Annual Report & Consolidated Accounts
Year ended 31 December 2021
THIS DOCUMENT IS IMPORTANT AND REQUIRES
YOUR IMMEDIATE ATTENTION.
If you are in any doubt as to the action you should take, you are recommended
to seek your own independent financial advice from your stockbroker,
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the United Kingdom or, if not, from another appropriately authorised financial
adviser. If you have sold or otherwise transferred all of your shares in Standard
Life Investments Property Income Trust Limited, please forward this document
as soon as possible to the purchaser or transferee, or to the stockbroker,
bank or other agent through whom the sale or transfer was, or is being,
effected, for delivery to the purchaser or transferee.
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Investment
Manager’s Review
Financial Statements
Independent
Auditor’s Report
Corporate
Governance Report
Sustainability
Committee Report
Consolidated
Cash Flow Statement
Annual General Meeting
Notice of Annual
General Meeting
Chairman’s
Statement
Statement of Directors’
Responsibilities
Directors’
Report
Consolidated Statement
of Changes in Equity
Information
for Investors
Performance
Summary
Directors’
Remuneration Report
Governance
Board of
Directors
Consolidated
Balance Sheet
Additional Information
Unaudited EPRA
Performance and
Sustainability Measures
& Additional Information
Strategic Report
Financial and
Portfolio Review
Audit
Committee Report
Stakeholder
Engagement
Strategic
Overview
Environmental,
Social and Governance
Taskforce for
Climate-related
Financial Disclosures
Consolidated
Statement of
Comprehensive Income
Notes to the
Consolidated Financial
Statements
1Year ended 31 December 2021
Contents
Loan-to-Value
*
19.2
PERCENT
Dividends paid
*
3.7725p
Low Loan-to-value of 19.2% (2020: 23.0%)
at the year end with scope to increase gearing
through available revolving credit facilities.
Dividends paid of 3.7725p in the year
(2020: 3.8080p) with a further increase
announced for Q4 2021 to an annualised
rate of 4.0p per share. Dividends paid in
2021 equated to a yield of 4.6% based
on the share price at 31 December 2021,
compared to the FTSE Index yield of 3.1% and
the FTSE All-Share REIT Index yield of 2.6%.
Financial resources
*
50
MILLION
POUNDS
Financial resources of £50 million as at
31 December 2021 (2020: £55 million) available
for investment to enhance earnings in the form of
the Company’s low cost revolving credit facility.
Dividend yield
*
4.6 PERCENT
Dividend yield – FTSE All-Share Index
3.1 PERCENT
Dividend yield – FTSE All-Share REIT Index
2.6 PERCENT
Yields based on stats at 31 December 2021
(based on share price at 31 December 2021 of 81.5p).
* These Alternative Performance Measures (“APMs”)
are defined in the glossary on pages 104 to 105.
2021 NAV total return
*
28.6
PERCENT
NAV total return of 28.6% (2020: –4.6%)
as valuations recovered. NAV has
outperformed the AIC peer group over
the longer term delivering a total return
of 188.9% compared to AIC peer group
total return of 54.6% over 10 years.
2021 Share price total return
*
43.4
PERCENT
Share buybacks
6
MILLION
POUNDS
Share price total return of 43.4% (2020: –29.8%)
as sentiment improved towards the UK commercial
real estate sector. The share price has delivered
strong returns over the longer term with a share
price total return over 10 years of 184.8%
compared to the AIC peer group of 40.9%.
Share buybacks totalling £6m in 2020 and
2021 at significant discounts to NAV which are
accretive to both NAV performance and earnings.
Standard Life Investments Property Income Trust Limited Annual Report & Consolidated Accounts 2
Strategic Report
2021 Financial Review
Portfolio well positioned
54.7
%
11.3
%
40.1
%
20.5
%
Portfolio is well positioned towards sectors forecast to outperform by our
Investment Manager with a 54.7% (2020: 48.2%) weighting in Industrials
(MSCI benchmark: 40.1%, 2020: 35.1%).
11.3% weighting in Retail (2020: 11.7%) (MSCI benchmark: 20.5%, 2020: 22.8%)
with 9.6% positioned in Retail Warehousing (MSCI benchmark: 11.7%), a sector
that is expected to outperform the benchmark.
2021 Portfolio total return
*
22.6
PERCENT
Portfolio total return of 22.6% (2020: –1.8%)
well ahead of the MSCI benchmark return of
18.6% and the Company has outperformed its
benchmark over all time periods.
Positive asset management
2.32
MILLION
POUNDS
Positive asset management
7.4
PERCENT
A total of 10 lease renewals and
restructurings were undertaken, securing
£2,323,217 pa in rent, and a total of
9 lettings securing £1,494,451 pa.
5 rent reviews were settled with uplifts in rent,
securing an additional £106,379 (an average
increase of 7.4% on previous rent).
PV schemes
The Company has 6 operational
PV schemes totalling 1.2 MWp and is
actively engaged in 14 additional schemes
that would add a further 4.6 MWp.
* These Alternative Performance Measures (“APMs”) are defined in the glossary on pages 104 to 105.
Rent collection
*
96 PERCENT
Rent collection for 2021 of 96% of rent due (2020: 93.6%) as
rent collection rates began to normalise towards the end of 2021.
Occupancy rate
90.3 PERCENT
Occupancy rate of 90.3% (2020: 91.7%) compared to the
MSCI rate of 90.0% (2020: 90.8%).
MSCI benchmark
Industrials
Retail MSCI benchmark
3Year ended 31 December 2021
Strategic Report
2021 Portfolio Review
*
Calculated as profit for the period before tax (excluding capital items
& swaps costs) divided by weighted average number of shares in
issue in the period (see page 91 for further details). EPRA stands for
European Public Real Estate Association.
**
Based on dividend paid of 3.7725p and the share price at
31 December 2021 of 81.5p.
***
Calculated as investment manager fees, auditor’s fees, directors’
fees and other administrative expenses divided by the average
NAV for the year.
†
Calculated as bank borrowings less all cash as a percentage
of the open market value of the property portfolio as at the end
of each year.
‡
Assumes re-investment of dividends excluding transaction costs.
Sources: abrdn, MSCI.
Alternative Performance Measures (“APMs”) including NAV total
return, share price total return, dividend cover, Loan-to-value
dividend yield and portfolio total return are defined in the glossary
on pages 104 to 105.
Strategic Report
Performance Summary
Earnings, Dividends & Costs
31 December
2021
31 December
2020
IFRS Earnings per share 21.54 (3.88)
EPRA earnings per share (excl capital items & swap movements)* 3.69 4.10
Dividends paid per ordinary share (p) 3.7725 3.8080
Dividend cover (%) 98 108
Dividend Yield (%)** 4.6 6.3
FTSE All-Share Real Estate Investment Trusts Index Yield (%) 2.6 3.1
FTSE All-Share Index Yield (%) 3.1 3.4
Ongoing Charges***
As a % of average net assets including direct property costs 2.2 2.0
As a % of average net assets excluding direct property costs 1.2 1.2
Capital Values & Gearing
31 December
2021
31 December
2020
Change
%
Total assets (£million) 526.6 459.6 14.6
Net asset value per share (p) (note 22) 101.0 82.0 23.2
Ordinary Share Price (p) 81.5 60.0 35.8
(Discount)/Premium to NAV (%) (19.3) (26.8)
Loan-to-value (%)† 19.2 23.0
Total Return 1 year % return 3 year % return 5 year % return 10 year % return
NAV‡ 28.6 27.7 60.1 188.9
AIC Property Direct – UK Commercial (weighted average) NAV Total Return 17.0 20.3 23.4 54.6
Share Price‡ 43.4 18.8 23.9 184.8
AIC Property Direct – UK Commercial (weighted average) Share Price Total Return 26.5 20.7 9.8 40.9
FTSE All-Share Real Estate Investment Trusts Index 29.4 41.8 39.3 177.1
FTSE All-Share Index 18.3 27.2 30.2 110.7
Portfolio Returns & Statistics (%)
31 December
2021
31 December
2020
Portfolio income return 4.7 4.9
MSCI Benchmark income return 4.4 4.7
Portfolio total return 22.6 (1.8)
MSCI Benchmark total return 18.6 (1.6)
Void rate 9.7 8.3
Standard Life Investments Property Income Trust Limited Annual Report & Consolidated Accounts 4
James Clifton-Brown
BACKGROUND
The COVID-19 pandemic continued to affect all of our
lives in 2021. The summer relaxation of restrictions
was relatively short lived as new variants caused
renewed Government intervention. The extent of
the vaccine roll-out, however, meant that the impact
on the economy, and by extension the real estate
market, was very different from 2020. In April 2022
it appears we are learning how to live with the
virus whilst maintaining more normality in our
day-to-day lives. At this time, we are also seeing the
distressing consequences of the war in Ukraine.
The human devastation is clear and, economically,
further increases in global inflation, and supply chain
issues are inevitable.
REAL ESTATE MARKET
The pandemic has had a significant impact on
the UK real estate market, but the Company’s portfolio
has been well positioned to benefit from some of
the structural changes. In particular, the industrial
sector has benefited from the surge in online retail,
accelerating a trend that had begun already. With
many people likely to continue to work from home
at least partially, this trend is likely to continue,
as the thorny problem of the last mile delivery is
solved by having someone to answer the door. We
expect the outperformance of industrial properties
to continue, given continued occupational demand,
and a restricted supply response.
The boom in online retail has, of course, been at the
expense of physical retail. In particular, high street
and shopping centre investments have suffered,
and we do not yet think they will recover in the short
term. Retail warehouse investments, however, have
already seen a pick-up in demand and values, and
this should continue throughout 2022.
Demand for offices remains an area of great
debate as many people became used to working
from home. It will take several years to fully play
out, but hybrid working appears to be here to stay,
and many employers are looking to upgrade their
offices to attract and encourage skilled employees
to come into the office. The Board and Investment
Manager have reviewed the Company’s office
holdings to focus on assets that will continue to
meet occupier needs. Four office disposals were
made during the year to realign the portfolio.
5Year ended 31 December 2021
Strategic Report
Chairman’s Statement
KIRKGATE, EPSOM
Standard Life Investments Property Income Trust Limited Annual Report & Consolidated Accounts 6
Strategic Report
Chairman’s Statement continued
WALTON SUMMIT INDUSTRIAL ESTATE, PRESTON
188.9
PERCENT
Strong Net Asset Value
(NAV) total return over 10 years
ONE STATION SQUARE, BRACKNELL
Fitted suites ready for occupation
Environmental, Social and Governance (ESG)
issues have continued to increase in importance
and focus. SLIPIT has actively embraced this,
through activities at asset level, investment
decisions, and the purchase of land for reforestation.
The Board has created a Sustainability Committee
that sits alongside the Audit and Property Valuation
Committees to give greater focus to the Company’s
activities and responsibilities in this space.
Inflation has started to rear its ugly head again,
something we have not had to contend with for
many years now. Real estate can offer a partial hedge
against inflation as a real asset, with some leases
having rents linked to CPI or RPI. Owning good quality
assets with prospects for rental growth is, in my
opinion, one of the best defences against inflation.
PORTFOLIO AND
CORPORATE PERFORMANCE
The Company provided shareholders with a share price
total return of 43.4% over the 12 months of 2021,
which was ahead of the NAV total return of 28.6% for
the same period as the share price discount to NAV
reduced. The real estate investment portfolio returned
22.6%, which compared favourably to the MSCI
benchmark return of 18.6%. The Company’s portfolio
has outperformed the MSCI quarterly version of the
monthly index benchmark over 1, 3, 5 and 10 years.
Although the discount to NAV reduced during the
year, the Company’s shares traded on a discount
for the whole period. The Board pursued its share
buyback programme into early 2021 and bought
a total of 7.4m shares at an average discount of
25.2%. The Board continues to monitor, as a priority,
the discount of the share price against NAV