abrdn Property Income Trust (API) has captured strong rental growth within its portfolio with three rent reviews in its industrial portfolio.

In Bristol, a rent review at Kings Business Park was agreed at £96,350 per annum, reflecting a 38.6% uplift to the previously passing rent. This was in line with the September 2023 valuation, but 28% ahead of the June valuation which the company said more accurately reflects the pre-agreement level.

At Opus 9 in Warrington, a rent review has been settled at £245,000 per annum, which is 57.6% above the previous passing level and 16.4% ahead of the September valuation.

Lastly, a rent review on Elliot Way in Birmingham at £428,000 per annum was agreed, which is 8.3% ahead of the September valuation and 52.4% above the previous rent.

The company said that the deals demonstrate a strong trajectory of income growth, particularly within its industrial portfolio, which accounts for 56% of the wider portfolio. The settlements also reflect a pattern of exceeding the portfolio valuation assumptions, the company added.

The company has also completed a 150,000 sq ft letting at its Rainhill Road industrial asset in Washington. A new 15-year lease was signed with a leading parcel delivery company. The industrial building underwent a comprehensive refurbishment, which repositioned the property to serve the parcel distribution market and includes a number of ESG initiatives. These include an extensive roof-mounted solar panel installation and approximately 1.2 acres of landscaping that will be seeded with wild flowers next spring to increase biodiversity. This has also resulted in an improvement to the Energy Performance Certificate (EPC) with an A rating having been achieved.

As the letting terms were agreed in mid-2022, the rent of £591,500 per annum is already estimated to be 10% below the prevailing market level, providing the potential for future rental growth.

Net Zero Carbon Pathway

Updated analysis from the group’s consultants indicates that it is on track to de-carbonise the portfolio by 2050. The portfolio not only met its 2022 targets, but its absolute emissions have also fallen below the calculated Net Zero trajectory by 16%. Additionally, the company has reduced its “whole building” carbon intensity by 33%.

Comments

Mark Blyth, deputy fund manager, said: “Our continued focus on ESG, and in particular the environmental performance of the portfolio, can now be evidenced by the recent carbon emission results.  These reflect that our strategy to take advantage of suitable opportunities to improve API’s assets is on track to meet our Net Zero commitments. We believe that these actions are not only moral obligations, but are also likely to protect future asset value.

“The excellent outcomes on the letting and rent review deals are indicative of the quality of the API portfolio, and also the underlying income growth that can be unlocked through good asset management.  The high sector weighting to industrial, allied to the ability to out-perform the valuation assumptions, should be a very positive driver of performance for API going forward.”

API : abrdn Property Income Trust captures rental growth with series of deals