Annual Results - December 2024

Guernsey: 30 April 2025

LEI: 549300HHFBWZRKC7RW84

abrdn Property Income Trust Limited

(an authorised closed-ended investment company incorporated in Guernsey with registration number 41352)

(“API” or the “Company”)

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024

The Company's Annual Report and Accounts for the year ended 31 December 2024 and the Notice of the Annual General Meeting will shortly be available to view on the Company's corporate website at https://www.abrdnpit.co.uk/en-gb/literature.  The Documents have also been submitted to the National Storage Mechanism and are available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.  Hard copies will be posted to shareholders shortly.

PERFORMANCE SUMMARY

* Represents the special interim property income distribution to shareholders (Ex-Dividend Date: 19 December 2024, Record Time: 20 December 2024) as a result of exiting the REIT regime. This was in addition to the return of capital via the redeemable bonus shares

** As defined and calculated under API’s Alternative Performance Measures (as detailed in the full Annual Accounts which can be found via the following link: https://www.abrdnpit.co.uk/en-gb/literature)

^ Assumes re-investment of dividends excluding transaction costs.

Sources: abrdn, MSCI

CHAIR’S STATEMENT

Background

As previously reported in both the Company’s 2023 Annual Report & Financial Statements and 2024 Interim Report & Accounts, the Board undertook a strategic review in the second half of 2023.  This was prompted by concerns about the Company’s size, lack of liquidity in its shares, uncovered dividend and the share price trading at a persistently large discount to the net asset value (NAV). The outcome of this review was for the Board to recommend to shareholders that they vote in favour of a proposed merger with Custodian REIT.  However, this ultimately did not garner enough shareholder support at the Extraordinary General Meeting in March 2024.

In advance of the March EGM, the Board had indicated that, should the Custodian merger proposal fail, then a liquidation of the Company would be the recommended alternative.  Therefore, in May 2024 API shareholders were given the opportunity to vote on a proposed change to the Group’s Investment Objective from “The Company’s objective and purpose is to provide Shareholders with an attractive level of income together with the prospect of income and capital growth.” to “The Company’s investment objective is to realise all existing assets in the Company’s portfolio in an orderly manner.”  Included in this change was a revision of the fees paid to the Investment Manager to reflect the new Investment Objective and align the interest of the Investment Manager with the sale and return of capital to shareholders.  On 28 May 2024, approximately 96% of shareholders (who voted) voted in favour of this proposal and the resolution passed.

Managed Wind-Down

Following the May 2024 vote, alongside the Investment Manager, the Board explored the most effective means of disposing of the Company’s assets, with the main aims being to obtain the best achievable value for the Company’s assets at the time of their realisation and to repay borrowings and return capital to shareholders as swiftly as possible. As previously disclosed, this encompassed various disposal strategies, including individual property sales (of which 6 completed in 2024) alongside a wider portfolio transaction.  Through an independent agent the whole residual portfolio (excluding the land at Far Ralia) was marketed to potential buyers in an extensive and competitive process; while it was made known that Far Ralia was also available for purchase, it was felt that its inclusion may deter potential purchasers of the wider portfolio and a more targeted approach for the asset in isolation would result in a more favourable outcome. Following consideration of these proposals, and what might be achieved by way of individual property sales over a longer period with the associated risks, the Board selected a preferred bidder and agreed a transaction with GoldenTree Asset Management (GoldenTree) for the sale of the entire share capital of abrdn Property Holdings Limited (aPH), the wholly owned subsidiary of the Company.

Sale of aPH

After extensive due diligence by the purchaser and detailed negotiations, the transaction completed on 29 November 2024 as expected and comprised the sale of 39 assets (being the Company’s entire residual investment property portfolio barring its interest in Far Ralia) in addition to the Group’s debt facility with RBSI and various net current assets/liabilities. The cash consideration for the purchase of the investment portfolio was £351m (an 8% discount to the portfolio’s valuation as at 30 June 2024), while the net proceeds, after adjusting for debt and other net assets subject to normal adjustments including those arising from the completion process, was £234.3m (resulting in an accounting loss of £48.2m).

GoldenTree paid an initial cash deposit of £35.1m upon exchange of contracts in September 2024, and a subsequent balancing payment on 29 November 2024.  As part of the sales agreement, there was then a period of review in which the final completion accounts were prepared to reflect any post balance sheet events which would impact the aforementioned adjustments.  This created a degree of uncertainty as to the final amount of the net proceeds.  After consultation with the proposed liquidators, Investment Manager and other advisors, the Board decided to keep a prudent retention to allow for future costs and conclusion of the completion accounts process.

The Board’s view was that the most efficient way of returning funds to shareholders was by means of a Redeemable Bonus Share Scheme.  To that end, a circular was issued to shareholders outlining proposed changes to the Articles of Association which allowed the Board to return 55p per share in aggregate. This was made up of:

▸an initial return of capital comprising 52p per share, paid on 23 December 2024.

▸an interim Property Income Distribution of 3p per share, paid on 10 January 2025.

At a General Meeting of the Company on 17 December 2024, approximately 99.5% of shareholders (who voted) voted in favour of this proposal and the resolution passed.

REIT Status

The Company had been a member of the REIT regime since 1 January 2015 and while a member was required to distribute at least 90% of the income profits of the Group’s UK property rental business (“Property Income”). A consequence of the transaction was that the Company immediately exited the REIT regime and is now required to distribute the accumulated undistributed Property Income. The 3p additional interim Property Income Distribution noted above represented an initial payment under this requirement and the Board intend to announce a further final property income distribution at a date in the future.

Board Composition

Following the disposal of the subsidiaries and initial return of Capital to shareholders, the Board undertook a review of the residual business and requirements for the foreseeable future. Taking account of the responsibilities which were required to be discharged and the need to exercise management of the Company’s ongoing operating costs, the Board concluded that two Directors was an appropriate number. On 31st December, three Directors (including the previous Chair) resigned from the Board.

The Company would like to acknowledge and thank them for their huge contributions to the Company - particularly over the last 18 months.

Financial Resources

As noted, the transaction with GoldenTree included the transfer of the Group’s debt facility with RBSI and the Company no longer has access to revolving credit facilities (“RCF”).  In order to ensure that the retained cash was invested appropriately, the Board invested the residual cash proceeds into a shorter-term money market fund, the abrdn Liquidity Fund – Sterling, which offered a competitive rate of interest. This was deemed to be a low risk investment offering good liquidity, competitive returns and low costs relative to alternative deposit options.

At the year end the Company held £36.7m in cash and had other financial resources of £18.4m net of any prevailing financial commitments; i.e. not including any future costs associated with the running of the company through liquidation or potential balancing payment due on the transaction.

Annual General Meeting (“AGM”)

The Annual General Meeting (“AGM”) will be held at 10.00am on Monday 11 August 2025 at the offices of Aberdeen PLC, 1 George Street, Edinburgh EH2 2LL. The timing of the sale of Far Ralia is uncertain so the Board have decided to defer the AGM from the usual June date. The Board looks forward to welcoming shareholders in person where they will have the opportunity to put questions to the Board and/or the Manager. Shareholders are also invited to submit questions by email in advance to [email protected]

Final Distributions and Outlook

As detailed further in these 2024 Annual Report & Financial Statements, the current NAV of 8p might imply that the Company could liquidate and distribute that to shareholders. It should be noted however that the current NAV does not reflect ongoing running costs until liquidation and beyond, or final matters relating to the Sales Agreement. Furthermore, there is still considerable uncertainty around the timing and value of the eventual sale of Far Ralia which could impact the size of future distributions. The Investment Manager is actively looking to dispose of Far Ralia and their sole focus, together with the Board, is to maximise the return of capital to shareholders as expeditiously as possible.

Shareholders are reminded that as soon as liquidators are appointed the Company’s shares will cease trading on the London Stock Exchange effectively meaning the shares cannot be sold with their value totally dependent on the proceeds distributed by the liquidator after all assets are sold and liabilities paid.

When appropriate the Board will update shareholders regarding the sale of Far Ralia, and any potential impact to the ultimate distribution they will receive.

30 April 2025

Mike Balfour

INVESTMENT MANAGER’S REPORT

Review of 2024

Throughout 2024 the main focus was on managing the property assets optimally despite the corporate activity affecting the future of the Company.  We began the year with the merger discussions and resulting due diligence, before the shareholder votes that led to the beginning of the Managed Wind-Down (MWD).  During this time, the Company continued to reduce debt with six disposals being completed – two in each of the first three quarters of the year.  These are outlined in more detail below.

Following the shareholder decision in May 2024 to begin the MWD, the Board and Investment Manager reviewed the various options available and decided to explore a portfolio sale whilst also preparing the assets for individual disposals.  Following an extensive marketing exercise, the Company entered into exclusive discussions with GoldenTree Asset Management in August 2024 to dispose of a portfolio of 39 assets (from the remaining 40 assets) by way of a sale of abrdn Property Holdings Limited (aPH), one of the Company subsidiaries which held all the company’s property assets (either directly or via its own investment in the General Partner / Limited Partnership).  Whilst at a discount to valuation at the time, it was decided that the benefit of an accelerated return of capital to shareholders was preferable to a more protracted individual sale process.

After an 8-week formal due diligence period, contracts were exchanged on the corporate sale of aPH in September with completion on the 29th of November.

Purchases:

Given the corporate activity in early 2024 and the subsequent vote to change the Group’s Investment Objective the Company made no purchases during the year.

Sales:

Prior to the disposal of aPH to GoldenTree, six assets had been sold in the year with a total sales price of £43.5m.

▸London, 15 Basinghall Street (Office) – sold in the first quarter for £9.8m, 7.1% below the preceding valuation.

▸Warrington, Opus 9 (Industrial) – sold in the first quarter for £6.8m, 5.5% above the preceding valuation.

▸Hebburn, Unit 4 Monkton Business Park (Industrial) – sold in the second quarter for £5.3m to the tenant, 6.0% above the preceding valuation.

▸Bristol, Kings Business Park (Industrial) – sold in the second quarter for £7.9m, 1.3% below the preceding valuation.

▸Dover, Bastion Point (Industrial)  - sold for £9.5m in the third quarter, 4.8% below the preceding valuation.

▸Manchester, 101 Princess Street (Office) – sold for £4.3m in the third quarter, 2.3% below the preceding valuation..

Overall, the 2024 sales were completed 0.1% above the valuation immediately preceding the relevant sale; the sales resulted in an accounting loss of £2.1m when taking into account the December 2023 valuations and transaction costs.

Outlook for 2025

The sole focus of the Board and Investment Manager in the coming year is to sell the remaining asset and liquidate the company as swiftly as possible.  To that end, we continue to market the one remaining property asset that the company owns, Far Ralia.  As a natural capital investment (in an emerging market), where a proportion of the value is attributed to the value of potential carbon offsets offered by the tree planting, there isn’t a large number of potential investors.  That said, we have had interest to date from a variety of potential buyers and anticipate completing a sale during the course of the year.

Valuation

The portfolio was valued quarterly by Knight Frank LLP under the provisions of the RICS Red Book. As at 31 December 2024 the sole property Far Ralia, was valued at £10.0m and the Company held cash of £36.6m.

PRINCIPAL RISKS AND UNCERTAINTIES

The Board ensures that proper consideration of risk is undertaken in all aspects of the Company’s business on a regular basis. Subsequent to completing the disposal of abrdn Property Holdings Limited (aPH) to GoldenTree the Board reassessed the Company’s principal risks as summarised below:

Delays in the eventual liquidation of the Company. 

The eventual liquidation of the Company is likely to be dependent on the timing of the sale of the Company’s sole remaining asset, Far Ralia; the Board will provide an update to Shareholders if this position changes. The risk therefore is that any delays in the sales process will likely impact not just the timing of the liquidation but also potentially the scale of final distribution to shareholders (see below).  The risk is mitigated by an active marketing process and risks include finalising Scottish Forestry consent required as part of the sales process which is progressing. Furthermore, the Board are in regular contact with the potential liquidators regarding the timing of when they could be appointed and the retention they would require.

The ultimate total distribution to shareholders is less than expected.

To mitigate this risk, the Board received regular updates from the Investment Manager during the negotiation period for the subsidiary sale and established a prudent buffer at the point of initial capital distribution to Shareholders during December 2024 (via the Redeemable Bonus Share issue). Estimates of what the ultimate total distribution to shareholders were communicated to shareholders when it was prudent to do so. The ultimate distribution to shareholders is highly dependent on the timing of the sale of Far Ralia and the resultant sales price achieved; the former is likely to impact ongoing running costs prior to liquidation (i.e. longer period to liquidation, higher running costs). This risk is mitigated through the regular review of forecast costs, scrutiny of the selling agent, and proactive discussions with the potential liquidator. 

Environmental.

Extreme weather events both in the UK and globally are becoming a more regular occurrence due to climate change, the impact of the environment on property and on the wider UK economy is seen as an increasing risk.  Environmental risk was historically considered as part of each purchase and monitored on an ongoing basis by the Investment Manager.

Please see the Sustainability Committee Report for further details on how the Company addresses environmental risk, including climate change.

Other Risks.

Other risks faced by the Company include the following:

• Tax efficiency – following the change in structure of the Group on 29 November 24, it can no longer qualify for REIT Tax status. As such, there is a clear risk that the Company can no longer be seen as a tax efficient investment vehicle for shareholders. In addition a future delisting may ultimately impact shareholders invested via tax efficient wrappers such as ISAs.
• Regulatory – breach of regulatory rules could lead to the suspension of the Group’s Stock Exchange Listing, financial penalties or a qualified audit report.
• Financial – inadequate controls by the Investment Manager or third-party service providers could lead to misappropriation of assets. Inappropriate accounting policies or failure to comply with accounting standards could lead to misreporting or breaches of regulations.
• Operational – failure of the Investment Manager’s accounting systems or disruption to the Investment Manager’s business, or that of third-party service providers, could lead to an inability to provide accurate reporting and monitoring, leading to loss of shareholder confidence.
• Business continuity – risks to any of the Company’s service providers or properties, following a catastrophic event e.g. terrorist attack, cyber-attack, power disruptions or civil unrest, leading to disruption of service, loss of data etc.
• Cyber – the risk of large-scale network disruption through various forms such as hacking, malware, phishing, DDOS, data breach or loss.  In addition, Artificial Intelligence and it's potential use in cyber attacks.

The Board seeks to mitigate and manage all risks through review, policy setting and enforcement of contractual obligations. It also regularly monitors the investment environment and where the Company’s cash is invested.

Details of the Group’s internal controls are described in more detail in the Corporate Governance Report in the full Annual Accounts which can be found via the following link: https://www.abrdnpit.co.uk/en-gb/literature.

Emerging Risks

Emerging risks have been identified by the Board through a process of evaluating relatively new risks that have emerged and increased materially in the year, and subsequently, or through market intelligence are expected to grow significantly and impact the Company. Any such emerging risks are likely to cause disruption to the business model. If ignored, they could impact the Company’s financial performance and prospects. Alternatively, if recognised, they could provide opportunities for transformation and improved performance.

▸Future of the Company

In the Company’s 2023 Annual Report & Financial Statements, several risks were noted associated with the size, speed and method of capital distributions back to shareholders, and maintenance of REIT status if shareholders voted in favour of the (then) proposed managed wind-down. Following the vote, the Board took steps to address these ultimately resulting in the disposal of the Group’s subsidiaries to GoldenTree Asset Management LP. This helped to ensure that a sizeable proportion of capital was distributed quickly to shareholders. As noted above, there are still some risks regarding the timing and magnitude of the final distributions and these now form part of the key risks of the Company.

There now exists a clear risk around the liquidation process itself. Once in liquidation, the Company’s shares will no longer be traded on a stock exchange and shareholders will not be able to realise their investments and will be dependent on the liquidator who will assume responsibilities over the operational management of the Company during the liquidation period. The length of the liquidation itself and timing of ultimate distributions relating to any residual cash due to shareholders would be at their discretion.

▸Economic and Geopolitical

The current economic and geopolitical environment is unpredictable, and changing rapidly, and this may affect real estate valuations and/or deter prospective buyers, increasing the risk relating to the quantum and timing of sale of Far Ralia.

▸Climate

A "greenlash" against climate policies is emerging following the Republicans win in the US elections in 2024. This could derail progress against global climate targets and dampen the demand for carbon offset assets.

▸Technology & Artificial Intelligence

Cyber-attacks are increasing in occurrence and target businesses’ data, IT systems and even their physical infrastructure as buildings have become more reliant on smart technology for their daily operation. In addition, the rapid evolution of AI is potentially introducing risks that have not yet been identified or quantified.

Viability Statement

The Company’s sole remaining property asset is the land at Far Ralia. Subsequent to the post year end PID of 3p, other assets comprise an investment in a money market fund, cash at bank and other net current assets. The Board has therefore considered whether the Company could still be considered ‘viable’.  As part of this assessment, the Board reviewed estimations of projected costs (up to and during a liquidation period) relative to cash retained from the initial distribution of 55p.  

The Board has also carried out a robust assessment of the principal and emerging risks faced by the Group, as detailed above. 

After review, the Board are confident that the Company has sufficient resources to be able to meet its liabilities as they fall due.  However, it also acknowledges that the Company can no longer be considered viable given there is a clear intention to liquidate the Company and return surplus cash to shareholders.

STATEMENT OF DIRECTOR’S RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the Group Consolidated Financial Statements for each year which give a true and fair view, in accordance with the applicable Guernsey law and those International Financial Reporting Standards (“IFRSs”) as adopted by the European Union.

In preparing those Consolidated Financial Statements, the Directors are required to:

• Select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;
• Make judgement and estimates that are reasonable and prudent;
• Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
• Provide additional disclosures when compliance with the specific requirements in IFRSs as adopted by the European Union is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group’s financial position and financial performance;
• State that the Group has complied with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the Group Consolidated Financial Statements; and
• Prepare the Group Consolidated Financial Statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors confirm that they have complied with the above requirements in preparing the Group Consolidated Financial Statements.  As detailed further in note 2.1, the Directors have deemed it appropriate to prepare the Group Consolidated Financial Statements on a basis other than that of a going concern.

The Directors are responsible for keeping adequate accounting records, that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time, the financial position of the Group and to enable them to ensure that the Financial Statements comply with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with law and regulations.

The maintenance and integrity of the Company’s website is the responsibility of the Directors through its Investment Manager; the work carried out by the auditors does not involve considerations of these matters and, accordingly, the auditors accept no responsibility for any change that may have occurred to the Consolidated Financial Statements since they were initially presented on the website. Legislation in Guernsey governing the preparation and dissemination of the consolidated financial statements may differ from legislation in other jurisdictions.

Responsibility Statement of the Directors in respect of the Consolidated Annual Report under the Disclosure and Transparency Rules

The Directors each confirm to the best of their knowledge that:

• The Consolidated Financial Statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and
• The management report, which is incorporated into the Strategic Report, Directors’ Report and Investment Manager’s Review, includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that they face.

Statement under the UK Corporate Governance Code

The Directors each confirm to the best of their knowledge and belief that the Annual Report and Consolidated Financial Statements taken as a whole are fair, balanced and understandable and provide the information necessary to assess the Group’s position and performance, business model and strategy.

Approved by the Board on

30 April 2025

Mike Balfour

Chair

All items in the above Consolidated Statement of Comprehensive Income derive from discontinuing operations.

The notes below are an integral part of these Consolidated Financial Statements.

Approved and authorised for issue by the Board of Directors on 30 April 2025 and signed on their behalf by James Clifton-Brown

The accompanying notes below are an integral part of these Consolidated Financial Statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2024

For the year ended 31 December 2023

Notes TO the consolidated financial statements

1. General information      

abrdn Property Income Trust Limited (“the Company”) and its former subsidiaries (together “the Group”) historically carried on the business of property investment through a portfolio of freehold and leasehold investment properties located in the United Kingdom.  During the year, the Company disposed of its entire holding in its subsidiaries and is now in the process of winding-down prior to entering liquidation. The Company is a limited liability company incorporated in Guernsey, Channel Islands. The Company has its listing on the London Stock Exchange.

The address of the registered office is

PO Box 255,

Trafalgar Court,

Les Banques,

St Peter Port,

Guernsey.

These audited Consolidated Financial Statements were approved for issue by the Board of Directors on 30 April 2025.

2. Accounting policies        

2.1 Basis of preparation       

The audited Consolidated Financial Statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union and as issued by the International Accounting Standards Board (“IASB”), and all applicable requirements of The Companies (Guernsey) Law, 2008. The audited Consolidated Financial Statements of the Group have been prepared under the historical cost convention as modified by the measurement of investment property, land and derivative financial instruments at fair value. The Consolidated Financial Statements are presented in pounds sterling and all values are not rounded except when otherwise indicated.

Assessment of Going Concern

During the second half of 2023 the Board undertook a strategic review. This review was prompted by the Board’s concerns, as well as those of some shareholders about the Group’s size, the lack of liquidity in its shares, the persistent discount to NAV and an uncovered dividend. The outcome of this review, following interest from other listed REITs, was that the Board recommended to shareholders that they vote in favour of a proposed merger with Custodian Property Income REIT plc (“Custodian”) for the reasons outlined in various announcements to shareholders during the first quarter of 2024.  As detailed more fully in the 2023 Annual Report & Financial Statements, this proposal did not attract sufficient support from shareholders to be passed at the Extraordinary General Meeting.  Following the vote, shareholders were given the opportunity to vote on a proposed change to the Group’s Investment Policy which if passed would place the Group into a Managed and Orderly Wind-Down (“wind-down EGM”), selling assets and returning funds to shareholders as such funds become available.  On the 28 May 2024, approximately 96% of shareholders who voted cast their votes in favour of this proposal and the resolution passed.

Under the Managed Wind-Down process, the Group and its subsidiaries were managed with the intention of realising all the assets in its portfolio in an orderly manner, with a view to repaying borrowings and making timely returns of capital to shareholders whilst aiming to obtain the best achievable value for the assets.  As part of this process, the Group successfully disposed of 6 Investment Properties prior to reaching an agreement with GoldenTree Asset Management LP for the sale of its wholly owned subsidiary abrdn Property Holdings Limited (aPH).  The transaction, which completed on the 29th November, comprised the sale of 39 assets being the Group’s entire investment property portfolio excluding its interest in the land at Far Ralia (which was subsequently transferred to the Company prior to year end following subsequent Scottish Government consent).

Following completion of the transaction, Shareholders were given the opportunity to vote on a proposal for the Company to make an initial return of the proceeds of sale by way of an initial issue and redemption of Redeemable Bonus Shares repurchased for 52 pence per Redeemable Bonus Share.  On 17th December 2024, approximately 99.5% of shareholders who voted cast their votes in favour of this proposal and the funds were returned to shareholders prior to year end. 

As at 31st December 2024, the Group consists solely of the Company itself which holds the aforementioned interest in the land at Far Ralia and cash retained from the sales proceeds to cover anticipated costs until fully liquidated.  The Board is satisfied that the Company will have no material difficulty in meeting its liabilities as they fall due during the period until fully liquidated.  However, there now exists a clear intention to enter liquidation once the completion accounts process has been settled with GoldenTree and the directors are satisfied that there is an appropriate process for realising the remaining assets.  As such, in accordance with IAS1 para 25 and IAS 10 (Events after the Reporting Period) para 14, these financial statements have been prepared on a basis other than that of a going concern.

As a result of adopting a basis other than that of a going concern, the Board has deemed it appropriate to reduce the fair value of the land by the expected costs of disposal. No other costs of liquidation have been recognised other than those committed or incurred at the balance sheet date.

Changes in accounting policy and disclosure.

The following amendments to existing standards and interpretations were effective for the year, but were deemed not applicable to the Group:

▸ Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback; Amendments to IAS 7 and IFRS 7 – Supplier Finance Arrangements.

The following amendments to existing standards and interpretations were effective for the year and have been adopted by the Company:

▸ Amendments to IAS 1 Classification of Liabilities as Current or Non-current.

The amendment clarifies a criterion for recognising a liability as non-current if an entity has the right to defer settlement for at least 12 months after the reporting period. Given the current circumstances of the Company, all liabilities have been deemed current albeit the Board acknowledge that the classification is unaffected by the Company’s intention or expectation whether it will exercise a right to defer.

New and revised IFRS Standards in issue but not yet effective

At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS Accounting Standards that have been issued but are not yet effective.  The Group will consider these amendments in due course to see if they will have any impact on the Group.

▸ Amendments to IAS 21 Lack of Exchangeability - The Effects of Changes in Foreign Exchange Rates [Effective 1 January 2025]

▸ Amendments to IFRS 9 Financial Instruments (Classification and Measurement) [Effective 1 January 2026]

▸ Amendments to IFRS 18 Presentation and Disclosure in Financial Statements [Effective 1 January 2027]

▸ Amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures [Effective 1 January 2027]

2.2  Significant accounting judgements, estimates and assumptions 

The preparation of the Group’s Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainties about these assumptions and estimates, could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods. The most significant estimates and judgements are set out below. There were no critical accounting judgements.

Fair value (& presentation) of investment properties and land

Investment properties and land have historically been stated at fair value as at the Balance Sheet date. Gains or losses arising from changes in fair values were included in the Consolidated Statement of Comprehensive Income in the year in which they arose. The fair value of investment properties and land was determined by external real estate valuation experts using recognised valuation techniques. The fair values were determined having regard to any recent real estate transactions where available, with similar characteristics and locations to those of the Group’s assets. The directors consider that there is a significantly wider range of estimation uncertainty for land than for investment properties because there are few comparable assets or recent transactions, and the estimates involved (namely Carbon pricing). As detailed further in notes 2.4 and 9, the Directors have also assessed the classification of Land as a current asset considering the current marketing of the site and presentation of these financial statements on a basis other than that of a going concern.                                                                                                                                                                                                                                                                                                                                                                                      

2.3  Summary of material accounting policies 

The Group adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practical Statement 2) from 1 January 2023.  The amendments require the disclosure of ‘material’, rather than ‘significant’, accounting policies.  Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements.

Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial.  However, not all accounting policy information relating to material transactions, other events or conditions is itself material.  The Directors have reviewed the accounting policies and are satisfied that the information previously disclosed as part of their ‘significant’ accounting policies fulfils the definitions of ‘material’ under the amended standards – as such there has been no change to the summary of accounting policies below in the current year.

A Basis of consolidation

The audited Consolidated Financial Statements have historically comprised the financial statements of abrdn Property Income Trust Limited, and its material wholly owned subsidiary undertakings.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with subsidiaries and has the ability to affect those returns through its power over the subsidiary. Specifically, the Group controls a subsidiary if, and only if, it has:

• Power over the subsidiary (i.e. existing rights that give it the current ability to direct the relevant activities of the subsidiary)
• Exposure, or rights, to variable returns from its involvement with the subsidiary
• The ability to use its power over the subsidiary to affect its returns

The Group assesses whether or not it controls a subsidiary if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.

Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of other comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary.

During the year, the Company completed on the disposal of its wholly owned subsidiaries.  As such, the Consolidated Statement of Financial Position represents the Company in isolation (2023: consolidated group), while the Consolidated Statement of Comprehensive Income includes the pro-rated income and expenditure up to the date of disposal as noted above.

B Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The Consolidated Financial Statements are presented in pound sterling, which is also the Company’s functional currency.             

C Revenue recognition

Revenue is recognised as follows;

i) Bank interest

Bank interest income is recognised on an accruals basis.

ii) Rental income

Rental income from operating leases is net of sales taxes and value added tax (“VAT”) recognised on a straight-line basis over the lease term including lease agreements with stepped rent increases. The initial direct costs incurred in negotiating and arranging an operating lease are recognised as an expense over the lease term on the same basis as the lease income. The cost of any lease incentives provided are recognised over the lease term, on a straight-line basis as a reduction of rental income. The resulting asset is reflected as a receivable in the Consolidated Balance Sheet.

Contingent rents, being those payments that are not fixed at the inception of the lease, for example increases arising on rent reviews, are recorded as income in periods when they are earned. Rent reviews which remain outstanding at the year-end are recognised as income, based on estimates, when it is reasonable to assume that they will be received.

iii) Other income

The Group was classified as the principal in its contract with the managing agent. Service charges billed to tenants by the managing agent are therefore recognised gross.

iv) Grant Income

Government grants that relate to the Group’s assets are accounted for as a reduction in the cost of the asset to which they relate. They are only recognised when there is both reasonable assurance that the Group will comply with all material conditions attached to the grant and that the grant will be received.

v) Property disposals

Where revenue is obtained by the sale of properties, it is recognised once the sale transaction has been completed, regardless of when contracts have been exchanged.

D Expenditure

All expenses are accounted for on an accruals basis. The investment management and administration fees, finance and all other revenue expenses are charged through the Consolidated Statement of Comprehensive Income as and when incurred. The Group also incurs capital expenditure which can result in movements in the capital value of the investment properties.

E Taxation

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Current income tax relating to items recognised directly in other comprehensive income or in equity is recognised in other comprehensive income and in equity respectively, and not in the income statement. Positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation, if any, are reviewed periodically and provisions are established where appropriate. The Group recognises liabilities for current taxes based on estimates of whether additional taxes will be due. When the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income and deferred tax provisions in the period in which the determination is made.

Deferred income tax is provided using the liability method on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which deductible temporary differences, carried forward tax credits or tax losses can be utilised. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities. In determining the expected manner of realisation of an asset the Directors consider that the Group will recover the value of investment property through sale. Deferred income tax relating to items recognised directly in equity is recognised in equity and not in profit or loss.             

As detailed further in note 6, the Group ceased being treated as a UK REIT from 29 November 2024.             

F Investment property

Investment properties comprise completed property and property under construction or re-development that is held to earn rentals or for capital appreciation or both. Property held under a lease is classified as investment property when the definition of an investment property is met.

Investment properties are measured initially at cost including transaction costs. Transaction costs include transfer taxes, professional fees for legal services and initial leasing commissions to bring the property to the condition necessary for it to be capable of operating. The carrying amount also includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met.

Subsequent to initial recognition, investment properties are stated at fair value. Fair value is based upon the market valuation of the properties as provided by the external valuers as described in note 2.2. Gains or losses arising from changes in the fair values are included in the Consolidated Statement of Comprehensive Income in the year in which they arise.

For the purposes of these financial statements, in order to avoid double counting, the assessed fair value is:

i)                    Reduced by the carrying amount of any accrued income resulting from the spreading of lease incentives and/or minimum lease payments.

ii)  Increased by the carrying amount of any liability to the superior leaseholder or freeholder (for properties held by the Group under operating leases) that has been recognised in the Balance Sheet as a finance lease obligation.

Acquisitions of investment properties are considered to have taken place on exchange of contracts unless there are significant conditions attached. For conditional exchanges acquisitions are recognised when these conditions are satisfied. Investment properties are derecognised when they have been disposed of and no future economic benefit is expected from their disposal. Any gains or losses on the disposal of investment properties are recognised in the Consolidated Statement of Comprehensive Income in the year of retirement or disposal.

Gains or losses on the disposal of investment properties are determined as the difference between net disposal proceeds and the carrying value of the asset in the previous full period financial statements.

G Investment properties held for sale

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value (except for investment property measured using fair value model).

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

H Land

The Group’s land is capable of woodland creation and peatland restoration projects which would materially assist the Group’s transition to Net Zero.

Land is initially measured at cost including transaction costs. Transaction costs include transfer taxes and professional fees for legal services. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group. Land is not depreciated but instead, subsequent to initial recognition, recognised at fair value based upon periodic valuations provided by the external valuers. Gains or losses arising from changes in the fair values are included in the Consolidated Statement of Comprehensive Income in the year in which they arise.

I Trade and other receivables

Trade receivables are recognised and carried at the lower of their original invoiced value and recoverable amount. Where the time value of money is material, receivables are carried at amortised cost. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through use of an allowance account, and the amount of the expected credit loss is recognised in the Consolidated Statement of Comprehensive Income. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in the Consolidated Statement of Comprehensive Income.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets.

A provision for impairment of trade receivables is established where the Property Manager has indicated concerns over the recoverability of arrears based upon their individual assessment of all outstanding balances which incorporates forward looking information. Given this detailed approach, a collective assessment methodology applying a provision matrix to determine expected credit losses is not used.

The amount of the provision is recognised in the Consolidated Balance Sheet and any changes in provision recognised in the Statement of Comprehensive Income.

J Cash and cash equivalents

Cash and cash equivalents are defined as cash in hand, demand deposits, and other short-term highly liquid investments readily convertible within three months or less to known amounts of cash and subject to insignificant risk of changes in value.

K Borrowings and interest expense

All loans and borrowings were initially recognised at the fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost. Amortised cost is calculated by taking into account any discount or premium on settlement. Borrowing costs are recognised within finance costs in the Consolidated Statement of Comprehensive Income as incurred.

L Accounting for derivative financial instruments and hedging activities

Interest rate hedges are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedging transactions. The Group also documents its assessment both at hedge inception and on an ongoing basis of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in other comprehensive income in the Consolidated Statement of Comprehensive Income. The gains or losses relating to the ineffective portion are recognised in operating profit in the Consolidated Statement of Comprehensive Income.

Amounts taken to equity are transferred to profit or loss when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expenses are recognised.

When a derivative is held as an economic hedge for a period beyond 12 months after the end of the reporting period, the derivative is classified as non-current consistent with the classification of the underlying item. A derivative instrument that is a designated and effective hedging instrument is classified consistent with the classification of the underlying hedged item.

M Service charge

IFRS15 requires the Group to determine whether it is a principal or an agent when goods or services are transferred to a customer. An entity is a principal if the entity controls the promised good or service before the entity transfers the goods or services to a customer. An entity is an agent if the entity’s performance obligation is to arrange for the provision of goods and services by another party.

Any leases entered into between the Group and a tenant required the Group to provide ancillary services to the tenant such as maintenance works etc, therefore these service charge obligations belonged to the Group. However, to meet this obligation the Group appointed a managing agent, Jones Lang Lasalle Inc “JLL” and directed it to fulfil the obligation on its behalf. The contract between the Group and the managing agent created both a right to services and the ability to direct those services. This was a clear indication that the Group operated as a principal and the managing agent operated as an agent. Therefore, it was necessary to recognise the gross service charge revenue and expenditure billed to tenants as opposed to recognising the net amount.

N Other financial liabilities

Trade and other payables are recognised and carried at invoiced value as they are considered to have payment terms of 30 days or less and are not interest bearing. The balance of trade and other payables are considered to meet the definition of an accrual and have been expensed through the Income Statement or Balance Sheet depending on classification. VAT payable at the Balance Sheet date will be settled within 31 days of the Balance Sheet date with Her Majesty’s Revenue and Customs (“HMRC”) and deferred rental income is rent that has been billed to tenants but relates to the period after the Balance Sheet date. Rent deposits recognised in note 13 as current are those that are due within one year as a result of upcoming tenant expiries.

2.4  Adjustments to going concern basis of accounting 

In addition to assessing the Company’s significant and material accounting judgements, estimates and assumptions, the Board has also considered the following areas where it might be appropriate to apply adjustments to the ‘normal’ IFRS basis:

1) Measurement of Assets

It is appropriate to consider the need to write down assets to their net realisable value.  Investment Properties including Land are stated at fair value, while other assets including trade receivables are recognised at their recoverable amount already.  The Board has assessed the basis for and measurement of the residual interest in Land and have decided to reduce fair value by the estimated cost of disposal.  Further details can be found in note 25.

2) Liabilities

The Board recognise that it would be appropriate to accrue costs associated with potentially onerous contracts by applying guidance in IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’.  However, at the date of approval of the financial statement, no such contracts exist, and accordingly no provisions have been made.

3) Presentation and disclosure

The Board has assessed the classification of assets and liabilities between current and non-current. Assets that met the criteria to be classified as held for sale at 31 December 2024 have been classified as current assets. Non-current assets and liabilities have been reclassified as current as they are expected to be realised in less than 12 months.

After careful consideration, the Board believes that it would not be meaningful to present the results of discontinued operations as a separate financial statement line item of income or loss (in accordance with IFRS 5) because this would not result in meaningful information in a situation where all of an entity’s operations will be discontinued. 

Finally, the Board has assessed whether adoption of a basis other than that of a going concern would have any material impact on comparatives and have concluded this not to be the case.  As at 31 December 2023, 5 assets valued at £35.1m were deemed ‘held for sale’ which would have been impaired by £579,150 (0.15p per share) if adopting a similar methodology.                           

3. Financial Risk Management

The Group’s principal financial liabilities have historically been loans and borrowings. The main purpose of the Group’s loans and borrowings were to finance the acquisition and development of the Group’s property portfolio. The Group had rent and other receivables, trade and other payables and cash and short-term deposits that arose directly from its operations.

The Group is exposed to market risk (including interest rate risk and real estate risk), credit risk, liquidity risk and capital risk. The Group is not exposed to currency risk or price risk. The Group is engaged in a single segment of business, being property investment in one geographical area, the United Kingdom. Therefore, the Group only engages in one form of currency being pound sterling.

The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below.

Market risk

Market risk is the risk that the fair values of financial instruments will fluctuate because of changes in market prices. The financial instruments held by the Group that were affected by market risk were principally the interest rate swap (which ended 27 April 2023) and the interest rate cap (which commenced 27 April 2023 and ceased to belong to the Group on 29 November 2024).

i)                    Interest Rate risk

As described below the Group invested cash balances with Citibank, RBS and Barclays; the latter two were only relevant for the Company’s subsidiaries. In the current year the Company also made an investment in the abrdn Liquidity Fund managed by Aberdeen PLC with the excess proceeds from the sale of the subsidiaries. These balances expose the Group to cash flow interest rate risk as the Company’s income and operating cash flows will be affected by movements in the market rate of interest. There is considered to be no fair value interest rate risk in regard to these balances.

The bank borrowings as described in note 14 also historically exposed the Group to cash flow interest rate risk. The Group’s policy has historically been to manage its cash flow interest rate risk using interest rate derivatives (see note 15). The Group had floating rate borrowings at the point of sale of the subsidiaries of £113,300,000; £85,000,000 of these borrowings were fixed via an interest rate cap limiting the floating rate exposure to 3.959%.

The fair value of the derivative was exposed to changes in the market interest rate as their fair value was calculated as the present value of the estimated future cash flows under the agreements. The accounting policy for recognising the fair value movements in the interest rate derivatives is described in note 2.3 L.

Trade and other receivables and trade and other payables are interest free and have settlement dates within one year and therefore are not considered to present a fair value interest rate risk.

The tables below set out the carrying amount of the Company’s financial instruments excluding the amortisation of borrowing costs as outlined in note 14.

At 31 December 2024, if market interest rates had been 100 basis points higher, which is deemed appropriate given historical movements in interest rates, with all other variables held constant, the profit for the year would have been £366,552 higher (2023: £66,538 higher) as a result of the higher interest income on cash and cash equivalents.

At 31 December 2024, if market interest rates had been 100 basis points lower with all other variables held constant, the profit for the year would have been £366,552 lower (2023: £66,538 lower) as a result of the lower interest income on cash and cash equivalents.

Credit risk    

Credit risk is the risk that a counterparty will be unable to meet a commitment that it has entered into with the Group.

With respect to credit risk arising from other financial assets of the Group, which comprise cash and cash equivalents, the Group’s exposure to credit risk arises from default of the counterparty with a maximum exposure equal to the carrying value of these instruments. As at 31 December 2024 £nil (2023 £316,737) was placed on deposit with The Royal Bank of Scotland plc (“RBS”), £3,807,736 (2023: £242,900) was held with Citibank, £nil (2023: £6,094,201) was held with Barclays, while £32,847,430 was invested in the abrdn Liquidity Fund (Lux) Sterling Fund (2023: £nil).

The abrdn Liquidity Fund (Lux) Sterling Fund is a money market fund which offers same day liquidity and has obtained an Aaa-mf money market fund rating from Moody’s. Citibank is rated A-2 Stable by Standard & Poor’s and P-2 Stable by Moody’s.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulties in realising assets or otherwise raising funds to meet financial commitments. The investment property in which the Company invests is not traded in an organised public market and is illiquid.  As a result, the Company may not be able to liquidate its investment in that property quickly at an amount close to its fair value in order to meet the Company’s liquidity requirements.

The following table summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.

The disclosed amounts for interest-bearing loans and interest rate derivatives in the below table are the estimated net undiscounted cash flows. 

The Company’s liquidity position is regularly monitored by management and is reviewed quarterly by the Board of Directors.

Fair values          

Set out below is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments that are carried in the financial statements at amortised cost.

In addition to the above, the Group's financial instruments in the past also included an Interest rate swap and Interest rate cap.  These have not been included in the disclosure above as these were already held at fair value.  The fair value of trade receivables and payables are materially equivalent to their amortised cost.

The fair value of the financial assets and liabilities are included at an estimate of the price that would be received to sell a financial asset or paid to transfer a financial liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used to estimate the fair value:

• Cash and cash equivalents, trade and other receivables and trade and other payables are the same as fair value due to the short-term maturities of these instruments.  Trade and other receivables/payables are measured in reference to contractual amounts due to/from the Group.  These contractual amounts are directly observable.
• The fair value of bank borrowings was estimated by discounting future cash flows using rates currently available for debt on similar terms and remaining maturities. The fair value approximated their carrying values gross of unamortised transaction costs. This was considered as being valued at level 2 of the fair value hierarchy.

The table below shows an analysis of the fair values of financial assets and liabilities recognised in the Balance Sheet by the level of the fair value hierarchy:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

4. Administrative and Other Expenses      

* Void Service charge costs for the year amounted to £1,037,936 (2023: £1,470,241).  These have been reclassified as Service charge expenditure as noted below.

4a. Investment management fees

From 1 January 2023, the Group agreed a 10bps reduction in the fee payable to the Investment Manager under the terms of the IMA; effective from 1 January 2023 this was 0.60% of total assets up to £500m, and 0.50% of total assets in excess of £500 million.  Considering the proposed merger (see note 2.1), the Board served notice on the Investment Management Agreement  on 12 October 2023.  Following the Shareholder vote to place the Group into a Managed Wind-Down, a new agreement was signed effective 31 May 2024.  Under the novated agreement, the Investment Manager is entitled to a fee of 0.20% per annum on total assets (with a floor of £50,000 per quarter until there are no properties remaining and £35,000 thereafter). The Investment Manager is also entitled to a further 0.40% payable based on the Gross Disposal proceeds of the underlying portfolio – £1,459,100 has been recognised in accordance with the disposal of the assets to date and is part of the realised loss on disposal.

As detailed further in Note 26, the Investment Manager receives an ‘Incentive Fee’ based on the cumulative Gross Disposal Proceeds relative to valuation of the portfolio as at 31 May 2024, with the fee only being triggered if this is greater than 90% of said valuation and if all assets are sold prior to November 2025; if Far Ralia is sold at its current valuation, this fee would be £187,388 if sold prior to 28 November 2025 and £374,775 if sold prior to 28 May 2025.

In addition, the Company paid the Investment Manager a sum of £98,688 excluding VAT (2023: £184,750 excluding VAT) to participate in the Managers marketing programme and Investment Trust share plan.

4b. Fees associated with strategic review, aborted merger and wind-down

As described in more detail in note 2.1, the Board undertook a strategic review during the second half of 2023 after concerns over the Company’s size, liquidity, persistent discount to NAV and dividend cover.  The outcome of this review, following interest from other listed REITs, was that the Board recommended to shareholders that they vote in favour of a proposed merger with Custodian REIT.  The costs associated with the initial Rule 2.7 announcement (including advisor, due diligence and valuation fees) were £2,041,248 of which £1,729,925 was accrued and unpaid at 31 December 2023 based on levels of work in progress (WIP).  Since the end of 2023, further fees and costs of £3,199,420 have been recognised in 2024 of which £399,197 relates to the Managed Wind-Down and portfolio disposal. These fees exclude transaction costs which are explained in note 10.

4c. Valuers fee

Knight Frank LLP (“the Valuers”), external international real estate consultants, were appointed as valuers in respect of the assets comprising the property portfolio. The total valuation fees charged for the year amounted to £57,835 (2023: £75,524).   Until the sale of the subsidiaries, the total valuation fee comprised a base fee for the ongoing quarterly valuation at an annual rate of 0.017 percent of the aggregate value of the property portfolio (paid quarterly), and a one-off fee on acquisition of an asset.   Following the conclusion of the sale, the agreement with Knight Frank was novated and fees are now and initial £5,000 (excluding VAT) for the first valuation and £2,500 (excluding VAT) for each subsequent valuation undertaken.

The amount due and payable at the year-end amounted to £5,000 excluding VAT (2023: £18,665 excluding VAT).

4d. Auditor’s fee

At the year-end date Deloitte LLP continued as independent auditor of the Company. The audit fees for the year amounted to £167,125 (2023: £192,700) and relate to audit services provided for the 2024 financial year; including £52,445 pertaining to the Group’s share of fees relating to the subsidiaries. Deloitte LLP did not provide any non-audit services in the year (2023: nil).

4e. Administration, secretarial and registrar fees

On 19 December 2003 Northern Trust International Fund Administration Services (Guernsey) Limited (“Northern Trust”) was appointed administrator, secretary and registrar to the Group. Following increased activity early 2024, a novated agreement with Northern Trust was agreed on 29 July 2024 – prior to this, Northern Trust was entitled to an annual fee, payable quarterly in arrears, of £65,000. From 1 August 2024 to 31 July 2025, Northern Trust are entitled to an annual fee of £95,670 subject to annual fixed RPI increases of 6.3% effective on the anniversary of 1 August. In addition, they were entitled to a fixed fee of £25,000 in addition to fees of £3,000 (subject to RPI uplifts) for assistance with each property disposal – replaced with a fee of £10,000 if multiple properties are sold in tranches. Finally, Northern Trust is also entitled to reimbursement of reasonable out of pocket expenses. Total fees and expenses charged for the year amounted to £136,262 (2023: £70,325). The amount due and payable at the year-end amounted to £116,946 (2023: £32,500).

5. Finance income and costs

Of the finance costs above, £1,959,463 of the interest expense on bank borrowings were accruals at 31 December 2023 and included in Trade and other payables. No such accruals existed at 31 December 2024 as the debt and associated accrued interest was settled via the disposal proceeds.

6. Taxation

UK REIT Status

The Group migrated tax residence to the UK and elected to be treated as a UK REIT with effect from 1 January 2015. As a UK REIT, the income profits of the Group’s UK property rental business were exempt from corporation tax as were any gains it makes from the disposal of its properties, provided they were not held for trading or sold within three years of completion of development. The Group was otherwise subject to UK corporation tax at the prevailing rate.

As the principal company of the REIT, the Company was required to distribute at least 90% of the income profits of the Group’s UK property rental business. There are a number of other conditions that were also required to be met by the Company and the Group to maintain REIT tax status. These conditions were met in the period up until the Company disposed of its shareholding in the subsidiaries. Accordingly, deferred tax was not recognised on temporary differences relating to the property rental business.

Following the sale of the Group’s subsidiaries on 29th November 2024 (including the investment property portfolio), the Group automatically left the UK REIT regime; one of the quantitative requirements for being a member of the UK REIT regime is that the qualifying property rental business must contain at least three separate properties. Prior to the sale, the Group consulted with their appointed tax advisors on implications of leaving the REIT regime.

The Company and its former Guernsey subsidiary had obtained exempt company status in Guernsey so that they were exempt from Guernsey taxation on income arising outside Guernsey and bank interest receivable in Guernsey. A reconciliation between the tax charge and the product of accounting profit multiplied by the applicable tax rate for the year ended 31 December 2024 and 2023 is as follows:

* Calculated as a blended average of 23.5% being 3 months at the prevailing 19%, and 9 months at 25%.

7. Investment Properties

Valuations have been performed by Knight Frank LLP, acting in the capacity of a valuation adviser to the AIFM, accredited external valuers with recognised and relevant professional qualifications and recent experience of the location and category of the investment properties being valued. The valuation model in accordance with Royal Institute of Chartered Surveyors (‘RICS’) requirements on disclosure for Regulated Purpose Valuations has been applied (RICS Valuation - Global Standards, which incorporate the International Valuation Standards). These valuation models are consistent with the principles in IFRS 13. Historically, an adjustment has also been made for lease incentives (2023: £9,248,902) and right of use assets (£1,810,120) in respect of the present value of future ground rents – however both are no longer relevant following the sale of the subsidiaries. Valuation gains and losses from investment properties are recognised in the Consolidated Statement of Comprehensive Income for the period and are attributable to changes in unrealised gains or losses relating to investment properties held at the end of the reporting period.

In the Cash Flow Statement, proceeds from disposal of investment properties comprise:

Valuation Methodology      

The fair value of completed investment properties were historically determined using the income capitalisation method.

The income capitalisation method is based on capitalising the net income stream at an appropriate yield. In establishing the net income stream the valuers reflected the current rent (the gross rent) payable to lease expiry, at which point the valuer assumed that each unit would be re-let at their opinion of ERV. The valuers made allowances for voids where appropriate, as well as deducting non recoverable costs where applicable. The appropriate yield was selected on the basis of the location of the building, its quality, tenant credit quality and lease terms amongst other factors.

The table below outlines the valuation techniques and inputs used to derive Level 3 fair values for each class of investment properties. The table includes:

• The fair value measurements at the end of the reporting period.
• The level of the fair value hierarchy (e.g. Level 3) within which the fair value measurements are categorised in their   entirety.
• A description of the valuation techniques applied.
• Fair value measurements, quantitative information about the significant unobservable inputs used in the fair value measurement.
• The inputs used in the fair value measurement, including the ranges of rent charged to different units within the same building.

As noted above, all investment properties listed in the table below are categorised Level 3 and all are valued using the Income Capitalisation method.

Descriptions and definitions

The table above includes the following descriptions and definitions relating to valuation techniques and key observable inputs made in determining the fair values.

Estimated rental value (ERV)

The rent at which space could be let in the market conditions prevailing at the date of valuation.

Equivalent yield

The equivalent yield is defined as the internal rate of return of the cash flow from the property, assuming a rise or fall to ERV at the next review or lease termination, but with no further rental change.

Initial yield

Initial yield is the annualised rents of a property expressed as a percentage of the property value.

Reversionary yield

Reversionary yield is the anticipated yield to which the initial yield will rise (or fall) once the rent reaches the ERV.

The table below shows the ERV per annum, area per square foot, average ERV per square foot, initial yield and reversionary yield as at the Balance Sheet date.

The table below presents the sensitivity of the valuation to changes in the most significant assumptions underlying the valuation of completed investment property.