Not another one? Abrdn property trust moves to shutter
Another Abrdn trust has moved to shutter after struggling to drum up enough interest from investors, as the number of trusts continues to decline rapidly.
The £234m Abrdn European Logistics Income trust, which focuses on the European property market, reached the conclusion of its strategic review that in began in December, with its board recommending a managed wind-down.
It cited its small size and low share liquidity, which it said had deterred some potential investors, as well as its “materially uncovered” dividend.
The trust’s share price has fallen by 40 per cent in the last two years, and currently sits on a 26.7 per cent discount to its net asset value.
Abrdn has seen a large number of its trusts decide to close in recent months, despite a push from the company to emphasise its wide investment trust offering.
Abrdn Property Income’s attempt to be taken over fizzled out this year, leading it to move towards a wind-down, while last year, three Abrdn trusts were merged into similar vehicles.
In December, the firm announced it would be pouring six months worth of management fees, or over £30m, into its UK investment trust range to “demonstrate its commitment” to the vehicles.
In February, the trust announced it would be delaying the payout of its fourth-quarter dividend due to a range of proposals to buy the trust.
The trust wanted to be “optimally positioned” and maintain “maximum flexibility,” so it said it would forgo its dividend for the previous quarter, which is usually declared in February and issued in March.
The trust said today that it would continue to pay its dividend while the wind-down was going on, with the size of the payments declining as the portfolio is sold off.
The board predicted that a majority of its assets should be sold off by the midpoint of next year, adding there was a “significant majority” of potential buyers who wanted to acquire individual assets over buying the whole portfolio.
The trust’s shareholders will vote on the board’s recommendation to close on 24 June during the company’s annual general meeting.
All four European-focused property trusts listed in the UK have been suffering in recent years, falling an average of 31 per cent since 2019.
Abrdn’s trust actually has the smallest discount of any trust in the sector, with Phoenix’s Spree Deustchland sitting on the largest at almost 50 per cent.
Last week, Numis analyst Andrew Rees said the decision of the Abrdn trust’s strategic review would be a “key event for sentiment” of similar trusts in the sector, with the largest being the £1.3bn Tritax Eurobox.
Tony Roper, chair of the Abrdn trust, said: “Despite retaining a high conviction in the logistics asset class and investment strategy, given the challenges facing both the company and the broader investment trust sector, the board has concluded that a managed wind-down in a timely manner is the optimal route to maximise shareholder value in the short to medium term.”