Aberdeen Standard European Logistics reports strong valuation uplift

Aberdeen Standard European Logistics Income (ASLI) has reported a 6.6% increase in net asset value (NAV) for the quarter to the end of December 2020.

The growth in NAV, to 120.1€c per share (107.9p) from 112.7€c (102.9p) in September 2020, was mainly due to a 6.0% increase in the value of its property portfolio.

[QD comment: The huge quarterly rise reflects the strength of the logistics market that has benefitted from an acceleration in online retailing during the pandemic.]

The value of its 14-asset portfolio now stands at €430.2m (Sept 2020 : €405.7m).

It is due to complete the purchase of its 15th asset in the first quarter this year, a €28m acquisition of a new warehouse in Poland.

Tenant administration

One of ASLI’s largest tenants, Office Depot France, which occupies an  asset in Meung-sur-Loire, France and accounts for 6.4% of ASLI income, has sought court protection and the appointment of an administrator.

ASLI said that while the Q4 2020 rent was paid in full, the invoice for the quarterly in advance rent for Q1 2021 has not been collected. The company does have a three month rental security deposit that it will use to cover the lost income.

The company said the administration did not necessarily mean Office Depot would vacate the building, as the process could result in a new buyer for the business. Office Depot has in recent years closed two other distribution centres in France and consolidated to the Meung-sur-Loire asset, which is a good sign that if it were to be acquired out of administration the asset will be retained.

[The administration of Office Depot France does show that the logistics sector is not immune to tenant failure, especially from retailers and in this case an office supplies retailer. What is in ALSI’s favour is that the property is well located in an established distribution area just south of Orleans and close to main motorways towards Bordeaux/ Northern Spain and towards Marseille/ Lyon/ Toulouse. ASLI’s manager Evert Castelein said he was confident that the company would be able to find another tenant if needs be without too much delay.]

Rent collection and dividend

The company collected 100% of rent for the final quarter of 2020, and 97% of total rent for the year of 2020, which is among the highest of its peers.

Rent collection for future quarters in 2021 could be impinged by the administration of Office Depot France.

The company has declared a fourth interim dividend of 1.41 euro cents (equivalent to 1.24p) per share, in respect of the year ended 31 December 2020. This fourth interim dividend will be paid in sterling on 26 March 2021 to shareholders on the register on 5 March 2021 (ex-dividend date of 4 March 2021).

ALSI : Aberdeen Standard European Logistics reports strong valuation uplift

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