21st Apr 2023 12:20
(Alliance News) - abrdn European Logistics Income PLC said on Friday that its net asset value performance displayed "resilience", despite falling year-on-year, and said it was "well placed" this year despite anticipated "broader economic challenges".
The investment trust, which finances European logistics real estate, is headquartered in Essex. It reported an IFRS total NAV return of negative 3.8% in 2022, compared to a total NAV return of positive 12.4% in 2021.
The company's NAV per share decreased by 7.8% to EUR1.19 as at December 31, from EUR1.29 at the same time a year prior.
abrdn European reported IFRS earnings per share of 4.51 euro cents in 2022, a 71% drop from last year's earnings per share of 15.43 cents.
Dividends paid per share were unchanged at 5.64 cents.
abrdn European's chair, Tony Roper, told shareholders that "2022 was characterised by unpredictable political events, an economic slowdown and surging inflation".
He added: "The impact on debt costs led to a declining flow of capital into real estate generally and softening yields. We have not been immune to negative sentiment despite robust occupier demand as our discount to net asset value widened in a relatively short period of time."
abrdn European said that its portfolio value increased by 14% to EUR759 million at year-end from EUR666 million a year prior, but its like-for-like portfolio valuation decreased by 4%. It said that the value increased reflected several recent acquisitions, including an Amazon-leased warehouse and parking deck in Madrid.
CEO Roper appeared optimistic looking forward, telling shareholders: "We are highly aware of the broader economic challenges ahead for the remainder of 2023 that could have a negative impact on valuations. However, we believe that we are well placed in terms of the resilience of our increasingly diversified portfolio, our fixed rate debt and the future earnings growth driven by predominantly long-term indexed leases."
Lead fund manager Troels Andersen commented: "Continental European logistics real estate is well placed to navigate the current high inflationary environment due to its CPI indexation characteristics and robust market fundamentals. Backed by the tailwinds of record-low vacancies and structural demand drivers, rental growth is expected to retain its momentum in most European logistics hotspots.
"While lingering economic, political, and financial market uncertainties may disrupt investment trends and present select occupational challenges in the short-term, the favourable underlying trends [...] should remain important drivers for the sector."
Roper added: "Our core focus over the coming months will be on optimising the current portfolio in terms of both occupancy and earnings growth. We retain a strong conviction in our investment strategy and during this period of inflationary pressure, the vompany's indexation characteristics should provide a level of inflation protection alongside our attractive dividend yield. Furthermore, we believe a combination of the portfolio valuation resilience versus other commercial real estate funds and the growth prospects in our key markets versus the UK provides an attractive differentiator for investors."
Shares in Abrdn European were 0.3% lower at 71.77 pence each in London on Friday.
By Emma Curzon, Alliance News reporter
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