eurologisticsincome.co.uk
Capturing long-term income potential from logistics real estate in Europe
Annual Report 31 December 2023
02 Annual Report 2023
Gavilanes, Madrid
Contents
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR
IMMEDIATE ATTENTION. If you are in any doubt about the
action you should take, you are recommended to seek your
own independent financial advice from your stockbroker,
bank manager, solicitor, accountant or other financial
adviser authorised under the Financial Services and
Markets Act 2000 if you are in the United Kingdom or, if not,
from another appropriately authorised financial adviser.
If you have sold or otherwise transferred all your Ordinary
shares in abrdn European Logistics Income plc, please
forward this document, together with the accompanying
documents immediately to the purchaser or transferee,
or to the stockbroker, bank or agent through whom the sale
or transfer was effected for transmission to the purchaser
or transferee.
Visit our Website
To find out more about abrdn European Logistics
Income plc, please visit: eurologisticsincome.co.uk
Any Questions?
If you should have any questions in relation to this
Annual Report and financial statements please send
them by email to: European.Logistics@abrdn.com
Overview
Company Overview 04
Chairman’s Statement 05
Strategic Report
Overview of Strategy 12
Results 23
Performance 24
Our Unique Selling Points 25
2023 Accomplishments 27
Investment Manager’s Review 30
Property Portfolio 39
Group Structure 54
Sustainability, Impact and Futureproofing –
company approach 57
Transparency, Integrity and Reporting 58
Capability and Collaboration 73
Investment Process and Asset Management 74
Governance
Your Board of Directors 80
Directors’ Report 82
Directors’ Remuneration Report 91
Statement of Directors’ Responsibilities in Respect
of the Annual Report and the Financial Statements 94
Report of the Audit Committee 95
Financial Statements
Independent Auditor’s Report to the Members of
abrdn European Logistics Income plc 99
Consolidated Statement of Comprehensive Income 106
Consolidated Balance Sheet 107
Consolidated Statement of Changes in Equity 108
Consolidated Statement of Cash Flows 109
Notes to the Financial Statements 110
Parent Company Balance Sheet 138
Parent Company Statement of Changes in Equity 139
Parent Company notes to the Financial Statements 140
Corporate Information
Information about the Investment Manager 150
Investor Information 153
EPRA Financial Reporting (Unaudited) 156
Alternative Investment Fund Managers Directive
Disclosures (Unaudited) 160
Glossary of Terms and Definitions and Alternative
Performance Measures 161
Disclosure Concerning Sustainable Investment
(Article 8) (Unaudited) 166
Notice of Annual General Meeting 182
Contact Addresses 186
03Annual Report 2023
Overview
Company Overview
abrdn European Logistics Income plc (the “Company” or “ASLI”) is an investment trust investing in quality
European logistics real estate to achieve its objective of providing its shareholders with a regular and
attractive level of income and capital growth. The Company along with its subsidiaries (the “Group”) invests
in a portfolio of mid-box and urban logistics warehouses diversified by both geography and tenant
throughout Europe, targeting well located assets in established distribution hubs and within population
centres. On 27 November 2023, the Company announced that it was undertaking a strategic review of all
options available to the Company that could offer maximum value for its shareholders. The review is ongoing
at the date of this Annual Report.
In addition to its performance objective, the Company is characterised by:
A diverse portfolio of assets
across five countries
A strong focus on ESG
Investment predominantly in
the more liquid mid-box and
urban logistics segment of
the real estate market
Modest gearing
parameters
Durable inflation-linked
rental income
Local abrdn asset managers
across European offices
Highlights as at 31 December 2023
Net asset value total return (EUR) (%)
1
2022: (3.8)
(17.1)
IFRS net asset value (€‘000)
2022: 489,977
384,928
Net asset value per share (¢)
1
2022: 118.9
93.4
Share price total
return (GBP) (%)
1
2022: (38.3)
(3.5)
Discount to net asset value
per share (%)
1
2022: (35.0)
(24.1)
Ordinary dividend paid
per share (¢)
2022: 5.64
5.64
Ongoing charges ratio (%)
1
2022: 1.3
1.6
IFRS earnings per share (¢)
2022: (4.5)
(19.8)
Portfolio valuation (€‘000)
2022: 758,719
633,806
Number of
properties
2022: 27
26
Average lease length excl breaks
(Years)
2022: 8.9
8.4
Gearing
1
(%)
2022: 34.0
38.7
Average building size (sqm)
2022: 21,374
20,940
All-in fixed interest rate (%)
2022: 2.01
2.00
EPRA net tangible assets per share (¢)
1
2022: 123.7
95.7
1
Alternative Performance Measurements - see glossary on pages 161 to 165.
04 Annual Report 2023
Overview
Chairman’s Statement
Dear Shareholder,
I am pleased to present the Company’s sixth Annual
Report in respect of the year ended 31 December 2023.
2023 continued as 2022 ended, with global macro
events driving market sentiment, a continued economic
slowdown and high inflation. Rapidly rising interest rates
saw the cost of debt increase which led to a decline in the
flow of capital into the real estate sector and a significant
softening of yields.
This contrasted with the strong market fundamentals at
the Company’s inception in 2017, a period which saw
the sector attracting considerable amounts of capital,
encouraged by supportive debt markets. This underpinned
falling property yields and an increase in capital values.
The recent sharp rise in interest rates to combat high
levels of inflation has resulted in property yields moving
out to reflect the higher cost of capital, with asset values
subsequently falling. Such fluctuations are a reminder
that real estate markets are inherently cyclical in nature.
With investors fearing continued valuation falls and
seeking to lower their risk profiles, share price discounts
to NAV have been persistently wide, not only in the REIT
sector but also the wider investment trust sector.
Whilst the logistics sector fundamentals remain
compelling, a combination of this challenging backdrop
and the lack of a clear pathway to reaching full dividend
cover in the near future resulted in the Board launching
a strategic review in November 2023. This is allowing
us to look at all sensible options to deliver shareholders’
value. At the time of writing, this review is still underway.
It is too early to tell whether this will lead to any corporate
activity for the Company, but the Board will communicate
with shareholders as soon as it feels in a position to say
further. In the meantime, the Company is required under
its articles to hold a continuation vote at its forthcoming
AGM in June, and at this stage the Board recommends
that shareholders vote in favour of this resolution to enable
the Board to continue to a sensible conclusion in seeking
best value for all shareholders.
Market overview
December 2023 saw the end of seven consecutive months
of falling Eurozone inflation figures, resulting in the money
markets adjusting their expectations. However with the
deposit rate held at 4%, valuations continue to come
under pressure. Looking forward, our Investment Manager
believes that the most significant value correction is
behind us and the negative pressure on yields, which has
lagged the UK, will plateau later this year.
Future occupational demand looks set to be determined by
two key trends: stabilising growth amongst eCommerce
operators and a continued trend towards onshoring
amongst manufacturers. The logistics market is
characterised by rising occupier demand, limited supply
in core markets and high barriers to developing new
assets in prime locations.
The onshoring of operations should be a long-term trend
over the next decade. While it could lead to a tangible
boost in take-up in the near term, we do not believe it will
result in the same explosive growth that the increase in
online shopping led to over the last decade. Data from
a European Central Bank survey points to an increasing
number of firms expecting to increase their sourcing
of production inputs from within the EU, compared to a
declining number of firms sourcing their inputs externally.
The prime logistics markets in Germany, Netherlands,
France, and Spain, where the majority of the portfolio is
focused, continue to witness near-historically low vacancy
rates. With speculative development expected to remain
low due to increased costs and regulation, we expect
vacancy rates to remain tight, which will keep upward
pressure on indexed rents.
Tony Roper
Chairman
05Annual Report 2023
Company overview
As at 31 December 2023, the Company’s property
portfolio was independently valued at €633.8 million
(31 December 2022: €758.7 million), and consisted of
26 assets (2022: 27 assets) located across five European
countries. The like-for-like portfolio valuation (excluding
the sold Leon warehouse) fell over the year by 14.4% as a
result of the impact of the higher interest rate backdrop on
investor sentiment and debt costs.
In May 2023, the Company announced the completion of
the first sale from its portfolio, the 32,645 sqm Decathlon-
leased warehouse, in Leon, Northern Spain, to SCPI Iroko
Zen, for €18.5 million. The disposal price reflected a small
premium to the December 2022 valuation and crystalised
a 20% gross profit. It generated an attractive IRR, improved
the cash position, reduced gearing and the all-in-interest
rate, whilst reducing our retail related exposure to a
Spanish location which the Investment Manager felt could
be more challenging in the future.
Pleasingly during the year the Investment Manager
agreed a number of lease regears, more detail of which
can be found in the Investment Manager’s Report that
follows. These included
.
A new 9.5 year lease with Dachser France in La Creche,
Niort, with the rent 3% ahead of the previous annual rent
payable and significantly ahead of ERV. Importantly for
revenue generation, uncapped annual ILAT indexation
was agreed.
.
A new 12 year lease with Biocoop over the Avignon,
France, property generating annual contracted rent
of €2.5 million, equating to €86 per sqm with full annual
French ILAT indexation with no cap. Both of these
facilities serve as strategically important locations
for our tenants.
In March 2024 we sold the vacant Meung-sur-Loire
warehouse for €17.5 million, reflecting a small discount
to the September 2023 valuation and in line with the
December 2023 valuation. As one of the portfolio’s older
assets and with an eye on location and the potential
capital expenditure required to improve its sustainability
credentials, the Board agreed with the Investment
Manager that this was a sensible sale, with the proceeds
strengthening the Company’s balance sheet, which was
one of the key 2023 priorities.
Shareholders should be aware of the situation the
Company faced over the electric vehicle company
Arrival’s units located in Gavilanes, Madrid. Despite
lengthy negotiations and continued legal proceedings,
with the limited possibility of obtaining any surrender
premium or rent due to Arrival’s deteriorating financial
situation, following the advice of the Investment Manager,
the Company deemed it sensible to negotiate a surrender
of the lease and to obtain possession of the units for
re-leasing as quickly as possible. It is pleasing to note that
the 5,130 sqm unit was quickly leased in March to Spanish
company Method Logistics, at a rent 8.7% ahead of the
Arrival passing rent. The Getafe area remains attractive to
many companies and there is good interest being shown
for the remaining units.
The Company’s investment case is enhanced by the
competitive advantage provided through the Investment
Manager’s relationships and market knowledge, with its
local teams based in key markets in Europe, enabling it
to originate and then execute on attractive acquisitions.
It has built a portfolio of assets diversified by both
geography and tenant, in established distribution hubs
and within close proximity of cities that have substantial
labour pools and excellent transport links, all important
factors and underpinning the appeal of the assets
for tenants and longer term valuations and revenue
earning abilities.
Further details on the composition of the portfolio and
lease renewals are provided in the Investment Manager’s
Report that follows.
Results
As at 31 December 2023 the audited Net Asset Value
(“NAV”) per Share was 93.4 euro cents (GBp – 81.2p),
a decrease of 21.5% compared with the NAV per Share
of 118.9 euro cents (GBp - 105.4p) at 31 December 2022.
With the interim dividends declared, this reflected a
NAV total return of -17.1% for the year in euro terms
(-19.0% in sterling).
The closing Ordinary Share price at 31 December 2023 was
61.6p (31 December 2022 – 68.5p), representing a discount
to NAV per Share of 24.1% (31 December 2022 - 35.0%).
06 Annual Report 2023
Dividends
First, second and third interim dividends in respect of
the year ended 31 December 2023 of 1.41 euro cents
per Ordinary Share were paid to Shareholders on 23
June 2023, 22 September 2023 and 29 December 2023.
These equated to 1.23 pence, 1.22 pence and 1.23 pence
respectively.
In light of the initial response to the previously announced
Strategic Review, the Board and its advisers were keen
to ensure that the Company was optimally positioned,
and that it maintains maximum flexibility to allow it to
advance any particular proposal. As a result, the Board
took the decision, announced on 19 February 2024,
to forego declaring a fourth interim distribution in respect of
the quarter ended 31 December 2023. With the Strategic
Review ongoing and to maintain flexibility, it is likely that the
Company will also forego paying a dividend in relation to
the quarter ended March 2024.
Normally distributions may be made up of both dividend
income and income which is designated as an interest
distribution for UK tax purposes and therefore subject to
the interest streaming regime applicable to investment
trusts. Further details on this breakdown can be found on
page 23 and are reflected within the Company’s dividend
announcements.
Financing
The Company’s debt provided by our European partner
banks remains fixed in nature and secured on certain assets
or groups of assets within the portfolio. These non-recourse
loans range in maturities between 1.4 (mid-2025) and
5.1 years with all-in interest rates ranging between 1.10%
and 3.11% per annum. Full details can be found in note 14
on page 125.
The Company maintains an uncommitted master loan
facility (“Facility”) with Investec Bank plc for €70 million,
which is currently undrawn. Under this Facility, the Company
may make requests for drawdowns at selected short-
duration tenors, as and when required, to fund acquisitions
or for other liquidity requirements and this was used to
good effect during the purchase of the Gavilanes, Madrid,
assets. Within the Facility, Investec also makes available
a £3.3 million committed revolving credit facility which
is carved out of the total €70 million limit of the Facility.
This facility sits at the parent company level and provides
added flexibility. There were no drawdowns against this
facility during 2023.
The year-end gearing level was 38.7% (2022 – 34.0%)
with an average all-in interest rate of 2.0% (2022: 2.01%)
on the total fixed term debt arrangements of €259.5 million
(2022: 270.3 million).
GRESB and Asset Management
The Investment Manager continues to seek to improve
the sustainability credentials of the portfolio and the results
of the 2023 GRESB (‘Global Real Estate Sustainability
Benchmark’) survey saw the Company’s portfolio achieve
another year-on-year increase, with a score of 89/100
representing continued improvement and an uplift on
its 2022 GRESB survey score of 86/100. It also compares
favourably versus the 81/100 average peer score and
75/100 overall average 2023 GRESB score.
The Company was awarded a maximum five stars in the
2023 GRESB awards, achieving a welcome first place in
its peer group of diversified funds investing across Europe
(European industrial: distribution warehouse).
In addition, the Company attained the top-rated gold level
awarded by EPRA for compliance with its ‘Best Practice
Recommendations’ in financial reporting.
The latest GRESB scoring continues to recognise the
fundamental importance that the Investment Manager
places on sustainability when acquiring and subsequently
enhancing the Company’s portfolio. The improved
performance score rewards the progress made with
regards to environmental, social and governance
(“ESG”) factors.
The Company has executed several sustainability-led
initiatives during the period, building on the significant
progress made improving the credentials of our portfolio
of Grade-A, modern properties. These included:
.
High tenant data coverage which has helped to inform
carbon performance and feed into our net zero plans
.
Ongoing assessment of the operational performance
of the portfolio, through BREEAM In-Use assessments
and sustainability audits identifying actions to improve
performance
.
A portfolio-wide occupier engagement programme
.
100% of landlord energy procured from renewable
sources
.
34% of the portfolio by floor area with solar PV with
ongoing reviews across the estate for further additions
.
96% of assets by floor area with EPC’s A-B
The Company has set a net zero carbon target of 2050
across all emissions (Scopes 1, 2 and 3), and the Company’s
strategy for achieving net zero carbon is fully detailed
on page 65 of this report. ESG is embedded within the
Investment Manager’s investment and asset management
processes and although many of our assets were new
when purchased, a programme of works continues to
enhance areas where improvements can be made.
The ESG section gives further clarity on these processes.
07Annual Report 2023
Governance and Board Change
The Company is a member of the Association of
Investment Companies and seeks to follow best practice
regarding appropriate disclosure.
In accordance with good governance, the Directors offer
to meet with our substantial shareholders during the year
to hear their views on the Company and its performance.
Following the announcement of the Strategic Review,
Directors together with the Company’s advisers have met
with many of our larger shareholders to understand their
views on the Company and how they would like to see it
positioned. The Directors may be contacted through the
Company Secretary.
The Board looks to undertake short annual site visits to
view the properties owned, meet with tenants where
possible and members of local staff and advisers of the
Investment Manager. During the year the Board was
pleased to visit the German assets helping to better
understand their locations, site layouts and meeting with
abrdn’s local well-resourced Frankfurt-based real estate
team which has a focus on managing these assets for us.
With the Company having been launched in December
2017, the Directors have been considering succession
planning. With this in mind, Diane Wilde has confirmed
that she will retire and not stand for re-election at
the AGM in June. I would like to thank Diane for all her
efforts since joining the Board. Following best practice,
the remaining three Directors will stand for re-election
at the forthcoming AGM and further details on each
Director may be found on pages 80 and 81 of the Annual
Report and financial statements for the year ended
31 December 2023. No decision on a replacement Board
member will be taken until the Strategic Review has been
concluded and the direction of the Company is known.
Strategic Review
As at the date of this report, the Board is continuing to
undertake a Strategic Review of the options available
to the Company, and is being advised on this by the
Company’s broker, Investec, and by Savills, who have been
retained to give strategic property advice. The Board is
considering all options available that offer maximum value
for shareholders including, but not limited to, continuing
with the current investment objective, selling the entire
issued share capital of the Company or a managed wind-
down of the Company’s portfolio and returning monies to
shareholders.
The Company has received a number of indicative
non-binding proposals. However, there can be no
certainty at this stage that the final terms of any proposal
will prove to be sufficiently attractive to merit a Board
recommendation to the Company’s shareholders.
All proposals received will be analysed and considered
in the light of feedback received from shareholders and
the value that could be best achieved when looking
at current and forecast market conditions. The Board
welcomes the support shown by shareholders, both before
and during this process, and will update shareholders on
the progress or the outcome of the Strategic Review as
soon as the process allows.
Annual General Meeting and Continuation
Vote
The Company’s Annual General Meeting will be held in
London on Monday, 24 June 2024 at 09:00 am at the offices
of FTI Consulting, 200 Aldersgate, Aldersgate Street, London
EC1A 4HD.
The formal Notice of AGM may be found on page 182 of the
Annual Report and financial statements for the year ended
31 December 2023.
This year the Company is required by its Articles to hold a
continuation vote. With the Strategic Review still ongoing,
the Board recommends that shareholders vote in favour
of the Company’s continuation to ensure that the review
can be completed properly and the optimal outcome for
shareholders delivered. It is the Board’s current expectation
that the result of the Strategic Review will be announced
ahead of the AGM, so shareholders should have the benefit
of a clear picture of the proposed way forward by the time
that they are asked to vote. Should the Board not be in a
position to communicate the outcome (or likely outcome)
of the Strategic Review ahead of the AGM, the Board
would ensure that shareholders were provided with the
opportunity to vote on the future direction of the Company
as and when the Review was completed (unless the
proposed course of action arising from the Strategic
Review in and of itself required a shareholder vote).
08 Annual Report 2023
Outlook
While the market looks set to improve in H2 2024 and
into 2025, and the post period transactions and letting
activity achieved by the Investment Manager supports this,
challenges will remain for the real estate sector, primarily
as a result of higher-for-longer interest rates. Crucially for
us, the logistics market remains well-positioned in terms of
its fundamentals. While vacancy rose across the sector in
Europe in the last year, we believe that vacancy levels have
settled with speculative development pipelines contracting.
Several factors are driving an increased focus among
occupiers on the type of prime, modern and sustainable
warehouses that our portfolio contains. Many occupiers
have put a greater focus on more energy-efficient space
following the energy price shock and modern warehouses
are more suitable for implementing automation processes,
whereas older warehouses often have specifications which
are unsuitable for the machinery needed. In addition, they
are more flexible and thoughtfully designed, built around
integrating new supply chain management technologies
like RFID (radio frequency identification technology).
The portfolio remains well diversified by property, tenant
and geography and our tenants’ businesses are generally
well positioned in areas which remain essential to the
everyday operation of the modern economy. A strong
commitment to sustainability, demonstrated by the
Company’s increased GRESB rating with five Green stars
awarded for 2023, together with the inflation-linked nature
of the portfolio’s leases, has provided a counterbalance to
the yield expansion witnessed.
Positive tailwinds from structural demand drivers should
continue to benefit the portfolio. The impact of increasing
online shopping penetration, the need to build greater
resilience into supply chains, and the aim of reducing
the environmental impact of distribution operations will
continue to generate strong demand for high-quality,
sustainable warehouse space and the portfolio remains
well positioned to benefit from these trends.
In parallel to the abovementioned Strategic Review
process, the near-term focus for the Investment Manager
is to continue improving the earnings position, principally
through letting up the vacant space in Spain and capturing
the portfolio’s attractive indexation characteristics.
Whilst this has been a hugely frustrating period, the Board
reiterates its thanks for the support shown by shareholders,
both before and during this process. It hopes to update
shareholders on the outcome as soon as a conclusion
has been reached, which should be in advance of the
Company’s AGM.
Tony Roper
Chairman
25 April 2024
09Annual Report 2023
10 Annual Report 2023
Strategic Report
The Company is a UK investment trust with a premium listing on the Main Market of the
London Stock Exchange. The Company invests in European logistics real estate to
achieve its objective of providing its shareholders with a regular and attractive level of
income return together with the potential for long-term income and capital growth.
The Company invests in a portfolio of mid-box and urban logistics warehouses
diversified by both geography and tenant throughout Europe, predominantly targeting
well-located assets at established distribution hubs and within population centres.
The Company was launched on the London Stock Exchange in December 2017.
11Annual Report 2023
Strategic Report
Overview of Strategy
The Company
The Company was incorporated in England and Wales
25 October 2017 with registered number 11032222 and
launched on 15 December 2017.
As indicated in the Chairman’s Statement on page 8,
on 27 November 2023, the Board announced that it was
undertaking a strategic review of the options available
to the Company (the “Strategic Review”). The Board is
considering all options available to the Company that
offer maximum value for the shareholders including,
but not limited to, undertaking some form of consolidation,
combination, merger or comparable corporate action,
selling the entire issued share capital of the Company
(which would be conducted under the framework of a
“formal sale process” in accordance with the City Code
on Takeovers and Mergers (the “Code”)), and selling
the Company’s portfolio and returning monies to
shareholders. There is no certainty that any changes will
result from the Strategic Review and, for the avoidance
of doubt, a continuation of the Company’s current
investment strategy with a rebased target dividend level is
a potential outcome of the Strategic Review.
Investment Objective
The Company aims to provide a regular and attractive
level of income return together with the potential for
long-term income and capital growth from investing in
high quality European logistics real estate.
Investment Policy
The Company aims to deliver the investment objective
through investment in, and active asset management of, a
diversified portfolio of logistics real estate assets in Europe.
The Company will invest in a portfolio of single and
multi-let assets diversified by both geography and
tenant throughout Europe, predominantly targeting
well-located assets at established distribution hubs and
within population centres. In particular, the Investment
Manager will seek to identify assets benefiting from long-
term, index-linked, leases as well as those which may
benefit from structural change, and will take into account
several factors, including but not limited to:
.
the property characteristics and whether they are
appropriate for the location (such as technical quality,
ESG credentials, scale, configuration, layout, transportation
links, power supply, data connectivity, manoeuvrability,
layout flexibility, and overall operational efficiencies);
.
the location and its role within European logistics
(city, regional, national or international distribution),
key fundamentals supporting logistics activity within
the micro location such as proximity to airport, port,
transport nodes, multimodal transport infrastructure,
established warehousing hubs, transport corridors,
population centres, labour availability and market
dynamics such as supply (of both land and existing stock),
vacancy rate and planned infrastructure upgrades;
.
the terms of the lease(s) focusing on duration, inflation-
linked terms, ESG criteria, level of passing rent relative to
market rent, the basis for rent reviews, and the potential
for capturing growth in market rental income;
.
the strength of the tenant’s financial covenant;
.
the business model of the tenant and their commitment
to the asset both in terms of capital expenditure and the
role it plays in their operations; and
.
the potential to implement active asset management
initiatives to add value over the holding period.
The Company will invest either directly or through
holdings in special purpose vehicles, partnerships, or
other structures. The Company may invest in forward
commitments when the Investment Manager believes
that to do so would enhance risk adjusted returns for
Shareholders and/or secure an asset at an attractive yield.
The Company’s active asset management activities are
expected to focus on adding value through:
.
negotiating or renegotiating leases to increase/secure
rental income, managing vacancies;
.
undertaking refurbishments to maintain liquidity;
.
managing redevelopments as assets approach
obsolescence;
.
adding solar panels to reduce carbon emissions and
generate additional income streams;
.
where appropriate, extending existing on-site buildings
or developing adjacent plots;
.
refurbishment and redevelopment activity will,
amongst other things, focus on: enhancing occupier
wellbeing; operational efficiencies; energy efficiency;
.
reducing carbon emissions; and elevating technological
provision as well as increasing lettable area.
12 Annual Report 2023
The Company’s active management of debt will
effectively manage costs and risk seeking to enhance
investment returns.
Diversification of Risk
The Company will at all times invest and manage its
assets in a manner which is consistent with the spreading
of investment risk. The following investment limits and
restrictions will apply to the Company and its business
which, where appropriate, will be measured at the time
of investment:
.
the Company will only invest in assets located in Europe;
.
no more than 50 per cent. of Gross Assets will be
concentrated in a single country;
.
no single asset may represent more than 20 per cent.
of Gross Assets;
.
forward commitments will be wholly or predominantly
pre-let and/or have the benefit of a rental guarantee
and the Company’s overall exposure to forward
commitments and development activity will be limited
to 20 per cent. of Gross Assets;
.
the Company’s maximum exposure to any single
developer will be limited to 20 per cent. of Gross Assets;
.
the Company will not invest in other closed-ended
investment companies;
.
the Company will predominantly invest in assets with
tenants which have been classified by the Investment
Manager’s investment process, as having strong
financial covenants. However, the Company may, on an
exceptional basis, invest in an asset with a tenant with a
lower financial covenant strength (and/or with a short
lease term) where the Investment Manager believes
that the asset can be leased on a longer term tenancy
to a tenant with strong financial covenants within a
reasonable time period; and
.
no single tenant will represent more than 20 per
cent. of the Company’s annual gross income
measured annually.
The Company will not be required to dispose of any asset
or to rebalance the Portfolio as a result of a change in the
respective valuations of its assets.
The Company intends to conduct its affairs so as to
continue to qualify as an investment trust for the purposes
of section 1158 and 1159 (and regulations made
thereunder) of the Corporation Tax Act 2010.
Borrowing and Gearing
The Company uses gearing with the objective of
improving shareholder returns. Debt is typically non-
recourse and secured against individual assets or groups
of assets with or without a charge over these assets,
depending on the optimal structure for the Company
and having consideration to key metrics including lender
diversity, cost of debt, debt type and maturity profiles.
The aggregate borrowings are always subject to an
absolute maximum, calculated at the time of drawdown
for a property purchase, of 50 per cent. of Gross Assets.
Where borrowings are secured against a group of assets,
such group of assets will not exceed 25 per cent. of Gross
Assets in order to ensure that investment risk remains
suitably spread.
The Board has established gearing guidelines for the
Alternative Investment Fund Manager (“AIFM”) in
order to maintain an appropriate level and structure
of gearing within the parameters set out above. Under
these guidelines, aggregate asset level gearing will sit,
as determined by the Board, at or around 35 per cent of
Gross Assets. This level may fluctuate as and when new
assets are acquired until longer term funding has been
established or whilst short-term asset management
initiatives are being undertaken.
The Board will keep the level of borrowings under
review. In the event of a breach of the investment
guidelines and restrictions set out above, the AIFM will
inform the Board upon becoming aware of the same,
and if the Board considers the breach to be material,
notification will be made to a Regulatory Information
Service and the AIFM will look to resolve the breach with
the agreement of the Board. The Directors may require
that the Company’s assets are managed with the
objective of bringing borrowings within the appropriate
limit while taking due account of the interests of
shareholders. Accordingly, corrective measures may not
have to be taken immediately if this would be detrimental
to shareholders’ interests.
Any material change to the Company’s investment policy
set out above will require the approval of shareholders by
way of an ordinary resolution at a general meeting and the
approval of the Financial Conduct Authority. Non-material
changes to the investment policy may be approved by
theBoard.
Comparative Index
The Company does not have a benchmark.
Duration
Although the Company does not have a fixed life, underthe
Company’s articles of association the Directorsare required
to propose an ordinary resolution for the continuation of
the Company at the Annual GeneralMeeting to be held in
2024 and then every third year thereafter. While the Board
continues to evaluate the options resulting from the ongoing
strategic review, a resolution proposing that the Company
continue as an investment trust is included in the Notice
for the Annual General Meeting scheduled to be held on
24 June 2024. Please also refer to the Going Concern
section within the Directors’ Report on page 85.
13Annual Report 2023
Key Performance Indicators (KPIs)
The Board uses a number of financial performance measures to assess the Company’s success in achieving its objective
and to determine the progress of the Company in pursuing its Investment Policy. The main KPIs identified by the Board in
relation to the Company, which are considered at each Board meeting, are as follows:
KPI Description
Net asset value total
return (EUR)
1
The Board considers the NAV total return to be the best indicator of performance over time
and is therefore the main indicator of performance used by the Board. Performance for the
year and since inception is set out on page 24.
The Company is targeting, for an investor in the Company at launch, a total NAV return of
7.5per cent. per annum (in € terms).
Share price
total return (GBP)
1
The Board also monitors the price at which the Company’s shares trade on a total return
basis over time. A graph showing the share price performance is shown on page 24.
Premium/
(Discount)
1
The premium/(discount) relative to the NAV per share represented by the share price is
monitored by the Board. A graph showing the share price (discount)/premium relative to
the NAV is shown on page 24.
Dividends
per Share
The Board’s aim is to pay a regular quarterly dividend enabling shareholders to rely on
a consistent stream of income. Dividends paid are set out on page 23. The Company is
targeting, for an investor in the Company at launch, an annual dividend yield of 5.0 per cent.
per Ordinary Share (in € terms).
Ongoing charges
ratio (“OCR”)
1
The OCR is the ratio of expenses as a percentage of average daily shareholders’ funds
calculated in accordance with the industry standard. The Board reviews the OCR regularly
as part of its review of all expenses. The aim is to ensure that the Company remains
competitive and is able to deliver on its yield target to Shareholders. The Company’s OCR is
disclosed on page 23.
1
Alternative Performance Measure - see glossary on pages 161 to 165.
Manager
Under the terms of the Management Agreement, the
Company has appointed abrdn Fund Managers Limited
as the Company’s alternative investment fund manager
(“AIFM”) for the purposes of the AIFM Rules. The AIFM has
delegated portfolio management to the Danish Branch
of abrdn Investments Ireland Limited which acts as
Investment Manager.
Pursuant to the terms of the Management Agreement,
the AIFM is responsible for portfolio and risk management
on behalf of the Company and will carry out the on-
going oversight functions and supervision and ensure
compliance with the applicable requirements of the AIFM
Rules. The AIFM and the Investment Manager are both
legally and operationally independent of the Company.
Dividend Policy
Subject to compliance with all legal requirements
the Company normally pays interim dividends on a
quarterly basis. The Company declares dividends in Euros,
but shareholders will receive dividend payments in Sterling
unless electing to receive payments in Euros through the
Equiniti Shareview Portfolio website or via CRESTPay.
If applicable, the date on which the Euro/Sterling
exchange rate is set will be announced at the time the
dividend is declared. Distributions made by the Company
may take the form of either dividend income or ‘‘qualifying
interest income’’ which may be designated as interest
distributions for UK tax purposes. With the strategic review
still underway, the Company announced the suspension
of the fourth interim dividend for 2023 to maintain
the maximum flexibility to allow it to advance any
particular proposal.
14 Annual Report 2023
Principal Risks and Uncertainties
There are a number of risks which, if realised, could have
a material adverse effect on the Company and its financial
condition, performance and prospects. The Board has
carried out a robust assessment of the principal risks as
set out below, ordered by category of risk, together with a
description of the mitigating actions taken by the Board.
The Board confirms that it has a process inplace for
regularly reviewing emerging risks that mayaffect the
Company in the future. The Board collectively discusses
with the Manager areas where there may be emerging
risk themes and maintains a register of these. Such risks
may include, but are not limited to, future pandemics,
the use of AI, cybercrime, and longer term climate change.
In the event that an emerging risk has gained significant
weight or importance, that risk is categorised and
added to the Company’s risk register and is monitored
accordingly. The principal risksassociated with an
investment in the Company’s shares can be found in the
Company’s latest Prospectus dated 8 September 2021,
published on the Company’s website.
The Board continues to be very mindful of ongoing
geopolitical events which have caused significant market
volatility across Europe and the World. There has been no
discernible impact to date on our tenants across the wider
region. The indicators below show how the Board’s views
on the stated risks have evolved over the last year.
Description Mitigating Action ↗ Increasing, ↘ Decreasing, → Stable Risk
Strategic Risk: Strategic Objectives
andPerformance - The Company’s strategic
objectives and performance, both absolute
and relative, become unattractive to investors
leading to a widening of the discount, potential
hostile shareholder actions and the Board
fails to adapt the strategy and/or respond to
investor demand.
.
The Company’s strategy and objectives are regularly
reviewed by the Board to ensure they remain appropriate
and effective. The Company announced in November 2023
a strategic review and this remains ongoing at the date of
this report.
.
The Board receives regular presentations on the economy
and also the property market to identify structural shifts and
threats so that the strategy can be adapted if necessary.
.
There is regular contact with shareholders both through the
Investment Manager and the broker with additional direct
meetings undertaken by the Chairman and other Directors.
.
Board reports are prepared by the Investment Manager
detailing performance, NAV return and share price analysis
versus peers.
.
Cash flow projections are prepared by the Investment
Manager and reviewed quarterly by the Board.
.
Shareholder/market reaction to Company
announcements is monitored.
↗
Investment and Asset Management Risk:
Investment Strategy - Poorly judged investment
strategy, regional allocation, use of gearing,
inability to deploy capital and the mis-timing
of disposals and acquisitions, resulting in poor
investment returns.
.
abrdn has real estate research and strategy teams which
provide performance forecasts for different sectors
and regions.
.
There is a team of experienced portfolio managers
who have detailed knowledge of the markets in which
they operate.
.
abrdn has a detailed investment process for both
acquisitions and disposals that require to be signed off
internally before the Board reviews any final decision.
.
The Board is very experienced with Directors having a
knowledge of property markets.
→
15Annual Report 2023
Description Mitigating Action ↗ Increasing, ↘ Decreasing, → Stable Risk
Investment and Asset Management Risk:
Developing and refurbishing property -
Increased construction costs, construction
defects, delays, contractor failure, lack of
development permits, environmental and third
party damage can all impact the resulting
capital value and income
from investments.
.
abrdn has experienced investment managers with
extensive development knowledge with in-depth research
undertaken on each acquisition/development.
.
Development contracts are negotiated by experienced
teams supported by approved lawyers.
.
Due diligence is undertaken on developers including credit
checks and current pipelines.
.
Construction and risk insurance checked.
.
Post completion the developer is responsible for defects
and monies are held in escrow for a period of time
after handover.
→
Investment and Asset Management Risk: Health
and Safety - Failure to identify and mitigate
major health and safety issues or to react
effectively to an event leading to injury, loss of
life, litigation and any ensuing financial and
reputational impact.
.
For new properties health and safety is included as a key
part of due diligence.
.
Asset managers visit buildings on a regular basis.
.
Property managers are appointed by abrdn to monitor
health and safety in each building and reports are made
to the asset managers on a monthly basis.
.
Asset managers visit each building at least twice a year.
.
Tenants are responsible for day to day operations
of the properties.
→
Investment and Asset Management
Risk: Environment - Properties could
be negatively impacted by hazardous
materials (for example asbestos or other
ground contamination) or an extreme
environmental event (e.g. flooding) or the
tenants’ own operating activities could create
environmental damage. Failure to achieve
environmental targets could adversely affect
the Company’s reputation and result in
penalties and increased costs and reduced
investor demand. Legislative changes relating
to sustainability could affect the viability of
asset management initiatives.
.
The Investment Manager undertakes in depth research
on each property acquisition with environmental surveys
and considers its impact on the environment and
local communities.
.
The Investment Manager has adopted a thorough
environmental policy which is applied to all properties
in the portfolio.
.
Experienced advisers on environmental, social and
governance mattersare consulted both internally (within the
Investment Manager) and externallywhere required.
.
The Investment Manager in conjunction with specialist
advisers has worked on a roadmap for the Company to
reach a net zero emissions target date of 2050.
→
16 Annual Report 2023
Description Mitigating Action ↗ Increasing, ↘ Decreasing, → Stable Risk
Financial Risks: Macroeconomic -
Macroeconomic changes (e.g. levels of GDP,
employment, inflation, interest rate and FX
movements), political changes (e.g. new
legislation) or structural changes (e.g. new
technology or demographics) negatively
impact commercial property values and the
underlying businesses of tenants (market risk
and credit risk). Falls in the value of investments
could result in breaches of loan covenants
and solvency issues. Interest rate increases
from historical lows will impact strategy if
unchanged when re-financings are required.
Pressure on overall net revenue returns.
.
abrdn research teams take into account macroeconomic
conditions when collating forecasts. This research is fed into
Investment Manager decisions on purchases/sales and
regional allocations.
.
The portfolio is EU based and diversified across a number
of different countries and also has a diverse tenant base
seeking to minimise risk concentration.
.
There is a wide range of lease expiry dates within the
portfolio in order to minimise re-letting risk.
.
The Company has no exposure to speculative development
and forward funding is only undertaken where the
development is predominantly pre-let.
.
Rigorous portfolio reviews are undertaken by the
Investment Manager and presented to the Board on a
regular basis.
.
Annual asset management plans are developed for each
property and individual investment decisions are subject to
robust risk versus return evaluation and approval.
.
Most leases are indexed to provide increases in line with
movements in inflation and leverage is fixed to reduce the
impact of interest rate rises.
→
Financial Risks: Gearing - Gearing risk - an
inappropriate level of gearing, magnifying
investment losses in a declining market,
could result in breaches of loan covenants
and threaten the Company’s liquidity and
solvency. An inability to secure adequate
borrowing with appropriate tenor and
competitive rates could also negatively impact
the Company. Earliest Company re-financing
required in 2025 but current conditions
expected to impact banks’ willingness to
lend or seek tighter covenants.
.
Regular covenant reporting to banks is undertaken
as required.
.
The gearing target is set at an indicative 35% asset level
limit and an absolute Company limit of 50%.
.
The Company’s diversified European logistics portfolio,
underpinned by its tenant base, should provide sufficient
value and income in a challenging market to meet the
Company’s future liabilities.
.
The portfolio attracted competitive terms and interest rates
from lenders for the Company’s fixed term loan facilities.
.
The Investment Manager has relationships with multiple
funders and wide access to different sources of funding on
both a fixed and variable basis.
.
Financial modelling is undertaken and stress tested
annually as part of the Company’s viability assessment and
whenever new debt facilities are being considered.
.
Loan covenants are continually monitored and reported to
the Board on a quarterly basis and would also be reviewed
as part of the disposal process of any secured property.
↗
Financial Risks: Liquidity Risk and FX Risk -
The inability to dispose of property assets in
order to meet financial commitments of the
Company or obtain funds when required for
asset acquisition or payment of expenses or
dividends. Movements in foreign exchange
and interest rates or other external events
could affect the ability of the Company to
pay its dividends. Yield expansion witnessed
as valuations impacted by global
economic concerns.
.
The diversified portfolio is geared towards an attractive sector.
.
A cash buffer is maintained and an overdraft facility is
currently in place.
.
Investment is focused on mid-sized properties which is
considered the more liquid part of the sector.
.
The assets of the Company are denominated in a non-
sterling currency, predominantly the Euro. No currency
hedging is planned for the capital, but the Board periodically
reviews the hedging of dividend payments having regard to
availability and cost.
↗
17Annual Report 2023
Description Mitigating Action ↗ Increasing, ↘ Decreasing, → Stable Risk
Financial Risks: Credit Risk - Credit Risk – the risk
that the tenant/counterparty will be unable or
unwilling to meet a commitment entered into
by the Group: failure of a tenant to pay rent
or failure of a deposit taker, future lender or a
current exchange rate swap counterparty.
.
The property portfolio has a balanced mix of investment
grade tenants and reflects diversity across business sectors.
.
Rigorous due diligence is performed on all prospective
tenants and their financial performance continues to be
monitored during their lease.
.
Rent collection from tenants is closely monitored so that
early warning signs might be detected.
.
Deposits are spread across various abrdn approved banks
and AAA rated liquidity funds.
↗
Financial Risks: Insufficient Income
Generation - Insufficient income generation
due to macro-economic factors, and/or due
to inadequate asset management resulting in
long voids or rent arrears or insufficient return
on cash; dividend cover falls to a level whereby
the dividend needs to be cut and/or the
Company becomes unattractive to investors.
Level of ongoing charges becomes excessive.
.
The Investment Manager seeks a good mix of tenants in
properties. A review of tenant risk and profile is undertaken
using, for example, the Dun & Bradstreet Failure Scoring
method and tenant covenants are thoroughly considered
before a lease is granted.
.
The abrdn team consists of asset managers on the
ground who undertake asset management reviews and
implementation and there is a detailed approval process
within abrdn for lettings. The Investment Manager through
its teams on the ground seeks to manage voids and any
non-payment of rent.
.
At regular Board meetings forecast dividend cover is
considered. There is regular contact with the broker
and shareholders to ascertain, where possible, views on
dividendcover.
↗
Regulatory Risks: Compliance - The regulatory,
legal and tax environment in which the
Company’s assets are located is subject to
change and could lead to a sub-optimal
corporate structure and result in increased tax
charges or penalties. Failure to comply with
existing or new regulation.
.
The Company has an experienced Company Secretary and
engages lawyers who will advise on changes once any new
proposals are published. There is regular contact with tax
advisers in relation to tax computations and transfer pricing.
.
Directors have access to updates on relevant regulatory
changes through the Company’s professional advisers.
.
The highest corporate governance standards are required
from all key service providers and their performance is
reviewed annually by the Management Engagement
Committee.
→
Operational Risks: Service Providers - Poor
performance/inadequate procedures at
service providers leads to error, fraud, non-
compliance with contractual agreements
and/or with relevant legislation or the
production of inaccurate or insufficient
information for the Company (NAV, Board
Reports, Regulatory Reporting) or loss of
regulatory authorisation. Key service providers
include the AIFM, Company Secretary,
the Depositary, the Custodian, the managing
agents, lending banks and the
Company’s Registrar.
.
abrdn has an experienced Investment Manager and Asset
Management Team.
.
The Company has engaged an experienced registrar:
Equiniti is a reputable worldwide organisation.
.
All service providers have a strong control culture that is
regularly monitored.
.
abrdn aims to meet all service providers once a year and
the Management Engagement Committee reviews all
major service providers annually.
.
The Company has the ability to terminate contracts.
→
18 Annual Report 2023
Description Mitigating Action ↗ Increasing, ↘ Decreasing, → Stable Risk
Operational Risks: Business continuity -
Business continuity risk to any of the
Company’s service providers or properties,
following a catastrophic event e.g. pandemic,
terrorist attack, cyber attack, power disruptions
or civil unrest, leading to disruption of service,
loss of data etc.
.
abrdn has a detailed business continuity plan in place with
a separate alternative working office if required and the
ability for the majority of its workforce to work from home.
.
abrdn has a dedicated Chief Information Security Officer
who leads the Chief Information Security Office covering
the following functions: Security Operations & Delivery,
Security Strategy, Architecture & Engineering,
Data Governance & Privacy, Business Resilience,
Governance & Risk, Security & IT.
.
Properties within the portfolio are all insured.
.
The IT environment of service providers is reviewed as part
of the initial appointment and on an ongoing basis.
→
Promoting the Company
The Board recognises the importance of promoting the
Company to prospective investors both for improving
liquidity and enhancing the value and rating of the
Company’s shares. The Board believes an effective way
to achieve this is through subscription to, and participation
in, the promotional programme run by abrdn on behalf of
a number of investment trusts under its management.
The Company’s financial contribution to the programme
is matched by abrdn. abrdn’s marketing team reports
quarterly to the Board giving analysis of the promotional
activities as well as updates on the shareholder register
and any changes in the make up of that register.
The purpose of the programme is both to communicate
effectively with existing shareholders and to gain new
shareholders with the aim of improving liquidity and
enhancing the value and rating of the Company’s
shares. Communicating the long-term attractions of
the Company is key and therefore the Company also
supports abrdn’s investor relations programme which
involves regional roadshows, promotional and public
relations campaigns.
Board Diversity
The Board recognises the importance of having a
range of skilled, experienced individuals with the right
knowledge represented on the Board in order to allow
the Board to fulfil its obligations. The Board also recognises
the benefits and is supportive of the principle of diversity
in its recruitment of new Board members. The Board
will not display any bias for age, gender, race, sexual
orientation, religion, ethnic or national origins, or disability
in considering the appointment of its Directors. The Board
will continue to ensure that any future appointments
are made on the basis of merit against the specification
prepared for each appointment and, therefore,
the Company does not consider it appropriate to set
diversity targets. At 31 December 2023, there were two
male Directors and two female Directors on the Board.
The Board commenced detailed discussions on succession
planning in October 2023 before the announcement of the
strategic review. The Board expects to consider succession
planning fully once again when the result of the strategic
review is known.
Sustainable and Responsible Investment
Policy and Approach
Further details on abrdn’s Sustainable and Responsible
Investment Policy and Approach for Direct Real Estate are
available at abrdn.com.
Environmental, Social and Human
Rights Issues
The Company has no employees as the Board has
delegated day to day management and administrative
functions to abrdn Fund Managers Limited. There are
therefore no disclosures to be made in respect of
employees. The Company’s socially responsible investment
policy is outlined in the Investment Manager’s Review.
Due to the nature of the Company’s business, being a
Company that does not offer goods and services to
customers, the Board considers that it is not within
the scope of the Modern Slavery Act 2015 (“MSA”).
The Company is not required to make a slavery and
human trafficking statement. The Board considers the
Company’s supply chains, dealing predominantly with
professional advisers and service providers in the financial
services industry, to be low risk in relation to this matter.
A copy of the Manager’s statement in compliance
with the Modern Slavery Act is available for download
at abrdn.com
The bulk of emissions relating to properties owned by
the Company are the responsibility of the tenants and
any emissions relating to the Company’s registered
office are the responsibility of abrdn plc. The Company
has no direct greenhouse gas emissions to report from
19Annual Report 2023
the operations of its business, although it is responsible
for low emissions generated at certain properties within
its portfolio reportable under the Companies Act 2006
(Strategic Report and Directors’ Reports) Regulations 2013,
see page 75.
Viability Statement
The Company does not have a formal fixed period
strategic plan but the Board formally considers risks
and strategy at least annually. The Board considers the
Company, with no fixed life, to be a long-term investment
vehicle, but for the purposes of this viability statement has
decided that a period of three years is an appropriate
period over which to report. The Board considers that
this period reflects a balance between looking out over
a long-term horizon and the inherent uncertainties of
looking out further than three years.
In assessing the viability of the Company over the review
period the Directors have conducted a robust review of
the principal risks focusing upon the following factors:
.
The status of the ongoing Strategic Review;
.
The principal risks detailed in the Strategic Report;
.
The ongoing relevance of the Company’s investment
objective in the current environment;
.
The demand for the Company’s shares evidenced by
the historical level of premium or discount;
.
The level of income generated by the Company and
the stability of tenants;
.
The level of gearing including the requirement to meet
lending covenants, negotiate new facilities and repay or
refinance future facilities;
.
The continuation vote required to be put to shareholders
at the AGM to be held in 2024; and
.
The flexibility of the Company’s bank facilities
and putting these facilities in place in time to
meet commitments.
The Directors have reviewed summaries from the portfolio
models prepared by the Investment Manager which
have been stress tested to highlight the performance of
the portfolio in a number of varying economic conditions
coupled with potential opportunities for mitigation. The
Directors have also stress tested the financial position of the
Company with attention on the proceeds from the disposal
of the asset in France and refinancing of loans in 2025.
The Company has prepared cash flow forecasts which
reflect the potential impact of reductions in rental income
including reasonably possible downside scenarios.
The impact of reductions in rental income could be
mitigated through a reduction in dividends to shareholders
if considered necessary by the Board.
The Company has modelled severe but plausible
downside scenarios, taking into account specific tenant
risks. These scenarios modelled reduced rental income
through to 2026 with the worst case scenario modelling to
an overall 40% reduction of rental income per annum over
that period.
The Board and Manager regularly monitor the permitted
and ‘hard breach’ loan-to-value covenants on the
Company’s eight loan facilities. Further details on loan
covenants are provided in Note 1(a) to the financial
statements on page 110. There were no breaches of
the loan-to-value covenants based upon the valuations
adopted at year end. The Directors believe that the
liquidity in the Group and £70m revolving credit facility
could be used for partial repayment of a loan in the event
of any future breaches.
Accordingly, taking into account the Company’s current
position and the potential impact of its principal risks and
uncertainties, the Directors have a reasonable expectation
that the Company will be able to continue in operation
and meet its liabilities as they fall due for a period of three
years from the date of this Report subject to the material
uncertainty and outcome of Strategic Review as outlined
in note 1(a) and shareholders’ approval of the continuation
vote required under the articles to be put to the AGM to be
held in 2024, noting that the Directors are unaware at this
early stage of any shareholder intentions to vote against
such a resolution. In making this assessment, the Board
has considered that matters such as significant economic
uncertainty, stock market volatility and changes in investor
sentiment could have an impact on its assessment of the
Company’s prospects and viability in the future.
s172 Statement
The Board is required to describe to the Company’s
shareholders how the Directors have discharged their
duties and responsibilities over the course of the financial
year under section 172 (1) of the Companies Act 2006
(the “s172 Statement”). This s172 Statement requires the
Directors to explain how they have promoted the success
of the Company for the benefit of its members as a whole,
taking into account the likely long-term consequences
of decisions, the need to foster relationships with all
stakeholders and the impact of the Company’s operations
on the environment.
The Board’s philosophy is that the Company should
operate in a transparent culture where all parties are
treated with respect and provided with the opportunity
tooffer practical challenge and participate in positive
debate which is focused on the aim of achieving the
expectations of shareholders and other stakeholders alike.
The Board reviews the culture and manner in which the
Investment Manager operates at its regular meetings and
receives regular reporting and feedback from the other
key service providers.
20 Annual Report 2023
Investment trusts are long-term investment vehicles,
with no employees. The Company’s Board of Directors
sets the investment mandate as published in the most
recent prospectus, monitors the performance of all service
providers and is responsible for reviewing strategy on a
regular basis.
Key Stakeholders
A key stakeholder and service provider for the Company is
the Alternative Investment Fund Manager (the “Manager”)
and this relationship is reviewed at each Board meeting
and relationships with other service providers are reviewed
at least annually.
Shareholders are seen as key stakeholders in the Company.
The Board seeks to meet at least annually with shareholders
at the Annual General Meeting. This is seen as a very
useful opportunity to understand the needs and views
of the shareholders. In between AGMs the Directors and
Investment Manager also conduct programmes of investor
meetings with larger institutional, private wealth and other
shareholders to ensure that the Company is meeting their
needs. Such regular meetings may take the form of joint
meetings or solely with a Director where any matters of
concern may be raised directly.
Our European partner lending banks are also key
stakeholders. We leverage off the Investment Manager’s
key relationships with a wide range of lending banks and
the Investment Manager has regular contact with these
banks updating them on the portfolio and valuations and
also on plans for new acquisitions or disposals.
The other key stakeholder group is that of the underlying
tenants that occupy space in the properties that the
Company owns. The Board aims to conduct a site visit
at least annually with the aim of meeting tenants locally
and discussing their businesses and needs and assessing
where improvements may be made or expectations
managed. The Investment Manager’s asset managers are
tasked with conducting meetings with building managers
and tenant representatives in order to ensure the smooth
running of the day to day management of the properties.
The Board receives reports on the tenants’ activities at its
regular Board meetings.
The Board via the Management Engagement Committee
also ensures that the views of its service providers are
heard and at least annually reviews these relationships in
detail. The aim is to ensure that contractual arrangements
remain in line with best practice, services being offered
meet the requirements and needs of the Company
and performance is in line with the expectations of the
Board, Manager, Investment Manager and other relevant
stakeholders. Reviews will include those of the Company
depositary, custodian, share registrar, broker, legal adviser,
lenders and auditor.
The Investment Manager’s Report on page 30 details
the key investment decisions taken during the year and
subsequently. The Investment Manager has continued
to invest the Company’s assets in accordance with the
mandate provided by shareholders at launch, under the
oversight of the Board. The Company aims to maintain
gearing at asset level at or around 35% over the longer
term. abrdn’s dedicated treasury team has negotiated
the debt facilities at competitive market rates, resulting
in the Company’s blended all-in interest rate across all its
debt being 2.00% which is to the benefit of all shareholders.
The Company has an uncommitted four year €70 million
master facilities loan agreement with Investec Bank plc
to provide additional flexibility which expires in October
2024. This facility increases the Company’s ability to
acquire new assets prior to any fresh equity raise and will
reduce the impact of cash drag on investment returns.
Details of how the Board and Investment Manager have
sought to address environmental, socialand governance
matters across the portfolio aredisclosed from page
57 onwards.
The Company is just over six years old having been
launched at the end of 2017. However, it is a long-term
investor and the Board has established the necessary
procedures and processes to promote the long-term
success of the Company. The Board will continue to
monitor, evaluate and seek to improve these processes
as the Company grows, to ensure that the investment
proposition is delivered to shareholders and other
stakeholders in line with their expectations.
Future
With exception of the Strategic Review, many of the
non-performance related matters likely to affect the
Company in the future are common across all closed
ended investment companies, such as the attractiveness
of investment companies as investment vehicles,
geopolitical tensions and the impact of regulatory
changes. These factors need to be viewed alongside the
outlook for the Company, both generally and specifically,
in relation to the portfolio. The Board’s view on the general
outlook for the Company can be found in my Chairman’s
Statement on page 9 whilst the Investment Manager’s
views on the outlook for the portfolio are included on
page 37.
Tony Roper
Chairman
25 April 2024
21Annual Report 2023
Annual General Meeting (AGM)
The AGM provides an opportunity for
Directors to engage with shareholders,
answer their questions and meet them
informally. The 2024 AGM isscheduled
to take place on 24 June 2024 in
London. The Board is looking forward
to meeting as many shareholders as
possible at the AGM.
Annual Report
We publish a full annual report
each year that contains a strategic
report, governance section, financial
statements and additional information.
The report is available online and in
paper format.
Company Announcements
We issue announcements for all
substantive news relating to the
Company, including the purchase and
sale of properties. You can find these
announcements on the website.
Results Announcements
We release a full set of financial and
operational results at the interim and
full year stage. Updated net asset value
figures are announced on a quarterly
basis in line with our valuation policy.
Website
Our website contains a range of
information on the Company and
includes details of our property
investments. Details of financial results,
the investment process and Manager
and Investment Manager together
with Company announcements and
contact details can be found here:
eurologisticsincome.co.uk.
The ways we engage with our shareholders include:
22 Annual Report 2023
Strategic Report
Results
Financial Highlights
31 December 2023 31 December 2022
Total assets (€’000) 693,892 817,783
Total equity shareholders’ funds (net assets) (€’000) 384,928 489,977
Net asset value per share (cents)
1
93.4 118.9
Net asset value per share (pence)
1
81.2 105.4
Share price - (mid market) (pence) 61.6 68.5
Market capitalisation (£’000) 253,899 282,339
Discount to net asset value per share (%)
1
(24.1) (35.0)
Dividends and earnings
Net asset value total return per share (EUR) (%)
1
(17.1) (3.8)
Dividends declared per share 4.23c (3.68p) 5.64c (4.80p)
Revenue reserves (€’000) 22,766 20,083
Loss (€’000) (81,801) (18,442)
Operating costs
Ongoing charges ratio (excluding property costs) (%)
1
1.6 1.3
Ongoing charges ratio (including property costs) (%)
1
2.4 1.7
Performance (total return)
Year ended
31 December 2023
%
Year ended
31 December 2022
%
Since Launch
%
Share price (GBP)
1
(3.5) (38.3) (18.1)
Net asset value (EUR)
1
(17.1) (3.8) 7.2
Dividends declared in respect of the Financial Year to 31 December 2023
Dividend
distribution
GBP pence
Dividend
distribution
Euro cents
equivalent
2
Qualifying
interest
GBP pence
Qualifying
interest
Euro cents
equivalent
2
ex-dividend
date
Record
date
Pay
date
First interim 0.94 1.08 0.29 0.33 01/06/2023 02/06/2023 23/06/2023
Second interim 1.11 1.28 0.11 0.13 31/08/2023 01/09/2023 22/09/2023
Third interim 0.86 0.98 0.37 0.43 30/11/2023 01/12/2013 29/12/2023
Fourth interim
3
- - - - - - -
Total 2.91 3.34 0.77 0.89
1
Considered to be an Alternative Performance Measure (see Glossary on pages 161 to 165 for more information).
2
The interim distributions are paid in GBP to shareholders on the register. However, shareholders are able to make an election to receive distributions in euros.
3
On 19 February 2024, the Board announced that the Company would forego the fourth interim distribution for the quarter ended 31 December 2023, which historically has been
declared in February and paid in March each year. This was to give maximum flexibility during the strategic review process.
23Annual Report 2023
Strategic Report
Performance
Share price Premium/(Discount) to net asset value per share
Launch to 31 December 2023
1
Premium/(Discount)
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
Dec 23
Sep 23
Jun 23
Mar 23
Dec 22
Sep 22
Jun 22
Mar 22
Dec 21
Sep 21
Jun 21
Mar 21
Dec 20
Sep 20
Jun 20
Mar 20
Dec 19
Sep 19
Jun 19
Mar 19
Dec 18
Sep 18
Jun 18
Mar 18
Dec 17
Source: abrdn, Factset.
1
Using the daily share prices together with the quarterly NAVs as announced by the Company at data points.
Share price
Launch to 31 December 2023 (rebased to 100 at launch)
40
50
60
70
80
90
100
110
120
130
140
Dec 23
Dec 22
Dec 21
Dec 20
Dec 19
Dec 18
Dec 17
Source: abrdn, Factset.
24 Annual Report 2023
Strategic Report
Our Unique Selling Points
abrdn European Logistics Income plc was launched in December 2017 and has sought to build a strategic position
in the real estate market that the Board and Investment Manager believed would deliver the investment objective to
shareholders over the longer term.
Our main USPs are listed below:
1
The Investment Manager has local teams on the ground that
know the market
The property business is a local business. You have to speak the local language
and have a network withbrokers, developers, investors and owner-occupiers
to not only find the best opportunities at the right price but also manage
properties and keep in close contact with tenants. abrdn is one of the largest
real estate investors in Europe with over £43 billion of real estate under
management. abrdn has local boots on the ground with eight offices across
Europe - London, Edinburgh, Frankfurt, Amsterdam, Madrid, Paris, Brussels and
Copenhagen - with over 300 real estate professionals with expertise in fund
management, research, transactions, asset management, financing and other
specialist property activities.
2
Investing in the most liquid mid-box and strong growth
segment of urban logistics
Durability of income stream is key for an income driven strategy.
The Investment Manager looks beyond the length of the initial lease contract
to see if a warehouse has a second life after the lease matures. The mid-box
section of the market, with building sizes reaching up to a maximum of
50,000 square metres, is where most of the leasing activity takes place
providing us with options in the future. We believe we operate in a more liquid
area of the sector than the ultra ‘big-box’ part of the market where leasing
options may be more limited. Our portfolio is weighted towards urban logistics
and this is where we have highest growth expectations. The urbanisation trend
across Europe and the competition for shorter deliverytimes amongst parcel
delivery specialists has created a higher demand for land in dense population
areas resulting in higher land prices and stronger rental growth. The Manager
has strong real estate research and strategy capabilities which help formulate
an annual review of strategy for the Company.
3
A diversified, high quality portfolio with long indexed leases
to tenants
Durability of income streams will be achieved by acquiring the right warehouses
in the right locations. The Company now has 26 properties in the portfolio,
of which 16 were new builds when acquired, across five European countries with
over 50 tenants providing good risk diversification. All buildings in the portfolio
are either located alongside main transport corridors or within a short distance
to dense population urban locations. Our buildings have modern specifications
in terms of free height, floor load capacity, number of loading doors and yard
depth, all features that are particularly important for e-commerce focused
logistics operators. Average lease length is 8.4 years (excluding breaks) and all
leases are index-linked, the majority with indexation uncapped.
25Annual Report 2023
4
A clear focus on the European Continent
This is a European strategy with a very clear focus on the European Continent
and not the UK. There are several reasons for this. Firstly, e-commerce
penetration has been materially behind that seen in the UK with higher growth
expected. Secondly, CPI-linked leases give a level of protection against inflation.
Thirdly, the European market has seen lower long-term debt costs and finally,
the region provides diversification options with 75% of the investable European
market in continental Europe.
5
ESG is embedded in the investment philosophy resulting in an
improving GRESB score
abrdn, as a global asset manager, has the ambition to become net zero by
2050. As an investment company, the Company has a clear focus on improving
the green performance of its buildings with the asset and property managers
working closely with our tenants. One of the key focuses is the implementation
of solar panels on the roofs of our buildings which are now on eight of our
warehouses. The Company, through abrdn, continues to develop the path to
zero carbon emissions.
6
Modest gearing with attractive all-in costs
The Company has a modest long-term target Loan-To-Value ratio (LTV) of
c. 35%, with a current LTV of 38.7% (as at 31 December 2023). The maximum
LTV is 50% at the time of drawdown but the level of LTV may fluctuate through
the use of shorter term loan facilities and in advance of cash raises allowing the
Company to commit to further opportunities as they arise. All-in costs of the
current loanportfolio were 2.00% at the year end.
7
Low investment management fees
The investment management fee is set at a competitive rate of 75 basis points
of NAV up to €1.25 billion which will drop to 60 basis points above this.
26 Annual Report 2023
Strategic Report
2023 Accomplishments
2023 was another active year. With volatile money
markets, rising interest rates and challenging economic
headwinds affecting capital values, the Company focus
remained on managing income.
Eight significant active management initiatives were
delivered through 2023, involving over 144,000 sq m of
space and €8.2 million of rent.
The Company completed its first asset sale in April 2023.
The property, let to Decathlon, in Leon, northern Spain sold
for €18.5 million delivering a 20% profit on acquisition cost.
Once again, the Company improved it’s GRESB rating
year-on-year, to deliver its first 5 star rating with 89 points
from 100. A significant achievement considering the high
scoring achieved in 2021 and 2022.
Our local teams on the ground are crucial in managing
our diverse logistics portfolio and a key factor in abrdn’s
real estate offering. With highly experienced teams based
around Europe, the Investment Manager is able to engage
directly with tenants in implementing long-term value
improvement strategies and maintaining a future-fit portfolio.
Long-term gearing at attractive all-in fixed cost
38.7%
Loan-to-Value
2.00%
Asset level cost of debt
2.3yrs
Average term to maturity
Dachser France, Bordeaux
27Annual Report 2023
ACTIVE PORTFOLIO
MANAGEMENT
8 active management initiatives across 4 countries.
6 new leasing agreements extending the unexpired
lease terms, improving Company metrics and core
income base.
Asset management deals covering 144,000 sq m and
involving €8.2 million of annual rent.
Two opportunistic sales delivering value and mitigating risk.
Leon, let to Decathlon, was sold in April 2023 for €18.5 million.
Meung sur Loire, the vacant asset in France, was sold in
March 2024.
ESG
GRESB 2023 the Company achieved its first 5-star award.
Peer Group Leader with 89 points, ahead of Sector and
Global Benchmarks.
Continued Year-on-Year improvement in scoring.
Net Zero Carbon pathway analysis continues.
Gavilanes Amazon Hub, Phase IV – Madrid
Lodz, PolandKrakow, PolandExtension project, Waddinxveen, Netherlands
28 Annual Report 2023
ASSET MANAGEMENT
Six renegotiations in France, the Netherlands and Poland:
our local asset management teams continue to add value
across the portfolio
France: a new 9.5 year lease signed with Dachser at Niort
and new 12 year lease signed with Biocoop in Avignon.
Netherlands: a 5 year lease extension with AS Watson in Ede.
Poland: 3 year lease extensions signed with Max-Fliz and
Chef’s Culinar in Krakow and a new 3 year lease signed with
EGT in Lodz.
Post Year-End Activity
A number of initiatives have occurred post-year end into
Q1, 2024.
In February 2024, the Company completed the lease
surrender to Arrival at Madrid, Gavilanes, 3A/B/C.
More positively, in March 2024, the Company secured a
new letting at Gavilanes, 3B to Method Logistics.
Also in March 2024, the Company completed the sale of the
vacant asset in Meung sur Loire, France. This long-standing,
capex-hungry void was sold as a value-add proposition.
Meung sur Loire; Dachser France, Niort; Arrival, Gavilanes, Madrid respectively top to bottom.
29Annual Report 2023
Strategic Report
Investment Manager’s Review
Having joined the investment management team
responsible for managing the Company’s portfolio in
October 2022, it is my pleasure on behalf of the entire
fund management team to present my second Investment
Manager’s Review, covering the financial year ending in
December 2023.
2023 Market Overview
Short-term fundamentals
The European logistics sector experienced a tougher year
in terms of occupier fundamentals and leasing activity,
while capital markets also remained quiet. Although inflation
cooled to 2.6% in the Eurozone in February 2024, the higher
interest rate environment and fiscal drag in the economy
have weighed on economic growth and investor sentiment.
Borrowing costs remain high for investors and tenants are
taking a more cautious approach to leasing. This has meant
the market has been slower than anticipated in rebuilding
momentum.
Logistics leasing demand, which has been strong in recent
years, cooled in 2023, with total take up of 29 million
square metres representing a 24% year on year decrease.
Although this indicates a deceleration in the market in-line
with slower economic growth, take up was still 9% above
the long-term average. 2023 quarter-on-quarter take up
did gather some momentum, however, with over 8 million
square metres of take up recorded in Q4, which was just
a 7% reduction on the same quarter in 2022. With 2022
delivering the second highest take up volume on record,
the Q4 2023 outcome can be considered a positive sign
for the leasing market. With H2 coming in 17% above the
first half of 2023, the occupier market is carrying improving
momentum into 2024.
Regionally, there was a clear trend with more mature and
larger logistics markets seeing the sharpest slowdowns in
2023, while smaller, less mature markets such as Belgium,
Ireland and Italy saw the most resilient leasing activity.
However, this hides the fact that the largest markets
typically had very strong years in 2021 and 2022, so some
of the slowdown can be considered a natural transition
back to more typical levels of long-term demand. The UK,
Germany, Netherlands and Spain all saw take up drop
year-on-year by more than 20%.
The type of demand is also shifting. In most markets,
newer entrants such as Amazon have established their
bulk inbound distribution hubs and regional fulfilment
centres and are now switching to focus on efficiencies
in their Local or “last mile” delivery stations in city fringe
locations. This has also contributed to a lower level of
overall take up, as demand has switched to smaller 10,000
to 40,000 square metre mid-box units, from the larger units
in high demand in previous years. The largest deal ever
recorded in Poland was signed in 2023, with a Chinese
e-commerce operator taking 265,000 square metres
of space.
A lack of modern, fit for purpose stock also remains a
limiting factor for take up in good locations. With rents
continuing to rise, leasing tensions in Europe’s logistics
hotspots are still evident. While vacancy rates increased
over the course of 2023, rising by 205 basis points to an
average of 5.4%, there is clear evidence that a slowdown
in construction activity is having a stabilising influence,
evidenced by an 11 basis points decline in Q4 2023,
significantly below the average for the year.
The highest vacancy rates are in Poland, Spain and the UK,
where rates are all in excess of 6%, while the tightest supply
situations are found in Ireland, Denmark, Czech Republic
Troels Andersen
Fund Manager
30 Annual Report 2023
and Netherlands. However, at the city level and in the
most desirable fringe city locations, supply of good quality
and modern logistics properties remains very low and
competition between tenants is pushing up rents.
We can see this relationship when comparing rental
growth with vacancy rates. As vacancy declined through
the pandemic, rents gradually increased at a faster pace
with a strong correlation between the two. However,
during 2023, prime rental growth has continued to exceed
inflation and at the same time vacancy rates have
increased. This is because competition for modern best-
in-class logistics facilities remains strong, while secondary
buildings in weaker locations typically represent the bulk
of the increasing supply in the market. It is important to
differentiate between the vacancy of increasingly obsolete
older warehousing stock and modern logistics facilities in
high demand.
According to data from Savills, prime rents increased by
11% in 2023 on average, sustaining the same rate seen in
2022. However, there was a slowdown in Q4 2023 when
rents increased by 1.5% during the quarter.
Looking ahead, the undersupply of modern logistics
space in good locations across the supply chain means
that cashflows should be increasingly resilient and strong
income growth should persist. For European logistics, the
milder recession expectation is supportive given the link
between economic growth and logistics activity.
Long-term fundamentals
Supply chains continue to move through a period of
exceptional structural change, backed by four key
demand drivers.
.
The Covid pandemic accelerated many aspects of
de- globalisation, stress-tested existing distribution
networks, and increased the need for companies to
diversify their supply chains.
.
e-commerce remains an incremental demand driver
for the long-term, despite a slowdown in the growth
rate; some pull back in growth was naturally due after
the e-commerce boom during the pandemic where
online sales penetration rates were artificially boosted
by lockdowns.
.
On-shoring has been an incrementally more important
driver of demand over the last decade, but this has
recently accelerated as a result of supply chain disruption
through the Gulf of Aden and the Suez Canal. Rising
tensions in the Middle East doubled international shipping
costs in late 2023, resulting in supply chains re-routing
goods. Volatility in variable costs, rising fixed costs and
increased supply chain risks as well as broader de-
globalisation pressures, are increasing supply chain
diversification and the need to be closer to end users.
.
Lastly, ESG and “net zero” considerations are beginning to
play a clearer role in logistics performance, where tighter
regulations from the European Union’s Energy Efficiency
Directive combined with valuation guidance from the
RICS, will push tenants and investors to upgrade buildings
to deliver more efficient performance. This will further
widen the gap between future-fit assets and those
facing obsolescence. When markets are undergoing a
transformation, such as in logistics, the choice of asset
quality in the right location and the future relevance of
the building are increasingly critical factors.
A large proportion of European stock is no longer
appropriate for today’s logistics requirements and requires
modernisation, especially as regulatory deadlines around
energy efficiency approach. Current total supply growth
of c.8% for 2023 is expected to slow to c.4% p.a. in 2024
and likely level off in the longer term, according to Green
Street. Two of the key drivers of the expected limitations
of new supply are increased financing and development
costs. 2023 saw development economics deteriorate, with
estimated profit margins halving to c.15%, driven by higher
construction input costs (up 25% in 2022).
The ESG factor cannot be underestimated as a
further constraining factor on future-fit logistics supply.
In preparation for the net zero transition, the Research
and Energy Committee of the European Parliament
is finalising its position on the Energy Performance of
Buildings Directive which seeks to make the EU building
sector carbon neutral by 2050. However, we are seeing
more significant retrofitting and energy improvement
costs factored into cash flows and this is being accounted
for in purchase prices or valuations. Polarisation between
prime and secondary assets will amplify as limited new
supply in most sectors becomes evident, while secondary
and tertiary properties begin to be penalised.
Values and capital flows
Industrial rents have experienced strong growth over
the last two years, an aspect of Europe that has lagged
the UK and US markets. While yields have come under
pressure from higher debt costs, some of this has been
partially offset by rental growth or rent indexation built into
many European lease contracts. 2023 gradually saw a
stabilisation in logistics yields in Continental Europe, with the
sector experiencing more resilience than other sectors such
as offices and the lagging residential sector.
Investment values have declined as interest rates increased.
Prime logistics yields had tightened to 3% or below in the
most sought-after locations. This was no longer supportable
as debt costs spiked and relative pricing against bonds
weakened. However, given the fundamentals and strength
of investor sentiment towards long-term structural demand
drivers, when interest rates stabilise and commercial real
estate begins to attract increased investment again,
New stacking system at Zeewolde, Netherlands
31Annual Report 2023
we believe that the logistics sector is well placed to recover
lost performance over the short to medium term.
Capital flows into European logistics real estate
have increased to now regularly reach roughly 20% of
total investment, up from 10% in 2013. The volume of
transactions closed in 2023 was unsurprisingly down from
the record set in 2021, and 50% below the level reached
in 2022. The largest markets continue to be Germany,
France, The Netherlands and Spain. Where markets
have seen the sharpest repricing (the UK, Netherlands,
Germany and Nordics) we are starting to see investor
demand return and values stabilise. In the UK, yields have
shown some signs of tightening under increased investor
competition, although it is too early to tell if this is the start
of a new phase in the cycle.
Well diversified, liquid portfolio with strong urban profile
Fully aligned with the Manager’s research and strategy
teams, the Company continues to pursue its high conviction
strategy focusing on the most ‘liquid’ and in-demand part
of the European logistics market where both capital and
rental growth expectations are highest. Urban logistics and
mid-sized (‘mid-box’) warehouses are the areas of the
market where supply / demand dynamics are the strongest
and the potential tenant base the largest. A typical mid-box
warehouse sits between 10,000 – 50,000 square metres in
size and for urban logistics, often called the ‘final touch in
the supply chain’, building sizes are generally smaller and
located in close proximity to dense population centres for
speedier deliveries.
With our focus on long-term, sustainable income, the
future-proofing or ‘second life’ of our warehouses is an
important consideration when acquiring any new assets.
Building specifications we consider important, amongst
others, are the eaves’ height, floor-load capacity, number
of loading doors, manoeuvrability around the building,
power supply and increasingly important, a building’s
sustainability credentials.
Buildings positioned alongside main transport corridors,
close to seaports, infrastructural nodes, or in the case of
urban logistics, close to large population concentrations,
are important criteria in analysing new acquisition
opportunities.
The Company’s focus is solely on Continental Europe,
which provides a deep pool of potential acquisition targets
and strong diversification options, limiting single market
risk. A standard lease agreement on the Continent often
includes full annual CPI indexation of rents, thereby
providing a strong hedge against inflation which has
become particularly relevant in today’s inflationary
environment. Despite recent upward pressure, our
investment strategy continues to benefit from lower
financing costs fixed with European banks. Finally,
e-commerce penetration is still at an earlier stage on
the Continent with strong growth forecast, creating an
attractive investment backdrop. Statista also forecasts
strong growth in online sales in the food sector as
more tech conscious generations become earners
and consumers.
Growth is expected to be strongest in the urban logistics
sub sector, especially those assets located in dominant
cities that have warehousing supply constraints and where
demand is coming from different land uses, resulting in
higher land costs and ultimately underpinning higher
rents. Parcel delivery specialists are continuing to improve
their services by reducing delivery times and thereby
transportation costs. Operating a logistics warehouse in
close proximity to their ultimate customer base is the best
way to reduce their cost base with rental and building costs
materially less impactful than transportation costs.
Approximately 50% of the Company’s portfolio by value
comprises urban logistics warehouses in locations such
as Madrid, Frankfurt, Warsaw, Barcelona and Den Hoorn
located in the Netherlands between the cities of The Hague
and Rotterdam.
As at the Company’s year-end, 16 out of the 26 warehouses
held in the portfolio were newly developed at the point
of purchase and have been constructed since 2018.
The portfolio specifications are therefore very modern
and in line with tenant requirements. The portfolio is well
diversified and spread across five different countries.
As at 31 December 2023, the Netherlands represented
the largest geographic exposure in the portfolio by value
(30.2%), followed by Spain (29.8%), France (15.7%),
Poland (14.3%) and Germany (10.0%).
Asset Management Initiatives
2023 was a hugely challenging year with valuation
declines witnessed across all geographies and sub-sectors.
Despite sector re-pricing and a weakening of investor
sentiment, the markets remained active for the right stock.
In all for the Company, we completed eight transactions
covering 144,000 square metres of space, involving
€8.2 million in annualised rent. This comprised six lease
extensions, one sale, and agreeing terms committing to
another which was completed post year end.
During the first quarter the Company agreed a 9.5 year
lease renewal with Dachser France in La Creche, Niort.
The new rent achieved a 3% uplift on the previous annual
rent payable and significantly ahead of ERV, reflecting
the tenant-critical nature of the asset. The strategic
significance of the location and the continued upward
pressure on real rents also supported the tenant agreeing
to uncapped annual ILAT indexation, with the next uplift
effective January 2025.
32 Annual Report 2023
Also in Q1, the Company secured a new 12 year lease
re-gear with Biocoop at its Avignon property, generating
annual contracted rent of €2.5 million, again with full
annual French ILAT indexation with no cap. The ‘HQE
Excellent’ climate-controlled facility serves as a strategically
important location for Biocoop, which operates a unique
multi-professional cooperative model, supporting a network
of over 570 organic stores promoting local production in
order to limit transportation and support local economies.
The asset also generates €165,000 per annum of additional
income from rooftop solar panels.
In May, the Company completed a 5-year lease extension
at its single-tenant warehouse in Ede, the Netherlands.
The new extended lease with pharmaceutical retailer
AS Watson (trading as Kruidvat) moved the expiry out
from 2028 to July 2033 and provides for future upward-
only indexation capped at 4% per annum.
There was steady leasing activity in Poland, with two lease
extensions agreed in Krakow. A lease extension for 3 years
was agreed with MaxFliz home interiors at their 8,842 sq m
facility, moves the expiry out to July 2027, reflecting their
ongoing commitment to the strong location supporting
their future operations. Also in Krakow, Chef’s Culinar
agreed to a 3-year extension moving the expiry at their
1,339 sq m unit out to November 2026.
In Lodz, Poland, a lease extension was agreed, with EGT
Logistics, moving the lease expiry at their 1,634 sq m
facility out to March 2027.
In May, the Company announced the sale of its 32,645
sqm warehouse, in Leon, northern Spain for €18.5 million.
The price reflected a premium to the Q4 2022 valuation
and crystalised a 20% gross profit. The Company had
acquired the asset, let previously to Decathlon, in 2018 for
€15.3 million.
Post year-end 2023 the Company sold its vacant French
asset at Meung sur Loire, which completed on 25 March
2024. The price represented a modest discount to the Q3
2023 valuation, with the proceeds being used to further
strengthen the Company’s balance sheet.
This was a good result in exiting an asset that would
require substantial capex, especially with an eye to our net
zero emissions target.
In Madrid, the Company is now carrying 7% of the portfolio
void at Phase 1B Gavilanes (which was vacated in August
2023) as well as accounting for the void following the
surrender of the units occupied by Arrival.
Despite continued efforts to secure both a surrender
premium, which had previously been agreed with Arrival,
and the outstanding rental payments for 2023, we were
unable to reach a satisfactory conclusion. The Company
previously noted Arrival’s announcement and SEC filing
regarding bridge financing and in the continued absence
of a satisfactory conclusion, legal proceedings to recoup
monies owed continued. Off the back of good occupier
interest in the properties, the Company has secured the
surrender of the lease agreement with Arrival to take full
possession of the units. Whilst it is extremely disappointing,
the Company took the decision to take full control of
the assets in order to maximise revenue going forward.
Reflecting the ongoing demand for Grade-A, highly
sustainable logistics space in Spain, a new lease has been
agreed for 5,131 sqm of the space, at a rent 8.7% above
the previous passing rent, with Spanish transportation
company METHOD Advanced Logistics.
In October 2023 the Company announced that it had
been awarded a maximum five stars in the 2023 Global
Real Estate Sustainability Benchmark (‘GRESB’) awards,
achieving first place in its peer group of diversified funds
investing across Europe (European industrial: distribution
warehouse). This was a welcome achievement and
progressively increased scoring over 2021 and 2022.
Country allocation, Q4 2023
(by portfolio value)
Netherlands
Spain
Germany
France
Poland
33Annual Report 2023
Property portfolio as at 31 December 2023
Country Location Built
WAULT incl
breaks
(years)
WAULT excl
breaks
(years)
2023
% of
Portfolio
France Avignon 2018 10.7 10.7 7.9
France Meung sur Loire 2004 - - 2.8
France Bordeaux 2005 5.1 8.1 1.8
France Dijon 2004 6.0 9.0 1.4
France Niort 2014 8.0 11.0 1.8
Germany Erlensee 2018 4.2 4.2 6.0
Germany Florsheim 2015 4.3 4.3 4.0
Netherlands Den Hoorn 2020 6.3 6.3 7.2
Netherlands Ede 1999/ 2005 9.7 9.7 4.1
Netherlands Horst 2005 8.7 8.7 1.4
Netherlands Oss 2019 10.5 10.5 2.4
Netherlands ‘s Heerenberg 2009/ 2011 8.0 8.0 4.4
Netherlands Waddinxveen 1983/ 1994/ 2002/
2018 /2022
9.9 9.9 6.2
Netherlands Zeewolde 2019 10.5 10.5 4.5
Poland Krakow 2018 2.6 2.6 4.8
Poland Lodz 2020 4.5 4.5 4.8
Poland Warsaw 2019 4.2 4.2 4.7
Spain Barcelona 2019 2.5 5.5 2.7
Spain Madrid - Coslada 1999 3.0 7.0 1.6
Spain Madrid - Gavilanes 1A 2019 6.1 6.1 4.4
Spain Madrid - Gavilanes 1B 2019 - - 2.1
Spain Madrid - Gavilanes 2A 2020 2.6 12.6 2.0
Spain Madrid - Gavilanes 2B 2020 1.5 1.5 1.5
Spain Madrid - Gavilanes 2C 2020 1.5 3.5 1.5
Spain Madrid - Gavilanes 3A/B/C 2019 - - 5.0
Spain Madrid - Gavilanes 4 2022 13.3 23.3 9.0
TOTAL 7.0 8.4 100.0
34 Annual Report 2023
A strong tenant base with inflation
linked income
Our key objective remains the generation of long-term
sustainable income streams in order to pay an attractive
quarterly dividend.
2023 saw the Company collect 95% of total expected
rent, with the shortfall attributable to Arrival. With more
than 50 lease agreements, the portfolio has a diversified
tenant base across different sectors. In addition to the
regular interaction of our asset and property managers
with our tenants, their covenant strength is monitored on
a regular basis using a variety of data sources including
Dun & Bradstreet.
In terms of exposure by segment, third party logistics
providers (“3PLs”) represent the largest at 37% of total
portfolio rent. The 3PL market continues to be buoyant,
particularly those businesses specialising in parcel
deliveries; our exposure comprises DHL, which occupies
our assets in Madrid and Warsaw and Dachser occupying
three assets in Niort, Dijon and Bordeaux, France.
The combination of both DHL and Dachser France
accounts for 9.4% of rental income in aggregate,
across 5 units and 3 countries. Manufacturers (20%)
and companies related to the food industry (19%)
complete the top three. Food related companies such
as supermarkets like Biocoop or Carrefour and traders
in food such as Combilo and Limax all performed well
during the pandemic. The retail exposure (8.3% of total
rent) is accounted for by Netherlands based drugstore
Kruidvat (part of the A.S Watson group) operating
its e-commerce platform. The direct exposure to
e-commerce (9.1% of total rent) is accounted for by
the holding of the state-of-the-art, last mile Amazon
facility at Gavilanes, Madrid. This is the largest asset in
the portfolio by value.
Standard lease agreements on the Continent typically
have annual CPI indexation of rent. This is not the standard
in the UK. Having this annual inflation protection has proved
beneficial with rising energy prices and supply chain issues
driving inflation well into double digits in the Eurozone
towards the end of 2022 and throughout 2023. 65% of the
portfolio’s current income has full CPI or ILAT indexation,
which undoubtedly helped to grow 2023 income.
The Company’s existing leases have an average length of
7.0 years including break options and 8.4 years excluding
breaks to lease expiry.
Exposure by sector (% of total rent) as at 31 December 2023
37%
20%
19%
8%
9%
5%
Logistics/Transport
Manufacturing
Retail
Food
E-commerce
Wholesale
Other
2%
Indexation of rental income (% of total rent) as at
31 December 2023
100% CPI/ILAT
CPI/ILAT with a cap
Threshold indexation
Other
65%
27%
7%
1%
35Annual Report 2023
Lease expiry profile (% of total rent)
0
2
4
6
8
10
12
14
16
204120372036203520342033203220312030202920282027202620252024
2%
9%
8%
13%
2%
0%
11%
3%
7%
5%
16%
9%
6%
9%
0%
Top 10 tenants based on current rents
Tenant Property
Contracted
rent
(€000 p.a.)
Contracted
rent
(%)
WAULT incl.
breaks
(years)
WAULT excl.
breaks
(years)
1 A.G. van der Helm Den Hoorn 3,435 10.7% 6.3 6.3
2 Amazon Madrid - Gavilanes 4 2,647 8.2% 13.3 23.3
3 Combilo International B.V. Waddinxveen 2,228 6.9% 9.9 9.9
4 Biocoop Avignon 2,177 6.8% 10.7 10.7
5 JCL Logistics Benelux B.V. 's Heerenberg 1,744 5.4% 8.0 8.0
7 Aalberts integrated piping
systems B.V.
Zeewolde 1,706 5.3% 10.5 10.5
6 A.S. Watson Ede 1,664 5.2% 9.7 9.7
8 DHL Madrid - Coslada; Warsaw 1,558 4.8% 3.7 4.4
9 DACHSER France Bordeaux; Niort; Dijon 1,481 4.6% 6.5 9.5
10 Primera Línea Logística, S.L. Madrid - Gavilanes 1A 1,361 4.2% 6.1 6.1
Subtotal 20,001 62.1%
Other tenants 12,177 37.9%
Portfolio as at 31 December 2023 32,178 100.0% 7.0 8.4
Excludes income from Arrival in Madrid 3 where lease was surrendered in February 2024.
36 Annual Report 2023
Loan portfolio 31 December 2023
Country Property Lender
Loan
(€million) End date
Duration
(years)
Fixed
interest rate
(incl margin)
Germany Erlensee DZ Hyp 17.8 January 2029 10 1.62%
Germany Florsheim DZ Hyp 12.4 January 2026 7 1.54%
France Avignon + Meung sur Loire BayernLB 33.0 February 2026 7 1.57%
Netherlands Ede + Oss + Waddinxveen Berlin Hyp 44.2 June 2025 6 1.35%
Netherlands ‘s Heerenberg Berlin Hyp 11.0 June 2025 6 1.10%
Netherlands Den Hoorn + Zeewolde Berlin Hyp 43.2 January 2028 8 1.38%
Spain Madrid Gavilanes 4 + Madrid
Coslada + Barcelona
ING Bank 53.9 September 2025 3 3.11%
Spain Madrid Gavilanes 1 + 2 + 3 ING Bank 44.0 July 2025 3 2.72%
Total 259.5 2.00%
Well diversified debt portfolio
During 2023 interest rates have remained high across the
continent. The Company’s debt from its European partner
banks remains fixed in nature and secured on certain assets
or groups of assets within the portfolio. These non-recourse
loans, which include no parent company guarantees, range
in maturities between 1.4 and 5.1 years with all-in interest
rates ranging between 1.10% and 3.11% per annum. During
the year €10.8 million was repaid following the sale of Leon
in April 2023.
At the end of 2023, the Company´s fixed debt facilities
totalled €259.5 million at an average all-in rate of 2.0%
and with a loan-to-value of 38.7%, slightly above the
long- term target of 35%. The Company´s secured fixed
rate debt supports its investment objective with the earliest
re-financing of debt required in mid-2025.
The Company arranged asset level fixed rate bank debt
financings in those local markets where all-in loan costs
were the lowest, such as Germany, the Netherlands, France
and Spain with dedicated real estate banks that are active
in this lending space. Stress testing on the existing financial
covenants such as Interest Cover Ratios and Loan-To-Value
(LTV) is conducted on a regular basis. In order to diversify
risk, the loan facilities have also been cross-collateralised
with groups of single-tenanted buildings or have diversified
risk thanks to multi-tenanted leasing structures.
The Company also benefits from its revolving credit
facility agreement with Investec Bank for the amount
of €70 million which provides further flexibility for the
acquisition of new properties and / or for the implementation
of asset management initiatives. At the end of 2023 the
revolving credit facility agreement with Investec Bank was
undrawn. Within the facility, Investec also makes available
a £3.3 million committed revolving credit facility which is
carved out of the total €70 million limit of the facility.
This facility sits at the parent company level and provides
added flexibility.
Outlook
We believe Continental European logistics real estate is
well placed to recover from a difficult market position
due to the robust market fundamentals. Backed by the
tailwinds of low vacancies and structural demand drivers,
rental growth is expected to outperform historic averages
and beat inflation in most European logistics hotspots.
While lingering economic, political, and financial markets
uncertainties may disrupt investment trends in the short-
term, the favourable underlying trends including ongoing
e-commerce penetration, onshoring and supply chain
reconfiguration/modernisation should remain important
drivers for the sector.
37Annual Report 2023
We continue to prefer fringe city locations where land
supply is more constrained, and where tenant and
investor demand is active. Good quality assets in these
locations are hard to source for tenants due to low levels
of new builds over the last ten years and low construction
activity going forwards. The development pipeline is also
constrained by rapidly rising financing costs, together with
high construction and labour costs, planning difficulties
and more stringent controls over sustainability and
efficiency ratings of new schemes.
The immediate focus for us is to continue improving the
earnings position, principally through letting up the vacant
space in Spain and capturing the portfolio’s attractive
indexation characteristics.
abrdn’s large and established local network and reputation
provides a competitive advantage when sourcing deals
and implementing initiatives. abrdn is one of Europe’s
largest real estate investors, managing approximately
£43 billion of real estate, with over £15 billion of logistics
assets across 12 countries. Its eight offices across Europe -
London, Edinburgh, Frankfurt, Amsterdam, Madrid, Paris,
Brussels and Copenhagen – employ over 300 abrdn real
estate colleagues including portfolio managers, local
transaction and asset managers and researchers.
We are starting to see signs of interest returning to
the sector with increased investment activity in those
markets that have already seen strong pricing correction,
such as in the UK and the Netherlands. Various successful
capital raises targeting the sector exclusively, or as part
of multi-sector strategies, have recently been announced
providing evidence in the longer-term conviction for
the sector.
Troels Andersen
Fund Manager, abrdn
25 April 2024
38 Annual Report 2023
Strategic Report
Property Portfolio
1
7
6
2
8
10
11
26
23
21
25
24
20
9
3
4
5
16 17
18 19
13
15
14
12
22
Property portfolio as at 31 December 2023
Property Tenure Principal Tenant 2023 valuation (€m)
1 France, Avignon Freehold Biocoop 50.4
2 France, Meung sur Loire Freehold Vacant 17.5
3 France, Dijon Freehold Dachser 8.7
4 France, Niort Freehold Dachser 11.4
5 France, Bordeaux Freehold Dachser 11.5
6 Germany, Erlensee Freehold Bergler 38.1
7 Germany, Flörsheim Freehold Ernst Schmitz 25.1
8 Poland, Krakow Freehold Lynka 30.2
9 Poland, Lodz Freehold Compal 30.5
10 Poland, Warsaw Freehold DHL 29.7
11 Spain, Barcelona Freehold Mediapost 16.8
12 Spain, Madrid - Coslada Freehold DHL 10.0
13 Spain, Madrid - Gavilanes 1A Freehold Talentum 28.4
14 Spain, Madrid - Gavilanes 1B Freehold Vacant 13.3
15 Spain, Madrid - Gavilanes 2A Freehold Carrefour 12.5
16 Spain, Madrid - Gavilanes 2B Freehold MCR 9.8
17 Spain, Madrid - Gavilanes 2C Freehold Servicios Empresariales Ader 9.6
18 Spain, Madrid - Gavilanes 3A/B/C Freehold Arrival
2
31.5
19 Spain, Madrid - Gavilanes 4 (2 buildings) Freehold Amazon 57.1
20 Netherlands, Den Hoorn Leasehold Van der Helm 45.5
21 Netherlands, Ede Freehold AS Watson (Kruidvat) 25.9
22 Netherlands, Horst Freehold Limax 8.8
23 Netherlands, Oss Freehold Orangeworks 15.4
24 Netherlands, 's Heerenberg Freehold JCL Logistics 28.0
25 Netherlands, Waddinxveen Freehold Combilo International 39.5
26 Netherlands, Zeewolde Freehold VSH Fittings 28.6
Market Value as at 31 December 2023 633.8
Less operating lease incentives (4.5)
Total market value less operating lease incentive debtor 629.3
Add IFRS 16 leasehold asset
1
24.4
Total per Balance Sheet (Investment properties & Investment property held-for-sale) 653.7
1
Ground lease on warehouse in Den Hoorn detailed in note 12.
2
Arrival lease was surrendered in February 2024.
39Annual Report 2023
FRANCE
AVIGNON
.
Avignon (92,000 inhabitants) is in the heart of the Provence close to
larger cities Montpellier (280,000) and Marseille (978,000). The Provence
is the #1 region to produce fruit and vegetables in France explaining
why tenant Biocoop (organic food retailer) and other supermarkets
(Carrefour, Aldi, Systeme U) and food specialists have located
distribution centres here
.
Sustainable warehouse with modern specifications and solar panels
.
Property consists of 4 cells, 2 of which are treated as cold storage
(1/3 of floor space)
SPA signed/ closing Jul 18 / Oct 18
Year of construction 2018
Net leasable area 28,469 sqm
Main tenants Biocoop
Indexation 100% ILAT (annual)
WAULT (incl/ excl breaks) 10.7 / 10.7 years
Property specifications Free height of 10.5m, floor load capacity of 5 t/sqm, 24 loading doors,
sprinklers, HQE Excellent certificate, 11% office space, LED, solar panels
MEUNG SUR LOIRE
.
The property which was sold post year end in March 2024 is in the
centre of France 27 km southwest of Orleans (115,000 inhabitants).
The unit serves Paris, Central and the South of France for both national
and international distribution
.
Established and growing logistics location, for DHL, ID Logistics,
XPO and Rexel. Former tenant Office Depot went into liquidation,
paying rent until Summer 2022. Former tenant installations have
been removed, with new LED lighting installed
.
Good specification and low site cover of 29% allowing expansion
SPA signed/ closing Nov 18 / Feb 19
Year of construction 2004
Net leasable area 30,180 sqm
Main tenants Vacant - Sold in March 2024
Indexation n/a
WAULT (incl/ excl breaks) n/a
Property specifications Free height of 12-17m, 28 loading doors, floor load capacity of 5-7 t/sqm,
sprinklers, site cover of 29%, 6% office space, LED (partial)
40 Annual Report 2023
BORDEAUX
.
Bordeaux (260,000 inhabitants) is in the Gironde department at the
heart of the Nouvelle-Aquitaine region of south-west France. The A10
motorway connects Bordeaux to Paris, Orleans, and Niort to the north.
The A62 and A63 motorways to the south connect Toulouse and Spain
respectively
.
Cross-docked parcel hub facility built in 2005
.
Low site density of c22%
.
Acquired as part of portfolio of three assets let to Dachser France
SPA signed/ closing Dec 21 / Sep 22
Year of construction 2005
Net leasable area 6,504 sqm
Main tenants Dachser France
Indexation 100% ILAT (annual)
WAULT (incl/ excl breaks) 5.1 / 8.1 years
Property specifications Traditional, lower-eaves, cross-docked facility. 89 loading bays, low site
cover. Full circulation
DIJON
.
Dijon (160,000 inhabitants) is in the Cote d’Or department of the
Bourgogne – Franche-Comte region of France. Well located to
connect the east of France and its trade routes with Switzerland,
Germany and Luxembourg and central France using the A31, A38,
A39 and E17 routes
.
Cross-docked parcel hub facility built in 2004
.
Low site density of c17%
.
Acquired as part of portfolio of three assets let to Dachser France
SPA signed/ closing Dec 21 / Sep 22
Year of construction 2004
Net leasable area 5,069 sqm
Main tenants Dachser France
Indexation 100% ILAT (annual)
WAULT (incl/ excl breaks) 6.0 / 9.0 years
Property specifications Traditional, lower-eaves, cross-docked facility. 80 loading bays, low site
cover. Full circulation
41Annual Report 2023
NIORT
.
Niort (177,000 inhabitants) is in the Deux-Sevres department of the
Nouvelle Aquitaine region of France. The A10, A83 routes link Niort to
Paris, Bordeaux, Orleans, and Nantes
.
Cross-docked parcel hub facility built in 2014
.
Very low site cover of c9%
.
Acquired as part of portfolio of three assets let to Dachser France
SPA signed/ closing Dec 21 / Sep 22
Year of construction 2014
Net leasable area 3,939 sqm
Main tenants Dachser France
Indexation 100% ILAT (annual)
WAULT
1
(incl/ excl breaks) 8.0 / 11.0 years
Property specifications Traditional, lower-eaves, cross-docked facility. 34 loading bays, low site
cover. Full circulation
GERMANY
ERLENSEE
.
Two logistics buildings on a new logistics hub to the West of the
Frankfurt Rhine-Main region (6m inhabitants) with other companies
like Dachser and Wilhelm Brandenburg Group located close by.
Acquired off-market via forward funding
.
The asset comprises two modern multi-let logistics buildings
.
Limited logistics supply in Rhine-Main region offers platform for strong
rental growth prospects
SPA signed/ closing Jun 18 / Feb 19
Year of construction 2018
Net leasable area 26,700 sqm
Main tenants Bergler, DS Smith, MSG Frucht, Raben
Indexation Threshold indexations with combination of 5%/80% and 10%/80%
WAULT (incl/ excl breaks) 4.2 / 4.2 years
Property specifications Free height of 10.5m, 50 loading doors, sprinklers, floor load capacity of
5 t/sqm, 10% office space, LED
42 Annual Report 2023
FLÖRSHEIM
.
Prime multi-let logistics park built in 2015 and located to the East of the
Frankfurt Rhine-Main region (6m inhabitants), just 15 kilometres from
Frankfurt airport. Acquired via forward funding
.
Project comprises two modern multi-let logistics buildings of 10,762
and 7,047 sqm
.
Limited logistics supply in Rhine-Main region creating space for
future growth
SPA signed/ closing Dec 17 / Feb 18
Year of construction 2015
Net leasable area 17,809 sqm
Main tenants Ernst Schmitz, Maintrans, Duhome, Hangcha, Horiba
Indexation 100% CPI (annual) and 1 lease with threshold indexation (5%/80%)
WAULT (incl/ excl breaks) 4.3 / 4.3 years
Property specifications Free height of 10m, 22 loading doors, floor load capacity of 5 t/sqm,
sprinklers, 11% office space, LED (partial)
THE NETHERLANDS
EDE
.
Ede (112,000 inhabitants) very centrally located in the Netherlands
and well positioned for national distribution
.
One part of the building (30% of total) was fully renewed in 2018 with a
new floor and installations
.
Kruidvat is part of the AS Watson Group with this location supporting
their growing e-commerce business
SPA signed/ closing Aug 18 / Aug 18
Year of construction 1999 / 2005
Net leasable area 39,569 sqm
Main tenants Kruidvat
Indexation 100% CPI (annual) cap at 4%
WAULT (incl/ excl breaks) 9.7 / 9.7 years
Property specifications Free height of 12.2m, 23 loading doors, floor load capacity of 2.5-10.0 t/sqm,
sprinklers, 8% office space, LED
43Annual Report 2023
DEN HOORN
.
Den Hoorn is in the most densely populated area in the Netherlands in
the Rotterdam/ the Hague metropolitan area (2.7 million inhabitants)
and easily accessible by motorway
.
Modern, flexible warehouse with excellent specifications and full solar
PV coverage
SPA signed/ closing Dec 19 / Jan 20
Year of construction 2020
Net leasable area 42,570 sqm
Main tenants Van der Helm
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 6.3 / 6.3 years
Property specifications Free height of 12.2 meters, 36 loading doors, floor load capacity of
5t/ sqm, 11% office space, LED, sprinklers, solar panels
OSS
.
Oss (86,000 inhabitants) is strategically located between port of
Rotterdam and Ruhr area and ranked as number 7 logistics hotspot in
the Netherlands
.
Established logistics location with large companies such as Montea
Logistics, Vos Logistics, Heineken, Vetipak, Movianto and Mediq
.
Forward funded project
SPA signed/ closing Oct 18 / Jul 19
Year of construction 2019
Net leasable area 12,383 sqm
Main tenants Orangeworks
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 10.5 / 10.5 years
Property specifications Free height of 10m, 5 loading doors with option to create 10 more,
floor load capacity of 5 t/sqm, sprinklers, 14% office space, LED
44 Annual Report 2023
‘S HEERENBERG
.
Located in an exciting logistics hub close to A12 highway and Emmerich
barge terminal in Germany. 3PL providers keen to locate close to
NL-GER border with advantages in customs and employment flexibility
.
Grade A warehouse and cross-dock with offices. Total site is
45,000 sq metres
SPA signed/ closing Jun 19 / Jul 19
Year of construction 2009/ 2011
Net leasable area 23,031 sqm
Main tenants JCL Logistics
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 8.0 / 8.0 years
Property specifications Warehouse free height 12m, cross-dock 5.5m. 40 loading doors,
floor-load capacity 3.0-4.0 t/sqm, LED (partial), sprinklers
WADDINXVEEN
.
Waddinxveen is centrally located in the Randstad conurbation
(8 million consumers within 1 hour’s driving distance) and ranked
as number 5 logistics hotspot in the Netherlands
.
Established, strategic location due to large concentration of
greenhouses. Combilo is a specialist in the import and export and
packaging of fruit/vegetables for supermarkets/wholesale
.
Cross-dock warehouse of with ample loading doors on both sides
.
Additional warehouse c2,500 sq m added to holding on same lease
terms completed in 2022
SPA signed/ closing Nov 18 / Nov 18
Year of construction 1983/ 1994/ 2002/ 2018 / 2022
Net leasable area 31,631 sqm
Main tenants Combilo International
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 9.9 / 9.9 years
Property specifications Cross-dock with 51 loading doors, free height 7-11m, sprinklers, floor load
capacity 1.0 - 3.5 t/sqm, 6% office space, LED (partial), solar panels (partial)
45Annual Report 2023
ZEEWOLDE
.
Zeewolde is a town with 23,000 inhabitants located in the heart of the
Netherlands in the province of Flevoland and close to Almere, the fastest
growing municipality in the Netherlands (197,000 inhabitants, forecast:
350,000) and Lelystad (96,000 inhabitants)
.
Region is ranked as number 6 logistics hotspot in the Netherlands and
benefits from the expansion of Lelystad airport and further critical mass
in the logistics supply
SPA signed/ closing Nov 18 / Jun 19
Year of construction 2019
Net leasable area 35,898 sqm
Main tenants Aalberts Integrated Piping Services
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 10.5 / 10.5 years
Property specifications Free height of 12.2m, 37 loading doors, floor load capacity of 5 t/sqm,
BREAAM Very Good, sprinklers, 4% office space, LED
HORST
.
Horst is a town and municipality with 43,000 inhabitants located in the
south of the Netherlands in the province of Limburg. The property is
well located between Venlo 8km south and Venray 7km north on
the A73
.
The area is famed for its support of the agrifood and agriculture
economies
.
Well-specified unit with 12 loading docks and ancillary offices. Low site
cover on a 40,593 sq m plot
SPA signed/ closing Sep 22 / Sep 22
Year of construction 2005
Net leasable area 6,904 sqm
Main tenants Limax
Indexation 100% CPI (annual, cap 100% to 2%, and 50% at 2-3%)
WAULT (incl/ excl breaks) 8.7 / 8.7 years
Property specifications Free height of 9m, 12 loading doors, floor load capacity of 30 kN/sqm
46 Annual Report 2023
POLAND
KRAKOW
.
Krakow is the 2nd largest city in Poland with 760,000 inhabitants and
characterised by a relatively affluent population, the dominance of
added value industries, a strong education infrastructure and business
friendly policy
.
The Polish logistics market is strong benefitting from being the largest
economy within the Central and Eastern European block with a lower
cost labour force
.
Modern, multi-tenant building with excellent specifications
SPA signed/ closing Feb 19 / Feb 19
Year of construction 2018
Net leasable area 34,932 sqm
Main tenants Agata, Lynka, Max Fliz, DS Smith, Gebrüder Weiss, BRB, Chefs Culinar, IDC
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 2.6 / 2.6 years
Property specifications Free height of 12m, 70 loading doors, floor load capacity of 5 t/sqm,
sprinklers, 11% office space, LED
WARSAW
.
Warsaw is the wealthiest and largest, most urbanised area in Poland
with a population size of 1.8 million making it attractive for parcel
delivery specialists such as DHL
.
The Polish logistics market is strong benefitting from being the largest
economy within the Central and Eastern European block with a lower
cost labour force
.
Modern, logistics scheme consisting of two Grade A logistics buildings.
One building is cross-docking warehouse for the e-commerce
activities of DHL (over 50% of total rent), the other is a traditional
warehouse sub-divided to form 3 units
SPA signed/ closing Oct 19
Year of construction 2019
Net leasable area 24,690 sqm
Main tenants DHL, ICS, DBK, Spedimex
Indexation 100% Euro CPI (annual)
WAULT (incl/ excl breaks) 4.2 / 4.2 years
Property specifications Free height of 10m in warehouse and 7.5m in cross-dock, 60 loading doors,
floor load capacity of 5 t/sqm, LED, 9% office space, solar panels (partial)
47Annual Report 2023
LODZ
.
Lodz is the 3rd largest logistics city in Poland (with 750,000 inhabitants)
and centrally located alongside main motorways and Europe’s key
railway link to China
.
Multi-tenanted building with several occupiers having a direct link
with the Bosch/ Siemens Campus and Dell factory creating a stable
tenant base
.
Lodz is one of the core markets in Poland with a low vacancy rate
SPA signed/ closing April 2021
Year of construction 2020
Net leasable area 31,512
Main tenants Bilplast, Compal, EGT, Kan, Mecalit, Tabiplast, Alfa Laval
Indexation 100% EU CPI (annual)
WAULT (incl/ excl breaks) 4.5 / 4.5 years
Property specifications 10.0m clear height, 5T floor load, LEDs, sprinklers, 56 loading doors,
yard depth of 35m, 6% office space, solar panels
SPAIN
BARCELONA
.
Barcelona is the 2nd most populous city in Spain with the fastest
growing seaport in Europe
.
Asset located 20 minutes from the city centre
.
Undersupplied market practically zero vacancy in the 1st ring.
Physical supply constraints with sea/ mountains surrounding
.
Asset is highly reversionary
SPA signed/ closing July 2021
Year of construction 2019
Net leasable area 13,907 sqm
Main tenants Mediapost
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 2.5 / 5.5 years
Property specifications 11.0m clear height, 5T floor load, LEDs, sprinklers, 10 loading doors,
yard depth of 35m, 6% office space, solar panels
48 Annual Report 2023
MADRID - COSLADA
.
Madrid, the third largest city in Europe with a metropolitan population of
almost seven million people
.
Coslada is perfectly located for last-mile logistics with its location between
the city centre and adjacent to the airport
.
Cross-dock warehouse with loading doors at both sides
.
Leased out to DHL who have occupied this building since it was constructed
SPA signed/ closing December 2021
Year of construction 1999
Net leasable area 6,805 sqm
Main tenants DHL
Indexation 100% CPI (annual)
WAULT (incl/ excl breaks) 3.0 / 7.0 years
Property specifications Free height of 10.5m, cross-dock with 12 loading bays at the front and
25 doors at the back, floor load capacity of 5 t/sqm, 20% office space
MADRID – GAVILANES 1A
.
Urban logistics hub located in southern Madrid, the third largest city in
Europe with a metropolitan population of almost seven million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the A-4
motorway (Spain’s main north-south motorway)
SPA signed/ closing December 2021
Year of construction 2019
Net leasable area 21,713 sqm
Main tenants Talentum
Indexation 100% CPI (annual, capped at 3%)
WAULT (incl/ excl breaks) 6.1 / 6.1 years
Property specifications 11.2m clear height, LEDs, sprinklers, 5T floor load, yard depth >33m and
9% office space, LEED Silver rating
49Annual Report 2023
MADRID – GAVILANES 1B
.
Urban logistics hub located in southern Madrid, the third largest city in
Europe with a metropolitan population of almost seven million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the A-4
motorway (Spain’s main north-south motorway)
.
Amazon relocated from Gavilanes 1B to phase 4
SPA signed/ closing December 2021
Year of construction 2019
Net leasable area 11,264 sqm
Main tenants Vacant (since Aug 2023)
Indexation n/a
WAULT (incl/ excl breaks) n/a
Property specifications 11.2m clear height, LEDs, sprinklers, 5T floor load, yard depth >33m and
8% office space, LEED Silver rating
MADRID – GAVILANES 2A
.
Urban logistics hub located in southern Madrid, the third largest city in
Europe with a metropolitan population of almost seven million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the A-4
motorway (Spain’s main north-south motorway)
SPA signed/ closing December 2021
Year of construction 2020
Net leasable area 9,512 sqm
Main tenants Carrefour
Indexation 100% CPI (annual, capped at 2%)
WAULT (incl/ excl breaks) 2.6 / 12.6 years
Property specifications 11.2m clear height, 5T floor load, LEDs, sprinklers, yard depth of 55m and
13.6% office space, LEED silver rating
50 Annual Report 2023
MADRID – GAVILANES 2B
.
Urban logistics hub located in southern Madrid, the third largest city in
Europe with a metropolitan population of almost seven million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the A-4
motorway (Spain’s main north-south motorway)
SPA signed/ closing December 2021
Year of construction 2020
Net leasable area 7,718 sqm
Main tenants MCR
Indexation 100% CPI (annual, uncapped)
WAULT (incl/ excl breaks) 1.5 / 1.5 years
Property specifications 11.2m clear height, 5T floor load, LEDs, sprinklers, yard depth of 55m and
13.6% office space, LEED silver rated
MADRID – GAVILANES 2C
.
Urban logistics hub located in southern Madrid, the third largest city in
Europe with a metropolitan population of almost seven million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the A-4
motorway (Spain’s main north-south motorway)
SPA signed/ closing December 2021
Year of construction 2020
Net leasable area 7,375 sqm
Main tenants ADER
Indexation 100% CPI (annual, uncapped)
WAULT (incl/ excl breaks) 1.5 / 3.5 years
Property specifications 11.2m clear height, 5T floor load, LEDS, sprinklers, yard depth of 55m and
13.6% office space, LEED silver rated
51Annual Report 2023
MADRID – GAVILANES 3A/B/C
.
Urban logistics hub located in southern Madrid, the third largest city in
Europe with a metropolitan population of almost seven million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the A-4
motorway (Spain’s main north-south motorway)
.
Property comprises two adjacent warehouse buildings of 16,500 sq m
and 10,665 sq m (which can be split)
SPA signed/ closing December 2021
Year of construction 2019
Net leasable area 27,165 sqm
Main tenants Arrival (Lease surrendered in February 2024)
1
Indexation n/a
WAULT (incl/ excl breaks) n/a
Property specifications 11.2m clear height, 5T floor load, LEDs, sprinklers, yard depth of 31 - 45m
and 11% office space, LEED Gold rating
1
Reflecting the ongoing demand for Grade-A, highly sustainable logistics space in Spain, the Company agreed a new lease for 5,131 sqm of the space, at a rent 8.7% above the
previous passing rent, with Spanish transportation company METHOD Advanced Logistics.
MADRID – GAVILANES 4
.
Urban logistics hub located in southern Madrid, the third largest city in
Europe with a metropolitan population of almost seven million people
.
Property is located in Gavilanes, just 17km south of the city centre,
alongside the M-50 motorway (Madrid ring road) intersecting the A-4
motorway (Spain’s main north-south motorway)
.
Amazon parcel delivery hub, optimised for last mile deliveries, including
multi-level van parking deck fully prepared for electric charging
capability and canopy with numerous van loading areas
SPA signed/ closing December 2021
Year of construction 2022
Net leasable area 16,467 sqm + 20,748 sqm parking deck
Main tenants Amazon
Indexation 100% CPI (annual, capped at 3%)
WAULT (incl/ excl breaks) 13.3 / 23.3 years
Property specifications 11.0m clear height, 7.5T floor load, LEDs, sprinklers, yard depth of 41m
and 19% office space, BREEAM Very Good rating expected
52 Annual Report 2023
Group Structure
53Annual Report 2023
Strategic Report
Group Structure
As at 31 December 2023
100%
100%
100%
100%
100%
100%
Madrid - Coslada
Barcelona
Waddinxveen
ASELI
Waddinxveen B.V
Flörsheim
ASELI
Flörsheim B.V
ASELI
Leon B.V
Erlensee
ASELI
Erlensee B.V
Ede
Oss
ASELI
Netherlands I B.V
Holding 100%
less 1 share
ASELI
Meung SCI
Meung Sur Loire
Avignon
ASELI
Avignon SCI
abrdn European Logistics Income plc
(UK Investment Trust)
Poland
France
The Netherlands England & Wales Spain
ASELI France
Holding SAS
100%
Zeewolde
ASELI
Netherlands II B.V
100%
's Heerenberg
ASELI
‘s Heerenberg B.V
100%
100%
PDC Industrial
Centre 92
Sp. z o.o
Warsaw
100%
Circulus
Investments SP
z.o.o.
Lodz
PDC Industrial
Centre 72
Sp. z o.o
Krakow
Den Hoorn
ASELI
Netherlands
Holdings B.V
100%
100%
ASELI
Den Hoorn BV
ASELI Madrid
Holding S.L
Madrid -
Gavilanes 1
100%
aELI Madrid
Logistics 1 S.L.U
Madrid -
Gavilanes 2
Madrid -
Gavilanes 3
Holding 1 share
Holding 1 share
aELI
Immobilier SCI
Dijon
aELI
Messageries SCI
Niort
Bordeaux
Holding 1 share
Holding 1 share
aELI Madrid
Holdings 2 S.L
Madrid -
Gavilanes 4
aELI Madrid
Logistics 2 S.L.U
100% 100%
100%
Legal entity country of domiciliation
54 Annual Report 2023
100%
100%
100%
100%
100%
100%
Madrid - Coslada
Barcelona
Waddinxveen
ASELI
Waddinxveen B.V
Flörsheim
ASELI
Flörsheim B.V
ASELI
Leon B.V
Erlensee
ASELI
Erlensee B.V
Ede
Oss
ASELI
Netherlands I B.V
Holding 100%
less 1 share
ASELI
Meung SCI
Meung Sur Loire Avignon
ASELI
Avignon SCI
abrdn European Logistics Income plc
(UK Investment Trust)
Poland
France
The Netherlands England & Wales Spain
ASELI France
Holding SAS
100%
Zeewolde
ASELI
Netherlands II B.V
100%
's Heerenberg
ASELI
‘s Heerenberg B.V
100%
100%
PDC Industrial
Centre 92
Sp. z o.o
Warsaw
100%
Circulus
Investments SP
z.o.o.
Lodz
PDC Industrial
Centre 72
Sp. z o.o
Krakow
Den Hoorn
ASELI
Netherlands
Holdings B.V
100%
100%
ASELI
Den Hoorn BV
ASELI Madrid
Holding S.L
Madrid -
Gavilanes 1
100%
aELI Madrid
Logistics 1 S.L.U
Madrid -
Gavilanes 2
Madrid -
Gavilanes 3
Holding 1 share
Holding 1 share
aELI
Immobilier SCI
Dijon
aELI
Messageries SCI
Niort
Bordeaux
Holding 1 share
Holding 1 share
aELI Madrid
Holdings 2 S.L
Madrid -
Gavilanes 4
aELI Madrid
Logistics 2 S.L.U
100% 100%
100%
Legal entity country of domiciliation
55Annual Report 2023
Environment, Social and
Governance (ESG)
The management of Environmental, Social and Governance issues is a fundamental
part of our business.
56 Annual Report 2023
Strategic Report
Sustainability, Impact and Futureproofing –
company approach
The Company believes that comprehensive assessment
of ESG factors leads to better outcomes for shareholders
and adopts the Investment Manager’s policy and
approach to integrating ESG which has been used as
the basis for establishing the Company’s ESG objectives.
The Investment Manager views ESG as a fundamental
part of its business. Whilst real estate investment provides
valuable economic benefits and returns for investors it has
– by its nature – the potential to affect environmental and
social outcomes, both positively and negatively.
The Investment Manager’s approach is underpinned by
the following three over-arching principles:
1. Transparency, Integrity and Reporting: being
transparent in the ways in which it communicates
and discusses its strategy, approach and performance
with investors, tenants and other stakeholders.
2. Capability and Collaboration: drawing together
and harnessing the capabilities and insights of the
Investment Manager’s platforms, with those of its
investment, supply chain and industry partners.
3. Investment Process and Asset Management:
integrating ESG into decision making, governance,
underwriting decisions and asset management
approach. This includes the identification and
management of material ESG risks and opportunities
across the portfolio.
Under principle 3, of particular focus to the Company
is climate change, which represents one of the most
material ESG issues, both in terms of physical climate risk,
and reducing the emissions from the Company’s activities
(i.e. addressing transition risks). The Company has set
a Net Zero Carbon target of 2050 across all emissions
(Scopes 1, 2 and 3), and the Company’s strategy for
achieving Net Zero Carbon is fully detailed on page 75.
Planet
Environment & Climate
Change
Biodiversity Vulnerability and Inclusion Diversity and Labour Rights Digital Connectivity
Outdoor Air Quality Accessibility and Experience Occupier Quality Smart Connectivity
Public Realm and Cultural Value Occupier
Waste and Circularity
Land and Water Contamination Affordability Occupier Engagement Physical Connectivity
Noise Pollution Employment, Skills and Enterprise Partnerships
Water Efficiency
Climate Resilience
People
Demographics
Process
Governance and
Engagement
Progress
Technology and
Infrastructure
Carbon and Energy
57Annual Report 2023
This section discloses the Company’s commitments and
obligations to disclose ESG performance information
in line with both voluntary and regulatory reporting
frameworks. It includes:
Voluntary reporting:
.
EPRA Sustainability Best Practice Recommendations
.
Global Real Estate Sustainability (GRESB) Benchmark
performance
Regulatory reporting:
.
Streamlined Energy and Carbon Reporting (SECR)
.
Sustainable Finance Disclosure Regulation (SFDR)
.
Taskforce for Climate-related Financial Disclosure (TCFD)
Sustainability Performance
This section details the Company’s sustainability
performance using the EPRA Sustainability Best Practice
Recommendations Guidelines (sBPR). It also meets
the requirements for Streamlined Energy and Carbon
Reporting (SECR) under the Companies (Directors’
Report) and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018.
EPRA Sustainability Best Practice
Recommendations
The Company has adopted the 2017 EPRA Sustainability
Best Practice Recommendations Guidelines (sBPR) to
inform the scope of indicators reported against.
The Company has reported against all EPRA sBPR
indicators that are material to it. The Company also
reports additional data not required by the EPRA sBPR
where it believes this to be relevant (e.g. like-for-like
greenhouse gas emissions).
A full outline of the scope of reporting and materiality
review in relation to EPRA sBPR indicators is included below.
The portfolio comprises predominantly tenant-controlled
assets, where the vast majority is outwith the Company’s
direct control. Where the Company does have control,
it has full coverage of data, which is disclosed in the
EPRA tables below. The GHG emissions have been
calculated, in line with the guidance from the GHG
Protocol, by multiplying the energy consumption for each
asset with the carbon emissions factor for the national
grid relevant to the asset. The emissions factors have been
provided by the International Energy Agency (IEA).
The ESG dataset (including energy, GHG and water
data) disclosed in this report has been subject to limited
assurance by an external third-party in accordance with
the International Standard on Assurance Engagements
(UK) 3000.
Explanatory notes on methodology
Reporting period
The Company was launched in December 2017 with the
first asset acquired in February 2018. Sustainability data in
this report covers the calendar years of 2022 and 2023.
Changes to disclosure methodology vs last year
In previous Company annual reports, EPRA ESG
disclosures have included both landlord ESG data
(e.g. Scope 1 and 2 GHG emissions) and tenant ESG
data (e.g. Scope 3 GHG emissions) for the reporting
year. However, collecting a complete, accurate and
meaningful ESG dataset from tenants which is directly
comparable/consistent with the previous year, within the
annual reporting timescales, is challenging. This results
in the collection of incomplete data, which is not possible
to disclose in a meaningful way, especially in terms of
year-on-year comparisons. This also results in a need for
additional tenant ESG data collection following annual
report publishing, which results in subsequent inconsistent
ESG data disclosures throughout the year (e.g. when
GRESB data is compared with annual reporting data).
As a result, for the EPRA disclosures in this year’s annual
report, the focus has been on collecting and reporting
landlord ESG data only, given that this data is within the
Company’s direct control, and therefore fully complete;
resulting in more meaningful disclosures and year-on-
year comparisons. It should be noted that landlord ESG
data for the portfolio is relatively limited, given the tenant-
controlled nature of the assets.
Organisational boundary and data coverage
The Company defines its organisational boundary
as where it has direct operational control of activities.
The Company’s disclosures in this report are therefore
confined to where it has direct control over a given ESG
indicator; for example where the Company procures its
own utilities for its assets under management. Given the
nature of the Company’s assets (predominantly single-
let, occupier-controlled assets with occupier-managed
utility supplies), there is naturally a relatively limited
selection of ESG indicators to report which are directly
under the Company’s control. However, where such ESG
indicators do fall within the Company’s organisational
boundary, these have been disclosed in full in this report.
Note that the Investment Manager undertakes extensive
work throughout the first half of each year to collect
ESG data points beyond its direct control/organisational
boundary (e.g. occupier procured utility data), which are
disclosed as part of the Company’s GRESB submission,
the reporting for which is issued later in the year.
Strategic Report
Transparency, Integrity and Reporting
58 Annual Report 2023
The data reported below differs from the annual carbon
footprint reported. This is because:
.
The annual carbon footprint relates to the reporting
year of 2022 (whereas the data disclosed in this section
relates to 2022 and 2023); and,
.
The annual carbon footprint includes estimates in order
to fill gaps in occupier data, to allow us to obtain a fuller
understanding of the Company carbon footprint across
all emissions scopes.
The like-for-like portfolio is determined on the basis of
assets that were held for two full reporting years and were
not subject to major refurbishment or development during
that time.
The Company does not manage any of the waste
generated from any of its assets; rather the occupiers
manage this directly (and therefore such waste
performance data falls beyond the Company’s
organisational boundary, and is therefore not disclosed in
this report). The Company does not employ any staff and
does not have its own premises; these corporate aspects
fall within the scope of the Investment Manager.
Normalisation
The floor areas used for normalisation are those used for
independent valuation purposes. Measurement practices
deviate marginally from jurisdiction to jurisdiction but cover
the internal lettable area. This is the most appropriate
choice for the Company’s portfolio as it is the most widely
available metric. It enables year-on-year comparisons
within the portfolio to be made.
Auditing and assurance
An increasing proportion of landlord utility data contracts
are owned by the Company’s Utilities Bureau/data
consultant, who also validates this data (which feeds into
the Company’s sustainability reporting). The ESG dataset
(including energy, GHG and water data) disclosed in
this report has been subject to limited assurance by an
external third-party in accordance with the International
Standard on Assurance Engagements (UK) 3000.
Materiality
The Company has undertaken a review of materiality against each of the EPRA sBPR indicators. The table below
indicates the outcome of the review.
Code Performance measure Review outcome
Environmental
Elec-Abs Total electricity consumption Material (for the electricity procured for
the assets by the landlord only)
Elec-LfL Like-for-like total electricity consumption Material (for the electricity procured for
the assets by the landlord only)
DH&C-Abs Total district heating & cooling consumption Not material – none of the Company’s
assets are connected to district heat
supplies
DH&C-LfL Like-for-like total district heating & cooling consumption
Fuels-Abs Total fuel consumption Material (for the fuel (e.g. gas) procured
for the assets by the landlord only)
Fuels-LfL Like-for-like total fuel consumption Material (for the fuel (e.g. gas) procured
for the assets by the landlord only)
Energy-Int Building energy intensity Material (for the energy procured for
the assets by the landlord only)
GHG-Dir-Abs Total direct greenhouse gas (GHG) emissions Material (for Scope 1 and 2 GHGs only,
associated with utility consumption
under landlord control/procurement)
GHG-Indir-Abs Total indirect greenhouse gas (GHG) emissions Material (for Scope 1 and 2 GHGs only,
associated with utility consumption
under landlord control/procurement)
GHG-Int Greenhouse gas (GHG) emissions intensity from
building energy consumption
Material (for Scope 1 and 2 GHGs only,
associated with utility consumption
under landlord control/procurement)
59Annual Report 2023
Code Performance measure Review outcome
Water-Abs Total water consumption Material (for the water procured for the
assets by the landlord only)
Water-LfL Like-for-like total water consumption Material (for the water procured for the
assets by the landlord only)
Water-Int Building water intensity Material (for the water procured for the
assets by the landlord only)
Waste-Abs Total weight of waste by disposal route Not material – all waste management is
under the direct control of the building
occupiers, and there are no landlord
managed waste contracts.
Waste-LfL Like-for-like total weight of waste by disposal route Not material – all waste management is
under the direct control of the building
occupiers, and there are no landlord
managed waste contracts.
Cert-Tot Type and number of sustainably certified assets Material
Social
Diversity-Emp Employee gender diversity Not material – the Company has no
employees. There are 2 male and 2
female directors on the board
Diversity-Pay Gender pay ratio Material - the gender pay ratio is 53/47
male to female. Of the two male and
two female board members, one male
is the company Chair with greater
responsibilities and consequently higher
remuneration.
Emp-Training Employee training and development Not material (there are no company
employees)
Emp-Dev Employee performance appraisals Not material (there are no company
employees)
Emp-Turnover New hires and turnover Not material (there are no company
employees)
H&S-Emp Employee health and safety Not material (there are no company
employees)
H&S-Asset Asset health and safety assessments Material
H&S-Comp Asset health and safety compliance Material
Comty-Eng Community engagement, impact assessments and
development programs
Not Material
Governance
Gov-Board Composition of the highest governance body
Material – see main body of report
(page 79 onwards for content related to
Governance)
Gov-Selec Process for nominating and selecting the highest
governance body
Gov-CoI Process for managing conflicts of interest
60 Annual Report 2023
This section provides a wide range of metrics to track ESG performance and also includes those metrics listed as material
in the EPRA materiality table.
Please note that some of the 2022 data listed below has been updated from what was reported in the last annual report
due to additional data becoming available which wasn’t available last year.
Absolute Energy Consumption
Due to the nature of the portfolio, the landlord energy data disclosed in this table is typically associated with common parts
at multi-let assets (except for Poland where the landlord procures energy for the whole asset). Whilst the coverage figure
states that there is data for 12 of 27 assets owned during the year, there is 100% data coverage for landlord data, it is just
that there is only landlord procured energy for 12 of the assets. The energy consumption tables do not include any tenant
procured energy.
Absolute landlord electricity consumption increased by 2% year-on-year, primarily driven by the vacancy at Meung Sur
Loire which meant that the landlord now procures the energy for this site whereas the tenant did so previously, alongside
additional increases at Warsaw and Erlensee. These increases were offset by reductions in electricity consumption at Ede,
Madrid 3 S.L Getafe Phase I and Madrid 4 S.L Getafe Phase II.
Landlord gas consumption decreased by 31% due to decreases in consumption at all assets with the exception of
Meung Sur Loire where the landlord wasn’t previously responsible for energy procurement.
Absolute energy intensity decreased by 35% year-on-year.
Landlord Electricity
(kWh)
Landlord-obtained Gas
(kWh)
Total Energy
(kWh)
Energy Intensity
(kWh/ sqm)
Indicator references Elec-Abs Fuels-Abs Fuels-Abs Energy-Int
Sector
Coverage
2022
(assets)
Coverage
2023
(assets) 2022 2023
%
Change 2022 2023
%
Change 2022 2023
%
Change 2022 2023
%
Change
Industrial, Distribution
warehouse 10 of 27 12 of 27 11,294,621 11,490,690 2% 7,090,657 4,883,648 -31% 18,385,278 16,374,337 -11% 95 62 -35%
Absolute Greenhouse Gas Emissions
Scope 1 emissions reduced by 31% year on year, driven by reductions in gas consumption outlined above. Scope 2
emissions decreased by 6% year-on-year, as a result of lower carbon emissions factors for 2023 for the national grids
where the assets are situated. Absolute emissions intensity decreased by 34% between 2022 and 2023.
Scope 1 Emissions
(tCO
2
e
)
Scope 2 Emissions
(tCO
2
e
)
Total Emissions
(tCO
2
e
)
Emissions Intensity -
Scopes 1 & 2
(kgCO
2
e
/m
2
)
Indicator references GHG-Dir-Abs GHG-Indir-Abs GHG-Abs GHG-Int
Sector
Coverage
2022
(assets)
Coverage
2023
(assets) 2022 2023
%
Change 2022 2023
%
Change 2022 2023
%
Change 2022 2023
%
Change
Industrial, Business
Parks 10 of 27 12 of 27 1,294 893 -31% 6,252 5,846 -6% 7,546 6,739 -11% 39.1 25.6 -34%
SECR table - GHGs
Data Type 2022 2023 % Change 2023 vs 2022
Total Scope 1/2 GHG Emissions (tCO
2
e
) 7102 6837 -4%
Emissions Intensity (kgCO
2
e
/m
2
NLA) 36.8 26.0 -29%
Total Landlord Energy Consumption (kWh) 18,385,278 16,374,337 -11%
Strategic Report
ESG Indicators
61Annual Report 2023
Like-for-like Energy Consumption
The trends seen in the landlord like-for-like energy consumption are the same as in the absolute energy consumption,
as all assets with landlord procured energy supplies have been in the portfolio for two or more years. The like-for-like
energy intensity decreased by 11% which is significantly lower than the absolute energy intensity as the floor area
for 2022 in the like-for-like calculations includes Meung Sur Loire, where as the absolute 2022 floor area does not.
This difference means that the 2022 energy intensity for the like-for-like calculation is lower so the difference between
2022 and 2023 is also lower.
Landlord Electricity
(kWh)
Landlord-obtained Gas
(kWh)
Total Energy
(kWh)
Energy Intensity
(kWh/ sqm)
Indicator references Elec-Like for Like Fuels-Like for Like Fuels-Like for Like Energy-Int Like for Like
Sector
Coverage
(assets) 2022 2023
%
Change 2022 2023
%
Change 2022 2023
%
Change 2022 2023
%
Change
Industrial, Distribution
warehouse 12 of 22 11,294,621 11,490,690 2% 7,090,657 4,883,648 -31% 18,385,278 16,374,338 -11% 70 62 -11%
Like-for-like GHG Emissions
The trends seen in the scope 1 & 2 like-for-like emissions are the same as in the absolute emissions, as all assets with
associated scope 1 and 2 have been in the portfolio for two or more years. The like-for-like emissions intensity decreased
by 5% which is significantly lower than the absolute energy intensity as the floor area for 2022 in the like-for-like
calculations includes Meung Sur Loire, where as the absolute 2022 floor area does not. This difference means that the
2022 energy intensity for the like-for-like calculation is lower so the difference between 2022 and 2023 is also lower.
Scope 1 Emissions
(tCO
2
e
)
Scope 2 Emissions
(tCO
2
e
)
Total Emissions
(tCO
2
e
)
Emissions Intensity -
Scopes 1 & 2
(kgCO
2
e
/m
2
)
Indicator references GHG-Dir-Like for Like GHG-Indir-Like for Like GHG-Like for Like GHG-Int-Like for Like
Sector
Coverage
(assets) 2022 2023
%
Change 2022 2023
%
Change 2022 2023
%
Change 2022 2023
%
Change
Industrial, Business Parks 12 of 22 1294 893 -31% 5808 5846 1% 7103 6739 -5% 27.0 25.6 -5%
Absolute Water Consumption
Absolute Water Consumption (m
3
)
Indicator reference Water-Abs; Water-Int
Sector
Coverage 2022
(assets)
Coverage 2023
(assets)
2022
(m
3
)
2022 intensity
(litres/m
2
)
2023
(m
3
)
2023 intensity
(litres/m
2
)
%
Change
Industrial, Distribution Warehouse 11 of 23 11 of 27 34,434 164 25,460 113 -31%
Like-for-like Water Consumption
Like-for-like Water Consumption (m
3
)
Indicator reference Water-Lfl; Water-Int
Sector
Coverage
(assets)
2022
(m
3
)
2022 intensity
(litres/m
2
)
2023
(m
3
)
2023 intensity
(litres/m
2
)
% Change
(Intensity)
Industrial, Distribution Warehouse 10 of 22 33,697 162 23,543 113 -30%
62 Annual Report 2023
Absolute and Like-for-Like Waste Generation
There are no landlord managed waste contracts in the portfolio. All waste is managed directly by occupiers, and
therefore is not considered within the Company’s organisational boundary. As a result, waste metrics have not been
reported on.
Renewable energy
Solar PV is installed at nine properties within the portfolio, please see below:
Property Country Comment
Avignon France Fully optimised
Barcelona Spain Minimal coverage but scope to optimise
Den Hoorn Netherlands Fully optimised
Ede Netherlands Fully optimised
Horst Netherlands Minimal coverage but scope to optimise
Oss Netherlands Minimal coverage but scope to optimise
Waddinxveen Netherlands Fully optimised
Zeewolde Netherlands Minimal coverage but scope to optimise
Sustainability Certifications
The below metric measures the percentage Gross Asset Value (GAV) of all properties held that have achieved a Green
Building rating/certificate on completion compared to the percentage GAV for the whole portfolio during the reporting
year. This includes stock recently acquired, held for the long-term and those refurbished, developed or forward funded.
2018 2019 2020 2021 2022 2023
% assets under management 17 39 40 55 69 68
Certified properties
Property Unit Certificate type Rating
Flörsheim Whole DGNB Gold
Avignon Whole HQE Excellent
Oss Whole BREEAM Very Good
Ede Whole BREEAM Good
Zeewolde Whole BREEAM Very Good
Waddinxveen Whole BREEAM Pass
Den Hoorn Whole BREEAM Good
Lodz Whole BREEAM Good
Madrid 3 S.L Gavilanes A Whole LEED Silver
Madrid 3 S.L Gavilanes B Whole LEED Silver
Madrid 4 S.L Gavilanes 1 Whole LEED Silver
Madrid 4 S.L Gavilanes 2 Whole LEED Silver
Madrid 4 S.L Gavilanes 3 Whole LEED Silver
63Annual Report 2023
Property Unit Certificate type Rating
Madrid 1 S.L Gavilanes 1 Whole LEED Gold
Madrid 1 S.L Gavilanes 2 Whole LEED Gold
Madrid 1 S.L Gavilanes IV Whole BREEAM Very Good
Energy Performance Certificate (EPC) ratings for assets owned by the Company are shown below:
Energy Performance Certificate (EPC) rating % Net Lettable Area (NLA)
A+++++ 9%
A 49%
B 30%
C 1%
D 0%
E 0%
F 2%
G 1%
German Rating 8%
Social Indicators
Diversity
The Board is diverse on a gender basis, comprising two males and two females. The gender pay ratio is 53/47 male to
female. Of the two male and two female board members, one male is the Company Chair with greater responsibilities
and consequently higher remuneration which skews the remuneration figures.
Health & Safety
All tenants occupying assets in the portfolio (i.e. 100% coverage) are contractually required, through lease agreements,
to comply with all relevant local and national legislation relating to Health & Safety. This includes Health and Safety
assessments relating to the asset itself and the health and safety of the tenants’ employees together with visiting
customers/clients/third parties.
64 Annual Report 2023
Streamlined Energy and Carbon Reporting
The reporting against the EPRA sBPR indicators included on pages 61 to 62 also includes disclosures required under
Streamlined Energy and Carbon Reporting (SECR) Regulation.
SECR table - GHGs
Data Type 2022 2023 % Change 2023 vs 2022
Total Scope 1 & 2 GHG Emissions (tCO2
e
) 7,102 6,837 -4%
Emissions Intensity (kgCO2
e
/m
2
NLA) 36.8 24.4 -34%
Total Landlord Energy Consumption (kWh) 18,385,278 16,308,479 -11%
Sustainable Finance Disclosure Regulation
(SFDR)
The Company falls in-scope of the EU’s Sustainable
Finance Disclosure Regulation, and is classed as an Article
8 Fund which does not have a sustainable investment
objective, but promotes environmental and social
characteristics as part of its investment process.
The Company’s periodic disclosure documentation
required as part of its SFDR obligations is shown within the
Corporate Information section of this document.
2023 GRESB Assessment
The GRESB Assessment is the leading global
sustainability benchmark for real estate
vehicles. The Company was reviewed by
GRESB in 2023 and achieved a score of 89
out of 100 points and placed 1st out of 6
within its peer group (achieving a 5-star
rating). The Company is in a strong position
to further build on this performance in 2024.
Taskforce for Climate-related Financial
Disclosure
TCFD was established to provide a standardised way to
disclose and assess climate-related risks and opportunities.
Recommendations are structured around four key topics:
Governance, Strategy, Risk Management and Metrics &
Targets. The Company is committed to implementing the
recommendations of the TCFD to provide investors with
information on climate risks and opportunities that are
relevant to the business. TCFD covers risks and opportunities
associated with two overarching categories of climate risk;
transition and physical:
.
Transition risks are those that relate to an asset, portfolio
or company’s ability to decarbonise. An entity can be
exposed to risks as a result of carbon pricing, regulation,
technological change and shifts in demand related to
the transition.
.
Physical risks are those that relate to an asset’s
vulnerability to factors such as increasing temperatures
and extreme weather events as a result of climate
change. Exposure to physical risks may result in, for
example, direct damage to assets, rising insurance costs
or supply chain disruption.
There is still significant uncertainty and methodological
immaturity in assessing climate risks and opportunities
and there is not yet a widely-recognised net zero
carbon standard. Nonetheless, the Company has
progressed already with work to model the implications
of decarbonising the portfolio in line with a 1.5°C scenario
(using the ‘Carbon Risk Real Estate Monitor’ (CRREM) as
a real-estate specific framework to measure against)
and undertaken analysis to understand potential future
physical climate risks.
There are different regulations in place that require
companies to disclose against various levels of TCFD
recommendations. Whilst the company does not fall
in scope of the ‘Companies (Strategic Report) (related
Finanical Disclosure) Regulations 2022’, the company
still voluntarily follows this framework, as best practice,
to provide an overview of the Company’s approach to all
11 TCFD recommendations. The below disclosure outlines
how the Company aligns with all 11 recommendations.
Note that this disclosure against the TCFD recommendations
is entirely voluntary. The company does, however, fall
under the regulatory framework created by the Financial
Conduct Authority (FCA) in Policy Statement 21/24, for
asset managers, life insurers and FCA-regulated pension
providers to make climate-related disclosures consistent
with the recommendations of the TCFD. In order to meet
this requirement, the Company is required to publish a
standalone TCFD report no later than June each year.
Please see the 2023 TCFD report for the Company at
invtrusts.co.uk/en-gb/prices-and-literature/company-
literature. Updated TCFD metrics are also included on
pages 66 to 71.
65Annual Report 2023
TCFD Recommendation Company Approach Further Information
Governance
Board oversight of
climate-related risks
and opportunities
Climate-related risks and opportunities are considered and assessed by the Board as a whole on a
quarterly basis, as advised by the Investment Manager and appointed consultants.
The Company has identified its most material potential risks, one of which relates to its investment
and asset management activity, and how ill-judged property investment decisions could expose the
Company to risk, including those associated with climate change.
The Board, alongside the Investment Manager, considers climate related risks and opportunities
relating to transitional and physical climate risk, as an integral part of the Investment and Asset
Management Process. This includes review of such risks and opportunities during acquisition
ESG due diligence (at the pre-bid and exclusivity phase), and during annual Company strategic
planning, which is the process by which risks and opportunities against various ESG indicators
(including climate indicators) are identified across the portfolio, and strategic goals are set.
Risk Management
section on page 57.
Management’s role
in assessing and
managing climate-
related risks and
opportunities
The Investment Manager’s ESG approach groups material sustainability indicators into four
main categories: (i) Environment & Climate, (ii) Demographics; (iii) Governance & Engagement;
and (iv) Technology & Infrastructure. This approach allows the identification and promotion
(where relevant) of material ESG risks and opportunities relevant to a fund’s investment
strategy, sector and geography. These guide the prioritisation and integration of ESG factors
at the fund and asset level, whilst providing a structure for engagement with, and reporting
to stakeholders. Of these ESG factors, climate change represents one of the most material
ESG risks and opportunities that the Company’s real estate portfolio considers as part of its
investment process. The Investment Manager’s ‘Blueprint for addressing climate change’, which
details its approach to climate risk, is available on the website here https://www.abrdn.com/
docs?editionId=42ec6ae7-d171-4a81-a0ac-1f06106c86b4.
At an operational level, the Investment Manager is responsible for integrating consideration of
climate risks and opportunities into the investment and asset management process. The Company
adopts the Investment Manager’s approach to integrating ESG in the investment process, and
climate related risks and opportunities are considered the most material ESG topic relating to
the Company. As such, climate risk and opportunities are considered throughout the investment
process, including during acquisitions, asset/property management, refurbishment/development
and fund strategic planning.
A range of governance mechanisms exist which are used to ensure that (a) the Investment Manager’s
approach and house-view on climate risk approaches is cascaded down from the senior leadership
team to the real estate and Company level; and (b) to ensure the climate related factors are
considered during investment decisions. These governance bodies include (but are not limited to):
.
abrdn Investments-level Climate Change Strategy Group: this is led by abrdn’s Head of
Sustainability Insights and Climate Strategy, attended by the Real Estate Head of ESG. This group
meets quarterly and is the decision-making forum for climate related risks and opportunities in
the investments vector, and ensures compliance with TCFD reporting obligations.
.
Investment Strategy Committee (ISC): this committee is the decision-making and approval
body for the Company’s annual strategic plan, which includes several sections on ESG risks/
opportunities (including relating to climate risks), and strategic goals. This committee is also the
approval body for ESG/climate-related changes to the investment process, developed in the ‘ESG
Strategy Working Group’.
.
Investment Committee (IC): this is the approval body for acquisitions, fundings and large
development proposals, during which a climate related risks and opportunities are considered.
.
ESG Strategy Working Group: this group is led by the Head of Real Estate ESG, and is used to
develop new processes and procedures with respect to ESG (including climate related processes
and procedures), to ensure that the Investment Manager stays in line with best practice and
emergent legislation.
There is an organisational chart which represents this governance structure within the Investment
Manager’s ‘Blueprint for addressing climate change’ document.
The Investment Manager reports a number of KPIs to the Board on a quarterly and annual basis,
including data coverage and portfolio carbon emissions. More details of the KPIs reported to the
Board can be found in the ‘Metrics and Targets’ section on page 72.
The Company’s
approach is set out
in the Environmental,
Social & Governance
(ESG) section on
pages 56–78.
66 Annual Report 2023
TCFD Recommendation Company Approach Further Information
Strategy
Climate -related risks
and opportunities
the organisation has
identified over the
short, medium, and
long term
As part of the investment and asset management process climate-related risks and opportunities
are considered over a range of timescales and scenarios, also taking into account the type and
geographical location of our assets. A summary of our initial assessment over the short, medium and
long term is as follows. The time horizons used below are considered to be appropriate umbrellas
under which to identify climate risks and opportunities and are informed by the timescales against
which the Company expects the impacts of transitional/policy related and physical climate risks to
be felt, based on our understanding of local regulation, and the outputs of climate scenario analysis
completed on our portfolio to-date.
Short-term (0-5 years):
.
Transition: Policy and Legal: in the short term it is anticipated that regulations affecting the
energy performance and emissions of buildings to continue to tighten to align more closely
with Government targets for economy-wide decarbonisation. Whilst this will provide clarity
of direction to the sector, the risk is likely to take the form of increased development and
refurbishment costs, which could start to affect valuations.
.
Transition: Market and Reputational: the above trends will also create opportunities to benefit from
shifting occupier and investor demand for low-carbon, future-fit assets.
.
Physical: Acute: it is anticipated that the frequency and severity of acute/extreme weather events
will continue to increase, even in the short-term.
Medium-term (5-15 years):
.
Policy and Legal: the aforementioned policy and legal related trends will continue and the Company
expects regulations and market sentiment to further drive energy efficiency and decarbonisation
towards alignment with science-based decarbonisation pathways (such as CRREM), representing
the same risks as outlined above (increased costs).
.
Market and Reputational: as with the short-term risks, it is anticipated that addressing policy
and legal related risks will create market and reputational opportunities arising from shifting
investor demand.
.
Technology: The Company anticipates significant technological change in this period particularly
in relation to heat pump solutions which will improve the technical and financial feasibility of
decarbonising heat in buildings. In addition, grid decarbonisation will continue to contribute to
the required carbon emissions reductions from the built environment sector.
Long-term (15+ years):
.
Physical: Acute and Chronic: over the long term (15+ years), in terms of risk it is likely that
climate-related extreme/acute weather events increase in frequency and severity which may
impact built environment assets depending on their location and characteristics. In addition,
we are also likely to see how the impact of chronic physical climate risks, such as the influence
that changing weather will have on heating and cooling costs, along with energy consumption.
This is an example where increased cooling costs associated with heat stress could also have
a negative impact on the asset’s alignment with net-zero carbon benchmarks, due to the
increased energy consumed. However, there will remain opportunities to enhance the resilience
of our assets through resilience planning/interventions, creating market and reputational
opportunities.
An overview of the
Company’s approach
to addressing physical
climate risks is on
page 78.
67Annual Report 2023
TCFD Recommendation Company Approach Further Information
The impact of
climate-related risks
and opportunities
on the organisation’s
businesses, strategy,
and financial planning
where material
The Company sees physical and transition risk as potential material risks to its investments.
This is evidenced by the policy backdrop which supports reduction of risk in the form of improvement
of EPC ratings over time. In addition, global weather events are becoming increasingly frequent and
of increasing severity. As a result of the above, costs could be occurred in the form of, for example,
energy efficiency improvements, or climate adaptation solutions and the cost of these interventions
could constitute a material risk.
Transition Climate Risks:
In recognition of the importance of decarbonisation, and in order to support
the Company’s alignment with tightening policy around carbon reduction,
the Company has set a net zero carbon target of 2050 for all emissions scopes.
The Company also established a baseline operational carbon footprint of 2020, against which
progress has been measured in 2021 and 2022. Operational energy consumption data is used
to support the calculation of the portfolio’s operational carbon footprint, with industry accepted
benchmarks used to estimate the remainder. For the latest analysis, 73% of the data (by portfolio
floor area) used in the carbon footprint was ‘actual’ data, with the remainder estimated.
On an absolute carbon emissions basis, the portfolio emissions increased by 41% between 2020
and 2022, however, within the same time period 13 new assets have been added to the portfolio,
increasing the total floor area by 44%. On a like-for-like basis the portfolio emissions decreased by
18% between 2020 and 2022. The actual data coverage (by floor area) has reduced slightly with
data coverage being 82% in 2020 and 73% in 2022.
On an emissions intensity basis: in 2020, the energy intensity at the portfolio level was 104 kWh/m
2
and the operational emissions intensity was 32 CO2
e
/m
2
across Scopes 1, 2 and 3. In 2022 the net
zero analysis yielded a portfolio energy intensity of 79 kWh and an operational emissions intensity
of 33 CO2
e
/m
2
across Scopes 1, 2 and 3. This represents a 24% reduction in energy intensity and
a 3% increase in emissions intensity. The main reason for the emissions intensity increase despite
the reduction in energy intensity is the in the carbon intensity of the national grids for some of the
countries where the assets are situated, particularly Spain and Poland.
Such analysis has supported the identification of opportunities to reduce the carbon intensity of
poor performing assets. The Company uses the Carbon Risk Real Estate Monitor (CRREM) tool to
analyse the net-zero performance of its assets. CRREM is a real estate specific net-zero assessment
framework, widely used across the real estate industry, and recommended under the Institutional
Investors Group on Climate Change (IIGCC) (under which the Investment Manager is a member)
net-zero investment framework implementation guide.
Company will use such analysis to compare its assets against 1.5°C science-based decarbonisation
pathways (CRREM), to support the prioritisation of assets to take forward for more detailed net-zero
carbon audits. While the Company is already including decarbonisation-related capital expenditure
(CAPEX) figures into its asset cash flow calculations, such detailed audits will support the refinement
of these CAPEX figures and support our asset managers in programming in net-zero interventions
into wider asset management plans.
The EPC profile of the
Company’s properties
is set out on page 64.
The Company’s
approach to net-zero
is set out on pages
74 to 77.
68 Annual Report 2023
TCFD Recommendation Company Approach Further Information
Physical Climate Risks:
The Company continues to participate in physical climate risk scenario analysis (using a third-
party data provider) to understand future risks and opportunities based on asset type/nature
and geographical location of its assets. The analysis uses climate data relating to various hazards
(e.g. cyclones, windstorm, wildfire, inland/coastal flood) along with company exposure data (e.g.
asset type, location, insurance costs, replacement value, floor area and market value). This data is
modelled out under varying time horizons (out to 2080) under different climate scenarios outlined
in Section X). The outputs of the analysis support the understanding of future cost and value
impact relating to the portfolio. The round of analysis which was concluded in 2023 identified a very
low portfolio-level physical climate value impact of less than -21% by 2050 (under a worst-case
scenario), and yielded the following other key takeaways:
.
Acute physical climate risks: the analysis did not identify any significant value impacts (>5%) at
any asset screened against the key acute weather risks of coastal flooding, river flooding, tropical
cyclone, windstorm, wildfire, surface water flooding, right from the short-term (<5 years) out to 2050.
.
Chronic physical climate risks: the analysis identified that heating costs will decrease out to 2050,
while cooling costs will increase over the same period; the net effect of such costs translating to a
negligible effect on total value impact by 2050.
It should be noted that data quality and methodologies in the physical climate risk space are
continually evolving, and the Company continues to work with an external third-party data provider to
analyse such risks, and their materiality. Importantly, no significant risks to the Company’s assets have
been identified at this stage. In the event significant risks are identified by any subsequent physical
climate risk analysis, the Company will take appropriate action to limit its exposure to such risks,
including integrating the cost of resilience planning into asset cash flows.
The resilience of
the organisation’s
strategy, taking into
consideration different
climate related
scenarios, including a
2C or lower scenario
A full outline of how the Company has considered the climate related risks and opportunities under
chosen future scenarios has been outlined above. The Company has set out its long term aim to be a
net zero carbon Company by 2050 across all emissions (Scopes 1, 2 and 3). The Investment Manager
tracking progress against our long-term aim at the Company level and asset level, using key KPIs
including carbon data coverage, total energy/carbon emissions and energy/carbon intensity metrics.
With regard to resilience against science-based decarbonisation pathways, the Company’s work
to establish a net zero pathway is informed by industry benchmarks including the Carbon Risk Real
Estate Monitor (CRREM) 1.5°C Paris-aligned emissions trajectories. Sensitivity analysis has not been
completed for transition risk as it is considered best practice in the real estate industry to target a
1.5 degree future. Going forward, the Company will use such analysis to compare its assets against
1.5°C science-based decarbonisation pathways (CRREM), to support the prioritisation of assets
to take forward for more detailed net-zero carbon audits. While the Company is already including
decarbonisation-related capital expenditure (CAPEX) figures into its asset cash flow calculations, such
detailed audits will support the refinement of these CAPEX figures, and support our asset managers in
programming in net-zero interventions into wider asset management plans.
The Investment Manager considers consider that the portfolio and Company strategy is well-
positioned to decarbonise in line with this trajectory assuming national energy and climate policy is
also supportive of this goal. The Investment Manager will continue to engage with industry bodies such
as the Better Building Partnership to standardise net zero definitions across the industry. It is recognised
that the Company cannot act in isolation and that achieving this level of decarbonisation will require
supportive climate policy and the cooperation of our occupiers and suppliers.
The recent work on understanding value at risk as a result of physical climate risk has highlighted the
importance of considering changes in wind speeds and flood risk over time as well as the implications
of rising temperatures on cooling loads. Our initial assessment of these results is that in general under
the RCP8.5 scenario a worst-case climate scenario, physical climate risks do not become material
to the Company’s portfolio until after 2050, and that until after 2040 and that most potential cost is
associated with additional cooling demand due to rising temperatures. The Investment Manager
considers that our existing portfolio and Company strategy is resilient to physical climate risks in
the short to medium term. This will be kept under regular review as methodologies for physical risk
assessment improve.
Our delivery strategy
is set out on page 75.
69Annual Report 2023
TCFD Recommendation Company Approach Further Information
Risk Management
The Company’s
processes for
identifying and
assessing climate-
related risks
The Company’s processes for assessing the size and extent of transition and physical climate risk
are outlined in detail above under “The impact of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial planning where material.”
Climate -related risks and opportunities are considered and assessed by the Board as a whole as
advised by the Investment Manager and appointed consultants.
The Company employs the Investment Manager’s approach to addressing climate risks and
opportunities as part of the investment process. This includes assessment of transition and physical
climate risks during acquisition due diligence, asset management, refurbishment/development and
portfolio-level strategic planning.
The Company considers transition climate risks via net-zero carbon analysis, to determine the
extent to which the portfolio aligns with the defined net-zero targets, and to define indicative high-
level CAPEX figures to decarbonise the portfolio in line with a net-zero pathway. The Company also
uses a third-party data provider to assess value at risk (amongst other indicators) associated with
several climate hazards, over multiple time horizons and climate scenarios.
Risk Management
section on page
57, which includes
information on
environmental risk
mitigation.
Company approach
to integration/
assessment of ESG
factors, including
climate risks, is
available on pages
74-78.
The Company’s
processes for
managing climate-
related risks
The Company follows the Investment Manager’s approach to managing climate related risk.
The approach to such risks is embedded into the investment process for acquisitions,
refurbishments/developments and standing investments. This approach is outlined below.
On acquisition:
Transition risks:
The ESG DD process involves the assessment of transition risks at both the pre-bid and
post-bid stage, with the aim of reducing exposure to transitional climate risks going forward.
At the pre-bid stage, the Manager uses use all available information about the asset, its context
and regulatory backdrop, alongside the in-house decarbonisation guidance and ESG priorities of
the Company, to form a view of anticipated decarbonisation costs over the next 10-year period.
Where appropriate, such decarbonisation CAPEX is captured as part of the pre-bid screen
and meeting; which subsequently feeds into the Investment Manager’s Investment Committee
paper for review. When detailed DD is completed during exclusivity, the assumptions around
decarbonisation for compliance and net-zero alignment (using a 1.5°C CRREM pathway) are
refined by an external consultant. This allows the Company to better understand the costs that
it may be responsible for in the future for decarbonisation. Such findings are included in our pre-
signing checklist prior to deal completion.
Physical risks:
As part of any pre-bid ESG screen/meeting, a mapping tool, made available by a physical climate
risk data provider, is used to screen assets (based on their geographical location) against up to
8 different physical climate risks across different time horizons (current, 2030, 2050, 2100) under
different climate scenarios including Low (RCP2.6), Intermediate (RCP4.5) and High (RCP8.5)
scenarios. This tool is used alongside available online mapping provided by environmental
regulators/authorities in the given country (where/if available). Such risks are considered at pre-bid
stage in a “go/no-go” context. During exclusivity, as a minimum, flood risk will be assessed in more
detail by an external third-party, alongside any other physical climate risks identified during the
pre-bid screen.
An overview of the
findings of the latest
net-zero and physical
climate risk analysis
is provide above on
pages 74-78.
70 Annual Report 2023
TCFD Recommendation Company Approach Further Information
On development/refurbishment:
abrdn has established a set of ESG guidelines and standards (which include a focus on climate
related aspects) that apply to all new construction, major renovations and forward funded
developments. These standards ensure new developments are future fit and resilient to future
transition and physical climate risks. This sets out the standards that are used as a benchmark
during the design and appraisal of development schemes and outlines the process to be followed
by the internal and external teams when undertaking major development work. This covers, for
example, requirements for EPC ratings, CRREM alignment and physical climate resilience.
Approval for major development must be sought through the Investment Committee in the
same way as for asset acquisitions. The process can also be flexible to account for any separate
Investment Committee processes outlined by client requirements. For smaller refurbishment
activity an ESG checklist is available to teams to support the identification of ESG opportunities
(which include climate related risks and opportunities) that contribute to Company goals that can
be included in project specification. Approval for landlord refurbishment works is through a Capital
Expenditure Approval Form (CEAF) which requires description of ESG measures incorporate in
the works. Overall, the approach to development seeks to deliver high quality assets that meet the
needs of tenants and ultimately support investment returns.
On standing investments:
The Company completes an annual ESG risk and performance dashboard as part of their strategic
plan which flags priority assets for action against both transition risks (looking at levels of energy
data collection, carbon performance against net-zero pathways where data available and energy
performance ratings) and physical risks (looking at modelled acute weather risks out to 2050 as a
result of climate change). The Company’s strategic plan is approved via the Investment Manager’s
Investment Strategy Committee (ISC). All assets have an ESG and climate related component
integrated into their asset management plan. These are set to enable the assets to contribute to the
fund level strategic ESG ambition/goals set in the annual strategic plan. An example of this would
be installing solar panels onto the roof of a property; enabling the Company to sell the generated
electricity to the tenant and in turn generating additional income from the asset.
In addition to the annual ESG risk and performance dashboard, The Company completes an annual
carbon footprinting exercise to review progress against its 2019 baseline, and to review asset level
performance against CRREM 1.5°C benchmarks, to help determines next steps and priorities
for the Company with regards to priority assets for focus and specific initiatives to roll out with more
detailed analysis.
The Company also undertakes analysis with an external consultant to assess the assets within the
Company against various hazards which are expected to impact real estate due to climate change
under multiple different scenarios, including a worst-case scenario (RCP8.5).
The Company’s
processes for
identifying, assessing
and managing
climate-related risks
into the organisation’s
overall risk
management.
The Company’s overall risk management process is underpinned by the Investment Manager’s
investment process described above. Climate related risks and opportunities are assessed at
all stages of the investment process, which are in turn supported by robust governance bodies
including the Investment Manager’s Investment and Investment Strategy Committees.
71Annual Report 2023
TCFD Recommendation Company Approach Further Information
Metrics and Targets
The metrics used by
the organisation to
assess climate related
risks and opportunities
in line with its strategy
and risk management
process
The Company discloses greenhouse gas emissions (alongside other related ESG performance
metrics on energy and water consumption, waste generation and disposal routes) in line with EPRA
Sustainability Best Practices Recommendations. In addition, the following carbon and climate
metrics are also disclosed in line with TCFD requirements:
.
Scope 1, 2 and 3 emissions (tCO
2
e
)
.
Scope 1, 2 and 3 emissions data coverage (%)
.
Year-on-year change in carbon emissions (%)
.
Portfolio carbon intensity by floor area (tCO
2
e
/m
2
)
.
Weighted Average Carbon Intensity (WACI) (tCO
2
e
/m
2
weighted by value)
.
Economic Emissions Intensity (tCO
2
e
/Gross Asset Value)
.
Climate Value at Risk (%)
As part of the decarbonisation strategy progress against the baseline carbon footprint from 2020 is
also tracked. Information on year-on-year performance is included in the net zero pathway section
above (on pages 74-78) and in the EPRA disclosures on pages 61 to 65. There is not currently an
standard industry definition for Net Zero Carbon, however the Investment Manager is using the CRREM
framework and annual targets to model the decarbonisation pathway at the Company and asset level.
At present, the Company does not have sufficient reliable data to report a specific percentage of
total assets that have associated climate related ‘risks’ vs ‘opportunities’. However, based on the
findings of the net zero carbon and climate scenario analysis completed to date there are several
assets which are performing worse than the CRREM benchmark for the asset type and location.
As part of the Investment Manager’s approach these assets are prioritised for Net Zero carbon
audits so that the recommendations and associated costs can be included in the cash flows for
each asset. CRREM is a voluntary industry tool, and the assets flagged as performing worse than the
CRREM benchmark are still compliant from a regulatory perspective. The Company accounts for
the cost of decarbonising its assets in line with regulation and recognised industry pathways
(e.g. CRREM), by factoring in such cost into cash flows (and deploying capital where necessary).
The Company does not apply a specific carbon price (e.g. £ per tonne of carbon), rather assets
are assessed to understand what the interventions to decarbonise assets may cost, and where
necessary use the Investment Manager’s house-level decarbonisation cost guidance. In addition,
it should be noted that ESG goals (which include climate relate goals) are included in investment
teams’ performance targets.
The metrics from the 2023 calendar year included in the EPRA disclosures will in part be used
to inform future progress updates relating to the Company’s net-zero pathway (alongside any
additional Scope 3 data collected for the 2023 calendar year throughout the first half of 2024).
This net zero pathway analysis supports the analysis of assets against CRREM 1.5°C net zero
pathways, to better understand risk, and likely decarbonisation related CAPEX to include in cash
flow calculations. In addition, the metrics outlined above also support with investment decision
making at all touch-points of the investment process.
As part of the Investment Manager’s ESG policy and approach, ESG goals (including those related to
climate aspects) are embedded in investment teams’ performance targets. Metrics related to ESG
performance contribute to overall evaluations. Our 2022 carbon footprint is presented on page 75
and the 2023 scope 1 and 2 emissions are disclosed on page 65.
The EPRA disclosures
included on pages
61-65 include the
relevant climate-
related performance
data, including GHG
emissions.
Further information
on our net-zero
pathway are included
above in pages 74-77.
Scope 1, Scope 2 and,
if appropriate, Scope
3 greenhouse gas
(GHG) emissions and
the related risks
The Company discloses emissions in line with EPRA Sustainability Best Practices Recommendations
(see pages 61–65).
This covers Scope 1 and 2 emissions associated with landlord-procured energy as well as Scope 3
emissions from energy sub-metered to occupiers. Scope 3 emissions are considered material to the
Company, especially given that they contributed to around 91% of the Company’s total operational
carbon footprint in 2022. The 2020 baseline is presented on page 75.
Data on emissions
is set out on pages
61–65.
The targets used by
the organisation to
manage climate-
related risks and
opportunities and
performance against
targets
An outline of the Company’s climate related targets are outlined above in section “The impact of
climate-related risks and opportunities on the organisation’s businesses, strategy, and financial
planning where material”. The Company has set its long-term aim to be net zero carbon by 2050
across all emissions (Scopes 1, 2 and 3). Whilst the Company has not yet established specific targets
around other climate related elements, the Company continually looks to improve the portfolio’s
performance through implementation of the Investment Manager’s investment process and will
look to set specific targets in the future where appropriate. The Company also looks to maintain or
improve its GRESB score year-on-year.
Our delivery strategy
is set out on page 75.
72 Annual Report 2023
The Investment Manager makes use of the expertise
within its ESG Real Estate team and is actively engaged
with the European Union, national governments and
industry working groups, including GRESB, the UK Better
Building Partnership and the UN Principles for Responsible
Investment (UN PRI). This ensures that it can help to
formulate government policies and that its management
teams are well informed of future government intent and
market direction.
There are multiple ways that capability and collaboration
is addressed by the Company outlined below.
.
The first is by advocating for sustainability best practice
across the real estate industry through government and
industry collaboration
.
The second is to encourage good collaboration
internally to ensure sustainability is fully integrated into
the Company ethos
.
The third is to ensure sustainability is address through
supplier engagement
.
The final two aspects are specifically in relation to the
real estate investments the Company holds in ensuring
that its tenants and the surrounding communities are
engaged where appropriate.
0 | abrdn.com
Capability &
Collaboration
What does engagement look like for real estate?
Industry &
government
engagement
Tena nt
engagement
Supplier
engagement
Community
engagement
Internal team
engagement
Strategic Report
Capability and Collaboration
73Annual Report 2023
Strategic Report
Investment Process and Asset Management
The Investment Manager’s ESG approach groups
material sustainability indicators into four main categories:
(i) Environment & Climate; (ii) Demographics; (iii)
Governance & Engagement; and (iv) Technology &
Infrastructure. The Investment Manager has identified 21
different ESG ‘indicators’ that sit beneath these four main
categories. These 21 ESG indicators are considered by the
Investment Manager with a focus on those most material
to the Company. The risk and opportunities of those most
material indicators are assessed as part of the Company’s
investment decisions. This approach allows the
identification and promotion (where relevant) of material
ESG risks and opportunities relevant to the Company’s
investment strategy, sector and geography. These guide
the Company’s prioritisation and integration of ESG
factors at the asset level, whilst providing a structure for
engagement with, and reporting to, stakeholders.
As outlined above. of particular focus to the Company
is climate change, which represents one of the most
material ESG issues, both in terms of physical climate risk,
and reducing the emissions from the Company’s activities
(i.e. addressing transition risks).
Company approach to Climate Change
Further to the TCFD section above, this section
highlights specific progress on climate change risks
and opportunities including the company’s carbon
performance, initiatives and asset case studies.
Transition Risks
The Company’s net zero carbon target
In 2023 the company committed to achieve Net Zero
Carbon across all portfolio emissions (Scopes 1, 2 & 3)
by 2050.
The following provides an overview of the different
emissions scopes:
.
Scope 1 & 2: Cover emissions that directly result from the
landlord’s activities where there is operational control,
either through the purchase or consumption of energy
or refrigerant losses.
.
Scope 3: Emissions are those that occur in our supply
chains and downstream leased assets (tenant spaces)
over which the Company has a degree of influence but
limited control.
Why has 2050 been set as the target date?
.
2050 is a challenging yet realistic date- this date aligns
with the Paris agreement and so will likely align with
future regulations when they are introduced, however,
given the types of assets, degree of operational control
and geographical location of the buildings, it will still be
challenging to deliver on.
.
To ensure that any target set is meaningful and robust,
and setting an earlier target date would likely mean
that the Company would need to rely more heavily on
offsets which would divert funds from being used on
decarbonisation works which the Company considers
to be priority.
.
Over 70% of the portfolio is single let, meaning that there
is very little under Landlord operational control, so the
main opportunities to carry out decarbonisation works
are during vacancy periods, or when a tenant is looking
to carry out refits.
.
The portfolio has assets throughout Europe, and the
national grids in the different countries are expected
to decarbonise at varying rates. Some countries (for
example Poland) are expected to require the period
right up to 2050 to do this.
74 Annual Report 2023
The Company’s net zero principles
Although a pathway may seem clear, definitions and
standards on net zero and the policy mix to support it
remain immature. In this context, several key principles
need to be established that underpin the strategy to
ensure it has integrity, robustness and delivers value:
Practical:
.
Asset-level action: focusing on energy efficiency and
renewables is a priority to ensure compliance with
energy performance regulations. This improves the
quality of assets for occupiers and reduces exposure to
regulatory and market risk.
.
Timing: the Company aims to align improvements and
planned refurbishment activities wherever possible. This
ensures that functional equipment is not replaced well
ahead of end-of-life unless necessary, which reduces
cost and embodied carbon.
Realistic:
.
Targets: long-term targets must be stretching but
deliverable and complemented by near-term targets
and actions.
.
Policy support: it is important to recognise that to fully
decarbonise the real estate sector requires a supportive
policy mix to incentivise action and level the playing field.
.
Collaborative:
.
Occupiers: net zero cannot be achieved in isolation.
The Company will work closely with tenants, many
of whom have their own decarbonisation strategies
covering their leased space. Many of the portfolio
tenants have their own decarbonisation commitments
and the Company’s interests are aligned on this issue.
.
Suppliers: the Company will work with suppliers,
including property managers and consultants,
in order that all stakeholders are clear on their role
in the pathway to net zero.
Measurable:
.
Clear key performance indicators at the asset and
portfolio level.
Company Baseline and Net Zero Carbon
Pathway Annual update
In last year’s annual report the operational carbon
footprint baseline for the year of 2020 was disclosed,
against which the Company has committed to measuring
progress. In 2023 an annual update of the net zero carbon
pathway was completed, the results of the analysis are
disclosed below. Note that the analysis completed in 2023
uses data for the calendar year of 2022, due to this being
the latest data available at the time of the analysis.
ESG data for 2023 is included in this report in the EPRA
tables on pages 61 - 62, but is not considered below as
part of the net zero carbon analysis.
Carbon Footprint
2020
Scope 2
Scope 3: Downstream
leased assets
Scope 3: Waste
generated from
operations
Scope 3: Purchased
goods and services
Scope 3: Fuel and
energy related
activities
0.1%
88.2%
7.5%
3.8%
0.4%
12,203 tCO
2
e
2022
Scope 2
Scope 3: Downstream
leased assets
Scope 3: Purchased
goods and services
Scope 3: Fuel and
energy related
activities
90.5%
7.1%
2.0%
0.4%
17,176 tCO
2
e
Of the 2020 emissions, approximately 8% are associated
with Scope 1 and 2 emissions that are in direct control of the
Company, and the remaining 92% are Scope 3 emissions
from tenant procured energy. This is in comparison with
2022, where the total operational carbon footprint was
17,176 tCO
2
e
of which 7% was associated with Scope 1
and 2 emissions, while 93% was associated with Scope 3
emissions from tenant procured energy.
It should also be noted that for 2020, there was actual
energy consumption data for 82% of the portfolio by floor
area, with representative industry standard benchmarks
used to estimate the rest. For 2022 the actual energy
consumption data coverage was 73%. The bar chart
below provides an overview of how data coverage has
changed between 2020 and 2022.
75Annual Report 2023
Data coverage by Floor Area (%) 2020 vs 2022
Actual Estimated
0
20
40
60
80
100
20222020
The 2020 energy intensity at the portfolio level was
104 kWh/m
2
and the operational emissions intensity was
32 kgCO
2
e
/m
2
across Scopes 1, 2 and 3.
Portfolio Carbon Intensity (kgCO
2
e
/m
2
)
Scope 1 Scope 2
Scope 3
0
5
10
15
20
25
30
35
Most Recent YearBaseline
In comparison the latest net zero carbon analysis using
2022 data yielded an energy intensity of 79 kWh/m
2
and
an operational emissions intensity of 33 kgCO
2
e
/m
2
across all emissions scopes. This represents an 24%
reduction in the energy intensity of the portfolio, and a 3%
increase in carbon intensity. It is important to note that the
2022 carbon intensity figure includes fugitive emissions,
which weren’t included in the 2020 baseline which is part
of the reason for this increase. However, in addition to
this, the carbon intensity of the national grids in some of
the countries where the assets are located, particularly
Poland, increased which also contributed to the rise in
portfolio carbon intensity.
National Grids Carbon Intensity (kgCO
2
e
/m
2
)
Total Intensity 2020 Total Intensity 2022
0
10
20
30
40
50
60
70
80
90
PolandSpainFranceNetherlandsGermany
Overall, the Company is on track in terms of progress
towards its net zero carbon target of 2050. Progress will
continue to be monitored against the net zero carbon
pathway annually and work to deliver on the actions
outlined in the delivery strategy above, supported by
the Investment Manager’s investment process, which
ensures that net zero carbon thinking is integrated into
all investment decisions.
76 Annual Report 2023
The table below summarises the Company’s commitments to improve net-zero carbon performance, it’s current
performance and next steps
Theme Commitment Current Status Next Steps
Carbon Reduction
and Energy
Efficiency
Net Zero Carbon Carbon baseline established which
supports the Company’s Net Zero
Carbon target of 2050 for all portfolio
emissions. The Company has since
completed an annual net zero
carbon pathway analysis to review
progress against the baseline, and
the findings of this analysis are
included in page 74 of this report.
Continue to fully embed Net
Zero Carbon across asset
management, acquisition and
development/refurbishment
processes.
Improve tenant
energy data coverage
73% data coverage in 2022 which
was a decrease from 82% in 2020.
Seek to increase data coverage
through continued tenant
engagement. In addition
the Investment Manager will
continue to include green lease
clauses into new leases issued
by the Company, to encourage
ESG collaboration and landlord-
tenant sharing of ESG data.
Maximise solar PV
capacity
2,414,117 kWh by on-site PV systems
generation in 2022.
Continue to review the feasibility
of PV installations across the
portfolio.
Embodied Carbon The Company is considering how
best to monitor and report on the
embodied carbon of development
and major refurbishment projects.
Consider embodied carbon
emissions for each project on a
case-by-case basis.
Resilience and
physical climate
risk
Undertake scenario
analysis to better
understand future risk
Review asset level results in
detail when finalised and
define appropriate next steps
to improve climate resilience of
portfolio.
77Annual Report 2023
Physical Climate Risks
Physical risks are those that relate to an asset’s vulnerability
to factors such as increasing temperatures and extreme
weather events as a result of climate change. Exposure
to physical risks may result in, for example, direct damage
to assets, rising insurance costs or supply chain disruption.
The costs of adaptation (i.e. the infrastructure required to
protect from physical damage) should also be considered.
To date, the Company has engaged in 3 rounds of analysis
to evaluate the acute and chronic physical risks associated
with the buildings owned by the Company; the latest of
which was completed in early 2023.
The results of this assessment include (but are not limited
to) an overview of how asset value at risk may change
over time, as a result of chronic and acute physical risks.
Results of Analysis
In the first two rounds of analysis (concluded in 2021
and 2022 respectively), the Company’s assets were
modelled under a “worst-case” climate change scenario
(an increase of around 4 degrees Celsius, above pre-
industrial levels) to identify any relevant physical risks.
In the third-round of analysis, the Company’s assets were
compared against the following scenarios under a 2022
and 2025 scenario, then at 5 year intervals out to 2080:
.
Current policies: this is a worst-case climate scenario
broadly consistent with a future global temperature
increase of around 4°C above pre-industrial levels,
assuming that ‘current policies’ around climate
mitigation do not tighten;
.
Probability weighted: this is the most-likely scenario,
which assumed a global temperature increase of 2.3°C
above pre-industrial levels; and,
.
Paris-weighted: this is consistent with the targeted
scenarios of the Paris Agreement, which seeks to keep
global temperature increases well below 2°C, with
efforts to be made to limit such increases to 1.5°C.
The round of analysis which was concluded in 2023
identified a very low portfolio- level physical climate value
impact of -1% by 2050 (under a worst-case scenario),
and yielded the following other key takeaways:
.
Acute physical climate risks: the assets are screened
against key acute weather risks of: coastal flooding,
river flooding, tropical cyclone, windstorm, wildfire
and surface water flooding. The analysis allowed us to
flag one asset as potentially at risk from surface water
flooding. The analysis considers geographic location
only, and does not factor in any local infrastructure
designed to mitigate against these risks, or any
insurance in place to cover for this kind of damage.
As such the asset may not be at risk in reality, but
further investigations will be required to determine this.
The insurance program in place for the asset covers
risk related to surface water flooding.
.
Chronic physical climate risks: the analysis identified that
heating costs will decrease out to 2050, while cooling
costs will increase over the same period; the net effect of
such costs translating to a negligible effect on total value
impact by 2050.
It should be noted that data quality and methodologies in
the physical climate risk space are continually evolving,
and the Company continues to work with an external
third-party data provider to analyse such risks, and their
materiality. It should also be noted that no significant
risks to the Company’s assets have been identified at this
stage. In the event significant risks are identified by any
subsequent physical climate risk analysis, the Company
will take appropriate action to limit its exposure to
such risks.
Next Steps
Physical climate risk assessment remains a fundamental
part of the Investment Manager’s investment process,
and is considered in detail during acquisition, asset
management and development/refurbishment.
More information on the Investment Manager’s Approach
to physical climate risks can be found on the document –
‘Our Blueprint for Addressing Climate Change’ – available
here https://www.abrdn.com/docs?editionId=42ec6ae7-
d171-4a81-a0ac-1f06106c86b4. At the time of writing,
the updated version of this document is being published.
78 Annual Report 2023
Governance
The Directors, all of whom are non-executive and independent of the AIFM and
Investment Manager, oversee the management of the Company and represent the
interests of shareholders.
The Company is registered as a public limited company in England and Wales and
is an investment company as defined by Section 833 of the Companies Act 2006.
The Company is also a member of the Association of Investment Companies.
79Annual Report 2023
Status: Independent Non-Executive Chairman.
Length of service: Six years, appointed a Director on
8 November 2017 and Chairman on 11 June 2019.
Experience: Tony started his career as a structural
engineer with Ove Arup and Partners in 1983. In 1994
he joined John Laing plc to review and make equity
investments in infrastructure projects both in the UK
and abroad and then in 2006 he joined HSBC Specialist
Investments (‘HSIL’) to be the fund manager for HICL
Infrastructure Company Limited. In 2011, Tony was part
of the senior management team that bought HSIL from
HSBC, renaming it InfraRed Capital Partners.
Tony was a Managing Partner and a senior member of
the infrastructure management team at InfraRed Capital
Partners until June 2018. He holds a MA in Engineering
from Cambridge University and is an ACMA.
Last re-elected to the Board: 12 June 2023.
Contribution: The Nomination Committee has reviewed
the contribution of Mr Roper in light of his forthcoming
re-election at the AGM to be held on 24 June 2024 and
concluded that Mr Roper has continued to skilfully chair
the Company through a turbulent yet successful year
for the Company. Mr Roper’s real estate and investment
trust experience is deeply valued by his fellow Directors.
Committee membership: Management Engagement
Committee and Nomination Committee.
Remuneration: £54,000 per annum.
All other public company directorships: SDCL Energy
Efficiency Income Trust plc.
Connections with Trust or Investment Manager: None.
Shared Directorships with any other Trust Directors: None.
Shareholding in Company: 122,812 Ordinary shares.
Status: Senior Independent Non-Executive Director.
Length of service: Six years, appointed a Director on
8 November 2017.
Experience: Caroline is a chartered accountant with
over 25 years’ experience at Ernst & Young LLP, latterly as
an executive director before leaving in 2012. During that
time, she specialised in the asset management sector
and developed an extensive experience of investment
trusts. She is a director of a number of other
investment companies.
Last re-elected to the Board: 12 June 2023.
Contribution: The Nomination Committee has reviewed
the contribution of Ms Gulliver in light of her forthcoming
re-election at the AGM to be held on 24 June 2024 and
concluded that Ms Gulliver has continued to expertly chair
the Audit Committee through the year drawing on her
significant wealth of financial and accounting experience.
Committee membership: Audit Committee
(Chairman), Nomination Committee and Management
Engagement Committee.
Remuneration: £42,000 per annum.
All other public company directorships: JP Morgan Global
Emerging Markets Income Trust plc, International
Biotechnology Trust plc and MIGO Opportunities Trust PLC.
Connections with Trust or Investment Manager: None.
Shared Directorships with any other Trust Directors: None.
Shareholding in Company: 90,000 Ordinary shares.
Governance
Your Board of Directors
Details of the current Directors, all of whom are non-executive and independent of the AIFM and Investment Manager,
are set out below. The Directors oversee the management of the Company and represent the interests of shareholders.
Anthony Roper Caroline Gulliver
80 Annual Report 2023
John Heawood Diane Wilde
Status: Independent Non-Executive Director.
Length of service: Six years, appointed a Director on
8 November 2017.
Experience: John has 40 years’ experience as a Chartered
Surveyor advising a broad range of investors, developers
and occupiers. He was a partner, and subsequently a
director, of DTZ responsible for the London-based team
dealing with industrial, logistics and business park projects
across the UK. In 1996 he was appointed to the board of
SEGRO plc and was responsible for its UK business for the
next 12 years. From 2009-2013 he was managing director
of the Ashtenne Industrial Fund, a £500 million multi-let
industrial and logistics portfolio managed by Aviva on
behalf of 13 institutional investors. John is currently a
member of Council and member of the finance and
general purposes committee of the Royal Veterinary
College and a trustee of Marshalls Charity.
Last re-elected to the Board: 12 June 2023.
Contribution: The Nomination Committee has reviewed
the contribution of Mr Heawood in light of his forthcoming
re-election at the AGM to be held on 24 June 2024 and
concluded that Mr Heawood has continued to provide
significant real estate experience and insight to the
Board as well as expertly chairing the Management
Engagement Committee.
Committee membership: Management Engagement
Committee (Chairman), Audit Committee and
Nomination Committee.
Remuneration: £36,000 per annum.
All other public company directorships: None
Connections with Trust or Investment Manager: None.
Shared Directorships with any other Trust Directors: None.
Shareholding in Company: 60,000 Ordinary shares.
Status: Independent Non-Executive Director.
Length of service: Six years, appointed a Director on
8 November 2017.
Experience: Diane was managing director at Gartmore
Scotland Ltd, managing investment trust assets from 1993
– 2000. Following a period of managing similar assets at
Aberdeen Asset Managers between 2000 and 2003,
she joined Barclays Wealth as Head of Endowment
Funds in Scotland, managing clients in the multi asset
space until 2014. She was an adviser at Allenbridge,
an investment consulting firm until May 2018. She is also
a board member of the Social Growth Fund, managed
by Social Investment Scotland (SIS), a leading social
enterprise and impact investor in Scotland and the
United Kingdom.
Last re-elected to the Board: 12 June 2023.
Contribution: As part of the Board’s refreshment and
succession planning, Ms Wilde has indicated that she will
retire as a Director of the Company with effect from the
conclusion of the AGM on 24 June 2024 and will not be
seeking re-election. The Nomination Committee would like
to reiterate its thanks to Ms Wilde for the insight provided.
Committee membership: Audit Committee, Management
Engagement Committee and Nomination Committee.
Remuneration: £36,000 per annum.
All other public company directorships: None.
Connections with Trust or Investment Manager: None.
Shared Directorships with any other Trust Directors: None.
Shareholding in Company: 74,375 Ordinary shares.
81Annual Report 2023
Governance
Directors’ Report
The Directors present their Report and the audited financial
statements for the year ended 31 December 2023.
Results and Dividends
Details of the Company’s results and dividends are shown
on page 23 of this Annual Report. The dividend policy is
disclosed in the Strategic Report on page 14.
Investment Trust Status
The Company was incorporated on 25 October 2017
(registered in England & Wales No. 11032222) and
has been accepted by HM Revenue & Customs as an
investment trust subject to the Company continuing
to meet the relevant eligibility conditions of Section
1158 of the Corporation Tax Act 2010 and the ongoing
requirements of Part 2 Chapter 3 Statutory Instrument
2011/2999 for all financial periods commencing on or
after 15 December 2017. The Directors are of the opinion
that the Company has conducted its affairs for the year
ended 31 December 2023 so as to enable it to comply with
the ongoing requirements for investment trust status.
Individual Savings Accounts
The Company has conducted its affairs so as to satisfy
the requirements as a qualifying security for Individual
Savings Accounts. The Directors intend that the Company
will continue to conduct its affairs in this manner.
Share Capital
The Company’s capital structure is summarised in
note 16 to the financial statements. At 31 December 2023,
there were 412,174,356 fully paid Ordinary shares of 1p
each in issue. During the year no Ordinary shares were
purchased in the market for treasury or cancellation and
no Ordinary shares were issued or sold from Treasury.
Voting Rights, Share Restrictions and
Amendments to Articles of Association
Ordinary shareholders are entitled to vote on all resolutions
which are proposed at general meetings of the Company.
The Ordinary shares carry a right to receive dividends.
On a winding up, after meeting the liabilities of the
Company, the surplus assets will be paid to Ordinary
shareholders in proportion to their shareholdings.
There are no restrictions concerning the transfer of
securities in the Company; no special rights with regard
to control attached to securities; no agreements between
holders of securities regarding their transfer known to the
Company; and no agreements which the Company is party
to that might affect its control following a takeover bid.
In accordance with the Companies Act, amendments to
the Company’s Articles of Association may only be made by
shareholders passing a special resolution in general meeting.
Borrowings
A full breakdown of the Company’s loan facilities is
provided in note 14 to the financial statements.
Management Agreement
Under the terms of a Management Agreement dated
17 November 2017 between the Company and the
AIFM, abrdn Fund Managers Limited (and amended
by way of side letters dated 25 May 2018, 22 February
2019 and 24 January 2023), the AIFM was appointed
to act as alternative investment fund manager of the
Company with responsibility for portfolio management
and risk management of the Company’s investments.
Under the terms of the Management Agreement,
the AIFM may delegate portfolio management functions
to the Investment Manager and is entitled to an annual
management fee together with reimbursement of all
reasonable costs and expenses incurred by it and the
Investment Manager in the performance of its duties.
Pursuant to the terms of the Management Agreement,
the AIFM is entitled to receive a tiered annual management
fee (the ‘‘Annual Management Fee’’) calculated by
reference to the Net Asset Value (as calculated under
IFRS) on the following basis:
.
On such part of the Net asset value that is less than or
equal to €1.25 billion, 0.75 per cent. per annum.
.
On such part of the Net asset value that is more than
€1.25 billion, 0.60 per cent. per annum.
The annual management fee is payable in Euros quarterly
in arrears,save for any period which is less than a full
calendar quarter.
The Company or the AIFM may terminate the Management
Agreement by giving not less than 12 months’ prior
written notice.
The AIFM has also been appointed by the Company under
the terms of the Management Agreement to provide
day-to-day administration services to the Company
and provide the general company secretarial functions
required by the Companies Act. In this role, the AIFM will
provide certain administrative services to the Company
which includes reporting the Net Asset Value, bookkeeping
and accounts preparation. Effective from March 2020
accounting and administration services undertaken on
behalf of the Company have been delegated to Brown
Brothers Harriman.
The AIFM has also delegated the provision of the general
company secretarial services to abrdn Holdings Limited.
82 Annual Report 2023
Risk Management
Details of the financial risk management policies and
objectives relative to the use of financial instruments by the
Company are set out in note 22 to the financial statements.
The Board
The current Directors, Ms Gulliver, Mr Heawood, Mr Roper
and Ms Wilde were the only Directors who served during
the year. With the exception of Ms Wilde who will be retiring
from the Board at the conclusion of the Annual General
Meeting, in accordance with the Articles of Association,
each Director will retire from the Board at the Annual
General Meeting convened for 24 June 2024 and, being
eligible, will offer himself or herself for re-election to the
Board. In accordance with Principle 23 of the AIC’s 2019
Code of Corporate Governance, each Director will retire
annually and submit themselves for re-election at the AGM.
The Board considers that there is a balance of skills and
experience within the Board relevant to the leadership
and direction of the Company and that all the Directors
contribute effectively.
In common with most investment trusts, the Company
has no employees. Directors’ & Officers’ liability insurance
cover has been maintained throughout the year at the
expense of the Company.
Board Diversity
As indicated in the Strategic Report, the Board recognises
the importance of having a range of skilled, experienced
individuals with the right knowledge represented on the
Board in order to allow it to fulfil its obligations. The Board
also recognises the benefits and is supportive of, and will
give due regard to, the principle of diversity in its recruitment
of new Board members. The Board will not display any bias
for age, gender, race, sexual orientation, socio-economic
background, religion, ethnic or national origins or disability
in considering the appointment of Directors. The Board will
continue to ensure that all appointments are made on the
basis of merit against the specification prepared for each
appointment. The Board takes account of the targets set
out in the FCA’s Listing Rules, which are set out below.
As an externally managed investment company, the Board
employs no executive staff, and therefore does not have
a chief executive officer (CEO) or a chief financial officer
(CFO) - both of which are deemed senior board positions
by the FCA. However, the Board considers the Chair of
the Audit Committee to be a senior board position and
the following disclosure is made on this basis. Other senior
board positions recognised by the FCA are chair of the
board and senior independent director (SID). In addition,
the Board has resolved that the Company’s year end date
be the most appropriate date for disclosure purposes.
The following information has been voluntarily disclosed
by each Director and is correct as at 31 December 2023.
The Company has initiated a search for a new non
executive Director although the process is currently
on hold. Following completion of, and subject to the
conclusions of, the Strategic Review which is currently
ongoing, the Board expects that, the Company will aim to
be in compliance with the recommendations of the Parker
Review on diversity in the UK boardroom by June 2025.
Board as at 31 December 2023
Number
of Board
Members
Percentage
of the Board
Number of
Senior Positions
on the Board
3
Men 2 50% 1
Women
1
2 50% 2
Prefer not to say - -
White British or
other White (including
minority-white groups)
4 100% 3
Minority Ethnic
2
- - 0
Prefer not to say - - -
1
Meets target that at least 40% of Directors are women as set out in LR 9.8.6R (9)(a)(i).
2
Does not currently meet target that at least one Director is from a minority ethnic
background as set out in LR 9.8.6R (9)(a)(iii).
3
Senior positions defined as Chair, Audit Chair and Senior Independent Director.
The Role of the Chairman and Senior
Independent Director
The Chairman is responsible for providing effective
leadership to the Board, by setting the tone of the
Company, demonstrating objective judgement
and promoting a culture of openness and debate.
The Chairman facilitates the effective contribution,
and encourages active engagement, by each Director.
In conjunction with the Company Secretary, the Chairman
ensures that Directors receive accurate, timely and
clear information to assist them with effective decision-
making. The Chairman leads the evaluation of the Board
and individual Directors, and acts upon the results of
the evaluation process by recognising strengths and
addressing any weaknesses. TheChairman also
engages with major shareholders offering annual review
meetings and ensures that all Directors understand
shareholder views.
The Senior Independent Director acts as a sounding
board for the Chairman and as an intermediary for other
directors, when necessary. The Senior Independent
Director takes responsibility for an orderly succession
process for the Chairman, and leads the annual appraisal
of the Chairman’s performance and is also available to
shareholders to discuss any concerns they may have.
83Annual Report 2023
Corporate Governance
The Company is committed to high standards of
corporate governance. The Board is accountable to the
Company’s shareholders for good governance and this
statement describes how the Company has applied the
principles identified in the UK Corporate Governance
Code as published in July 2018 (the “UK Code”), which is
available on the Financial Reporting Council’s (the “FRC”)
website: frc.org.uk.
The Board has also considered the principles and provisions
of the AIC Code of Corporate Governance as published in
February 2019 (the “AIC Code”). The AIC Code addresses
the principles and provisions set out in the UK Code, as
well as setting out additional provisions on issues that are
of specific relevance to the Company. The AIC Code is
available on the AIC’s website: theaic.co.uk.
The Board considers that reporting against the
principles and provisions of the AIC Code, which has been
endorsed by the FRC, provides more relevant information
to shareholders. The full text of the Company’s Corporate
Governance Statement can be found on the Company’s
website: eurologisticsincome.co.uk.
The Board confirms that, during the year, the Company
complied with the principles and provisions of the AIC
Code and the relevant provisions of the UK Code,
except as set out below.
The UK Code includes provisions relating to:
.
interaction with the workforce (provisions 2, 5 and 6);
.
the need for an internal audit function (provision 26);
.
the role and responsibility of the chief executive
(provisions 9 and 14);
.
previous experience of the chairman of a remuneration
committee (provision 32); and
.
executive directors’ remuneration (provisions 33 and
36 to 40).
The Board considers that these provisions are not relevant
to the position of the Company, being an externally
managed investment company. In particular, all of the
Company’s day-to-day management and administrative
functions are outsourced to third parties. As a result,
the Company has no executive directors, employees
or internal operations. The Company has therefore not
reported further in respect of these provisions.
During the year ended 31 December 2023, the Board had
four scheduled meetings and over 14 other ad hoc Board
meetings as well as numerous update calls. In addition,
theAudit Committee met three times and there was one
meeting of the Management Engagement Committee
and two meetings of the Nomination Committee. Between
meetings the Board maintains regular contact with the
Investment Manager. The Directors have attended the
following scheduled Board meetings and Committee
meetings during the year ended 31December 2023 (with
their eligibility to attend therelevant meeting in brackets):
Director Board
Audit
Committee MEC Nomination
T Roper
1
4 (4) N/A 1 (1) 2 (2)
C Gulliver 4 (4) 3 (3) 1 (1) 2 (2)
D Wilde 4 (4) 3 (3) 1 (1) 2 (2)
J Heawood 4 (4) 3 (3) 1 (1) 2 (2)
1
Mr Roper is not a member of the Audit Committee but attended all meetings by
invitation.
Policy on Tenure
The Board’s policy on tenure is that Directors need not
serve on the Board for a limited period of time only.
The Board does not consider that the length of service
of a Director is as important as the contribution he or
she has to make, and therefore the length of service will
be determined on a case-by-case basis. However, in
accordance with corporate governance best practice
and the future need to refresh the Board over time, it is
currently expected that Directors will not typically serve on
the Board beyond the Annual General Meeting following
the ninth anniversary of their appointment.
Board Committees
Audit Committee
The Audit Committee Report is on pages 95 to 97 of this
Annual Report.
Nomination Committee
All appointments to the Board of Directors are considered
by the Nomination Committee which, due to the relatively
small size of the Board, comprises all of the Directors
and is chaired by the Chairman of the Company.
The Nomination Committee advises the Board on
succession planning, bearing in mind the balance of
skills, knowledge and experience existing on the Board,
and will make recommendations to the Board in this
regard. The Nomination Committee also advises the
Board on its balance of relevant skills, experience and
length of service of the Directors serving on the Board. The
Board’s overriding priority when appointing new Directors
in the future will be to identify the candidate with the best
range of skills and experience to complement existing
Directors. The Board recognises the benefits of diversity
and its policy on diversity is disclosed in the Strategic
Report on page 19 and also on page 83 above.
84 Annual Report 2023
The Committee has put in place the necessary procedures
to conduct, on an annual basis, an appraisal of the
Chairman of the Board, Directors’ individual self evaluation
and a performance evaluation of the Board as a whole and
its Committees. In 2023 the Board conducted an evaluation
based upon completed questionnaires covering the Board,
individual Directors, the Chairman and the Audit Committee
Chairman. The Chairman then met each Director
individually to review their responses whilst the Senior
Independent Director met with the Chairman to review
his performance.
In accordance with Principle 23 of the AIC’s Code of
Corporate Governance which recommends that all
directors of investment companies should be subject
to annual re-election by shareholders, all the members
of the Board with the exception of Ms Wilde, will retire
at the forthcoming Annual General Meeting and will
offer themselves for re-election. As part of the Board’s
succession planning, Ms Wilde will be retiring from the
Board at the conclusion of the Annual General Meeting.
In conjunction with the evaluation feedback, the Committee
has reviewed each of the proposed reappointments and
concluded that each of the Directors has the requisite high
level and range of business and financial experience and
recommends their re-election at the forthcoming AGM.
Details of the contributions provided by each Director
during the year are disclosed on pages 80 and 81.
The Board has initiated the search for a new independent
non executive Director but the process is on hold whilst the
strategic review is concluded. Succession planning will be
considered again once the result of the review is known.
Management Engagement Committee
The Management Engagement Committee comprises
all of the Directors and is chaired by Mr Heawood.
The Committee reviews the performance of the
Manager and Investment Manager and its compliance
with the terms of the management and secretarial
agreement. Theterms and conditions of the Manager’s
appointment, including an evaluation of fees, are reviewed
by the Committee on an annual basis. Based upon the
competitive management fee and expertise of the
Manager, the Committee believes that the continuing
appointment of the Manager on the terms agreed is in
theinterests of shareholders as a whole. The Committee
also at least annually reviews the Company’s relationships
with its other service providers. These reviews aim to
ensure that services being offered meet the requirements
and needs of the Company, provide value for money
and performance is in line with the expectations
of stakeholders.
Remuneration Committee
Under the FCA Listing Rules, where an investment trust has
only non-executive directors, the Code principles relating
to directors’ remuneration do not apply. Accordingly,
matters relating to remuneration are dealt with by the full
Board, which acts as the Remuneration Committee.
The Company’s remuneration policy is to set
remuneration at a level to attract individuals of a calibre
appropriate to the Company’s future development.
Further information on remuneration is disclosed in the
Directors’ Remuneration Report on pages 91 to 93.
Terms of Reference
The terms of reference of all the Board Committees
may be found on the Company’s website
eurologisticsincome.co.uk and copies are available from
the Company Secretary upon request. The terms of
reference are reviewed and re-assessed by the relevant
Board Committee for their adequacy on an annual basis.
Going Concern
In accordance with the Financial Reporting Council’s
guidance the Directors have undertaken a rigorous review
of the Company’s ability to continue as a going concern.
The Board has set limits for borrowing and regularly
reviews the level of any gearing, cash flow projections and
compliance with banking covenants.
The Directors are mindful of the principal risks and
uncertainties disclosed on pages 15 to 19 and the Viability
Statement on page 20 and have reviewed forecasts
detailing revenue and liabilities and they believe that the
Company has adequate financial resources to continue its
operational existence for the foreseeable future and at least
12 months from the date of this Annual Report.
In coming to this conclusion, the Board has also considered
the impact of geopolitical and economic turbulence on the
Company’s and its investments. The Investment Manager
is in contact with tenants and third party suppliers and
continues to have a constructive dialogue with all parties.
A range of scenarios have been modelled looking at
possible impact to cash flows in the short to medium term
and this is kept under regular review.
While the Company is obliged under its articles to hold a
continuation vote at the 2024 AGM, the Directors do not
believe this should automatically trigger the adoption
of a basis other than going concern in line with the
Association of Investment Companies (“AIC”) Statement
of Recommended Practice (“SORP”) which states that it is
usually more appropriate to prepare financial statements
on a going concern basis unless a continuation vote has
already been triggered and shareholders have voted
against continuation.
On 27 November 2023, the Board announced that it was
undertaking a Strategic Review. The Board is considering
all options available to the Company. There is no certainty
that any changes will result from the Strategic Review
and, for the avoidance of doubt, a continuation of the
Company’s current investment strategy with a rebased
85Annual Report 2023
target dividend level is a potential outcome of the Strategic
Review. The matters referred to above indicate existence
of material uncertainty. Nevertheless, the Directors believe
that it is appropriate to continue to adopt the going
concern basis in preparing the financial statements.
Additional details about going concern are disclosed in
note 1(a).
Management of Conflicts of Interest
The Board has a procedure in place to deal with a situation
where a Director has a conflict of interest. As part of this
process, the Directors prepare a list of other positions
held and all other conflict situations that may need to be
authorised either in relation to the Director concerned
or his/her connected persons. The Board considers
each Director’s situation and decides on any course of
action required to be taken if there is a conflict, taking into
consideration what is in the best interests of the Company
and whether the Director’s ability to act in accordance
with his or her wider duties is affected. Each Director is
required to notify the Company Secretary of any potential,
or actual, conflict situations that will need authorising by
the Board. Authorisations given by the Board are reviewed
at each Board meeting.
No Director has a service contract with the Company
although Directors are issued with letters of appointment
upon appointment. No Director had any interest in contracts
with the Company during the year or subsequently.
The Board has adopted appropriate procedures designed
to prevent bribery. The Company receives periodic reports
from its service providers on the anti-bribery policies of
these third parties. It also receives regular compliance
reports from the Manager.
The Criminal Finances Act 2017 introduced the corporate
criminal offence of “failing to take reasonable steps to
prevent the facilitation of tax evasion”. The Board has
confirmed that it is the Company’s policy to conduct all of
its business in an honest and ethical manner. The Board
takes a zero-tolerance approach to the facilitation of tax
evasion, whether under UK law or under the law of any
foreign country.
Accountability and Audit
The respective responsibilities of the Directors and the
auditor in connection with the financial statements are
set out on pages 94 and 105 respectively.
Each Director confirms that:
.
so far as he or she is aware, there is no relevant audit
information of which the Company’s auditor is
unaware; and,
.
each Director has taken all the steps that they ought to
have taken as a Director in order to make themselves
aware of any relevant audit information and to establish
that the Company’s auditor is aware of that information.
Additionally there have been no important events since
the year end that impact this Annual Report.
The Directors have reviewed the level of non-audit
services provided by the independent auditor during the
year amounting to £nil (2022: £20,000 in respect of the
production of a Supplementary Prospectus) and remain
satisfied that the auditor’s objectivity and independence is
being safeguarded.
Independent Auditor
The auditor, KPMG LLP, has indicated its willingness to
remain in office. The Directors will place a resolution before
the Annual General Meeting to re-appoint KPMG LLP as
auditor for the ensuing year, and to authorise the Directors
to determine its remuneration.
Internal Control
The Board is ultimately responsible for the Company’s
system of internal control and for reviewing its
effectiveness and confirms that there is an ongoing
process for identifying, evaluating and managing the
significant risks faced by the Company. This process has
been in place for the year under review and up to the date
of approval of this Annual Report and financial statements.
It is regularly reviewed by the Board and accords with the
FRC Guidance.
The Board has reviewed the effectiveness of the system of
internal control. In particular, it has reviewed the process for
identifying and evaluating the significant risks affecting the
Company and policies by which these risks are managed.
The Directors have delegated the investment management
of the Company’s assets to members of the abrdn
Group within overall guidelines, and this embraces
implementation of the system of internal control,
including financial, operational and compliance controls
and risk management. Internal control systems are
monitored and supported by the abrdn Group’s internal
audit function which undertakes periodic examination
of business processes, including compliance with the
terms of the management agreement, and ensures that
recommendations to improve controls
are implemented.
Risks are identified and documented through a risk
management framework by each function within
the abrdn Group’s activities. Risk includes financial,
regulatory, market, operational and reputational risk.
86 Annual Report 2023
This helps the abrdn group internal audit risk assessment
model identify those functions for review. Any weaknesses
identified are reported to the Board, and timetables are
agreed for implementing improvements to systems.
The implementation of any remedial action required is
monitored and feedback provided to the Board.
The significant risks faced by the Company have been
identified as being strategic; investment and asset
management; financial; regulatory; and operational.
The key components of the process designed by the
Directors to provide effective internal control are
outlined below:
.
the AIFM prepares forecasts and management
accounts which allows the Board to assess the
Company’s activities and review its performance;
.
the Board and AIFM have agreed clearly defined
investment criteria, specified levels of authority and
exposure limits. Reports on these issues, including
performance statistics and investment valuations,
are regularly submitted to the Board and there are
meetings with the AIFM and Investment Manager
as appropriate;
.
as a matter of course the AIFM’s compliance
department continually reviews abrdn’s operations and
reports to the Board on a six monthly basis;
.
written agreements are in place which specifically
define the roles and responsibilities of the AIFM and
other third party service providers and, where relevant,
ISAE3402 Reports, a global assurance standard for
reporting on internal controls for service organisations,
or their equivalents are reviewed;
.
the Board has considered the need for an internal audit
function but, because of the compliance and internal
control systems in place within abrdn, has decided to
place reliance on the Manager’s systems and internal
audit procedures. At its April 2024 meeting, the Audit
Committee carried out an annual assessment of
internal controls for the year ended 31 December 2023
by considering documentation from the AIFM and the
Depositary, including the internal audit and compliance
functions and taking account of events since
31 December 2023. The results of the assessment,
that internal controls are satisfactory, were then
reported to the Board at the subsequent Board meeting.
Internal control systems are designed to meet the
Company’s particular needs and the risks to which it is
exposed. Accordingly, the internal control systems are
designed to manage rather than eliminate the risk of
failure to achieve business objectives and by their nature
can only provide reasonable and not absolute assurance
against mis-statement and loss.
Substantial Interests
The Board has been advised that the following
shareholders owned 3% or more of the issued Ordinary
share capital of the Company at 31 December 2023
(based upon 412,174,356 shares in issue):
Fund Manager
Shares at
31-Dec-2023
% at
31-Dec-2023
East Riding of Yorkshire 33,000,000 8.0
RBC Brewin Dolphin Ireland 29,494,068 7.2
Quilter Cheviot Investment Management 25,053,097 6.1
BlackRock 22,762,321 5.5
Investec Wealth & Investment 21,545,349 5.2
Hargreaves Lansdown, stockbrokers (EO) 18,562,445 4.5
RBC Brewin Dolphin, stockbrokers 16,494,252 4.0
Canaccord Genuity Wealth Management
(Retail)
13,730,263 3.3
Interactive Investor (EO) 12,453,748 3.0
On 2 April 2024, Asset Value Investors Limited notified
the Company that its total holding of Ordinary shares
was 24,732,890 representing 6.0% of the issued class of
capital. Save as disclosed, there have been no significant
changes notified in respect of the above holdings between
31 December 2023 and 25 April 2024.
Relations with Shareholders
The Directors place a great deal of importance on
communication with shareholders. The Annual Report
will be widely distributed to other parties who have an
interest in the Company’s performance. Shareholders
and investors may obtain up to date information on the
Company through the freephone information service
shown under Investor Information and on the Company’s
website eurologisticsincome.co.uk.
abrdn Holdings Limited (aHL) has been appointed
Company Secretary to the Company. Whilst aHL is a
wholly owned subsidiary of the abrdn Group, there is
a clear separation of roles between the Manager and
Company Secretary with different board compositions
and different reporting lines in place. The Board notes that,
in accordance with Market Abuse Regulations, procedures
are in place to control the dissemination of information
within the abrdn plc group of companies when necessary.
Where correspondence addressed to the Board is
received there is full disclosure to the Board. This is kept
confidential if the subject matter of the correspondence
requires confidentiality.
87Annual Report 2023
The Board’s policy is to communicate directly with
shareholders and their representative bodies without
the involvement of representatives of the Manager
(including the Company Secretary and Investment
Manager) in situations where direct communication is
required and usually a representative from the Board is
available to meet with major shareholders on an annual
basis in order to gauge their views.
The Notice of the Annual General Meeting, included within
the Annual Report and financial statements, is sent out
at least 20 working days in advance of the meeting.
Innormal circumstances, all Shareholders have the
opportunity to put questions to the Board or the
Investment Manager, either formally at the Company’s
Annual General Meeting or at the subsequent buffet
luncheon for Shareholders. Shareholders are, however,
invited to send any questions for the Board and/or the
Investment Manager on the Annual Report by email to
European.Logistics@abrdn.com. The Company Secretary
is available to answer general shareholder queries at any
time throughout the year.
Annual General Meeting
The Annual General Meeting will be held on 24 June 2024
at the offices of FTI Consulting, 200 Aldersgate, Aldersgate
Street London, EC1A 4HD at 9:00 a.m. In addition to the
usual resolutions the following matters will be proposed at
the AGM:
Special Business Directors’ Authority to Allot
Relevant Securities
Approval is sought in Resolution 9, an ordinary resolution,
to renew the Directors’ existing general power to allot
shares but will also provide a further authority (subject
to certain limits) to grant rights to subscribe for or to
convert any security into shares under a fully pre-emptive
rights issue. The effect of Resolution 9 is to authorise the
Directors to allot up to a maximum of 272,035,075 shares
in total (representing approximately 66% (as at the latest
practicable date before publication of this Annual Report)
of the existing issued share capital of the Company),
of which a maximum of 136,017,537 shares (approximately
33% (as at the latest practicable date before publication
of this Annual Report) of the existing issued share capital
of the Company) may only be applied other than to fully
pre-emptive rights issues. This authority is renewable
annually and will expire at the conclusion of the next
Annual General Meeting in 2025, or 30 June 2025,
whichever is earlier. The Directors do not have any
immediate intention to utilise this authority.
Special Business Disapplication of Pre-emption Rights
Resolution 10 is a special resolution that seeks to renew
the Directors’ existing authority until the conclusion of the
next Annual General Meeting to make limited allotments of
shares for cash of up to a maximum of 41,217,435 shares
representing 10% of the issued share capital (as at the
latest practicable date before publication of this Annual
Report) other than according to the statutory pre-emption
rights which require all shares issued for cash to be offered
first to all existing shareholders.
This authority includes the ability to sell shares that have
been held in treasury (if any), having previously been
bought back by the Company. The Board has established
guidelines for treasury shares and will only consider buying
in shares for treasury at a discount to their prevailing
NAV and selling them from treasury at or above the then
prevailing NAV.
New shares issued in accordance with the authority sought
in Resolution 10 will always be issued at a premium to the
NAV per Ordinary share at the time of issue. The Board
will issue new Ordinary shares or sell Ordinary shares
from treasury for cash when it is appropriate to do so, in
accordance with its current policy. It is therefore possible
that the issued share capital of the Company may change
between the date of this document and the Annual General
Meeting and therefore the authority sought will be in
respect of 10% of the issued share capital as at the date
of the Annual General Meeting rather than the date of this
document. This authority is renewable annually and will
expire at the conclusion of the Annual General Meeting in
2025 or 30 June 2025, whichever is earlier.
Special Business Purchase of the Company’s Shares
Resolution 11 is a special resolution proposing to renew
the Directors’ authority to make market purchases of
the Company’s shares in accordance with the provisions
contained in the Companies Act 2006 and the Listing Rules
of the Financial Conduct Authority. The minimum price to
be paid per Ordinary share by the Company will not be
less than £0.01 per share (being the nominal value) and
the maximum price should not be more than the higher of
(i) an amount equal to 5% above the average of the
middle market quotations for an Ordinary share taken
from the London Stock Exchange Daily Official List for the
five business days immediately preceding the date on
which the Ordinary share is contracted to be purchased;
and (ii) the higher of the price of the last independent
trade and the current highest independent bid on the
trading venue where the purchase is carried out.
88 Annual Report 2023
The Directors do not intend to use this authority to
purchase the Company’s Ordinary shares unless to do so
would result in an increase in NAV per share and would be
in the interests of Shareholders generally. The authority
sought will be in respect of 14.99% of the issued share
capital as at the date of the Annual General Meeting
rather than the date of this document.
The Company’s shares have traded at a premium to NAV
per share for the majority of the life of the Company since
its launch, and therefore the Company has not bought
back any shares for treasury or cancellation. However,
the Board is very aware of the current wide share price
discount to NAV and regularly monitors this. The Directors
view buybacks as a very useful tool for seeking to assist in
the management of the liquidity of the Company shares
which could be used in the future as one of a number of
methods to address imbalances of supply and demand
which, arithmetically, can cause discounts to NAV per share.
Shares bought back would be purchased at a discount
to the prevailing NAV per share and the result would be
accretive to the NAV for all on-going shareholders.
The authority being sought will expire at the conclusion
of the Annual General Meeting in 2025 or 30 June 2025,
whichever is earlier unless it is renewed before that date.
Any Ordinary shares purchased in this way will either be
cancelled and the number of Ordinary shares will be
reduced accordingly or under the authority granted in
Resolution 10 above, may be held in treasury.
If Resolutions 9 to 11 are passed then an announcement
will be made on the date of the Annual General Meeting
which will detail the exact number of Ordinary shares to
which each of these authorities relates.
These powers will give the Directors additional flexibility
going forward and the Board considers that it will be in the
interests of the Company that such powers be available.
Such powers will only be implemented when, in the view
of the Directors, to do so will be to the benefit of
Shareholders as a whole.
Special Business Notice of Meetings
Resolution 12 is a special resolution seeking to authorise
the Directors to call general meetings of the Company
(other than Annual General Meetings) on 14 days’
clear notice. This approval will be effective until the
Company’s Annual General Meeting in 2025 or 30 June
2025 whichever is earlier. In order to utilise this shorter
notice period, the Company is required to ensure that
Shareholders are able to vote electronically at the general
meeting called on such short notice. The Directors confirm
that, in the event that a general meeting is called, they
will give as much notice as practicable and will only utilise
the authority granted by Resolution 12 in limited and time
sensitive circumstances.
Special Business Continuation of Company
In accordance with Article 163.2 the Directors are
required to propose an ordinary resolution that the
Company continue its business as presently constituted
(the “Continuation Resolution”) at the sixth annual
general meeting of the Company and every third annual
general meeting thereafter. Accordingly, Resolution 13
is an ordinary resolution proposing that the Company
continue its business as presently constituted. With the
Strategic Review still ongoing, the Board recommends that
shareholders vote in favour of the Company’s continuation
to ensure that the review can be completed properly
and the best outcome for shareholders delivered. It is
the Board’s current expectation that the result of the
Strategic Review will be announced ahead of the AGM,
so shareholders should have the benefit of a clear picture
of the proposed way forward by the time that they are
asked to vote. Should the Board not be in a position to
communicate the outcome (or likely outcome) of the
Strategic Review ahead of the AGM, the Board would
ensure that shareholders were provided with the
opportunity to vote on the future direction of the Company
as and when the Review was completed (unless the
proposed course of action arising from the Strategic
Review in and of itself required a shareholder vote).
If the Continuation Resolution is not passed, the Articles
require the Directors to cease further investment, the
properties in the Company’s portfolio to be sold in an
orderly fashion as market demand appears and the
net funds, determined by the Directors as available for
distribution, to be distributed to Shareholders.
Dividend Policy
As a result of the timing of the payment of the Company’s
quarterly dividends, the Company’s Shareholders are
unable to approve a final dividend each year. In line
with good corporate governance, theBoard therefore
proposes to put the Company’s dividend policy to
Shareholders for approval at the Annual General Meeting
and on an annual basis.
Resolution 13 is an ordinary resolution to approve the
Company’s dividend policy. The Company’s dividend
policy shall be that dividends on the Ordinary shares are
payable quarterly in relation to periods ending March,
June, September and December and the last dividend
referable to a financial year end will not be categorised as
a final dividend that is subject to Shareholder approval.
It is intended that the Company will pay quarterly
dividends consistent with the expected annual underlying
portfolio yield. The Company has the flexibility in
accordance with its Articles to make distributions
from capital.
89Annual Report 2023
Shareholders should note that references to ‘‘dividends’’
are intended to cover both dividend income and income
which is designated as an interest distribution for UK tax
purposes and therefore subject to the interest streaming
regime applicable to investment trusts.
Recommendation
Your Board considers Resolutions 9 to 13 to be in
the best interests of the Company and its members as
a whole and most likely to promote the success of the
Company for the benefit of its members as a whole.
Accordingly, your Board unanimously recommends that
Shareholders should vote in favour of all Resolutions to be
proposed at the AGM, as they intend to do in respect of
their own beneficial shareholdings amounting to 347,187
Ordinary shares.
By order of the Board
abrdn Holdings Limited - Company Secretaries and
Registered Office
280 Bishopsgate
London EC2M 4AG
25 April 2024
90 Annual Report 2023
Governance
Directors’ Remuneration Report
The Board has prepared this report in accordance with
the regulations governing the disclosure and approval
of Directors’ remuneration. This Directors’ Remuneration
Report comprises three parts:
Remuneration Policy
Which is subject to a binding shareholder vote every three
years (or sooner if varied during this interval) – approved
by Shareholders at the AGM held on 6 June 2022;
Implementation Report
Which provides information on how the Remuneration
Policy has been applied during the year and which is
subject to an advisory vote on the level of remuneration
paid during the year; and
Annual Statement
Which confirms compliance with the regulations.
The law requires the Company’s Auditor to audit certain of
the disclosures provided in this report. Where disclosures
have been audited, they are indicated as such. The auditor’s
opinion is included in the report on page 99.
Remuneration Policy
The Directors’ remuneration policy takes into consideration
the principles of UK Corporate Governance and there
have been no changes to the policy during the year nor
are there any changes proposed for the foreseeable
future. No shareholder views were sought in setting the
remuneration policy although any comments received
from shareholders are considered by the Board.
As the Company has no employees and the Board is
comprised wholly of non-executive Directors and,
given the size and nature of the Company, the Board has
not established a separate Remuneration Committee.
Directors’ remuneration is determined by the Board as
a whole.
The Directors are non-executive and the Company’s
Articles of Association limit the annual aggregate fees
payable to the Board of Directors to £300,000 per annum.
This cap may be increased by shareholder resolution from
time to time.
Fees payable to Directors in respect of the year ended
31 December 2023 were:
£
Chairman 54,000
Chairman of Audit Committee 42,000
Director 36,000
Subject to this overall limit, the Board’s policy is that the
remuneration of non-executive Directors should reflect the
nature of their duties, responsibilities and the value of their
time spent and be fair and comparable to that of other
investment trusts that are similar in size, have a similar
capital structure and have a similar investment objective.
Appointment
.
The Company only appoints non-executive Directors.
.
Directors must retire and be subject to election at the
first AGM after their appointment, and voluntarily submit
themselves for annual election.
.
New appointments to the Board will be placed on the
fee applicable to all Directors at the time of appointment.
.
No incentive or introductory fees will be paid to
encourage a Directorship.
.
The Directors are not eligible for bonuses, pension
benefits, share options, long-term incentive schemes or
other benefits.
.
Directors are entitled to re-imbursement of out-of-
pocket expenses incurred in connection with the
performance of their duties, including travel expenses.
.
The Company indemnifies its Directors for all costs,
charges, losses, expenses and liabilities which may be
incurred in the discharge of duties, as a Director of
the Company.
Performance, Service Contracts, Compensation and
Loss of Office
.
The Directors’ remuneration is not subject to any
performance-related fee.
.
No Director has a service contract, although Directors
are issued with letters of appointment.
.
No Director has an interest in any contracts with the
Company during the year or subsequently.
.
The terms of appointment provide that a Director may
be removed upon three months’ notice.
.
Compensation will not be due upon leaving office.
.
No Director is entitled to any other monetary payment or
to any assets of the Company.
Directors’ and Officers’ liability insurance cover is
maintained by the Company on behalf of the Directors.
Under the Articles, the Company indemnifies each of
the Directors out of the assets of the Company against
any liability incurred by them as a Director in defending
proceedings or in connection with any application to the
Court in which relief is granted and separate deeds of
indemnity exist in this regard between the Company and
each Director.
The Remuneration Policy was approved at the AGM held
on 6 June 2022 and became effective for the three year
period commencing from the conclusion of that AGM.
91Annual Report 2023
Implementation Report
Directors’ Fees
The Board has carried out an annual review of the level
of fees payable to Directors including analysis of fees
paid by comparable investment companies. In addition,
the Board considered the need to remain competitive to
attract the required calibre of experienced non executive
Director as part of the forthcoming succession planning
and also took into account the findings of the independent
external review of fees that had been undertaken in
2022. The Board concluded that the level of fees payable
should be increased from 1 July 2024, to £58,000 for the
Chairman (+£4,000), £45,000 for the Audit Committee
Chairman (+£3,000) and £38,000 for other Directors
(+£2,000). The fees were last increased with effect from
1 January 2023. There are no further fees to disclose
as the Company has no employees, chief executive or
executive directors.
Company Performance
The following chart illustrates the total shareholder return
(including reinvested dividends) for a holding in the
Company’s shares as compared to the FTSE All Share
Index for the period from launch to 31 December 2023
(rebased to 100 at launch). Given the absence of any
meaningful index with which to compare performance,
the FTSE All Share index is deemed to be the most
appropriate one against which to measure the
Company’s performance.
Inception to 31 December 2023
Share Price Total Return FTSE All Share Total Return
60
70
80
90
100
110
120
130
140
150
160
Dec 23
Dec 22
Dec 21
Dec 20
Dec 19
Dec 18
Dec 17
Source: abrdn, Factset.
Statement of Voting at Annual
General Meeting
At the Company’s AGM held on 12 June 2023, Shareholders
approved the Directors’ Remuneration Report in respect
of the year ended 31 December 2022 (other than the
Directors’ Remuneration Policy for the three years ending
30 June 2025 which was approved at the AGM held on
6 June 2022). The following proxy votes were received
on the resolutions:
Resolution For
*
Against Withheld
(2) Receive and
Adopt Directors’
Remuneration Report
214.5m
(99.2%)
1.6m
(0.8%)
0.04m
(3) Approve Directors’
Remuneration Policy
195.9m
(99.9%)
0.3m
(0.1%)
0.05m
* Including discretionary votes.
Spend on Pay (Audited)
Fees Payable
The Directors received the following fees which exclude
employers’ NI and any VAT payable for the year ended
31 December 2023 and the year ended 31 December 2022.
Fees are pro-rated where a change takes place during a
financial year.
Director
2023
£’000
2022
£’000
T Roper 54 50
C Gulliver 42 40
J Heawood 36 35
D Wilde 36 35
Total 168 160
In euro terms the Directors were paid €193,000
(2022: €186,000).
92 Annual Report 2023
The table below shows the actual expenditure in the year in
relation to Directors’ remuneration and shareholder dividends.
2023
€’000
2022
€’000
Directors’ Fees paid 193 186
Dividends paid 23,248 23,248
Sums Paid to Third Parties
None of the fees disclosed above were payable to third
parties in respect of making available the services of
the Directors.
Annual Percentage Change in Directors’ Remuneration
The table below sets out the annual percentage change in
Directors’ fees for the past four years. The 2020 increases
reflected the lower level of fees paid from the initial public
offering and were the first increases implemented.
Year ended
31 Dec 2023
%
Year ended
31 Dec 2022
%
Year ended
31 Dec 2021
%
Year ended
31 Dec 2020
%
T Roper
1
8.0 2.0 4.3 32.2
C Gulliver 5.0 2.6 2.6 8.6
J Heawood 2.9 2.9 3.0 10.0
D Wilde 2.9 2.9 3.0 10.0
1
Tony Roper was appointed Chairman on 11 June 2019.
Directors’ Interests in the Company
The Directors are not required to have a shareholding
in the Company. The Directors’ interests in contractual
arrangements with the Company are as shown in
note 23 to the financial statements. The Directors
(including connected persons) at 31 December 2023
had no interest in the share capital of the Company other
thanthose interests, all of which are beneficial interests,
shownin the table below.
31 Dec 2023
Ordinary shares
31 Dec 2022
Ordinary shares
T Roper 122,812 102,812
C Gulliver 90,000 72,500
J Heawood 60,000 60,000
D Wilde 74,375 74,375
These interests were unchanged at 25 April 2024,
being the nearest practicable date prior to the signing of
this Report.
Annual Statement
On behalf of the Board and in accordance with Part 2 of
Schedule 8 of the Large and Medium-sized Companies
and Groups (Accounts and Reports) (Amendment)
Regulations 2013, I confirm that the above Report on
Remuneration Policy and Remuneration Implementation
summarises, as applicable, for the year ended
31December 2023:
.
the major decisions on Directors’ remuneration;
.
any substantial changes relating to Directors’
remuneration made during the year; and
.
the context in which the changes occurred and
in which decisions have been taken.
Tony Roper
Chairman
25 April 2024
93Annual Report 2023
Governance
Statement of Directors’ Responsibilities in Respect of the
Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual
Report and the Group and parent Company financial
statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare Group
and parent Company financial statements for each
financial year. Under that law they are required to prepare
the Group financial statements in accordance with
UK-adopted international accounting standards and
applicable law and have elected to prepare the parent
Company financial statements in accordance with UK
accounting standards and applicable law, including FRS
101 Reduced Disclosure Framework.
Under company law the Directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group
and parent Company and of the Group’s profit or loss for
that period. In preparing each of the Group and parent
Company financial statements, the Directors are
required to:
.
select suitable accounting policies and then apply
them consistently;
.
make judgements and estimates that are reasonable,
relevant, reliable and prudent;
.
for the Group financial statements, state whether they
have been prepared in accordance with UK-adopted
international accounting standards;
.
for the parent Company financial statements,
state whether applicable UK accounting standards
have been followed, subject to any material departures
disclosed and explained in the parent Company
financial statements;
.
assess the Group and parent Company’s ability to
continue as a going concern, disclosing, as applicable,
matters related to going concern; and
.
use the going concern basis of accounting unless
they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the parent Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the parent Company and enable them to
ensure that its financial statements comply with the
Companies Act 2006. They are responsible for such
internal control as they determine is necessary to enable
the preparation of financial statements that are free from
material misstatement, whether due to fraud or error,
and have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of
the Group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Strategic Report,
Directors’ Report, Directors’ Remuneration Report and
Corporate Governance Statement that complies with
that law and those regulations.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website. Legislation in the UK
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
In accordance with Disclosure Guidance and
Transparency Rule 4.1.14R, the financial statements will
form part of the annual financial report prepared using
the single electronic reporting format under the TD
ESEF Regulation. The auditor’s report on these financial
statements provides no assurance over the ESEF format.
Responsibility statement of the Directors in
respect of the annual financial report
We confirm that to the best of our knowledge:
.
the financial statements, prepared in accordance with
the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the company and the undertakings
included in the consolidation taken as a whole; and
.
the Strategic Report/Directors’ Report includes a
fair review of the development and performance of
the business and the position of the issuer and the
undertakings included in the consolidation taken as a
whole, together with a description of the principal risks
and uncertainties that they face.
We consider the Annual Report and financial statements,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders
to assess the Group’s position and performance,
business model and strategy.
By order of the Board
Tony Roper
25 April 2024
94 Annual Report 2023
Governance
Report of the Audit Committee
I am pleased to present the report of the Audit Committee
(the ‘Committee’) for the year ended 31 December 2023
which has been prepared in compliance with
applicable legislation.
Committee Composition
The Audit Committee comprises three independent
Directors: Mr Heawood, Ms Wilde and myself (Ms Gulliver)
as Chairman. The Directors have satisfied themselves
that at least one of the Committee’s members has recent
and relevant financial experience. Iam a member of the
Institute of Chartered Accountants of Scotland (ICAS)
and I confirm that the Audit Committee as a whole has
competence relevant to the investment trust sector and
that at least one member has competence in accounting.
Functions of the Committee
The principal function of the Committee is to assist the
Board in relation to the reporting of financial information,
the review of financial controls and the management
of risk. The Committee has defined terms of reference
which are reviewed and re-assessed for their adequacy
on an annual basis. Copies of the terms of reference are
published on the Company’s website.
The Committee’s main audit review functions are
listedbelow:
.
to review and monitor the internal control systems and
risk management systems (including review of non-
financial and emerging risks) on which the Company
is reliant;
.
to develop and implement policy on the engagement
of the Auditor to supply non-audit services. No non-
audit fees were paid to the Auditor during 2023
(2022: £20,000 in respect of the production of a
supplementary prospectus). The Audit Committee
reviews and approves the provision of all non-audit
services in the light of the potential for such services to
impair the Auditor’s independence;
.
to consider annually whether there is a need for the
Company to have its own internal audit function;
.
to review and challenge the investment valuation
process employed by the Investment Manager;
.
to monitor the integrity of the half-yearly and annual
financial statements of the Company by reviewing,
and challenging where necessary, the actions and
judgements of the Investment Manager;
.
to review, and report to the Board on, the significant
financial reporting issues and judgements made in
connection with the preparation of the Company’s
financial statements, interim reports, announcements
and related formal statements;
.
to review the content of the Half Yearly Report and
Annual Report and Financial Statements and advise the
Board on whether, taken as a whole, it is fair, balanced
and understandable and provides the information
necessary for Shareholders to assess the Company’s
performance, business model and strategy;
.
to meet with the Auditor to review their proposed audit
programme of work and the findings of the Auditor.
The Committee shall also use this as an opportunity
to assess the effectiveness of the audit process;
.
to review a statement from the Manager detailing the
arrangements in place within the AIFM whereby the
AIFM staff may, in confidence, escalate concerns about
possible improprieties in matters of financial reporting or
other matters (“whistleblowing”);
.
to make recommendations in relation to the
appointment of the Auditor and to approve the
remuneration and terms of engagement of the Auditor;
.
to review the Company’s audit arrangements and
consider the requirement for an audit tender in line with
best practice;
.
to monitor and review annually the Auditor’s
independence, objectivity, effectiveness, resources
and qualification;
.
to investigate, when an auditor resigns, the reasons
giving rise to such resignation and consider whether any
action is required; and
.
to consider the Company’s correspondence with the FRC.
Performance Evaluation of the Committee
In 2023 an evaluation of the Audit Committee was
conducted by the Board. The evaluation, which concluded
that the Committee operated effectively, was based upon
questionnaires and the results allowed the Committee
members to agree priorities for future consideration.
Activities During the Year
The Audit Committee met three times during the year
when it considered the Half Yearly Report in detail,
reviewed the Auditor’s audit planning report and reviewed
the Annual Report and financial statements. The reviews of
the Half Yearly Report and Annual Report included detailed
work in relation to the Going Concern status and viability
of the Company together with significant oversight of the
preparation of the financial statements. Representatives of
the AIFM’s internal audit, risk and compliance departments
reported to the Committee at these meetings on matters
such as internal control systems, risk and the conduct of
the business in the context of its regulatory environment.
The Audit Committee continues to believe that the
Company does not require an internal audit function of
its own as it delegates its day to day operations to third
parties from whom it receives internal controls reports.
95Annual Report 2023
Review of Internal Control Systems and Risk
The Committee considers the internal control systems
and a matrix of risks at each of its meetings. There is more
detail on the process of these reviews in the Directors’
Report. In addition, details of the principal risks faced by the
Company can be found within the Strategic Report on
pages 15 to 19.
Financial Statements and Significant Issues
During its review of the Company’s financial statements for
the year ended 31 December 2023, the Audit Committee
considered the following significant issues, including,
in particular, those communicated by the Auditor as
key areas of audit emphasis during their planning and
reporting of the year end audit.
Valuation of Investment Property – The valuation of
the Group’s investment properties is performed by an
independent external valuer in accordance with the RICS
Red Book. The valuation of investment property requires
significant judgement and estimates by the independent
valuer. The Committee is responsible for reviewing and
challenging the investment valuation process employed.
The independent valuer is appointed by the Manager
and its direct property pricing committee is responsible
for ensuring that the valuation is independent, fair and
compliant with the abrdn valuation policies. Portfolio
managers are responsible for correcting any matters of
factual inaccuracy during the valuation process but are
not permitted to express any opinion in relation to the
valuation itself.
Fair Value of Group Loans Receivable – The carrying amount
of the group loan balance represents 69% of the parent
Company’s total assets. Their measurement is not at a high
risk of significant misstatement or subject to significant
judgement. In structuring the group loan arrangements the
Manager has received specialist advice and is therefore
confident of the recoverability of these loans.
Going Concern
On 27 November 2023, the Board announced that it was
undertaking a Strategic Review and considering all options
available to the Company. There is no certainty that any
changes will result from the Strategic Review.
The matters referred to above indicate the existence of
material uncertainty. Nevertheless, the Directors believe
that it is appropriate to continue to adopt the going
concern basis in preparing the financial statements.
Review of Financial Statements
The Committee is responsible for the preparation of the
Company’s Annual Report. The process is extensive,
requiring input from a number of different third party
service providers. The Committee reports to the Board on
whether, taken as a whole, the Annual Report and financial
statements are fair, balanced and understandable.
In so doing, the Committee has considered the
following matters:
.
the existence of a comprehensive control framework
surrounding the production of the Annual Report and
Financial Statements which includes a number of
different checking processes;
.
the existence of extensive levels of reviews as part
of the production process involving the depositary,
the AIFM, the Company Secretary and the Auditor
as well as the Committee’s own expertise;
.
the controls in place within the various third party service
providers to ensure the completeness and accuracy of
the financial records and the security
of the Company’s assets;
.
the externally audited internal control reports of
abrdn plc, and related service providers.
.
Considered letters received from the FRC and the
Company’s response letters which related to disclosure
around valuation inputs and enhancement of disclose
related to this area.
The Committee has reviewed the Annual Report and the
work undertaken by the third party service providers and
is satisfied that, taken as a whole, the Annual Report and
Financial Statements is fair, balanced and understandable.
The Committee has reported its findings to the Board
which in turn has made its own statement in this regard in
the Directors’ Responsibility Statement on page 94.
Financial Reporting Council
During the year, the Company received a letter from
the FRC following the review of the Company’s Annual
Report and Financial Statements for the year ended
31 December 2022 which requested information principally
relating to valuation inputs used in property valuation.
Following explanations and further details provided by
the Company to the FRC, the FRC closed its inquiry.
No restatement of the financial statements was required as
a result of the FRC’s inquiry. The Company has enhanced
certain disclosures made in the financial statements in
response to the points raised in the FRC’s letter.
The FRC’s review provides no assurance that the 2022
abrdn European Logistics Income plc Annual Report and
Financial Statements are correct in all material respects.
The FRC’s role is not to verify the information provided
but to consider compliance with reporting requirements.
The FRC letters are written on the basis that the FRC
(which includes the FRC’s officers, employees and agents)
accepts no liability for reliance on them by the Company
or any third party, including but not limited to investors
and shareholders.
96 Annual Report 2023
EPRA Best Practices recommendations
(BPRs) Award
The Company has attained the top-rated gold level
awarded by EPRA for compliance with its ‘Best Practice
Recommendations’ in financial reporting based on the
Annual Report and Financial Statements for the year
ended 31 December 2022.
Review of Auditor
The Audit Committee has reviewed the effectiveness of
the Auditor including:
.
Independence: the Auditor discusses with the Audit
Committee, at least annually, the steps it takes to
ensure its independence and objectivity and makes the
Committee aware of any potential issues, explaining all
relevant safeguards;
.
Quality of audit work: (i) the ability to resolve issues
in a timely manner – the Audit Committee is confident
that identified issues are satisfactorily and promptly
resolved; (ii) its communications/presentation of outputs
– the Audit Committee is satisfied that the explanation of
the audit plan, any deviations from it and the subsequent
audit findings are comprehensible; and (iii) working
relationship with management – the Audit Committee
is satisfied that the Auditor has a constructive working
relationship with the Manager; and,
.
Quality of people and service including continuity and
succession plans: the Audit Committee is satisfied
that the audit team is made up of sufficient, suitably
experienced staff.
The Audit Committee therefore supports the
recommendation to the Board that the reappointment of
the Auditor be put to Shareholders for approval at the AGM.
Tenure of the Auditor
KPMG has held office as Auditor since the incorporation
of the Company in 2017. In accordance with present
professional guidelines the audit director will be rotated
after no more than five years and the year ended
31 December 2023 is the first year for which the present
director has served. The Committee considers KPMG,
the Company’s auditor, to be independent of the Company.
Companies Act legislation requires listed companies to
tender the audit every 10 years and rotate after a maximum
of 20 years. The Committee therefore expects to conduct a
tender for audit services by 2027 at the latest.
Caroline Gulliver
Audit Committee Chairman
25 April 2024
97Annual Report 2023
Financial Statements
The audited net asset value (“NAV”) per share as at 31 December 2023 was
93.4c (GBp 81.2p), compared with the NAV per share of 118.9c (GBp 105.4p)
at the end of 2022, reflecting, with the interim dividends paid, a NAV total return
of -17.1% (2022: -3.8%) for the year in euro terms.
98 Annual Report 2023
Financial Statements
Independent Auditor’s Report to the Members of
abrdn European Logistics Income plc
[UPDATED AUDIT REPORT
TO BE SUPPLIED]
1. Our opinion is unmodified
We have audited the financial statements of abrdn
European Logistics Income plc (“the Company” or “the
Parent Company”) and its subsidiaries (together “the
Group”) for the year ended 31 December 2023 which
comprise the Consolidated Statement of Comprehensive
Income, Consolidated Balance Sheet, Consolidated
Statement of Changes in Equity, Consolidated Statement
of Cash Flows, Parent Company Balance Sheet, Parent
Company Statement of Changes in Equity, and the
related notes, including the accounting policies in note
1.
In our opinion:
— the financial statements give a true and fair view of
the state of the Group’s and of the Parent
Company’s affairs as at 31 December 2023 and of
the Group’s net return for the year then ended;
— the Group financial statements have been properly
prepared in accordance with UK-adopted
international accounting standards;
— the Parent Company financial statements have been
properly prepared in accordance with UK accounting
standards, including FRS 101 Reduced Disclosure
Framework;and
— the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities are described
below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our
opinion. Our audit opinion is consistent with our report
to the audit committee.
We were first appointed as auditor by the shareholders on
14 November 2017. The period of total uninterrupted
engagement is for the six financial years ended 31
December 2023. We have fulfilled our ethical
responsibilities under, and we remain independent of the
Group in accordance with, UK ethical requirements including
the FRC Ethical Standard as applied to listed public interest
entities. No non-audit services prohibited by that standard
were provided.
Independent
auditor’s report
to the members of abrdn European Logistics Income plc
Overview
Materiality:
group financial
statements as a
whole
€6.9 m (2022:€7.6m)
1.00% (2022: 0.94%) of Total Assets
Coverage 100% (2022:100%) of group total
assets
Key audit matters vs 2022
New risks Going Concern
Recurring risks Valuation of investment
properties
◄►
Recoverability of Parent
Company’s loans due
from Group entities.
◄►
99Annual Report 2023
2. Material uncertainty related to going concern
The risk
Our response
Going Concern
We draw attention to note 1 to the
financial statements which indicates
that following the announcement on
27th November 2023 and as at the
date of approval of the annual report,
the Board is undertaking a strategic
review of the options available to the
Company (the “Strategic Review”).
The Board is considering all options
that offer maximum value for the
shareholders including, but not
limited to, undertaking some form of
consolidation, combination, merger,
or comparable corporate action,
selling the entire issued share capital
of the Company, and selling the
Company’s portfolio and returning
monies to shareholders.
These events and conditions, along
with the other matters explained in
note 1, constitute a material
uncertainty that may cast significant
doubt on the group’s and the parent
company’s ability to continue as a
going concern.
Our opinion is not modified in respect
of this matter.
Disclosure quality
The financial statements explain how the
Board has formed a judgement that it is
appropriate to adopt the going concern
basis of preparation for the Group and
Parent Company.
That judgement is based on an evaluation of
the inherent risks to the Group’s and
Company’s business model and how those
risks might affect the Group’s and
Company’s financial resources or ability to
continue operations over a period of at least
a year from the date of approval of the
financial statements.
There is little judgement involved in the
directors’ conclusion that risks and
circumstances described in note 1 to the
financial statements represent a material
uncertainty over the ability of the Group
and Company to continue as a going
concern for a period of at least a year
from
the date of approval of the financial
statements.
However, clear and full disclosure of the
facts and the directors’ rationale for the use
of the going concern basis of preparation,
including that there is a related material
uncertainty, is a key financial statement
disclosure and so was the focus of our audit
in this area. Auditing standards require that
to be reported as a key audit matter.
Our procedures included:
•
Assessing transparency: Considered whether
the going concern disclosure in note 1 to the
financial statements gives a full and accurate
description of the directors’ assessment of going
concern including the identified risks,
dependencies, and related sensitivities.
Our assessment of the Group’s going concern
assessment also included:
•
Strategy review assessment: We performed
inquiries with the Group’s financial adviser and
directors to understand the latest status of the
Strategic Review.
•
Cashflow assessment review: We obtained and
inspected the Group’s cashflow forecasts,
including downside scenarios. We challenged
assumptions used within their forecasts with our
own expectations based on our knowledge of
the entity and experience of the industry in
which it operates.
•
Covenant assessment: We also inspected the
loan agreement for covenants and recalculated
the Group’s position as at the year-end. Where
we identified tighter headroom for some loan
covenants we evaluated the Group’s options to
mitigate the risks of covenant breaches.
Our results
We found the going concern disclosure in note 1
with a material uncertainty to be acceptable.
100 Annual Report 2023
3. Other key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements
and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those
which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. Going concern is a significant key audit matter and is described in section 2 of our report. We summarise below the
other key audit matters (unchanged from 2022) in decreasing order of audit significance, in arriving at our audit opinion above, together
with our key audit procedures to address those matters and, as required for public interest entities, our results from those procedures.
These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our
audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we
do not provide a separate opinion on these matters.
[We continue to perform procedures over [identify key audit matter]. However, following [explain why risk is less significant this year], we
have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not separately identified in our report
this year.]
The risk Our response
Valuation of investment properties
(€653.7 million*; 2022: €776.6m)
Refer to page 95 (Report of the Audit
Committee), page 114 (accounting
policy) and page 121 (financial
disclosures).
*includes €17.5 million of investment
properties held-for-sale
Subjective valuation
The carrying amount of the Group’s
property portfolio makes up 94%* (2022:
95%) of the Group’s total assets by value.
Valuation of the Group’s investment
properties are performed by external
valuation advisers.
The valuation of investment property
requires significant judgement and
estimates by management and the external
valuation advisers. As a result there is an
inherent risk that the subjective
assumptions used in the calculations of fair
value are inappropriate. In certain periods,
such as the period around 31 December
2023, real estate transactions are subdued
and the judgement of the valuation advisers
is magnified in that context.
The effect of these matters is that, as part of
our risk assessment, we have determined
that the valuation of investment properties
has a high degree of estimation uncertainty,
with a potential range of reasonable
outcomes greater than our materiality for
the financial statements a whole, and
possibly many times that amount. The
financial statements disclose the sensitivity
of the estimate to changes in the
capitalisation/discount rate/equivalent yield
and Estimated Rental Value (‘ERV’).
We performed the detailed tests below rather than
seeking to rely on controls, because the nature of
the balance is such that we would expect to obtain
audit evidence primarily through the detailed
procedures described:
1. Assessing valuation advisers’ credentials:
Critically assessing the independence,
professional qualifications, competence and
experience of the external valuation advisers
used by the Group to determine whether there
were any matters that might have affected
their objectivity or may have imposed scope
limitations upon their work.
2. Methodology choice:
Critically assessing the methodology used by
the external valuation advisers by considering
whether their valuations were prepared in
accordance with market practice for the
estimation of fair value and relevant
accounting standards.
3. Benchmarking assumptions:
For a sample of properties, selected using a
risk based approach, challenging the key
assumptions upon which the valuations were
based, with the assistance of a valuation
specialist. This included assumptions relating
to ERV, discount rate, growth rate and
yield/capitalisation rate by making a
comparison to our own assumptions
independently derived from market data.
4. Input assessment:
Agreeing observable inputs used in the
valuations, such as rental income, lease
incentives, break clauses and lease lengths
back to lease agreements for a sample of
leases.
5. Disclosure assessment:
Critically assessing the adequacy of the
Group’s disclosures in relation to the
accounting estimate. We recognised the
significance of providing appropriate
sensitivity analysis disclosure to reflect the
limited transactional evidence that underpins
key assumptions and that the directors have
reflected this appropriately in the ranges.
Our results
We found the Group’s valuation of investment
properties to be acceptable (2022: acceptable).
101Annual Report 2023
4. Our application of materiality and an overview of the
scope of our audit
Materiality for the Group financial statements as a whole was
set at €6.9m (2022: €7.6m), determined with reference to a
benchmark of total assets, of which it represents 1.00% (2022:
0.94%).
Materiality for the Parent Company financial statements as a
whole was set at €3.6m (2022: €4.2m), determined with
reference to a benchmark of total assets, of which it represents
1.00% (2022: 0.98%).
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an
acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a
material amount across the financial statements as a whole.
Group and Parent Company performance materiality was set at
75% (2022: 75%) of materiality for the financial statements as a
whole, which equates to €5.2m (2022: €5.7m), (Parent Company
€2.7m (2022: €3.1m)). We applied this percentage in our
determination of performance materiality because we did not
identify any factors indicating an elevated level of risk.
In addition, we applied a materiality of €760k (2022: €753k) to
the rental income for which we believe misstatements of a
lesser amounts than materiality for the financial statements as a
whole could reasonably be expected to influence the members’
assessment of the financial performance of the Group.
Performance materiality over rental income was set at 75%
(2022: 65%) of rental income materiality, which equates to
€570k (2022: €498k). We applied this percentage in our
determination of performance materiality for this balances
based on the level of identified misstatements during the prior
period in relation to this balances.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding €347k (2022:
€384k), in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Group Total Assets
€693.9m (2022: €817.8m)
Materiality
€6.9m (2022: €7.6m)
Total Assets
Group materiality
€6.9m
Whole financial
statements
materiality (2022:
€7.6m)
€5.2m
Whole financial
statements performance
materiality (2022: €5.7m)
€760k
Materiality over rental income
(2022: €753K)
€347k
Misstatements
reported
to the
audit committee (2022: €384K)
The Group team performed the audit of the Group as if it was a single
aggregated set of financial information. The audit was performed using the
materiality levels set out above and was performed by our team based in the
United Kingdom.
The scope of the audit work performed was fully substantive as we did not rely
upon the Group’s internal controls over financial reporting.
The risk Our response
Recoverability of the Parent
Company’s loans due from Group
entities (Parent Company Key Audit
Matter)
(€249.3m; 2022: €254.3m)
Refer to page 95 (Report of the Audit
Committee), page 141 (accounting
policy) and page 145 (financial
disclosures).
Low risk, high value
The carrying amount of the parent loan
balance represents 68.4% (2022: 58.6%) of
the Parent Company’s total assets. The
parent loans are measured at amortised cost
less impairment. The key risk to measurement
is if the borrower could not repay them.
Due to their materiality in the context of
the Parent Company financial statements,
this is considered to be the area that
requires the greatest effort in the Parent
Company audit and is hence a Key Audit
Matter.
We performed the detailed tests below rather than
seeking to rely on controls, because the nature of the
balance is such that we would expect to obtain audit
evidence primarily through the detailed procedures
described:
Test of details:
• Comparing the carrying amount of the parent loan
balances with the relevant subsidiaries’ draft
balance sheets to identify whether their net
assets, being an approximation of their minimum
recoverable amount, were in excess of their
carrying amount and assessing whether those
subsidiaries are profit-making.
Our results
We found the balance of the Parent Company loans to
be acceptable (2022: acceptable).
102 Annual Report 2023
5. Going concern basis of preparation
The directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the
Company or to cease their operations, and as they have
concluded that the Group’s and the Company’s financial position
means that this is realistic for at least a year from the date of
approval of the financial statements (“the going concern period”).
As stated in section 2 of our report, they have also concluded that
there is a material uncertainty related to going concern.
An explanation of how we evaluated management’s assessment
of going concern is set out section 2 of our report.
Our conclusions based on this work:
— we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is
appropriate;
— we have nothing material to add or draw attention to in
relation to the directors’ statement in Note 1 (a) to the financial
statements on the use of the going concern basis of accounting,
and their identification therein of a material uncertainty over the
Group and Company’s ability to continue to use that basis for the
going concern period,; and
— the related statement under the Listing Rules set out on page
85 is materially consistent with the financial statements and our
audit knowledge .
6. Fraud and breaches of laws and regulations – ability to
detect
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (“fraud
risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity
to commit fraud. Our risk assessment procedures included:
—Enquiring of the directors of whether they are aware of fraud
and of the Group’s high-level policies and procedures to prevent
and detect fraud;
— Reading Board and Audit Committee minutes; and
— Assessing the segregation of duties in place between the
directors, the administrators and the Group’s and Parent
Company’s Investment Manager.
As required by auditing standards, we perform procedures to
address the risk of management override of controls, in
particular to the risk that management may be in a position to
make inappropriate accounting entries.
On this audit we do not believe there is a fraud risk related to
revenue recognition because the Group’s income primarily arises
from operating lease contracts with fixed, or highly predictable,
periodic payments.
We did not identify any significant unusual transactions or
additional fraud risks.
We performed procedures including:
— evaluating the design and implementation of the controls
over journal entries and other adjustments and made
inquiries of the Administrators about inappropriate or
unusual activity relating to the processing of journal entries
and other adjustments; and
— identifying and selecting certain journal entries made at the
end of the reporting period and post-closing entries for
testing and comparing the identified entries to supporting
documentation.
Identifying and responding to risks of material misstatement
related to compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience and through
discussion with the Directors, the Investment Manager and the
Administrators (as required by auditing standards) and discussed
with the Directors the policies and procedures regarding
compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved
gaining an understanding of the control environment including
the entity’s procedures for complying with regulatory
requirements.
Identifying and responding to risks of material misstatement due
to non-compliance with laws and regulations (continued)
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation), distributable
profits legislation, overseas taxation legislation, and its
qualification as an Investment Trust under UK taxation
legislation, any breach of which could lead to the Company losing
various deductions and exemptions from UK corporation tax, and
we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial
statement items.
We assessed the legality of the distributions made by the Group
in the period based on comparing the dividends paid with the
distributable reserves prior to each distribution, including
consideration of interim accounts filed during the year.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance could
have a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely
to have such an effect: GDPR compliance, health and safety
legislation, money laundering, bribery and corruption legislation,
environmental protection legislation, landlord and tenant
legislation, building regulations, and certain aspects of company
legislation recognising the financial and regulated nature of the
Group’s and Company’s activities and its legal form.
Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of
the Directors and the Administrator and inspection of regulatory
and legal correspondence, if any. Therefore if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
103Annual Report 2023
7. We have nothing to report on the other information in the
Annual Report
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not
cover the other information and, accordingly, we do not express
an audit opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified
material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
strategic report and the directors’ report;
— in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and longer-term
viability
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
disclosures in respect of emerging and principal risks and the
viability statement, and the financial statements and our audit
knowledge.
Based on those procedures, other than the material uncertainty
related to going concern referred to above, we have nothing
further material to add or draw attention to in relation to:
— the directors’ confirmation within the Viability Statement on
page 20 that they have carried out a robust assessment of
the emerging and principal risks facing the Group, including
those that would threaten its business model, future
performance, solvency and liquidity;
— the Emerging and Principal Risks disclosures describing these
risks and how emerging risks are identified, and explaining
how they are being managed and mitigated; and
— the directors’ explanation in the Viability statement of how
they have assessed the prospects of the Group, over what
period they have done so and why they considered that
period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the Viability statement, set out
on page 20 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures are
materially consistent with the financial statements and our audit
knowledge.
Our work is limited to assessing these matters in the context of
only the knowledge acquired during our financial statements
audit. As we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were
made, the absence of anything to report on these statements is
not a guarantee as to the Group’s and Company’s longer-term
viability.
Corporate governance disclosures
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
corporate governance disclosures and the financial statements
and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements
and our audit knowledge:
— the directors’ statement that they consider that the annual
report and financial statements taken as a whole is fair,
balanced and understandable, and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy;
— the section of the annual report describing the work of the
Audit Committee, including the significant issues that the
audit committee considered in relation to the financial
statements, and how these issues were addressed; and
— the section of the annual report that describes the review of
the effectiveness of the Group’s risk management and
internal control systems.
We are required to review the part of the Corporate Governance
Statement relating to the Group’s compliance with the provisions
of the UK Corporate Governance Code specified by the Listing
Rules for our review. We have nothing to report in this respect.
8. We have nothing to report on the other matters on which
we are required to report by exception
Under the Companies Act 2006, we are required to report to you
if, in our opinion:
— adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
— the Parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
— certain disclosures of directors’ remuneration specified by
law are not made; or
— we have not received all the information and explanations
we require for our audit.
We have nothing to report in these respects.
104 Annual Report 2023
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 94, the
directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing
the Group and Parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going
concern; and using the going concern basis of accounting unless
they either intend to liquidate the Group or the Parent Company
or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in
an annual financial report prepared using the single electronic
reporting format specified in the TD ESEF Regulation. This
auditor’s report provides no assurance over whether the annual
financial report has been prepared in accordance with that
format.
10. The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
Matthew Humphrey (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
Canary Wharf
London
E14 5GL
25 April 2024
105Annual Report 2023
Financial Statements
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
Notes
Year ended 31 December 2023 | Year ended 31 December 2022 | ||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||
| €'000 | €'000 | €’000 | €'000 | €'000 | €’000 | ||
| REVENUE | |||||||
Rental income | 2 | ||||||
Property service charge income | |||||||
Other operating income | |||||||
Total revenue | |||||||
| GAINS/(LOSSES) ON INVESTMENTS | |||||||
Gains on disposal of investment properties | 9 | ||||||
Change in fair value of investment properties | 9 | ( | ( | ( | ( | ||
Total income and gains / (losses) on investments | ( | ( | ( | ( | |||
| EXPENDITURE | |||||||
Investment management fee | ( | ( | ( | ( | |||
Direct property expenses | ( | ( | ( | ( | |||
Property service charge expenditure | ( | ( | ( | ( | |||
SPV property management fees | ( | ( | ( | ( | |||
Impairment loss on trade receivables | ( | ( | ( | ( | |||
Other expenses | 3 | ( | ( | ( | ( | ||
Total expenditure | ( | ( | ( | ( | |||
Net operating return / (loss) before finance costs | ( | ( | ( | ( | |||
| FINANCE COSTS | |||||||
Finance costs | 4 | ( | ( | ( | ( | ( | |
| Gains arising from the derecognition of derivative financial | |||||||
| instruments | |||||||
| Effect of fair value adjustments on derivative financial | ( | ( | |||||
| instruments | |||||||
Effect of foreign exchange differences | ( | ( | ( | ( | |||
Net return before taxation | ( | ( | ( | ( | |||
Taxation | 5 | ( | ( | ||||
Net return for the year | ( | ( | ( | ( | |||
Total comprehensive return / (loss) for the year | ( | ( | ( | ( | |||
Basic and diluted earnings per share | 7 | ( | ( | ( | ( |
The accompanying notes are an integral part of the financial statements.
The total column of the Consolidated Statement of Comprehensive Income is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or
discontinued during the year.
106 Annual Report 2023
Financial Statements
Consolidated Balance Sheet
As at 31 December 2023
Notes
| As at 31 December 2023 | As at 31 December 2022 | ||
| €’000 | €’000 | ||
| NON-CURRENT ASSETS | |||
Investment properties | 9 | ||
Deferred tax asset | 5 | ||
Total non-current assets | |||
| CURRENT ASSETS | |||
Investment property held for sale | 9 | ||
Trade and other receivables | 10 | ||
Cash and cash equivalents | 11 | ||
Other assets | |||
Derivative financial assets | 15 | ||
Total current assets | |||
Total assets | |||
| CURRENT LIABILITIES | |||
Lease liability | 12 | ||
Trade and other payables | 13 | ||
Derivative financial instruments | 15 | ||
Total current liabilities | |||
| NON-CURRENT LIABILITIES | |||
Bank loans | 14 | ||
Lease liability | 12 | ||
Deferred tax liability | 5 | ||
Total non-current liabilities | |||
Total liabilities | |||
Net assets | |||
| SHARE CAPITAL AND RESERVES | |||
Share capital | 16 | ||
Share premium | 17 | ||
Special distributable reserve | 18 | ||
Capital reserve | 19 | ( | |
Revenue reserve | |||
Equity shareholders' funds | |||
Net asset value per share (cents) | 8 |
Company number: 11032222.
The accompanying notes are an integral part of the financial statements.
107Annual Report 2023
Financial Statements
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Notes
| Special | |||||||
| Share | distributable | Capital | Revenue | ||||
| Share capital | premium | reserve | reserve | reserve | Total | ||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | ||
Balance at 31 December 2022 | |||||||
Total comprehensive return for the year | ( | ( | |||||
Dividends paid | 6 | ( | ( | ( | |||
Balance at 31 December 2023 | ( |
For the year ended 31 December 2022
Notes
| Special | |||||||
| Share | distributable | Capital | Revenue | ||||
| Share capital | premium | reserve | reserve | reserve | Total | ||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | ||
Balance at 31 December 2021 | |||||||
Share Issue | 16/17 | ||||||
Share issue costs | 17 | ( | ( | ||||
Total comprehensive return for the year | ( | ( | |||||
Dividends paid | 6 | ( | ( | ( | |||
Balance at 31 December 2022 |
The accompanying notes are an integral part of the financial statements.
108 Annual Report 2023
Financial Statements
Consolidated Statement of Cash Flows
For the period ended 31 December 2023
Notes
| Year ended | Year ended | ||
| 31 December 2023 | 31 December 2022 | ||
| €’000 | €’000 | ||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net return for the year before taxation | ( | ( | |
| Adjustments for: | |||
Change in fair value of investment properties | |||
Gains on disposal of investment properties | ( | ||
(Increase)/decrease in lease liability | |||
(Increase)/Decrease in trade and other receivables | ( | ||
Increase/(Decrease) in trade and other payables | ( | ||
Change in fair value of derivative financial instruments | ( | ||
Result arising from the derecognition of derivative financial instruments | ( | ||
Finance costs | 4 | ||
Tax paid | ( | ( | |
Cash generated by operations | |||
Net cash inflow from operating activities | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
Capital expenditure and cost of disposal | ( | ( | |
Disposal of investment properties | |||
Net cash inflow/ (outflow) from investing activities | ( | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
Dividends paid | 6 | ( | ( |
Bank loans interest paid | ( | ( | |
Early termination fees | ( | ||
Bank loans drawn | |||
Bank loans repaid | 14 | ( | ( |
Proceeds from derivative financial instruments | 14 | ||
Proceeds from share issue | 16/17 | ||
Issue costs relating to share issue | 17 | ( | |
Net cash (outflow)/ inflow from financing activities | ( | ||
Net decrease in cash and cash equivalents | ( | ( | |
Opening balance 31 December 2022 | |||
Closing cash and cash equivalents | |||
REPRESENTED BY Cash at bank | 11 |
The accompanying notes are an integral part of the financial statements.
109Annual Report 2023
Financial Statements
Notes to the Financial Statements
1. Accounting policies
The consolidated financial statements of the Group for the year ended 31 December 2023 comprise the results of
abrdn European Logistics Income plc and its subsidiaries. The principal accounting policies adopted by the Group are
set out below, all of which have been applied consistently throughout the year.
110 Annual Report 2023
111Annual Report 2023
112 Annual Report 2023
113Annual Report 2023
114 Annual Report 2023
115Annual Report 2023
116 Annual Report 2023
2. Rental Income
| Year ended | Year ended | |
| 31 December 2023 | 31 December 2022 | |
| €'000 | €'000 | |
Rental income | 33,435 | 29,686 |
Total rental income | 33,435 | 29,686 |
Included within rental income is amortisation of rent free periods granted.
| Year ended | Year ended | |
| 31 December 2023 | 31 December 2022 | |
| €'000 | €'000 | |
Professional fees | 2,438 | 1,880 |
Audit fee for statutory services | 412 | 317 |
Directors' fees | 193 | 186 |
Depositary fees | 122 | 44 |
Registrar fees | 47 | 52 |
Stock exchange fees | 37 | 20 |
Broker fees | 93 | 54 |
Directors liability insurance expense | 26 | 10 |
Employers NI | 15 | 15 |
Other expenses | 200 | 219 |
Total expenses | 3,583 | 2,797 |
| Year ended | Year ended | |
| 31 December 2023 | 31 December 2022 | |
| €'000 | €'000 | |
Interest on bank loans | 5,478 | 4,262 |
Amortisation of loan costs | 2,129 | 730 |
Other finance charges | 395 | 684 |
Early loan repayment cost | 110 | - |
Total finance costs | 8,112 | 5,676 |
117Annual Report 2023
Year ended 31 December 2023 | Year ended 31 December 2022 | |||||
| Revenue | Capital | Total | Revenue | Capital | Total | |
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
| Current taxation: | ||||||
Overseas taxation | 1,327 | 440 | 1,767 | 1,029 | - | 1,029 |
| Deferred taxation: | ||||||
Overseas taxation | - | (13,854) | (13,854) | - | (3,893) | (3,893) |
Total taxation | 1,327 | (13,414) | (12,087) | 1,029 | (3,893) | (2,864) |
Year ended 31 December 2023 | Year ended 31 December 2022 | |||||
| Revenue | Capital | Total | Revenue | Capital | Total | |
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
Net result before taxation | 14,506 | (108,394) | (93,888) | 15,065 | (36,371) | (21,306) |
| Theoretical tax at UK corporation tax | 3,413 | (25,495) | (22,082) | 2,862 | (6,910) | (4,048) |
| blended rate of 23.52% (19% to 1 April | ||||||
| 2023 and 25% from 1 April 2023) | ||||||
| Effect of: | ||||||
Losses where no deferred taxes have been recognised | - | 13,535 | 13,535 | - | 3,171 | 3,171 |
| Impact of different tax rates on foreign | (1,460) | (1,855) | (3,315) | (1,090) | - | (1,090) |
| jurisdictions | ||||||
| Expenses that are not deductible / | 459 | 401 | 860 | 151 | (154) | (3) |
| income that is not taxable | ||||||
Impact of UK interest distributions from the Investment Trust | (1,085) | - | (1,085) | (894) | - | (894) |
Total taxation on return | 1,327 | (13,414) | (12,087) | 1,029 | (3,893) | (2,864) |
118 Annual Report 2023
| 2023 | 2022 | |
| €'000 | €'000 | |
| Deferred tax assets: | ||
On overseas tax losses | 4,740 | 3,384 |
On other temporary differences | 156 | 370 |
Total taxation on return | 4,896 | 3,754 |
| 2023 | 2022 | |
| €'000 | €'000 | |
| Deferred tax liabilities: | ||
Differences between tax and derivative valuation | 422 | 973 |
Differences between tax and property valuation | 11,312 | 23,473 |
Total taxation on return | 11,734 | 24,446 |
2023 | 2022 | |||||
| Tax losses | Tax losses | |||||
| carried | Deferred | carried | Deferred | |||
| forward | tax asset | forward | tax asset | |||
| €’000 | €’000 | Expiry date | €’000 | €’000 | Expiry date | |
Expire | 2,645 | 563 | 2024-2027 | 2,564 | 432 | 2023-2027 |
Never expire | 16,828 | 4,177 | - | 12,130 | 2,952 | - |
Total | 19,473 | 4,740 | 14,694 | 3,384 |
119Annual Report 2023
6. Dividends
| Year ended | Year ended | ||
| 31 December 2023 | 31 December 2022 | ||
| €'000 | €'000 | ||
2022 | Fourth Interim dividend of 1.41c /1.20p per share paid | 5,812 | 5,812 |
| 24 March 2023 | |||
(2021 | Fourth Interim: 1.41c /1.21p) | ||
2023 | First Interim dividend of 1.41c/1.23p per share paid | 5,812 | 5,812 |
| 23 June 2023 | |||
(2022 | First Interim: 1.41c /1.19p) | ||
2023 | Second Interim dividend of 1.41c/1.22p per share paid | 5,812 | 5,812 |
| 22 September 2023 | |||
(2022 | Second interim: 1.41c/1.20p) | ||
2023 | Third Interim dividend of 1.41c/1.23p per share paid | 5,812 | 5,812 |
| 29 December 2023 | |||
(2022 | Third interim: 1.41c/1.20p) | ||
Total dividends paid | 23,248 | 23,248 |
On 19 February 2024 the Board announced that the Company would forego payment of the fourth interim
distribution for the quarter ended 31 December 2023, which has historically been declared in February and paid in
March each year.
7. Earnings per share (Basic and Diluted)
| Year ended | Year ended | |
| 31 December 2023 | 31 December 2022 | |
Revenue net return attributable to Ordinary shareholders (€'000) | 13,179 | 14,036 |
Weighted average number of shares in issue during the year | 412,174,356 | 408,956,423 |
Total revenue return per ordinary share | 3.2¢ | 3.4¢ |
Capital return attributable to Ordinary shareholders (€'000) | (94,980) | (32,478) |
Weighted average number of shares in issue during the year | 412,174,356 | 408,956,423 |
Total capital return per ordinary share | (23.0¢) | (7.9¢) |
Total return per ordinary share | (19.8¢) | (4.5¢) |
Earnings per share is calculated on the revenue and capital loss for the year (before other comprehensive
income) and is calculated using the weighted average number of shares in the period of 412,174,356 shares
(2022: 408,956,423 shares).
8. Net asset value per share
2023 | 2022 | |
Net assets attributable to shareholders (€'000) | 384,928 | 489,977 |
Number of shares in issue at 31 December | 412,174,356 | 412,174,356 |
Net asset value per share | 93.4¢ | 118.9¢ |
120 Annual Report 2023
9. Investment properties
| 2023 | 2022 | |
| €'000 | €'000 | |
Opening carrying value | 776,616 | 683,878 |
Purchase at cost | - | 128,278 |
Acquisition costs, disposal costs and capital expenditure | 329 | 4,892 |
Proceeds from disposal of investment property | (18,500) | - |
Realised gain on disposal | 133 | - |
Right of use asset reassessment | 1,988 | - |
Valuation losses | (106,935) | (40,304) |
Movements in lease incentives | 328 | 180 |
Decrease in leasehold liability | (272) | (308) |
Transfer to Investment property held for sale | (17,500) | - |
Total carrying value at 31 December | 636,187 | 776,616 |
On 3 May 2023 the Company announced the sale of a warehouse, in Leon, Northern Spain, for €18,500,000 which
generated a realised gain on disposal of €133,000.
The Meung-Sur-Loire warehouse in France was classified as held of sale as at 31 December 2023 and was valued at
€17.5m (2022: €22.1m). The asset was disposed of on 25 March 2024.
Valuation methodology
The Investment Manager appoints a suitable valuer (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 RICS Valuation – Global Standards (‘Red Book Global Standards’) effective from 31 January 2022, published by the
Royal Institution of Chartered Surveyors.
Valuations were performed by Savills (2022: Savills), an accredited independent valuer with a recognised and relevant
professional qualification. The valuer has sufficient current local and national knowledge of the particular property
markets involved and has the skills and understanding to undertake the valuations competently.
The Investment Manager meets with the valuer on a quarterly basis to ensure the valuer is aware of all relevant
information for the valuation and any change in the investments over the quarter. The Investment Manager then
reviews and discusses draft valuations with the valuer to ensure correct factual assumptions are made prior to the
valuer issuing a final valuation report. Where known, the property valuer takes account of deleterious materials included
in the construction of the investment properties in arriving at its estimate of fair value when the Investment Manager
advises of the presence of such materials. The majority of the leases are on a full repairing and insurance basis and as
such the Group is not liable for costs in respect of repairs or maintenance to its investment properties.
The fair value of investment property is determined using either the discounted cash flow or traditional method.
Choice of methodology for a particular jurisdiction is determined by the valuers independently, based on local market
practices. Both valuation methodologies are in accordance with RICS guidelines and used in determining the fair value
of investment properties.
Discounted cash flow methodology is based on the future annual net cash flow over a hold period of 10 years.
The calculation of fair value using this method includes:
.
Present value of the cashflow generated through the future net operating income from the investment property
over the hold period.
.
Present value of the exit value (sale price) at the end of the 10-year hold period.
121Annual Report 2023
The rate used to calculate the present value of cashflow is the Discount Rate. The rate used to calculate the exit value at
the end of hold period is called the Capitalisation Rate (exit cap rate). Fair value is calculated using rates that the valuer
considers appropriate for the specific investment property.
The traditional method requires an assessment of rental value (the market rent) and a market-based yield. The yield
can be simply defined as the annual return on investment expressed as a percentage of capital value. The traditional
method can reflect income streams which are under-rented and over-rented by incorporating risk within the yield
choice (i.e., an all risks yield) and by structuring the calculation appropriately, for example a term and reversion for
under-rented income streams and a hardcore and top-slice for over-rented income streams. This will require the
valuer to reflect risk in each element of the calculation, e.g., increasing the yield above the market in the top-slice to
reflect the added risk of an above market rent being paid for a specified period, or reducing the yield in the term to
reflect that a below market rent is being paid until the reversion is due. These ‘traditional’ approaches are typically
referred to as being growth implicit, meaning that rental growth is built into the choice of yield and not explicitly
modelled within the calculation.
As at 31 December 2023 and 31 December 2022 the German, French, Polish and Spanish assets were valued using the
discounted cash flow method, and Netherlands properties using the traditional method. The fair value of investment
properties amounted to €633,806,000 (2022: €758,719,000).
The difference between the fair value and the value per the Consolidated Balance Sheet at 31 December 2023
consists of adjustments for the asset held for sale of €17.5million in Meung sur Loire, and for lease incentive assets and
the Den Hoorn lease liability separately recognised in the balance sheet of €4,472,000 and €24,353,000 respectively
(2022: €4,740,000 and €22,637,000). Further details of the Den Hoorn lease are disclosed in note 12.
The following disclosure is provided in relation to the adoption of IFRS 13 Fair Value Measurement. All properties are
deemed Level 3 for the purposes of fair value measurement and the current use of each property is considered the
highest and best use.
| Fair Value | Fair Value | Range | Range | |||||
| Country | 2023 | 2022 | Valuation | Key Unobservable | (weighted average) | (weighted average) | ||
| and sector | €'000 | €’000 | techniques | inputs | 2023 | 2022 | ||
| Netherlands - | 191,700 | 227,800 | Traditional | ERV | €578,180 - | €3,242,079 | €561,744 - | €2,942,598 |
| Logistics | Method | (€2,192,655) | (€2,014,129) | |||||
Equivalent yield | 4.58% - 5.65% (4.98%) | 3.70% - 4.71% (4.15%) | ||||||
| Germany - | 63,200 | 68,170 | Discounted | Capitalisation rate | 4.60% - 4.65% (4.63%) | 4.10% - 4.25% (4.16%) | ||
| Logistics | Cash Flow | |||||||
Discount rate | 5.60% - 6.10% (5.80%) | 4.95% - 5.20% (5.05%) | ||||||
ERV | €1,486,034 - | €2,088,971 | €1,282,212 - | €1,874,346 | ||||
| (€1,849,513) | (€1,644,685) | |||||||
| France - | 99,380 | 107,390 | Discounted | Capitalisation rate | 4.50% - 5.25% (4.75%) | 3.50% - 4.30% (4.08%) | ||
| Logistics | Cash Flow | |||||||
Discount rate | 6.00% - 8.00% (6.45%) | 4.65% - 7.30% (5.90%) | ||||||
ERV | €430,900 - | €2,590,794 | €430,900 - | €2,016,869 | ||||
| (€1,704,072) | (€1,380,297) | |||||||
| Poland - | 90,390 | 93,600 | Discounted | Capitalisation rate | 6.10% - 6.50% (6.28%) | 5.30% - 5.70% (5.48%) | ||
| Logistics | Cash Flow | |||||||
Discount rate | 7.65% - 8.05% (7.80%) | 6.80% - 7.35% (7.03%) | ||||||
ERV | €1,843,811 - | €2,099,948 | €1,620,954 - | €1,852,180 | ||||
| (€1,955,779) | (€1,709,416) | |||||||
| Spain - | 189,136 | 261,759 | Discounted | Capitalisation rate | 4.75% - 5.00% (4.89%) | 3.75% - 6.00% (4.11%) | ||
| Logistics | Cash Flow | |||||||
Discount rate | 6.25% - 7.50% (6.78%) | 4.75% - 8.50% (5.53%) | ||||||
ERV | €486,749 - | €2,568,852 | €464,624 - | €2,568,852 | ||||
| (€1,546,589) | (€1,503,010) | |||||||
122 Annual Report 2023
Sensitivity analysis
The table below presents the sensitivity of the valuation to changes in the most significant assumptions underlying
the valuation of investment property.
All non-current assets other than financial instruments, deferred tax assets and trade receivables are non-UK based.
| Effect on Valuation | Effect on Valuation | |||
| 2023 | 2022 | |||
Country and sector | Assumption | Movement | €’000 | €’000 |
Netherlands - Logistics | Equivalent Yield | +100 basis points Equivalent Yield | (32,613) | (46,058) |
-100 basis points Equivalent Yield | 49,116 | 73,665 | ||
ERV | -10% ERV | (14,444) | (15,937) | |
+10% ERV | 14,571 | 15,691 | ||
Capitalisation | +100 basis points | (46,886) | (67,483) | |
-100 basis points | 70,530 | 109,982 | ||
| Germany - Logistics | ||||
| France - Logistics | Discount | +100 basis points | (32,213) | (39,516) |
| Poland - Logistics | -100 basis points | 35,405 | 43,556 | |
| Spain - Logistics | ERV | -10% ERV | (25,854) | (17,454) |
+10% ERV | 22,978 | 15,248 |
10. Trade and other receivables
| 2023 | 2022 | |
| €'000 | €'000 | |
Trade debtors | 11,197 | 8,070 |
Bad debt provisions | (1,821) | (634) |
Lease incentives | 4,472 | 4,740 |
Tax receivables | 562 | 39 |
VAT receivable | 270 | 270 |
Other receivables | 2 | 85 |
Total receivables | 14,682 | 12,570 |
Lease incentives include accrued income resulting from the spreading of lease incentives and/or minimum lease
payments over the term of the lease. A proportion of this balance relates to period over 12 months.
The ageing of trade debtors is as follows:
| 2023 | 2022 | |
| €'000 | €'000 | |
Less than 6 months | 9,433 | 7,584 |
Between 6 & 12 months | 1,493 | 486 |
Over 12 months | 271 | - |
Total receivables | 11,197 | 8,070 |
123Annual Report 2023
11. Cash and cash equivalents
| 2023 | 2022 | |
| €'000 | €'000 | |
Cash at bank | 18,061 | 20,262 |
Total cash and cash equivalents | 18,061 | 20,262 |
| 12. Leasehold liability | ||
| 2023 | 2022 | |
| €'000 | €'000 | |
| Maturity analysis - contractual undiscounted cash flows | ||
Less than one year | 659 | 550 |
One to two years | 659 | 550 |
Two to three years | 659 | 550 |
Three to four years | 659 | 550 |
Four to five years | 659 | 550 |
More than five years | 26,218 | 25,065 |
Total undiscounted lease liabilities | 29,513 | 27,815 |
| Lease liability included in the statement of financial position | ||
Current | 659 | 550 |
Non - Current | 23,694 | 22,087 |
Total lease liability included in the statement of financial position | 24,353 | 22,637 |
On 15 January 2020 the Group acquired a logistics warehouse in Den Hoorn. The property is located on land owned
by the local municipality and leased to the Group on a perpetual basis. The Group reserves the option to acquire
the freehold ownership on 1 July 2044 for the total sum of €15,983,000. The annual ground lease payments amount
to €659,000 per annum, the present value of these future payments (assuming the option to acquire the freehold is
exercised) being €24,353,000 as at 31 December 2023.
13. Trade and other payables
| 2023 | 2022 | |
| €'000 | €'000 | |
Trade payables | 4,729 | 2,354 |
Tenant deposits | 4,008 | 3,853 |
Rental income received in advance | 3,994 | 4,035 |
VAT payable | 1,172 | 1,221 |
Accruals | 1,681 | 1,534 |
Management fee payable | 729 | 1,937 |
Accrued acquisition and development costs | 40 | 72 |
Total payables | 16,353 | 15,006 |
124 Annual Report 2023
| 2023 | 2022 | |
| €'000 | €'000 | |
Bank borrowing drawn | 259,462 | 270,270 |
Loan issue costs paid | (6,384) | (6,055) |
Accumulated amortisation of loan issue costs | 3,446 | 1,317 |
Total bank loans | 256,524 | 265,532 |
| 2023 | 2022 | |
| €'000 | €'000 | |
Maturity less than 1 year | - | - |
Maturity above 1 year | 256,524 | 265,532 |
Total receivables | 256,524 | 265,532 |
| Fixed | ||||||
| interest rate | ||||||
| Loan | (including | |||||
Country | Property | Lender | (€’000) | Start date | End date | margin) |
Germany | Erlensee | DZ Hyp | 17,800 | 20/02/2019 | 31/01/2029 | 1.62% |
Germany | Flörsheim | DZ Hyp | 12,400 | 18/02/2019 | 30/01/2026 | 1.54% |
France | Avignon + Meung Sur Loire | BayernLB | 33,000 | 12/02/2019 | 12/02/2026 | 1.57% |
Netherlands | Ede + Oss + Waddinxveen | Berlin Hyp | 44,200 | 06/06/2019 | 06/06/2025 | 1.35% |
Netherlands | ‘s Heerenberg | Berlin Hyp | 11,000 | 27/06/2019 | 27/06/2025 | 1.10% |
Netherlands | Den Hoorn + Zeewolde | Berlin Hyp | 43,200 | 15/01/2020 | 14/01/2028 | 1.38% |
Spain | Madrid Gavilanes 4 + Madrid | ING Bank | 53,862 | 26/09/2022 | 26/09/2025 | 3.11% |
| Coslada + Barcelona | ||||||
Spain | Madrid Gavilanes 1 + 2 + 3 | ING Bank | 44,000 | 07/07/2022 | 07/07/2025 | 2.72% |
259,462 | 2.00% |
| Bank | Bank | Financial | ||
| borrowings | interest | Derivatives | Total | |
| €’000 | €’000 | €’000 | €’000 | |
Balance at 1 January 2023 | 265,532 | - | 3,709 | 269,241 |
| Cash flow from financing activities: | ||||
Bank loans interest repaid | - | (5,202) | - | (5,202) |
Bank loans repaid | (10,808) | - | - | (10,808) |
| Non-cash movement: | ||||
Amortisation of capitalised borrowing costs | 2,129 | - | - | 2,129 |
Capitalised borrowing costs | (329) | - | - | (329) |
Termination of derivative financial instruments | - | - | (313) | (313) |
Changes in fair value of financial instruments | - | - | (1,706) | (1,706) |
Change in creditors for loan interest payable | - | 5,218 | - | 5,218 |
Balance at 31 December 2023 | 256,524 | 16 | 1,690 | 258,230 |
| Bank | Bank | Financial | ||
| borrowings | interest | Derivatives | Total | |
| €’000 | €’000 | €’000 | €’000 | |
Balance at 1 January 2022 | 175,947 | 326 | 109 | 176,382 |
| Cash flow from financing activities: | ||||
Bank loans interest paid | - | (3,050) | - | (3,050) |
Bank loans drawn | 154,547 | - | - | 154,547 |
Bank loans repaid | (65,692) | - | - | (65,692) |
| Non-cash movement: | ||||
Amortisation of capitalised borrowing costs | 730 | - | - | 730 |
Changes in fair value of financial instruments | - | - | 3,600 | 3,600 |
Change in creditors for loan interest payable | - | 2,724 | - | 2,724 |
Balance at 31 December 2022 | 265,532 | - | 3,709 | 269,241 |
126 Annual Report 2023
15. Derivative financial instruments
| 2023 | 2022 | |
| €'000 | €'000 | |
Forward foreign exchange contracts | - | (185) |
Interest rate swap | 1,690 | 3,894 |
1,690 | 3,709 |
In 2022 the Company employed currency hedging to provide greater certainty as to the level of Sterling distributions
paid in respect of the year. A forward FX contract was entered into fixing the EUR: GBP exchange rate at €1.17:£1.
Such currency hedging was not used during 2023.
During the 2022 financial year AELI Leon entered into an agreement with ING Bank N.V for a loan facility of
€25.35 million at an interest rate payable of EURIBOR plus 1.9%. In order to mitigate the interest rate risk, it entered a
fixed floating interest rate swap for the notional amount of €23.52 million against an all-in fixed rate of 3.05% over the
three year loan term expiring September 2025. The remaining €1.83 million drawn on the loan facility is capped at all-
in fixed rate of 4.15%. On 3 May 2023 the Company announced the sale Leon and repayment of loan of €10.81 million.
Following repayment of the loan, the company terminated €8.98 million of interest rate swaps and €1.83 million cap
realising a gain on termination of €313,000.
AELI Madrid Logistics 1 has an agreement with ING Bank N.V for a loan facility of €44 million at an interest rate
payable of EURIBOR plus 1.15%. In order to mitigate the interest rate risk, it entered a fixed floating interest rate
swap for the notional amount of €40 million against an all-in fixed rate of 2.57% over the three year loan term expiring
July 2025.The remaining €4 million drawn on the loan facility is capped at all-in fixed rate of 4.15%.
AELI Madrid Logistics 2 has an agreement with ING Bank N.V for a loan facility of €39.3 million at an interest rate
payable of EURIBOR plus 1.15%. In order to mitigate the interest rate risk, it entered a fixed floating interest rate
swap for the notional amount of €36.5 million against an all-in fixed rate of 3.05% over the three year loan term
expiring September 2025. The remaining €2.8 million drawn on the loan facility is capped at all-in fixed rate of 4.15%.
| 2023 | 2022 | |
| €'000 | €'000 | |
Opening balance | 4,717 | 4,309 |
Ordinary shares issued | - | 408 |
Balance as at 31 December | 4,717 | 4,717 |
127Annual Report 2023
| 2023 | 2022 | |
| €'000 | €'000 | |
Opening balance | 269,546 | 225,792 |
Premium arising on issue of new shares | - | 44,513 |
Share issue costs deducted | - | (759) |
Balance as at 31 December | 269,546 | 269,546 |
| 2023 | 2022 | |
| €'000 | €'000 | |
Opening balance | 164,851 | 178,207 |
Dividends paid | (12,752) | (13,356) |
Balance as at 31 December | 152,099 | 164,851 |
| Realised capital | Unrealised | Total capital | |
| reserve | gains/(losses) | reserve | |
| €'000 | €'000 | €'000 | |
Opening balance | (2) | 30,782 | 30,780 |
Deferred taxation | 1,124 | 12,730 | 13,854 |
Change in fair value of investments | 1,933 | (108,811) | (106,878) |
Gains on disposal of investment properties | 133 | - | 133 |
| Taxation on disposal of investment | (440) | - | (440) |
| properties | |||
Early loan repayments costs | (110) | - | (110) |
| Movement in fair value gains on derivative | - | (1,706) | (1,706) |
| financial instruments | |||
Gains arising from the derecognition of derivative financial instruments | 313 | - | 313 |
Currency gains during the year | - | (146) | (146) |
Balance as at 31 December 2023 | 2,951 | (67,151) | (64,200) |
128 Annual Report 2023
| Realised capital | Unrealised | Total capital | |
| reserve | gains/(losses) | reserve | |
| €'000 | €'000 | €'000 | |
Opening balance | (2) | 63,260 | 63,258 |
Deferred taxation | - | 3,893 | 3,893 |
Fair value losses of investments | - | (40,432) | (40,432) |
| Movement in fair value gains on derivative | - | 3,600 | 3,600 |
| financial instruments | |||
Currency gains during the year | - | 461 | 461 |
Balance as at 31 December 2022 | (2) | 30,782 | 30,780 |
| Parent | |||||||
| Netherlands | Poland | Germany | Spain | France | Company | Total | |
| 2023 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 |
Total Assets | 224,723 | 94,759 | 64,670 | 198,564 | 108,816 | 2,360 | 693,892 |
Total Liabilities | 128,459 | 5,832 | 33,044 | 100,070 | 40,107 | 1,452 | 308,964 |
| Total Comprehensive return | 3,588 | 1,623 | 182 | (2,568) | 197 | 10,157 | 13,179 |
| for the year (Revenue) | |||||||
| Total Comprehensive return | (28,319) | (2,126) | (4,319) | (54,376) | (6,031) | 191 | (94,980) |
| for the year (Capital) | |||||||
| Included in Total | |||||||
| Comprehensive income | |||||||
| Net change in fair value | (36,416) | (2,892) | (4,913) | (54,187) | (8,470) | - | (106,878) |
| adjustment on investment | |||||||
| property | |||||||
Rental income | 11,808 | 5,068 | 3,242 | 9,259 | 4,058 | - | 33,435 |
129Annual Report 2023
| Parent | |||||||
| Netherlands | Poland | Germany | Spain | France | Company | Total | |
| 2022 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 |
Total Assets | 258,324 | 97,947 | 69,431 | 275,129 | 115,160 | 1,792 | 817,783 |
Total Liabilities | 134,913 | 6,564 | 33,663 | 111,143 | 39,083 | 2,440 | 327,806 |
| Total Comprehensive return | 677 | 1,501 | 353 | 1,745 | 1,126 | 8,634 | 14,036 |
| for the year (Revenue) | |||||||
| Total Comprehensive return | (19,933) | 3,202 | (1,634) | (11,337) | (2,941) | 165 | (32,478) |
| for the year (Capital) | |||||||
| Included in Total | |||||||
| Comprehensive income | |||||||
Net (loss)/gain from the fair value adjustment on investment property | (24,762) | 3,901 | (1,742) | (14,635) | (3,194) | - | (40,432) |
Rental income | 10,398 | 4,605 | 2,950 | 8,395 | 3,338 | - | 29,686 |
| Level 1 | Level 2 | Level 3 | Total fair value | |
| 31 December 2023 | €'000 | €'000 | €'000 | €'000 |
Investment properties | - | - | 636,187 | 636,187 |
Investment property held-for-sale | - | - | 17,500 | 17,500 |
| Level 1 | Level 2 | Level 3 | Total fair value | |
| 31 December 2022 | €'000 | €'000 | €'000 | €'000 |
Investment properties | - | - | 776,616 | 776,616 |
130 Annual Report 2023
| Level 1 | Level 2 | Level 3 | Total fair value | |
| 31 December 2023 | €'000 | €'000 | €'000 | €’000 |
Derivative financial asset | - | 1,690 | - | 1,690 |
| Level 1 | Level 2 | Level 3 | Total fair value | |
| 31 December 2022 | €'000 | €'000 | €'000 | €’000 |
Derivative financial liability | - | (185) | - | (185) |
Derivative financial asset | - | 3,894 | - | 3,894 |
| Level 1 | Level 2 | Level 3 | Total fair value | |
| 31 December 2023 | €'000 | €'000 | €'000 | €’000 |
Bank loans | - | 253,667 | - | 253,667 |
| Level 1 | Level 2 | Level 3 | Total fair value | |
| 31 December 2022 | €'000 | €'000 | €'000 | €’000 |
Bank loans | - | 257,449 | - | 257,449 |
131Annual Report 2023
| Interest | Local | Foreign | Euro | |
| rate | currency | exchange | equivalent | |
| As at 31 December 2023 | % | '000 | rate | €'000 |
| Assets: | ||||
Euro | 4.00 | 17,457 | 1.00 | 17,457 |
Pound Sterling | 5.25 | 180 | 0.87 | 207 |
Polish Zloty | 5.25 | 1,723 | 4.35 | 397 |
Total | 18,061 |
| Interest | Local | Foreign | Euro | ||
| rate | currency | exchange | equivalent | ||
| As at 31 December 2022 | % | '000 | rate | €'000 | |
| Assets: | |||||
Euro | 2.00 | 19,371 | 1.00 | 19,371 | |
Pound Sterling | 3.50 | 188 | 0.89 | 212 | |
Polish Zloty | 6.25 | 3,152 | 4.69 | 679 | |
Total | 20,262 |
132 Annual Report 2023
| Net monetary | Total currency | |
| exposure | exposure | |
| As at 31 December 2023 | €'000 | €'000 |
Pound Sterling | (680) | (680) |
Polish Złoty | 397 | 397 |
Total foreign currency | (283) | (283) |
Euro | (268,476) | (268,476) |
Total | (268,759) | (268,759) |
| Net monetary | Total currency | |
| exposure | exposure | |
| As at 31 December 2022 | €'000 | €'000 |
Pound Sterling | 381 | 381 |
Polish Złoty | 679 | 679 |
Total foreign currency | 1,060 | 1,060 |
Euro | (287,699) | (287,699) |
Total | (286,639) | (286,639) |
| As at 31 December 2023 | As at 31 December 2022 | |
| €'000 | €'000 | |
Polish Zloty | 40 | 68 |
Pound Sterling | (68) | 38 |
133Annual Report 2023
134 Annual Report 2023
| Within 1 year | 1-2 years | 2-5 years | Over 5 years | Total | |
| As at 31 December 2023 | €’000 | €’000 | €’000 | €’000 | €’000 |
Bank loans | 5,182 | 156,823 | 90,759 | 17,824 | 270,588 |
Lease liability | 659 | 659 | 1,977 | 26,218 | 29,513 |
Trade liabilities | 16,353 | - | - | - | 16,353 |
Total | 22,194 | 157,482 | 92,736 | 44,042 | 316,454 |
135Annual Report 2023
| Within 1 year | 1-2 years | 2-5 years | Over 5 years | Total | |
| As at 31 December 2022 | €’000 | €’000 | €’000 | €’000 | €’000 |
Bank loans | 4,836 | 4,836 | 214,634 | 61,337 | 285,643 |
Lease liability | 550 | 550 | 1,650 | 25,065 | 27,815 |
| Derivative financial | 185 | - | - | - | 185 |
| instruments | |||||
Trade liabilities | 9,750 | - | - | - | 9,750 |
Total | 15,321 | 5,386 | 216,284 | 86,402 | 323,393 |
| 2023 | 2022 | |
| €’000 | €’000 | |
Caroline Gulliver | 49 | 47 |
John Heawood | 41 | 41 |
Tony Roper | 62 | 57 |
Diane Wilde | 41 | 41 |
Balance as at 31 December | 193 | 186 |
| 31 December 2023 | 31 December 2022 | |
| Ordinary shares | Ordinary shares | |
T Roper | 122,812 | 102,812 |
C Gulliver | 90,000 | 72,500 |
J Heawood | 60,000 | 60,000 |
D Wilde | 74,375 | 74,375 |
136 Annual Report 2023
24. Lease analysis
The group leases out its investment properties under operating leases.
The future income under operating leases, based on the unexpired lease length at the year end was as follows
(based on total rents and excluding annual CPI adjustments).
| 2023 | 2022 | |
| €’000 | €’000 | |
Less than one year | 33,884 | 34,087 |
Between one and two years | 32,370 | 32,708 |
Between two and three years | 29,584 | 31,298 |
Between three and four years | 26,086 | 28,985 |
Between four and five years | 23,689 | 27,111 |
Over five years | 89,742 | 154,893 |
Total cash and cash equivalents | 235,355 | 309,082 |
The largest single tenant at the year end accounted for 10.7 per cent of the annualised rental income at
31 December 2023.
The Group has entered into commercial property leases on its investment property portfolio. These leases have
remaining lease terms of between 1 and 18 years.
26. Capital commitments
As at the 31 December 2023 the Group had capital commitments of €nil (2022: €nil).
27. Ultimate parent company
In the opinion of the Directors on the basis of shareholdings reviewed by them, the Company has no immediate or
ultimate controlling party.
137Annual Report 2023
Parent Company Balance Sheet
As at 31 December 2023
Notes
2023
€’000
2022
€’000
Non-current assets
Investment in subsidiaries 2 109,670 173,862
Group loans receivable 4 249,311 238,894
358,981 412,756
Current assets
Cash and cash equivalents 3 2,348 1,696
Group loan interest receivable 4 2,897 3,150
Group loans receivable 4 - 15,407
Other receivables 336 819
5,581 21,072
Total assets 364,562 433,828
Current liabilities
Derivative financial instruments - 185
Trade and other payables 5 1,713 2,353
1,713 2,538
Non-current liabilities
Bank loans 6 (39) (92)
Total liabilities 1,674 2,446
Net assets 362,888 431,382
Represented by:
Share capital 7 4,717 4,717
Share premium 7 269,546 269,546
Special distributable reserve 152,099 164,851
Capital reserve (63,474) (7,732)
362,888 431,382
The Directors have taken advantage of the exemption available under Section 408 of the Companies Act 2006 and not
presented an income statement or a statement of comprehensive income for the Company alone.
The loss made by the Parent Company in the year was €45,246,000 (2022: profit of €719,000).
The financial statements on pages 138 to 148 were approved and authorised for issue by the Board of Directors on
25 April 2024 and signed on its behalf by:
Caroline Gulliver
Independent Non-Executive Director
Company number: 11032222.
The accompanying notes are an integral part of the financial statements.
138 Annual Report 2023
Parent Company Statement of Changes in Equity
For the year ended 31 December 2023
Notes
Share
Capital
€'000
Share
Premium
€'000
Special
Distributable
Reserve
€'000
Revenue
Reserve
€'000
Capital
Reserve
€'000
Total
€'000
As at 31 December 2022 4,717 269,546 164,851 - (7,732) 431,382
Total comprehensive income - - - 10,496 (55,742) (45,246)
Dividends paid - - (12,752) (10,496) - (23,248)
As 31 December 2023 4,717 269,546 152,099 - (63,474) 362,888
For the year ended 31 December 2022
Notes
Share
Capital
€'000
Share
Premium
€'000
Special
Distributable
Reserve
€'000
Revenue
Reserve
€'000
Capital
Reserve
€'000
Total
€'000
As at 31 December 2021 4,309 225,792 178,207 1,529 (88) 409,749
Issue of shares 7 408 44,513 - - - 44,921
Share issue costs 7 - (759) - - - (759)
Total comprehensive income - - - 8,363 (7,644) 719
Dividends paid - - (13,356) (9,892) - (23,248)
As 31 December 2022 4,717 269,546 164,851 - (7,732) 431,382
The accompanying notes are an integral part of the financial statements.
139Annual Report 2023
Parent Company notes to the Financial Statements
1. Accounting policies
The principal accounting policies, all of which have been applied consistently throughout the period, are set out below.
(a) Basis of accounting
Basis of preparation of financial statements
The Parent Company financial statements have been prepared in accordance with FRS 101 Reduced Disclosure
Framework and the Companies Act 2006 (the Act). FRS 101 sets out a reduced disclosure framework for a
‘qualifying entity’ as defined in the standard which addresses the financial reporting requirements and disclosure
exemptions in the individual financial statements of qualifying entities that otherwise apply the recognition,
measurement and disclosure requirements of UK-adopted IFRS.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under
that standard in relation to business combinations, financial instruments, capital management, presentation of
comparative information in respect of certain assets, presentation of a cash flow statement, the effect of new
but not yet effective IFRS’s, impairment of assets, share-based payments and related party transactions. Where
required, equivalent disclosures are given in the consolidated financial statements.
The Parent Company financial statements are prepared on a going concern basis as set out in note 1a of the
consolidated financial statements.
The Directors have taken advantage of the exemption available under Section 408 of the Companies Act 2006
and not presented an income statement or a statement of comprehensive income for the Company alone. The
loss made by the Parent Company in the year was €45,246,000 (2022: profit of €719,000).
A summary of the Company’s significant accounting policies is set out below.
(b) Significant accounting judgements, estimates and assumptions
The preparation of the Company’s financial statements requires Directors to make judgements, estimates and
assumptions that affect the amounts recognised in the financial statements. However, uncertainty about these
judgements, assumptions and estimates could result in outcomes that could require a material adjustment to the
carrying amount of the asset or liability affected in future periods.
Key estimation uncertainties
Investments in subsidiaries are recognised at cost less any provision for impairment. The determination of
impairment requires the use of estimates such as future cash flows and fair value of investment properties.
Group loans are classified based on the business model for managing the financial asset. These loans are
in place to earn contractual cashflow for payment of principal and interest and therefore are measured at
amortised cost using the effective interest rate method less any impairment losses. The net asset value of each
borrower is reviewed to consider if there is sufficient value within the subsidiary to meet the contractual cash
flows. Fundamental to the net asset value of the borrower is the fair value of the investment properties owned.
The valuation uncertainty of investment properties is detailed within the consolidated group financial statement
notes. Where there are expected cash shortfalls, the carrying value of the loans are impaired and losses
recognised in the statement of comprehensive income.
(c) Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary
economic environment in which the Company operates (“the functional currency”) which in the judgement of
the directors is Euro. The financial statements are also presented in Euro. All figures in the financial statements are
rounded to the nearest thousand unless otherwise stated.
(d) Foreign currency
Transactions denominated in foreign currencies are converted at the exchange rates ruling at the date of the
transaction. Monetary and non-monetary assets and liabilities denominated in foreign currencies held at the
financial year end are translated using London closing foreign exchange rates at the financial year end. Any
gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an
exchange gain or loss to capital or revenue in the Statement of Comprehensive Income as appropriate.
Foreign exchange movements on investments are included in the Statement of Comprehensive Income within
gains on investments.
140 Annual Report 2023
(e) Revenue recognition
Interest income is accounted for on an effective interest rate basis and included in finance income.
(f) Expenses
Expenses are accounted for on an accruals basis. The Company’s investment management and administration
fees, finance costs and all other expenses are charged through the Statement of Comprehensive Income.
(g) 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 equity
is recognised in equity and not in profit or loss. Positions taken in tax returns with respect to situations in which
applicable tax regulations are subject to interpretation are periodically evaluated and provisions established
where appropriate.
(h) Distributions
Interim distributions payable to the holders of equity shares are recognised in the Statement of Changes in Equity
in the year in which they are paid. An annual shareholder resolution is voted upon to approve the Company’s
distribution policy.
(i) Share issue expenses
Incremental external costs directly attributable to the issue of shares that would otherwise have been avoided
are written off to share premium.
(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) Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are
measured at amortised cost using the effective interest rate method less any impairment losses.
(l) Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are
measured at amortised cost using the effective interest method.
(m) Reserves
Share Capital – This represents the proceeds from issuing Ordinary shares and is non-distributable.
Share Premium – Share premium represents the excess consideration received over the par value of Ordinary
shares issued and is classified as equity. Incremental costs directly attributable to the issue of Ordinary shares are
recognised as a deduction from share premium. This reserve is non-distributable.
Special Distributable Reserve – The special reserve is a distributable reserve to be used for all purposes permitted,
including the buyback of shares and the payment of dividends.
Capital Reserve – Is a distributable reserve subject to applicable legislation and practice and realised gains and
losses on currency settlements and disposals are accounted for in this reserve.
Revenue Reserve – The revenue reserve is a distributable reserve and reflects any surplus arising from the net
return on ordinary activities after taxation.
(n) Investments in subsidiaries
Investments in subsidiaries are initially recognised at cost, then at the cost less any provision for impairment.
(o) Intercompany loans
The Company previously measured its intercompany loans at fair value. In the current year, this accounting
treatment was reassessed. The directors believe these loans represent solely payments of principal and interest
and should have been measured at amortised cost as they are held in a hold to collect business model. As the
loans held in the previous period were repayable on demand the impact of this change would not have had any
material impact on the prior year and therefore the comparatives have not been restated.
141Annual Report 2023
2. Investments in subsidiaries
Additional details of each subsidiary are noted below, all subsidiary shares are the same class:
31 December 2023 31 December 2022
Subsidiary Address
Share capital
& premium
(€'000)
%
Shares
owned
Share capital
& premium
(€'000)
%
Shares
owned Activity
ASELI Florsheim BV Naritaweg 165,
1043 BW Amsterdam,
The Netherlands
5,171 100 5,171 100 Property
Investment
ASELI Erlensee BV Naritaweg 165,
1043 BW Amsterdam,
The Netherlands
8,373 100 8,373 100 Property
Investment
ASELI Leon BV Naritaweg 165,
1043 BW Amsterdam,
The Netherlands
7,123 100 15,665 100 Property
Investment
ASELI Netherlands I BV Naritaweg 165,
1043 BW Amsterdam,
The Netherlands
5,173 100 6,133 100 Property
Investment
ASELI Netherlands II BV Naritaweg 165,
1043 BW Amsterdam,
The Netherlands
2,538 100 2,957 100 Property
Investment
ASELI Waddinxveen BV Naritaweg 165,
1043 BW Amsterdam,
The Netherlands
5,170 100 5,170 100 Property
Investment
ASELI France Holding SAS 8 Avenue Hoche,
75008 Paris,
France
15,267 100 15,760 100 Property
Investment
ASELI sHeerenberg BV Naritaweg 165,
1043 BW Amsterdam,
The Netherlands
8,126 100 8,811 100 Property
Investment
ASELI Netherlands
Holdings BV
Naritaweg 165,
1043 BW Amsterdam,
The Netherlands
6,537 100 6,537 100 Property
Investment
PDC Industrial 92 Sp. zo.o Piekna 18,
00-549 Warsaw,
Poland
4,658 100 4,658 100 Property
Investment
PDC Industrial 72 Sp. zo.o Piekna 18,
00-549 Warsaw,
Poland
3,707 100 3,707 100 Property
Investment
Circulus Investments
Sp. z o.o.
Piekna 18,
00-549 Warsaw,
Poland
2,867 100 2,867 100 Property
Investment
ASELI Madrid Holding S.L. Pinar 7 - 5 Izq,
28006 Madrid,
Spain
14,110 100 48,068 100 Property
Investment
AELI Madrid Holding 2 S.L. Pinar 7 - 5 Izq,
28006 Madrid,
Spain
20,850 100 39,985 100 Property
Investment
109,670 173,862
142 Annual Report 2023
Additional details relating to the cost of shares, share premium and net asset value of each subsidiary is noted below.
31 December 2023 31 December 2022
€’000
Share
capital
€’000
Share
premium
€’000
Net asset
value
€’000
Share
capital
€’000
Share
premium
€’000
Net asset
value
Direct Subsidiaries
ASELI Florsheim BV 1 5,170 8,549 1 5,170 9,535
ASELI Erlensee BV 1 8,372 12,398 1 8,372 15,549
ASELI Leon BV 1 7,122 7,123 1 15,664 19,590
ASELI Netherlands I BV 1 5,172 5,173 1 6,132 10,861
ASELI Netherlands II BV 1 2,537 2,538 1 2,956 7,464
ASELI Waddinxveen BV 1 5,169 6,023 1 5,169 9,721
ASELI France Holding SAS 15,267 - 15,267 15,760 - 21,101
ASELI sHeerenberg BV 1 8,125 8,126 1 8,810 11,675
ASELI Netherlands Holdings BV 1 6,536 7,302 1 6,536 14,172
PDC Industrial 92 Sp. zo.o 1 4,657 9,148 1 4,657 9,887
PDC Industrial 72 Sp. zo.o 88 3,619 9,470 88 3,619 9,485
Circulus Investments Sp. z o.o. 3 2,864 5,506 3 2,864 5,232
ASELI Madrid Holding S.L. 3 14,107 14,110 3 48,065 48,068
AELI Madrid Holding 2 S.L. 3 20,847 20,851 3 39,982 39,985
15,373 94,297 131,584 15,866 157,996 232,325
31 December 2023 31 December 2022
€’000
Share
capital
€’000
Share
premium
€’000
Net asset
value
€’000
Share
capital
€’000
Share
premium
€’000
Net asset
value
Indirect Subsidiaries
ASELI France Holding
ASELI Meung SCI 7,030 - (2,835) 7,030 - 3,583
ASELI Avignon SCI 18,174 - 27,401 18,174 - 28,487
AELI Messageries SCI 14,215 - 10,823 14,215 - 12,588
AELI Immobiler SCI 10 - (79) 10 - (26)
ASELI Netherlands Holdings BV
ASELI Caprev Den Hoorn BV 12 13,424 34,066 12 13,424 42,784
ASELI Madrid Holding S.L.
AELI Madrid Logistics 1 SLU. 62 49,227 13,381 62 49,227 47,755
ASELI Madrid Holding 2 S.L.
AELI Madrid Logistics 2 SLU. 3 41,876 20,820 3 43,376 39,988
143Annual Report 2023
Impairment analysis
Where subsidiaries have a lower net asset value than carrying amount of investment, an impairment is recognised.
Due to a decrease in the value of the investment, the Company recognised an impairment of the following investments:
1) € 38,690,000 (2022: € 4,632,000) on ASELI Madrid Holding S.L.,
2) € 21,158,000 (2022: € 3,424,000) on AELI Madrid Holding 2 S.L,
3) € 494,000 (2022: € nil) on ASELI France Holding SAS,
4) € 1,221,000 (2022: € nil) on ASELI Leon BV,
5) € 961,000 (2022: € nil) on ASELI Netherlands I BV.
6) € 419,000 (2022: € nil) on ASELI Netherlands II BV,
7) € 685,000 (2022: € nil) on ASELI sHeerenberg BV.
The company’s share price was a discount to NAV as at 31 December 2023 (31 December 2022: Discount). This is not
considered to have any impact on the value of the Company’s subsidiaries, and no impairment is recognised.
A reconciliation of opening to closing investments in subsidiaries is noted below.
2023
€’000
2022
€’000
Opening carrying value as at 1 January 173,862 101,406
Additions 200 81,727
Loan to equity conversions - 144,500
Capital reductions (8,820) (145,715)
Impairment (55,572) (8,056)
Total carrying value as at 31 December 109,670 173,862
The Directors estimated the recoverable amount of investments in subsidiaries. The amount was estimated based on
their net asset value. As at 31 December 2023, the recoverable amount of investments in subsidiaries was as follows.
2023
€’000
2022
€’000
Recoverable amount 131,584 232,325
3. Cash and cash equivalents
2023
€’000
2022
€’000
Cash 2,348 1,696
2,348 1,696
144 Annual Report 2023
4. Intercompany loans
2023
€’000
2022
€’000
Accrued interest on intercompany loan receivable in less than one year 2,897 3,150
2,897 3,150
Intercompany loan receivable in greater than one year 249,311 238,894
Intercompany loan expected to be received in less than one year - 15,407
249,311 254,301
A summary of the various group loans is provided in the following table:
Borrower
Limit
€’000
Balance Drawn €’000
Maturity
Date
yrs Loan Type
Interest
Rate
Outstanding Interest €’000
As at
31 Dec 2023
As at
31 Dec 2022
As at
31 Dec 2023
As at
31 Dec 2022
ASELI Florsheim BV 6,125 3,425 3,425 Jan 28 Interest bearing Loan 3.50% 30 33
ASELI Erlensee BV 16,500 1,679 1,678 May 28 Interest bearing Loan 2.50% - -
ASELI Erlensee BV 10,300 5,486 5,485 May 28 Interest bearing Loan 3.50% 60 62
ASELI Leon BV (Polinya) 13,370 5,470 5,470 Jun 31 Interest bearing Loan 3.49% 48 7
ASELI Netherlands I BV (Ede) 35,584 11,808 11,808 Aug 28 Interest bearing Loan 4.80% 143 145
ASELI Netherlands II BV (Zeewolde) 23,760 9,173 9,173 Sep 28 Interest bearing Loan 4.60% 106 109
ASELI Den Hoorn BV 16,000 13,986 15,136 Jan 33 Interest bearing Loan 3.05% 108 253
ASELI France Holding SAS (Avignon) 10,905 9,394 9,394 Oct 28 Interest bearing Loan 3.13% 197 83
ASELI France Holding SAS (Meung) 6,096 4,212 4,212 Feb 29 Interest bearing Loan 3.13% 88 36
ASELI France Holding SAS 8,523 7,723 8,523 May 32 Interest bearing Loan 2.63% 139 86
ASELI Avignon SCI 27,264 1,989 2,209 Oct 28 Interest bearing Loan 3.13% 16 19
AELI Messageries SCI 21,465 20,765 21,465 May 32 Interest bearing Loan 2.63% 138 231
ASELI Waddinxveen BV 29,200 8,075 8,075 Nov 28 Interest bearing Loan 4.50% 92 103
ASELI Waddinxveen BV 5,180 5,180 5,180 Jul 32 Interest bearing Loan 3.05% 40 68
ASELI Meung SCI 15,240 8,580 8,580 Nov 28 Interest bearing Loan 3.13% 135 69
PDC Industrial 72 Sp. z o.o. 2,000 2,000 2,000 Feb 29 Interest bearing Loan 4.10% 345 -
PDC Industrial 72 Sp. z o.o. 18,807 17,157 17,407 Feb 29 Interest bearing Loan 4.20% 228 386
ASELI sHeerenberg BV 11,300 2,776 2,776 Jun 29 Interest bearing Loan 5.29% 37 40
ASELI sHeerenberg BV 8,000 8,000 8,000 Jun 29 Interest bearing Loan 5.29% 107 107
ASELI sHeerenberg BV 8,470 7,290 8,040 Sep 29 Interest bearing Loan 3.50% 64 73
ASELI Madrid Holding S.L. 71,017 - - Dec 23 Interest bearing Loan 3.00% - 29
ASELI Madrid Holding S.L. 60,928 - - Dec 23 Interest bearing Loan 2.10% - 18
AELI Madrid Logistics 1 78,656 50,381 50,381 Nov 33 Interest bearing Loan 3.69% 469 219
Circulus Investments Sp. z o.o. 25,780 24,772 25,073 Apr 31 Interest bearing Loan 3.39% 148 507
Circulus Investments Sp. z o.o. - - 271 Dec 22 Interest bearing Loan 4.10% - 28
PDC Industrial 92 Sp. z o.o. 21,340 19,990 20,540 Oct 29 Interest bearing Loan 4.10% 159 439
551,810 249,311 254,301 2,897 3,150
Fair value of group loans 255,491 254,301 2,897 3,150
145Annual Report 2023
5. Trade payables
2023
€’000
2022
€’000
Investment management fee payable 729 1,937
Accruals and other payables 984 416
1,713 2,353
6. Bank loans
The Company maintains an uncommitted master facility loan agreement with Investec Bank plc for €70 million.
Under the facility, the Company may make requests for drawdowns at selected short-duration tenors as and when
needed to fund acquisitions or for other liquidity requirements. Within the facility, a £3.3 million committed revolving
credit facility is carved out of the total €70 million. As at 31 December 2023 the Company had no drawings against the
facility (2022: €nil drawn).
In prior years the Company incurred €207,000 of capitalised financing fees, which are being spread over the four year
term of the facility until October 2024. As at 31 December 2023 the remaining amortised cost of these financing fees is
€39,000 (2022: €92,000).
7. Share capital and share premium
Share capital
2023
€’000
2022
€’000
Opening balance 4,717 4,309
Ordinary shares issued - 408
As at 31 December 4,717 4,717
Ordinary shareholders participate in all general meetings of the Company on the basis of one vote for each share held.
Each Ordinary share has equal rights to dividends and equal rights to participate in a distribution arising from a winding
up of the Company. The Ordinary shares are not redeemable.
The number of Ordinary Shares authorised, issued and fully paid at 31 December 2023 was 412,174,356 (2022:
412,174,356). The nominal value of each share is £0.01.
Share premium
2023
€’000
2022
€’000
Opening balance 269,546 225,792
Premium arising on issue of new shares - 44,513
Share issue costs deducted - (759)
Balance at 31 December 269,546 269,546
146 Annual Report 2023
8. Dividends
To maintain status as an approved Investment Trust Company, the Company must comply with the eligibility
conditions set out in section 1158 of the Corporation Tax Act 2010 as well as additional requirements outlined in
The Investment Trust (Approved Company) (Tax) Regulations 2011. Regulation 19 provides that the Company must
comply with an income distribution requirement and, specifically, cannot retain more than the higher of 15% of its
income for the accounting year or any brought forward revenue reserve deficit. Any dividend that the Company
must pay in order to satisfy this requirement must be paid within 12 months of the end of the accounting year.
On 19 February 2024 the Board announced that the Company would forego payment of the fourth interim
distribution for the quarter ended 31 December 2023, which has historically been declared in February and paid
in March each year.
Dividends paid in the year have been split between the Special distributable reserve and Revenue reserve as follows:
Special
distributable
reserve
€’000
Revenue
reserve
€’000
Total
€’000
Accounting
year applied
to for income
retention test
2022 Fourth interim dividend of 1.41c
(1.20p) per share paid 24 March 2023
- 5,812 5,812 2022
2023 First interim dividend of 1.41c (1.23p)
per share paid 23 June 2023
1,128 4,684 5,812 2023
2023 Second interim dividend of 1.41c
(1.22p) per share paid 22 September 2023
5,812 - 5,812 2023
2023 Third interim dividend of 1.41c (1.23p)
per share paid 29 December 2023
5,812 - 5,812 2023
Total dividends paid 12,752 10,496 23,248
Special
distributable
reserve
€’000
Revenue
reserve
€’000
Total
€’000
Accounting
year applied
to for income
retention test
2021 Fourth Interim dividend of 1.41c
(1.21p) per Share paid 25 March 2022
3,259 2,553 5,812 2021
2022 First Interim dividend of 1.41c (1.19p)
per Share paid 24 June 2022
- 5,812 5,812 2022
2022 Second Interim dividend of 1.41c
(1.20p) per Share paid 23 September 2022
4,285 1,527 5,812 2022
2022 Third Interim dividend of 1.41c (1.20p)
per Share paid 30 December 2022
5,812 - 5,812 2022
Total dividends paid 13,356 9,892 23,248
9. Capital commitments
As at 31 December 2023 the Company had capital commitments of €150.4 million (2022: €107.4 million) relating to
undrawn intercompany loans.
147Annual Report 2023
10. Ultimate parent company
In the opinion of the Directors on the basis of shareholdings reviewed by them, the Company has no immediate or
ultimate controlling party.
11. Fair value of financial instruments
The Company measures fair values using the following fair value hierarchy, which reflects the significance of the inputs
used in making the measurements.
Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments.
Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or
indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active
markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less
than active; or other valuation techniques in which all significant inputs are directly or indirectly observable from
market data.
Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation technique includes
inputs that are not observable and the unobservable inputs have a significant effect on the instrument’s valuation.
Fair value hierarchy
The Company’s financial instruments measured at amortised cost relate to group loans due from group entities,
disclosed in Note 4. The group loans are classified as level 3 (2022: level 3) in the fair value hierarchy.
Level 3 fair value measurements
Reconciliation
The following table shows a reconciliation of the opening to closing fair value the Group Loans receivable, the fair
value of which is considered to be within Level 3 of the fair value hierarchy.
2023
€’000
2022
€’000
Opening balance 254,301 322,513
Classified to amortised cost, see note 1(o) (254,301) -
Issued - 114,306
Repayments - (38,019)
Conversions to investments in subsidiaries - (144,499)
Closing balance - 254,301
During the year, €4,990,000 (2022: €38,019,000) of group loans were repaid.
Group loans are measured at amortised cost less impairment. The fair value is estimated using discounted cash flows
with the current interest rates and yield curve applicable to each loan. As at 31 December 2023 the estimated fair value
of the Group loans is €255,491,000 (2022: €254,301,000). The amortised cost is €249,311,000 (2022: €254,301,000).
The fair value considers the net asset value of each borrower and whether this is sufficient value within the subsidiary
to meet the contract cash flows. The net asset value of the borrower is primarily driven by the valuation of investment
property, refer to the unobservable inputs into that valuation in Note 9 of the Group Consolidated Financial Statements.
148 Annual Report 2023
Corporate Information
The Company’s Investment Manager is abrdn Investments Ireland Limited, a wholly
owned subsidiary of abrdn pc whose group companies as at 31 December 2023 had
approximately £495 billion under management and administration.
Information about the
Investment Manager
149Annual Report 2023
Corporate Information
Information about the Investment Manager
abrdn Fund Managers Limited
abrdn Fund Managers Limited (“aFML”), authorised and
regulated by the Financial Conduct Authority, has been
appointed as alternative investment fund manager
to the Company. aFML has in turn delegated portfolio
management to the Danish branch of abrdn Investments
Ireland Limited (“aIIL”).
abrdn
Worldwide, abrdn plc group companies had approximately
£495 billion under management and administration
(as at 31 December 2023) in assets for a range of clients,
including individuals and institutions, through mutual and
segregated funds.
abrdn operates a fully integrated property investment
management platform and has an extensive regional
presence across the UK and Continental Europe. Its eight
offices across Europe - London, Edinburgh, Frankfurt,
Amsterdam, Madrid, Paris, Brussels and Copenhagen
- employ over 300 real estate professionals in fund
management, research, transactions, asset management,
financing and other specialist property activities.
The real estate teams within these offices are responsible
for sourcing and managing all the assets acquired across
the region. Having teams in the key target markets in
which the Company invests provides, in the Investment
Manager’s view, a significant competitive advantage,
with improved local market knowledge, better access to
potential deals, closer implementation of asset business
plans and improved ability to manage and mitigate risk.
The Investment Team Senior Managers
Troels Andersen
Fund Manager, Real Estate
Investment Management
Troels Andersen, who joined abrdn in April 2011 and is
based in Copenhagen, assumed the role of lead fund
manager for the Company in October 2022. Prior to his
involvement with the Company, Troels had been Fund
Manager of abrdn’s €150 million multi-sector European
Long Income Real Estate Fund, having successfully
overseen its launch in 2019. Prior to that he was Fund
Manager of abrdn’s €500 million gross asset value
Aberdeen Property Nordic I Fund, together with a further
segregated value-add mandate. He was previously a
member of abrdn´s Nordic and European Investment
Committees, which approves all major decisions for
investments in the region. Troels brings 25 years of real
estate investment experience, including logistics asset
transactions, together with knowledge of debt facility
management, having spent the first part of his career
working for German banks in both Germany and the UK.
150 Annual Report 2023
Geoff Hepburn
Deputy Fund Manager, Real
Estate Investment Management
Geoff Hepburn is Deputy Fund Manager of the Company
based in Edinburgh. Responsibilities include developing
and implementing Company strategy, client reporting,
managing transactions and ensuring the delivery of the
ESG strategy. Since joining abrdn in January 2012 he has
had responsibility as Investment Manager and Deputy
Fund Manager for several balanced UK institutional funds.
He joined abrdn from a London property company as
Development & Investment Manager responsible for two
large Central London office projects as well as a mixed
use regional investment and development portfolio.
Previously, Geoff worked for Ediston Properties having
begun his client-side career at Standard Life Investments
as Portfolio Manager on the Pooled Pension Fund in 2001.
In a varied career spanning more than 20 years, Geoff has
transacted and developed over £1bn of real estate.
Geoff graduated LLB Bachelor of Scots Law, followed
by a Postgraduate Diploma in Land Economy (with
commendation) in 1999. Both degrees were awarded by
the University of Aberdeen. Geoff qualified as a Chartered
Surveyor (MRICS) with DTZ in 2001. He speaks English
and French.
Attila Molnar
Deputy Fund Manager, Real
Estate Investment Management
Attila is a Fund Manager based in Frankfurt. Attila joined
Dresdner Bank’s property fund management business
(DEGI) in 2006, shortly before the business was acquired
by abrdn. Attila has been involved in the planning and
establishment of new product lines for institutional clients
and joined the fund management teams of those funds.
At present, in addition to his responsibilities for the Company,
he is responsible for two institutional funds. Prior to joining
DEGI Attila worked for PricewaterhouseCoopers where
he was responsible for a diverse range of audit and
due diligence projects in the property funds sector.
Attila graduated with a MSc in Accounting and Finance
from Budapest University of Economics and speaks English,
German and Hungarian.
The Investment Process
The Investment Manager is responsible for sourcing and
managing the transaction process for new acquisitions.
The Investment Manager sources potential acquisitions
through its property teams based in Europe. The teams
based in the target markets have an in-depth knowledge
of the local markets and a wide network of relationships
for identifying and selecting the best investment
opportunities. Having local teams on the ground provides
for in-depth local insight and, in turn, is a significant
competitive advantage that should enable the Investment
Manager to implement the Company’s investment policy
in the key cities and regions.
Furthermore, focusing on income durability, location and
propensity for rental growth, combined with the ability
to carry out active asset management, enables the
Investment Manager to invest in properties where the
competition from other investors is weaker than for the
big, long-leased properties with no asset management
requirements, where competition among potential buyers
is very high.
Each transaction is assessed against individual fund
criteria and, if considered potentially suitable, a detailed
financial and economic analysis and review is undertaken
of the property, the location, quality of construction,
the existing leases, the rents being paid versus market
level, the tenants and the market prospects. This process
is informed by a significant database of proprietary
information held by the Investment Manager, experienced
investment professionals, including people on the ground
in the relevant markets and a dedicated research function
that assists in identifying rental and capital growth
prospects at country, regional, city, sub-market and
sector level.
The Investment Manager operates a pan-European
Investment Committee which approves all investment
plans, transactions, financing decisions and material
asset management activity. The Investment Committee
includes senior members of the real estate team.
If, following analysis, property inspections and negotiations
with the owner of the property, the fund managers wish
to proceed with an acquisition, Investment Committee
approval is required.
An active asset management strategy (i.e. defining,
implementing and regularly reviewing business plans for
each property in the Portfolio) is an important element in
helping to deliver investment performance. An important
part of this is that the properties are managed by local
asset managers in the countries where the properties are
located who have better access to tenants, advisers and
consultants to help generate outperformance.
151Annual Report 2023
Active asset management means the individual asset
manager involved in acquiring the property is also
responsible for implementing the business plan once
acquired, resulting in carefully researched and robust
assumptions and a focus on long-term performance
from purchase through to any potential sale. The types of
active asset management initiatives which the Investment
Manager may utilise are:
.
renegotiating leases to capture market rental
growth and/or extend lease duration;
.
managing any vacancies to maximise
rental performance;
.
exploiting ancillary development opportunities on or
around the properties;
.
assessing and effecting changes of use where this would
add value;
.
undertaking refurbishments to increase rents; and
.
changing unit size and configuration to maximise the
potential income from a property.
The majority of the Portfolio comprises properties where
the main asset management activities are likely to be
renegotiating leases, managing vacancies, growing rental
income and undertaking light refurbishments.
Approach to ESG
The Investment Manager views ESG as a fundamental
part of its business. Whilst real estate investment provides
valuable economic benefits and returns for investors it has
– by its nature – the potential to affect environmental and
social outcomes, both positively and negatively.
The Investment Manager’s approach is underpinned by
the following three over-arching principles:
.
Transparency, Integrity and Reporting: being transparent
in the ways in which it communicates and discusses
strategy, approach and performance with investors and
stakeholders.
.
Capability and Collaboration: drawing together and
harnessing the capabilities and insights of its platforms,
with those of its investment, supply chain and industry
partners.
.
Investment Process and Asset Management: integrating
ESG into decision making, governance, underwriting
decisions and asset management approach. This
includes the identification and management of material
ESG risks and opportunities across the Portfolio.
152 Annual Report 2023
Corporate Information
Investor Information
Investors may receive information about
the Company via email by registering at
the foot of the homepage of the website:
eurologisiticsincome.co.uk
The website also includes current and historic Annual
and Half-Yearly Reports, performance data, the latest
quarterly factsheet issued by the Manager together with
links to the Company’s share price and recent London
Stock Exchange announcements.
Information about the Company, and other investment
companies managed by the Manager, may also be found
on social media, as follows:
‘X’/(Twitter): @abrdnTrusts
LinkedIn: abrdn Investment Trusts
Alternative Investment Fund Managers
Directive (“AIFMD”) and Pre-Investment
Disclosure Document (“PIDD”)
The Company has appointed abrdn Fund Managers
Limited as its alternative investment fund manager and
Citibank UK Limited as its depositary under the AIFMD.
Details of the leverage and risk policies which the Company
is required to have in place under the AIFMD are published
in the Company’s PIDD which can be found on the website
eurologisticsincome.co.uk. The periodic disclosures required
to be made by the AIFM under the AIFMD are set out on
page 160.
Investor Warning: Be alert to share fraud and
boiler room scams
The Company has been made aware by abrdn that some
investors have received telephone calls from people
purporting to work for abrdn, or third parties, who have
offered to buy their investment trust shares. These may
be scams which attempt to gain personal information
with which to commit identity fraud or could be ‘boiler
room’ scams where a payment from an investor is
required to release the supposed payment for their
shares. These callers do not work for abrdn and any
third party making such offers has no link with abrdn.
abrdn never makes these types of offers and does not
‘cold-call’ investors in this way. If investors have any doubt
over the veracity of a caller, they should not offer any
personal information, end the call and contact abrdn’s
investor services centre using the details provided below.
The Financial Conduct Authority provides advice with
respect to share fraud and boiler room scams at:
fca.org.uk/consumers/scams
Shareholder Enquiries
Registered Shareholders
In the event of queries regarding their holdings of
shares, lost certificates, dividend payments, registered
details, etc shareholders holding their shares in the
Company directly should contact the registrars,
Equiniti Limited, via their website www.shareview.co.uk
or Tel: +44 (0) 371 384 2030. Lines are open Monday to
Friday (excluding public holidays in England & Wales).
General Enquiries
Any general enquiries about the Company should be
directed to the Company Secretary, abrdn European
Logistics Income plc, 280 Bishopsgate, London EC2M 4AG
or by email at CEF.CoSec@abrdn.com.
Closure of the abrdn Investment Trust Savings Plans and
transfer to interactive investor
On 8 December 2023 the abrdn Investment Trust ISA,
Share Plan and Investment Plan for Children (the “Plans”)
were closed. All investors with a holding or cash balance
in the Plans at that date were transferred to interactive
investor (“ii”). ii communicated with planholders in late
November 2023 to set up account security to ensure that
investors can continue to access their holdings via ii as the
Plans close.
Please contact ii for any ongoing support with your ii
account on 0345 646 1366, or +44 113 346 2309 if you
are calling from outside the UK. Lines are open 8.00am to
5.00pm Monday to Friday. Alternatively you can access
the ii website at www.ii.co.uk/abrdn-welcome.
For all other queries relating to the former abrdn Plans,
please email trusts@abrdn.com.
Suitable for Retail/NMPI Status
The Company’s securities are intended for investors
primarily in the UK (including retail investors), professionally
advised private clients and institutional investors who
are seeking exposure to European logistical real estate
and who understand and are willing to accept the
risks of exposure to this asset class. Investors should
consider consulting a financial adviser who specialises in
advising on the acquisition of shares and other securities
before acquiring shares. Investors should be capable of
evaluating the risks and merits of such an investment
and should have sufficient resources to bear any loss that
may result.
153Annual Report 2023
The Company currently conducts its affairs so that its
securities can be recommended by a financial adviser
to ordinary retail investors in accordance with the
Financial Conduct Authority’s (FCA) rules in relation to
non-mainstream pooled investments (NMPIs) and intends
to continue to do so for the foreseeable future.
The Company’s shares are excluded from the FCA’s
restrictions which apply to non-mainstream investment
products because they are shares in an investment trust.
Key Information Document (“KID”)
The KID relating to the Company can be found under
‘Key Documents’ in the ‘Literature’ section of the
Company’s website.
How to Invest in the Company and other
abrdn-managed investment trusts
A range of leading investment platforms and share dealing
services let you buy and sell abrdn-managed investment
trusts including the shares of the Company.
Many of these platforms operate on an ‘execution-only’
basis. This means they can carry out your instruction to
buy or sell a particular investment trust. But they may not
be able to advise on suitable investments for you. If you
require advice, please speak to a qualified financial adviser
(see below).
Flexibility
Many investment platform providers will allow you to
buy and hold abrdn Investment Trust shares within an
Individual Savings Account (ISA), Junior ISA or Self Invested
Personal Pension (SIPP), all of which have potential tax
advantages. Most will also allow you to invest on both a
lump sum and regular savings basis.
Costs and service
It is important to choose the right platform for your needs,
so take time to research what each platform offers before
you make your decision, as well as considering charges.
When it comes to charges, some platforms have flat fee
structures while others levy percentage-based charges.
Typically, you will also pay a fee every time you buy and
sell shares, so you need to bear in mind these transaction
costs if you are trading frequently. There may also be
additional charges for ISA and SIPP investments.
Can I exercise my voting rights if I hold my
shares through an investment platform?
Yes, you should be able to exercise your right to vote
by contacting your platform provider. Procedures differ,
but some platforms will automatically alert you when new
statutory documents are available and then allow you
to vote online. Others will require you to contact them
to vote. Your chosen platform provider will provide
further guidance. Alternatively, the Association of
Investment Companies has provided information on how
to vote investment company shares held on some of the
major platforms. This information can be found at:
www.theaic.co.uk/how-to-vote-your-shares.
Getting advice
abrdn recommends that you seek financial advice prior to
making an investment decision. If you do not currently have
a financial adviser, details of authorised financial advisers
in your area can be found at pimfa.co.uk or unbiased.co.uk
(see below). You will pay a fee for advisory services.
Platform providers
Platforms featuring the Company, as well as other abrdn-
managed investment trusts, include:
.
interactive investor (owned by abrdn):
www.ii.co.uk/investment-trusts
.
AJ Bell:
www.ajbell.co.uk/markets/investment-trusts
.
Barclays Smart Investor:
www.barclays.co.uk/smart-investor
.
Charles Stanley Direct:
www.charles-stanley-direct.co.uk
.
Fidelity: www.fidelity.co.uk
.
Halifax: www.halifax.co.uk/investing
.
Hargreaves Lansdown:
www.hl.co.uk/shares/investment-trusts
The companies above are shown for illustrative purposes
only. Other platform providers are available. The links
above direct you to external websites operated by each
platform provider. abrdn is not responsible for the content
and information on these third-party sites, apart from
interactive investor, which is owned by abrdn.
Discretionary Private Client Stockbrokers
If you have a large sum to invest, you may wish to contact
a discretionary private client stockbroker. They can
manage your entire portfolio of shares and will advise you
on your investments. To find a private client stockbroker
visit The Personal Investment Management & Financial
Advice Association at: pimfa.co.uk.
154 Annual Report 2023
Financial Advisers
To find an adviser who recommends on investment trusts,
visit: unbiased.co.uk.
Regulation of Stockbrokers
Before approaching a stockbroker, always check that they
are regulated by the Financial Conduct Authority:
Tel: 0800 111 6768 or at
at https://register.fca.org.uk
Email: consumerqueries@fca.org.uk
Note
Please remember that past performance is not a guide
to the future. Stock market and currency movements may
cause the value of shares and the income from them to fall
as well as rise and investors may not get back the amount
they originally invested.
As with all equity investments, the value of investment
trusts purchased will immediately be reduced by the
difference between the buying and selling prices of the
shares, the market maker’s spread.
Investors should further bear in mind that the value of any
tax relief will depend on the individual circumstances of
the investor and that tax rates and reliefs, as well as the tax
treatment of ISAs, may be changed by future legislation.
The information on pages 153 to 155 has been issued
by abrdn Investments Limited, which is authorised and
regulated by the Financial Conduct Authority in the
United Kingdom. abrdn Investments Limited is entered
on the Financial Services Register under registration
number 121891.
155Annual Report 2023
Corporate Information
EPRA Financial Reporting (Unaudited)
Prepared in accordance with EPRA best practice recommendations (BPR) February 2022.
EPRA Performance Measures
31 December 2023
Total
31 December 2022
Total
A. EPRA Earnings (€'000) 13,033 14,497
A. EPRA Earnings per share (cents) 3.2 3.5
B. EPRA Net tangible assets (“NTA”) (€'000) 394,550 509,741
B. EPRA Net tangible assets per share (cents)
1
95.7 123.7
C. EPRA Net reinstatement value ("NRV") (€'000) 430,527 546,326
C. EPRA Net reinstatement value per share (cents) 104.5 132.5
D. EPRA Net disposal value (“NDV”)(€'000) 387,785 498,060
D. EPRA Net disposal value per share (cents) 94.1 120.8
E. EPRA Net initial yield (%) 4.4 4.0
E. EPRA topped-up net initial yield (%) 4.4 4.1
F. EPRA Vacancy rate (%) 6.0 3.6
G. EPRA Cost ratios - including direct vacancy costs (%) 34.1 32.0
G. EPRA Cost ratios - excluding direct vacancy costs (%) 32.4 31.0
H. EPRA Capital expenditure (€’000) 139 133,170
I. EPRA Like for like rental growth (%) 1.8 5.0
J. EPRA LTV (%) 40.0 34.6
1
Defined as an Alternative Performance Measure.
A. EPRA Earnings (€000)
Earnings per IFRS income statement (81,801) (18,442)
Adjustments to calculate EPRA Earnings, exclude:
Changes in value of investment properties 106,878 40,432
Gains on disposal of investment properties (133) -
Tax on profits on disposals 440 -
Deferred tax (13,854) (3,893)
Gains on termination of financial instruments (313) -
Early loan repayment cost 110 -
Changes in fair value of financial instruments 1,706 (3,600)
EPRA Earnings 13,033 14,497
Weighted average basic number of shares 412,174 408,956
EPRA Earnings per share (cents) 3.2 3.5
156 Annual Report 2023
31 December 2023
Total
31 December 2022
Total
B. EPRA Net tangible assets (“NTA”) (€’000)
IFRS NAV 384,928 489,977
Exclude:
Fair value of financial instruments (1,690) (3,709)
Deferred tax in relation to fair value gains of
investment property
1
11,312 23,473
394,550 509,741
Shares in issue at end of year 412,174 412,174
EPRA Net tangible assets per share (cents) 95.7 123.7*
1
Excludes deferred tax adjustments on other temporary differences, recognised under IFRS.
* Restated following correction of treatment of fair value of financial instruments in
calculation of this performance measure.
C. EPRA Net reinstatement value (“NRV”) (€’000)
EPRA NTA 394,550 509,741
Real estate transfer tax and other purchasers' costs 35,977 36,585
EPRA NRV 430,527 546,326
EPRA Net reinstatement value per share (cents) 104.5 132.5*
* Restated following correction of treatment of fair value of financial instruments in
calculation of this performance measure.
D. EPRA Net disposal value (“NDV”) (€’000)
IFRS NAV 384,928 489,977
Fair value adjustment for fixed interest debt 2,857 8,083
EPRA NDV 387,785 498,060
EPRA Net disposal value per share (cents) 94.1 120.8
E. EPRA Net initial yield and ‘topped up’ NIY disclosure (€’000)
Investment property - wholly owned 633,806 758,719
Less: developments - -
Completed property portfolio 633,806 758,719
Allowance for estimated purchasers' costs 35,977 36,585
Gross up completed property portfolio valuation 669,783 795,304
Annualised cash passing rental income
2
34,150 33,994
Property outgoings (4,392) (2,501)
Annualised net rents 29,758 31,493
Add: notional rent expiration of rent free periods or other
lease incentives
- 778
Topped-up net annualised rent 29,758 32,271
EPRA NIY (%) 4.4 4.0
EPRA "topped-up" NIY (%) 4.4 4.1
2
Calculated based on lease agreements as at the reporting date.
157Annual Report 2023
31 December 2023
Total
31 December 2022
Total
F. EPRA Vacancy rate (€’000)
Estimated rental value of vacant space 2,231 1,270
Estimated rental value of whole portfolio 37,420 35,176
EPRA Vacancy Rate (%) 6.0 3.6
EPRA vacancy rate corresponds to the vacancy rate at year-end. It is calculated as the
ratio between the estimated market rental value of vacant spaces and potential rents for
the operating property portfolio. EPRA vacancy rate does not include leases signed with a
future effect date.
G. EPRA Cost ratios (€’000)
Administrative / property operating expense per IFRS
income statement
19,495 15,743
Net service charge costs / fees (8,095) (6,237)
EPRA Costs (including direct vacancy costs) 11,400 9,506
Direct vacancy costs (558) (315)
EPRA Costs (excluding direct vacancy costs) 10,842 9,191
Gross Rental income less ground rent costs 33,435 29,686
EPRA Cost Ratio (including direct vacancy costs) (%) 34.1 32.0
EPRA Cost Ratio (excluding direct vacancy costs) (%) 32.4 31.0
Overhead and operating expenses capitalised - -
H. Property related capital expenditure for the Group (€’000)
Acquisitions - 132,754
Investment properties:
Non incremental lettable space 139 416
Incremental lettable space - -
Total CapEx 139 133,170
Conversion from accrual to cash basis 378 353
Total CapEx on cash basis 517 133,523
There is no capital expenditure associated with Joint Ventures.
Capital expenditure recognised by the Group that has not resulted in increase of the
lettable area.
Please see details in note 9 of consolidated financial statements.
The difference in comparison to note 9 is disposal costs on sale of assets which are not
included in above table.
158 Annual Report 2023
31 December 2023
Total
31 December 2022
Total
I. Like for like rental growth
Rental income growth (%):
Germany 2.1 10.3
Poland 7.9 7.6
France 1.3 4.9
Spain (5.2) 2.4
Netherlands 4.5 4.2
1.8 5.0
Rental income total
1
(€000):
Germany 3,367 3,298
Poland 5,820 5,393
France 4,098 4,044
Spain 8,560 9,025
Netherlands 12,305 11,775
34,150 33,535
1
Calculated based on lease agreements as at the reporting date.
Total portfolio value on which the like-for-like rental growth
is based (€000):
Germany 63,200 68,170
Poland 90,390 93,600
France 99,380 107,390
Spain 189,136 243,781
Netherlands 191,700 227,800
633,806 740,741
J. EPRA LTV (€’000)
Borrowings from financial institutions 259,462 270,270
Net payables
2
16,353 15,006
Exclude:
Cash and cash equivalents (18,061) (20,262)
Net debt (a) 257,754 265,014
Investment properties at fair value
3
633,806 758,719
Net receivables (excluding lease incentives)
4
10,210 7,829
Total property value (b) 644,016 766,548
LTV (a/b) (%) 40.0 34.6
2
Refer to note 13 for details.
3
Based on independent property valuation. Includes Investment property held for sale.
4
Refer to note 10 for details.
159Annual Report 2023
Corporate Information
Alternative Investment Fund Managers Directive
Disclosures (Unaudited)
abrdn Fund Managers Limited and the Company are
required to make certain disclosures available to investors
in accordance with the Alternative Investment Fund
Managers Directive (‘AIFMD’). Those disclosures that are
required to be made pre-investment are included within a
pre-investment disclosure document (‘PIDD’) which can be
found on the Company’s website eurologisticsincome.co.uk.
There have been no material changes to the disclosures
contained within the PIDD since its last publication in
September 2023.
The periodic disclosures as required under the AIFMD to
investors are made below:
.
Information on the investment strategy, geographic and
sector investment focus and principal stock exposures
are included in the Strategic Report.
.
None of the Company’s assets are subject to special
arrangements arising from their illiquid nature.
.
The Strategic Report, note 22 to the financial statements
and the PIDD together set out the risk profile and risk
management systems in place. There have been no
changes to the risk management systems in place in
the period under review and no breaches of any of the
risk limits set, with no breach expected.
.
There are no new arrangements for managing the
liquidity of the Company or any material changes to
the liquidity management systems and procedures
employed by aFML.
.
All authorised Alternative Investment Fund Managers
are required to comply with the AIFMD Remuneration
Code. In accordance with the Remuneration Code,
the Company’s AIFM remuneration policy is available
from the Company Secretaries, abrdn Holdings Limited
on request (see contact details on page 153) and the
numerical remuneration in the disclosures in respect
of the AIFM’s reporting period for the year ended
31 December 2023 are available on the
Company’s website.
Leverage
The table below sets out the current maximum permitted
limit and actual level of leverage for the Company:
Gross
method
Commitment
method
Maximum level of leverage 365.0% 185.0%
Actual level at
31 December 2023
164.7% 164.7%
There have been no breaches of the maximum level
during the period and no changes to the maximum level
of leverage employed by the Company. There is no right
of re-use of collateral or any guarantees granted under
the leveraging arrangement. Changes to the information
contained either within this Annual Report or the PIDD
in relation to any special arrangements in place, the
maximum level of leverage which aFML may employ on
behalf of the Company; the right of use of collateral or any
guarantee granted under any leveraging arrangement; or
any change to the position in relation to any discharge of
liability by the Depositary will be notified via a regulatory
news service without undue delay in accordance with
the AIFMD.
The information above has been issued by abrdn
Investments Limited, which is authorised and regulated
by the Financial Conduct Authority in the United Kingdom.
abrdn Investments Limited is entered on the Financial
Services Register under registration number 121891.
160 Annual Report 2023
Corporate Information
Glossary of Terms and Definitions and Alternative
Performance Measures
abrdn abrdn plc
abrdn Group the abrdn plc group of companies
AIC Association of Investment Companies
AIFMD The Alternative Investment Fund Managers Directive
AIFM the alternative investment fund manager, being aFML
Alternative Performance
Measures
Alternative performance measures are numerical measures of the Company’s
current, historical or future performance, financial position or cash flows, other
than financial measures defined or specified in the applicable financial framework.
The alternative performance measures that have been adopted by the Company
are in line with general comparable measures used widely across the investment
trust industry such as the level of discount/premium, NAV/Share price total return
and ongoing charges which are each explained more fully below. The Company’s
applicable financial framework includes IFRS
Annual Rental Income Rental income passing at the Balance Sheet date
aFML or AIFM or Manager abrdn Fund Managers Limited
aIIL or the Investment
Manager
abrdn Investments Ireland Limited is a wholly owned subsidiary of abrdn plc and acts as
the Company’s investment manager
Asset Cover The value of a company’s net assets available to repay a certain security. Asset cover
is usually expressed as a multiple and calculated by dividing the net assets available
by the amount required to repay the specific security
Contracted Rent The contracted gross rent receivable which becomes payable after all the occupier
incentives in the letting have expired
Covenant Strength This refers to the quality of a tenant’s financial status and its ability to perform the
covenants in a lease
161Annual Report 2023
1
Defined as an Alternative Performance Measure.
Dividend Cover
1
The ratio of the Company’s net profit after tax (excluding the below items) to the
dividends paid.
As at
31 December 2023
€’000
As at
31 December 2022
€’000
Earnings per IFRS income statement (81,801) (18,442)
Adjustments to calculate dividend
cover:
Net changes in the value of
investment property
106,878 40,432
Gains on disposal of investment
property
(133) -
Gains on termination of financial
instruments
(313) -
Capitalised finance costs 110 -
Tax on disposal of investment
property
440 -
Deferred taxation (13,854) (3,893)
Effect of fair value adjustments on
derivative financial instruments
1,706 (3,600)
Effects of foreign exchange
differences
213 (346)
Profits (A) 13,246 14,151
Dividend (B) 23,248 23,248
Dividend Cover (A)/(B) 57.0% 60.9%
Discount to Net asset value
per share
1
The amount by which the market price per share of an investment trust is lower than
the net asset value per share. The discount is normally expressed as a percentage of
the NAV per share
As at
31 December 2023
As at
31 December 2022
Share price (A) 61.6p 68.5 p
NAV (B) 81.2p 105.4p
Discount (A-B)/B (24.1%) (35.0%)
Earnings Per Share Profit for the year attributable to shareholders divided by the weighted average
number of shares in issue during the year
EPRA European Public Real Estate Association
Europe The member states of the European Union, the European Economic Area (“EEA”) and
the members of the European Free Trade Association (“EFTA”) (and including always
the United Kingdom, whether or not it is a member state of the European Union, the
EEA or a member of EFTA)
ERV The estimated rental value of a property, provided by the property valuers
162 Annual Report 2023
Gearing
1
Calculated as gross external bank borrowings divided by total assets
As at
31 December 2023
€’000
As at
31 December 2022
€’000
Bank loans 259,462 270,270
Gross assets
2
669,539 795,146
Gearing (%) 38.7% 34.0%
Group The Company and its subsidiaries
Adjusted Gross Assets and
Gross Asset Value (GAV)
The aggregate value of the total assets of the Company as determined in accordance
with the accounting principles adopted by the Company from time to time
As at
31 December 2023
€’000
As at
31 December 2022
€’000
Gross asset value per Balance Sheet 693,892 817,783
Exclude IFRS 16 right of use asset (24,353) (22,637)
Gross assets 669,539 795,146
FRC Financial Reporting Council
IFRS International Financial Reporting Standards
Index Linked The practice of linking the review of a tenant’s payments under a lease to a published
index, most commonly the Retail Price Index (RPI) but also the Consumer Price Index
(CPI), French Tertiary Activities Rent Index (ILAT)
Key Information Document
or KID
The Packaged Retail and Insurance-based Investment Products (PRIIPS) Regulation
requires the Manager, as the Company’s PRIIP “manufacturer,” to prepare a key
information document (“KID”) in respect of the Company. This KID must be made
available by the AIFM to retail investors prior to them making any investment decision
and is available via the Company’s website. The Company is not responsible for the
information contained in the KID and investors should note that the procedures for
calculating the risks, costs and potential returns are prescribed by law. The figures
in the KID may not reflect the expected returns for the Company and anticipated
performance returns cannot be guaranteed
Lease incentive A payment used to encourage a tenant to take on a new lease, for example by a
landlord paying a tenant a sum of money to contribute to the cost of a tenant’s fit-out
of a property or by allowing a rent free period
Leverage For the purposes of the Alternative Investment Fund Managers Directive, leverage
is any method which increases the Company’s exposure, including the borrowing
of cash and the use of derivatives. It is expressed as a ratio between the Company’s
exposure and its net asset value and can be calculated on a gross and a commitment
method. Under the gross method, exposure represents the sum of the Company’s
positions after the deduction of sterling cash balances, without taking into account
any hedging and netting arrangements. Under the commitment method, exposure
is calculated without the deduction of sterling cash balances and after certain
hedging and netting positions are offset against each other. At year end actual level of
leverage was 164.7% (2022: 154.8%)
1
Defined as an Alternative Performance Measure.
2
Excluding IFRS 16 lease liabilities.
163Annual Report 2023
Net asset value
total return (EUR)
1
The return to shareholders, expressed as a percentage of opening NAV, calculated
on a per share basis by adding dividends paid in the year to the increase or decrease
in NAV. Dividends are assumed to have been reinvested in the quarter they are paid,
excluding transaction costs
Year ended
31 December 2023
Year ended
31 December 2022
Opening NAV 118.9¢ 129.1¢
Movement in NAV (25.5¢) (10.2¢)
Closing NAV 93.4¢ 118.9¢
% increase in NAV (21.4%) (7.9%)
Impact of reinvested dividends 4.3% 4.1%
NAV total return (17.1%) (3.8%)
Net Asset Value or NAV The value of total assets less liabilities. Liabilities for this purpose include current and
long-term liabilities. The net asset value divided by the number of shares in issue
produces the net asset value per share
1
Ongoing Charges Ratio
1
Ratio of expenses as a percentage of average daily shareholders’ funds calculated as
per the industry standard. A reconciliation of ongoing charges
is below:
Year ended
31 December 2023
€’000
Year ended
31 December 2022
€’000
Expenditure per Statement of
comprehensive income 19,495 15,743
Less Property service charge expense (8,095) (6,237)
Less Bad debt provision (1,237) (634)
Less restructuring costs - (58)
Group operating costs including
property costs (A) 10,163 8,814
Less Direct property expenses
and property management fees
excluding bad debt provision (3,155) (1,867)
Group operating costs (excluding
property costs) (B) 7,008 6,947
Average net asset value (C) 425,210 526,085
Ongoing charges (excluding property
costs) (B/C) 1.6% 1.3%
Ongoing charges (including property
costs) (A/C) 2.4% 1.7%
Passing Rent The rent payable at a particular point in time
1
Defined as an Alternative Performance Measure.
164 Annual Report 2023
PIDD The pre-investment disclosure document made available by the AIFM in relation to
the Company
Premium to Net asset value
per share
1
The amount by which the market price per share of an investment trust exceeds the
net asset value per share. The premium is normally expressed as a percentage of the
net asset value per share
Prior Charges The name given to all borrowings including long and short-term loans and overdrafts
that are to be used for investment purposes, reciprocal foreign currency loans,
currency facilities to the extent that they are drawn down, index-linked securities, and
all types of preference or preferred capital, irrespective of the time until repayment
Portfolio valuation The market value of the company’s property portfolio, which is based on the external
valuations provided by Savills
The Royal Institution of
Chartered Surveyors (RICS)
The global professional body promoting and enforcing the highest international
standards in the valuation, management and development of land, real estate,
construction and infrastructure
Share price total return (GBP)
1
The return to shareholders, expressed as a percentage of opening share price,
calculated on a per share basis by adding dividends paid in the year to the increase
or decrease in share price. Dividends are assumed to have been reinvested in the
quarter they are paid, excluding transaction costs
Year ended
31 December 2023
Year ended
31 December 2022
Opening share price 68.5p 117.0p
Movement in share price (6.9p) (48.5p)
Closing share price 61.6p 68.5p
% decrease in share price (10.1%) (41.5%)
Impact of reinvested dividends 6.6% 3.2%
Share price total return (3.5%) (38.3%)
SPA Sale and purchase agreement
SPV Special purpose vehicle
Total Assets Total assets less current liabilities (before deducting prior charges as
defined above)
WAULT Weighted Average Unexpired Lease Term. The average time remaining until the next
lease expiry or break date
1
Defined as an Alternative Performance Measure.
165Annual Report 2023
Corporate Information
Disclosure Concerning Sustainable Investment
(Article 8) (Unaudited)
Template periodic disclosure for the financial products referred to in Article 8, paragraphs
1, 2 and 2a, of Regulation (EU) 2019/2088 and Article 6, first paragraph, of Regulation (EU)2020/852
Sustainable investment
means an investment
in an economic activity
that contributes to an
environmental or social
objective, provided that
the investment does
not significantly harm
any environmental
or social objective
and that the investee
companies follow good
governance practices.
The EU Taxonomy
is a classification
system laid down
in Regulation (EU)
2020/852, establishing
a list of environmentally
sustainable economic
activities. That
Regulation does not lay
down a list of socially
sustainable economic
activities. Sustainable
investments with
an environmental
objective might be
aligned with the
Taxonomy or not.
Product Name: abrdn European Logistics Income plc
Legal entity identifier: 213800I9IYIKKNRT3G50
Environmental and/or social characteristics
Did this financial product have a sustainable investment objective?
Yes No
It made sustainable investments with an
environmental objective: ___%
It promoted Environmental/Social (E/S)
characteristics and while it did not have as its
objective a sustainable investment, it had a
proportion of ___% of sustainable investments
in economic activities that qualify as
environmentally sustainable under the EU
Taxonomy
in economic activities that do not qualify
as environmentally sustainable under the
EU Taxonomy
with an environmental objective in
economic activities that qualify as
environmentally sustainable under the
EU Taxonomy
with an environmental objective in
economic activities that do not qualify as
environmentally sustainable under the
EU Taxonomy
with a social objective
It made sustainable investments with a social
objective: ___%
It promoted E/S characteristics, but will not make
any sustainable investments
166 Annual Report 2023
Sustainability indicators
measure how the
environmental or
social characteristics
promoted by the
financial product are
attained.
To what extent were the environmental and/or social characteristics
promoted by this financial product met?
The fund promotes environmental and social characteristics that are relevant to the real
estate assets it invests in with the principal objective of supporting the fund’s investment
objective. Given the nature of direct investments in the physical built environment this
can capture a wide range of topics depending on the characteristics of the asset and its
location.
In particular, environmental and social characteristics of assets promoted by the fund
include:
.
Environmental – greenhouse gas emissions: Reductions in greenhouse gas emissions to
support the decarbonization of the built environment.
.
Environmental – energy: Improving Energy efficiency and on-site renewable energy
generation
.
Environmental – water: Improving Water efficiency
.
Environmental – waste, circular economy and raw materials: Improving resource
efficiency and best practice waste management including recycling and recovery
.
Social – other: Social factors such as respect for human rights and anti-corruption and
anti-bribery matters are considered in relation to major suppliers and tenants.
.
Environmental – other: The mitigation and management of flood risk and future physical
climate risk
.
Environmental – other: The mitigation and management of contamination risk
.
Environmental – waste, circular economy and raw materials: When undertaking
development and refurbishment works principles of sustainable design and
construction are promoted
Sustainability indicators have been created in line with the characteristics above to track
performance and promotion of the E and S characteristics. These are listed in the next
section. Environmental and social characteristics such as these are promoted for new
investments, relevant development projects and as part of asset management activities
for standing assets. No reference benchmark has been designated for the purpose of
attaining the environmental or social characteristics promoted by the Fund.
167Annual Report 2023
How did the sustainability indicators perform?
As described above, quantitative and qualitative sustainability indicators have been
established and linked to the Environmental and Social characteristics listed above. These
are aggregated to fund level from asset level data and are presented in the table below.
Sustainability indicator description Sustainability indicator metric
Fund performance
(this reference period)
#1 Environmental – energy:
Operational energy performance
#1.1 % fund value where landlord energy data
collected where applicable (see limitations
section)
1
100%
#1.2 % fund value with partial or full tenant
energy data collected where applicable (see
limitations section)
1
89%
#1.3 % fund value with whole building energy
data collected
1
82%
#1.4 % fund value (where energy performance
ratings are applicable) with energy
performance ratings of A-B
94%
#2 Environmental – greenhouse
gas emissions: Operational
carbon performance against
decarbonisation benchmarks
#2.1 % fund value where whole building carbon
data is available which equals or is below the
current year Carbon Risk Real Estate Monitor
(CRREM) 1.5-degree target
1
20%
#2.2 % fund value where whole building carbon
data is available which equals or is below the
5-year 1.5 degree CRREM target
1
12%
#3 Environmental – water:
Operational water consumption
#3.1 % fund value where landlord water data
collected where applicable (see limitations
section)
1
100%
#3.2 % fund value where partial or full tenant
water data collected where applicable
(see limitations section)
1
81%
#3.3 % fund value with whole building
water data
1
81%
#3.4 % fund value where water consumption
has decreased year on year where applicable
(see limitations section)
1
40%
(2022 vs 2021)
#4 Environmental – waste, circular
economy and raw materials: Waste
management indicators including
generation and treatment method
#4.1 % fund value where landlord waste data
is collected where applicable (see limitations
section)
1
N/A
#4.2 % fund value where recycling rate has
increase year on year where applicable
(see limitations section)
1
N/A
(2022 vs 2021)
#5 Environmental – Other: Future
physical climate risk exposure
including flood risk
#5.1 % fund value with a current flood risk
rating of medium or above
29%
#5.2 % fund value with an acute extreme
weather event risk rating of medium or above
in an RCP8.5
2
scenario out to 2050
19%
#6 Environmental – Other:
Contamination risk level
#6.1 % fund value with contamination risk of
medium or above
0%
#7 Environmental – Other:
Building certifications
#7.1 % fund value with energy performance
ratings of A and B
943%
#7.2 % fund value with green building
certification
68%
168 Annual Report 2023
Sustainability indicator Sustainability indicator metric
Fund
performance
#8 Social – Other: Implementation
of procedures on anti-corruption
and human rights
Qualitative description as at 31st December 2023
New investments
abrdn applies a risk-based approach in order to ensure that we focus
on the actual risks of money laundering or terrorist financing within
any transaction; the type of entity and country of incorporation and
operations are key criterions in assessing the risk profile.
Certain types of counterparts can be classed as lower risk, such as those
regulated or listed in equivalent jurisdictions; conversely, other types
of entities can be classed as higher risk such as Trusts or unregulated
entities. For moderate and higher risk entities the ownership structure of
the seller involved must be traced back through different layers to identify
the ultimate beneficial owners. In order to aid us in this task, abrdn uses a
Client Due Diligence (CDD) Matrix which lists the common types of legal
structures to which the firm is exposed and shows what information and
verification documentations is required, with increasing due diligence
requirements for the higher the risk types.
When a Direct Real Estate transaction is agreed with a counterparty
following the agreement of Heads of Terms or LOI, the process for the
Anti Money Laundering (AML) Screening and Sanction Check on the
counterparty and Legal Advisor is triggered. Only once the Credit and
Risk Team have confirmed they are satisfied with their checks and
returned the signed form to confirm this, can a Transaction be signed.
Existing investments
Checks on suppliers:
We have protective measures to ensure we are not appointing suppliers
and service providers that do not clear AML, sanctions and PEPs
(Politically Exposed Persons) screening. In order to comply with abrdn’s
regulatory obligations and meet our own internal minimum standards
of compliance, we are obligated to screen all parties we wish to enter
a relationship with before the service is taken. It is part of our process to
screen all our relationships at the time of onboarding to check for PEP,
Relative and Close Associates (RCA), or Sanctions. This is mandated
at the time of onboarding, and the establishment of a new business
relationship. Doing so is vital in order to both protect our business and
evidence that appropriate business controls are in place to identify any
PEPs or Sanctions applied to the service provider.
In addition, our property management suppliers contractually confirm
that they have protective measures in place and ensure to
.
comply with all applicable statutes, laws, secondary legislation,
regulations and codes pertaining to anti-bribery;
.
not offer or accept any bribe, advantage or commit any corrupt act;
.
not engage in any Modern Slavery Practice;
.
ensure that the above are not taking place in their supply chain.
Checks on tenants:
On any new commercial lease, we have screened our tenants to check
for PEPs and sanctions. We also undertake AML checks for new tenants
who have annual rent of over 10,000 EUR.
1
Denotes metrics reported for the current reference period but using data from the Dec-22 calendar year. Any metrics without the
asterisk are reported using data in line with the current reference period (as at 31st December 2023). See ‘limitations’ below for an
outline of the reasons behind the data-lag.
2
RCP8.5 is the climate scenario which assumes worse case with no cut in greenhouse gas emissions
169Annual Report 2023
Limitations:
(1) Due to availability and frequency of certain ESG data sets, it is not always possible
to report the ESG data in exact line with the reporting year. Where this is not
possible, the latest period of ESG available data is used and referenced in the table
above for full transparency. The consistent value used in the sustainability indicator
metrics however is the fund value based on underlying asset values excluding cash
Should be which is aligned with the reporting year of 31st December 2023. And for
the previous period the 31st December 2022.
(2) Another limitation is the availability of data which is dictated by the party who owns
the data. To fully understand the performance of the sustainability indicators listed
in the table above #1 (related to energy), #3 (related to water) and #4 (related to
waste) with regards to real estate, it is preferable to have data related to the whole
building. However the whole building data can be comprised from two sources
depending on the party that procures the energy/water/waste services. These
two sources are:
(1) The landlord. This is where the investment manager procures the services
and directly has access to the data, on behalf of the fund and the tenant
which occupies the building.
(2) The tenant. This is where the tenant who occupies the building procures the
services and has direct access to the data.
Due to the complexity and availability of data from the tenant, whole building data
is not always available. Therefore metrics on data coverage as listed for the
sustainability indicators #1, #3 and #4 are an important starting point to
understand the % of the portfolio with whole building data. It is this % of the portfolio
we can therefore further measure performance of energy consumption, water
consumption and waste disposal routes.
(3) With regard to on-site renewable energy generation within the ‘environmental
– energy’ characteristic, note that sufficient data is not yet available to report a
sustainability indicator.
(4) With regard to our sustainability indicators for ‘environmental – greenhouse gas
emissions’, although GHG emissions are not explicitly disclosed, they are calculated
and are part of the metrics disclosed under Sustainability Indicators #2.1 and #2.2.
In addition, while the pre-contractual document makes reference to ‘costs to
decarbonise the asset over time’, note that sufficient data is not yet available yet to
report on this.
…and compared to previous periods?
Please see table above for figures for previous reference period against current reference
period. The table below shows % change year on year and a description of actions which
have caused those changes.
170 Annual Report 2023
Sustainability indicator
description
Sustainability indicator
metric
Fund performance
(previous reference
period)
Comments on year on year
% changes
#1 Environmental –
energy: Operational
energy performance
#1.1 % fund value where
full landlord energy data
collected where applicable
(see limitations section)
3
1
100% No change.
#1.2 % fund value with
partial or full tenant energy
data collected where
applicable (see limitations
section)
1
78%
The increase to 89% with
partial or full tenant energy
data is due to tenants
providing data for additional
assets in 2023 as compared
to 2022. In 2023 data was
provided for Meung Sur
Loire, Madrid 4 SL Getafe
Fase II Nave 1, Madrid 1
Getafe Fase IV, and Horst.
#1.3 % fund value with
whole building energy data
collected
1
78%
#1.4 % fund value (where
energy performance ratings
are applicable) with energy
performance ratings of A-B
3
94% No change.
#2 Environmental
– greenhouse gas
emissions: Operational
carbon performance
3
#2.1 % fund value where
whole building carbon data
is available which equals
or is below the current
year Carbon Risk Real
Estate Monitor (CRREM)
1.5-degree target
1
63%
Decrease to 20% in current
reference period driven by
a greater number of assets
for which comparison
against CRREM was
possible, of which the
majority perform worse
than CRREM targets.
#2.2 % fund value where
whole building carbon data
is available which equals
or is below the 5-year 1.5
degree CRREM target
1
63%
Decrease to 12% in current
reference period driven by
a greater number of assets
for which comparison
against CRREM was
possible, of which the
majority perform worse
than CRREM targets.
#3 Environmental –
water: Operational
water consumption
#3.1 % fund value where
landlord water data
collected where applicable
(see limitations section)
1
100% No change.
#3.2 % fund value where
partial or full tenant water
data collected where
applicable (see limitations
section)
1
75%
The increase to 81% is due
to tenants providing data for
additional assets in 2023 as
compared to 2022.
#3.3 % fund value with
whole building water data
1
75%
#3.4 % fund value where
water consumption has
decreased year on year
where applicable (see
limitations section)
1
20%
(2021 vs 2020)
Increase to 40% in current
reference period driven by
a greater percentage of
assets (where year on year
data available) achieving
a decrease in water
consumption.
171Annual Report 2023
Sustainability indicator
description
Sustainability indicator
metric
Fund performance
(previous reference
period)
Comments on year on year
% changes
#4 Environmental –
waste, circular economy
and raw materials:
Waste management
indicators including
generation and
treatment method
#4.1 % fund value where
landlord waste data is
collected where applicable
(see limitations section)
1
N/A
There are no landlord
procured waste services for
this portfolio.
#4.2 % fund value where
recycling rate has increase
year on year where
applicable (see limitations
section)
1
N/A
(2021 vs 2020 )
#5 Environmental –
Other: Future physical
climate risk exposure
including flood risk
#5.1 % fund value with a
current flood risk rating of
medium or above
28%
No change in the assets with
flood risk rating of medium
or above. The increase
to 29% is likely driven by
valuation change.
#5.2 % fund value with an
acute extreme weather
event risk rating of medium
or above in an RCP8.5
2
scenario out to 2050
19% No change.
#6 Environmental –
Other: Contamination
risk level
#6.1 % fund value with
contamination risk of
medium or above
No change.
#7 Environmental
– Other: Building
certifications***
#7.1 % fund value with
energy performance ratings
of A and B
94% No change.
#7.2 % fund value with
green building certification
69%
No change in the assets
with green building
certifications. The decrease
to 68% is likely driven by
valuation change.
#8 Social – Other:
Implementation of
procedures on anti-
corruption and human
rights
1
Denotes sustainability indicators that were calculated using data inconsistent with the previous reference period (i.e. using Dec-22 data).
2
RCP8.5 is the climate scenario which assumes worse case with no cut in greenhouse gas emissions.
3
Denotes where the wording of the sustainability indicator description or the sustainability indicator metric has been adjusted
compared to the previous annual report (for the previous reference period). Any changes made to sustainability indicator
descriptions/metrics are minor and only intended to simplify and provide additional clarity/transparency of the indicator/metric.
172 Annual Report 2023
How did this financial product consider principal adverse impacts on
sustainability factors?
The fund committed to consider the following indicators: Exposure to fossil fuels through
real estate assets and Exposure to energy-inefficient real estate assets in line with the
Principle Adverse Impacts (PAI) indicators (the data on the indicators is included in the
table below).
The PAI indicators are considered throughout the real estate investment process for the
fund in both due diligence and asset management.
During acquisition due diligence, the PAIs (alongside a broader selection of ESG criteria)
are considered at both pre-bid stage, and during post-bid detailed due diligence.
During such acquisition due diligence, information (where available) relating to the asset
and mandatory PAIs (including construction date, EPC rating/NZEB status and site use
in the context of fossil fuel extraction, storage, transport and manufacture) is reviewed
and included in pre-bid ESG screening checklist and investment committee (IC) paper.
Such elements are assessed in more detail where relevant using an external consultant.
The PAIs are considered with the aim of minimising the Fund’s exposure to energy-
inefficient real estate assets and fossil fuels through real estate assets. Data on the PAIs
obtained at acquisition due diligence stage is used post-acquisition to support with
ongoing reporting against the PAIs, and to support with asset management.
What were the objectives of the sustainable investments that the financial
product partially made and how did the sustainable investment contribute to
such objectives?
Not applicable no minimum commitment of sustainable investments.
How did the sustainable investments that the financial product partially made not cause
significant harm to any environmental or social sustainable investment objective?
Not applicable in line with precontractual document with no minimum commitment of
sustainable investments.
How were the indicators for adverse impacts on sustainability factors taken
into account?
Not applicable in line with precontractual document with no minimum
commitment of sustainable investments.
Were sustainable investments aligned with the OECD Guidelines for Multinational
Enterprises and the UN Guiding Principles on Business and Human Rights? Details:
Not applicable in line with precontractual document with no minimum
commitment of sustainable investments.
Principal adverse
impacts are the
most significant
negative impacts of
investment decisions
on sustainability
factors relating to
environmental, social
and employee matters,
respect for human
rights, anti-corruption
and anti-bribery
matters.
173Annual Report 2023
PAI Sub-group Indicator
Share in % of fund value
(exc. cash)
#17: Climate and other
environment-related
indicators
Fossil fuels
Exposure to fossil fuels
through real estate assets
(extraction, storage,
transport or manufacture
of fossil fuels)
20%
#18: Climate and other
environment-related
indicators
Energy efficiency
Exposure to energy-
inefficient real estate
assets
Energy-inefficient means:
built before 31/12/2020:
EPC is C or below
built after 31/12/2020: PED
is below NZEB in Directive
2010/31/EU
16%
From an asset management perspective, data relating to the PAIs (including construction
date, EPC rating/NZEB status and site use in the context of fossil fuel extraction, storage,
transport and manufacture) is held in a central database to support with ongoing
reporting. The data on PAIs is also used as part of asset management and fund strategic
planning decisions; to inform asset-level ESG action plans and investment decisions
(e.g. disposal, refurbishment/redevelopment). This process aims to minimise the Fund’s
exposure to energy-inefficient real estate assets and fossil fuels through real estate assets.
PAIs are reported as at 31st December 2023.
174 Annual Report 2023
What were the top investments of this financial product?
Date as at 31 December 2023
Largest investments Sector % Assets (exc. Cash) Country
Madrid - Gavilanes 4 Real Estate 9.0% Spain
Avignon Real Estate 7.9% France
Den Hoorn Real Estate 7.2% Netherlands
Waddinxveen Real Estate 6.2% Netherlands
Erlensee Real Estate 6.0% Germany
Madrid - Gavilanes 3 Real Estate 5.0% Spain
Lodz Real Estate 4.8% Poland
Krakow Real Estate 4.8% Poland
Warsaw Real Estate 4.7% Poland
Zeewolde Real Estate 4.5% Netherlands
Madrid - Gavilanes 1A Real Estate 4.5% Spain
‘s Heerenberg Real Estate 4.4% Netherlands
Ede Real Estate 4.1% Netherlands
Flörsheim Real Estate 4.0% Germany
Meung sur Loire Real Estate 2.8% France
Date as at 30 September 2023
Largest investments Sector % Assets (exc. Cash) Country
Madrid - Gavilanes 4 Real Estate 9.2% Spain
Avignon Real Estate 7.9% France
Den Hoorn Real Estate 7.3% Netherlands
Erlensee Real Estate 6.1% Germany
Waddinxveen Real Estate 6.0% Netherlands
Madrid - Gavilanes 3 Real Estate 5.6% Spain
Lodz Real Estate 4.6% Poland
Warsaw Real Estate 4.6% Poland
Krakow Real Estate 4.5% Poland
Madrid - Gavilanes 1A Real Estate 4.5% Spain
‘s Heerenberg Real Estate 4.5% Netherlands
Zeewolde Real Estate 4.3% Netherlands
Ede Real Estate 4.0% Netherlands
Flörsheim Real Estate 4.0% Germany
Meung sur Loire Real Estate 2.9% France
The list includes
the investments
constituting the
greatest proportion
of investments of the
financial product
during the reference
period which is:
175Annual Report 2023
Date as at 30 June 2023
Largest investments Sector % Assets (exc. Cash) Country
Madrid - Gavilanes 4 Real Estate 9.9% Spain
Avignon Real Estate 7.6% France
Den Hoorn Real Estate 7.0% Netherlands
Madrid - Gavilanes 3 Real Estate 6.0% Spain
Waddinxveen Real Estate 5.9% Netherlands
Erlensee Real Estate 5.8% Germany
Madrid - Gavilanes 1A Real Estate 4.8% Spain
Lodz Real Estate 4.4% Poland
Warsaw Real Estate 4.4% Poland
Krakow Real Estate 4.4% Poland
‘s Heerenberg Real Estate 4.4% Netherlands
Zeewolde Real Estate 4.3% Netherlands
Ede Real Estate 3.9% Netherlands
Flörsheim Real Estate 3.8% Germany
Meung sur Loire Real Estate 2.9% France
Date as at 31 March 2023
Largest investments Sector % Assets (exc. Cash) Country
Madrid - Gavilanes 4 Real Estate 10.0% Spain
Avignon Real Estate 7.1% France
Den Hoorn Real Estate 7.0% Netherlands
Waddinxveen Real Estate 6.0% Netherlands
Madrid - Gavilanes 3 Real Estate 6.0% Spain
Erlensee Real Estate 5.8% Germany
Madrid - Gavilanes 1A Real Estate 4.8% Spain
Lodz Real Estate 4.5% Poland
Warsaw Real Estate 4.4% Poland
Krakow Real Estate 4.4% Poland
‘s Heerenberg Real Estate 4.4% Netherlands
Zeewolde Real Estate 4.2% Netherlands
Ede Real Estate 3.9% Netherlands
Flörsheim Real Estate 3.7% Germany
Meung sur Loire Real Estate 3.0% France
176 Annual Report 2023
What was the proportion of sustainability-related investments?
The investment strategy of the fund applies to and captures all assets it holds. Applicable
environmental and social characteristics are considered and promoted for all assets and
the intention is that all assets contribute to the attainment of characteristics promoted by
the fund (i.e. 1B in the below chart).
No sustainable investments, including EU Taxonomy aligned investments, were made
during the reporting period.
The percentage figure in the ”#1aligned with E/S characteristics” box below only includes
the underlying investments and excludes cash within the fund. The figure in the “#2 Other”
box represents the cash held within the Fund.
What was the asset allocation?
The ambition of the fund is the pre-contractual document outlined 100% of assets to
promote environmental and social characteristics. However, this did not take into account
the small % of cash in the fund which fluctuates year on year. Thus 97.2% has been
calculated to cover all real estate assets but excludes cash which is the remaining 2.8%
as at 31 December 2023.
Investments
#2 Other
2.8%
#1 Aligned
with E/S
characteristics
97.2%
#1B Other E/S
characteristics
97.2%
#1 Aligned with E/S characteristics characteristics includes the investments of the
financial product used to attain the environmental or social characteristics promoted by
the financial product.
#2 Other includes the remaining investments of the financial product which are neither
aligned with the environmental or social characteristics, nor are qualified as sustainable
investments.
The category #1 Aligned with E/S characteristics covers:
.
The sub-category #1B Other E/S characteristics covers investments aligned with the
environmental or social characteristics that do not qualify as sustainable investments.
Asset allocation
describes the share of
investments in specific
assets.
177Annual Report 2023
In which economic sectors were the investments made?
Economic sector: Real estate
Sub economic sectors: Property Type (aligned with GRESB) with % weighting by value.
Sub-Sector
% of Total Fund Asset Value
(Exc. Cash)
Industrial: Distribution Warehouse 100%
To what extent were the sustainable investments with an
environmental objective aligned with the EU Taxonomy?
The Fund does not currently commit to making a minimum proportion of
sustainable investments. However, the fund has outlined the ambition to
voluntarily assess the alignment of assets with the EU Taxonomy criteria for
climate mitigation related to the acquisition and ownership of buildings. Whilst it
was expected that the Fund would have a proportion of investments that meet
these criteria and the extent of alignment would be reported in the periodic
reports, due to certain data availability issues, the sustainable investments aligned
with EU Taxonomy has been calculated at 0%.
Did the financial product invest in fossil gas and/or nuclear related activity
complying with the EU Taxonomy?
Yes
In fossil gas In nuclear energy
No
Taxonomy-aligned
activities are expressed
as a share of:
.
turnover reflecting
the share of
revenue from green
activities of investee
companies
.
capital expenditure
(CapEx) showing the
green investments
made by investee
companies, e.g. for a
transition to a green
economy.
.
operational
expenditure
(OpEx) reflecting
green operational
activities of investee
companies.
178 Annual Report 2023
The graphs below show in green the percentage of investments that were aligned with
the EU Taxonomy. As there is no appropriate methodology to determine the taxonomy-
alignment of sovereign bonds
1
, the first graph shows the Taxonomy alignment in relation
to all the investments of the financial product including sovereign bonds, while the second
graph shows the Taxonomy alignment only in relation to the investments of the financial
product other than sovereign bonds.
Taxonomy - alignment of investments including sovereign bonds
1
%
Taxonomy-aligned (gas and nuclear)
Taxonomy-aligned: Nuclear
Taxonomy-aligned: Fossil gas Non Taxonomy-aligned
0 20 40 60 80
100
OpEx
CapEx
Turnover
1
For the purpose of these graphs, ‘sovereign bonds’ consist of all sovereign exposures.
Taxonomy - alignment of investments excluding sovereign bonds
1
%
0 20 40 60 80
100
OpEx
CapEx
Turnover
Taxonomy-aligned (gas and nuclear)
Taxonomy-aligned: Nuclear
Taxonomy-aligned: Fossil gas Non Taxonomy-aligned
This graph represents 100% of the total
1
For the purpose of these graphs, ‘sovereign bonds’ consist of all sovereign exposures.
179Annual Report 2023
What was the share of investments made in transitional and enabling activities?
0%.
How did the percentage of investments that were aligned with the EU Taxonomy compare
with previous reference periods?
The percentage of EU Taxonomy aligned investments remained at 0% during the
reference period (no change from previous reference period).
What was the share of sustainable investments with an environmental objective
not aligned with the EU Taxonomy?
0%
What was the share of socially sustainable investments?
0%
What investments were included under “other”, what was their purpose and
were there any minimum environmental or social safeguards?
The investments included under “other” are cash only. All cash held in the
fund is subject Anti-Money Laundering and Sanction checks. Applicable
environmental and social characteristics are considered and promoted for
all assets and the intention is that all assets contribute to the attainment of
characteristics promoted by the fund.
are sustainable
investments with an
environmental
objective that do not
take into account
the criteria for
environmentally
sustainable economic
activities under the EU
Taxonomy.
180 Annual Report 2023
What actions have been taken to meet the environmental and/or
social characteristics during the reference period?
ESG action example
ESG data collection supporting all E/S characteristics: In order to improve our ESG data collection and
understand performance, property and asset managers have increased efforts to engage with tenants
and increase tenant data collection resulting in a higher data collection rate compared to previous years.
Energy efficiency and greenhouse gas Emissions reductions:
.
Using green energy for landlord-controlled electricity supply in Germany and Poland
.
Installing LED lighting and a new BMS at Niort, France
.
New Green leases when tenant engagement supports discussion Avignon, Ede
.
Smart metering project underway across entire portfolio with implementation in Avignon and Waddinxveen
.
Exploring PV potential at Erlensee, Florsheim, Zeewolde, Oss, s’Heerenberg
.
Build and progress NZC strategy at Fund level
.
Asset level NZC analysis is instructed for the Polish portfolio
All E/S characteristics: Three asset in the Netherlands have been certified BREEAM In-Use, with each asset under
review on the potential for implementing improvements
All E/S characteristics with a focus on energy efficiency, greenhouse gas emissions reductions, sustainable design
in construction: Ongoing annual Net Zero Carbon Pathway analysis for the existing portfolio to benchmark its
emissions and develop a strategy to reduce emissions in the individual properties to meet global climate targets.
How did this financial product perform compared to the reference
benchmark?
How does the reference benchmark differ from a broad market index?
Not applicable to this fund.
How did this financial product perform with regard to the sustainability indicators to
determine the alignment of the reference benchmark with the environmental or social
characteristics promoted?
Not applicable to this fund.
How does this financial product perform compared with the reference benchmark?
Not applicable to this fund.
How did this financial product perform compared with the broad market index?
Not applicable to this fund.
Enabling activities
directly enable other
activities to make a
substantial contribution
to an environmental
objective.
Transitional activities
are activities for
which low-carbon
alternatives are
not yet available
and among others
have greenhouse
gas emission levels
corresponding to the
best performance.
Reference benchmarks
are indexes to measure
whether the financial
product attains the
environmental or social
characteristics that
they promote.
181Annual Report 2023
Corporate Information
Notice of Annual General Meeting
Notice is hereby given that the sixth annual general meeting (the “Annual General Meeting”) of abrdn European Logistics
Income plc (the “Company”) will be held at the offices of FTI Consulting, 200 Aldersgate Street, Aldersgate, London
EC1A 4HD on 24 June 2024 at 9:00 a.m. for the following purposes:
To consider and if thought fit, pass the following resolutions of which Resolutions 1 to 9 and Resolution 13 will be proposed
as ordinary resolutions and Resolutions 10 to 12 as special resolutions:
Ordinary Business
1. To receive and adopt the Company’s financial statements for the year ended 31 December 2023, together with the
Directors’ Report and the auditor’s report thereon.
2. To receive and approve the Directors’ Remuneration Report as set out in the Company’s Annual Report and financial
statements for the year ended 31 December 2023 (other than the Directors’ Remuneration Policy as set out on
page 91 of the Directors’ Remuneration Report).
3. To authorise the Directors of the Company to declare and pay all dividends of the Company as interim dividends
and for the last dividend referable to a financial year not to be categorised as a final dividend that is subject to
shareholder approval.
4. To re-elect Ms C. Gulliver as a Director.
5. To re-elect Mr J. Heawood as a Director.
6. To re-elect Mr T. Roper as a Director.
7. To re-appoint KPMG LLP as the Company’s auditor to hold office from the conclusion of this Annual General Meeting
until the conclusion of the next annual general meeting at which accounts are laid before the Company.
8. To authorise the Directors to determine the auditor’s remuneration.
Special Business
9. THAT in substitution for all existing powers the Directors be generally and unconditionally authorised for the purposes
of section 551 of the Companies Act 2006 (the “Act”) to exercise all powers of the Company:
a. to allot shares in the Company up to an aggregate nominal amount of £1,360,175 (such amount to be reduced
by the nominal amount of any equity securities allotted pursuant to the authority in sub-paragraph (b) below in
excess of £1,360,175); and
b. to grant rights (“Relevant Rights”) to subscribe for, or to convert any security into, shares in the Company up to
an aggregate nominal amount of £2,720,350 (such amount to be reduced by the nominal amount of any shares
allotted pursuant to the authority in sub-paragraph (a) above) in connection with an offer made by means of a
negotiable document to (i) all holders of ordinary shares of £0.01 each in the capital of the Company (“Ordinary
Shares”) in proportion (as nearly as may be practicable) to the respective numbers of such Ordinary Shares
held by them and (ii) to holders of other equity securities as required by the rights of those securities (but subject
in either case to such exclusions, limits or restrictions or other arrangements as the Directors may consider
necessary or appropriate to deal with treasury shares, fractional entitlements, record dates or legal, regulatory or
practical problems in or under the laws of any territory, or the requirements of any regulatory body or any stock
exchange in any territory or otherwise howsoever);
such authorisation to expire on 30 June 2025 or, if earlier, at the conclusion of the next annual general meeting
of the Company to be held in 2025 unless previously renewed, revoked or varied by the Company in general
meeting, save that the Company may at any time before the expiry of this authorisation make an offer or enter
into an agreement which would or might require shares to be allotted or Relevant Rights to be granted after the
expiry of this authorisation and the Directors may allot shares or grant Relevant Rights in pursuance of any such
offer or agreement as if the authorisation conferred hereby had not expired.
182 Annual Report 2023
10. THAT subject to the passing of Resolution numbered 9 above and in substitution for all existing powers the Directors
be empowered pursuant to sections 570 and 573 of the Act to allot equity securities (within the meaning of section
560 (1), (2) and (3) of the Act) for cash either pursuant to the authorisation under section 551 of the Act as conferred
by Resolution 9 above or by way of a sale of treasury shares, in each case for cash as if section 561(1) of the Act did
not apply to such allotment or sale, provided that this power shall be limited to:
a. the allotment of equity securities or sale of treasury shares (otherwise than pursuant to sub-paragraph (b)
below) to any person up to an aggregate nominal amount of £412,174 which are, or are to be, wholly paid up
in cash, at a price representing a premium to the net asset value per share at allotment, as determined by the
Directors, and do not exceed up to 10% of the issued share capital (as at the date of the Annual General Meeting
convened by this notice); and
b. the allotment of equity securities in connection with an offer (but, in the case of the authority granted under
Resolution 10 (b) above, by way of a rights issue only) to (i) all holders of Ordinary Shares in proportion (as nearly
as may be practicable) to the respective numbers of Ordinary Shares held by them and (ii) to holders of other
equity securities as required by the rights of those securities (but subject in either case to such exclusions, limits or
restrictions or other arrangements as the Directors may consider necessary or appropriate to deal with treasury
shares, fractional entitlements, record dates or legal, regulatory or practical problems in or under the laws of
any territory, or the requirements of any regulatory body or any stock exchange in any territory or otherwise
howsoever) at a price representing a premium to the net asset value per share at allotment, as determined by the
Directors, and such power shall expire on 30 June 2025, or, if earlier, at the conclusion of the next annual general
meeting of the Company to be held in 2025 unless previously renewed, revoked or varied by the Company in
general meeting, save that the Company may at any time before the expiry of this power make an offer or enter
into an agreement which would or might require equity securities to be allotted or treasury shares to be sold after
the expiry of this power and the Directors may allot securities or sell treasury shares in pursuance of any such
offer or agreement as if the power conferred hereby had not expired.
11. THAT, the Company be generally and unconditionally authorised in accordance with section 701 of the Act to make
market purchases (within the meaning of section 693(4) of the Act) of Ordinary Shares and to cancel or hold in
treasury such shares provided that:
a. the maximum aggregate number of Ordinary Shares hereby authorised to be purchased is 14.99% of the
Ordinary Shares in issue as at the date of the passing of this Resolution;
b. the minimum price which may be paid for an Ordinary Share is £0.01;
c. the maximum price (exclusive of expenses) which may be paid for an Ordinary Share shall not be more than the
higher of (i) an amount equal to 5% above the average of the middle market quotations for an Ordinary Share
taken from the London Stock Exchange Daily Official List for the five business days immediately preceding the date
on which the Ordinary Share is contracted to be purchased; and (ii) the higher of the price of the last independent
trade and the current highest independent bid on the trading venue where the purchase is carried out;
d. the authority hereby conferred shall expire on 30 June 2025, or, if earlier, at the conclusion of the annual general
meeting of the Company to be held in 2025 unless such authority is renewed, revoked or varied prior to such time
by the Company in general meeting; and
e. the Company may make a contract to purchase Ordinary Shares under the authority hereby conferred prior to
the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority
and may make a purchase of Ordinary Shares pursuant to any such contract.
12. THAT a general meeting of the Company other than an annual general meeting may be called on not less than
14 clear days’ notice.
13. THAT pursuant to Article 163.2 the Company continue its business as presently constituted.
By order of the Board
abrdn Holdings Limited
Secretaries
280 Bishopsgate
London EC2M 4AG
25 April 2024
183Annual Report 2023
Notes:
1. In accordance with section 311A of the Companies
Act 2006, the contents of this Notice of Meeting,
details of the total number of shares in respect of
which members are entitled to exercise voting rights
at the Annual General Meeting and, if applicable,
any members’ statements, members’ resolutions
or members’ matters of business received by the
Company after the date of this notice will be available
on the Company’s website eurologisticsincome.co.uk.
2. As a member, you are entitled to appoint a proxy or
proxies to exercise all or any of your rights to attend,
speak and vote at the Annual General Meeting.
A proxy need not be a member of the Company.
You may appoint more than one proxy provided each
proxy is appointed to exercise rights attached to
different shares. You may not appoint more than one
proxy to exercise the rights attached to any one share.
A form of proxy is enclosed.
3. To be valid, any form of proxy or other instrument of
proxy and any power of attorney or other authority,
if any, under which they are signed or a notarially
certified copy of that power of attorney or authority
should be sent to the Company’s registrars so as to
arrive not less than 48 hours before the time fixed for
the meeting (excluding non working days). The return
of a completed form of proxy or other instrument
of proxy will not prevent you attending the Annual
General Meeting and voting in person if you wish to
do so.
4. The right to vote at the meeting is determined by
reference to the Company’s register of members
as at 6.30 p.m. on 20 June 2024 or, if this meeting
is adjourned, at 6.30 p.m. on the day two business
days prior to the adjourned meeting. Changes to the
entries on that register of members after that time
shall be disregarded in determining the rights of any
member to attend and vote at the meeting.
5. As a member you have the right to put questions at
the meeting relating to the business being dealt with
at the meeting.
6. CREST members who wish to appoint a proxy
or proxies by utilising the CREST electronic proxy
appointment service may do so for the Annual
General Meeting and any adjournment(s) thereof
by utilising the procedures described in the CREST
Manual. CREST Personal Members or other CREST
sponsored members, and those CREST members
who have appointed a voting service provider(s),
should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate
action on their behalf.
7. In order for a proxy appointment made by means of
CREST to be valid, the appropriate CREST message
(a“CREST Proxy Instruction”) must be properly
authenticated in accordance with Euroclear UK
& Ireland Limited’s (“EUI”) specifications and must
contain the information required for such instructions,
as described in the CREST Manual which can be
viewed at www.euroclear.com. The message must
be transmitted so as to be received by the issuer’s
agent (ID RA19) by the latest time(s) for receipt of
proxy appointments specified in the notice of Annual
General Meeting. For this purpose, the time of receipt
will be taken to be the time (as determined by the
timestamp applied to the message by the CREST
Applications Host) from which the issuer’s agent is
able to retrieve the message by enquiry to CREST in
the manner prescribed by CREST.
8. CREST members and, where applicable, their CREST
sponsors or voting service providers should note that
EUI does not make available special procedures in
CREST for any particular messages. Normal system
timings and limitations will therefore apply in relation
to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to
take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed a
voting service provider(s), to procure that his CREST
sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message
is transmitted by means of the CREST system by any
particular time. In this connection, CREST members
and, where applicable, their CREST sponsors or voting
service providers are referred, in particular, to those
sections of the CREST Manual concerning practical
limitations of the CREST system and timings.
9. It is possible for you to submit your proxy votes
online by going to Equiniti’s Shareview website,
www.shareview.co.uk, and logging in to your Shareview
Portfolio. Once you have logged in, simply click ‘View’
on the ‘My Investments’ page and then click on the link
to vote and follow the on-screen instructions. If you
have not yet registered for a Shareview Portfolio,
go to www.shareview.co.uk and enter the requested
information. It is important that you register for a
Shareview Portfolio with enough time to complete
the registration and authentication processes.
10. The Company may treat as invalid a CREST
Proxy Instruction in the circumstances set out in
Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
11. Institutional investors may be able to appoint a proxy
electronically via the Proxymity platform, a process
which has been agreed by the Company and
approved by the Registrar. For further information
regarding Proxymity, please go to www.proxymity.io.
Your proxy must be lodged by no later than 9:30 a.m.
on 20 June 2024 in order to be considered valid.
184 Annual Report 2023
Before you can appoint a proxy via this process you
will need to have agreed to Proxymity’s associated
terms and conditions. It is important that you read
these carefully as you will be bound by them and they
will govern the electronic appointment of your proxy.
12. In the case of joint holders, where more than one
of the joint holders completes a proxy appointment,
only the appointment submitted by the most senior
holder will be accepted. Seniority is determined by the
order in which the names of the joint holders appear in
the Company’s register of members in respect of the
joint holding (the first-named being the most senior).
13. A corporation which is a shareholder can appoint one
or more corporate representatives who may exercise,
on its behalf, all its powers as a shareholder provided
that no more than one corporate representative
exercises powers over the same share. A Director,
the company secretary, or some person authorised
for the purpose by the company secretary,
may require any representative to produce a certified
copy of the resolution so authorising him or such other
evidence of his authority reasonably satisfactory to
such Director, company secretary or other person
before permitting him to exercise his powers.
14. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies
Act 2006 to enjoy information rights (a “Nominated
Person”) may, under an agreement between them
and the member by whom they were nominated,
have a right to be appointed (or to have someone
else appointed) as a proxy for the Annual General
Meeting. If a Nominated Person has no such proxy
appointment right or does not wish to exercise it,
they may, under any such agreement, have a right to
give instructions to the member as to the exercise of
voting rights. Anyperson holding 3% of the total voting
rights in the Company who appoints a person other
than the Chairman as his or her proxy(ies) will need to
ensure that both he or she and such proxy(ies) comply
with their respective disclosure obligations under the
UK Disclosure Guidance and Transparency Rules.
15. The statement of the rights of members in relation
tothe appointment of proxies in paragraphs 2 and
3above does not apply to Nominated Persons.
Therights described in these paragraphs can
only be exercised by members of the Company.
16. As at close of business on 25 April 2024 (being the
latest practicable date prior to publication of this
document), the Company’s issued share capital
comprised 412,174,356 Ordinary Shares and there
were no shares held in treasury. Each Ordinary Share
carries the right to one vote at a general meeting of
the Company and therefore the total number of voting
rights in the Company as at close of business on
25 April 2024 is 412,174,356.
17. No Director has a service contract with the Company,
however, copies of Directors’ letters of appointment
will be available for inspection for at least 15 minutes
prior to the meeting and during the meeting.
18. Under section 338 of the Companies Act 2006,
members may require the Company to give,
to members of the Company entitled to receive this
Notice of Meeting, notice of a resolution which may
properly be moved and is intended to be moved at the
Annual General Meeting. Under section 338A of that
Act, members may request the Company to include
in the business to be dealt with at the Annual General
Meeting any matter (other than a proposed resolution)
which may be properly included in the business.
19. Members should note that it is possible that, pursuant
to requests made by the members of the Company
under section 527 of the Companies Act 2006,
the Company may be required to publish on a website
a statement setting out any matter relating to: (i)
the audit of the Company’s accounts (including the
auditor’s report and the conduct of the audit) that are
to be laid out before the Annual General Meeting;
or (ii) any circumstances connected with an auditor of
the Company ceasing to hold office since the previous
meeting at which annual accounts and reports were
laid in accordance with section 437 of the Companies
Act 2006. The Company may not require the members
requesting any such website publication to pay its
expenses in complying with sections 527 or 528 of the
Companies Act 2006. Where the Company is required
to place a statement on a website under section
527 of the Companies Act 2006, it must forward the
statement to the Company’s auditor not later than the
time when it makes the statement available on the
website. The business which may be dealt with at the
Annual General Meeting includes any statement that
the Company has been required under section 527 of
the Companies Act 2006 to publish on the website.
20. Pursuant to section 319A of the Companies Act
2006, the Company must cause to be answered at
the Annual General Meeting any question relating to
the business being dealt with at the Annual General
Meeting which is put by a member attending the
meeting, except in certain circumstances, including if
it is undesirable in the interests of the Company or
the good order of the meeting that the question be
answered or if to do so would involve the disclosure of
confidential information.
21. You may not use any electronic address provided
either in this Notice of Meeting or any related
documents (including the Form of Proxy) to
communicate with the Company for any purposes
other than those expressly stated.
185Annual Report 2023
Contact Addresses
Directors
Anthony Roper (Chairman)
Caroline Gulliver
John Heawood
Diane Wilde
Secretaries and Registered Office
abrdn Holdings Limited
Alternative Investment Fund Manager
abrdn Fund Managers Limited
280 Bishopsgate
London
EC2M 4AG
Investment Manager
abrdn Investments Ireland Limited
2nd Floor
2-4 Merrion Row
Dublin 2
Stockbroker
Investec PLC
30 Gresham Street
London
EC2V 7QP
Solicitor
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
Registrar
Equiniti Limited
Aspect House Spencer Road
Lancing
West Sussex BN99 6DA
Tel: UK and Overseas +44 (0) 371 384 2030
Lines open 8:30am to 5:30pm (UK time), Monday to
Friday, (excluding public holidays in England and Wales)
shareview.co.uk
Depositary
Citibank UK Limited
Citigroup Centre
Canada Square
Canary Wharf
London
E14 5LB
Independent Auditor
KPMG LLP
15 Canada Square
Canary Wharf
London
E14 5GL
Website
eurologisticsincome.co.uk
Foreign Account Tax Compliance Act
(“FATCA”)IRS Registration Number (‘‘GIIN’’)
DF2TVL.99999.SL.826
Legal Entity Identifier (LEI)
213800I9IYIKKNRT3G50
Registered Number
Incorporated in England & Wales with number 11032222
186 Annual Report 2023
0002879788
abrdn.com
For more information visit eurologisticsincome.co.uk