial year, approximately 22.3% of the Group's income will be subject to rent reviews or lease expiries, 16.4% as annual index-linked rent reviews, 5.1% as a periodic index-linked rent review (3 years since the previous review) and 0.8% lease expiry of storage land in St Helens.

I would like to thank our shareholders, my fellow Directors, the Investment Adviser and our other advisers and service providers for the professional support and guidance they have provided to the Group during the Period.

Simon Bennett

Chairman

2 March 2026

Key Performance Indicators ('KPIs')

EPRA Performance Measures

Detailed below is a summary table showing EPRA performance measures (which are all alternative performance measures) of the Group.

1      The reconciliation of this APM is set out in Note 8 of the Notes to the Consolidated Financial Statements.

2      The reconciliation of this APM is set out in the EPRA Performance Measures Calculations section following the Notes to the Consolidated Financial Statements.

Investment Adviser's Report   

Market Outlook

UK Economic Outlook

The UK economy posted weak growth in H2 2025, with real GDP growing 0.1% in Q3 and Q4, indicating a soft expansion rather than stagnation^A. UK performance continued to lag peers, with Q4 2025 UK GDP being 5.2% above Q4 2019 as compared to 6.8% for the Eurozone and 14.5% for the US, and quarter‑on‑quarter growth of 0.1% as compared to 0.3% in the Eurozone and 1.1% in the US^B. The Bank of England's November 2025 Monetary Policy Report projected medium‑term growth of circa 1.5%, it flagged near‑term softness (roughly flat Q4), and thus implied 2025 would be below its February 2025 guidance which had suggested a stronger year than 2024^C.

UK unemployment rose further in H2 2025, reaching 5.1% in the three months to November 2025, its highest level since 2021, reflecting a weakening labour market after earlier resilience^D. As a result, annual wage growth eased through the second half of the year, signalling reduced inflationary pressure heading into 2026^E. Businesses continued to express concern that increasing employment costs - particularly higher National Insurance contributions - will constrain hiring and place upward pressure on prices. The British Chambers of Commerce subsequently revised its 2026 unemployment forecast upwards, citing weaker demand, elevated costs, and rising youth unemployment^F.

Inflationary pressures remained during the second half of 2025, with the Consumer Prices Index (CPI) rising to 3.4% year‑on‑year in December 2025, above the 2% target^G. Service‑sector inflation continued to be a key driver of overall price growth, with CPI services inflation at 4.5% in December 2025, reflecting persistent cost pressures in labour‑intensive industries. Looking ahead, the Office for Budget Responsibility are projecting that CPI inflation will ease to around 2.1% in 2026^H.

The Bank of England continued its easing policy in 2025, with the base rate - held at 4% in early November 2025 - reducing in December to 3.75%, marking the fourth reduction in 2025 as inflation cooled and economic momentum weakened. Financial markets expect the Bank to continue its gradual easing cycle in 2026, with analysts anticipating further rate cuts as the labour‑market softens further and inflation trends downward^I. Major institutions, including BlackRock, forecast that the Bank Rate could fall toward 3.5% by mid‑2026, aligning with money‑market pricing that signals an expected decline to between 3.25% and 3.5% by late 2026^J.

Economic sentiment remained fragile in late 2025. In the two weeks to 14 December 2025, the ONS Business Insights and Conditions Survey reported that 16.2% of firms expected their performance to decline over the next 12 months (versus 18.3% expecting an improvement), underscoring a deterioration from early‑year readings^K. Consumer confidence showed only marginal improvement into year‑end, with Growth from Knowledge's overall Index rising to ‑17 in December 2025 from ‑19 in November but remaining deeply negative and below long‑run norms^L.

The UK economy enters 2026 with weak underlying momentum, having posted only minimal growth and continuing to lag key international peers, though reduced inflation and improving financial conditions offer some tentative support. A softening labour market, marked by rising unemployment and slowing wage growth, points to further slack ahead, yet moderating cost pressures may help stabilise real incomes. Inflation remains elevated, but forecasts indicate a steady easing toward target over the coming year. The Bank of England is expected to continue loosening policy, with markets and major institutions anticipating further rate cuts through 2026 to help underpin demand. Overall, economic sentiment remains subdued, but conditions for a gradual recovery are beginning to improve.

Sources:^A ONS (2026), GDP estimates;^B House of Commons Library (2026), GDP international comparisons: Key Economic Indicators;^C Bank of England (2025), Monetary Policy Report - November 2025;^D ONS (2025), UK Labour Market Statistics;^E ONS (2025), Average weekly earnings in Great Britain: November 2025;^F British Chambers of Commerce, Economic Forecast (December 2025);^G ONS (2025), Consumer Price Inflation, UK: November 2025;^HHouse of Commons Library (2025), Inflation: Key Economic Indicators;^I Morningstar (2026), Will the Bank of England Cut Interest Rates in 2026?;^J HomeOwners Alliance (2026), Will the Bank of England Cut Interest Rates Again on 5 February 2026?;^K UK Parliament (2025), Business and consumer confidence: Economic indicators;^L Trading Economics (2026), United Kingdom - Consumer Confidence.

UK Real Estate Outlook

Following a muted summer period, H2 2025 closed with a powerful resurgence in activity as Q4 2025 delivered a decisive shift in momentum. Earlier volumes were constrained by a lack of major deals, but Q4 investment surged to a record £21.6 billion, up 145% on Q3 2025 and underpinned by an exceptional rebound in large scale transactions^A. Alongside the completion of major pipeline deals in Q3 2025 such as Tritax's £1.0 billion Project Centurion acquisition, the £340 million Can of Ham sale, and the £628.9 million PRS REIT disposal, Q4 was dominated by landmark activity in the living sector, including Welltower's £5.2 billion purchase of the Barchester Healthcare portfolio and its separate £1.2 billion acquisition of HC‑One^B. With 20 transactions exceeding £200 million in the final three months of 2025, all major sectors recording volumes above their five-year averages, improved financial conditions and renewed investor confidence helped deliver a markedly stronger finish to the second half of 2025 and set a positive foundation heading into 2026.

Across the half year, monetary and market conditions shifted from cautious to favourable. The Bank of England's base rate cuts, combined with the easing of CPI inflation, have supported an improvement in relative pricing for real estate. Credit availability strengthened throughout, with lenders reporting seven consecutive quarters of improvement, underpinning refinancing and selective new origination^C. On pricing, despite no movement to the MSCI All-Property equivalent yield in the first six months of the year, a 68% increase in transaction volume in the final six months pushed yields in by 10 bps^D. Capital values continued their positive trajectory, delivering total growth of 1.4% in 2025. Even so, forecasters tempered 2025 expectations over the course of the year: Colliers revised total returns from 9.8% (Q2) to 7.4% (Q3) and then 6.7% at year end - citing higher-for-longer debt costs and a 17-year-low spread between property gilts^E. Looking ahead, the rate cut and softer inflation set the stage for wider spreads and renewed capital value growth in 2026, with total returns trending back toward 8% - 8.5%^F.

Sector wise, the UK real estate investment landscape over the half year was driven by living, which strengthened from a Q3 rebound (£3.8bn; +38% q/q; 10% above trend) to a record £10.6bn in Q4, supported by unprecedented healthcare and single family rental transactions that lifted the sector well above its long-term average. Industrial sector activity remained resilient, with Q3 2025 volumes outside London being more than double Q2 2025 levels and 22% above trend, before accelerating further in Q4 to £3.7bn.  This is circa 45% above the five-year average which was underpinned by major portfolio trades including Tritax's £1.0bn Project Centurion acquisition. MSCI data show the sector continuing to lead performance into late 2025, with capital values rising 2.97% for the year and ERV growth of 0.37% in December alone, the strongest among all major segments. Looking ahead, retail is expected to outperform in 2026, with shopping centres and retail warehouses forecast to deliver c.10.1% and 8.9% total returns respectively, supported by tightening prime vacancy, limited new development and sustained rental growth potential.year was driven family rental transactions that lifted the sector well above its long-term average. year average

After a strong first six months the FTSE EPRA Nareit UK delivered 11.1% total return in 2025^G. Returns softened into Q3 as higher bond yields pressured equity pricing, leaving year-to-date gains around mid-‑date gains around mid-single digits by September and underscoring rate sensitivity rather than asset-single digits by September and underscoring rate sensitivity rather than asset‑-level‑ weakness. Even so, valuations remained deeply discounted, with UK REITs trading at 27-30% below NAV - a level that, historically, has preceded stronger forward returns as financing conditions stabilise^H. Long‑ term guidance is also supportive: J.P. Morgan's Guide to the Markets (UK) indicates core real assets can deliver high-single-‑single digit annualised returns over the coming decade, providing a constructive backdrop for patient digit annualised returns over the coming decade, providing a constructive backdrop for patient ‑capital^I. At the stock level, AIRE finished 31 December 2025 at 73.6pps (roughly flat over H2), reflecting income resilience but lingering rate sensitivity, with prices rebuilding into January. Early signs of improved credit availability towards the year‑end added support to the case for listed real estate.

UK real estate closed the half year on a markedly stronger footing as Q4 2025 activity surged to record levels, supported by easing inflation, a December rate cut, and improved credit conditions. Living and industrial sectors led the rebound, delivering above trend volumes and the strongest capital value performance, while retail's 2026 outlook improved with shopping centres and retail warehouses expected to outperform. Although 2025 return forecasts were revised lower amid higher borrowing costs, stabilising MSCI pricing indicators, historically wide REIT discounts, and widening yield spreads underpin a more constructive outlook. Overall, the market enters 2026 with firmer momentum and total returns expected to normalise toward high single digits, supported by resilient sector fundamentals and long-term structural demand drivers.

*Sources: ^ALSH Research (2026), UKIT Q4 25, ^BLSH Research (2026), UKIT Q3 25, ^CBank of England (2025), Credit Conditions Survey, Q4 2025, ^DMSCI (2025), MSCI UK Monthly Data - December 2025, ^EColliers (2025), REIF Q4 2025,^FCBRE (2026), UK Real Estate Market Outlook 2026, ^GFTSE (2025), FTSE EPRA Nareit UK Index, ^HGravis Capital (2025), UK REITs: does the resurgence still have legs?, ^IJP Morgan 2025, Guide to the Markets UK Q1 2026.

Portfolio Activity 

The following transactions were undertaken during the Period:

In October 2025, the Company completed the sale of Crawley for £4.5 million (gross of disposal costs). This property represented 4.0% of the Group's portfolio capital valuation at 30 September 2025. The disposal represented a net initial yield of 5.7%

The following asset management initiatives were undertaken during the Period:

NAV Movements

Valuation

At 31 December 2025, the Group owned 19 assets valued at £103.5 million (30 June 2025: 20 assets, £107.4 million) following the sale of Crawley for £4.5 million in October 2025.