Portfolio Update and 30 June 2023 Net Asset Value

LEI: 213800I9IYIKKNRT3G50

abrdn European Logistics Income plc

Portfolio Update and Unaudited Net Asset Value as at 30 June 2023

Asset management initiatives and focus on Continental European tenant-critical urban and mid-box warehouses underpinning valuation resilience

22 August 2023 - abrdn European Logistics Income plc (the "Company" or "ASLI"), the Company which invests in a diversified portfolio of European logistics real estate, announces its unaudited quarterly Net Asset Value ("NAV") for the quarter ended 30 June 2023.

Summary

·      The portfolio valuation decreased marginally from €722.7 million to €693.5 million, a 1.5% like-for-like valuation decline (excluding sale of Leon during the quarter), reflecting slowing outward yield movement as key medium-term economic indicators improve

·      NAV per Ordinary share decreased by 2.6% to 108.3c (GBp - 92.9p¹) (31 March 2023: 111.2c (GBp - 97.7p¹)), reflecting a NAV total return, with quarterly distributions reinvested, of -6.6% in Euro terms (-9.6% in sterling) for the 6 months to 30 June 2023

·      EPRA Net Tangible Assets² decreased by 2.8% to 113.1c per Ordinary share (31 March 2023 - 116.4c)

·      Completed the sale of the 32,645 sqm warehouse in Leon, Northern Spain, for €18.5 million. The disposal price reflected a small premium to the 31 March 2023 valuation

·      Other asset management initiatives executed including:

•              a five-year lease extension with AS Watson, at the Company's single-tenant warehouse in Ede, the Netherlands

•              a three-year lease extension with MaxFliz home interiors at the Company's Krakow, Poland warehouse, extending the expiry to July 2027

·      Portfolio WAULT improved to 7.1 years to break and 8.7 years to expiry

·      Second interim dividend for 2023 of 1.41c (GBP - 1.22p) declared, payable on 22 September 2023

·      The Company's loan-to-value ("LTV") was 35.3%, with the Investec €70 million facility undrawn at the quarter end. The Company's fixed debt facilities totalled €259.5 million at an average all-in interest rate of 2.0% with no re-financings required until mid-2025.

Troels Andersen, Lead Fund Manager, abrdn, commented:

"Global markets continue to be characterised by uncertainty driven by base rate rises and economic pressures. Encouragingly, the continental European logistics sector, and the ASLI portfolio valuation, has held up relatively well despite these headwinds. The slowing capital value decline across the portfolio this quarter reflects improving investor sentiment, the underlying fundamentals of our portfolio and attractive inflation-linked income profile, as well as the successful asset management leasing results delivered by our local abrdn teams in the year to date. Indicators suggest that some regions may be starting to see the early stages of this reversal in sentiment with buying interest returning for well-placed logistics portfolios and the hoped-for early stages of recovery in values."

Performance

The independent unaudited external valuation of the Company's property portfolio undertaken by Savills (UK) Limited decreased by €10.8 million in the quarter, or 1.5%. The Dutch (-2.5%) and Polish (-2.3%) assets saw the largest valuation declines, with the Spanish portfolio decreasing 1.5% whilst the German and French assets were broadly flat.

For the 12 month period to 30 June 2023, the Company's net asset value total return with quarterly distributions reinvested was -13.2% in Euro terms (-13.5% in sterling terms). As at 30 June 2023, the Company's share price was 66.0p, and as at the date of this announcement the share price was 67.5p.

Dividend

The Directors have declared a second interim distribution for the year ending 31 December 2023 of 1.41 euro cents (equivalent to 1.22 pence) per Ordinary share, which is unchanged from the previous period. The second interim dividend will be paid in sterling on 22 September 2023 to Ordinary shareholders on the register on 1 September 2023 (ex-dividend date of 31 August 2023).

Sale of Asset in Leon, Northern Spain

On 5 May 2023, the Company announced that it had completed the sale of its 32,645 sqm warehouse, in Leon, Northern Spain, to SCPI Iroko Zen, for €18.5 million. The disposal price reflected a small premium to the 31 March 2023 valuation and crystalised a 20% gross profit. The Company acquired the asset, let to Decathlon, in 2018 for €15.3 million.

Rent Collection & Asset Management

As at the date of this announcement, 94% of the expected rental income for the quarter ended 30 June 2023 has been collected. As a result of Arrival's publicly stated intention to consolidate operations in the US, negotiations with the EV manufacturer remain ongoing regarding the two units it leases in Madrid. Rent continues to accrue and is expected to be paid on the conclusion of discussions and the Investment Manager is confident of reaching a satisfactory agreement.

During the quarter, the Company completed:

·      a previously announced five-year lease extension at its single-tenant warehouse in Ede, the Netherlands. The new extended lease with pharmaceutical retailer AS Watson (trading as Kruidvat), moves the expiry out from 2028 to July 2033 and provides for future upward-only indexation capped at 4% per annum

·    a three-year lease extension to MaxFliz home interiors at its Krakow warehouse in Poland. The new lease extends the expiry out to July 2027.

The combination of these asset management initiatives and the Leon sale have improved the portfolio lease metrics by extending the weighted average unexpired lease term (to break) from 6.1 years to 7.1 years and the weighted average lease term (to expiry) from 8.3 years to 8.7 years.

Debt Financing

At the end of the quarter, the Company's fixed debt facilities totalled €259.5 million with an average all-in interest rate of 2%, representing a loan-to-value ratio of 35.3%, in line with the Company's target LTV. The Company's lower cost, secured, fixed rate debt provides support to its investment objective with the earliest re-financing of debt required in mid-2025.

Breakdown of NAV Movement

Set out below is a breakdown of the change to the unaudited net asset value per Ordinary Share over the period from 1 April 2023 to 30 June 2023. The unaudited net asset value has been prepared under International Financial Reporting Standards ("IFRS").

EPRA Net Tangible Assets per share is 113.1 euro cents, which excludes deferred tax liability.

Net Asset Value analysis as at 30 June 2023 (unaudited)

The NAV per share at 30 June 2023 is based on 412,174,356 shares of 1 pence each, being the total number of Ordinary shares in issue at that time. As at the date of this announcement, the Company's share capital consists of 412,174,356 Ordinary shares with voting rights.

The Board is not aware of any other significant events or transactions which have occurred between 30 June 2023 and the date of publication of this statement which would have a material impact on the financial position of the Company.

Details of the Company and its property portfolio may be found on the Company's website at: http://www.eurologisticsincome.co.uk

For further information please contact:

abrdn Fund Managers Limited                                          +44 (0) 20 7463 6000

Stephanie Hocking

Gary Jones

Investec Bank plc                                                                 +44 (0) 20 7597 4000

David Yovichic

Denis Flanagan

FTI Consulting                                                                       +44 (0) 20 3727 1000

Dido Laurimore

Richard Gotla

James McEwan

¹ Exchange rate £1 : €1.17 (31 March 2023: £1 : €1.14)

² EPRA Net Tangible Assets focuses on reflecting a company's tangible assets and the calculation assumes entities buy and sell assets, thereby crystallising certain levels of deferred tax liability

The above information is unaudited