abrdn Property Income Trust Limited - Interim Results for the period ended 30 June 2024
LEI: 549300HHFBWZRKC7RW84
(“API” or the “Company”)
INTERIM RESULTS FOR THE PERIOD ENDED
Today the Board of
PERFORMANCE SUMMARY
6 months to 6 months to
Earnings, Dividends & Costs 30 June 30 June
2024 2023
IFRS (Loss)/gain per share (p) (3.0) 0.8
EPRA earnings per share (p) (excl capital items & 0.7 1.6
derivative movements) *
Dividends paid per ordinary share (p) 2.0 2.0
Dividend Cover (%) ** 36.4 80.6
Dividend Cover excluding non-recurring items (%) ** 77.3 80.6
Dividend Yield (%) *** 7.8 8.4
FTSE All-Share Real Estate Investment Trusts Index 5.0 5.1
Yield (%)
FTSE All-Share Index Yield (%) 4.0 3.7
Ongoing Charges **
As a % of average net assets including direct property 2.3 2.6
costs
As a % of average net assets excluding direct property 1.2 1.1
costs
30 June 31 December Change
Capital Values & Gearing
2024 2023 %
Total assets (£million) 416.7 456.1 (8.6)
Net asset value per share (p) 73.3 78.2 (6.2)
Ordinary Share Price (p) 51.6 53.0 (2.6)
(Discount)/Premium to NAV (%) (29.6) (32.2)
Loan-to-value (%) 2 28.7 30.8
6 months 1 year 3 year 5 year
Total Return
% return % return % return % return
NAV ^ (4.1) (8.1) (5.4) 0.8
Portfolio 0.4 (0.7) 4.8 12.5
Share Price ^ 1.1 17.2 (10.3) (24.9)
FTSE All-Share Real Estate Investment (2.2) 18.1 (12.8) (3.4)
Trusts Index
FTSE All-Share Index 7.4 13.0 23.9 30.9
30 June 30 June
Property Returns & Statistics (%)
2024 2023
Portfolio income return 2.8 2.5
MSCI Benchmark income return 2.4 2.3
Portfolio total return 0.4 1.7
MSCI Benchmark total return 1.8 0.3
Void rate 10.5 8.6
* Calculated as profit for the period before tax (excluding capital items & derivative movements) divided by weighted average number of shares in issue in the period. EPRA stands for
** As defined and calculated under API’s Alternative Performance Measures (as detailed in the full Interim Accounts which can be found via the following link: https://www.abrdnpit.co.uk/en-gb/literature)
*** Based on annual dividend paid of 4.0p and the share price at
^ Assumes re-investment of dividends excluding transaction costs.
Sources: abrdn, MSCI
The above performance summary information excludes the effects of the transaction with GoldenTree which are explained in the Chairman’s statement.
CHAIR’S STATEMENT
Background
Following the downward trajectory of
Since then, we have seen a rate cut at the beginning of August and a feeling, certainly in some sectors of the
Corporate Activity
As previously reported in the Company’s 2023 Annual Report & Financial Statements, the Board undertook a strategic review in the second half of 2023 prompted by concerns about the Company’s size, lack of liquidity in its shares, the discount to NAV and uncovered dividend. The outcome of this review was that the Board recommended to shareholders that they vote in favour of a proposed merger with Custodian REIT for the reasons outlined in various announcements to shareholders during the first quarter of 2024. However, this ultimately did not garner enough shareholders of API to vote in favour of the proposal at the Extraordinary General Meeting.
Following the vote, shareholders of API 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 investment management fees to reflect the new Investment Objective and align the interest of the Investment Manager with the sale and return of capital to shareholders. On
Since then, alongside the Investment Manager, the Board has explored the most effective means of disposing of the Company’s assets, with the main aim being to obtain the best achievable value for the Company’s assets at the time of their realisation, with a view to repaying borrowings and making returns of capital to shareholders. As the Board has disclosed before, we have looked at all potential disposal strategies, including individual property sales alongside a wider portfolio transaction.
Through an independent agent the whole portfolio was marketed to potential buyers in an extensive and competitive process. 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 has agreed a transaction with
The transaction comprises the sale of 39 assets, being the Company’s entire investment property portfolio, with the exception of its interest in the land at Far Ralia, which will be retained by the Company for sale at a later date, subject to certain approvals. The Company’s debt facility with RBSI will be transferred in full to GoldenTree. The cash consideration for the purchase is £351m, and the Company will receive net proceeds after adjusting for debt and other net assets subject to normal adjustments including those arising from the completion process.
GoldenTree has paid a cash deposit of £35.1m, with the balance of the consideration being payable in cash on completion which is expected to be
The consideration represents a discount of 8.0 per cent. to the Company’s external valuation of the Portfolio as at
This estimated net asset value per share represents:
-- a discount of 12.7 per cent. to the Company's net asset value per share
of 73.3 pence as at 30 June 2024 ;
-- a premium of 6.7 per cent. to the Company's share price of 60.0 pence as
at 26 September 2024 , being the closing share price immediately prior to
the date of the announcement of the disposal; and
-- a premium of 20.1 per cent. to the Company's share price of 53.3 pence
on 28 May 2024 , being the date that shareholders approved the Managed
Wind-Down process.
It is intended that, following completion, returns of capital to shareholders in cash will be made as swiftly as practically possible by way of a members' voluntary liquidation. Putting the Company into liquidation will require shareholder approval.
Such returns will be subject to the net realisation value of Far Ralia, which the manager is actively marketing, adjustments arising from the completion process, the operational costs of managing the Company through to liquidation (including tax effects) and the liquidation costs.
After four quarters of capital declines through 2023, the MSCI Quarterly Index reflected an arrest of this trend with a decline of 0.6% in the first quarter and then 0.0% in quarter two. This resulted in positive Total Returns of 0.6% and 1.2% for the first two quarters of the year respectively.
This recovery masks the persistent polarisation we see between sectors, with Industrial and Retail providing positive total returns, whilst Offices continue to lag with further negative capital growth.
In the Industrial sector, the strong dynamics of low supply and reasonable tenant demand has meant that rental growth is still evident, albeit at more muted levels than seen previously. Investors continue to be attracted to this rental growth, and competition amongst buyers is driving a recovery in capital values.
The positive Retail sector performance has largely been driven by a higher relative income return and capital growth in the
In contrast, the Office sector continues to grapple with occupier uncertainty as companies work out a suitable strategy to incorporate hybrid working. Despite the differing approaches being taken, the result is inevitably going to be a lower overall demand for office space. Due to this, investors have been shying away from the sector meaning there has been a dearth of transactional evidence. Without deal activity for valuers to form their views, it is believed that the market has fallen further than valuations.
Portfolio and Corporate Performance
The NAV total return for the six months to
Whilst the share price continued to trade at a significant discount to the NAV for the first half of 2024, the share price total return at 1.1% has exceeded both the NAV and the property portfolio performance.
IFRS earnings decreased from 0.8p per share to -3.0p reflecting the recognition of future transaction costs associated with the Managed Wind-Down and modest property valuation declines over the first half of 2024. EPRA earnings per share decreased from 1.6p to 0.7p per share, reflecting higher debt costs and exceptional items associated with the strategic review and aborted merger.
Financial Resources and Portfolio Activity
The Company continues to be in a strong financial position with unutilised financial resources of £44.4m available in the form of its revolving credit facilities (“RCF”) net of existing cash and financial commitments.
As at the period end the Company had a Loan-to-Value (“LTV”) ratio of 28.7%, which sits within the Board’s target range.
During the first half of the year, the Company completed four property disposals for a combined £29.75m, reflecting a 0.51% premium to the
Dividends
The Board has maintained an annualised rate of 4p per share during the first half of 2024. Dividend cover for the first half of 2024 (excluding non-recurring costs) was 77.3%, reflecting a decrease from 80.6% in the first half of 2023 (also excluding non-recurring items). This is largely due to the increase in finance costs effective from
It is the Boards intention to pay one further 1p dividend before completion of the sale transaction and the appointment of a liquidator.
Outlook
Having exchanged contracts with GoldenTree and having received a deposit from them it is highly likely that the sale of the portfolio will take place. It is hoped that will take place on
The land at Far Ralia is the only property asset that is not part of the portfolio sale. The plan is to transfer this asset up from the subsidiary company (which is being sold) to
It is likely that a liquidator will be appointed shortly after the completion of the sale of the portfolio and the proceeds have been received by the Company. Putting the Company into a members’ voluntary liquidation will require shareholder approval at an extraordinary general meeting. If the liquidator is appointed, the Company’s shares will delist from the
The timing of the final wind-up of the company is highly dependent on when Far Ralia is sold.
The last two years have been testing for the company and all its stakeholders. The rapid rise in financing costs, the continued difficulties in the office market as it adjusted to the post COVID world, the erosion of the yield advantage property companies had over gilts, the negative sentiment towards alternative assets and the wide discounts to net asset values in the closed end fund market all amounted to a very challenging backdrop.
Throughout that period the board have focused solely on what they believed was in the best interests of shareholders.
The Board, having considered the potential alternatives including the present value of what could realistically be achieved by an asset-by-asset disposal, believes that this transaction represents an effective execution of the Managed Wind-Down process. It provides greater price certainty and a quicker return of proceeds for shareholders through realising the substantial majority of the investment portfolio in a single transaction. The Board and the Manager believe that this is the best achievable outcome for shareholders at this time.
INVESTMENT MANAGER’S REPORT
Market Review
The first half of 2024 was another period of very low transaction volumes in the real estate market. In the second half of 2023 sentiment improved in the belief that the rate cutting cycle would start, but over the first half of 2024 this sentiment reversed, with the timing and extent of rate cuts moving out.
The
Real Estate Market
We have seen growing signs of stabilisation across most
Transaction volumes over the first half of 2024 remained muted in a historic context as investors awaited economic and political certainty. Despite this, volumes were up approximately 8% on the same period last year according to RCA data. Of these, the living and Industrial sectors saw the largest shares at 21% and 18%, respectively. The hospitality segment was notable in its strength, seeing over £3bn transact and quickly surpassing the cumulative total for 2023 of £2.4bn. At the other end of the spectrum, Offices remained the least popular of the core real estate segments at 16% of total volume as secondary assets continue to face heightened capex requirements and structural challenges. Volumes are expected to shape up more favourably in the second half of the year as the
Industrial
The Industrial and Logistics sector remains in a position of strength for investors due to its structural drivers. Following the recent trend of consolidation by occupiers,
Retail
Retail fundamentals appear to have held up well considering the prevailing challenges to the consumer, although rising vacancy levels and shifting retail sales profiles may cast lingering doubts on certain segments. Discretionary spending remains subdued, with luxury retailers seeing hits to sales over the first half of the year. On the other hand, discount retailers and supermarkets continue their expansion plans, citing consistently strong results. The
Office
The Office sector continues to struggle as changing workplace habits have accelerated secondary assets towards obsolescence. While values for best-in-class assets are faring better, given strong rental growth prospects and favourable supply/demand dynamics, regional and sub-prime assets are expected to see greater value slippage because of environmental, social and governance issues and amenity-rich buildings remain front-and-centre. This is reflected across
Investment Outlook
From a risk perspective, the change in government doesn’t seem to have had much of an impact on investor intentions. The living sector may be under more scrutiny given potential policy changes, but the probability of any radical shifts from
Still, given our current assumptions, we expect
Performance
During the reporting period the Company changed its Investment Strategy, which was to dispose of all assets and wind up the Company, returning capital to shareholders. This change affects measures of performance, as the portfolio was no longer being managed in the same way as it would if focused on medium term performance as was previously the case.
NAV Return:
NAV total return is a measure of the performance of the property portfolio, the impact of debt and managing the corporate entity and provides shareholders with information on how the Company itself has performed. In the first half of 2024 the NAV of the Company was impacted by the costs incurred in the strategic review and subsequent corporate activity, and a change in accounting policy.
NAV Total Returns to
1 year 3 years 5 years 10 years
Source AIC, abrdn
% % % %
abrdn Property Income Trust Limited (8.1) (5.4) 0.8 73.0
AIC Property UK Commercial (weighted average) (5.5) (2.0) 5.7 59.7
Investment Association Open Ended Commercial 1.5 (2.3) (2.3) 18.8
Property Funds sector
NAV Bridge (p per share)
December 2023 NAV 78.2
Other Reserves 0.1
Net Income before dividend 1.5
Quarterly dividend paid (2.0)
Accrued sales costs (Managed Wind-Down) (1.8)
Exceptional Corporate Activity (0.8)
Gross Valuation Movement (1.1)
Capital Expenditure (0.7)
Loss on Sale (0.1)
June 2024 NAV 73.3
Share Price:
The share price total return (assuming dividends reinvested) is the return measure most aligned to the experience of the shareholder but is the one that the Investment Manager has the least influence over.
The table below compares the API share price return to that of the
Share Price Total Returns to
1 year 3 years 5 years 10 years
Source AIC, abrdn
% % % %
abrdn Property Income Trust Limited 17.2 (10.3) (24.9) 21.3
FTSE All-Share Index 13.0 23.9 30.9 77.8
FTSE All-Share REIT Index 18.1 (12.8) (3.4) 20.2
AIC Property Direct – UK Sector (weighted 7.1 (10.4) (7.8) 18.2
Average)
Dividends
The Company has continued to pay a dividend of 1p per quarter. Excluding the costs incurred with the various corporate activities (non-recurring costs) the dividend was 77.3% covered by net income. Including costs associated with the corporate activity the dividend cover was 36.4%. The Board has confirmed it will pay one further dividend of 1p before the exchange of contracts for the sale of the property portfolio. After the sale distributions to shareholders are likely to be capital in nature.
Portfolio Valuation
The investment portfolio is valued on a quarterly basis by
Environmental Social and Governance (ESG)
ESG is covered in detail in our annual report and accounts. It is fully integrated into the Investment Manger’s investment process, however with the change of Investment Strategy the focus is on ensuring ESG supports sales of the assets, rather than taking a longer-term outlook on carbon reduction and asset enhancement. The Company no longer subscribes to GRESB.
No further investment will be made in new ESG projects unless approved by the Board or already committed.
Land at Far Ralia
Significant progress has been made with the planting regime, and as at
Asset Management
Three new leases were agreed during the first half of the year, securing an annual rent of £0.25m per annum. While we received good interest in the two largest voids (logistics units in Swadlingcote and Knowsley) we have not yet been able to agree terms on these. Three lease renewals were agreed securing an increase of £0.5m per annum and two rent reviews were settled with an average uplift of 6.9%
Sales:
Four assets have been sold in the first half of 2024 with a total sales price of £29.8m.
▸
▸
▸
Hebburn, Unit
▸
Two further assets have exchanged following
▸
Dover,
▸
Debt
The Company has two debt facilities from the
Both facilities mature in
Outlook and Future Strategy
As managers we will work with the Board and their advisers to enable the sale of the property portfolio to GoldenTree as quickly as possible. The sale of Far Ralia also remains a focus. Once the portfolio sale has taken place and the liquidator has been appointed it is likely we will continue to assist as the Company is wound up and the final cash payment is made to shareholders.
PROPERTY INVETMENTS
Property Value (range) Sector % of total portfolio Halesowen, B&Q £22m - £24m Retail 5.6% Rotherham, Ickles Way £20m - £22m Industrial 5.2% Birmingham, 54 Hagley Road £18m - £20m Office 4.7% Welwyn Garden City, Morrison’s £18m - £20m Retail 4.5% Shellingford, White Horse Business £16m - £18m Industrial 3.8% Park Swadlincote, Tetron 141 £14m - £16m Industrial 3.7% London, Hollywood Green £12m - £14m Other 3.4% Washington, Rainhill Road £12m - £14m Industrial 3.4% Corby, 3 Earlstrees Road £12m - £14m Industrial 3.3% St Helens, Stadium Way £12m - £14m Industrial 3.1%
Top Ten Tenants
Tenant Passing Rent % of total contracted rent Public Sector £2,022,243 7.6% B&Q Plc £1,560,000 5.9% WM Morrisons Supermarkets Ltd £1,252,162 4.7% The Symphony Group Plc £1,225,000 4.6% Schlumberger Oilfield UK Plc £1,138,402 4.3% Timbmet Limited £904,768 3.4% Atos IT Services Limited £872,466 3.3% CEVA Logistics Limited £840,000 3.2% Thyssenkrupp Materials (UK) Ltd £643,565 2.4% Hermes Parcelnet Ltd £591,500 2.2%
Portfolio Allocation by region
Region Weighting South East 24.2%West Midlands 19.9% North West 15.1%East Midlands 14.4% North East 11.8%Scotland 11.2% LondonWest End 1.8% South West 1.6%
PRINCIPAL RISKS AND UNCERTAINTIES
The Company’s assets consist of direct investments in
The Board has carried out an assessment of the risk profile of the Company which concluded that the risks as at
Having reviewed the principal risks, the Directors believe that the Company has adequate resources to continue in operational existence throughout the portfolio sale and liquidation process.
Given there existed a clear indication to place the group into liquidation at a point in the future, the financial statements to
Future of the Company
On the
The proposed sale of abrdn
An additional risk is the transfer of Far Ralia from abrdn
Once the sale to GoldenTree has completed, the Board will seek shareholder approval to appoint a liquidator and put the company into liquidation.
STATEMENT OF DIRECTOR’S RESPONSIBILITIES CONDENSED
The Directors are responsible for preparing the Interim Report in accordance with the applicable law and regulations. The Directors confirm that to the best of their knowledge:
▸ The Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with IAS 34; and;
▸ The Interim Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules; and
▸ In accordance with 4.2.9R of the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules, it is confirmed that this publication has not been audited or reviewed by the Company’s auditors.
The Interim Report, for the six months ended
▸
the Unaudited Condensed Consolidated Financial Statements are prepared in accordance with IFRSs as adopted by the
▸ the Interim Report 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 faced.
For and on behalf of the Directors of
Approved by the Board on
Chair
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the period ended30 June 2024
01 Jan 24 01 Jan 23 01 Jan 23
to 30 Jun 24 To 30 Jun 23 to 31 Dec 23
Notes £ £ £
Rental income 13,518,687 13,158,202 27,552,279
Service charge income 3 2,867,089 2,634,895 4,884,357
Service charge expenditure 3 (3,372,243) (3,548,933) (6,354,598)
Net Rental Income 13,013,533 12,244,164 26,082,038
Administrative and other expenses
Investment management fee 3 (1,080,365) (1,319,824) (2,632,225)
Other direct property operating 3 (1,030,686) (1,356,485) (2,408,461)
expenses
Net Impairment gain/(loss) on trade 3 88,255 (62,325) 213,048
receivables
Fees associated with strategic 3 (3,009,280) - (1,729,925)
review and aborted merger
Other administration expenses 3 (709,857) (544,932) (1,136,742)
Total administrative and other (5,741,933) (3,283,566) (7,694,305)
expenses
Operating profit before changes in 7,271,600 8,960,598 18,387,733
fair value of investment properties
Valuation loss from investment 4 (8,292,948) (2,796,932) (17,989,531)
properties
Valuation gain/(loss) from land 6 1,334,755 (475,619) (783,683)
Estimated costs arising from future 13 (6,690,173) - -
disposal
Loss on disposal of investment 4 (453,768) (5,465) (279,090)
properties
Operating (loss)/profit (6,830,534) 5,682,582 (664,571)
Finance income 52,081 51,405 92,178
Finance costs (4,548,455) (2,870,136) (7,695,508)
(Loss)/gain for the period before (11,326,908) 2,863,851 (8,267,901)
taxation
Taxation
Tax charge - - -
(Loss)/gain for the period, net of (11,326,908) 2,863,851 (8,267,901)
tax
Other comprehensive income/(loss)
Movement in fair value on swap - (902,534) (902,534)
Movement in fair value on interest 356,278 1,837,334 (789,918)
rate cap
Total other comprehensive income/ 356,278 934,800 (1,692,452)
(loss)
Total comprehensive (loss)/gain for (10,970,630) 3,798,651 (9,960,353)
the period, net of tax
(Loss)/earnings per share
Basic and diluted (loss)/earnings 7 (3.0) 0.8 (2.2)
per share
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.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at30 June 2024 30 Jun 24 30 Jun 23 31 Dec 23 Assets Notes £ £ £ Non-current assets Investment properties 4 - 431,171,992 388,338,754 Lease incentives 4 - 8,162,006 9,306,403 Land 6 - 7,500,000 8,250,000 Interest rate cap 11 - 2,900,969 559,671 Rental deposits held on behalf - 703,209 895,003 of tenants - 450,438,176 407,349,831 Current Assets Investment properties 4, 5 342,733,133 - - Investment properties held for 4, 5, 13 39,757,987 - 35,100,000 sale Land 6 9,835,000 - - Trade and other receivables 15,572,608 5,737,177 6,101,152 Cash and cash equivalents 7,485,037 9,958,675 6,653,838 Interest rate cap 11 1,350,870 1,406,290 849,110 416,734,635 17,102,142 48,704,100 Total assets 416,734,635 467,540,318 456,053,931 Liabilities Current liabilities Trade and other payables 11,358,974 11,320,946 14,018,455 Bank borrowings 12 123,410,970 - - Obligation under finance leases 2,481,258 - - 137,251,202 11,320,946 14,018,455 Non-current liabilities Bank borrowings 12 - 134,242,626 141,251,910 Obligations under finance leases - 1,811,711 1,810,120 Rental deposits due to tenants - 703,209 895,003 - 136,757,546 143,957,033 Total liabilities 137,251,202 148,078,492 157,975,488 Net assets 279,483,433 319,461,826 298,078,443 Equity Capital and reserves attributable to Company’s equity holders Share capital 9 228,383,857 228,383,857 228,383,857 Treasury share reserve 9 (18,400,876) (18,400,876) (18,400,876) Retained Earnings - 2,899,511 - Capital reserves (23,406,434) 8,740,962 (9,660,578) Other distributable reserves 92,906,886 97,838,372 97,756,040 Total equity 279,483,433 319,461,826 298,078,443 2024 (p) 2023 (p) 2023 (p) NAV per share 73.3 83.8 78.2
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 204
Other
Share Treasury Retained Capital Distributable Total
Notes Capital Shares Earnings Reserves Reserves Equity
£ £ £ £ £ £
Opening
balance 1 228,383,857 (18,400,876) - (9,660,578) 97,756,040 298,078,443
January 2024
Loss for the - - (11,326,908) - - (11,326,908)
period
Other
comprehensive - - - 356,278 - 356,278
income
Total
comprehensive - - (11,326,908) 356,278 - (10,970,630)
loss for the
period
Dividends 10 - - (7,624,380) - - (7,624,380)
paid
Valuation
loss from 4 - - 8,292,948 (8,292,948) - -
investment
properties
Valuation
gain from 6 - - (1,334,755) 1,334,755 - -
land
Estimated
costs arising 13 - - 6,690,173 (6,690,173) - -
from future
disposal
Loss on
disposal of 4 - - 453,768 (453,768) - -
investment
properties
Transfer from
Other - - 4,849,154 - (4,849,154) -
distributable
reserves
Balance at 30 228,383,857 (18,400,876) - (23,406,434) 92,906,886 279,483,433
June 2024
Opening
balance 1 228,383,857 (18,400,876) 4,382,024 11,084,178 97,838,372 323,287,555
January 2023
Profit for the - - 2,863,851 - - 2,863,851
period
Other
comprehensive - - - 934,800 - 934,800
income
Total
comprehensive - - 2,863,851 934,800 - 3,798,651
gain for the
year
Dividends paid 10 - - (7,624,380) - - (7,624,380)
Valuation loss
from 4 - - 2,796,932 (2,796,932) - -
investment
properties
Valuation loss 6 - - 475,619 (475,619) - -
from land
Loss on
disposal of 4 - - 5,465 (5,465) - -
investment
properties
Balance at 30 228,383,857 (18,400,876) 2,899,511 8,740,962 97,838,372 319,461,826
June 2023
Opening
balance 1 228,383,857 (18,400,876) 4,382,024 11,084,178 97,838,372 323,287,555
January 2023
Loss for the - - (8,267,901) - - (8,267,901)
year
Other
comprehensive - - - (1,692,452) - 1,692,452
loss
Total
comprehensive - - (8,267,901) (1,692,452) - (9,960,353)
loss for the
year
Dividends paid 10 - - (15,248,759) - - (15,248,759)
Valuation loss
from 4 - - 17,989,531 (17,989,531) - -
investment
properties
Valuation loss 6 - - 783,683 (783,683) - -
from land
Loss on
disposal of 4 - - 279,090 (279,090) - -
investment
properties
Transfer from
Other - - 82,332 - (82,332) -
distributable
reserves
Balance at 31 228,383,857 (18,400,876) - (9,660,578) 97,756,040 298,078,443
December 2023
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW For the period ended30 June 2024 01 Jan 24 01 Jan 23 01 Jan 23 to 30 Jun 24 to 30 Jun 23 to 31 Dec 23 Cash flows from operating Notes £ £ £ activities Loss for the year before taxation (11,326,908) 2,863,851 (8,267,901) Movement in lease incentives (53,108) 195,030 (984,446) Movement in trade and other 353,512 1,768,479 1,212,710 receivables Movement in trade and other (3,249,221) (50,187) 2,353,098 payables Finance costs 4,548,455 2,870,136 7,695,508 Finance income (52,081) (51,405) (92,178) Valuation loss from investment 4 8,292,948 2,796,932 17,989,531 properties Valuation (gain)/loss from land 6 (1,334,755) 475,619 783,683 Estimated costs arising from 13 6,690,173 - - future disposal Loss on disposal of investment 4 453,768 5,465 279,090 properties Net cash inflow from operating 4,322,783 10,873,920 20,969,095 activities Cash flows from investing activities Finance income 52,081 51,405 92,178 Purchase of investment properties 4 - (23,984,360) (23,986,401) Additions to land 6 (415,245) (475,619) (1,533,683) Capital expenditure on investment 4 (2,369,803) (7,854,889) (21,678,721) properties Net proceeds from disposal of 4 29,146,232 (5,465) 6,120,910 investment properties Net cash inflow/(outflow) from 26,413,265 (32,268,928) (40,985,717) investing activities Cash flows from financing activities Borrowing on RCF 12 10,300,000 50,000,000 63,000,000 Repayment of RCF 12 (28,274,379) - (6,125,621) Repayment of expired facility 12 - (110,000,000) (110,000,000) New term facility 12 - 85,000,000 85,000,000 Interest paid on bank borrowing (4,816,402) (3,098,005) (7,396,815) Receipts on Interest rate SWAP - 1,254,217 1,254,217 Receipts on Interest rate Cap 544,080 - 365,674 Finance lease interest (33,768) (49,202)) (49,289) Dividends paid to the Company’s 10 (7,624,380) (7,624,380) (15,248,759) shareholders Net cash (outflow)/ inflow from (29,904,849) 15,482,630 10,799,407 financing activities Net increase/(decrease) in cash 831,199 (5,912,378) (9,217,215) and cash equivalents Cash and cash equivalents at 6,653,838 15,871,053 15,871,053 beginning of period Cash and cash equivalents at end 7,485,037 9,958,675 6,653,838 of period
Notes TO the consolidated financial statements
1. Accounting policies
Basis of preparation
The Unaudited Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standard (“IFRS”) IAS 34 ‘Interim Financial Reporting’ and, except as described below, the accounting policies set out in the statutory accounts of the Group for the year ended
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
Under the Managed Wind-Down process, the Group and its subsidiaries have been 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.
The timeline for the disposal of the property portfolio depends on the completion of the sale and purchase agreement with GoldenTree, and the authority to transfer Far Ralia from a subsidiary to the top company. The target completion day for the sale of the subsidiary is
At the date of approval of the 2023 Annual Report & Financial Statements of API, the outcome of the vote at the wind-down EGM was not known and could not be ascertained. As such, the consolidated financial statements were prepared on a going concern basis with material uncertainty.
The Boards of Directors of API have undertaken an assessment and are satisfied that all entities within the Group will have no difficulty in meeting their liabilities as they fall due during the forthcoming sale process. In particular, the relevant Boards are satisfied that the requirements of the Group’s lender can be met. However, there now exists a clear intention to enter liquidation at some point after the completion of the sale and purchase agreement with GoldenTree. 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 going concern.
There is no general dispensation from the measurement, recognition and disclosure requirements if the entity is not expected to continue as a going concern. The Company proposes to use the ‘normal’ recognition and measurement requirements as the starting point for accounting and only apply different methods where adequate justification exists, for example arising from events after the reporting date. As the Group and its subsidiaries are currently not in the process of being liquidated nor will they be liquidated until shareholders approve the appointment of a liquidator it has not been deemed appropriate to prepare these accounts on a ‘break-up basis’. As such, the financial statements have been prepared on a basis other than that of a going concern.
Adjustments to going concern basis of accounting
In addition to assessing the Company’s significant 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 and Financial Instruments 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 Investment Properties and have decided to reduce fair value by the estimated cost of disposal. Further details can be found in note 13.
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
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 a going concern would have any material impact on comparatives and have concluded this not to be the case.
As at
1. Related Party Disclosure
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.
Directors’ remuneration
The Directors of the Company are deemed as key management personnel and received fees for their services. Total fees for the period ended
Investment manager
abrdn
3. Administrative and Other Expenses
6 months to 6 months to Year to
30 Jun 24 30 Jun 23 31 Dec 23
Notes £ £ £
Investment management fees 3a 1,080,365 1,319,824 2,632,225
Other direct property expenses
Vacant Costs (excluding void service 449,622 693,261 1,217,722
charge)
Repairs and maintenance 164,039 255,958 418,360
Letting fees 211,037 200,102 405,684
Other costs 205,988 207,164 366,695
Total Other direct property expenses 1,030,686 1,356,485 2,408,461
Net Impairment gain on trade receivables (88,255) 62,325 (213,048)
*
Fees associated with strategic review 3b 3,009,280 - 1,729,925
and aborted merger
Other administration expenses
Directors’ fees and subsistence 2 256,081 114,057 239,436
Valuer’s fees 35,248 37,615 75,524
Auditor’s fees 76,450 65,640 192,700
Marketing 76,425 112,402 222,893
Other administration costs 265,653 215,218 406,189
Total Other administration expenses 709,857 544,932 1,136,742
Total Administrative and other expenses 5,741,933 3,283,566 7,694,305
* In the prior period, impairment gains/(losses) on trade receivables (
6 months to 6 months to Year to
30 Jun 24 30 Jun 23 31 Dec 23
£ £ £
Total service charge billed to tenants 2,714,494 2,593,408 4,731,793
Service charge due from tenants 152,595 41,487 152,564
Service charge income 2,867,089 2,634,895 4,884,357
Total service charge expenditure incurred 2,867,089 2,634,895 4,884,357
Service charge incurred in respect of void 505,154 914,038 1,470,241
units
Service charge expenditure 3,372,243 3,548,933 6,354,598
3a. Investment management fees
From
3b. Fees associated with strategic review and aborted merger
As described in more detail in note 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
4. Investment Properties
UK UK UK UK
Industrial Office Retail Other Total
30 Jun 2024 30 Jun 2024 30 Jun 2024 30 Jun 2024 30 Jun 2024
£ £ £ £ £
Market value at 1 250,070,037 72,575,000 72,390,000 35,900,000 430,935,037
January
Purchases - - - - -
Capital 2,363,118 (247,299) 254,369 (385) 2,369,803
expenditure
Opening market (19,750,000) (9,850,000) - - (29,600,000)
value of disposals
Valuation loss (596,732) (5,008,133) (3,400,395) 712,312 (8,292,948)
Movement in lease 38,577 80,432 (53,974) (11,927) 53,108
incentives
Market value at 30 232,125,000 57,550,000 69,190,000 36,600,000 395,465,000
June
Investment
property (36,025,000) (4,400,000) - - (40,425,000)
recognised as held
for sale
Market value net
of held for sale 196,100,000 53,150,000 69,190,000 36,600,000 355,040,000
at 30 June
Right of use asset
recognised on - 2,481,258 - - 2,481,258
leasehold
properties
Adjustment for (5,760,982) (1,829,289) (792,259) (547,435) (8,929,965)
lease incentives
Estimated costs
arising from (3,235,650) (876,975) (1,141,635) (603,900) (5,858,160)
future disposal
Carrying value at 187,103,368 52,924,994 67,256,106 35,448,665 342,733,133
30 June
The valuations were performed by
In the condensed unaudited cash flow statement, loss from disposal of investment properties arises as follows:
30 Jun 24 30 Jun 23 31 Dec 23
£ £
Opening market value of disposals 29,600,000 - 6,400,000
Loss on disposal (453,768) (5,465) (279,090)
Net proceeds from disposal of investment 29,146,232 (5,465) 6,120,910
properties
Valuation Methodology
The fair value of completed investment properties are 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 have reflected the current rent (the gross rent) payable to lease expiry, at which point the valuer has assumed that each unit will be re-let at their opinion of ERV. The valuers have made allowances for voids where appropriate, as well as deducting non recoverable costs where applicable. The appropriate yield is selected on the basis of the location of the building, its quality, tenant credit quality and lease terms amongst other factors.
There have been no changes to the valuation techniques applied to any property. At the Balance Sheet date the income capitalisation method is considered to be appropriate for valuing all assets.
The Company appoints suitable valuers (such appointment is reviewed on a periodic basis) to undertake a valuation of all the direct real estate investments on a quarterly basis. The valuation is undertaken in accordance with the current RICS guidelines and requirements as mentioned earlier.
The Investment Manager meets with the valuers on a quarterly basis to ensure the valuers are aware of all relevant information for the valuation and any change in the investment over the quarter. The Investment Manager then reviews and discusses the draft valuations with the valuers to ensure correct factual assumptions are made.
The management group that determines the Company’s valuation policies and procedures for property valuations is the Property Valuation Committee. The Committee reviews the quarterly property valuation reports produced by the valuers (or such other person as may from time to time provide such property valuation services to the Company) before its submission to the Board, focusing in particular on:
• significant adjustments from the previous property valuation report;
• reviewing the individual valuations of each property;
• compliance with applicable standards and guidelines including those issued by RICS and the FCA Listing Rules;
• reviewing the findings and any recommendations or statements made by the valuer;
• considering any further matters relating to the valuation of the properties.
The Chair of the Committee makes a brief report of the findings and recommendations of the Committee to the Board after each Committee meeting. The minutes of the Committee meetings are circulated to the Board. The Chair submits an annual report to the Board summarising the Committee’s activities during the year and the related significant results and findings.
The table over leaf 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 over leaf are categorised Level 3 and all are valued using the Income Capitalisation method.
Country & Class UK Industrial UK Office UK Retail UK Other
30 Jun 2024 Level 3 Level 3 Level 3 Level 3
Fair Value£ 232,125,000 57,550,000 69,190,000 36,600,000
Initial Yield Initial Yield Initial Yield Initial Yield
Reversionary Reversionary Reversionary Reversionary
yield yield yield yield
Key
Unobservable Equivalent Equivalent Equivalent Equivalent Yield
Input Yield Yield Yield
Estimated Estimated Estimated Estimated rental
rental value rental value rental value value per sq ft
per sq ft per sq ft per sq ft
0.00% to 9.61% 5.68% to 10.98% 6.41% to 9.73% 5.39% to 8.06%
(5.11%) (8.62%) (7.28%) (6.38%)
5.20% to 8.99% 8.12% to 14.29% 5.76% to 7.81% 5.79% to 8.37%
Range (6.76%) (11.76%) (6.56%) (6.41%)
(weighted
average) 5.56% to 8.50% 7.50% to 11.53% 6.01% to 10.42% 5.59% to 8.71%
(6.63%) (9.82%) (7.36%) (6.64%)
£4.85 to £10.50 £15.79 to £8.74 to £32.54 £6.50 to £20.00
(£7.11) £40.71 (£24.06) (£16.83) (£14.37)
Country & Class UK Industrial UK Office UK Retail UK Other
31 Dec 2023 Level 3 Level 3 Level 3 Level 3
Fair Value 250,070,037 72,575,000 72,390,000 35,900,000
Initial Yield Initial Yield Initial Yield Initial Yield
Reversionary Reversionary Reversionary Reversionary
yield yield yield yield
Key
Unobservable Equivalent Equivalent Equivalent Equivalent Yield
Input Yield Yield Yield
Estimated Estimated Estimated Estimated rental
rental value rental value rental value value per sq ft
per sq ft per sq ft per sq ft
0.00% to 8.97% 4.56% to 10.51% 6.03% to 9.12% 5.40% to 9.30%
(4.80%) (7.57%) (6.91%) (6.53%)
4.74% to 8.79% 7.34% to 12.20% 5.52% to 7.99% 5.81% to 9.40%
Range (6.55%) (10.33%) (6.22%) (6.52%)
(weighted
average) 5.28% to 8.30% 7.04% to 9.98% 5.76% to 9.91% 5.58% to 9.21%
(6.46%) (8.89%) (7.02%) (6.67%)
£4.75 to £10.25 £15.79 to £0.00 to £30.61 £6.50 to £20.00
(£7.04) £45.94 (£27.08) (£11.35) (£14.49)
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.
30 Jun 24 30 Jun 23 31 Dec 23
ERV p.a. 32,550,144 33,858,142 £34,189,042
Area sq.ft. 3,341,499 3,585,128 3,503,840
Average ERV per sq.ft. £9.74 £9.44 £9.76
Initial yield 6.0% 5.7% 5.8%
Reversionary yield 7.5% 7.2% 7.1%
The table below presents the sensitivity of the valuation to changes in the most significant assumptions underlying the valuation of completed investment property.
30 Jun 24 30 Jun 23 31 Dec 23
£ £ £
Increase in equivalent yield of 50 bps (26,544,103) (33,598,162) (31,373,168)
Decrease in rental rates of 5% (ERV) (14,521,858) (16,650,621) (15,910,176)
Below is a list of how the interrelationships in the sensitivity analysis above can be explained.
In both cases outlined in the sensitivity table the estimated Fair Value would increase (decrease) if:
-- The ERV is higher (lower)
-- Void periods were shorter (longer)
-- The occupancy rate was higher (lower)
-- Rent free periods were shorter (longer)
-- The capitalisation rates were lower (higher)
5. Investment Properties Held for Sale
As at
As at
6. Land
6 months 6 months Year
to 30 Jun 24 to 30 Jun 23 to 31 Dec 23
£ £ £
Cost
Balance at the beginning of the year 9,595,555 8,061,872 8,061,872
Additions 1,053,052 475,619 2,154,160
Government Grant Income receivable (637,807) - (620,477)
Balance at the end of the year 10,010,800 8,537,491 9,595,555
Changes in fair value
Balance at the beginning of the year (1,345,555) (561,872) (561,872)
Valuation gain/(loss) from land 1,334,755 (475,619) (783,683)
Balance at the end of the year (1,037,491) (1,345,555)
Land Impairment for projected sales costs (165,000) - -
(see note 13)
Carrying amount as at 31 December 9,835,000 7,500,000 8,250,000
Valuation methodology
The Land is held at fair value and is categorised Level 3. The Group appoints suitable valuers (such appointment is reviewed on a periodic basis) to undertake a valuation of the land on a quarterly basis. The valuation is undertaken in accordance with the current RICS guidelines by
Additions represent costs associated with the reforestation and peatland restoration at Far Ralia.
Grants are receivable from the
As noted in more detail in note 1, the current condensed unaudited Interim Report & Accounts are not prepared on a going concern basis with the carrying value reduced by estimated costs of disposal of £165,000 has been recognised to write down the Land to its projected net realisable value. Further details are provided in note 13.
7. Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the year net of tax attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year. As there are no dilutive instruments outstanding, basic and diluted earnings per share are identical.
The earnings per share for the year is set out in the table below.
Earnings for the period to
6 months to 6 months to Year to
30 Jun 24 30 Jun 23 31 Dec 23
£ £
Loss for the year net of tax (11,326,908) 2,863,851 (8,267,901)
Weighted average number of ordinary shares 381,218,977 381,218,977 381,218,977
outstanding during the year
Loss per ordinary share (pence) (3.0) 0.8 (2.2)
Profit for the year excluding capital items 2,775,226 6,141,867 10,784,403
(£)
EPRA earnings per share (pence) 0.7 1.6 2.83
8. Investments in Limited Partnership and Subsidiaries
The Company owns 100 per cent of the issued ordinary share capital of abrdn
-- abrdn Property Holdings Limited (formerly known as Standard Life
Investments Property Holdings Limited ), a property investment company
with limited liability incorporated in Guernsey , Channel Islands .
-- abrdn (APIT) Limited Partnership (formerly known as Standard Life
Investments (SLIPIT) Limited Partnership), a property investment limited
partnership established in England .
-- abrdn APIT (General Partner ) Limited, a company with limited liability
incorporated in England , whose principal business is property
investment.
-- abrdn (APIT Nominee) Limited, a company with limited liability
incorporated and domiciled in England , whose principal business is
property investment.
9. Share capital
Under the Company’s Articles of Incorporation, the Company may issue an unlimited number of ordinary shares of
Allotted, called up and fully paid: 30 Jun 24 31 Dec 23 30 Jun 23
£ £
Opening balance 228,383,857 228,383,857 228,383,857
Shares issued - - -
Closing balance 228,383,857 228,383,857 228,383857
Treasury Shares
30 Jun 24 31 Dec 23 30 Jun 23
£ £ £
Opening balance 18,400,876 18,400,876 18,400,876
Bought back during the year - - -
Closing balance 18,400,876 18,400,876 18,400,876
The number of shares in issue on 30 Jun 2024 and 2023 are as follows
30 Jun 24 31 Dec 23 30 Jun 23
Number of shares Number of shares Number of shares
Opening balance 381,218,977 381,218,977 381,218,977
Bought back during the year - - -
and put into Treasury
Closing balance 381,218,977 381,218,977 381,218,977
10. Dividends and Property Income Distributions Gross of Income Tax
Dividends 6 months to Jun PID Non-PID Total PID Non-PID
2024
pence pence Pence £ £
Quarter to 31 December of 0.3980 0.6020 1.0000 1,517,252 2,294,938
prior year (paid in February)
Quarter to 31 March (paid in 1.0000 - 1.0000 3,812,190 -
May)
Total dividends paid 1.3980 0.6020 2.0000 5,329,442 2,294,938
Quarter to 30 June (paid in - - - - -
August)
Quarter to 30 September (paid - - - - -
in November)
Total dividends paid 1.3980 0.6020 2.0000 5,329,442 2,294,938
Quarter to 30 June of current
period (paid after period 0.4500 0.5500 1.0000 1,715,485 2,096,705
end)
Prior year dividends (per (0.3980) (0.6020) (1.0000) (1,517,252) (2,294,938)
above)
Total dividends paid 1.4500 0.5500 2.0000 5,527,675 2,096,705
A property income dividend of 1.00p per share was declared on
PID Non-PID Total PID Non-PID
Dividends 12 months to Dec 23
pence pence Pence £ £
Quarter to 31 December of prior - 1.0000 1.0000 - 3,812,190
year (paid in February)
Quarter to 31 March (paid in May) 1.0000 - 1.0000 3,812,190 -
Total dividends paid 1.0000 1.0000 2.0000 3,812,190 3,812,190
Quarter to 30 June (paid in 1.0000 - 1.0000 3,812,190 -
August)
Quarter to 30 September (paid in - 1.0000 1.0000 - 3,812,190
November)
Total dividends paid 2.0000 2.0000 4.0000 7,624,380 7,624,380
Quarter to 31 December of current 0.3980 0.6020 1.0000 1,517,252 2,294,938
year (paid after year end)
Prior period dividends (per - (1.0000) (1.0000) - (3,812,190)
above)
Total dividends paid 2.3980 1.6020 4.0000 9,141,632 6,107,128
11. Financial Instruments
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.
Carrying amount Fair Value
30 Jun 24 31 Dec 23 30 Jun 24 31 Dec 23
Financial Assets £ £ £ £
Cash and cash equivalents 7,485,037 6,653,838 7,485,037 6,653,838
Trade and other receivables 6,047,438 6,101,152 6,047,438 6,101,152
Financial liabilities
Bank borrowings 123,410,970 141,251,910 125,352,272 144,957,576
Trade and other payables 3,534,544 8,217,588 3,534,544 8,217,588
In addition to the above, the Group's financial instruments also include an Interest rate cap. This has not been included in the disclosure above as it is 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 is estimated by discounting future
cash flows using rates currently available for debt on similar terms and
remaining maturities. The fair value approximates their carrying values
gross of unamortised transaction costs. This is considered as being
valued at level 2 of the fair value hierarchy and has not changed level
since 31 December 2023 .
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.
Year ended 30 June 2024 Level 1 Level 2 Level 3 Total fair value
Financial assets
Trade and other receivables - 6,047,438 - 6,047,438
Cash and cash equivalents 7,485,037 - - 7,485,037
Interest rate cap - 1,350,869 - 1,350,869
Rental deposits held on behalf of 595,205 - - 595,205
tenants
Right of use asset - 2,481,258 - 2,481,258
8,080,242 9,879,565 - 17,959,807
Financial liabilities
Trade and other payables - 3,534,544 - 3,534,544
Bank borrowings - 125,352,272 - 125,352,272
Obligation under finance leases - 2,481,258 - 2,481,258
Rental deposits held on behalf of 595,205 - - 595,205
tenants
595,205 131,368,074 - 131,963,279
Year ended 31 December 2023 Level 1 Level 2 Level 3 Total fair value
Financial assets
Trade and other receivables - 6,101,152 - 6,101,152
Cash and cash equivalents 6,653,838 - - 6,653,838
Interest rate cap - 1,408,781 - 1,408,781
Rental deposits held on behalf of 895,003 - - 895,003
tenants
Right of use asset - 1,810,120 - 1,810,120
7,548,841 9,320,053 - 16,868,894
Financial liabilities
Trade and other payables - 8,217,588 - 8,217,588
Bank borrowings - 144,957,576 - 144,957,576
Obligation under finance leases - 1,810,120 - 1,810,120
Rental deposits held on behalf of 895,003 - - 895,003
tenants
895,003 154,985,284 - 155,880,287
12. Bank borrowings
30 Jun 24 30 Jun 23 31 Dec 23
£ £ £
Loan facility (including Rolling Credit 165,000,000 165,000,000 165,000,000
Facility)
Drawn down outstanding balance 123,900,000 135,000,000 141,874,379
On
30 Jun 24 30 Jun 23 31 Dec 23
£ £ £
Opening carrying value of expired facility - 109,928,234 109,928,234
as at 1 January
Borrowings during the period on expired - 25,000,000 25,000,000
RCF
Repayment of expired RCF - (25,000,000 (25,000,000
Repayment of expired facility - (110,000,000) (110,000,000)
Amortisation of arrangement costs - 71,766 71,766
Closing carrying value of expired facility - - -
Opening carrying value of new facility as 141,251,910 (804,297) (804,297) at 1 January Borrowings during the period on new RCF 10,300,000 50,000,000 63,000,000 Repayment of new RCF (28,274,379) - (6,125,621) New term loan facility - 85,000,000 85,000,000 Amortisation of arrangement costs 133,439 46,923 181,828 Closing carrying value 123,410,970 134,242,626 141,251,910
Opening carrying value of facilities 141,251,910 109,123,937 109,123,937 combined as at 1 January Closing carrying value of facilities 123,410,970 134,242,626 141,251,910 combined
Under the terms of the loan facilities there are certain events which would entitle RBSI to terminate the loan facility and demand repayment of all sums due. Included in these events of default is the financial undertaking relating to the LTV percentage. The loan agreement notes that the LTV percentage is calculated as the loan amount less the amount of any sterling cash deposited within the security of RBSI divided by the gross secured property value, and that this percentage should not exceed 60% for the period to and including
The Board, with the assistance of the Investment Manager, have undertaken a review of any potential breaches of borrowing covenants that may occur during the sale process. While no breaches are expected to occur, the expected disposal to GoldenTree includes the Group’s borrowing facilities and the directors therefore consider it appropriate to reclassify borrowings as current liabilities. There are no penalties for early repayment.
13. Commitments and Contingent Liabilities
As explained in note 1 the Group’s financial statements are no longer prepared on a going concern basis. The Board have assessed the consequences of this and the decision made in
Investment Investment Properties
Properties Land Total
Held for Sale
£ £ £ £
Market Value 355,040,000 40,425,000 10,000,000 405,465,000
Assumed average (4,438,000) (505,313) (125,000) (5,068,313)
sales costs of 1.25%
abrdn disposal fee (1,420,160) (161,700) (40,000) (1,621,860)
Estimated disposal (5,858,160) (667,013) (165,000) (6,690,173)
costs
Carrying Value 349,181,840 39,757,987 9,835,000 398,774,827
The assumed rate of 1.25% in the table above represents the best estimate of a reasonable average for the sales costs across the portfolio – taking into consideration that such costs could vary between asset to asset depending on level of complexity. The abrdn disposal fee has been calculated in accordance with the terms of the revised IMA as explained in note 3a.
14. Events after the balance sheet date
Portfolio Sale
Following the shareholder vote on the
As the heads of terms with GoldenTree were signed after 30 June and other methods of disposal were being considered at that date, the Board considers that this is a non-adjusting post balance sheet event. The significant terms of the transaction and the effect on the Net Asset Value are described in the Chairman’s statement.
Dividends
On
Sales
On
On
Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise. Investors may not get back the amount they originally invested.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.
Upon the publication of this announcement via
All enquiries to:
The Company Secretary
Trafalgar Court
Les Banques
GY1 3QL
Tel: 01481 745001
Fax: 01481 745051
Tel: 07801039463 or jason.baggaley@abrdn.com
Tel: 07703695490 or mark.blyth@abrdn.com
Tel: 07789676852 or craig.gregor@abrdn.com
