Liquidation
This pitch was shared by Daniel.
abrdn European Logistics Income (ASLI) is a £250m investment trust listed on the LSE that has been conducting a managed wind down after a shareholder vote in Summer 2024. The liquidation is progressing fast with a number of properties sold already and further material assets disposals in final stages. There is 23% upside to management’s NAV estimates including asset disposal and final wind-down expenses.
I won’t spend time delving into the background of ASLI as a trust since there’s already been several good writeups on this story (by Waseem Shakoor and Real Assets Value, including explanations as to why a buyer for the whole portfolio was not found). They both continue to believe IRR remains in the 20s from here. ASLI focuses on ‘midbox assets’ and urban warehouses in top tier cities across Europe, many strategically located near distribution hubs. The portfolio has been performing well with low vacancies, inflation-linked rent growth and a focus on newer properties. Abrdn is also one of the UK’s largest asset managers and has successfully wound down other funds recently.
I came across the situation after the RNS on Friday which I view as a major positive. In brief, three assets have been sold for 6% above NAV for approximately €45m in gross proceeds. The latest three sold were about 30,000 sq ft, and in the update the company mentioned three further assets with 90,000 sq ft combined are in due diligence. With simple math you can tell these will be among ASLI’s largest assets, about €45m each. They only own 5 properties worth over €35m, so I would guess the assets at due-diligence stage are some of the big Dutch or Spanish ones. Once they are through that is almost a third of the portfolio sold, with even more expected to be sold by the end of Q2. Individual portfolio property valuations can be found in annual report (page 39), and a more recent breakdown in half-year report (page 11). The assets already sold are not exceptional from what I can tell, with a mixture of locations in both the EU “core” and “periphery”, building age and WAULT (Weighted Average Unexpired Lease Term) – in fact the Spanish assets had a relatively low WAULT remaining of below 3 years (Real Assets Value also seems to think the same). These sales (although it is only 3 assets so far) are supportive of management’s NAV estimates, especially keeping in mind that with the release of Q3 update (Nov 28th) they found it prudent to maintain valuations, when they would have had a lot of visibility on demand.
Finally, management guided to an initial capital return already in Q1.
The latest NAV adjusting for the recent 3 property sales is approximately €365m (¢88/74p per share), including €13.7m provisioned for ‘disposal of portfolio and liquidation of the Company structure’ expenses. At the current price of €295m (¢72/60p per share) there is 23% upside to management’s figures. I am ignoring ongoing cash flow from rented units retained and presuming they roughly offset management fees and remaining interest – so far income from the portfolio is higher than ongoing expenses and adds to NAV every quarter.
The other authors are slightly more pessimistic, with Mr Shakoor’s target at ¢87 (70p+3-4p in dividends) and RAV’s base case at ¢82/69p, in the latter’s case largely due to scepticism over Spanish valuations which have since been borne out.
At the outset, the conclusion of realisation was anticipated at between 18-24 months, but management expected most assets to be sold by Q2 2025. Around a quarter of the portfolio has been or is about to be sold already. With a number of assets also expected to sell in Q2, I think a sensible assumption is around a quarter of capital returning during calendar 2025 and the remainder in the first half of 2026. For example, a schedule of around 3% (equivalent to around €12m) distributed in March, 22% in September, another 30% and 45% in January and May 2026 is achievable, representing an IRR of around 20%.
The timeline initially seems quite expedited for a managed wind-down that only started half a year ago, but this is a relatively liquid market and conditions have meaningfully improved over the last few quarters. The European logistics space has seen a lot of activity, with Brookfield acquiring Tritax Eurobox in November 2024 after a bidding war with Segro, at 5.1% net initial yield. Blackstone also acquired a similar logistics portfolio in September 2024 at 4.9% net initial yield. For reference, ASLI has a net initial yield of around 5.0% at book value. EURIBOR swap rates falling, ECB rate cuts and narrowing spreads over the past year have also contributed to European cost of capital declining to around 4%.
Risks
Trust manager’s incentives to liquidate this trust are not the most shareholder friendly. Trust manager receives 0.65%–0.75% disposal fee versus a 0.5% management fee – so not a particularly strong incentive structure to sell the properties quickly. However, Abrdn is probably one of the largest providers of closed end funds on the market and this is a tiny asset for them (will be even smaller after the expected Q2 disposals) so my confidence is pretty high. Moreover, the updated IM agreement allows for conditional disposal fees if assets are sold for at least 95% of book value. These hurdles are equivalent to almost 10% of the total disposal fees so I think there is reasonable confidence in achieving them. Another abrdn vehicle (abrdn Property Income Trust) was liquidated in a single transaction at a 12.7% discount to NAV but this done within a very short time-frame, only 7 months from shareholder vote to liquidating distributions.
Management’s NAV estimates include only €13.7m (as per Q3 update) for asset disposal and final wind-up expenses. This translates to only around 2% relative to the value of ASLI’s portfolio and kind of seems too low. I think 5% is more sensible and have included higher expenses in NAV calculations below. However, the disposal costs in the above mentioned abrdn Property Income Trust were only £5m, or 2%, probably because it was largely a single transaction, but also perhaps abrdn generally conducts a lot of the work in-house which they recoup from their fee.
The chance of the wind up process completing on time and at book value is reliant on the continuing easing of financial conditions and no further deterioration in Europe’s macro outlook, specifically in the industrial sector. Thankfully, there is a margin of safety available – even if the rest of the portfolio is only realised at 95% of NAV and disposals costs turn out to be higher there is still upside from the current prices (see the third column in the table below). Any delay in capital returns would also meaningfully affect the IRR, although management’s emphasis on speed and returns to shareholders mitigates this danger somewhat.
NAV calculations
RNS 24/02/2025:
“NAV per Ordinary share including full provision of estimated portfolio disposal and company structure liquidation costs, increased by 0.6% to 88.2c (GBp – 73.7p) (30 September 2024: 87.6c (GBp – 73.2p))”
“Detailed due diligence is ongoing, Further assets are being prepared for sale with agents appointed with a view to effecting further sales in Q2.”
“An initial return of capital following these sales and the repatriation of cash from the Company’s SPVs is expected by the end of March 2025. An announcement will be released shortly with details.”
https://www.londonstockexchange.com/news-article/ASLI/unaudited-net-asset-value-as-at-31-december-2024/16910952
The first distribution has been set. ASLI will return £16.5m (6.5% of the market cap) to shareholders following recent property sales. The ex-date is March 5 and the payment should be made by March 20.
Looks like Asset Value Investors have increased their position in ASLI to 10% from around 6% previously.
https://www.londonstockexchange.com/news-article/ASLI/holding-s-in-company/16959876
Progress on track as of the annual report on the 11th:
“The vast majority of the portfolio by value is now being actively marketed and is in various stages of the disposal process, with several assets expected to enter exclusivity in the coming months”.
Warning about market volatility but bidding so far is “robust”. EU bond yields also in good shape.
Pro-rata for 0.80p dividend and 4p capital return, the share price is only up 1p since the OP.
https://www.londonstockexchange.com/news-article/ASLI/unaudited-nav-as-at-31-march-2025/17056602
NAV increased by 1p to 71p (or 67p after the 4p capital return). Sales progressing and another capital distribution pencilled in for Q3.
If you look at the Breakdown of NAV Movement table in the PR, hasn’t the 84.5 cents or 70.6p NAV number already taken account of the 4p capital return?
That’s correct. I initially thought the statement that NAV was “excluding B share redemption of 4.8c during the quarter” meant it was “pre” distribution. So liquidation NAV is 71p after the first return.
Asset Value Investors Limited has slightly increased its stake in ASLI to over 11% (from previous 10%).
A positive development. ASLI sold 2 German warehouses (Flörsheim and Erlensee) for an aggregate €66.5m. This comes at 10% premium to Q1 valuation when initial sales were done at around 6% premium. So it might really be that the bv valuations are a bit conservative.
“The Company is currently engaged in advanced discussions regarding the sale of fifteen further assets, through a combination of individual asset disposals and portfolio transactions. The Board expects exchange of contracts for a number of these anticipated disposals in the coming weeks. Subject to the successful completion of these transactions and repayment of associated debt, the Board anticipates making a second capital distribution to Shareholders by mid August 2025.
The final seven assets are at various stages of the sales process, with completions targeted from Q4 2025 onwards. The Investment Manager continues to assess ongoing asset management initiatives and engage with tenants to identify opportunities where the Company can enhance value in advance of potential disposals. Active and direct engagement with parties interested in acquiring prime logistics space is ongoing.”
https://www.londonstockexchange.com/news-article/ASLI/portfolio-sales-update/17129673
Another €35m in properties sold at 3% below NAV. 12p distribution being made at the end of the month.
Spanish portfolio has been sold for ~€20m under NAV due to capital gains tax. There’s some confusion over why so much was due, and whether it was included in their 70p liquidation estimate. Silver lining is the bulk sale means a larger capital return lined up for September, probably 30p+. Not many assets left after that for any further surprises.
Lobbing 4p off doesn’t hurt IRR too much as long as Abrdn can stick to a timely schedule, which they seem to be doing well. Shares down 7% today but unclear if some of that is technically driven as they’re in the midst of the 12p capital return process.
https://www.londonstockexchange.com/news-article/ASLI/portfolio-sales-update/17160433
Although ASLI received a net consideration of €146 million for the Spanish assets and €27.2 million for the Dutch asset, they also spent €137.8 million to repay associated debts, reducing total debts from €218 million to €80.2 million.
So 30p in dividends is not feasible for September, and only “at least £50 million” (or 12p) is announced.
Hi Daniel! What do you think about tax implications from this trade(withholding tax etc)? Thanks!
In the sales update today (another property sold for 2.5% below book), they included the following:
“Latent capital gains tax (CGT) liabilities may exist for assets that were acquired via share deal structures. These liabilities arise from historic, unrealised gains embedded within the acquired entities prior to acquisition and are separate from any CGT liabilities arising on gains made during the Company’s ownership period.
Within the remaining portfolio, certain assets acquired via share purchases continue to carry latent CGT exposure, which is not recognised in the NAV. The potential CGT impact from future sales of these assets remains uncertain, as it will depend on the structure and terms of each transaction. However, if all remaining disposals were structured as direct asset sales, a latent CGT impact of approximately 1-2 pence per share on the NAV could arise. This estimate is illustrative only, and the actual outcome will depend on several factors, including the final transaction structure, pricing and any agreement regarding tax exposure. The Company will continue to provide updates as further disposals are completed.”
WHT generally relates to income rather than capital gains, so I dont think that applies (I imagine they’d mention it here too). I’m not a tax expert though.
17 of the original 27 assets are now sold. Of the 10 remaining assets, three disposals are anticipated to complete in Q4 2025. The final seven are targeted for completion from Q4 2025 onwards. The company states its intention to make a further capital distribution of “at least £50 million in September 2025.”
The RNS clarifies that “Latent capital gains tax (CGT) liabilities may exist for assets that were acquired via share deal structures.” These relate to historical gains embedded in the SPVs before ASLI acquired them.
Management clarified that “However, if all remaining disposals were structured as direct asset sales, a latent CGT impact of approximately 1-2 pence per share on the NAV could arise.”
https://www.londonstockexchange.com/news-article/ASLI/continued-sales-momentum-disposal-process-update/17170178
ASLI has announced its third capital distribution to shareholders:
– The company will return £53.5m, which equates to 13.0p/share.
– The ex-distribution date is September 15, 2025, with payment scheduled for September 30, 2025.
– This distribution brings the total capital returned since the wind-down began to 29p/share (£119.5m in total), following prior distributions of 4.0p and 12.0p.
– This return is a direct result of proceeds from the recent large asset sales, specifically the Spanish and Dutch portfolios mentioned in the July and August comments.
https://www.londonstockexchange.com/stock/ASLI/abrdn-european-logistics-income-plc/company-page
Daniel, is my take correct?
June 30 NAV is 67.4p. This figure is post-Gavilanes (Spanish) sale adjustment, removing that major uncertainty.
NAV:
67.4p (June 30 NAV) – 12.0p (Paid Aug 13) – 13.0p (Payable Sep 30) = 42.4p remaining NAV per share.
Stock price:
47.0p (Current Share Price) – 13.0p (Upcoming Distribution) = 34.0p effective price for the stub.
So investors are paying 34.0p for a stub that management values at 42.4p/the implied upside to the stated NAV is 24.7%.
This is before factoring in the potential 1-2p latent CGT liability on the remaining 10 assets. Adjusting for a worst-case 2p hit, the remaining NAV would be 40.4p, still offering an 18.8% upside from the current stub price. The main variable now is simply the execution and timeline for selling the final 10 assets.
Yes that was my take too. The final assets are a mix of Dutch, French and Polish assets. Polish ones are in the major cities and have a WAULT around 3 years, Dutch/French between 5-10. French in particular are in smaller cities and its slightly concerning they haven’t sold a single one, especially now with the political situation worsening.
Polish real estate firm DL Invest Group has recently acquired a 17.9% stake in ASLI. Based on the filings, it appears they fully bought out Asset Value Investors’ position. ASLI owns several Polish assets, so we might see a takeover bid from DL Invest. Do I get it right that ASLI currently trades at 36p/share compared to an NAV of 48p/share as of September 30.
48c but 42p, same as your working from last month.
DLI stake almost raises more questions than it answers. Would be a strange way to announce an intention to acquire the whole entity. Nothing in ASLI’s update today marks out the 3 Polish assets in the sales process. Could it be a hedge on being bid up higher on those? Price they bought from ASLI isn’t disclosed either.
3 Polish assets have been sold at 5% discount to Q2 valuation, but the sales values have been reflected in Q3 NAV number.
7 assets remain, but 4 of them are :currently under offer and subject to detailed due diligence and the anticipated signing of sales agreements”.
“The final three assets remain at various stages of the sales process. Completions are targeted for Q1 2026.”
“3 November 2025 – abrdn European Logistics Income plc (the “Company” or “ASLI”), which is invested in a portfolio of European logistics real estate, announces that it has completed the sale of three further assets in Poland, as part of its managed wind-down.
The three multi-let warehouse estates are located in Krakow, Lodz and Warsaw in Poland and were sold for an aggregate consideration of approximately €84 million, representing a c.5% discount to the Q2 2025 valuation.
These three assets were marked at their sales values in the recently announced Q3 2025 estimated net asset value.”
ASLI has announced a fourth capital distribution of £41.2m, or 10p/share, to be paid on December 30. Combined with the three previous distributions, shareholders will have received 39p/share.
https://www.londonstockexchange.com/news-article/ASLI/4th-capital-distribution-by-way-of-b-share-scheme/17354278
DL Invest have sort of revealed why they’ve bought a stake in an open letter, saying liquidating at a cyclical low point is poor timing and that they should gain control of ASLI as IM.
Seems rather promotional and opportunistic in tone to me, with weak arguments around how poorly the winddown is going and why shareholders would benefit from beginning another acquisition phase under a different manager. ASLI board has rebuffed by saying they are aware of shareholders comprising 25% that are in favour of continuing the winddown, which is on track to conclude in Q1.
https://dlinvest.pl/en/letter-to-asli-shareholders/
https://www.londonstockexchange.com/news-article/ASLI/response-to-dl-invest-group/17377253
ASLI confirmed the disposal of 2 French logistics assets to tenant Dachser for 15.6m Euros, executing at Q3 2025 NAV. They also acknowledged receipt of a formal requisition from DL Invest Group demanding a general meeting to oust the current manager and reverse the liquidation strategy. Seems that DL wants to fire the current manager and install themselves, effectively using the ASLI vehicle to reverse-merge their own growth pipeline into the public market. Their stated goal is to halt the “fire sale” and instead build the portfolio to over 1.5b Euros within 24 months, focusing on pan-European logistics and data centers. Pretty unexpected turn of events.
The board is using deal flow as a defense mechanism. By highlighting that 22 of the original 27 assets are now sold management is implying that the wind-down is practically irreversible. 1 further asset has been signed and the final 4 are under offer for Q1 completion.
Circular has been released regarding DL’s proposal to stop the wind down. It needs 75% shareholder approval. I think this will go nowhere. Management said this:
“In recent weeks, the Board has engaged with Shareholders through the Company’s adviser, Investec Bank plc. That engagement has reinforced the Board’s view that there is no meaningful support among the wider Shareholder base for the proposals being put forward by DL Invest or for revisiting the mandate overwhelmingly approved by Shareholders in July 2024 at this late stage.”
https://www.londonstockexchange.com/news-article/ASLI/publication-of-circular-notice-of-general-meeting/17433673
So ASLI sold another French asset at NAV for €7.9m.
23 of 27 assets are now gone. Of the final 4, 1 is signed (5% deposit held) and 3 are under offer. All are expected to complete “before the end of Q1 2026.”
@dt you said in your weekly update “The stock trades at 27p/share compared to 38p NAV as of September 30.”
I think the Q3 NAV was 48c (and 41-42p) not 48p, and substracting 10p dividend gets us to current NAV about 31-32p (and likely less after some latent capital gains tax (CGT) liabilities).
So at 27p stock price the discount is likely less than 10%.
You are correct, and thanks for catching that.
Shareholders have rejected DL Invest’s attempt to seize control and halt the liquidation.
https://www.londonstockexchange.com/news-article/ASLI/result-of-requisitioned-general-meeting/17470816
ASLI completed the sale of a Dutch asset (Waddinxveen) for EUR 35m. It was done at a 4.5% premium to the independent Q3 2025 Savills valuation. 24 of the original 27 assets are now sold. Of the final 3, one is signed and expected to complete shortly, and the last two are in due diligence. The Q4 NAV update is expected shortly.
Another asset has been sold. Two more remain, both currently in the due diligence phase. Daniel, could you share your updated view on the liquidation value?
RAV posted a useful detailed note on the remaining two assets and sees 7% upside to 34¢ (29.5p) within 3 months, so 20-30% IRR. I had it slightly lower just to be cautious on CGT, macro and FX.
https://substack.com/@realassetsvalue/note/c-230634267
Some highlights from the FY25 results release:
– At 24.05p, ASLI trades at a ~15% discount to the 32.6c (28.4p) Liquidation NAV. That baseline may require a haircut depending on the structure and pricing of the remaining disposals. Management noted a risk of “further latent CGT, currently estimated to be up to 1.2p per Ordinary Share.” Such a haircut would drop the discount to NAV to 11-12%.
– The disposal timeline has shifted slightly. January guidance had the final two Dutch assets completing in Q1 2026. Now, only one is under offer, targeting an “early Q2 2026” completion, suggesting the deal should close any day now.
– The sales process for the last asset has been delayed due to the Iran war and wider macro concerns. The target for placing the company into liquidation has been pushed to H2 2026 (management used the word “hopeful”).
– The DL Invest angle is still somewhat in play. The board continues to engage with the activist regarding a potential takeover of the management contract, stating a willingness to consider a “fully developed and appropriately costed proposal.”
https://www.londonstockexchange.com/news-article/ASLI/final-results/17557569
ASLI has announced a fifth capital distribution of 4p/share (£16.5m) via the B Share scheme, with an ex-date of 13 May and payment on 29 May. This brings cumulative capital returned to 43p per share.
ASLI is now a single-asset stub following a sale agreement over its warehouse located in Ede, Netherlands, which is due to close in late-May. The last remaining asset is in early stage due diligence and management is “hopeful” they will be able to sell it in H2 2026.
The Q1 NAV update puts the liquidation baseline at 28.7p. Adjusting for the 6.0p in May distributions, the remaining NAV sits at 22.7p. Haircutting that for the explicitly warned “potential latent capital gains tax liability now estimated at up to 1.2 pence per share” yields a realistic ex-all stub NAV of 21.5p.
At the current price of ~19p, the market is pricing in only a ~11-12% discount to NAV. Do others see it similarly?
ASLI is now a single-asset stub, but language around the final Den Hoorn property has softened worryingly from “early-stage due diligence” to merely stating the manager “continues to pursue a disposal.”
At the June 1 AGM, a low voter turnout allowed DL Invest to use its stake and vote down 2 special resolutions requiring a 75% majority, blocking seemingly routine approvals for share buybacks and shorter meeting notices. The activist also voted against director re-elections and the executive pay report, though these still passed. As I understand, these blocking tactics change nothing for the investment case; DL Invest allowed th cash reserve restructuring to pass, which clears the way for the next payout.
@Daniel, what do you think DL Invest is realistically trying to achieve here? Thus far they are just putting sticks in management’s wheels, but since their plan to stop the liquidation was crushed by shareholders in February, what better outcome do they hope to extract at this stage?
Your guess is as good as mine here. Their behaviour has been strange from the start and to be honest I’m a little surprised they haven’t sold. Maybe they are planning on paying a premium for the listing upon liquidation so they can take over a listed shell?
Putting the company into liquidation requires 75% approval, and without a high turnout (54% of all shares voting yes) DL Invest can block it.
Even with unusually high turnout in the February vote, only 74.6% yes votes were secured.
Thanks for the replies, I think you might be right here. DL originally wanted to build out a large pan-European portfolio and discussed installing themselves as the company’s external manager. I found a seemingly fresh article where it says they called out the board for ignoring their “proposal for acquiring and continuing the company’s listed shell structure”.
https://www.morningstar.com/news/alliance-news/1780498083003002300/dl-invest-raises-serious-concerns-on-abrdn-european-wind-down
So thus far they are basically allowing the liquidation and cash distributions to occur (they let the cash reserve restructuring pass at the June 1 AGM), but it seems like they will indeed use their stake to block the final 75% Special Resolution needed to formally dissolve the company. I’m just wondering how this will actually end up. Let’s say the final wind down is blocked and either 1 or 0 assets remain. What then?
Given the questionable timing on the remaining asset sale + the risk of a liquidation not happening at all, I’m beginning to think of closing this one out for my personal portfolio.
I agree and closed my position today. Make it around 10% return/IRR over the 15 months.