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URBAN LOGISTICS REIT PLCAnnual Report and Accounts 2022
DRIVING
PERFORMANCE
Urban Logistics REIT plc
ANNUAL REPORT AND ACCOUNTS 2022
CONTENTS 01. OUR PURPOSE
OUR PURPOSE IS
TOACQUIRE AND
MANAGE HIGH
QUALITY, SINGLE LET,
LOGISTICS ASSETS TO
GENERATE BOTH
INCOME AND CAPITAL
GROWTH FOR OUR
SHAREHOLDERS.
02. OUR VISION
TO BE THE LEADER
INUKURBAN LOGISTICS
WAREHOUSING.
STRATEGIC REPORTpages 1 to 55
Our Highlights 2
At a Glance 4
Investment Case 5
Chairman’s Statement 6
Strategic Locations 8
Market Context 9
Business Model 10
Q&A with the Investment Manager 12
Our Strategy 14
Our Strategy in Action 15
Investment Manager’s Report 18
Financial Review 33
Sustainability Report 38
s172 Statement and Stakeholder Engagement 46
Key Performance Indicators 50
Principal Risks and Uncertainties 51
Viability Statement 55
GOVERNANCEpages 56 to 79
Board of Directors 56
Corporate Governance Statement 58
Nomination Committee Report 65
Audit Committee Report 66
Management Engagement Committee Report 69
Environmental, Social and Governance (“ESG”)
Committee Report 70
Directors’ Remuneration Report 72
Directors’ Report 75
Directors’ Responsibility Statement 79
FINANCIAL STATEMENTSpages 80 to 123
Independent Auditor’s Report 80
Consolidated Statement of
Comprehensive Income 86
Consolidated Statement of Financial Position 87
Company Statement of Financial Position 88
Consolidated Statement of Cash Flows 89
Company Statement of Cash Flows 90
Consolidated Statement of Changes in Equity 91
Company Statement of Changes in Equity 92
Notes to the Financial Statements 93
Supplementary Information 113
ADDITIONAL INFORMATIONpages 124 to 128
Investment Policy 124
Glossary of Terms 126
Company Information 127
Financial Information 128
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
1
Urban Logistics invests in properties from which our tenants are able to serve the major urban areas of the UK.
We target a total shareholder return of 10-15%, from both dividend income and capital growth. In order to achieve that
we have built a portfolio balanced between our Core assets, the rental income of which underpins our dividend, and
our Active Asset Management properties, where we can use our expertise to make material improvements to the
lease or property to drive capital value increase. We also undertake forward funding of developments, where we see
potential for market-leading returns.
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
03. OUR MODEL
04. OUR ESG TARGETS
01
BUY WELL
Urban logistics properties that
are well located.
02
MANAGE WELL
Undertake our asset
management initiatives.
03
CREATE VALUE
Generate a 10-15% shareholder
return.
02 ACHIEVE NET ZERO IN TERMS OF SCOPE 1 AND 2 EMISSIONS
03 ENGAGE WITH OUR TENANTS TO PLAN SCOPE 3 EMISSIONS TARGETS
01 REDUCE THE ENVIRONMENTAL IMPACT OF OUR BUILDINGS
06 PROMOTE TRANSPARENCY INOUR ESG DISCLOSURES
05 MAKE MORE SPACE FOR NATURE ON OUR SITES
04 INCREASE ON-SITE RENEWABLE ENERGY
See more on page 40
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
2
Urban Logistics is the only listed company giving investors a focused
exposure to UK-based urban logistics assets, which remains real
estate’s top-performing sector.
OUR HIGHLIGHTS
FINANCIAL HIGHLIGHTS:
NET RENTAL INCOME
£36.5M
+59.8%31 March 2021: £22.9m
ADJUSTED EPS
1
6.71P
-0.7%31 March 2021: 6.76p
IFRS NET ASSETS
£892.6M
+130.4%31 March 2021: £387.5m
TOTAL ACCOUNTING RETURN
28.9%
31 March 2021: 15.6%
IFRS PROFIT BEFORE TAX
£171.8M
+260.9%31 March 2021: £47.6m
DIVIDEND PER SHARE
7.60P
31 March 2021: 7.60p
EPRA NTA PER SHARE
188.78P
+23.9%31 March 2021: 152.33p
TOTAL COST RATIO
21.8%
31 March 2021: 21.3%
1. A full reconciliation between IFRS profit and Adjusted earnings can be found in note 13 of the Financial Statements.
2. A reconciliation of other financial information can be found in the Supplementary Information on pages 113 to 123.
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
3
OPERATIONAL HIGHLIGHTS:
PORTFOLIO VALUATION
£1,015M
+99.9%31 March 2021: £508m
CONTRACTED RENT
£47.3M
+56.1%31 March 2021: £30.3m
WAULT
7.7 YEARS
31 March 2021: 7.4 years
EPC – % OF PORTFOLIO RATED A–C
75.5%
31 March 2021: 76.2%
PORTFOLIO LIKE-FOR-LIKE VALUATION GROWTH
25.4%
31 March 2021: 13.2%
GROSS TO NET RENTAL INCOME RATIO
97.2%
31 March 2021: 96.5%
EPRA VACANCY RATE
1
6.9%
31 March 2021: 6.9%
TOTAL PROPERTY RETURN
30.3%
31 March 2021: 17.1%
1. At year end 3.7% was in solicitors’ hands.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
4
Our investment thesis
Our underlying belief, at IPO and today, that high-quality,
single-let logistics properties represent the most interesting
sub sector oftheindustrial and logistics market.
Our commitment to shareholders is to acquire well-located
assets with the correct specification for occupiers, typically
at below replacement cost. Our focus on tenant covenants,
in sectors which have been less volatile historically, has
served us well.
What we do
Urban Logistics REIT plc (LSE: SHED) isa property
investment company which invests in strategically located,
single-let logistics properties servicing high-quality tenants
across the UK.
Why we do it
Logistics assets serving urban areas is one of the highest
performing sectors in real estate, with structural factors
driving rental growth. We believe that a focus on mid box,
single let assets allow us to generate a strong return for
shareholders.
The UK faces a structural mismatch between supply and demand
inthe market for mid-box logistics assets.
AT A GLANCE
DIFFERENTIATORS
Focus on “last mile”
20,000 – 200,000 SQ FT
•
Most appropriate size for last-mile
deliveryoperators
Strategic locations
63% MIDLANDS AND
SOUTH EAST BIAS
•
Area had among the strongest take-up of
logisticsspace
Strong covenants
86% LOW/LOW-
MODERATE RISK
•
Single-let assets
•
High-quality tenants
•
No fashion retail
A PURE PLAY ON URBAN LOGISTICS
UK REIT quoted on the premium segment of
the Main Market of the London Stock Exchange
Income and Total Return strategy through
active asset management
Invests in UK mid-box logistics buildings with a
sweet spot in the 20,000 – 200,000 sq ft range
Assets located in key urban “last touch”
and “last mile” locations
The only London-listed REIT with such a focus
Management team with specific logistics
experience within the broader real estate
market
16.4% p.a. average Total Accounting Return
from IPO to 31 March 2022
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
5
Generating an industry-leading return in this market requires
activeasset management.
INVESTMENT CASE
EXPERIENCED
BOARD
AND TEAM
Urban Logistics benefits from
a high-quality investment
management team,
complemented by an
experienced and knowledgeable
Board. This selective and
deliberate combination of skills
and experience enables the
Company to identify and acquire
assets, implement its asset
management strategy, and
createvalue for shareholders.
IDENTIFYING
UNIQUE VALUE
OPPORTUNITIES
The Company’s specialist focus
on single-let properties exploits
aunique value opportunity in
thisreal estate sector,
underpinned by companies
building resilience into their
supply chains.
CONSERVATIVE
CAPITAL
STRUCTURE
Underpinning these significant
advantages, thebusiness
benefits from a conservative
capital structure appropriate
toits asset base, with a
measured approach to
theuseofdebt.
We actively asset manage our
portfolio, and have completed
25lease events in the year,
with16.4% like-for-like
rentalincreases.
16.4%
LIKE-FOR-LIKE RENTAL INCREASES
We have completed £302 million
of property investments in the
year at a weighted average NIY of
5.3%, financed by raising share
issues and debt.
£302M
PROPERTY INVESTMENT IN YEAR
We target a long-term net LTV
position of between 30-40%. Our
interest expense at year end is 74%
hedged, providing certainty
against a significant portion of our
debt cost.
30%-40%
LTV TARGET
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
6
We are proud to
have moved from
the AIM to the Main
Market, and to have
become a
constituent of the
FTSE 250 Index.
Nigel Rich CBE
Chairman
Overview
We started our financial year in the depths of Covid, and are
ending it with war in Ukraine and inflation levels not seen
for decades dominating the news cycle. Through it all, the
Company has raised a total of £358 million of new equity,
and moved from being an AIM-listed company to a
constituent of the FTSE 250, while the property portfolio has
nearly doubled from £508 million at 31 March 2021 to
£1,015million at 31 March 2022. During the year the market
for the type of assets in which we invest has strengthened
considerably, driven by a continued lack of supply in the
market, coupled with increased demand from companies
building resilience into their supply chains. Following
significant asset management and rental growth, we have
seen a like-for-like increase in valuations of 25.4%
(31March2021. 13.2%). This has driven up EPRA NTA per
share from 152.33 pence to 188.78 pence per share.
Fundraising
We raised £108 million of new equity in July 2021, and a
further £250 million in December, at the same time as
completing our Main Market move. The majority of this
equity has now been invested in line with our investment
policy at the year end and the expectations set out at the
time of the December raise. These assets have been
acquired at a net initial yield of 5.3%, against our portfolio
valuation net initial yield of 4.3%, and we are confident that
our Manager will be able to actively manage these assets in
the coming year to unlock further value.
ESG
As we move onto the Main Market, and the Company grows
in size, we are committing to do more to promote
transparency in our ESG efforts, and continue to improve.
Last year we received our first ESG ratings and signed our
first debt financing agreement with sustainability-linked
metrics. In the current year we are presenting our first
Sustainability Report with our ESG targets, including a
commitment to net zero. We look forward to updating the
investment community and our wider stakeholders about
our plans later in the year.
CHAIRMAN’S STATEMENT
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
7
Results and financing
We saw a significant increase in net rental income in the
year from £23 million to £37 million, driven by acquisitions
and rent increases arising from 25 lease events. At the year
end we had an LTV of 11.3% with total drawn debt of
£239million at an average cost of 2.6% and weighted
average maturity of 3.7 years. The debt is 74% hedged
until maturity.
As we draw down debt to fund further asset purchases we
will aim to keep our LTV at the lower end of the target range
of 30-40%.
Dividends
A first interim dividend of 3.25 pence per share was paid in
December 2021 to shareholders prior to the issuance of new
shares in the same month. A second interim dividend of
4.35 pence per share will be paid on 22 July 2022 to
shareholders on the register at the close of business on
1July 2022. The total dividends declared amount to
7.60pence per share, which is the same as in the previous
year, however in respect of the second interim dividend this
will be paid on a much higher number of shares.
Board and management
Following our move to the Main Market we have embarked
on the search for a new Non-Executive Director. We believe
the Board would benefit from further diversification, and
we are also seeking to add complementary skills to the
Board as we grow. A search firm has been appointed and
a number of candidates have been interviewed.
The management team has been considerably increased in
the past twelve months following the capital raises and the
consequent acquisition of assets. The increase in personnel
dedicated to Urban Logistics includes both property and
administrative functions. The team sources the pipeline,
executes the property transactions and then implements
asset management plans. We also place considerable
reliance on the Manager’s very capable finance team.
The current management contract runs to April 2024, and
we will shortly start discussions with the Manager about
future arrangements. We will consult with shareholders at
the appropriate time.
Outlook
While the current-macro economic conditions are
uncertain, your Board will manage the Company’s affairs
accordingly.
Despite the uncertainty the occupational demand for the
kind of assets we invest in remains strong, and the supply of
suitable properties remains tight, with resulting upward
pressure on rental rates. In recent months we have slowed
the pace of investment, believing that a patient deployment
allows us to take advantages of opportunities in the market
which were not there a year ago. Whilst we will continue to
acquire new assets in the short term using our borrowing
capacity, we will target the lower end of our LTV range, at
least until the macro-economic climate becomes more
certain. In the round therefore we anticipate that 2023 will
be a year of modest improvement in earnings, and we
intend to at least maintain the dividend at the current level.
With the benefit of the momentum we have built in the
business today, and with the continued strong market for
logistics real estate, we look to the medium term with some
confidence. Whilst the political and economic uncertainty
persists, we are optimistic and vigilant in equal measure.
Nigel Rich CBE
Chairman
22 June 2022
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
8
STRATEGIC LOCATIONS
OUR LOCATIONS
113
Number of assets
99.9%
Portfolio increase
4.3%
Net initial yield
8.3M SQ FT
Total area
Geographic value
breakdown:
Midlands | 38.0%
South East | 25.0%
Other | 14.0%
Yorkshire
& North East | 12.0%
North West | 11.0%
We focus our
investments in
the fastest-growth
regions of the
UK, with 63% of
our assets in the
Midlands and
SouthEast.
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
9
MARKET CONTEXT
We operate in a marketplace with a long-term structural
imbalancebetween supply and demand. Warehouse space
take-upremains at record levels, with the majority of 2022
take-up inour“mid-box” sector
1
.
STRONG MARKET FUNDAMENTALS STRUCTURAL TAILWINDS REMAIN STRONG
FOCUS ON “LAST MILE”
RECORD TAKE-UP AND SUPPLY BOTTLENECKS
Supply chain resilience requires increased
warehouse space
Resilient demand creating upward pressure on
rent and land values
Vacancies remain at an all-time low of sub 3%
2
Inflation in construction costs continues to
drive up replacement costs
Development land is constrained by planning
delays and high costs
The pandemic and other recent supply chain
shocks highlighted the importance of supply
chain resilience, with many businesses now
adopting “just-in-case” mentality rather than
“just-in-time”
£6.50
ERV per sq ft
5.2%
Portfolio reversionary yield
Occupational market remains strong:
UK vacancy rates
20,000 –
200,000 SQ FT
Most appropriate size for
last-mile delivery operators
2022 was another record year, with 4 million
sqft of warehouse space take-up, 56% above
the long-term average
3
1. Take up by floor space in 2021. Source CBRE.
2. Source Savills.
3. Source CBRE.
Million sq ft
Source: Savills
vacancy rate
20
40
0
60
80
100
09 10 11 12 13 14
15 16 17 18 19 20 21
5%
10%
0%
15%
20%
25%
supply vacancy rate
94m
79m
86m
42m
34m
25m
29m
30m
29m
35m
31m
17m
47m
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
10
Urban Logistics has built a portfolio of high-quality
single-let properties with secure income principally
let to logistics operators.
BUSINESS MODEL
OUR PURPOSE
TO ACQUIRE AND MANAGE
HIGH-QUALITY, SINGLE-LET
LOGISTICS ASSETS AND
GENERATE BOTH INCOME
AND CAPITAL GROWTH FOR
OUR SHAREHOLDERS.
OUR VISION
TO BE THE LEADER IN
URBANWAREHOUSING.
OUR CULTURE
STRATEGIC DECISION
MAKING, DILIGENT
INVESTIGATION, CLOSE
RELATIONSHIPS WITH
STAKEHOLDERS AND AN
APPROACH FOCUSED
ON SUSTAINABLE
PERFORMANCE.
FOCUS ON LAST MILE
Highest-growth segment
oflogistics assetclass.
STRONG COVENANTS
Focus on single-let
propertieslet to
institutionalgradetenants.
86%
Low/moderate risk
1
STRATEGIC
LOCATIONS
Targeting e-fulfilment in
locations where supply is
limited and demand robust.
63%
Midlands and South East bias
INVESTMENT THESIS
Negotiate acquisitions at
30-70% of new build cost, on
assets with below-market rents
and with reversionary potential
in the short to medium term.
30–70%
percentage ofnewbuildcost
WHAT DRIVES US
UNDERPINNED BY...
CORE ACTIVITIES
MARKET DYNAMICS HOW WE ADD VALUE
01
BUY WELL
Urban logistics properties
that are well located.
02
MANAGE WELL
Undertake our asset
management initiatives.
03
CREATE VALUE
Recycle capital or hold
forincome.
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
11
Our active asset management approach enables
us to deliver sector-leading returns toshareholders,
targeting a 10-15% total returnperannum.
CORE ACTIVITIES
DELIVERING VALUE FOR OUR STAKEHOLDERSHOW WE ADD VALUE
MARKET
A closer integration of logistics and retailing across
theUK.
INVESTORS
Reward equity holders with high-quality income,
maintaining a supportive institutional and private
shareholder register.
42.35P
Dividends paid and declared since IPO
2
TENANTS
Proactive tenant engagement and relationship
management, with a collaborative approach,
makingour assets work harder for them.
£5.59
Average rent per sq ft
FINANCING PARTNERS
The Group has a £151 million facility with Barclays,
Santander and Lloyds banks and an £88 million facility
with Aviva.
30–40%
Target loan to value
ESG
Urban Logistics is committed to continual
improvement in the environmental performance
ofour portfolio, which enhances value for our
shareholders, tenants and the wider public.
76%
EPC ratings: A-C
3
01
BUY WELL
Urban logistics properties
that are well located.
02
MANAGE WELL
Undertake our asset
management initiatives.
03
CREATE VALUE
Recycle capital or hold
forincome.
1. Per Dun & Bradstreet (Overall Business Risk).
2. Includes second interim dividend of 4.35 pence per share in respect of the financial year
ended 31 March 2022, which will be paid on 22 July 2022.
3. EPC ratings at 31 March 2022, by floor area.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
12
Our portfolio
valuation has
beensignificant
this year, with
properties
increasing on a
like-for-like basis
by25.4%.
Richard Moffitt
Chief Executive Officer
of the Investment Manager
Q&A WITH THE INVESTMENT MANAGER
Q:
IT’S BEEN ANOTHER GROWTH YEAR FOR URBAN,
WITH A SIGNIFICANT VALUATION INCREASE IN THE
PORTFOLIO. DO YOU THINK THIS IS SOMETHING
THAT CAN CONTINUE?
A:
Our portfolio valuation has been significant this year,
with properties increasing on a like-for-like basis by
25.4%. When we look at valuation increases it’s
important to separate out the effects of yield
compression from rental growth, as they are
influenced by different things.
Yield compression is driven by macro economics,
particularly interest rates and yields on capital
available elsewhere. We see ten-year gilt rates
climbing, and getting closer to prime yield rates,
which is a signal that there is not significant room for
yield compression in the near term.
On the other hand, the excess demand and
undersupply of space in the country means the
occupational market remains strong, and there is
upward pressure on rental rates. This is evident in the
national vacancy rate of just 3%, the lowest it has ever
been. It is our active asset management, resulting in
rental increases, longer leases and stronger covenants,
which will drive valuation growth and ensure there is no
sudden correction in capital values. In this market,
being an active asset manager who is able to capture
these rental increases is crucial to supporting valuations.
Q:
YOUR FOCUS IS STRICTLY ON URBAN LOGISTICS.
HAVE YOU EVER THOUGHT OF DIVERSIFYING TO
OTHER TYPES OF LOGISTICS ASSETS?
A:
From our original IPO prospectus, we have firmly believed
that the mid-box urban logistics assets represented the
most interesting sub sector of the logistics market.
That belief holds true today – and we can back that
conviction up with some impressive results.
Our shareholders are best served by us sticking to the
things we know best, and driving performance across
our £1 billion portfolio.
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
13
Q:
REITS HAVE HISTORICALLY BEEN REGARDED AS A
GOOD INFLATION-HEDGE. DO YOU THINK THAT’S
STILL THE CASE?
Q:
WHAT ARE YOUR CURRENT THOUGHTS ON
DEVELOPMENTS?
A:
I think REITs can offer an inflationary hedge, but
different REITs will give different levels of protection.
We believe we are relatively well positioned for an
inflationary world. Our assets typically have shorter
property WAULTs than other commercial property,
meaning we can capture rental uplift early. We also
have tenants with strong covenants in place, who we
believe are able to pass on inflationary pressures to
their customer base. We have long steered clear of
fashion retail and prefer essential products like
pharmaceuticals for this reason. This, coupled with the
low availability and high demand for the assets we
invest in, the ability to enhance value through active
asset management, and the fixed term debt we hold,
mean that we represent, in my view, an excellent
hedge against inflation.
A:
We’re very proud of our developments in the year,
with 172,433 sq ft of space completed, and a further
547,304 sq ft under construction. We’ve achieved a
fantastic 5.7% yield on cost on these developments,
and all developments have been delivered on time
and on budget.
That said, in the second half of the year we have not
committed significant capital to new developments
– for the very simple reason that we just won’t commit
unless we are confident we can deliver circa 6% yield
on cost. With land prices and construction costs rising
rapidly, these opportunities are few and far between,
and we believe we are better placed to acquire
income-producing standing assets until we see these
costs reset.
Q:
THERE IS A HUGE AMOUNT OF CAPITAL CHASING
LOGISTICS ASSETS. HOW ARE YOU ABLE TO
CONTINUE TO ACQUIRE ASSETS AT THE YIELDS
SETOUT AT YOUR LAST RAISE?
A:
At the time of writing we have been deploying funds
from theDecember fundraise at exactly the 5.4% NIY
that featured in our prospectus at the time. It’s hard to
do this of course, but we have significant decades of
experience in this market. We know where the best
assets are and are often able to buy off market. We
value our reputation as a good counterparty to work
with and have a great team in place to execute on
deals. Post year end we have continued to transact
and are confident of being fully deployed by the
summer, as set out at the December fundraise.
Q:
YOU’VE GOT A MIDLANDS AND SOUTH EAST BIAS.
WOULD YOU EVER CONSIDER EXTENDING THAT?
A:
63% of the portfolio is in the Midlands and South East,
but that still leaves £371 million of assets outside these
areas. We take a UK-wide approach to sourcing deals.
The reason why we focus on the Midlands and South
East is simply that these are the key regions for our
target tenant base, reflecting population density and
the density of urban areas. Our focus is on those
geographies where we see opportunities for value
creation, and as the government’s levelling up agenda
drives infrastructure investment outside of the South
East we expect to see more opportunities in a more
diverse range of regions.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
14
OUR STRATEGY
We aim to build a balanced portfolio of last-touch logistics assets,
from which tenants are able to serve the major UK urban areas.
We have deliberately constructed a balanced portfolio, split between
secure rental income, asset management opportunities, and a
select number of development opportunities.
STRATEGIC PILLARS STRATEGIC FOCUS
•
Our Core assets are those where we have a strong tenant in place for
the foreseeable future, and we have no immediate plans to seek
changes.
•
There is still financial performance to be captured through regular
rent reviews. Our latest valuation showed an ERV of £24.0 million
against a contracted rent of £22.2 million, demonstrating that these
properties have room to improve both NTA and EPS.
•
Our WAULT on these assets is over twelve years, and our covenant
risk is typically low or low-moderate.
•
Our Active Asset Management assets are those where we have plans
in place to lengthen the lease, improve the covenant or let a vacant
building. We also include here those assets where the environmental
performance requires attention.
•
The assets will typically have a Dunn and Bradstreet credit risk of
low-moderate or moderate.
•
These assets have a WAULT of just under four years, and an
equivalent yield of 5.3% – 50 bps higher than our Core portfolio. As we
lengthen leases and improve covenants, the aim is to move these
assets to our Core portfolio.
•
The ERV of these assets as a group is £30.6 million, significantly above the
£25.1 million contracted rent, showing the real opportunity to drive EPS.
•
While the focus of the Company is very much on managing standing
assets, we have seen opportunities for the outsized returns
development opportunities can offer.
•
When we invest in development assets, we aim to take on lettings
risk but not construction risk. We do this by signing forward funding
agreements with developers with good covenants, on fixed price
contracts to protect against build cost inflation.
•
We aim for a yield on cost of 6%, and when that is not available due to
high land and build costs, we tend to focus elsewhere.
01
CORE PROPERTIES
45% OF THE PORTFOLIO
02
ACTIVE ASSET MANAGEMENT
51% OF THE PORTFOLIO
03
DEVELOPMENT
4% OF THE PORTFOLIO
Read more on page 15
Read more on page 16
Read more on page 17
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
15
01
CORE
PROPERTIES
OUR STRATEGY IN ACTION
Longer leases and strong
covenants provide the
foundation to the portfolio.
NORTHAMPTON
Our 153,473 sq ft building in Foxbridge Way, Normanton is occupied
bytheUnipart Group, a multi national logistics and supply chain group.
They occupy the building on a lease until 2036, and have a very
strongcovenant.
We will continue to engage closely with the tenant on new
requirements, ESGinitiatives and building improvements.
£17.5M
CAPITAL VALUE
4.4%
EQUIVALENT YIELD
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
16
02
ACTIVE ASSET
MANAGEMENT
Highly reversionary assets with an
asset management plan in place.
MIDLANDS
A well established business operating out of a unit in the Midlands
witha lease expiry in 2022. Current ERV represents a 33% uplift on
current contracted rent and we see potential to improve both rental
income and term. We are engaging with the occupier around a lease
extension which achieves both those objectives.
£5.0M
CAPITAL VALUE
5.0%
EQUIVALENT YIELD
OUR STRATEGY IN ACTION CONTINUED
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
17
03
DEVELOPMENT
Opportunities for
outsizedreturns.
GOLBORNE
We are funding development of a new 120,725 sq ft unit at Golborne,
with atarget completion date of October 2022.
The build is on track and on budget, and we have recently signed
anagreement for lease on the building, at significantly ahead of our
appraisal rent, ensuring a very strong yield on capital deployed.
£13.0M
MAXIMUM COMMITMENT
7.2%
YIELD ON COST
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
18
Overview
This has been a truly transformational year for Urban
Logistics, with two capital raises totalling £358 million,
the portfolio value rising from £508 million to £1,015 million,
our movefrom AIM to the Main Market of the London Stock
Exchange in December, all culminating in our inclusion
inthe FTSE 250 in March2022.
The first half of the year was dominated by COVID-19, as
theprevious 18 months had been. The supply chain issues
associated with the pandemic, and the rise and rise of
e-commerce, need no further elaboration, but as we have
learned to “live with COVID-19”, pent-up demand has met
those continuing supply chain issues, resulting in inflation.
Itis in this environment that our focus on strong tenant
covenants becomes important, as demonstrated by our
99.9% rent collection rate in the year.
Towards the end of our financial year Russia attracted
theattention and condemnation of the world through
itsinvasion of Ukraine. Aside from dreadful human cost to
the citizens of Ukraine, the war and subsequent sanctions
have led to the effective decoupling of Russia from the
western economy. Thanks to Russia’s role as a major
supplier of oil, gas and grain to the European markets, this
has quickly fed through into higher energy and food prices,
throwing further fuel on the inflationary fires.
At Urban Logistics we feel we are well positioned for
aninflationary world. As an active asset manager, with strong
tenant engagement, we are able to capture inflationary uplifts
in rental incomes quickly. With our focus on strong covenants,
and occupiers delivering essential goods, we believe our
tenants will be in a good position to pass along inflationary
price increases. In terms of our exposure to interest rate
increases, we are 74% hedged with a 3.7-year weighted
average maturity date, and post year end entered into a
ten-year fixed rate term loan with Aviva Investors, further
extending our debt to 5.1 years and increasing ouroverall
fixed or hedged position to 95%. Towards the end of the year
we took a decision to slow the pace of investment to allow us
to take advantage of opportunities in the market in a time of
economic turbulence.
The market
Investment volumes in the warehousing market have been
exceptionally high in the calendar year 2021, at £18.4billion,
almost double 2020’s record of £10.2 billion
1
.
Despite this, we have continued to source assets off market,
allowing us to generate attractive pricing, even as the yields
for logistics assets continue to tighten, as we have seen in
our own portfolio, now valued at a blended yield (before any
portfolio premium) of 4.3%.
The reason for this, of course, is the continued supply and
demand imbalance we see in the marketplace.
A few years ago, the idea that the UK’s supply chain might
feature in a news report would have seemed far-fetched.
Over the last twelve months front page appearances have
been a regular feature. Whether it is COVID-19, Brexit, Suez
Canal blockages, petrol shortages, HGV driver shortages, or
the war in Ukraine, we have been constantly reminded of
the effects of supply chain shocks on our daily lives.
INVESTMENT MANAGER’S REPORT
1. Savills UK Logistics: Big Shed Briefing January 2022.
Q1
2017
Q1
2018
Yorkshire & NE Midlands
Q1
2020
Q1
2021
Q1
2022
Q1
2019
£400,000
£600,000
£800,000
£1,000,000
£1,200,000
£1,400,000
£1,600,000
£1,800,000
£2,000,000
Price per acre
INDUSTRIAL LAND VALUES
Building resilient supply chains which can deal with these
shocks means holding greater stock levels, and hence
greater warehousing space. This has been a key driver of
demand for warehousing space across the country, and
shows no sign of slowing down: take-up of warehouse
space in the first quarter of 2022 was 10.4 million sq ft,
double what it was in the first quarter of 2021 (CBRE
Research). In a new development for the market, for the first
time the majority of this take-up was from our sector – the
mid-box units between 100k-300k sq ft
1
.
This demand-side pressure has led to a response on the
supply side, as more project starts have been recorded in
2021 ascompared to 2020. Nevertheless, the constraints
onsupply are not easy to surmount as planning for this
useclass is noteasy to come by. In addition, build costs
have been rising sharply, as has the cost of suitable land,
leading new space coming to the market at well over £150
psf – which is exceptionally high when considered as a
replacement value for our stockwhich is currently valuedat
£122 psf.
We predict these issues will cause speculative development
opportunities to be more constrained in the future.
The inevitable effect of these pressures is an upward
pressure on rental levels, and a downward pressure on
vacancy rates. Savills estimate vacancies at just 2.9%, down
from 5.6% at the same point twelve months earlier.
1
We have seen this upward pressure on rentals in our own
portfolio, with a like-for-like increase in rental rates of 16.4%,
and it is these pressures which lead Tasos Vezyridis, the
Executive Director of UK and EMEA Logistics Research at
CBRE, to predict that “Despite yields being at low levels and
therefore forecasting a more constrained capital value
growth, the industrial and logistics sector is still expected to
outperform all other sectors during the next five years” –
asentiment we agree with.
Source: CBRE
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
19
£8b
£0b
£12b
£16b
£20b
Source: Savills
2000 2002 2004
£2.0b
£2.8b
£4.8b
2006
£5.6b
2008 2010
£2.6b
£3.3b
2012
£3.0b
£4b
2014
£7.0b
2016 2018 2020 2021
£6.0b
£8.9b
£10.2b
£18.4b
INVESTMENT VOLUMES
2%
4%
0%
6%
8%
10%
Mar
2007
Mar
2010
Mar
2011
Mar
2012
Mar
2013
Mar
2014
Mar
2022
Mar
2015
Mar
2016
Mar
2017
Mar
2018
Mar
2019
Mar
2020
Mar
2021
Yield
Source: Savills
Industrial
multi-let
Industrial
distribution
(OMR)
Mar
2008
Mar
2009
PRIME INVESTMENT YIELDS
20
40
0
60
80
100
2009 2010 2011 2012 2013 2014
2015 2016 2017 2018 2019 2020
2021
Million sq ft
Source: Savills
5%
10%
0%
15%
20%
25%
vacancy rate
supply vacancy rate
94m
79m
86m
42m
34m
25m
29m
30m
29m
35m
31m
17m
47m
UK LOGISTICS AVAILABILITY AND VACANCY RATES
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
20
INVESTMENT MANAGER’S REPORT CONTINUED
Portfolio overview
1. UK Logistics: Market Summary CBRE Research January 2022.
PORTFOLIO VALUATION
£1,015M
31 March 2021: £508m
Two years ago, our portfolio consisted of 33 assets worth £186 million. Today it stands at 113 assets valued at over £1billion.
During this growth, our core thesis has remained the same – we believe that single-let, last-touch logistics assets, let to
tenants with good covenants, represents the sub sector of the logistics industry with the greatest potential. We have
targeted and delivered both income and valuation growth to provide shareholders with impressive total returns.
To achieve this for our investors, we need a strong record on rental growth and collections to underpin the dividend,
aswellas active asset management and developments to generate impressive valuation growth.
We have therefore constructed a portfolio balanced between core assets underpinning our dividend payment, asset
management opportunities where we can apply our expertise to move valuations on, and a carefully selected limited
poolof developments, offering an opportunity for outsized returns.
Core assets Active asset management Developments
The foundation of our portfolio, these
assets underpin our dividend and
banking covenants. Core assets are
typically let on long-term leases to
large-scale tenants with strong
covenants.
These assets are typically highly
reversionary, where we have a
short-term asset management plan
to move rents on, extend lease term,
improve covenant strength or make
significant improvements to the
environmental performance of the
building.
These assets are forward-funded
developments on a maximum
commitment basis to insulate us from
build cost inflation. They are done
either with or without a pre-let
tenancy in place. We target a yield on
cost of c.6% and aim to further
enhance the sustainability credentials
of the portfolio with these assets.
We are weighted towards our “Core” assets – as a class these assets have an equivalent yield of 4.8%, and typically have a
stronger covenant and longer WAULT than the portfolio average. They also require less management, allowing the team to
focus on the active asset management opportunities. This section of the portfolio has greater room for yield compression,
as it is currently valued at 5.3% equivalent yield, but more importantly greater room for rental growth, as ERV represents a
22% uplift versus current contracted rent. With a WAULT of 3.8 years, this rental growth can be captured in the near term,
and these factors combine to allow potential valuation growth. Meanwhile our developments are a very small section of our
portfolio, but offer a yield on cost of 7.2%, significantly above market.
This diversification within the portfolio creates a robust and resilient company, and allows us to deliver both secure income
and valuation growth.
PORTFOLIO VALUATION NIY
4.3%
31 March 2021: 5.1%
PORTFOLIO EQUIVALENT YIELD
5.2%
31 March 2021: 6.0%
TOTAL PROPERTY RETURN
1
30.3%
31 March 2021: 17.1%
WAULT (TO EXPIRY)
7.7 YEARS
31 March 2021: 7.4 years
AVERAGE RENT PER SQ FT
£5.59
31 March 2021: £5.35
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
21
Portfolio performance
Our portfolio was valued at £1,015 million at 31 March 2022, an increase of £507 million or 99.9% year-on-year. Approximately
70% of this growth has been through acquisition and forward funding of logistics assets and 30% to revaluation surpluses.
On a like-for-like basis, the portfolio has increased in value by £127 million or 25.4% (31 March 2021: £16.7 million or 13.2%).
Active asset
Core management Development
1
Total
Capital value £453m £523m £39m £1,015m
Percentage of portfolio 45% 51% 4% 100%
Contracted rent £22.2m £25.1m — £47.3m
ERV/expected rent £24.0m £30.6m £4.3m £58.9m
WAULT 12.2 3.8 NA 7.7 years
Equivalent yield/yield on cost
2
4.8% 5.3% 7.2% 5.2%
1. Developments are included as valued by CBRE as at 31st March 2022. Further CAPEX spend is required to completion.
2. Equivalent yield from 31 March 2022 valuation is used for Core and active asset management. For development assets, a calculated yield on cost
isused.
Received|99.9%
Foregone|0.1%
Low/low-moderate
risk|
86%
Moderate risk|10%
Moderate-high/high
risk|
4%
RENT COLLECTION TENANT CREDIT RATINGS
6.2%
5.9%
4.5%
4.4%
3.6%
3.3%
3.2%
3.0%
2.9%
2.6%
Ashfordby Storage & Haulage Limited
1
Theo Muller Group
Unipart Group
XPO
Giant Booker
Fidens Studios Limited
CEVA Logistics Ltd
Kinaxia Group
Ebuyer (UK) Limited
Lookers Motor Group Ltd
TOP 10 TENANTS
1. 100% of rent for the lease on deposit.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
22
INVESTMENT MANAGER’S REPORT CONTINUED
£200m
£400m
£600m
0
£800m
£1,000m
£1,200m
31 March
2021
Net
additions
Capital
expenditure
LFL
surplus
Acquisition
surplus
Development
surplus
31 March
2022
+99.9%
£153m valuation surplus –
25.4% LFL growth
£508m
£294m
£60m
£127m
£10m
£16m
£1,015m
2.0%
1.0%
3.0%
4.0%
0.0%
5.0%
6.0%
7.0%
Refurbishments Developments
which have completed
in the previous 12 months
Acquired
vacant in
last 12 months
Other
vacancies
31 March
2022
3.9%
1.7%
0.5%
0.8%
6.9%
MOVEMENT IN PORTFOLIO VALUE DURING THE YEAR
VACANCY RATE
Vacancy rate
At year end our EPRA vacancy rate was 6.9%. On 31 March 2022, the majority of these vacant properties (3.7% of the total)
were in solicitors’ hands.
At the year end a significant driver of our vacancy rate was planned refurbishments of buildings, as well as recently
completed developments. In a market of rising rental rates we took the decision to market these buildings on completion,
to maximise rental income and returns on the project.
Portfolio performance continued
01
BUY WELL
SAWTRY, HUNTINGDON
BUY WELL
Read more on page 27
£12.2M
Purchase price
4.5%
Acquisition NIY
£0.6M
Passing rent
£16.4M
NBV as 31 March 2022
34%
Uplift on purchase price
£0.9M
ERV
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
23
02
MANAGE WELL
NHS SUPPLY CHAIN,
ALFRETON
£8.9M
Purchase price
10 YEARS
Term added
18.0%
Rental uplift
£15.7M
NBV at 31 March 2022
4.2%
Valuation NIY
77%
Uplift on purchase price
MANAGE WELL
Read more on page 29
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
24
03
RISK
CONTROLLED
DEVELOPMENTS
PROJECT LANGHAM
£20.4M
Gross development cost
£1.3M
Contracted rent
6.4%
Yield on cost
£28.7M
NBV as 31 March 2022
4.2%
Valuation NIY
41%
Uplift on cost
CREATE VALUE
Read more on page 31
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
25
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
26
INVESTMENT MANAGER’S REPORT CONTINUED
Investment activity
During the year to 31 March 2022, the Group acquired assets for a combined consideration of £281.8 million (excluding
development sites and purchaser costs), representing a weighted average NIY of 5.3% and a 66% Midlands and
SouthEastbias.
Midlands|44%
Yorkshire & NE|23%
South East|22%
Scotland|6%
North West|5%
GEOGRAPHICAL LOCATIONS FOR ASSETS ACQUIRED
DURING THE YEAR ENDED 31 MARCH 2022
Acquisition of high-quality logistics properties
South North Yorkshire
East Midlands West & NE Scotland
Purchase price
1
£62.4m £122.9m £14.7m £63.8m £18.0m
Net initial yield 3.8% 5.6% 5.6% 5.6% 6.1%
Area (sq ft) 378,906 1,444,348 193,813 914,576 184,405
Contracted rent £2.5m £7.4m £0.9m £3.9m £1.2m
Rent per sq ft £9.75 £5.14 £4.64 £4.23 £6.76
Capital value per sq ft £164.81 £85.12 £75.97 £69.71 £97.37
1. Excludes development sites and is stated before acquisition costs.
HEADLINE PURCHASE PRICE
£282M
31 March 2021: £252m
WEIGHTED AVERAGE NIY
5.3%
31 March 2021: 6.2%
AVERAGE RENT PER SQ FT
£5.32
31 March 2021: £5.44
HEADLINE SALES PRICE
£9.0M
31 March 2021: £30m
PREMIUM TO BOOK VALUE
10.4%
31 March 2021: 35.4%
TOTAL PROPERTY RETURN
31.6%
31 March 2021: 78.8%
Acquisitions Disposals
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
27
Case study: Sawtry, Huntingdon
On 14 September 2021, the Company acquired a modern and high specification distribution unit for a consideration
of £12.2 million, representing a 4.5% net initial yield. The unit is let to Wilsons Limited (Amari Metals Limited as guarantor)
on a 15-year lease, withseven years unexpired at the time of acquisition.
Situated in Huntingdon, an established distribution centre, the property is located less than one mile from Junction 15 of
the A1(M). We acquired this property in the knowledge that significant infrastructure upgrades in the area were due,
including a new junction between the A1 and A14, transforming access to the estate. This was a key driver in the investment
decision, and has led to significant valuation uplift.
The property was built in 2005 and has a gross internal area of 124,134 sq ft and the wider site extends to approximately
10.7 acres, representing a low site cover of 27% offering the opportunity to expand the building footprint in the future.
Theproperty has car parking and yard areas and is serviced by five level access loading doors and one raised dock leveller.
The headline rent currently reflects £4.74 per sq ft, whichis subject to a RPI-linked rent review in 2024. The current ERV is
£7.24 per sq ft, reflecting a 53% increase on current passing rent, providing excellent reversionary potential. This increase is
being driven by local infrastructure improvements, which the Manager identified as part of its acquisition diligence.
At the year end, the unit was valued by CBRE at £16.4million, representing a net initial yield of 3.4% anda 33.9% uplift on
purchase price.
Targeted recycling of capital
During the year, the Group sold a property in Melkshamfor a consideration of £9.0 million, reflecting anet initial yield of
4.9% and 10.4% premium to the 30September2021 book value.
The property was acquired in April 2020 as part of a portfolio for a consideration of £6.7 million, reflecting a net initial yield
of 5.8%, and was let to G-Plan Upholstery with an unexpired term of 3.4 years. During our ownership we agreed a new long
lease with the company, increasing the term by 12.5 years and atthesame time increasing the rent by 15.9% (5.3%aheadof
ERV).
On sale the property generated a Total Property Return of31.6%.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
28
INVESTMENT MANAGER’S REPORT CONTINUED
Asset management activity
PORTFOLIO CONTRACTED INCOME
£47.3M
31 March 2021: £30.3m
PORTFOLIO ERV
£54.5M
31 March 2021: £33.8m
LFL RENTAL UPLIFT
16.4%
31 March 2021: 13.9%
AVERAGE LEASE LENGTHS ON NEW LETTINGS
13.6 YEARS
31 March 2021: 7.6 years
RENT ROLL GROWTH THROUGH LEASING ACTIVITY
£6.4M
31 March 2021: £4.6m
RENT COLLECTION
99.9%
31 March 2021: 99.9%
High levels of occupier demand fuelling rental growth
In the year, the Group successfully completed 25 deals across 1.5 million sq ft, or 18% of the total portfolio gross internal area at
the year end. In aggregate, these deals added £6.4 million to annual contracted income and 11.6 years of WAULT.
16 of these deals were new lettings which generated £5.9 million of contracted rent and a WAULT of 13.6 years. Therental
levels achieved across these lettings represent a like-for-like increase of 17.8%, reflecting strong occupier demand for
high-quality last-mile logistics assets.
No. of Additional LFL rental WAULT
deals rent uplift (years)
New lettings 16 £5.9m 17.8% 13.6 years
Lease re-gears 5 £0.3m 16.4% 5.9 years
Rent reviews 4 £0.2m 13.6% n/a
Total 25 £6.4m 16.4% 11.6 years
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
29
£40m
£50m
£60m
£70m
Contracted at
March 2022
Reversion Vacancies Completed
developments
Near-term
developments
Future
development
pipeline
Total
potential
+27.4%
£3.5m
£2.8m
£0.9m
£4.3m
£1.4m
£60.2m
£47.3m
ANNUALISED RENT POTENTIAL AS AT 31 MARCH 2022
Case study: NHS Supply Chain, Alfreton
In September 2018, the Group acquired a logistics property let to Unipart Group as part of a portfolio for a consideration
of£8.9 million, representing a net initial yield of 6.2% and, at the time of acquisition, the lease had an unexpired term of
3.2years.
Unipart Group are the NHS Supply Chain’s logistics provider, and have a significant ESG initiative, aimed at reducing
carbon from their operations. To this end, over the time of our ownership they have spent significant CAPEX on
improvements to the building, improving the ESG performance with fast-closing warehouse doors, LED lighting and a
trial of electric vehicle charge points, in line with our ESG goals and their 2024 net zero targets.
The lease, which was due to expire in the year, was successfully re-geared, adding an additional ten years of term and, at
the same time, increasing contracted rent by 18.0%.
At the year end, the property was valued by CBRE at £15.7 million, representing a net initial yield of 4.2% and a 77% uplift
on original purchase price.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
30
INVESTMENT MANAGER’S REPORT CONTINUED
Development activity
CAPITAL DEPLOYED IN YEAR
£52.9M
31 March 2021: £26.2m
CURRENT ERV
£5.8M
31 March 2021: £4.0m
COMPLETED IN YEAR
172,433 SQ FT
31 March 2021: 222,935 sq ft
CURRENT YIELD ON COST
6.7%
31 March 2021: 5.8%
UNDER CONSTRUCTION
547,304 SQ FT
31 March 2021: 265,073 sq ft
EPC RATING A
100%
31 March 2021: 100%
During the year to 31 March 2022, the Company invested £52.9 million across nine forward-funded development properties.
In total, we completed 172,433 sq ft of new space during the year, with all of these projects completing on time and on
budget, despite rising construction costs and wider supply chain issues. At 31 March 2022, 57% of the completed units are
either let or under offer, generating £0.9 million of contracted rent and a further £0.6 million once the remaining space has
been let, representing a 5.7% yield on cost.
All but one of the projects completed in the year were speculatively developed and had a combined gross development
cost of £26.6 million. At the year end, they were collectively valued by CBRE at £34.2 million, representing a 29% uplift on
cost.
Completed in year GDC Yield on cost Area sq ft ERV
DC3, Exeter Gateway £11.4m 5.1% 54,771 £0.6m
DC4, Exeter Gateway £4.8m 5.6% 29,082 £0.3m
Willow Farm, Castle Donnington £5.2m 6.3% 44,608 £0.3m
Optimus Point, Leicester £5.2m 6.4% 43,972 £0.3m
Total £26.6m 5.7% 172,433 £1.5m
Under construction/committed GDC Yield on cost Area sq ft ERV
Bridge Street, Golborne £13.0m 7.2% 120,725 £0.9m
Blenheim Park, Nottingham £18.0m 6.6% 166,330 £1.2m
Kingsway, Rochdale £12.5m 7.7% 118,749 £1.0m
Newhall Road, Sheffield £13.8m 7.1% 131,500 £1.0m
Colchester, Unit 100 £3.1m 7.8% 10,000 £0.2m
Total £60.4m 7.2% 547,304 £4.3m
At 31 March 2022, the Company had committed to or commenced construction on a further five development
projectstotalling 547,304 sq ft of new space and a gross development cost of £60.4 million. The remaining cash to be
committed across these projects is £40.6 million and together they are expected to generate £4.3 million of contracted
income once fully let, representing a 7.2% yield on cost.
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
31
Case study: Project Langham
In 2019, the Company acquired and agreed to forward fund three development sites, Stone Business Park, Lime Kilns
Business Park in Hinckley and Tungsten Park in Southwater (together “Project Langham”), which had a gross development
costof £20.4 million, equating to a build cost of £115 per sq ft. From land acquisition through to practical completion, the
Company benefited from a 6.0% interest rate coupon on funding provided and a two-year rental guarantee was negotiated
from practical completion. In total, the project consisted of seven units for which practical completion was achieved towards
the end of 2020 and early 2021. One letting was secured in 2021, with the remaining six lettings completed in this
financialyear.
During the year, we successfully completed lettings across the remaining six units. Together, all seven units have added
£1.3million to contracted income, which represents a 6.4% yield on cost and 8.2% ahead of appraised rents at the outset of
the project.
All seven units achieved an EPC rating of A and at 31 March 2022, CBRE valued the properties at £28.7 million, reflecting a net
initial yield of 4.2% and representing a 41% uplift on cost.
Stone Business Park
The site at Stone comprises four logistics units with a total gross internal floor area of 88,100 sq ft and is situated in an
established industrial location which benefits from direct access to junctions 14 and 15 of the M6.
Lime Kilns Business Park, Hinckley
The site at Hinckley comprises two units with a total gross internal floor area of 64,651 sq ft and is situated in Lime Kilns
Business Park, which has direct access to the A5 and is close to junction 1 of the M69, enabling easy onward access to the
M1 and M6.
Tungsten Park, Southwater
The Southwater development comprises a single logistics unit with a total gross internal area of 24,330 sq ft and is situated
in an established industrial location two miles south of Horsham in the South East of England.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
32
INVESTMENT MANAGER’S REPORT CONTINUED
ESG
Our ESG agenda and governance has moved on
considerably this year, the first full year with a Board-level
ESG Committee in place, chaired by Heather Hancock.
Working with the Committee we have set targets for the
coming years, and we’re proud to publish our Sustainability
Report for the first time, where we also aim to report
against EPRA sBPRs, TCFD and SECR guidelines.
We believe that the greatest impact we can have on the
environment is not by acquiring and holding assets with
strong environmental performance, but by acquiring assets
with standard performance, and improving them. We have
seen significant improvement in the portfolio, with the
percentage of our property rated EPC A-B moving from 21%
to 31% on a like-for-like basis.
We have also continued with the green financing we trialled
in 2021, with all new financing in the year containing
sustainability-linked KPIs.
The team
As the portfolio we manage has grown, so has the team,
and we have added experience and depth to the property
and finance teams at both senior and junior levels. This
depth gives sustainability to the team, and is also key to
ourability to further scale the portfolio and carry out asset
management priorities. We target a ratio of 10-15 assets per
member of the property team.
We are particularly proud that in a male-dominated
industry we have a fairly even gender split in the team, with
53% male to 47% female. We support our team with
significant training and development opportunities, paid
charity days, as well as coaching and support programmes.
Together with competitive pay and bonus programmes
linked to share price to align all staff with the REIT
performance, these measures help us recruit and retain the
highest quality team members – which is key to our
success.
Outlook
The last few years have taught us that trying to predict
the short-term political or macro-economic future is a
fool’s game. However, we do firmly believe that in the
medium term the country and the economy will not go
back to “the way things were”. An emphasis on resilient
supply chains will continue as global trade rules are
rewritten. E-commerce remains a fundamental part of
the economy. Land prices are unlikely to fall.
All of this provides tailwinds to our business model of
last-touch, mid-sized logistics assets, let to financially
resilient tenants.
As an active asset manager, we don’t rely on yield
compression for our portfolio valuation, instead we focus
on moving rental rates and covenants forward. Given
our long experience in this sector, we are still able to
source assets off market at attractive yields. These are
important differentiators in a world where rising inflation
and interest rates will make yield compression harder to
find.
We are very proud of what we have achieved in the last
twelve months. We have welcomed new tenants, assets,
shareholders and team members. Despite rising interest
rates weighing on earnings in the coming financial year,
we see significant economic upside in the portfolio, and
look to the future with ambition and excitement.
The Manager
22 June 2022
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
33
IFRS reported profit
Year ended Year ended
31 March 31 March
2022 2021
£’000 £’000
Revenue 37,811 24,181
Property operating costs (1,262) (1,307)
Net rental income 36,549 22,874
Other operating income 1,021 159
Administrative expenses (7,159) (4,230)
Net finance costs (6,840) (3,988)
Adjusted earnings 23,571 14,815
Long-term incentive plan (4,114) (295)
Exceptional items (459) —
Changes in fair value of investment property 149,892 25,760
Profit on disposal of investment property 220 7,035
Changes in fair value of interest rate derivatives 2,663 287
IFRS reported profit 171,773 47,602
Net rental income
In the financial year to 31 March 2022, the portfolio generated net rental income of £36.5 million, an increase of
£13.7million or 59.8% compared to the prior year. The increase was largely driven by the acquisitions made in the
yearfollowing the July and December 2021 equity fundraises.
On a like-for-like basis, EPRA net rental income decreased by 1.0% year-on-year, however, the prior year comparison figure
included a £0.6 million payment for back rent, which artificially inflated the comparison figure. Adjusting for this, EPRA net
rental income would have instead increased by4.6%.
Property operating costs remained broadly flat year-on-year. Our gross to net rental ratio remains high at 97.2%
(31March2021: 96.5%), illustrating the strength of our business model.
Administrative expenses
Administrative expenses, which include all operational costs of running the business, increased by £2.9 million to
£7.2million. This is primarily due to the increase in the investment management fee following the July and December 2021
equity fundraises, and the corresponding increase in EPRA net tangible assets (“EPRA NTA”).
FINANCIAL REVIEW
£20m
£25m
£30m
£35m
£40m
March 2021 LFL net rent
1
Acquisitions Disposals Developments March 2022
+59.8%
£22.9m
£0.5m
£13.4m
£1.5m
£1.2m
£36.5m
NET RENTAL INCOME BRIDGE
1. Prior year comparison adjusted for exceptional back rent received in the period.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
34
Total cost ratio
We continue to monitor the operational efficiency of the Group through the total cost ratio, which increased to 21.8% from
21.3%. The Group’s total cost ratio is expected to reduce in future periods, where gross rental income will benefit from a full
period of rental income from acquisitions made in the year.
Year ended Year ended
31 March 31 March
2022 2021
£’000 £’000
Total costs including vacant property costs 21.8% 21.3%
Total costs excluding vacant property costs 20.0% 18.9%
Net finance costs
The weighted average cost of debt for the year was 34bps lower than the previous year at 2.55% (31 March 2021: 2.89%)
andthe Group reported an interest cover of 4.5x (31 March 2021: 5.4x). The interest cover was higher in the prior period than
ordinarily expected as a result of the March 2020 equity fundraise and corresponding debt not being drawn until August
2020. The weighted average debt maturity is 3.7 years (31 March 2021: 3.5 years). Post year end, we entered into anew
£47 million term loan facility with Aviva Investors. This facility has a maturity of ten years and a fixed interest rate of 3.52%.
The net finance costs for the year, excluding fair value movement of our interest rate derivatives were £6.8 million
(31March2021: £4.0 million), an increase of £2.8 million from the prior year. This is explained partly by gross drawn
debtincreasing by £40.0 million and a full year of interest on our Aviva loan, first drawn in March 2021.
Exceptional items
On 7 December 2021, the Company announced its admission to the premium segment of the Main Market of the London
Stock Exchange. As part of the migration from AIM to the Main Market, the Company incurred one-off expenses totalling
£0.5 million.
IFRS profit and adjusted earnings
IFRS profit after tax for the year was £171.8 million (31 March 2021: £47.6 million), representing a basic and diluted earnings
per share of 48.86 pence, compared with 21.72 pence for the prior year. The growth in earnings per share has been driven
primarily by the valuation uplift of £149.9 million.
Adjusted earnings for the year were £23.6 million (31 March 2021: £14.8 million), which represents an £8.8 million increase
when compared to the prior year. However, on an adjusted per share basis this reduced by 0.05 pence to 6.71 pence per
share. This is due to the cash drag effect of our two share issues, as it takes time to deploy this capital into
income-producing assets, as well as a full year of interest on our Aviva loan facilities, first drawn in March 2021.
The Directors consider Adjusted earnings a key measure of the Company’s underlying operating results, and therefore
excludes non-cash and exceptional items. A full reconciliation between IFRS profit and Adjusted earnings can be found
in note 13 of theFinancial Statements.
March 2021 Net rental
income
Other
income
Admin
expenses
Net finance
costs
March 2022
6.76p
0.02p
0.22p 0.16p
0.13p
6.71p
6.0
6.5
7.0
ADJUSTED EARNINGS PER SHARE
FINANCIAL REVIEW CONTINUED
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
35
Dividend
With respect to the financial year ended 31 March 2022, the Company declared the following interim dividends:
Amount In respect of
pence per financial year Paid/
Declared share ended to be paid
11 November 2021 3.25p 31 March 2022 17 December 2021
23 June 2022 4.35p 31 March 2022 22 July 2022
A second interim dividend of 4.35 pence per share will be paid on 22 July 2022 to shareholders on the register at the close
of business on 1 July 2022. The total dividend for the year will therefore be 7.60 pence per share, which is the same as was
paid in the prior year.
IFRS net assets
Year ended Year ended
31 March 31 March
2022 2021
£’000 £’000
Investment property
1
1,014,697 507, 571
Bank and other borrowings (242,422) (202,246)
Cash 127,379 60,459
Other net assets (8,672) 22,719
EPRA net tangible assets 890,982 388,503
Interest rate derivatives 1,603 (1,060)
Intangible assets 47 12
IFRS net assets 892,632 387,455
1. Per CBRE independent valuation as at 31 March 2022 and 31 March 2021.
At 31 March 2022, IFRS net assets attributable to Ordinary Shareholders were £892.6 million (31 March 2021: £387.5 million),
representing a basic and diluted net asset value per share of 189.12 pence (31 March 2021: 151.92 pence).
The Group considers EPRA net tangible assets (“NTA”) a key measure of overall performance. At 31 March 2022, EPRA NTA
were £891.0 million (31 March 2021: £388.5 million), representing an EPRA NTA per share of 188.78 pence (31 March 2021:
152.33 pence), an increase of 23.9%.
140p
160p
190p
200p
210p
EPRA NTA:
March 2021
Adjusted
earnings
Property
revaluations
Dividends
paid
Share issue
costs
Other
1
EPRA NTA:
March 2022
+23.9%
152.33p
6.71p
42. 64p 7.60p
2.17p
3.13p
188.78p
180p
150p
170p
EPRA NTA PER SHARE BRIDGE
1. Other movements have arisen as a result of income statement components being calculated based on the weighted average number of
shares during the year whereas EPRA net tangible assets have been calculated based on the issued share capital as at 31 March 2022.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
36
FINANCIAL REVIEW CONTINUED
IFRS net assets continued
On a per share basis, both IFRS and EPRA net assets increased over the financial year to 31 March 2022, primarily due to
revaluation surplus as a result of value created through a combination of asset management initiatives crystallised in
the year, ERV growth and yield compression.
The Total Accounting Return for the year, which reflects growth in EPRA NTA plus dividends paid in the year, was 28.9%
(31March 2021: 15.6%), ahead of the Group’s target total return of 10-15% per annum. The average Total Accounting
Return since IPO in 2016 has been 16.4%.
90p
250p
March 2017 March 2018 March 2019
DividendEPRA NTA per share
March 2020 March 2021 March 2022
116.1
122.5
3.0
9.3
138.0
137.9
30.4
152 .3
23.3
188.8
38.0
130p
170p
210p
15.5
TOTAL ACCOUNTING RETURN SINCE IPO
Portfolio valuation
The value of our portfolio at 31 March 2022, which includes forward-funded developments, was £1,015 million, an increase of
£507 million, or 99.9% year-on-year. In the period, the Group invested £302 million in industrial and logistics properties and
advanced £53 million of funding across nine forward-funded developments. In addition, the Group incurred capital
expenditure of £7 million in the year, which principally relates to two properties undergoing extensive refurbishment works,
which have now finished, and has significantly enhanced capital value.
During the year, we also sold a property in Melksham for a consideration of £9.0 million, reflecting a net initial yield of 4.9%
and 10.4% premium to the 30 September 2021 book value.
31 March 31 March
2022 2021
Portfolio movement in the year £m £m
Opening valuation 507.6 207.0
Additions 301.9 264.6
Capital expenditure
1
59.9 31.9
Disposals (8.2) (22.2)
Revaluations 153.5 26.3
Portfolio valuation 1,014.7 507.6
Lease incentives 5.4 1.3
Right-of-use assets 9.0 6.9
Investment property 1,029.1 515.8
1. Capital expenditure includes land acquisition costs in relation to development properties.
The Group recognised a valuation surplus (excluding provision for profit share) of £153.5 million (31 March 2021: £26.3million)
upon revaluation of the portfolio. On a like-for-like basis, the portfolio generated a valuation surplus of£127.2million, or
25.4% (31 March 2021: 13.2%).
The portfolio delivered a record Total Property Return (“TPR”) of 30.3% (31 March 2021: 17.1%) for the year.
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
37
Financing
At 31 March 2022, the Group had two term loan facilities totalling £239 million. Our £151 million loan facility with Barclays,
Santander and Lloyds was entered into in August 2020 and had a three-year term with an option to extend for a further
two years. During the year, the Group exercised its option to extend the facility for one year, pushing out the expiry to
August 2024.
In March 2021, the Group entered into a £48 million green loan facility with Aviva Investors, which provided a seven-year
term and came at a fixed cost of 2.34%. In December 2021, the Group agreed a further £40 million interest-only facility
witha term of seven years provided at a fixed rate of 2.26%. This facility includes, inter alia, margin rate improvement
available on hitting environmental targets across the assets charged.
Of the total debt facilities, 74% is hedged (31 March 2021: 69%) and has a weighted average maturity of 3.7 years
(31March2021: 3.5 years).
Cash and net debt
During the year, the Group’s cash balances increased by £66.9 million, as illustrated in the table below:
31 March 31 March
2022 2021
£m £m
Cash generated from/(used in) operations 57.7 (8.0)
Cash used in investing activities (353.4) (265.3)
Cash generated from financing activities 362.6 201.5
Net increase/(decrease) in cash 66.9 (71.8)
Opening cash balance 60.5 132. 3
Closing cash balance 127.4 60.5
At 31 March 2022, the Group’s cash balance was £127.4 million, of which £40.6 million is earmarked for developments.
Overthe financial year, net debt decreased by £26.7 million, to £115.0 million, representing a loan to value (“LTV”) of 11.3%,
which is below our medium-term target of 30-40%. Post period end, £51 million of the Barclays loan facility was paid down
and the Group entered into a new £47 million green loan facility with Aviva Investors, which came at a fixed rate of 3.52%.
(see note 34 of the Financial Statements for further details).
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
38
We firmly believe
that there is no
tension between
our environmental
agenda and our
pursuit of
shareholder wealth
– instead we believe
them to be
inextricably linked.
Introduction
Over the past year Urban Logistics’ property portfolio
valuation has doubled, and we have moved from the AIM to
the Main Market of the London Stock Exchange. In step
with this growth, we have extended our sustainability
approach; commitments and reporting. Sustainability is a
core part of business operations and has always been
central to how we have done business. We are now
committing to new strategic sustainability programmes to
manage our growing portfolio in line with best practice.
The UK’s Climate Change Act places obligations on the UK
Government to decarbonise the economy by 2050 and to
manage the impacts of climate change. The regulation
growing from this increasingly affects the operations of our
sites, and our tenants’ customer expectations, whether
commercial or at the consumer level are firmly focused on
enhanced sustainability. That’s why we see consistency
between managing climate risks and enhancing the value
of our Company. Recognising the significance of the climate
crisis and our contribution to the UK’s response, we have
adopted a programme to address sustainability risks.
Urban Logistics operates in the last mile or “mid-box” sector
of the logistics market, with a focus on assets between
20,000 and 200,000 sq ft. The buildings we acquire range
from new developments to older buildings which are still an
essential part of the national infrastructure. The greatest
influence we can have in making buildings more
sustainable is to develop and refurbish buildings to a
highstandard and work with our tenants to support
theirendeavours.
Our focus is:
•
addressing climate change:
•
improve the environmental performance and quality
of our buildings as measured by EPC ratings. This
“fabric first” approach to building aligns with best
practices in addressing climate change, butalso
recognises our core responsibility in providing tenants
with highly efficient buildings;
•
achieve operational net zero on our Scope 1 and 2
emissions in2024. To do this, we will need to change
the way we procure electricity and ensure that we
account for fossil fuel-based heating where it exists in
our buildings; and
•
develop a longer-term Scope 3 decarbonisation target
in the coming years. To do this we will continue to
engage with our tenants to support existing
decarbonisation programmes, but also to collect
baseline data and help them to understand how to
operate buildings better.
•
increasing the space for nature across the estates in our
portfolio. This promotes biodiversity and can mitigate
flood risk and improve the wellbeing of the people who
work in and live near our sites; and
•
transparent reporting on our activities. We are aligned
with the EPRA sustainability best practice reporting
guidelines, and are preparing for a fresh detailed
assessment of our climate risks, in line with the
recommendations of the TCFD. We are reporting our
initial assessment of these risks within this report.
Heather Hancock
Chair of ESG Committee
SUSTAINABILITY REPORT
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
39
Our commitments reflect the multiple benefits that
sustainability provides; high-quality buildings which
aremore efficient to operate, attracting the high-quality
tenants we want to work with and enabling more
favourable debt terms. By improving the quality of
ourstock, we are reducing our exposure to regulatory
constraints, climaterisks and operating costs, and at the
same time aresupporting the ongoing transition of the UK
economy towards net zero.
How we manage sustainability at
UrbanLogistics
Our business model is focused on building a portfolio
ofhigh-quality assets and providing sustainable, efficient
space and customer service to our tenants. Practically,
sustainability has always played a core part of how the
fundoperates, making sure our assets are fit for the future
and that we are serving our tenants’ needs. Our role is in
implementing the vision and strategy set out by the Board,
and ESG is no different. We take on the Board’s
requirements for management of environmental and social
issues, in particular climate-related risks and opportunities.
Our approach to sustainability reflects a cost-effective
approach to managing the diversity of buildings and tenant
requirements.
To date we have achieved some notable successes in
delivering high-quality, future-proofed buildings:
•
over the past twelve months we have gone from 21% of
the portfolio with an EPC of A or B to 31% on a like-for-like
basis
1
, and all assets with EPCs of C or below have
upgrade plans in place;
•
our developments at Exeter DC3 and 4, Castle
Donnington and Optimus Point, which have completed
in the year, have achieved BREEAM Very Good or
Excellent and EPCs of A, which are the standard
forhowwe develop and position new buildings;
•
12% of assets by floor area have EV chargers installed
onsite;
•
we have appointed CBRE to provide strategic and
technical support in how we manage our buildings and
report on the progress of our sustainability initiatives;
•
all staff have had sustainability training to deepen our
understanding of sustainability topics, and we have a
programme of integrated sustainability leads across
ourbusiness. We believe this approach will maintain
anintegrated approach to sustainability in practice;
•
26% of our leases have green clauses, a core part of
howwe can integrate sustainability into our operations;
and
•
9% of our assets by floor area have plans for or are
actively considering solar PV installations, which will take
our total coverage up to 12%.
There are other ways our business can play a part in the
ESG agenda. Following the Russian invasion of Ukraine, we
worked with our tenants to collect equipment to donate
tothe humanitarian effort. We used some of our vacant
warehouse space to store the donations, before one of our
logistics tenants transported it to the area. We’d like to take
this opportunity to thank our tenants and team members
for their response to our appeal.
We firmly believe that there is no tension between our
environmental agenda and our pursuit of shareholder
wealth – instead we believe them to be inextricably linked.
The market will decarbonise, and our ability to manage this
transition effectively will help us attract tenants, remain
competitive and manage exposure to climate-related risks.
This year we saw COP26 meet in Glasgow, with a
commitment to keep the goal of 1.5 degrees of global
warming alive. As a significant owner of commercial
property, we are committed to act decisively to accelerate
progress in our business and in the wider sector.
Our material impacts
Our targets and objectives have been established based
onthe following sustainability themes which we consider to
be the most pressing to Urban Logistics, the key themes
when considering risks to property value, and the needs of
ourtenants and other stakeholders:
•
energy performance;
•
climate change mitigation;
•
climate adaptation;
•
on-site energy generation; and
•
promoting nature on our sites.
1. Based on floor area of portfolio held on 31 March 2021 and held on 31 March 2022.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
40
SUSTAINABILITY REPORT CONTINUED
Reduce the
environmental impact
of our buildings
2021-2028 EPC coverage: 100%
B or better
Develop fully costed asset management plans across
all buildings currently less than a B.
Achieve net zero in
terms of Scope 1 and
Scope 2 emissions
2021-2024 Net zero Scope 1
and 2
Ensure that all energy procured is zero carbon,
wherepossible.
Engage with our
tenants on
decarbonising
operations in our
buildings
2022-2024 Develop a
systematic
programme to
engage tenants to
decarbonise
Develop engagement plans which will promote and
support tenant decarbonisation in our estate. This is
central to reducing our overall carbon footprint, as
wellas to improve the EPCs of buildings.
Include green clauses in all new leases, supporting
ouraim of providing consistent sustainability standards
across an estate with a diverse range of buildings and
tenant needs.
Increase on-site
renewable energy
2022-2024 Solar PV capacity Increase our PV capacity. Our buildings can provide
aplatform for renewable energy, and we already have
PV cells fitted to a number of our buildings, including
our new developments. To support our objective of
increasing renewable generation of energy, we will
aimto fit PV cells to 10% of our buildings by floor
areaby 2024.
Make more space for
nature on our sites
2022-2024 Trees planted,
biodiverse areas
protected, grass
areas introduced
Develop a plan for further enhancing the biodiversity
ofthe sites we operate. This is not only good for nature,
but we know that it will promote wellbeing for the
tenants who occupy our estates.
Promote transparency
on ESG disclosures
2022 GRESB score, EPRA
sBPR ratings
Achieve a GRESB score above 55, and a Gold rating
onEPRA sBPRs.
Review resilience and climate risk management
withinour operations, in line with the
recommendations of the TCFD.
METRIC
OUR PLAN FOR 2022
PERIOD
TARGETS
Objectives and targets
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
41
Performance Measure Unit Source 2022 2021
Total energy consumption kWh Landlord-obtained electricity 674,233 943,349
Landlord-obtained natural gas 63,826 265,655
Fuel used in the Manager’s vehicles Unavailable Unavailable
Head office of the Manager 19,893 17, 587
Total 757,950 1,109,026
Energy Intensity kWh/m
2
/year Landlord Energy Intensity 9.26 16.48
Total greenhouse tCO
2
e Landlord-obtained electricity 143 220
gas emissions
Landlord-obtained natural gas 12 49
Fuel used in the Manager’s vehicles Unavailable Unavailable
Head office of the Manager 4
4
Total 159 273
Greenhouse gas tCO
2
e/m
2
Scope 1 & 2 Intensity 0.0019 0.0036
emissions intensity /year
SECR REPORTING: TONNES OF CO
2
E FOR FOOTPRINT
Greenhouse gas reporting
We report greenhouse gases (“GHG”) as Scope 1 and 2, which are acquired by us, and which we have control over.
Weareproud to launch our own net zero targets in relation to these emissions in this report.
Scope 3 GHG is emitted by our tenants through the operation of our buildings, and we are working towards
decarbonisation targets for these emissions in due course, in partnership with our tenants.
21%
31%
20%
40%
0%
60%
80%
100%
March
2021
March
2022
% A-B
20%
40%
0%
60%
80%
100%
77%
83%
March
2021
March
2022
% A-C
20%
40%
0%
60%
80%
100%
March
2021
March
2022
23%
17%
% D OR BELOW
For further information on the methodology used for these calculations, and a narrative on performance, please see
supplementary information on pages 113 to 123.
EPC improvement programme
Given that a large portion of GHG emissions are emitted through the operations of our buildings, measuring and improving
EPCs is a key metric in our sustainability agenda. We firmly believe we do more good from acquiring a poor-performing
building and improving it than in only acquiring buildings which already have a strong EPC performance. For this reason,
our key metric on EPCs is the movement over the twelve-month period on a “like-for-like” basis.
EPC ratings – like-for-like portfolio progression
Like-for-like EPC data looks at all assets owned on 31 March 2021, which were also owned on 31 March 2022, to compare
like-for-like EPC movements.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
42
Just outside of Exeter, the building was constructed to the
highest environmental standards, and has achieved a
BREEAM rating of Very Good and an EPC of A.
Environmental sustainability was built into the project at
every level, and the building features solar panels on the
roof to provide carbon-free power for the occupier, EV
charging points to support the decarbonisation of the
transport network, and market-leading insulation to ensure
energy efficiency.
The local community also benefited, as not only were 151
jobs created on site when DHL took occupation, but we also
included tree planting and installed an outdoor gym for the
community to use.
This environmental impact also had a positive financial
impact – with a total spend of £11.4 million, at the year end
the building was revalued to £14.6 million – a 28% uplift.
£14.6M
Capital Value
VERY GOOD:
BREEAM
EPC A
In April 2021 construction started on a new unit at Exeter
Gateway Logistics Park, in partnership with developer Stoford.
The building was completed in March 2022, and is let to DHL.
SUSTAINABILITY REPORT CONTINUED
NEW DEVELOPMENT:
EXETER DC3
MAJOR REFURBISHMENT:
228 OLD LONDON ROAD
COLCHESTER
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
43
MAJOR REFURBISHMENT:
228 OLD LONDON ROAD
COLCHESTER
Improving the site from a sustainability perspective meant
working with the tenants in place, as it took extensive
refurbishment to install a new roof, new cladding, LED
lighting throughout and solar panels on the roof.
In addition to this, a protected biologically diverse wildlife
area was established, creating a space for nature on the site.
The effect of this work was to move EPCs from C/D to A/B
for all units, and in doing so move the valuation of the
properties on significantly, resulting in a £5.4 million
revaluation surplus, a 32% increase.
£22.3 M
Capital Value
EPC A/B
£32,000
Spent on protecting ecosystems
228 Old London Road, Colchester was acquired in July
2020,with a number of units in place with EPCs ranging
fromC to D.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
44
ESG CONTINUED
During acquisition due diligence, a number of sustainability
deficiencies were identified, and the asset management
team worked with the tenant to find solutions.
At the time of the transaction a commitment was received
by the tenant to improve the performance of the building,
including installing LED lighting throughout.
The work has now been carried out, and the EPC of the
building has moved from a C to an A. At the same time, the
valuation of the property has moved from £6.7 million to
£8.45 million – a 26% uplift.
£8.5M
Capital Value
26%
Valuation uplift
Leigh B is an 80,000 sq ft parcel building,
operated by XPO Logistics. The property is
of 1990s construction, and was acquired by
way of a sale and leaseback.
SUSTAINABILITY REPORT CONTINUED
WORKING WITH
TENANTS: LEIGH B,
LEIGH, MANCHESTER
EPC A
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
45
Task Force on Climate-related Financial Disclosures (“TCFD”)
We recognise the value and importance of managing climate risks, and will continue to strengthen our reporting in line
with the TCFD recommendations in 2022.
REQUIREMENT PROGRESS
Strategy
Risk management
Metrics and targets
Governance
Urban Logistics will be conducting a review of climate-related risks and
responsibilities in line with the TCFD framework in 2022. At this time, we have
prioritised management of legislative risks, principally addressing the expected
changes to the UK’s Minimum Energy Efficiency Standards (“MEES”) legislation, with
the aim of upgrading our assets to an EPC of B or better by 2028, two years in
advance of the proposed legislative requirements.
In 2022 we will develop a more detailed account of climate-related risks, in line with
the TCFD recommendations.
Climate risks and other ESG-related risks are identified and assessed by the
Investment Manager, and reported to the Board through the Audit Committee,
chaired by Bruce Anderson, who is responsible for risk management.
We have been primarily focused on climate risks as presented through legislation
and compliance, specifically exposure to the updates to the Minimum Energy
Efficiency Standards (“MEES”) anticipated in 2022, and related costs to reduce
emissions and improve energy efficiency. Alongside this, we have been monitoring
our tenants’ evolving demands in this area, recognising the risks in changing
behaviours.
We have long been aware of the physical risk of flooding, which has been
considered within asset plans, but recognise the need for longer-term forecasting
of this acute physical risk.
Over the course of 2022 we will develop more specific climate risk management
processes, which we will summarise next year in our sustainability reporting.
Urban Logistics has collated Scope 1, 2 and 3 emissions, including the estimation of
the complete portfolio footprint, which can be found in the Supplementary
Information section on page 115. This includes data from our largest emissions
source, those Scope 3 emissions from the operations of our tenants, which account
for over 95% of our carbon impacts. We view the lack of direct control over these
emissions as the primary challenge in how we manage our climate risks.
For this reason, we have engaged with our tenants to support their
decarbonisationactivities and gather data, which will inform our Scope 3 GHG
targets in the coming years.
While our Scope 1 and 2 emissions are not a significant proportion of our footprint,
we believe our aim to be net zero by 2024 to be a significant commitment.
Alongside this, transitioning our portfolio in line with UK climate legislation represents
a significant transition risk to our business, and we are tracking EPCs to ensure we are
well positioned against the upcoming MEES legislation. We have a target to achieve
the legislation’s anticipated requirements of EPC B or better, but in 2028, two years in
advance of the target. Currently, 75% of our EPCs are below EPC B, representing 73% by
floor area.
The ESG Committee, chaired by Heather Hancock, is the governance body responsible
for the oversight of ESG activities, including the management of climate risks.
The responsibility for the direct and day-to-day oversight of ESG activities, including
the management of climate risks, is delegated to the InvestmentManager, with
regular reporting of performance against targets and objectives.
The Investment Manager is tasked with the responsibility for integrating climate
risks into the operations of the assets. This is set out through our annual
sustainability targets, which are incorporated into asset manager responsibilities.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
46
Section 172 Statement
In order to comply with section 172 of the Companies Act
2006, the Board is required to take into consideration the
interests of stakeholders and include a statement setting
out the way in which Directors have discharged this duty
during the year.
The Directors of the Company have acted in a way that they
considered, in good faith, to be most likely to promote the
success of the Company for the benefit of its members as a
whole and, in doing so, had regard, amongst other matters,
to those matters set out in section 172(1)(a) to (f) of the
Companies Act 2006, being:
(A) the likely consequences of any decision in the long
term;
(B) the interests of the Company’s employees;
(C) the need to foster the Company’s business relationships
with suppliers, customers and others;
(D) the impact of the Company’s operations on the
community and the environment;
(E) the desirability of the Company maintaining a
reputation for high standards of business conduct; and
(F) the need to act fairly as between members of
theCompany.
In doing so, the Directors have considered the interests
ofthe various stakeholders of the Company, the impact
theCompany has on the community and environment,
maintaining a reputation for high standards of business
conduct and fair treatment of shareholders and taken a
long-term view on the consequences of the decisions
theytake.
Fulfilling this duty supports the Company in achieving its
investment strategy and helps ensure that all decisions are
made in a responsible and sustainable way.
To ensure that the Directors are aware and understand
theirduties, they are provided with all relevant Company
information when they are appointed to the Board and
receive regular updates and training on matters where
appropriate. Directors also have access to the advice and
services of the Company Secretary as well as independent
advisers, should they wish. Directors receive technical
updates from the Company’s advisers, the Company
Secretary, and the Investment Manager as and when
appropriate. The Board has a schedule of matters reserved
for its approval which, alongside the Terms of Reference of
all Board Committees, is reviewed on at leastan annual
basis.
The Board continues to keep engagement mechanisms
under review so that they remain effective.
Risk management
The Audit Committee has responsibility for the ongoing
management of the Company’s risk management and
internal controls. To the extent that they are applicable, risks
that are set out in s172 Companies Act 2006 are included in
the Company’s risk register and are subject to regular
review and monitoring.
Stakeholders
During the period under review, the Board has discussed
which parties should be considered as stakeholders of the
Company. These are detailed in the table opposite. As an
externally managed Real Estate Investment Trust, the
Company has no employees and outsources its operations
to various service providers.
S172 STATEMENT AND STAKEHOLDER ENGAGEMENT
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
47
OUR SHAREHOLDERS OUR LOCAL COMMUNITIES OUR INVESTMENT MANAGER
Who are they?
Those who own shares in
theCompany.
Why are they important
tous?
Continued shareholder support is
critical to the sustainability of the
Company and delivery of the
Company’s long-term
businessstrategy.
What do they want
fromus?
Shareholders want a clearly
articulated strategy and effective
communication of our progress.
How do we engage
withthem?
Through the Annual and Interim
Reports and announcements to the
market. The Company encourages
and welcomes shareholder queries
at its Annual General Meeting
(“AGM”). TheChairman and
Manager CEO also make
themselves available
toshareholders at its Annual
GeneralMeeting.
Further information as to how the
Company has engaged with its
shareholders can be found on
page62.
Who are they?
Those who live in areas where we
work or have assets. For example,
local residents, businesses, schools
and charities.
Why are they important
tous?
The Board places increasing
emphasis on the importance of ESG
factors in its investment
deliberations. The Board and the
Investment Manager are fully
committed to managing the
business and its investment strategy
responsibly.
What do they want
fromus?
Our communities want us to
encourage our tenants to be good
neighbours and to engage with the
local community to support a
sustainable economy, jobs and
environment.
How do we engage
withthem?
The ESG Committee continues to
focus on the Company’s ESG policy
and holds the Investment Manager
to account for their ESG decisions.
Further information as to how the
Company has engaged with our
communities and environment
canbe found on pages 38 to 45.
Who are they?
PCP2 Limited.
Why are they important
tous?
The Investment Manager’s
performance is critical for the
Company to successfully deliver
itsinvestment strategy.
What do they want
fromus?
Our Manager expects the Board
toprovide clear direction in terms
of overall strategy and
investmentpolicy.
How do we engage
withthem?
The Board and the Investment
Manager have a close working
relationship. The Manager attends
the regular Board meetings and is
required to seek Board approval for
all major property acquisitions and
disposals. The Management
Engagement Committee reviews
the contractual arrangements with
the Investment Manager annually.
Further details on the activities
ofthe Management Engagement
Committee can be found on
page69.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
48
S172 STATEMENT AND STAKEHOLDER ENGAGEMENT CONTINUED
OUR BANKERS/CREDITORS OUR PARTNERS OUR TENANTS
Who are they?
Our principal financing partners
areBarclays, Santander, Lloyds
andAviva.
Why are they important
tous?
Gearing is an important part of our
strategy to grow our business and
deliver returns to shareholders.
What do they want
fromus?
Our financing partners expect us to
purchase appropriate real estate in
line with our investment parameters
and maintain compliance with
covenants and keep them
wellinformed.
How do we engage
withthem?
We report regularly to our banks
throughout the year and enjoy a
good working relationship with
them.
Further information as to how the
Company has engaged with our
bankers/creditors can be found on
pages 7 and 37.
Who are they?
Those who have a direct working
orcontractual relationship with the
Company. This includes our external
service providers, such as lawyers,
accountants and Company
Secretary.
Why are they important
tous?
As we outsource all our
administrative functions to external
service providers, they are critical to
the administration and running of
our business.
What do they want
fromus?
Our partners want us to be open
and straightforward in our dealings
with them.
How do we engage
withthem?
We work to find mutually effective
ways to communicate and
collaborate with each group and
endeavour to have constructive
relationships.
Further information as to how the
Company has engaged with our
various service providers can be
found on page 69.
Who are they?
Everyone who uses our buildings:
our warehouse occupiers, their
employees and guests.
Why are they important
tous?
Our tenants provide us with rental
income, so it is essential we serve
their needs, and the needs of their
stakeholders.
What do they want
fromus?
Tenants want us to understand and
respond to their changing needs so
their businesses can thrive.
That means providing sustainable,
efficient space and customer
service.
How do we engage
withthem?
Through regular contact with our
warehouse occupiers to understand
what is important to them and to
evaluate the services we provide.
Further information as to how the
Company has engaged with its
tenants can be found on pages 11,
38 and 39.
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
49
Decision-making and stakeholder impact
The Board’s principal decisions each year typically include approving acquisitions, capital expenditure, capital raises (debt
and equity) and dividend payments. Examples of the key decisions the Board has made during the year under review can
be found in the table below. The importance ofstakeholder considerations in the context of decision-making and to act
fairly between members of the Company is taken into account at every Board meeting.
Key Board decisions during the year Stakeholders affected
Admission to the Main Market Our shareholders and our partners
As a Board, we considered that the market capitalisation of the Company justified a move from AIM to the premium
segment of the London Stock Exchange’s Main Market. On 7 December 2021, the Company’s entire issued share capital
was admitted to listing on the Main Market.
This decision was made following feedback from shareholders, and following discussions with professional advisers.
Itwas judged to be in the best interests of both institutional and private retail shareholders, due to increased liquidity,
future capital raising potential, potential inclusion in the FTSA indices and improved governance rules.
Decision to make an equity raise
of£250million in November 2021
Our shareholders and our customers
Having fully deployed or committed £134 million of capital following the Company’s £108 million July fundraising, the
Manager identified a further pipeline of high-quality, last-mile logistics assets, strategically located in targeted logistics
hubs, totalling in excess of £400 million. The Company was pleased to announce on 2 December 2021 that due to the
strength and quality of demand from investors it had increased the size of the issue from £200 million to £250 million.
Decision to make an equity raise of
£108million in July 2021
Our shareholders and our customers
The Company’s funds at the time were fully invested or committed and the Manager, on behalf of the Company, had
identified a significant pipeline of attractive investment opportunities. The Company was pleased to announce on
9July2021 that gross proceeds of £108 million had been raised.
Decision to pay interim dividends Our shareholders
In the Interim Report the Company stated that we expected, subject to unforeseen circumstances, to pay a similar
dividend per share over the full year as was paid last year, in support of the Company’s target of an annual total return of
between 10% and 15% through a combination of dividends and growth in NAV. Detail on the dividendspaid to date can
be found on page 35.
Decision to make acquisitions Our shareholders, our communities
&environment and our customers
The Board is responsible for the ongoing review of investment activity and performance and the control and supervision
of the Investment Manager. Details on our acquisitions for the year to date can be found pages 18 to 32. Acquisitions are
made with the Company’s long-term strategy in mind, following thorough consideration of the benefits each
acquisition would bring to our shareholders and other stakeholders over the long term, as well as the environmental
credentials of the target property.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
50
Our aim is to deliver sustainable earnings and long-term capital
growth through the execution of our strategy. We track our progress
against six key performance indicators to monitor the performance
ofthe Group.
KEY PERFORMANCE INDICATORS
TOTAL COST RATIO
(%)
21.8
21.3
18.9
23.5
28.9
ADJUSTED EARNINGS PER SHARE
1
(P)
6.71
6.76
7.66
7.01
6.12
EPRA NTA PER SHARE
(p)
188.78
152.33
137.89
137.96
122.49
WAULT
(YEARS)
7.7
7.4
4.9
5.5
5.0
LOAN TO VALUE
(%)
11.3
27.9
0.0
33.7
34.4
TOTAL ACCOUNTING RETURN
(%)
TAR measures the movement in
EPRA NTA per share plus dividends
paid during the period, expressed
as a percentage of the EPRA NTA
per share at the beginning of the
period. Our objective is to deliver
long-term returns through
execution of our strategy.
Performance:
TAR of 28.9% for the year ended
31March 2022 (31 March 2021: 15.6%).
EPRA NTA per share is the value of
our assets less the book value of our
liabilities, calculated in accordance
with EPRA guidelines, that is
attributable to our shareholders.
Our aim is to build on long-term
asset value growth whilst
managingliabilities.
Performance:
EPRA NTA per share of 188.78
penceat31March 2022
(31 March 2021: 152.33 pence).
WAULT is the average unexpired
lease term across the invested
portfolio, weighted by annual
passing rents. It is used to determine
the quality of our investment
portfolio. Our medium-term target
isfive to seven years across the
portfolio.
Performance:
WAULT of 7.7 years for the
yearended 31 March 2022
(31March2021: 7.4 years).
The ratio of our property operating
and administrative costs expressed
as a percentage of the Group’s gross
rental income.
Performance:
Total cost ratio of 21.8% for the
yearended 31 March 2022
(31 March 2021:21.3%).
LTV measures the proportion of our
property assets that are funded by
borrowings. Our medium-term
target is 30-40% of the Group’s
gross asset value.
Performance:
LTV of 11.3% at 31 March 2022
(31March 2021: 27.9%).
Adjusted EPS measures the Group’s
underlying operating results and
provides an indication of the extent
to which current dividend payments
are supported by earnings.
Forfurther information see note
12of the Financial Statements.
Performance:
Adjusted EPS of 6.71 pence per share
for the year ended 31 March 2022
(31 March 2021: 6.76 pence).
28.9
2022
2022
2022
2022
2022
2022
15.6
5.6
10.9
17.7
2021
2021
2021
2021
2021
2021
2020
2020
2020
2020
2020
2020
2019
2019
2019
2019
2019
2019
2018
2018
2018
2018
2018
2018
1. A full reconciliation between IFRS earnings per share and Adjusted earnings per share can be found in note 13 of the Financial Statements.
2. For other non-financial key metrics, please refer to the Operational Highlights on page 3 of this report.
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
51
Risk Appetite Statement
The Company’s assets are made up of UK commercial
property. Its principal risks are therefore related to the
commercial property market in general and also to the
particular circumstances of the individual properties and
the tenants within the properties. Taking this into account,
the Company’s risk appetite policies and procedures
alongside the appropriate controls and financial reporting
are regularly reviewed and updated to ensure they remain
in line with regulation, corporate governance and expected
industry practice.
Urban Logistics utilises three lines of defence in terms of risk
management. Line one comprises the management team
at PCP2 Ltd (the “Investment Manager”) who take
ownership of the risk, manage the internal controls to
mitigate it, and report to the Board against our agreed risk
matrix. The second line of defence is built around oversight
and challenge, which is the responsibility of the Board and
reported on by the independent Directors who make up
the Audit Committee, and the third line is the comfort the
Directors take from the independent assurance provided by
the external auditor.
The Board has performed a robust assessment of the
principal strategic and operational risks facing the Company
as well as assessing identifiable emerging risks. The Board
formally reviews its risk matrix twice yearly but is made
aware of any risk exposure either as and when it happens
orat the quarterly Board meetings. The Audit Committee,
which I chair, will review the process on how risk is allocated
and reported while also making sure the appropriate
discussions are had with the Investment Manager on their
existing concerns or any threats from theexternal
environment.
Risks are measured based on probability and potential
impact, using a scoring matrix. This is populated by each
ofthe Directors independently and then collated into a
heat map which seeks to identify the most prescient of
risks. The output from the heat map draws out ten risks
which are detailed here, and the movement from the prior
year. The commentary below discusses both how the Board
sees the potential impact of the risk, as well as the actions
being taken to mitigate it.
Bruce Anderson ACMA FCIOBS
Chairman of the Audit Committee
PRINCIPAL RISKS AND UNCERTAINTIES
The Board is responsible for determining the nature
and extent of the principal risks that the Group is
willing to take in achieving its objectives and has
carried out a robust assessment of the principal risks
facing the Group, including those that would threaten
the business model, future performance, solvency or
liquidity.
The Board recognises that its ability to manage risk
effectively throughout the organisation is central to
the Company’s success.
Risk heat map
Low Moderate High
Unlikely Likely Very likely
Impact
Probability
4
5
1
9
3
7
8
6
2
10
Existing risk
New risk
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
52
RISK POTENTIAL IMPACT CHANGEMITIGATION
Increased Decreased No change
01.
A significant fall in
property valuation.
An adverse change will
have a negative impact
on the Company’s
financial performance
and may also lead to a
breach in our banking
covenants.
The investment property portfolio
iswell located and has a strong
tenant base with attractive asset
management opportunities. These
factors help to underpin our asset
values. The Board continually
reviews all forecast and budgetary
information to ensure compliance
with all banking covenants and
targets gearing in the range of
30-40% LTV. Our investment
property portfolio is revalued
twiceyearly by independent
valuers. The Board has regular
soundings taken on the market
from external advisers.
02.
Weakening
macro-economic
environment in the
sector in which we
operate.
A downturn in
economic conditions
may impact the Group’s
performance by way of
reduced rental income
and in turn negatively
affect property values.
The Company focuses on
well-located assets and has a
diverse tenant base across a range
of sectors with limited exposure to
any one tenant or sector.
This protects us from downturns
affecting any one industry.
In addition, our tenants tend
tofocus on essential goods like
pharmaceutical and food.
The Company focuses on acquiring
assets with resilient values, typically
30-70% replacement cost, and are
often sourced off-market.
03.
Higher inflation in
the UK and global
markets.
A prolonged period
ofhigher inflation may
impact the Group’s
performance due to
higher cost of capital,
increased vacancy rate
due to tenant failure
and reduction in real
returns due to an
inability to capture
inflationary uplift due to
long leases.
To mitigate the risk of tenant failure,
before a lease is signed, or a
property with a tenant in place is
acquired, the Manager performs
significant diligence into the
financial position of the company,
and monitors the financial position
on an ongoing basis.
To mitigate the risk of the impact of
rising interest rates in an inflationary
environment, the Company uses
hedging strategies and fixed rate
debt.
This sub sector of the market
typically has shorter rent review
cycles, allowing the Company to
capture inflationary uplift.
Our leases are generally either open
market, or explicitly linked to an
inflation measure.
N/A – New Risk
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
53
RISK POTENTIAL IMPACT CHANGEMITIGATION
04.
Development
projects not
producing targeted
financial returns.
The Company’s
development projects
provide an opportunity
for outperformance and
enhanced sustainability
in exchange for slightly
enhanced risk. An
increase in construction
costs or weakening
occupational market
may negatively impact
underlying income and
property values.
Detailed due diligence is carried
outprior to committing to a
development, which includes
consideration of the return and
funding profile relative to associated
risk. We limit our development
exposure to 10% of gross
assetvalue.
05.
Loss of key
personnel.
The Company places
reliance on the
Manager’s extensive
experience within the
logistics sector and on
its ability to provide
relevant information
ona regular basis.
Key personnel are partners in
theLLPwhich benefits from the
management contract. The
management contract contains an
LTIP which crystallises in September
2023, providing an incentive for
them to stay. As the portfolio has
grown, the Manager has added to
the team, to give further depth and
resilience to loss of individual
personnel. In addition, the portfolio
size and quality make it possible to
attract high-quality candidates for
any replacements required.
06.
Interest rate
exposure.
The Group uses
leverage, which brings
exposure to increases in
the total interest rate
paid, which could
impact earnings and
distributable profits.
The Group employs hedging
strategies, and at year end the
outstanding debt position is 74%
hedged until maturity, providing
protection from interest rate
exposure.
07.
Increased CAPEX
spend connected
to hitting
environmental
legislation,
and potentially
negative impact
on distributable
income.
MEES (Minimum Energy
Efficiency Standards)
regulations prohibit
granting a new lease on
a property which does
not meet minimum
standards. In 2024 this
moves to a D, and in
2026 this moves to a C.
The CAPEX associated
with this move has the
potential to be
considerable, and could
impact distributable
income.
The Company has significantly
expanded governance around ESG,
and EPCs in particular. The vast
majority of assets are already an
EPC of C or above, and all assets
have a plan to improve them to a B.
The Company believes that by the
Manager working in close
partnership with the tenants, who
have their own ESG agenda, the
necessary upgrades can be done
either at the expense of the tenant
or in connection with a new letting.
N/A – New Risk
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
54
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
RISK POTENTIAL IMPACT CHANGEMITIGATION
08.
Reluctance of
tenants to take
leases in buildings
with a lower
than average
environmental
performance.
If tenants are reluctant
to take leases in
poor-performing
buildings, rental rates
for those buildings will
fall, and vacancy rates
will rise. This will impact
Company earnings.
The impact will feed
through to property
valuations, and
therefore NAV.
Before every acquisition, the
Company performs forward-looking
environmental due diligence, to
understand where the EPC is now,
and what it would take to improve it.
All assets with a rating of C or below
have an asset management plan to
get them to a B.
If the Company does not believe an
asset can be improved sufficiently it
will not be acquired.
N/A – New Risk
09.
Cyber security
attack.
A cyber security attack
could lead to significant
business disruption,
loss of data and
reputational damage.
The IT capabilities of the Manager
are outsourced to a dedicated
service provider, who perform
regular testing of the IT security
systems.
Employees of the Manager
undertake regular awareness
training on cyber risk. In addition, a
business continuity plan is in place
and is regularly updated.
10.
Non-compliance
with the UK REIT
regulations.
If the Group fails to
comply with regulation,
then the Group may
lose its REIT status.
Any failure will impact
the Group’s profitability
and shareholder
returns.
Compliance with UK REIT regulation
is continuously monitored by both
the Manager and the Board.
External advice is sought for
specific transactions which may
have an impact on the Company’s
REIT status. The Board has ultimate
responsibility for ensuring we
comply with the UK REIT
regulations.
Increased Decreased No change
STRATEGIC REPORT
GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
55
The Board has assessed the prospects of the Group over a
period longer than the twelve months required by the
relevant “going concern” provisions. In reviewing the
Company’s viability, the Directors have assessed the viability
of the Company for the period to 31 March 2025 (the
“Period”). TheBoard believes that the Period, being
approximately three years, is an appropriate time horizon
over which to assess the viability of the Company,
particularly when takinginto account the long-term nature
of the Company’s investment strategy, difficulties in
accurately forecasting ahead given the cyclical nature of
property investment, andthe principal risks documented in
the Strategic Reporton pages 51 to 54.
In making this statement, the Directors have considered
and challenged the reports of the Investment Manager in
relation to the resilience of the Group, taking account of
itscurrent position, the principal risks faced in severe but
reasonable scenarios, including a stressed scenario, the
effectiveness of any mitigating actions and the Group’s
riskappetite.
In addition, the Board also considered a number of other
factors when assessing the viability of the Company:
•
strong rent collection rates. 99.9% of all rent demanded
was has been collected in the year;
•
the weighted average unexpired lease length of 7.7years;
•
substantial liquidity with £127.4 million of cash available
at the year end, and
•
74% of the Group’s debt facilities are hedged and at
theyear end had a weighted average debt maturity of
3.7 years.
Sensitivity analysis has been undertaken to consider
thepotential impacts of such risks on the business model,
future performance, solvency and liquidity over the Period,
both on an individual and combined basis. In particular, this
has considered:
•
a weakening macro-economic environment leading to
asignificant fall in property valuation;.
•
changes in the occupational market impacting lettings;
and
•
higher inflation in UK and Global markets leading to
higher cost of capital and increased vacancy rate due
totenant failure.
Reverse stress testing was also undertaken over the Period.
Inisolation, it would take at least a 45% reduction in
property values during the Period to breach the gearing
covenant. Rental income would need to decrease by
approximately 38% prior to any breach of the
interestcovercovenants.
The Directors have determined that a three-year look
forward to March 2025 is an appropriate period over which
to provide its viability statement. This is consistent with the
outlook period used in medium-term forecasts regularly
prepared for the Board by the Investment Manager and the
discussion of any new strategies undertaken by the Board
in its normal course of business.
These reviews consider both the market opportunity
andthe associated risks, principally the ability to raise
third-party funds and invest capital, or mitigating actions
taken, such as a reduction of dividends paid to shareholders
or utilisation of additional borrowings.
Based on this assessment, the Directors have a reasonable
expectation that the Company will be able to continue to
operate and to meet its liabilities as they fall due over the
period to 31 March 2025.
Approval of Strategic Report
The Strategic Report, including Financial Highlights,
Chairman’s Statement, Investment Manager’s Report,
Key Performance Indicators and Principal Risks and
Uncertainties, was approved by the Board of Directors
and signed on its behalfby:
Nigel Rich CBE
Chairman
22 June 2022
VIABILITY STATEMENT
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
56
BOARD OF DIRECTORS
Nigel Rich CBE FCA
Independent Non‑Executive
Chairman
Richard Moffitt
Non‑Independent Director
& CEO of Investment Manager
Jonathan Gray
Independent Non‑Executive
Director & Senior Independent
Director
M
N
E
A E
A
M
N
Date of appointment
January 2017
External appointments
Nigel is Chairman of Foxtons Group plc, a
Director of Matheson & Co. Limited and a
Director of Chelsea Square Gardens Limited.
Experience and contribution
Nigel brings a wealth of Board experience,
having operated across the globe in senior
positions.
He served as the Group Chief Executive of
Trafalgar House plc from 1994 to 1996 and
previously spent 20 years with the Jardine
Matheson Group in Asia and Africa, before
becoming Managing Director of the Group
from 1989 to 1994.
Nigel has served as the Chairman of the
Board of Exel, Hamptons, Xchanging and
most recently Segro. He has been a Director
of Granada, ITV, Harvey Nichols, ABI Global
and Pacific Assets. He has also been a
member of the Takeover Panel (UK).
Annual remuneration
£85,000
Employment by the Investment Manager
None
Other connections with the Company or
Investment Manager
None
Shared external directorships with any
other Company Directors
None
Shareholding in Company
540,536 Ordinary Shares
Date of appointment
January 2016
External appointments
Richard is Chairman of ELREP Asset
Management LLP and M1 Agency LLP.
Further information can be found in note 32
of the Financial Statements.
Experience and contribution
Previously an Executive Director at CBRE,
where he was Head of the UK Industrial
team, Richard has over 30 years’ specific
real estate logistics experience.
He has an in-depth understanding of the
market dynamics, credibility with owners
and operators of logistics assets, a thorough
understanding of both owner and tenant
requirements and an extensive network of
contacts across the real estate universe.
He is a member of the Chartered Institute
of Logistics and Transport.
Annual remuneration
Richard has waived his right to receive any
remuneration as a Director of the Company.
Employment by the Investment Manager
Richard leads the investment management
team at PCP2 Ltd.
Other connections with the Company or
Investment Manager
M1 Agency LLP.
Shared external directorships with any
other Company Directors
None
Shareholding in Company
1,142,843 Ordinary Shares
Date of appointment
January 2016
External appointments
Jonathan currently works as a financial
consultant to a variety of international
companies and has other non-executive
directorships including Argentex PLC.
Experience and contribution
Jonathan has considerable financial
services experience having worked as a
corporate financier for over 25 years in the
City with senior roles at HSBC, UBS and
NCB.
He has advised a number of property
companies such as Property Fund
Management, Cleveland Trust and CLS
Holdings. From 2010-2014 he was the
Non-Executive Chairman of PGF II SA, a
London-based £200 million private property
fund.
Annual remuneration
£50,000
Employment by the Investment Manager
None
Other connections with the Company or
Investment Manager
Jonathan is a Director of Argentex Group
PLC, a listed company in which Pacific
Investments has a shareholding.
Shared external directorships with any
other Company Directors
None
Shareholding in Company
60,000 Ordinary Shares
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
57
Bruce Anderson ACMA
FCIOBS
Independent Non‑Executive
Director
Mark Johnson
Non‑Independent
Director
Heather Hancock LVO DL
Independent Non‑Executive
Director
A
E
M
N E
A
M
N
Date of appointment
January 2016
External appointments
Bruce is currently a Non-Executive Director
at Green Property Limited, an adviser to the
Housing Growth Partnership Fund and a
Trustee of Edinburgh Athletic Club.
Experience and contribution
Bruce has considerable real estate and
financial services experience having worked
in senior roles at Lloyds, HBoS and Bank of
Scotland with 20 years of investment-led
boardroom positions. He has experience
with both real estate companies and REITs
across the UK, Europe and the Far East.
At Lloyds he was Head of Joint Ventures for
the Specialist Finance division, responsible
for a mixed portfolio of real estate, including
both equity and debt elements. He is a
qualified Accountant.
Annual remuneration
£50,000
Employment by the Investment Manager
None
Other connections with the Company or
Investment Manager
None
Shared external directorships with any
other Company Directors
None
Shareholding in Company
50,000 Ordinary Shares
Date of appointment
January 2017
External appointments
Mark is the CEO of the Pacific Investments
Group, having co-founded the business
over 25 years ago.
Experience and contribution
After qualifying as a lawyer, Mark worked in
corporate finance at Barclays Merchant
Bank and Barclays de Zoete Wedd before
co-founding Pacific.
Mark was the CEO of the Riverside Group,
and oversaw its successful sale.
Mark is (and was) a founding partner and
shareholder/director of Pacific’s investment
portfolio of companies, including Liontrust
Asset Management, Thames River Capital,
River & Mercantile Group, Argentex, and
Pacific Asset Management.
Annual remuneration
Mark has waived his right to receive any
remuneration as a Director of the Company.
Employment by the Investment Manager
PCP2 Ltd is a wholly owned subsidiary of
Pacific Investments, of which Mark is
the CEO.
Other connections with the Company or
Investment Manager
None
Shared external directorships with any
other Company Directors
None
Shareholding in Company
309,986 Ordinary Shares
Date of appointment
June 2020
External appointments
Heather is Master of St. John’s College,
Cambridge, a Director of Amerdale Limited
and Non-Executive Director of Rural
Solutions Limited. She is also a Trustee of
the Chatsworth Settlement Trust, chairs the
Prince’s Countryside Fund, and is a Deputy
Lieutenant of North Yorkshire.
Experience and contribution
Heather brings to the Board many years
of high-level experience in strategy,
governance and leadership, gained in
the real estate sector and wider economy.
In her current roles, she oversees extensive
real estate portfolios of investment,
development, strategic site and agricultural
property assets across the UK.
Previously, Heather has been Chair of the
Food Standards Agency, Managing Partner
at Deloitte and has served as the Executive
Director of Yorkshire Forward, leading on
the assembly of a £35 million property
portfolio.
Heather served as a trustee for the Prince’s
Trust, for which she was awarded the LVO in
2013.
Annual remuneration
£50,000
Employment by the Investment Manager
None
Other connections with the Company or
Investment Manager
None
Shared external directorships with any
other Company Directors
None
Shareholding in Company
14,388 Ordinary Shares
Committee key
Chairman
Member
E
ESG Committee
A
Audit Committee
M
Management Engagement Committee
N
Nomination Committee
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
58
Nigel Rich CBE
Chairman
The Board is
committed to the
highest standards of
corporate governance
and recognises its
responsibility to serve
the interests of
shareholders by
creating sustainable
growth.
CORPORATE GOVERNANCE STATEMENT
The Board is committed to the highest standards of
corporate governance and recognises its responsibility to
serve the interests of shareholders by creating sustainable
growth and shareholder value over the medium to long
term, whilst also reducing or mitigating risk.
On 7 December 2021, the Company was admitted to
thepremium segment of the London Stock Exchange’s Main
Market. Prior to this, the Company complied with the QCA
Corporate Governance Code (the “QCA Code”). Following
admission to the Main Market, the Company has complied
with the Association of Investment Companies’ Code of
Corporate Governance (the “AIC Code”), which sets out a
framework of best practice in respect of the governance of
investment companies. By reporting against the AIC Code,
the Company is meeting its obligations under the UK
Corporate Governance Code (the “UK Code”) and associated
disclosure requirements under paragraph 9.8.6 of the Listing
Rules.
The Board considers that reporting against the principles
and recommendations of the AIC Code provides better
information to shareholders as it addresses all the principles
set out in the UK Code, as well as setting out additional
principles and recommendations on issues that are of
specific relevance to investment companies and is
endorsed by the FRC. The terms of the FRC’s endorsement
mean that AIC members who report against the AIC Code
fully meet their obligations under the UK Code and the
related disclosure requirements contained in the Listing
Rules of the FCA.
A copy of the AIC Code can be found at www.theaic.co.uk.
A copy of the UK Code can be obtained at www.frc.org.uk.
The Company has complied with all provisions of the AIC
Code except for Provision 9.2(37) on the establishment of a
Remuneration Committee and Provision 8.2(29) whereby
Nigel Rich CBE, as Chairman of the Board, is a member of
the Audit Committee.
As the Board is comprised wholly of Non-Executive
Directors, there is no executive remuneration and as the
Company has no employees, being an externally managed
REIT, it is not currently felt necessary to establish a separate
Remuneration Committee. Instead, the Board as a whole
deals with matters of Directors’ remuneration.
The Board also considers the Chairman’s membership of the
Audit Committee appropriate given the size of the Board and
his knowledge of the industry.
Strategy and business model
The Company has a clear and established strategy and
business model which promotes long-term value for
shareholders. Further detail on the Company’s strategy and
business model can be found in the Investment Manager’s
Report on pages 18 to 32.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
59
APPLICATION OF AIC CODE PRINCIPLES
The table below outlines the main principles of the AIC Code and signposts to sections of the report where we have applied these principles.
Board leadership and purpose
Principle
A
A successful company is led by an effective Board, whose role is to promote the
long-term sustainable success of the Company, generating value for shareholders and
contributing to wider society. (Incorporates relevant content from UK Code Principle A)
Strategic Report, pages 1 to 55
Board of Directors,
pages 56 and 57
Business model, page 10
Principle
B
The Board should establish the Company’s purpose, values and strategy, and satisfy
itself that these and its culture are aligned. All Directors must act with integrity, lead by
example and promote the desired culture. (UK Code Principle B)
Strategic Report, pages 1 to 55
Our culture, pages 10 and 62
Our purpose, page 10
How we add value, pages 10 and 11
Principle
C
The Board should ensure that the necessary resources are in place for the Company to
meet its objectives and measure performance against them. TheBoard should also
establish a framework of prudent and effective controls, which enable risk to be
assessed and managed. (UK Code Principle C)
 Sustainability Report,
pages 38 to 45
 Principal risks and uncertainties,
pages 51 to 54
 Risk management and
internal control, page 63
Principle
D
In order for the Company to meet its responsibilities to shareholders and stakeholders,
the Board should ensure effective engagement with, and encourage participation from,
these parties. (UK Code Principle D)
Stakeholders, pages 47 and 48
Section 172 statement,
pages 46 to 49
 Shareholder engagement,
page 62
Division of responsibilities
Principle
F
The Chairman leads the Board and is responsible for its overall effectiveness indirecting
the Company. They should demonstrate objective judgement throughout their tenure
and promote a culture of openness and debate. Inaddition, the Chairman facilitates
constructive Board relations and the effective contribution of all Non-Executive
Directors, and ensures that Directors receive accurate, timely and clear information.
(UK Code Principle F)
 Role of the Chairman, page 60
The Board, page 61
Principle
G
The Board should consist of an appropriate combination of Directors (and, in particular,
independent Non-Executive Directors) such that no one individual or small group of
individuals dominates the Board’s decision-making. (Incorporates relevant content from
UK Code Principle G)
 Board of Directors,
pages 56 and 57
 Board Committees, page 63
Principle
H
Non-Executive Directors should have sufficient time to meet their Board
responsibilities. They should provide constructive challenge, strategic guidance, offer
specialist advice and hold third-party service providers toaccount. (Incorporates
relevant content from UK Code Principle H)
 Board composition and
succession, page 61
 Management Engagement
Committee report, page 69
Principle
I
The Board, supported by the Company Secretary, should ensure that it has the policies,
processes, information, time and resources it needs in order to function effectively and
efficiently. (UK Code Principle I)
The Board, page 61
 Section 172 statement,
pages 46 to 49
 Induction of new Directors, page 61
Composition, succession and evaluation
Principle
J
Appointments to the Board should be subject to a formal, rigorous and transparent
procedure, and an effective succession plan should be maintained. Both appointments
and succession plans should be based on merit and objective criteria and, within this
context, should promote diversity of gender, social and ethnic backgrounds, cognitive
and personal strengths. (Incorporates relevant content from UK Code Principle J)

Board composition and
succession, page 61
Diversity, page 61
 Nomination Committee report,
page 65
Principle
K
The Board and its Committees should have a combination of skills, experience and
knowledge. Consideration should be given to the length of service of the Board as a
whole and membership regularly refreshed. (UK Code Principle K)
 Board of Directors, 56 and 57
 Nomination Committee Report,
page 65
Board Committees, page 63
 Board succession and composition,
page 61
Principle
L
Annual evaluation of the Board should consider its composition, diversity andhow effectively
members work together to achieve objectives. Individual evaluation should demonstrate
whether each Director continues to contribute effectively. (UK Code Principle L)
 Board performance, page 62
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
60
CORPORATE GOVERNANCE STATEMENT CONTINUED
APPLICATION OF AIC CODE PRINCIPLES CONTINUED
Audit, risk and internal control
Principle
M
The Board should establish formal and transparent policies and procedures toensure
the independence and effectiveness of external audit functions andsatisfy itself on the
integrity of financial and narrative statements. (Incorporatesrelevant content from UK
Code Principle M)
 Risk management and internal
control, page 63
 Audit Committee Report,
pages 66 and 67
 Notes 3 and 4 to the Financial
Statements , pages 93 to 97
Principle
N
The Board should present a fair, balanced and understandable assessment of the
Company’s position and prospects. (UK Code Principle N)
 Strategic Report, pages 1 to 55
 Fair, balanced and understandable,
page 68
 Audit Committee Report,
pages 66 to 68
 Independent Auditor’s report,
pages 80 to 85
 Financial Statements,
pages 80 to 123
Principle
O
The Board should establish procedures to manage risk, oversee the internal control
framework, and determine the nature and extent of the principal risks the Company is
willing to take in order to achieve its long-term strategic objectives. (UK Code Principle O)
 Principal risks and uncertainties,
pages 51 to 54
 Viability statement, page 55
 Audit Committee Report,
pages 66 to 68
 Management Engagement
Committee report, page 69
 Risk management and internal
control, page 63
 Note 24 to the Financial
Statements, page 107
Remuneration
Principle
P
Remuneration policies and practices should be designed to support strategy and
promote long-term sustainable success. (Incorporates relevant content from UK Code
Principle P)
 Strategic Report, pages 1 to 55
 Directors’ remuneration report,
pages 72 to 74
 Directors’ remuneration policy,
page 74
Principle
Q
A formal and transparent procedure for developing policy on remuneration should be
established. No Director should be involved in deciding their own remuneration
outcome. (Incorporates relevant content from UK Code PrincipleQ)
 Directors’ remuneration report,
pages 72 to 74
Principle
R
Directors should exercise independent judgement and discretion when authorising
remuneration outcomes, taking account of Company and individual performance, and
wider circumstances. (UK Code Principle R)
 Directors’ remuneration report,
pages 72 to 74
Role of the Chairman
As Chairman of the Board, I have overall responsibility for the quality of the corporate governance arrangements of the
Company and the approach that is taken to ensure corporate governance compliance is achieved. The Board as a whole
has responsibility and a legal obligation to promote the interests of the Company and is responsible for defining the
Company’s corporate governance arrangements.
My role as Chairman is to lead the Board and I am responsible for its overall effectiveness in directing the Company. I strive to
promote a culture of openness and debate amongst the Board and to facilitate effective contribution from all Board members.
The AIC Code requires the Chairman to be independent upon appointment. I have been considered independent since my
appointment in January 2017 and I have no relationships that may create a conflict of interest with shareholders.
Senior Independent Director
The Company’s Senior Independent Director is Jonathan Gray. He provides a channel for any shareholder concerns
regarding the Chairman and leads the Chairman’s annual performance evaluation.
A full description of the responsibilities of the Chairman andthe Senior Independent Director can be found on the
Company’s website www.urbanlogisticsreit.com.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
61
The Board
The Board is responsible for determining the Company’s
strategy, investment policy and overseeing the Company’s
performance and business conduct. The Board is also
responsible for the continuing appointment and ongoing
performance of the Investment Manager.
The Board holds formal, scheduled meetings each quarter,
with additional ad hoc meetings arranged as required.
TheBoard (and Board Committees) are provided with
high-quality information in advance of each meeting
whichenables proper debate and consideration of
allmatters being presented.
The Board has a schedule of matters reserved for its
decision which is reviewed on an annual basis, and is
available on the Company’s website at
www.urbanlogisticsreit.com
The Board regularly reviews the Manager’s investment
performance and assesses the progress of new investment
opportunities. The Company’s strategy is regularly reviewed
in the context of a broader market outlook and future
financial forecasting as well as historic financial
performance is considered. The Board works closely with
the Company’s brokers, Singer Capital Markets and
Panmure Gordon, as well as its other advisers. The Board
receives reports regarding investor relations as well
asregular updates from the Manager and the Company
Secretary on regulatory and compliance matters.
The Board has direct access to the services of its Company
Secretary, Link Company Matters Limited (“Company
Matters”), as well as a range of other service providers.
Company Matters, in its role as Company Secretary, is
responsible to the Board for ensuring that Board and
governance procedures are followed, and that applicable rules
and regulations are complied with. When deemed necessary,
the Board may seek independent professional advice in the
furtherance of their duties, at the Company’s expense.
The Company has arranged a Directors’ and Officers’
liability insurance policy which includes cover for legal
expenses. The policy was reviewed at the time of the
MainMarket move, and remains in force as at the date
ofthis report.
Board composition and succession
The Board comprises four independent Non-Executive
Directors and two non-independent Non-Executive
Directors. There were no changes to the composition of the
Board during the year. The Board possesses a sufficient
balance of skills, relevant sector experience, and knowledge
to ensure, as a whole, it functions well and that discussions
and/or decisions are not dominated by any one Director.
The collective experience amongst the Board includes
senior Board level/chairmanship positions, financial services
experiences, and directorships within the property sector, all
of which contribute expertly to the deliberations of the
Board.
The Board, led by the Nomination Committee, is actively
considering succession planning and is currently
undertaking an active search for a new Non-Executive
Director. Further details can be found in the Nomination
Committee Report on page 65.
The majority of Directors are independent from the
Manager. Those Directors deemed to be independent can
be found in the Director biographies on pages 56 and 57
and in the table below on page 63.
As the Company is subject to the AIC Code, there is no
requirement for a limit on the tenure of the Chairman or the
Company’s Board members. However, the Board recognises
the value of regular refreshing of its composition and
remains committed to ensuring that it has the right mix of
skills and experience that are aligned with the evolution of
the strategic plans of the Company, while maintaining its
independence of character and judgement. The Board
expects to maintain a tenure of nine years or less for all of its
Directors, including the Chairman, thus preserving the
cumulative valuable experience and understanding of the
Company, while benefiting from fresh perspectives and
helping to promote diversity. Furthermore, all Directors will
be subject to annual re-election.
All Directors are expected to attend Board and Committee
meetings and to devote sufficient time to the Company’s
affairs to fulfil their duties as Directors. Each Director is
satisfied that they have sufficient time to commit to their
individual role and responsibilities on the Board. The time
commitment involved from each Director involves
preparation for meetings, meeting attendance, as well as
ad hoc meetings with the Manager and external advisers as
required. Individual Directors are responsible for their own
professional development and for ensuring their skills and
expertise are refreshed in order to support their role on the
Board.
Diversity
In accordance with the AIC Code, the Board is comprised of
a mixture of individuals who have an appropriate balance of
skills and experience to meet the future opportunities and
challenges facing the Company. Appointments to the Board
are made primarily on merit, though the Board understands
the importance of diversity in modern governance and
takes into consideration a variety of demographic attributes
and characteristics when making decisions on its
composition. The Board is aware of the new Listing Rules
that are on a ‘comply or explain’ basis which incorporate the
recommendations of the Parker and Hampton-Alexander
Reviews which considered how ethnic, cultural and gender
diversity could be improved on UK Boards and will continue
to be cognisant of these when making future succession
and composition plans. The Company will report its
compliance against this requirement in the Annual Report
for the year ending 31 March 2023.
Induction of new Directors
A procedure for the induction of new Directors is in
placewhich includes the provision of an induction pack
containing relevant information about the Company and its
processes and procedures. New Directors appointed to the
Board have the opportunity to meet with the Chairman,
theInvestment Manager and the Company Secretary.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
62
CORPORATE GOVERNANCE STATEMENT CONTINUED
Board performance
In order to review the effectiveness of the Board as a
whole,its Committees, the individual Directors (including
the independence of each Director) and the Chairman,
theCompany undertakes a thorough Board evaluation
process by way of an extensive, tailored Board evaluation
questionnaire. This process enables each Director to
evaluate, assess and reflect on the Board’s operations,
individual Director contributions and the Company’s
leadership with a view to identify any shortcomings and
address any areas requiring improvement.
For the year ended 31 March 2022, the Board evaluation
process was ledby the Chairman and the evaluation of the
Chairman was led by the Senior Independent Director,
Jonathan Gray.
The results of the evaluation confirmed that Directors and
Committee members continued to work well collectively
and that all Directors contributed to promoting the success
of the Company and advancing its strategy and business
model.
Culture
The Board acknowledges that it has the responsibility to
“set the tone from the top” in terms of the culture and
ethical behaviours of the Company and strives to
promote aculture that is based on sound ethical values
and behaviours, values diversity and is responsive to the
views ofshareholders and the Company’s stakeholders.
This isachieved by ensuring robust corporate
governance frameworks and Company policies are
inplace and ensuring the Manager is appropriately
challenged and heldto account for its investment
decisions. This culture isconsistent with the Company’s
business model and strategy and facilitates the best
possible opportunity to build a high-quality, diversified
logistics property portfolioby conducting exceptional
asset management anddelivering sector-leading
returns to investors.
The Board expects all service providers, including its
Manager, to exhibit high standards of ethical behaviour
and for the employees of the service providers to behave
in a professional and respectful manner. The Board feels
that all Directors continue to act with integrity, lead by
example and promote the Company’s culture. Further
detail regarding the Management Engagement
Committee’s review of all service providers can be
foundon page 69.
The Company’s section 172 statement can be found on
pages 46 to 49.
Shareholder engagement
We are confident in our approach to ongoing
communication with our shareholders and recognise the
value in positive shareholder engagement. We strive to
understand and meet our shareholders’ needs and
expectations.
Our website is kept up to date with information to help
investors keep in touch and to understand our business.
The Manager meets with shareholders and investors on
behalf of the Board by way of shareholder roadshows to
discuss our results, which have proven to be a popular and
effective way to engage with shareholders and develop our
understanding of their needs and expectations. The
Manager provides feedback to the Board following these
roadshows and also regularly updates the Board with the
views of shareholders and analysts.
In addition, the Chairman will write to the largest
shareholders, offering to meet with them and engage
directly.
We encourage two-way communication with both
institutional and private investors, and shareholders are
encouraged to write to the Company via the Company
Secretary at the registered office address, should they wish.
We endeavour to respond promptly to all enquiries.
Annual General Meeting
In accordance with current UK government guidance
regarding COVID-19, the AGM is currently intended to
be an open meeting allowing shareholders to attend in
person. However, whilst there are not expected to be any
government restrictions on public gatherings at the time
of the AGM, the Board recommends that shareholders
continue to monitor and review the UK government
guidance and consider whether your travel to, and
attendance at, the AGM is necessary. Shareholders are
asked to exercise good judgement and not to attend the
AGM in person if you have any symptoms of, or have tested
positive for, COVID-19.
For further information please see the Notice of Annual
General Meeting which has been dispatched to all
shareholders. An electronic copy of the Notice of AGM is also
available on the Company’s website at
www.urbanlogisticsreit.com.
Any further updates regarding the Annual General Meeting
will be made via the appropriate Regulatory Information
Service and on the Company’s website at
www.urbanlogisticsreit.com. Shareholders will be given
the opportunity to ask questions in advance of the Annual
General Meeting. Shareholders are encouraged to email
ir@urbanlogisticsreit.com and they will be responded to in
writing on the Company’s website.
In addition, the Manager seeks to engage directly with
major shareholders via regular meetings, round table
events, capital markets days and other outreach. The
Chairman proactively contacts the largest shareholders
tomake himself available for meetings and communication.
The voting results of the 20 July 2022 Annual General
Meeting will be announced to the market once it has
beenheld.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
63
Risk management and internal control
The Directors acknowledge that they have overall responsibility for the Company’s risk management and internal control
systems and for reviewing their effectiveness. As such, the Board, in consultation with the Audit Committee:
•
approves the Company’s/Group’s Risk Appetite Statements;
•
receives reports on, and reviews the effectiveness of, the Group’s risk and control processes to support its strategy
objectives;
•
approves the procedures for the detection of fraud, bribery, tax evasion and money laundering;
•
reviews quarterly management accounts against budget, full-year forecasts against both budget and analyst
expectations;
•
signs off all investments; and
•
ensures that there is a segregation of duties between the Manager’s property team who recommend property
investments, and the Manager’s finance and operations team who perform due diligence and authorise payments.
In addition to the high-level internal controls exercised by the Board, further internal controls are also in place at the
Manager. These controls which include those in relation to the financial reporting process for the undertakings included in
the consolidation are reviewed and tested as part of the external audit process and updated as required from both internal
feedback and external feedback from auditors and others.
An ongoing process has been implemented for identifying, evaluating and managing the principal and emerging strategic
and operational risks faced by the Company. This process has been in place for the year ended 31 March 2022 and is
reviewed on an annual basis.
The risk management process and systems of internal control are designed to manage rather than eliminate the risk of
failure to achieve the Company’s objectives and it should be recognised that such systems can only provide reasonable,
notabsolute, assurance against material misstatement or loss. pages 51 to 54 set out the Company’s Principal Risks and
Uncertainties. The Company’s Risk Appetite Statement can be found on page 51.
Board Committees
The Board has delegated a number of responsibilities to its Environmental, Social & Governance (“ESG”), Audit, Nomination
and Management Engagement Committees. Each Committee has Terms of Reference in place, which outline the duties of
those Committees that are delegated from the Board, including their statutory and regulatory responsibilities. The Terms of
Reference are reviewed on at least an annual basis. The Board accepts that while these Committees have the authority to
examine particular issues and will report back to the Board with their decisions and/or recommendations, the ultimate
responsibility on all matters lies with the Board. Details on each Committee and a report of the activities undertaken during
the year ended 31 March 2022 can be found in the individual Committee reports.
During the year, the Board considered the potential merits of establishing a Remuneration Committee but, after due and
careful consideration, has decided not to at the current time. Director remuneration continues to be considered by the
Board as a whole. Further information regarding Director remuneration can be found in the Directors’ Remuneration
Report on pages 72 and 73.
A copy of each Committee’s Terms of Reference can be found on our website www.urbanlogisticsreit.com
The membership of the Board Committees is as follows:
Management
ESG Audit Engagement Nomination
Name Independent Committee Committee Committee Committee
Nigel Rich CBE ✓ Member Member Chairman Chairman
Bruce Anderson ✓ Member Chairman Member Member
Heather Hancock ✓ Chairwoman Member Member Member
Jonathan Gray
1
✓ Member Member Member Member
Richard Moffitt ✗
— — — —
Mark Johnson ✗ — — — —
2
1. Senior Independent Director.
2. Mark stepped down from the Nomination Committee on 12 November 2021.
Richard Moffitt and Mark Johnson are not deemed to be independent due to their existing roles at, and interest in, the
Manager. Both Richard and Mark exclude themselves from voting on matters concerning PCP2 Limited and during the
approval of property sales and acquisitions proposed to the Board by the Manager, or where there is any other perceived
potential conflict of interest. Despite their non-independence, the Board considers that both Richard and Mark remain able
to provide constructive challenge and scrutiny to the Board, as well as valuable and relevant skills and experience.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
64
Meeting attendance
During the year ended 31 March 2022, there were six scheduled Board meetings. The Directors also met on an ad hoc basis
during the year to undertake business such as to discuss and approve various acquisitions and meetings related to the
Company’s admission to the Main Market of the London Stock Exchange. The Company Secretary attends all meetings of
the Board and its Committees. Representatives of the Investment Manager, the external auditor and other advisers are
invited to attend as required.
Management
ESG Audit Engagement Nomination
Name Board Committee Committee Committee Committee
Nigel Rich CBE 6/6 2/2 3/3 1/1 1/1
Bruce Anderson 6/6 2/2 3/3 1/1 1/1
Heather Hancock 6/6 2/2 3/3 1/1 1/1
Jonathan Gray 6/6 2/2 3/3 1/1 1/1
Richard Moffitt 6/6 — — — —
Mark Johnson 6/6 — — — —
Conflicts of interest
The Articles of Association allow the Board to authorise potential conflicts of interest that may arise, subject to imposing
limits or conditions when giving authorisation if this is appropriate. Only independent Directors (who have no interest in
the matter being considered) will be able to take the relevant decision and, in taking the decision, the Directors must act
ina way they consider will be most likely to promote the Group’s success for the benefit of its shareholders as a whole.
Procedures have been established to monitor actual and potential conflicts of interest on a regular basis, and the Board
issatisfied that these procedures are working effectively.
The Manager regularly uses M1 Agency LLP for its purchase and sale of assets. The Company incurs fees from M1 Agency
LLP, a partnership in which Richard Moffitt is a member. These fees are incurred in the acquisition of investment properties
and sale of investment properties. The Board, with the assistance of the Investment Manager, excluding Richard Moffitt,
carefully reviews and scrutinises each fee payable to M1 Agency LLP, and ensures the fees are in line with market rates and
on standard commercial property terms.
Environmental, Human Rights, Employee, Social and Community Issues
The Board recognises the requirement under the Companies Act 2006 to detail information about employees, human
rights, environmental and community issues, including information about any policies it has in relation to these matters
and the effectiveness of these policies. These requirements do not apply directly to the Company as it has no employees, all
the Directors are non-executive and it has outsourced all its functions to third-party service providers. The Company has
therefore not reported further in respect of these provisions, however information on our commitment to sustainability can
be found within the Sustainability Report on pages 38 to 45.
While the Company is not within the scope of the Modern Slavery Act 2015 and it is not, therefore, obliged to make a slavery
and human trafficking statement, the Company considers its supply chains to be of low risk as its principal service
providers are the professional advisers set out in the Company Information section on page 127. Further information on the
Company’s anti-bribery and corruption policy is set out below.
There are six Directors, five male and one female. Further information on the composition of the Board is detailed on pages
56 and 57.
Anti‑bribery and corruption
The Manager has a zero-tolerance anti-bribery and corruption policy and is committed to carrying out business fairly, honestly
and openly. The Manager undertakes annual regulatory training on anti-money laundering and anti-bribery and corruption.
The Manager has a Compliance Officer in place who monitors adherence to anti-bribery and corruption policies.
The Company has a whistleblowing policy with appropriate links to the Chairman and/or Audit Committee Chairman.
Nigel Rich CBE
Chairman
22 June 2022
CORPORATE GOVERNANCE STATEMENT CONTINUED
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
65
Nigel Rich CBE
Chairman of the Nomination
Committee
The results of the
Board evaluation
confirmed that
Directors and
Committee members
continue to work well.
NOMINATION COMMITTEE REPORT
Composition
Nigel Rich CBE is Chairman of the Nomination Committee.
The Nomination Committee comprises all of the
independent Directors.
The Directors deemed to be independent are shown in the
Director biographies on pages 56 and 57 and in the table on
page 63.
Responsibilities
The role of the Nomination Committee is to regularly review
the structure, size and composition of the Board and to lead
the appointment of new Directors to the Board as and
when appropriate. The Nomination Committee considers
resolutions relating to the election and re-election of
Directors at each Annual General Meeting and considers
the orderly succession planning of the Board.
Matters considered during the year
The Committee met once during the year ended
31March2022 and considered the structure, size and
composition of the Board as a whole, particularly its balance of
skills, knowledge, experience and diversity and made
recommendations to the Board with regard to any changes.
The Committee gave consideration to succession planning for
the Directors and key members of the management team
taking into account the challenges and opportunities facing
the Company, and the skills and expertise required on the
Board in the future. The Committee also agreed upon the
Board’s performance evaluation process and considered the
requirements for external performance evaluations to be
undertaken in the future.
Board composition and succession planning
The Nomination Committee is mindful of the fact that, as the
Company evolves, the mix of skills and experience on the Board
will change and Board composition may change to reflect this.
The Committee is also mindful of the recently announced rules
on diversity and inclusion on company Boards.
The Nomination Committee has therefore appointed a
recruitment firm, which is independent of the Board and
the Company, and there are no connections with any of the
Directors. The Committee members met a number of
candidates, and the Committee hope to appoint a suitable
candidate, with experience of both property and the public
markets, in the coming months.
The planned activities of the Committee include an external
Board evaluation. In addition, a number of Directors were
appointed in 2016, giving a length of service at the time of this
report of over six years. The Board aims for a maximum length
of service of nine years, and will therefore consider succession
planning in the coming year. Inaddition to this, the Board will
continue consideration ofenvironmental, social and
governance matters, theidentification of further professional
development opportunities for Board members and the
consideration offurther engagement with key investors and
stakeholders.
Nigel Rich CBE
Chairman of the Nomination Committee
22 June 2022
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
66
Bruce Anderson
ACMA FCIOBS
Chairman of the Audit Committee
I am pleased to
present the Audit
Committee Report
for the year ended
31 March 2022.
AUDIT COMMITTEE REPORT
Composition
The Audit Committee is comprised of myself as Chairman,
Nigel Rich CBE, Jonathan Gray and Heather Hancock, all of
whom are independent Non-Executive Directors. All Audit
Committee members consider that, individually and
collectively, they are each independent and appropriately
experienced to fulfil their role on the Audit Committee
within the sector in which the Company operates. Further
detail regarding individual Director experience can be found
within the Director biographies on pages 56 and 57.
The Chairman of the Company, Nigel Rich CBE, is a member
of the Audit Committee. The Board believes his
membership of the Audit Committee is appropriate
because he has significant experience in relation to financial
matters as a qualified accountant, and has a wealth of
experience in both property and the public markets given
his previous chairmanship of Segro PLC.
Responsibilities
The Audit Committee is responsible for ensuring that the
financial performance of the Company is properly reported
and monitored. The Audit Committee reviews the annual
and half-year accounts, the accounting policies of the
Company and key areas of accounting judgement,
management information statements, financial
announcements, internal control systems, risk
management, the processes employed by the AIFM and
theauditor to determine the underlying valuation of the
investment portfolio, and the continuing appointment of
the auditors. It also monitors the whistleblowing policy
andprocedures over fraud and bribery.
Terms of Reference for the Audit Committee have been
adopted and are reviewed on a regular basis by the Board.
The Audit Committee’s Terms of Reference are available on
the Company’s website www.urbanlogisticsreit.com
Matters considered during the year
The Committee met on three occasions during the year.
Details of the attendance at those meetings can be found
on page 64. At those meetings, the Audit Committee has:
•
reviewed and considered the Company’s property
portfolio valuation in conjunction with the independent
valuer at the half year and year end;
•
reviewed the Company’s Financial Statements for the
halfyear and year end and made recommendations
tothe Board;
•
reviewed the Company’s going concern statement;
•
considered the Company’s navigation of the COVID-19
pandemic and the management of any impact of this
onthe Company’s portfolio;
•
considered the Company’s additional disclosure
requirements following the Company’s move to the
MainMarket;
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
67
•
assisted the Board in its consideration of environmental,
social and governance matters;
•
reviewed the internal controls and risk management
procedures of the Company and of the Manager;
•
recommended the re-appointment of RSM UK Audit
LLP(“RSM”) as auditor of the Company to the Board for
approval and for the approval of shareholders at the 2022
Annual General Meeting; and
•
reviewed its own performance as an Audit Committee
and its own Terms of Reference.
The independent Directors meet in private with the lead
partner of the Company’s auditor on an annual basis and
this will continue with RSM going forward. The Audit
Committee Chairman has regular contact with the external
auditor throughout the year and particularly during the
preparation of the Annual Report and Financial Statements.
The significant matters considered by the Audit
Committeewere:
Valuation process and asset management
The Company uses CBRE as its property valuer, who
conduct a valuation of the Company’s properties on a
half-yearly basis. Discussions have been held with the
Manager and the independent valuer about the property
portfolio valuation process, asset management and the
systems in place at the Manager to ensure the accuracy of
the valuation of the Company’s property portfolio. The Audit
Committee has received assurances from the Manager
about the robustness of their valuation system and asset
management capabilities. To enable a full discussion of the
valuation, the valuer attended the Audit Committee
meeting in May 2022. Further information regarding the
valuation of the portfolio can be found below on page 68.
Inline with other service providers, the Committee feels it
isbest practice for regular external tender for services.
Following a five-year appointment, the valuation services
will therefore be put out to tender in the coming financial
year.
Internal controls
During the year, the Audit Committee has reviewed and
updated, where appropriate, the Company’s risk matrix.
Thisis considered on an ongoing basis and is in line with
the Company’s Risk Appetite Statement.
The Manager reports in writing to the Audit Committee
andBoard on operational and compliance issues prior
toeach quarterly meeting, and otherwise as necessary.
TheManager reports directly to the Audit Committee
concerning the internal controls applicable to the Manager’s
investment and office procedures, including information
technology systems.
Going concern and long‑term viability
of the Company
The Committee considered the Company’s financial
requirements for the next twelve months and concluded
thatithas sufficient resources to meet its commitments.
The Financial Statements therefore have been prepared on
agoing concern basis. The Committee also considered the
longer-term viability statement within the Annual Report
for the period ended 31 March 2022, covering a three-year
period, and the underlying factors and assumptions which
contributed to the Committee deciding that this was an
appropriate length of time to consider the Company’s
long-term viability.
The Company’s going concern and viability statement can
be found within the Strategic Report on page 55.
External auditor
RSM UK Audit LLP was appointed as the Company’s auditor
following an external audit tender process undertaken last
year. RSM UK Audit LLP audited the Annual Report and
Accounts of the Company for the financial year ended
31March 2022. In accordance with the statutory
requirements relating to the appointment of auditors, the
Company would need to conduct an audit tender no later
than for the accounting period 1 April 2030.
Following consideration of the performance of RSM,
theservices provided during the year and a review of
theirindependence and objectivity, the Committee has
recommended to the Board the re-appointment of RSM
asthe Company’s auditor. Shareholder approval of the
auditor’s re-appointment will be sought at the Annual
General Meeting to be held on 20 July 2022.
Effectiveness of the external audit
The Committee reviews the effectiveness of the external
audit carried out by the auditor on an annual basis.
TheChairman of the Audit Committee maintained regular
contact with the Company’s audit partner throughout the
year and met with them prior to the finalisation of the audit
of the Annual Report and Financial Statements for the year
ended 31 March 2022, without the Investment Manager
present, to discuss how the external audit was carried out,
the findings from the audit and whether any issues had
arisen from the auditor’s interaction with the Company’s
various service providers.
The Audit Committee will continue to monitor the
performance of the auditor and make any appropriate
recommendations.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
68
AUDIT COMMITTEE REPORT CONTINUED
Audit and non‑audit fees and independence and objectivity of the auditor
The audit fee for the review of the Annual Report, including non-audit fees and related assurance services, is shown in the
table below:
2022 2021
£’000 £’000
Audit fees including related assurance services 180 100
Non-audit fees – reporting accountant services connected with equity raises 119 —
Total 299 100
The Audit Committee reviews the scope and nature of all
proposed non-audit services before engagement to ensure
that the independence and objectivity of the auditor is
safeguarded. The Board’s policy is that non-audit services
may be carried out by the Company’s auditor unless there is
a conflict of interest or someone else is considered to have
more experience.
The Committee recognises the importance of auditor
objectivity and has reviewed the level of non-audit fees as
noted in the table above to ensure the independence of
RSM (who carried out the non-audit services to date) was
not compromised. In reviewing auditor independence, the
Committee has considered the nature of non-audit services
provided, quantum of fees charged, the expectation of fee
recurrence, and the internal controls applied by RSM to
mitigate potential or perceived conflicts.
Euan Banks is the RSM audit partner responsible for
theaudit of the Financial Statements for the year ended
31March 2022. The Committee is satisfied that the auditor’s
independence and objectivity is not impaired by the
performance of their non-audit services and that the
auditor has fulfilled its obligations to the Company
anditsshareholders.
Internal audit
The Audit Committee considered the need for an internal
audit function during the year and determined that it was
not necessary or appropriate given the current size of the
Group. The Group is managed by the Manager; as such, the
Audit Committee relies on the Manager’s internal systems
and controls. The Finance Director of the Manager is invited
to attend all Board meetings and in addition the Chairman
of the Audit Committee has a separate meeting with the
Finance Director twice a year ahead of the issuance of the
Half-Yearly and Annual Reports. The Audit Committee will
continue to keep this matter under review.
Valuation of property portfolio
The Group has investment properties totalling £1,015 million
asat 31 March 2022. In accordance with IAS 40: Investment
Property, investment property is carried at its fair value as
determined by an external valuer.
This valuation has been conducted by CBRE and has been
prepared as at 31 March 2022, in accordance with the RICS
valuation – Professional Standards UK January 2020 (the
“Red Book”). The Committee met with the team from CBRE
in May 2022 and discussed the assumptions underlying the
individual property valuations and has concluded that the
valuation is appropriate.
Maintenance of REIT status
The UK REIT regime enables the Group, so long as strict
criteria are met, to benefit from favourable income and
capital gains tax treatment. The Group must comply with
the UK REIT regulations to continue to benefit from the
favourable tax regime. The Manager prepares and monitors
the REIT tests, which are reported to the Board on a
quarterly basis.
During the year ended 31 March 2022, the Audit Committee
has therefore monitored the Company’s compliance status
and has considered the requirements for the maintenance
of the Company’s REIT status throughout the year. The Audit
Committee is satisfied that there is full compliance with the
UK REIT regulations and notes the significant headroom for
the financial year.
Evaluation of the Audit Committee
During the year, a thorough evaluation of the Committee’s
performance was carried out as part of the overall
evaluation of the Board. The findings of the evaluation
showed that the Committee continued to work well
together as a unit and the cumulative skills, knowledge and
experience of the Committee members remained adequate
and appropriate for the needs of the Company and its
obligation to its shareholders. Further information on the
Board’s evaluation of its performance and of its Committees
can be found within the Corporate Governance Statement
on pages 62 and 63.
Fair, balanced and understandable
As a result of the work performed, the Audit Committee
hasconcluded that the Annual Report for the year ended
31 March 2022 is fair, balanced and understandable and
provides the information necessary for shareholders to
assess the Company’s position and performance, business
model and strategy, and has reported on these findings to
the Board.
CMA Order
The Company has complied with the provisions of the CMA
Order throughout the year ended 31 March 2022.
Bruce Anderson ACMA FCIOBS
Chairman of the Audit Committee
22 June 2022
Nigel Rich CBE
Chairman of the Management
Engagement Committee
The Manager
maintains a high
standard of
performance and the
continuation of their
services was
considered to be in the
best interests of
shareholders as a
whole.
MANAGEMENT ENGAGEMENT COMMITTEE REPORT
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
69
Composition
Nigel Rich CBE is Chairman of the Management
Engagement Committee, which comprises all of the
independent Directors. The Directors deemed to be
independent are shown in the Director biographies on
pages 56 and 57 and in the table on page 63.
Responsibilities
The key responsibility of the Management Engagement
Committee is to review the services and performance of the
Company’s Manager and other external service providers.
The Management Engagement Committee has a formal
process in place to conduct an annual review of all
third-party service providers and will conduct ad hoc
reviews of any service provider where necessary. The results
of their review are shared with individual service providers.
The Management Engagement Committee also reports the
results of the review to the Board.
Matters considered during the year
The Management Engagement Committee met once
during the year and the reviews were undertaken.
The Manager
The Board delegates the execution of its investment
strategy and business model to the Manager, subject to
theBoard being kept informed of all material property
acquisitions and disposals, including development projects.
The Management Engagement Committee reviewed the
contractual relationship and engagement terms of the
Manager and their performance. The Management
Engagement Committee agreed no changes were deemed
necessary to the Manager’s contractual engagement terms
at present. The Manager’s performance was considered to
be of a high standard.
Other service providers
All other service providers were reviewed, and their terms
ofengagement and performances were considered to be
satisfactory and in the best interests of the Company.
The Management Engagement Committee reviewed the
relationship with M1 Agency LLP, in which Richard Moffitt,
aDirector of the Company, is a Partner. As noted in the
Corporate Governance Statement, the Company uses
M1Agency LLP regularly as an agent for the purchase and
disposal of assets, but not exclusively. The Management
Engagement Committee was satisfied that M1 Agency LLP
provided a valuable service to the Company and that its
fees were market competitive and fully disclosed to the
market as required. The Finance team at the Manager and
the independent members of the Board scrutinised all
proposals received from M1 Agency. Further details of how
conflicts of interest are managed can be found on page 64.
Nigel Rich CBE
Chairman of the Management Engagement Committee
22 June 2022
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
70
Heather Hancock LVO DL
Chairwoman of the
ESGCommittee
I am pleased to
present the ESG
Committee Report for
the year ended
31March 2022.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”)
COMMITTEE REPORT
Statement from the Chairwoman
The ESG Committee was duly set up in April 2021 to scrutinise
performance across the full suite of ESG commitments that
Urban Logistics places on the Manager, as well as relevant
obligations and governance requirements falling directly on
the Company. It refers and reports, as appropriate, to the
Board, and where appropriate to other Committees of the
Board e.g. the Audit Committee on risk.
Composition
The ESG Committee is comprised of myself as Chairwoman,
Nigel Rich CBE, Bruce Anderson and Jonathan Gray, all of
whom are independent Non-Executive Directors. All ESG
Committee members consider that, individually and
collectively, they are each independent and appropriately
experienced to fulfil their role on the ESG Committee within
the sector in which the Company operates. Further detail
regarding individual Director experience can be found
within the Director biographies on pages 56 and 57.
Responsibilities
The ESG Committee advises on and recommends to the
Board its ESG policy and ensures this remains up to date
with the Board’s strategic objective regarding ESG, which is
to achieve high governance standards and to scrutinise the
Manager’s progress in addressing the Board’s ESG priorities
and targets. The ESG Committee takes a strategic approach
and identifies and pursues sustainability issues whereby the
Company has optimal capacity to make a meaningful
impact.
Terms of Reference for the ESG Committee have been
adopted and are reviewed on a regular basis by the Board.
The ESG Committee’s Terms of Reference are available on
the Company’s website www.urbanlogisticsreit.com
Matters considered during the year
The ESG Committee meets at least once a year or more
often if required. The Committee met on two occasions
during the year.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
71
Details of the attendance at those meetings can be found
on page 64. At those meetings, the ESG Committee has:
•
advised on and recommended to the Board its ESG
policy;
•
proposed targets and KPIs to achieve the Board’s policy
objectives;
•
scrutinised the Manager’s progress in addressing the
Board’s ESG priorities and targets;
•
overseen compliance with legal and regulatory
requirements relevant to sustainability, including
corporate governance principles and standards;
•
advised the Audit Committee on specific risks relating to
ESG, for consideration within the Company’s risk register;
•
monitored the Company’s approach and performance in
relation to competitors, relevant benchmarks and
regulator expectations;
•
overseen ESG reporting within the Company’s Annual
Report and reporting to ESG Ratings Agencies as
appropriate, ensuring adherence to reporting
requirements; and
•
reviewed its own performance as an ESG Committee
and its own Terms of Reference.
Further information regarding the Company’s approach to
ESG can also be found on pages 38 to 45.
Heather Hancock LVO DL
Chairwoman of the ESG Committee
22 June 2022
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
72
DIRECTORS’ REMUNERATION REPORT
As disclosed on page 63 the Board as a whole deals with matters of Directors’ remuneration and fulfils the functions of a
Remuneration Committee and considers any changes to the Directors’ remuneration policy. No Directors are involved in
deciding their own remuneration.
In July 2021, Mark Johnson and Richard Moffitt, as unpaid Directors, considered the level of Directors’ fees for the year
ended 31 March 2022 and undertook a benchmarking exercise against peer group companies’ director remuneration.
Following this exercise, they recommended to the Chairman an increase to the annual Directors’ fees of£5,000. They also
recommended to the independent Directors an increase to the annual Chairman’s fee of £5,000. Both recommendations
were accepted, in order toreflect the specific circumstances of the Company, theincreasing duties and responsibilities of
the Directors following the growth of the Company, and the value andamount of time committed by each Director to the
Company’s affairs. As a result of this exercise the base annual fee was increased by £5,000. The fee increases took effect
from 1 July 2021. Further, to allow headroom for future appointments, the Board is proposing to increase the aggregate limit
of Directors’ fees payable under the Company’s Articles of Association from £400,000 to £500,000. Approval from
shareholders for this provision willbe sought at the Company’s upcoming Annual GeneralMeeting.
Performance of the Company
The Company does not have a specific benchmark against which performance is measured. The graph below compares
the total return (assuming all dividends are reinvested) to holders of ordinary shares since IPO, compared to the total
shareholder return of the EPRA NAREIT UK Index, which is the closest broad index against which to measure the
Company’s performance..
The Board is pleased to present the Directors’ Remuneration Report
for the year ended 31March2022.
Directors’ remuneration (audited)
The remuneration paid to the Directors during the year ended 31 March 2022 is set out in the table below:
Year ended Year ended
31 March 2022 31 March 2021
£ £
Fees Expenses Total Fees Expenses Total
Nigel Rich CBE (Chairman) 83,750 27 83,777 78,750 — 78,750
Bruce Anderson
1
48,750 1,832 50,582 42,500 202 42,702
Jonathan Gray 48,750 — 48,750 42,500 — 42,500
Heather Hancock
2
48,333 — 48,333 31,753 — 31,753
Mark Johnson
3
— — — — — —
Richard Moffitt
3
— — — — — —
Total 229,583 1,859 231,442 195,503 202 195,705
1. The Directors are entitled to all reasonable travel, hotel and other expenses incurred in the performance of their duties. As such, Bruce’s travel from
Scotland and overnight stays in London to attend Board meetings have been covered by the Company.
2. Heather Hancock was appointed Chairwoman of the ESG Committee with effect from 6 May 2021.
3. Mark Johnson and Richard Moffitt have waived their right to remuneration as Directors of the Company.
25
(25)
75
125
175
Apr
2016
Oct
2017
Apr
2018
Oct
2018
Apr
2019
Oct
2019
0
Apr
2020
Oct
2020
Apr
2021
Oct
2021
Apr
2022
Cumulative
Total Returns
SHED
Oct
2016
Apr
2017
EPRA NAREIT
UK Index
REVIEW OF PAST PERFORMANCE
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
73
The annual percentage change in remuneration paid to the Directors is set out in the table below:
Year ended Year ended Change to Change to
31 March 2022 31 March 2021 2022 2021
£ £ % %
Nigel Rich CBE 83,750 78,750 6% 5%
Bruce Anderson 48,750 42,500 15% 21%
Jonathan Gray 48,750 42,500 15% 21%
Heather Hancock
1
48,333 31,753 52% —
Mark Johnson
2
— — — —
Richard Moffitt
2
— — — —
1. Heather Hancock was appointed to the Board with effect from 15 June 2020, and appointed Chairwoman of the ESG Committee with effect
from 6 May 2021.
2. Mark Johnson and Richard Moffitt have waived their right to remuneration as Directors of the Company.
Relative importance of spend on pay (unaudited)
The table below sets out significant use of profit and cash in respect of the year ended 31 March 2022 and 31 March 2021:
Year ended Year ended
31 March 2022 31 March 2021 Change
£ £ %
Directors’ remuneration 229,583 195,503 +17%
Investment management fee 5,431,124 2,945,030 +84%
Dividends paid to shareholders 21,654,282 9, 508,458 +128%
Note: the items listed in the table above are as required by The Large and Medium-sized Companies and Groups
(Accountsand Reports) (Amendment) Regulations 2013 with the exception of the investment management fee, which
hasbeen included because the Directors believe it will aid shareholders’ understanding of the relative importance of the
spend on pay.
Directors’ shareholdings (audited)
The interests of the Directors (and any person closely associated) in the shares of the Company are set out below.
Number Percentage of issued
of Ordinary share capital as at
Shares held 31 March 2022 (%)
Nigel Rich CBE (Chairman) 540,536 0.11
Bruce Anderson 50,000 0.01
Jonathan Gray 60,000 0.01
Heather Hancock 14,388 0.003
Mark Johnson
1
309,986 0.07
Richard Moffitt
1
1,142,843 0. 24
1. Mark Johnson and Richard Moffitt are members of Pacific Industrial LLP, which holds 206,813 Ordinary Shares.
The Company has adopted a share dealing code in relation to the Company’s shares, which is based on the requirements
of the Listing Rules and MAR.
There is no requirement under the Company’s Articles of Association for Directors to hold shares in the Company.
None of the independent Directors or any persons connected with them had a material interest in the Company’s
transactions, arrangements or agreements during the year.
There have been no changes to any of the above holdings between 31 March 2022 and the date of this report.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
74
DIRECTORS’ REMUNERATION REPORT CONTINUED
Remuneration policy
Introduction
As the Company is now a constituent of the Main Market of the London Stock Exchange, Directors are required to seek
shareholder approval for a Remuneration Policy at least every three years, except in the event that a change to the Policy is
proposed or the advisory vote on the Directors’ Remuneration Report is not passed in any year subsequent to the approval
of the Policy. Accordingly, the Directors have recommended that the Policy be submitted for shareholder approval for the
first time at the 2022 Annual General Meeting.
Policy
The Company follows the principles of the AIC Code in that Non-Executive Directors’ remuneration should reflect the time
commitment and responsibilities of the role, and that our remuneration policies and practices support the Company’s
strategy and promote its long-term sustainable success. The Board’s policy is that the remuneration of Non-Executive
Directors should reflect the experience of the Board as a whole and be determined with reference to comparable
organisations and appointments. Furthermore, the Board considers that the level of remuneration should be sufficient
toattract and retain the calibre of Directors required to implement the Company’s strategy.
Each of the Directors is entitled to receive a fee from the Company at such rate as may be determined by the Articles
orbyordinary resolution (not exceeding in aggregate £500,000 (subject to the passing of an ordinary resolution at the
AGM) per annum or such other sum as the Company in general meeting shall from time-to-time determine). Save for
theChairman, the fees are £45,000 for each Director per annum. Anadditional fee of £5,000 is paid to Committee chairs,
aswell as to the Senior Independent Director. Mark Johnson andRichard Moffitt have waived their right to remuneration
asDirectors. The Chairman’s fee is £85,000 per annum. The fee for any new Director appointed to the Board will be
determined on the same basis. TheDirectors are also entitled to all reasonable travelling, hotel and other expenses properly
incurred in the proper performance of their duties. No amount has been set aside or accrued by the Company toprovide
pensions, retirement orother similar benefits. The Company has not made any loans to the Directors which are
outstanding, nor has it ever provided any guarantees for the benefit of any Director or the Directors collectively. There are
no performance conditions attaching to the remuneration of the Directors as the Board does not consider such
arrangements or benefits necessary or appropriate for Non-Executive Directors.
Under the Company’s Articles of Association, if by arrangement with the Board, or any committee authorised by the Board,
any Director shall perform or render any special duties or services outside his or her ordinary duties as a Director and not in
his or her capacity as a holder of employment or executive office, he or she may be paid such reasonable additional
remuneration (whether by way of salary, commission, participation in profits or otherwise) as the Board, or any committee
authorised by the Board, may from time to time determine.
No Director has a service contract with the Company, nor are any such contracts proposed, each Director having been
appointed pursuant to a letter of appointment entered into with the Company. The terms of their appointment provide
that Directors shall retire and be subject to election at the first AGM after their appointment. Thereafter, they will be subject
to annual re-election. The Directors’ letters of appointment do not provide for compensation upon termination of
employment. The Directors’ appointments can be terminated in accordance with the Articles. Directors’ appointments
may be terminated earlier by either party giving to the other three months’ prior written notice. The Articles provide that
the office of Director shall be terminated by, among other things: (i) written resignation; (ii) unauthorised absences from
Board meetings for six consecutive months or more; or (iii) written request ofall of the other Directors.
Directors’ and Officers’ liability insurance cover is maintained by the Company, at its expense, on behalf of the Directors.
The Company has also provided indemnities to the Directors in respect of costs or other liabilities which they may incur in
connection with any claims relating to their performance or the performance of the Company whilst they are Directors.
The Company is committed to ongoing shareholder dialogue and any views expressed by shareholders on the fees being
paid to Directors would be taken into consideration by the Board when reviewing the Directors’ remuneration policy and in
the annual review of Directors’ fees.
An ordinary resolution will be put to shareholders at the Company’s AGM on 20 July 2022 to receive and approve the
Directors’ remuneration policy.
On behalf of the Board.
Nigel Rich CBE
Chairman
22 June 2022
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
75
The Directors are pleased to present their report for
the year ended 31 March 2022.
DIRECTORS’ REPORT
Corporate governance
The Corporate Governance Statement can be found on
pages 58 to 64 and forms part of the Directors’ Report.
Directors
The current Directors of the Company were in office during
the whole of the year ended 31 March 2022. The biographies
of all Directors can be found on pages 56 and 57.
All Directors that were in office at 31 March 2022 will stand
for re-election at the Company’s Annual General Meeting on
20 July 2022.
The rules concerning the appointment and replacement of
Directors are governed within the Company’s Articles of
Association and relevant company law.
Share capital
At the Company’s Annual General Meeting on 12 July 2021,
the Company was granted authority to allot Ordinary Shares
up to a maximum nominal amount of £510,091.64
(representing approximately 20% of the issued Ordinary
Share capital of the Company as at 8 June 2021) until the
earlier of the conclusion of the Annual General Meeting to
be held in 2022 and 30 September 2022.
The authorities to allot Ordinary Shares granted at the 2021
AGM were fully utilised in July 2021, when the Company
issued 51,009,164 shares on 13 July 2021.
A special resolution was also passed at the Company’s
Annual General Meeting on 12 July 2021 granting the
Directors authority to repurchase up to 14.99% of the
Company’s issued Ordinary Share capital during the
periodexpiring on the conclusion of the Company’s
AnnualGeneral Meeting in 2022. Renewal of this buy-back
authority will be sought at each Annual General Meeting
ofthe Company or more frequently if required.
The Company made no purchase of its own shares during
the year and the rights attached to the Company’s shares
are set out in the Company’s Articles of Association.
At the Company’s general meeting held on
12November2021, the Company was granted authority to
issue up to 350 million Ordinary Shares and/or C Shares on
a non-pre-emptive basis with effect from the Company’s
admission to the premium segment of the London Stock
Exchange’s Main Market.
The Company was further granted authority to issue up to
an aggregate maximum nominal amount of £1,072,224.74
(equating to 107,222,474 Ordinary Shares and representing
approximately 33% of the Ordinary Share capital of the
Company as at 26 October 2021) provided that this authority
shall expire on the earlier of the conclusion of the next
Annual General Meeting of the Company and
30September2022.
The Company was also granted a general authority to issue
up to 64,983,318 Ordinary Shares (representing
approximately 20% of the Company’s issued share capital
(as at 26 October 2021)) on a non-pre-emptive basis.
The Company’s issued share capital as at 31 March 2022
consisted of 471,975,411 Ordinary Shares of £0.01 pence each.
At the date of this report, 471,975,411 Ordinary Shares of
£0.01 pence each have been issued, are fully paid up and are
quoted on the London Stock Exchange.
At 31 March 2022 and at the date of this report, the total
voting rights of the Company were 471,975,411.
Further details regarding the Company’s issued share
capital are set out in note 27 of the Financial Statements.
Information about securities carrying
votingrights
The following information is disclosed in accordance with
The Large and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013 and
DTR 7.2.6 of the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules:
•
the Company’s capital structure and voting rights and
details of the substantial shareholders in the Company
are set out in note 27 to the Financial Statements and in
the previous paragraph;
•
the giving of powers to issue or buy back the Company’s
shares requires an appropriate resolution to be passed by
shareholders; and
•
there are no restrictions concerning the transfer of
securities in the Company or on voting rights, no special
rights with regard to control attached to securities, and
no agreements between holders of securities regarding
their transfer known to the Company.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
76
DIRECTORS’ REPORT CONTINUED
Substantial shareholdings
So far as is known to the Company, and which is
notifiable under the Disclosure Guidance and
Transparency Rules, as at 31March 2022, there were no
persons who held, directly or indirectly, 3% or more of
the issued Ordinary Shares of the Company’s voting
rights.During the period between 31 March 2022
and22June 2022 (being the latest practicable date
priorto the publication of this document) the Company
has been notified by Waverton Investment
Management Limited of a change in the percentage
represented by their holding. As at 28 April 2022,
Waverton Investment Management Limited had a
holding of 18,974,592 shares, which represented 4.02% of
the Company’s voting rights.
The Manager
The Company initially appointed Pacific Capital Partners
Limited as its AIFM and Manager. On 18 June 2021, the
Company announced that, as part of an internal
reorganisation of the Pacific Group, Pacific Capital Partners
Limited novated its appointment as the Company’s
Alternative Investment Fund Manager to PCP2 Limited,
another wholly owned subsidiary in the Pacific Group.
The Company and the Manager have entered into the
Management Agreement, pursuant to which the Manager
has, subject to overall supervision and direction of the Board,
agreed to provide investment management services to the
Company. PCP2 Limited acts as the Company’s Manager for
the purposes of the AIFMD and certain other ancillary
services. The Manager has delegated the day-to-day
administration of the Company to the Pacific Group.
They are supported administratively by the Manager’s
professional staff. Richard Moffitt and Christopher Turner are
the principal members of the team and report to the Board
at each meeting and other members of the management
team attend as required.
The Manager regularly uses, for its purchase and sales of
assets, M1 Agency LLP, a limited liability partnership in
which Richard Moffitt has an interest. Each transaction is
reviewed by the Manager (excluding Richard Moffitt) and by
the independent Directors to ensure that the fees payable
are in line with market fees and practice. The total fees paid
in the year amounted to £2.0 million (31 March 2021: £2.1
million). For details as to which Directors are independent of
the Manager, please see the Director biographies on pages
56 and 57 and the table on page 63.
The Management Engagement Committee annually
reviews the Manager’s performance and makes
recommendations to the Board as to their continuing
appointment. Further information can be found in the
Management Engagement Committee Report on page 69.
The Investment Management Agreement was extended in
July 2018 and runs to April 2024, including a twelve-month
termination provision.
The Company has a Long-Term Incentive Plan (“LTIP”),
which crystallises in September 2023, accounted for as an
equity-settled share-based payment for the Manager and
its Affiliates. The Board believes that the success of the
Company depends, in part, on the future performance of
the Pacific Group and the Management Team. The Directors
also recognise the importance of ensuring that the Pacific
Group and the Management Team are incentivised and
identify closely with the long-term success of the Company,
in alignment with the shareholders. The LTIP was
established, which the Board believes meets this objective.
The Board reviewed the Company’s management incentive
arrangements during the year and the following terms were
agreed to the annual management fee and the LTIP. These
terms were last reviewed when set by the Board in 2018 and
no further changes have been made since.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
77
Annual management fee
The Company will pay the Manager the following fees,
payable quarterly in arrears:
•
0.95% per annum of the Group’s EPRA NTA up to and
including £250 million;
•
0.90% per annum of the Group’s EPRA NTA in excess of
£250 million and up to and including £500 million; and
•
0.85% per annum of the Group’s EPRA NTA in excess of
£500 million.
LTIP
The excess return on both elements of the LTIP payable to
the Manager is 5%.
The LTIP is calculated by reference to total value created as
follows:
•
the excess EPRA NTA return payable to the Manager shall
be calculated by reference to the increase in the
Company’s EPRA NTA (adjusted for any new issue of
shares) rather than by reference to an increase in the
EPRA NTA per Ordinary Share;
•
the excess share price return payable to the Manager
shall be calculated by reference to the increase in the
market capitalisation of the Company (adjusted for any
new issue of shares) rather than by reference to an
increase in the market price of an Ordinary Share; and
•
the LTIP payment shall be capped at three times the
average annual management fees paid from
7February2020 to the next calculation date, being
September 2023.
For further information, please see note 14 of the Financial
Statements on page 100.
Related party transactions
Details on related party transactions can be found in note
32 of the Financial Statements on pages 111 and 112.
Financial results and dividends
IFRS profit after tax for the year was £171.8 million
(31March2021: £47.6 million), representing a basic and
diluted earnings per share of 48.86 pence, compared with
21.72pence for the prior year.
Adjusted earnings for the year were £23.6 million, which
represents a £8.8 million increase when compared to the
prior year.
The Company is targeting an annual total return of between
10% and 15% through a combination of dividends and
growth in NAV.
The Company pays dividends on the Ordinary Shares on a
half-yearly basis with dividends declared in respect of the six
months ending on 30September and 31 March in each year.
The following interim dividends totalling 7.60 pence have been paid or declared in respect of the year ended 31March2022:
Pence Payment Financial
Description per share date year
Second interim dividend 4.35 July 2022 2022
First interim dividend 3.25 December 2021 2022
No final dividend is being proposed. Further information on dividends paid or declared can be found in note 15 to the
FinancialStatements and in the Financial Review section on pages 33 to 37.
Financial instruments
Details of the financial instruments used by the Group and financial risk management policies can be found in note 24 of
the Financial Statements and in the Principal Risks and Uncertainties section on pages 51 to 54.
Going concern and viability statements
The Company’s going concern and viability statements can be found on pages 55.
The Directors have reviewed the current and projected financial position of the Group, making reasonable assumptions
about future trading performance. As part of the review, the Group has considered its cash balances, its debt maturity
profile, including undrawn facilities, and the long-term nature of the tenant leases.
Employees
There are no senior management or other employees within the Group at either 31 March 2022 or 31 March 2021.
Political donations
No political donations were made by the Company or its subsidiaries during the year or prior year.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
78
DIRECTORS’ REPORT CONTINUED
Significant agreements
On 7 August 2020, the Company entered into a £151 million
loan facility with Barclays, Santander and Lloyds, to replace
the existing loan facility totalling £76 million, which was due
to expire in 2022. This facility provides a three-year term and
includes an option to extend for a further two years.
On 12 March 2021, the Company entered into a £48 million
loan facility with Aviva Investors, and in December 2021
entered into a further £40 million facility. These are in
addition to the £151 million loan facility with Barclays,
Santander and Lloyds which was secured in August 2020.
Further details regarding the principal agreements
between the Company and its service providers, including
the Investment Manager, are set out in note 22 to the
Financial Statements on page 106 and 107.
Articles of Association
During the year, the Company’s Articles of Association
wereamended to reflect the regulatory and governance
requirements of the premium segment of the Main Market
of the London Stock Exchange. Amendments to the
Company’s Articles of Association may only be made by
passing a special resolution of the shareholders of the
Company. The Company’s Articles of Association can be
found on the Company’s website or by application to the
Company Secretary.
Greenhouse gas emissions and Taskforce
on Climate‑related Financial Disclosures
(“TCFD”)
Information about the Group’s greenhouse gas
emissionsand the Company’s voluntary reporting against
the TCFD recommendations is set out in the Strategic
Report on page 41.
Streamlined Energy and Carbon Reporting
Further detail on the Company’s environmental reporting
can be found in the Sustainability Report on pages 38 to 45
and in the Supplementary Information on pages 113 to 123.
Independent auditor
RSM UK Audit LLP has expressed its willingness to continue
as auditor for the financial year ending 31 March 2023.
Aresolution to re-appoint RSM UK Audit LLP will be put
toshareholders at the 2022 Annual General Meeting.
Audit information
The Directors in office at the date of approval of the
Directors’ Report confirm that, so far as they are aware,
there is no relevant audit information of which the
Company’s auditor is not aware.
Each Director has taken all reasonable steps that he or she
ought to have taken as a Director to make him or herself
aware of any relevant audit information and to establish
that the Company’s auditor is aware of that information.
Requirements of the Listing Rules
Listing Rule 9.8.4 requires the Company to include specified
information in a single identifiable section of the Annual
Report or a cross reference table indicating where the
information is set out. The information required under
Listing Rule 9.8.4(7) in relation to allotment of shares is set
out on page 75. The Directors confirm that no additional
disclosures are required in relation to Listing Rule 9.8.4.
Annual General Meeting
The Company’s AGM is scheduled to be held on Wednesday
20 July 2022. A full description of the business to be
conducted at the meeting is set out in the separate notice
of AGM.
Future developments
Further information regarding the future developments of
the Company can be found within the Strategic Report on
pages 1 to 55..
Post balance sheet events
On 21 April 2022, the Group exercised a right to pay
down £51 million in respect of the Barclays loan facility.
The Company has the contractual right to redraw this
debt on ten days’ notice.
On 29 April 2022, the Group acquired a portfolio of five
assets for a total consideration of £13.7 million at a 5.8% NIY.
On 12 May 2022, the Group acquired a site totalling 6,742
sq ft, on a 1.34 acre plot, in Papworth for a consideration
of £1.4 million at a 5.1% NIY.
On 18 May 2022, the Group acquired a 13,301 sq ft
property in Nottingham for a consideration of
£3.3million at a 4.2% NIY.
On 31 May 2022, the Group entered into a new
£47million loan facility with Aviva Investors. This facility
provides a ten-year term at a fixed cost of 3.52%.
This report was approved by the Board on 22 June 2022.
Nigel Rich CBE
Chairman
22 June 2022
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
79
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the Strategic
Report and the Directors’ Report, the Directors’
Remuneration Report, the separate Corporate Governance
Statement and the Financial Statements in accordance with
applicable law and regulations. Company law requires the
Directors to prepare Group and Company Financial
Statements for each financial year. The Directors have
elected under company law and are required under the
Listing Rules of the Financial Conduct Authority to prepare
the Group Financial Statements in accordance with
UK-adopted International Accounting Standards. The
Directors have elected under company law to prepare the
Company Financial Statements in accordance with UK-
adopted International Accounting Standards.
The Group and Company Financial Statements are required
by law and UK-adopted International Accounting Standards
to present fairly the financial position of the Group and the
Company and the financial performance of the Group and
the Company; the Companies Act 2006 provides in relation
to such Financial Statements that references in the relevant
part of that Act to Financial Statements giving a true and
fair view are references to their achieving a fair presentation.
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
the Company and of the profit or loss of the Group and the
Company for that period.
In preparing each of the Group and Company Financial
Statements, the Directors are required to:
a. select suitable accounting policies and then apply them
consistently;
b. make judgements and accounting estimates that are
reasonable and prudent;
c. state whether they have been prepared in accordance
with UK-adopted International Accounting Standards;
and
d. prepare the Financial Statements on the going concern
basis unless it is inappropriate to presume that the Group
and the Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s and the Company’s transactions and disclose
with reasonable accuracy at any time the financial position
of the Group and the Company and enable them to ensure
that the Financial Statements and the Directors’
Remuneration Report comply with the Companies Act
2006. They are also responsible for safeguarding the assets
of the Group and the Company and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
Directors’ statement pursuant to the
Disclosure and Transparency Rules
Each of the Directors, whose names and functions are listed
on pages 56 and 57, confirms that, to the best of each
person’s knowledge:
a. 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 of the Company and the undertakings
included in the consolidation taken as a whole; and
b. the Strategic Report and the Directors’ Report include a
fair review of the development and performance of the
business and the position of the Company and the
undertakings included in the consolidation taken as a
whole, together with a description of the principal risks
and uncertainties that they face.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Urban Logistics REIT Plc website.
Legislation in the United Kingdom governing the
preparation and dissemination of Financial Statements may
differ from legislation in other jurisdictions.
Nigel Rich CBE
Chairman
22 June 2022
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
80
Opinion
We have audited the Financial Statements of Urban
Logistics REIT plc (the ‘parent company’) and its subsidiaries
(the ‘Group’) for the year ended 31 March 2022 which
comprise Consolidated Statement of Comprehensive
Income, Consolidated Statement of Financial Position,
Company Statement of Financial Position, Consolidated
Statement of Cash Flows, Company Statement of Cash
Flows, Consolidated Statement of Changes in Equity and
Company Statement of Changes in Equity and notes to the
Financial Statements, including significant accounting
policies. The financial reporting framework that has been
applied in the preparation of the Group Financial
Statements is applicable law and UK-adopted International
Accounting Standards in conformity with the requirements
of the Companies Act 2006. The financial reporting
framework that has been applied in the preparation of the
parent company Financial Statements is applicable law and
UK-adopted International Accounting Standards and, as
regards the parent company Financial Statements, as
applied in accordance with the provisions of the Companies
Act 2006.
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March 2022 and of the Group’s profit 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-adopted
International Accounting Standards and as applied in
accordance with the Companies Act 2006; and
•
the Financial Statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF URBAN LOGISTICS REIT PLC
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the
Financial Statements section of our report. We are
independent of the Group and parent company in
accordance with the ethical requirements that are relevant
to our audit of the Financial Statements in the UK, including
the FRC’s Ethical Standard as applied to listed public
interest entities and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Webelieve that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key audit
matters
Group
•
Valuation of Investment Property
Parent Company
•
No key audit matters
Materiality Group
•
Overall materiality: £11,790,000
(2021: £7,600,000)
•
Performance materiality:
£8,800,000 (2021: £5,700,000)
Parent Company
•
Overall materiality: £6,890,000
(2021: £4,750,000)
•
Performance materiality:
£5,170,000 (2021: £3,560,000)
Scope
Our audit procedures covered
100% of revenue, 98% of total
assets and 95% of profit before
tax.
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
81
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
oftheGroup Financial Statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, 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. These matters
were addressed in the context of our audit of the Group Financial Statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
We have determined that there are no key audit matters to communicate in our report in relation to the parent company.
Valuation of Investment Property
Key audit matter
description
This is detailed in the Audit Committee report on pages 66 to 68; the significant
accounting judgements and estimates on pages 93 and 94; significant accounting
policies on pages 94 to 97 and notes to the Financial Statements on pages 93 to 112.
The Group owns a portfolio of investment properties located across the UK and the total
value of the portfolio at 31 March 2022 was £1,015 million. The Directors’ assessment of
the value of the investment properties at year end date is considered a key audit matter
due to the magnitude of the total amount, the potential impact of the movement in value
on the reported results, and the subjectivity and complexity of the valuation process.
Thevaluation is carried out by external valuers, CBRE, in line with the methodology
setout in note 16.
How the matter was
addressed in
the audit
We audited the independent valuations of investment properties to ensure that they
hadbeen prepared on a consistent basis for all properties and correctly recorded in the
Financial Statements and in line with the Accounting Standards.
We assessed the external valuer’s qualifications and expertise and considered their terms
of engagement, we also considered their objectivity and any other existing relationships
with the Group and concluded that there was no evidence that the valuer’s objectivity
hadbeen compromised.
We engaged a property valuation specialist as our auditor expert to assist in the review
and challenge of the valuations. In addition, we selected a sample of 13 sites that had
valuation or yield movements that were higher or lower than expected from our overall
review of the portfolio and requested they complete a detailed assessment of each
valuation.
We discussed with the Manager and the valuer the overall movement in property values
and also challenged them on any properties whose movement was not consistent with
overall movements of the entire portfolio, to gain an understanding of why these
exceptions were reasonable.
We tested inputs provided by the Manager to the valuer to ensure these reflected the key
observable inputs for each property and considered whether market data for a sample of
properties was consistent with the valuation report.
Key observations
We concluded that the fair values of the investment properties being adopted by the
Group were appropriate.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
82
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing
andextent of our audit procedures. When evaluating whether the effects of misstatements, both individually and on the
Financial Statements as a whole, could reasonably influence the economic decisions of the users we take into account the
qualitative nature and the size of the misstatements. Based on our professional judgement, we determined materiality
asfollows:
Group Parent company
Overall materiality £11,790,000 (2021: £7,600,000) £6,890,000 (2021: £4,750,000)
Basis for determining overall
materiality
1% of total assets 1% of total assets
Rationale for benchmark applied Total assets used as a benchmark as
assessed that the shareholders will be
primarily interested in the growth in
the value of property, represented by
the property valuation.
Total assets used as a benchmark as
assessed that the shareholders will be
primarily interested in the growth in
the value of the investments held by
the parent company in its property
holding subsidiaries.
Performance materiality £8,800,000 (2021: £5,700,000) £5,170,000 (2021: £3,560,000)
Basis for determining performance
materiality
75% of overall materiality 75% of overall materiality
Reporting of misstatements to the
Audit Committee
Misstatements in excess of £440,000
and misstatements below that
threshold that, in our view, warranted
reporting on qualitative grounds.
Misstatements in excess of £258,500
and misstatements below that
threshold that, in our view, warranted
reporting on qualitative grounds.
An overview of the scope of our audit
The Group consists of 17 components, located in the UK and Jersey. Full scope audits were performed for eleven
components, specific audit procedures for 3 components including the Jersey entity and analytical review procedures were
performed for dormant subsidiaries Urban Logistics Acquisitions 7 Limited, Urban Logistics Acquisitions 8 Limited and
Urban Logistics Acquisitions 9 Limited. All work was performed by RSM UK Audit LLP.
The coverage achieved by our audit procedures was:
Number of Total Profit
components Revenue assets before tax
Full scope audit 11 89% 92% 93%
Specific audit procedures 3 11% 8% 7%
Analytical procedures 3 0% 0% 0%
Total 17 100% 100% 100%
Conclusions relating to going concern
In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of accounting in
the preparation of the Financial Statements is appropriate. Our evaluation of the directors’ assessment of the Group’s and
parent company’s ability to continue to adopt the going concern basis of accounting included review of sensitivity
analysis and forecast compliance with covenants. We concluded that the Directors’ assessment was appropriate in
the circumstances.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s or the parent company’s ability to continue as a
going concern for a period of at least twelve months from when the Financial Statements are authorised for issue.
In relation to the entities reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’ statement in the Financial Statements about whether the
Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF URBAN LOGISTICS REIT PLC
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
83
Other information
The other information comprises the information included in the Annual Report other than the Financial Statements
and our auditor’s report thereon. The Directors are responsible for the other information contained within the Annual
Report. Our opinion on the Financial Statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the Financial Statements or our knowledge obtained in the course of the audit, or otherwise appears
to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement in the Financial Statements themselves.
If,based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the Financial
Statements are prepared is consistent with the Financial Statements and those reports have been prepared in
accordance with applicable legal requirements;
•
the information about internal control and risk management systems in relation to financial reporting processes and
about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency
Rules sourcebook made by the Financial Conduct Authority (the FCA Rules), is consistent with the Financial
Statements and has been prepared in accordance with applicable legal requirements; and
•
information about the Company’s corporate governance code and practices and about its administrative,
management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in:
•
the Strategic Report or the Directors’ Report; or
•
the information about internal control and risk management systems in relation to financial reporting processes and
about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us 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; or
•
a corporate governance statement has not been prepared by the parent company.
Corporate governance statement
We have reviewed the Directors’ statement in relation to going concern, longer-term viability and the part of the
Corporate Governance Statement relating to the parent company’s compliance with the provisions of the UK Corporate
Governance Code, specified for our review by the Listing Rules.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
84
Corporate governance statement continued
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the Financial Statements and our knowledge obtained
during the audit:
•
Directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on pages 51 to 54 and 67;
•
Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and why
the period is appropriate set out on page 55;
•
Directors’ statement on whether it has a reasonable expectation that the Group will be able to continue in operation
and meets its liabilities set out on pages 67;
•
Directors’ statement on fair, balanced and understandable set out on page 68;
•
Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on
page 63;
•
Section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems set out on page 63; and
•
Section describing the work of the Audit Committee set out on pages 66 to 68.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibility Statement set out on page 79, the Directors are responsible for
the preparation of the Financial Statements and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the preparation of Financial Statements that are free
from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the 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 the Directors 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 for the audit of the Financial Statements
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 an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a 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 the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these Financial Statements.
The extent to which the audit was considered capable of detecting
irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient
appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination
of material amounts and disclosures in the Financial Statements, to perform audit procedures to help identify instances of
non-compliance with other laws and regulations that may have a material effect on the Financial Statements, and to
respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the Financial
Statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material
misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to
fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure
that the entity’s operations are conducted in accordance with the provisions of laws and regulations and for the prevention
and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the Group audit
engagement team:
•
obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework
that the Group and parent company operate in and how the Group and parent company are complying with the
legal and regulatory framework;
•
inquired of management, and those charged with governance, about their own identification and assessment of the
risks of irregularities, including any known actual, suspected or alleged instances of fraud; and
•
discussed matters about non-compliance with laws and regulations and how fraud might occur including
assessment of how and where the Financial Statements may be susceptible to fraud.
INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF URBAN LOGISTICS REIT PLC
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
85
The most significant laws and regulations were determined as follows:
Legislation/
Regulation
Additional audit procedures performed by the Group audit engagement
team included:
UK-adopted International
Accounting Standards in
conformity with the
requirements of the
Companies
Act 2006
Review of the financial statement disclosures and testing to supporting
documentation.
Completion of disclosure checklists to identify areas of non-compliance.
REIT status compliance
regulations
Input from a tax specialist was obtained regarding the Group’s compliance with the
REIT requirements.
Consideration of whether any matter identified during the audit required reporting to
an appropriate authority outside the entity.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk Audit procedures performed by the audit engagement team:
Management override
of controls
Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates are
indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that are unusual or
outside the normal course of business.
A further description of our responsibilities for the audit of the Financial Statements is located on the Financial Reporting
Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters which we are required to address
Following the recommendation of the Audit Committee, we were appointed by the Board on 15 February 2021 to audit the
Financial Statements for the year ending 31 March 2021 and subsequent financial periods.
The period of total uninterrupted consecutive appointment is 2 years, covering the years ending 31 March 2021 to
31 March 2022.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the parent company
and we remain independent of the Group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the Audit Committee in accordance with ISAs (UK).
Use of our report
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.
Euan Banks
(Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
22 June 2022
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
86
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
31 March 31 March
2022 2021
Note £’000 £’000
Continuing operations
Revenue 5 3 7 , 8 11 2 4 ,181
Property operating expenses 7 (1, 2 6 2) (1,307)
Net rental income 36 , 549 2 2 , 8 74
Administrative and other expenses (7,15 9) (4 , 2 3 0)
Other income 1, 0 21 15 9
Long-term incentive plan charge 14 (4 , 11 4) (29 5)
Operating profit before changes in fair value of
investment properties and interest rate derivatives 26 ,2 97 18 , 5 0 8
Changes in fair value of investment property 6, 16 149 , 8 9 2 2 5 ,76 0
Profit on disposal of investment property 220 7, 03 5
Operating profit 8 1 76,409 51, 3 0 3
Finance income 58 90
Finance expense 10 (6 , 8 98) (4 , 07 8)
Changes in fair value of interest rate derivatives 2 ,663 287
Exceptional items 11 (4 5 9) —
Profit before taxation 17 1, 7 7 3 4 7, 6 0 2
Tax charge 12 — —
Profit and total comprehensive income (attributable to the shareholders) 17 1, 7 7 3 4 7, 6 0 2
Earnings per share – basic 13 48. 86p 21.7 2p
Earnings per share – diluted 13 48. 86p 21.7 2p
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
87
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Year ended Year ended
31 March 31 March
2022 2021
Note £’000 £’000
Non-current assets
Investment property 16 1 ,029,071 5 15 , 7 9 4
Intangible assets 47 12
Interest rate derivatives 23 1, 6 0 3 —
Total non-current assets 1, 0 3 0 , 7 21 5 15 , 8 0 6
Current assets
Trade and other receivables 19 20,965 3 5 , 411
Cash and cash equivalents 20 12 7, 3 7 9 6 0, 459
Total current assets 14 8 , 3 4 4 9 5 , 870
Total assets 1,17 9 , 0 6 5 6 11 , 6 7 6
Current liabilities
Trade and other payables 21 (2 3 ,7 52) (7 ,484)
Deferred rental income (9 ,0 6 5) (5 , 56 8)
Total current liabilities (3 2 , 8 17) (13 ,0 52)
Non-current liabilities
Long-term rental deposits (5 ,6 9 8) (4 ,12 5)
Lease liability (8 ,7 2 0) (6 ,74 8)
Interest rate derivatives 23 — (1, 0 6 0)
Other borrowings (3, 058) (2 , 8 8 2)
Bank borrowings 22 (2 3 6 , 14 0) (19 6 , 3 5 4)
Total non-current liabilities (253, 6 1 6)
(211,169)
Total liabilities (286,433) (22 4 ,22 1)
Total net assets 892 ,632 3 8 7, 4 5 5
Equity
Share capital 27 4 ,7 2 0 2 , 550
Share premium 28 4 3 8 , 418 89,6 44
Capital reduction reserve 29 2 2 8 ,76 0 2 2 8 ,76 0
Other reserves 14 4,465 3 51
Retained earnings 31 216 , 2 6 9 6 6 ,15 0
Total equity 8 92 ,6 32 3 8 7, 4 5 5
Net asset value per share – basic 33 18 9 .12p 15 1. 9 2p
Net asset value per share – diluted 33 18 9 .12p 15 1. 9 2p
The Financial Statements of Urban Logistics REIT plc (registered number 09907096) were approved by the Board of
Directors and authorised for issue on 22 June 2022 and signed on its behalf by:
Nigel Rich CBE
Chairman
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
88
COMPANY STATEMENT OF FINANCIAL POSITION
Year ended Year ended
31 March 31 March
2022 2021
Note £’000 £’000
Non-current assets
Investment subsidiaries 18 552,766 297,766
Intangible assets 47 12
Total non-current assets 552,813 297,778
Current assets
Trade and other receivables 19 109,374 34,476
Cash and cash equivalents 20 27,695 1,791
Total current assets 137,069 36,267
Total assets 689,882 334,045
Current liabilities
Trade and other payables 21 (4,426) (1,316)
Total current liabilities (4,426) (1,136)
Total liabilities (4,426) (1,136)
Total net assets 685,456 332,729
Equity
Share capital 27 4,720 2,550
Share premium 28 438,418 89,644
Capital reduction reserve 29 228,760 228,760
Other reserves 14 4,465 351
Retained earnings 31 9,093 11, 424
Total equity 685,456 332,729
The Company has not presented its own Statement of Comprehensive Income, as permitted by section 408 of the
Companies Act 2006. The Company made a profit of £19.3 million (31 March 2021: £16.0 million).
The Financial Statements of Urban Logistics REIT plc (registered number 09907096) were approved by the Board
of Directors and authorised for issue on 22 June 2022 and signed on its behalf by:
Nigel Rich CBE
Chairman
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
89
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended Year ended
31 March 31 March
2022 2021
Note £’000 £’000
Cash flows from operating activities
Profit for the year (attributable to equity shareholders) 171 , 7 7 3 47, 6 0 2
Add: amortisation and depreciation 97 49
Less: changes in fair value of investment property 6, 16 (14 9 , 8 9 2) (26 , 2 5 0)
Less: changes in fair value of interest rates swaps (2 , 6 6 3) (287)
Less: profit on disposal of investment property (22 0) (7, 03 5)
Less: finance income — (9 0)
Add: finance expense 10, 23 6,898 4 ,0 78
Add: long-term incentive plan 14 4 ,114 295
Decrease/(increase) in trade and other receivables 9,024 (3 4 , 8 31)
Increase in trade and other payables 18 , 6 3 6 8 ,436
Cash generated from/(used in) operations 5 7, 7 6 7 (8 , 0 3 3)
Net cash flow generated from/(used in) operating activities 5 7, 7 6 7 (8 , 0 3 3)
Investing activities
Purchase of investment properties 16 (315 , 7 8 8) (17 1 , 314)
Capital expenditure on investment properties 16 (4 4 ,75 4) (3 0 , 5 2 5)
Disposal of investment properties 16 8, 38 0 29, 2 39
Acquisition of subsidiary, net of cash acquired 17 (1, 2 7 0) (9 2 , 7 2 2)
Net cash flow used in investing activities (35 3,432) (2 6 5 , 32 2)
Financing activities
Proceeds from issue of Ordinary Share capital 27 358 , 300 9 2, 337
Cost of share issue 28 (7,356) (2 , 0 32)
Bank borrowings drawn 22 40, 000 199 , 36 4
Bank borrowings repaid 22 — ( 7 5 , 7 0 1)
Loan arrangement fees paid (1, 3 0 0) (2 , 670)
Other borrowings drawn — 2, 8 82
Interest paid 10 (5,405) (3 , 2 28)
Interest received — 90
Dividends paid to equity holders 15 (2 1, 6 5 4) (9 , 5 0 8)
Net cash flow generated from financing activities 362, 5 85 2 01, 5 3 4
Net increase/(decrease) in cash and cash equivalents for the period 66 , 920 (7 1 , 8 2 1)
Cash and cash equivalents at start of period 60, 459 132 , 28 0
Cash and cash equivalents at end of period 1 2 7, 3 7 9 6 0, 459
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
90
COMPANY STATEMENT OF CASH FLOWS
31 March 31 March
2022 2021
Note £’000 £’000
Cash flows from operating activities
Profit for the period (attributable to equity shareholders) 19,323 15,966
Add: depreciation 13 5
Less: finance income (34) (85)
Less: dividends received from subsidiaries (23,040) —
Add: long-term incentive plan 14 4,114 295
Increase in trade and other receivables (203) (8)
Increase in trade and other payables 2 491
Cash generated from operations 175 16,664
Net cash flow generated from operating activities 175 16,664
Investing activities
(Increase)/decrease in loan due from Group undertakings (50,147) 106,939
Investment in subsidiary 18 (253,400) (203,966)
Purchase of intangible assets (48) —
Net cash flow used in investing activities (303,595) (97,027)
Financing activities
Proceeds from issue of Ordinary Share capital 27 358,300 92,337
Cost of share issue 28 (7,356) (2,032)
Interest received 34 85
Dividends paid to equity holders 15 (21,654) (9,508)
Net cash flow generated from financing activities 329,324 80,882
Net increase in cash and cash equivalents for the period 25,904 519
Cash and cash equivalents at start of period 1,791 1,272
Cash and cash equivalents at end of period 27,695 1,791
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
91
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital
Share Share reduction Other Retained
capital premium reserves reserves earnings Total
Year ended 31 March 2022 £’000 £’000 £’000 £’000 £’000 £’000
1 April 2021 2,550 89,6 44 228,7 60 35 1 6 6, 1 50 387,455
Profit for the period — — — — 1 71 ,773 1 71 ,773
Total comprehensive income — — — — 1 71 ,773 1 71 ,773
Dividends to shareholders — — — — (21,654) (21,654)
Long-term incentive plan — — — 4,1 1 4 — 4,1 1 4
Issue of Ordinary Shares 2 , 1 70 348,774 — — — 35 0,94 4
31 March 2022 4,720 438,418 2 28,760 4, 465 216,269 8 92,6 32
1 April 2020 1 , 88 6 228, 764 — 56 28 ,056 258,762
Profit for the period — — — — 4 7 ,6 02 4 7 ,602
Total comprehensive income — — — — 4 7 ,6 02 4 7 ,602
Dividends to shareholders — — — — (9,508) (9, 508)
Long-term incentive plan — — — 295 — 295
Issue of Ordinary Shares 664 89,6 40 — — — 90 , 304
Transfer to capital reduction reserve — (228, 760) 228,7 60 — — —
31 March 2021 2,550 89,6 44 228,7 60 35 1 6 6, 1 50 387 , 45 5
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
92
COMPANY STATEMENT OF CHANGES IN EQUITY
Capital
Share Share reduction Other Retained
capital premium reserves reserves earnings Total
Year ended 31 March 2022 £’000 £’000 £’000 £’000 £’000 £’000
1 April 2021 2,550 89,644 228,760 351 11,424 332,729
Profit for the period — — — — 19,323 19,323
Total comprehensive income — — — — 19,323 19,323
Dividends to shareholders — — — — (21,654) (21,654)
Long-term incentive plan — — — 4,114 — 4,114
Issue of Ordinary Shares 2,170 348,774 — — — 350,944
31 March 2022 4,720 438,418 228,760 4,465 9,093 685,456
1 April 2020 1,886 228,764 — 56 4,966 235,672
Profit for the period — — — — 15,966 15,966
Total comprehensive income — — — — 15,966 15,966
Dividends to shareholders — — — — (9,508) (9,508)
Long-term incentive plan — — — 295 — 295
Issue of Ordinary Shares 664 89,640 — — — 90,304
Transfer to capital reduction reserve — (228,760) 228,760 — — —
31 March 2021 2,550 89,644 228,760 351 11,424 332,729
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
93
NOTES TO THE FINANCIAL STATEMENTS
1. Corporate information
Urban Logistics REIT plc (the “Company”) and its subsidiaries
(the “Group”) carry on the business of property lettings
throughout the United Kingdom. The Company is a public
limited company incorporated and domiciled in England
andWalesand Wales and listed on the Main Market of the London
Stock Exchange. The registered office address is 6th Floor,
65Gresh65 Gresham Street, London, United Kingdom, EC2V 7NQ.
2. Basis of preparation
The Group and parent company have elected to prepare
theFinancial Statements in accordance with UK adopted
International Accounting Standards (“IAS”) and
interpretations issued by the IFRS Interpretations Committee
(“IFRS IC”) applicable to companies reporting under UK
adopted IFRS.
The Group’s financial information has been prepared on
a historical cost basis, except for investment property and
derivative interest rate caps which have been measured
at fair value.
The functional and presentational currency of the Group is
considered to be pounds sterling as this is the currency of
the primary environment in which the Company operates.
The Group has chosen to adopt European Public Real
Estate Association (“EPRA”) best practice guidelines for
calculating key metrics such as net tangible assets and
earnings per share (www.epra.com/finance/financial-
reporting/guidelines).
The Company has not presented its own Statement of
Comprehensive Income, as permitted by section 408 of
theCompanies Act 2006. The Company made a profit of
£19.3million (31 March 2021: £16.0 million).
All amounts presented in the notes to the Financial
Statements are to thenearest £1,000 unless
otherwisestated.
Going concern and viability statement
The Directors have reviewed the current and projected
financial position of the Group, making reasonable
assumptions about future trading performance. As part of
the review, the Group has considered its cash balances, its
debt maturity profile, including undrawn facilities, and the
long-term nature of the tenant leases.
The Group has undertaken risk assessments in respect of
the impact on key objectives and has appropriate response
plans such as stress testing, monitoring of tenant
performance and financial reviews.
On the basis of this review, and after making due enquiries,
the Directors have a reasonable expectation that the
Company and the Group have adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis
in preparing the Annual Report and Financial Statements.
3. Significant accounting judgements,
estimatesand assumptions
The preparation of the Financial Statements in conformity
with the generally accepted accounting practices requires
management to make estimates and judgements that
affect the reported amounts of assets and liabilities as well
as the disclosure of contingent assets and liabilities at the
Statement of Financial Position date and the reported
amounts of revenue and expenses during the
reportingperiod.
Key sources of estimation uncertainty
Fair value of investment property and
properties under construction
The Group values its investment properties using a yield
capitalisation methodology. Principal assumptions and
management’s underlying estimation of the fair value of
those relate to: capitalised occupancy levels; expected
future growth in rental income and operating costs;
maintenance requirements; capitalisation rate; and discount
rates. There are inter-relationships between the valuation
inputs and they are primarily determined by market
conditions. The effect of an increase in more than one input
could be to magnify the impact on the valuation. However,
the impact on the valuation could be offset by the
inter-relationship of two inputs moving in opposite
directions, e.g.an increase in rent may be offset by a
decrease in occupancy, resulting in minimal net impact
onthe valuation. A more detailed explanation of the
background, methodology and judgements made by
management that are adopted in the valuation of the
investment properties is set out in note 15 to the
FinancialStatements.
The market value of investment property is determined, by
real estate valuation experts, to be the estimated amount
for which a property should exchange on the date of the
valuation in an arm’s length transaction. Each property has
been valued on an individual basis. The valuation experts
use recognised valuation techniques and the principles of
IFRS 13.
The valuations have been prepared in accordance with RICS
Valuation – Global Standards January 2020 (the “Red Book”).
Factors reflected include current market conditions, annual
rentals, lease lengths and location. The significant methods
and assumptions used by the valuers in estimating the fair
value of investment property, including sensitivities, are set
out in note 23.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
94
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Borrowing costs
Borrowing costs in relation to interest charges on
bankborrowings are expensed in the period to which they
relate.Fees incurred in relation to the arrangement of bank
borrowings are capitalised and expensed on a straight-line
basis over the term of the loan using the effective
interestmethod.
Segmental reporting
IFRS 8 requires operating segments to be identified on the
basis of internal reports that are regularly reported to the
Board to allocate resources to the segments and to assess
their performance. The Directors consider there to be only
one reportable segment, being the investment in the
United Kingdom into small logistics warehouses.
Investment properties
Investment properties comprises completed property that
is held to earn rentals or for capital appreciation, or both,
and development properties that are under development
oravailable for development.
Investment properties are initially recognised at cost
including transactions costs. Transaction costs include
transfer taxes and professional fees for legal services.
Subsequent to initial recognition, investment properties are
carried at fair value, as determined by real estate valuation
experts. Gains or losses arising from changes in fair value
are recognised in the Statement of Comprehensive Income
in the period in which they arise.
In accordance with IAS 40, investment property held as
aleasehold is stated gross of the recognised lease liability.
Leasehold properties are classified as investment properties
and included in the balance sheet at fair value. The
obligation to the lessor for the leasehold is included
inthebalance sheet at the present value of minimum
leasepayments.
Investment properties cease to be recognised when they
have been disposed of. The difference between the disposal
proceeds and the carrying amount of the asset is
recognised in the Statement of Comprehensive Income.
A disposal is recognised on exchange if the sale contract
isunconditional; if the sale contract on exchange is
conditional, the disposal is recognised on legal completion.
Financial instruments
Financial assets and financial liabilities are recognised in the
Statement of Financial Position when the Group becomes a
party to the contractual provisions of the instrument.
Financial assets
Trade receivables are held in order to collect the contractual
cash flows and are initially measured at the transaction
price as defined in IFRS 15, as the contracts of the Group
donot contain significant financing components. Trade
receivables are subsequently measured at amortised cost
using the effective interest method less loss allowance.
Impairment losses are recognised based on lifetime
expected credit losses in profit or loss.
3. Significant accounting judgements,
estimatesand assumptions continued
Judgement of business combinations
The Directors assess whether the acquisition of a property
through the purchase of a corporate vehicle should be
accounted for as an asset purchase or a business
combination. Where the acquired vehicle is an integrated set
of activities and assets that is capable of being conducted
and managed to provide a return to investors, the transaction
is accounted for as a business combination. Where this is not
the case the transaction is treated as an asset purchase. The
Directors assess when the risks and rewards associated with
an acquisition or disposal have transferred.
4. Principal accounting policies
The principal accounting policies applied in the preparation
of these Financial Statements are set out below. These
policies, which are also applicable to the Financial
Statements of the Company, have been consistently
appliedto all the years presented.
Basis of consolidation
The Financial Statements consolidate the accounts of the
Company and all subsidiary undertakings drawn up to the
same year end.
Business combinations
The Group has acquired companies that own real estate.
At the time of acquisitions, the Group considers whether
each acquisition represents the acquisition of a business
orthe acquisition of an asset. The Group accounts for an
acquisition as a business combination where an integrated
set of activities is acquired in addition to the property.
Where such acquisitions are not judged to be the
acquisition of a business, they are not treated as business
combinations. Rather, the cost to acquire the corporate
entity is allocated between identifiable assets and liabilities
of the entity based upon their relative fair values at the
acquisition date. Accordingly, no goodwill or additional
deferred tax arises.
Investment in subsidiaries
Investments in subsidiaries are stated at cost less any
provision for permanent diminution in value. Realised gains
and losses are dealt with through the Statement of
Comprehensive Income. A review for impairment is carried
out if events or changes in circumstances indicate that the
carrying amount may not be recoverable, in which case an
impairment provision is recognised and charged to the
Statement of Comprehensive Income.
Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in profit and loss over the borrowings
period using the effective interest method.
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
95
Exceptional items
The Group defines exceptional items to be those
thatwarrant, by virtue of their nature, size or frequency,
separatedisclosure on the face of the income statement
where, in the opinion of the Directors, this enhances the
understanding of the Group’s financial performance.
Leases
At inception, the Group assesses whether a contract is or
contains a lease. This assessment involves the exercise of
judgement about whether the Group obtains substantially
all the economic benefits from the use of that asset, and
whether the Group has the right to direct the use of
theasset.
The Group recognises a right-of-use (“ROU”) asset and a
corresponding lease liability at the commencement date of
the lease. The ROU asset is initially measured based on the
present value of lease payments, plus initial direct costs and
the cost of obligations to refurbish the asset, less any
incentives received.
Lease payments include fixed payments. When the lease
contains an extension or purchase option that the Group
considers reasonably certain to be exercised, the cost of
theoption is included in the lease payments.
Each lease payment is allocated between the liability and
finance cost. The lease payments are discounted using the
interest rate implicit in the lease if that rate can be readily
determined or, if not, the incremental borrowing rate is
used which is the weighted average cost of debt. The
finance cost is charged to profit or loss over the lease
periodso as to produce a constant rate of interest on the
remaining balance of the liability for each period.
As the head leases meet the definition of investment
property, it is initially recognised in accordance with IFRS 16,
and then subsequently accounted for as if it was investment
property in accordance the Group’s accounting policy. After
initial recognition the ROU head lease asset is subsequently
carried at fair value and the valuation gains and losses
recognised within “Changes in fair value of investment
property” in the Statement of Comprehensive Income.
ROU assets are included in investment properties and the
lease liability included in the Statement of Financial Position.
Other receivables are held in order to collect the
contractualcash flows and accordingly are measured at
initial recognition at fair value, which ordinarily equates
to cost, and are subsequently measured at amortised cost
less impairment due to their short-term nature.
Financial liabilities
Financial liabilities, equity instruments and warrant
instruments issued by the Group are classified in
accordance with the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument. An equity instrument is
any contract that evidences a residual interest in the assets
of the Group after deducting all of its liabilities. Equity
instruments issued by the Group are recorded at the
proceeds received, net of direct issue costs.
Trade and other payables are initially measured at fair value
and are subsequently measured at amortised cost using the
effective interest rate method.
Derivative financial instruments
Derivative financial instruments, comprising interest
ratecaps and swaps for hedging purposes, are initially
recognised at cost and are subsequently measured at fair
value, being the estimated amount that the Group would
receive or pay to terminate the agreement at the period
end date, taking into account current interest rate
expectations and the current credit rating of the Group
andits counterparties.
The gain or loss at each fair value measurement date is
recognised in the Statement of Comprehensive Income.
Premiums payable under such arrangements are initially
capitalised into the Statement of Financial Position,
subsequently they are remeasured and held at their
fairvalues.
Hedge accounting has not been applied in these Financial
Statements.
Revenue recognition
Rental income and service charge income from operating
leases on properties owned by the Group is accounted for
on a straight-line basis over the term on the lease. Rental
income excludes service charges and other costs directly
recoverable from tenants.
Lease incentives are amortised on a straight-line basis over
the term of the lease.
Licence fees receivable
The Group receives licence fee income from the date of
initial investment in a forward funded agreement to the
date of practical completion. This is payable by the
developer to the Group on practical completion and
typically reflects the approximate level of rental income
that is expected to be payable under the lease. IAS 40.20
states that investment property should be recognised
initially at cost, being the consideration paid to acquire the
asset, therefore such licence fees are deducted from the
cost of the investment property and recognised within
revenue, as licence fee income, within the Statement of
Comprehensive Income.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
96
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
4. Principal accounting policies continued
Long-term incentive plan
There is a long-term incentive plan (“LTIP”) in place wherebyPacific Industrial LLP, an affiliate of PCP2 Limited (the
“Manager”) has subscribed for C Ordinary Shares issued in Urban Logistics Holdings Limited, a subsidiary of Urban Logistics
REIT plc (the “Company”). Under the terms of the LTIP, the Company is obliged to acquire the C Ordinary Shares in Urban
Logistics Holdings Limited, in return for services provided by Pacific Industrial LLP, subject to certainconditions.
The fair value of the share price element of the LTIP award is calculated at the grant date using the Monte Carlo model.
The resulting cost is charged to the Statement of Comprehensive Income over the vesting period.
At each year end, the Directors make an assessment of the fair value EPRA NTA element of the LTIP award based on
Company forecasts. The resulting cost is charged to the Statement of Comprehensive Income over the vestingperiod.
Further details have been provided in note 14.
Taxation
Taxation on the profit or loss for the year not exempt under UK REIT regulations comprises current and deferred tax.
Current tax is expected tax payable on any non-REIT taxable income for the year, using tax rates enacted or substantively
enacted at the period end date, and any adjustment to tax payable in respect of previous years.
Dividends
Dividends on equity shares are recognised when they become legally payable. In the case of interim dividends, this is when
paid. In the case of final dividends, this is when approved by the shareholders at the Annual General Meeting.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term deposits with banks and other financial institutions, with
an initial maturity of three months or less.
Standards and interpretations effective in the current year
In the current year, the following amendments have been adopted which were effective for the periods commencing on or
after 1 January 2021:
Name Description
IFRS 9, IAS 39, IFRS 7, Interest Rate Benchmark Reform – Phase 2
IFRS 4 and IFRS 16 (amendments)
IFRS 4 (amendments) Applying IFRS 9 Financial Instruments with IFRS 4
Insurance Contracts
IFRS 16 (amendments) COVID-19 related rent concessions
IFRS 16 (amendments) COVID-19 related rent concessions beyond 30 June 2021
The adoption of these amendments has not had a material impact on the Financial Statements.
Standards and interpretations in issue buy not yet effective
At the date of authorisation of these Financial Statements there were standards and amendments which were in issue but
which were not yet effective and which have not been applied. The principal ones were:
Name Description
IAS 16 (amendments) Property, Plant and Equipment – Proceeds before Intended Use
(effective 1 January 2022)
Annual Improvements 2018-2020 Cycle Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 4)
(effective 1 January 2022)
IFRS 3 (amendments) Reference to the Conceptual Framework (effective 1 January 2022)
IAS 37 (amendments) Onerous Contracts – Cost of Fulfilling a Contract (effective 1 January 2022)
IAS 1 (amendments) Presentation of Financial Statements: Classification of Liabilities as Current or
Non-Current and Classification of Liabilities as Current or Non-Current –
Deferral of Effect Date (effective 1 January 2023)
The Directors do not expect the adoption of these standards and amendments to have a material impact on the Financial
Statements.
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
97
Non-GAAP financial information
The Directors have identified certain measures that they believe will assist the understanding of the performance of
thebusiness. The measures are not defined under IFRS and they may not be directly comparable with other companies’
adjusted measures. The non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of
performance, but they have been included as the Directors consider them to be important comparable and key measures
used within the business for assessing performance. The key non-GAAP measures identified by the Group have been
defined in the supplementary information and, where appropriate, reconciliation to the nearest IFRS measure has
beengiven.
5. Revenue
The Group is involved in UK property ownership and letting and is considered to operate in a single geographical and
business segment. The total revenue of the Group for the year was derived from its principal activity, being that of property
lettings. No single tenant accounted for more than 10% of the Group’s gross rental income in both financial years.
All revenue is recognised over the period for which space is occupied by the tenant on a time apportionment basis.
31 March 31 March
2022 2021
£’000 £’000
Rental income 36,626 23,240
Service charge income 193 473
Licence fee 992 468
Total revenue 37,811 24,181
6. Changes in fair value of investment property
31 March 31 March
2022 2021
£’000 £’000
Revaluation surplus 153,474 26,250
Provision for profit share (3,582) (490)
Total changes in fair value of investment property 149,892 25,760
A provision for profit share is included in other creditors where there is a third party interest.
7. Property operating expenses
31 March 31 March
2022 2021
£’000 £’000
Vacant property costs 685 489
Letting and marketing fees 122 126
Premise expenses 63 114
Service charge expenses 392 569
Other — 9
Total property operating expenses 1,262 1,307
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
98
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
8. Operating profit
Operating profit is stated after charging:
31 March 31 March
2022 2021
£’000 £’000
Directors’ remuneration (note 9) 257 218
Long-term incentive plan (note 14) 4 ,114 295
Auditor’s fees
– Fees payable for the audit of the Company’s annual accounts 25 25
– Fees payable for the ISRE 2410 review of the Company’s interim accounts 20 —
– Fees payable for the audit of the Company’s subsidiaries 135 75
– Fees payable for other services 119 —
Total auditor’s fee 299 100
Fees payable for other services related to the provision of reporting accountant services in connection with the equity
fundraise in December 2021. These fees have been treated as share issue expenses and offset against share premium.
9. Directors’ remuneration
31 March 31 March
2022 2021
£’000 £’000
Directors’ fees 230 196
Employer’s National Insurance 27 22
Total 257 218
A summary of the Directors’ emoluments, including the disclosures required by the Companies Act 2006, is set out in the
Directors’ Remuneration Report. Two Directors are also set to benefit from the long-term incentive plan (“LTIP”). For further
information refer to related party transactions in note 32.
10. Finance expense
31 March 31 March
2022 2021
£’000 £’000
Interest on bank borrowings 4,938 2,738
Swap interest paid 467 450
Amortisation of loan arrangement fees 1,086 665
Other interest payable 178 123
Interest on lease liability 229 102
Total 6,898 4,078
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
99
11. Exceptional items
On 7 December 2021, the Company announced its admission to the premium segment of the Main Market of the London
Stock Exchange. As part of the migration from AIM to the Main Market, the Company incurred one-off expenses totalling
£0.5 million (31 March 2021: nil).
12. Taxation
As a REIT, the Group is exempt from corporation tax on the profits and gains from its property investment business,
provided it continues to meet certain conditions as per REIT regulations. For the year ending 31 March 2022 and
31March2021, the Group did not have any non-qualifying profits and accordingly there is no tax charge in the period.
Anynon-qualifying profits and gains however will continue to be subject to corporation tax.
13. Earnings per share
The calculation of the basic earnings per share (“EPS”) was based on the profit attributable to Ordinary Shareholders
divided by the weighted average number of Ordinary Shares outstanding during the period, in accordance with IAS 33.
31 March 31 March
2022 2021
Profit attributable to Ordinary Shareholders
Total comprehensive income (£’000) 171,773 47,602
Weighted average number of Ordinary Shares in issue 351,533,233 219,191,930
Basic earnings per share (pence) 48.86p 21.72p
Number of diluted shares under option/warrant — —
Weighted average number of Ordinary Shares for the purpose of dilutive earnings per share 351,533,233 219,191,930
Diluted earnings per share (pence) 48.86p 21.72p
Adjustments to remove:
Changes in fair value of investment property (£’000) (149,892) (25,760)
Changes in fair value of interest rate derivatives (£’000) (2,663) (287)
Profit on disposal of investment properties (£’000) (220) (7,035)
EPRA earnings (£’000) 18,998 14,520
EPRA earnings per share (pence) 5.40p 6.62p
Adjustments to add back:
LTIP adjustment (£’000) 4 ,114 295
Exceptional items (£’000) 459 —
Adjusted earnings (£’000) 23,571 14,815
Adjusted earnings per share (pence) 6.71p 6.76p
The number of Ordinary Shares is based on the time weighted average number of shares throughout the year.
EPRA earnings per share is based on the European Public Real Estate Association’s definition of earnings and is
definedasprofit or loss for the year after tax excluding changes in fair value of investment property, changes in the fair
value of interest rate derivatives and profit or loss on disposal of investment properties. The Group then makes further
Company-specific adjustments for the impact of exceptional items and IFRS 2 share-based payment charges. The Group
discloses an adjusted earnings per share measure as it provides a clearer understanding of the Group’s underlying trading
performance.
The potential dilutive impact of the long-term incentive plan (“LTIP”) shares under option has not been reflected in the
table above due to the settlement of the LTIP being at the Board’s discretion. The settlement of the LTIP in equity would
have an immaterial impact on the earnings per share, therefore, this has not been disclosed.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
100
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
14. Long-term incentive plan (“LTIP”)
The Company has an LTIP, accounted for as an equity-settled share-based payment. At 31 March 2022 and 31 March 2021
Pacific Industrial LLP, an affiliate of PCP2 Limited, has subscribed for 1,000 C Ordinary Shares of £0.01 each issued in Urban
Logistics Holdings Limited, a subsidiary of the Company.
Charge for
Class of Fair value the year
31 March 2022 share £’000 £’000
Option granted in August 2017
– Share price element C Ordinary 131 21
– EPRA NTA element C Ordinary 7,418 4,093
7, 549 4,114
Charge for
Class of Fair value the year
31 March 2021 share £’000 £’000
Option granted in August 2017
– Share price element C Ordinary 131 22
– EPRA NTA element C Ordinary 869 273
1,000 295
An independent valuation of the fair value of these shares was carried out at the grant date. The valuation was prepared in
accordance with International Financial Reporting Standard 2 (“IFRS 2”): Share-based Payments. These shares were
subsequently revalued at the modification date, in March 2020, with no material change.
The Monte Carlo valuation model has been used to estimate the fair value of the share price element of the award.
The assumptions used are as follows:
16 August
Date of grant 2017
Share price at grant £1.25
Hurdle (post-dividend adjustment) £1.53
Expected volatility 15.0%
Measurement period 6.1 years
Dividend yield 4.86%
Risk-free rate 0.63%
The Directors have made an assessment of the EPRA NTA element based on Company forecasts. An assessment has been
made at 31 March 2022, and will be made at each subsequent year end, with any adjustment to expected value being
charged as an expense in the Statement of Comprehensive Income.
From 7 February 2020 (the “Revised First Calculation Date”) to 30 September 2023 (the “Second Calculation Date”) the LTIP
will be assessed as follows:
•
the EPRA NAV element is 5% of the amount by which the Company’s EPRA NAV at the Second Calculation Date
exceeds the Company’s EPRA NAV as at the Revised First Calculation Date and an annualised 10% hurdle thereon
(adjusted for any new issue of shares, all distributions including inter alia dividends and any returns of capital); and
•
the share price element is 5% of the amount by which the market capitalisation of the Company at the Second
Calculation Date exceeds the market capitalisation of the Company as at the Revised First Calculation Date and an
annualised 10% hurdle thereon (adjusted for any new issue of shares, all distributions including inter alia dividends and
any returns of capital).
The balance included within Other reserves at 31 March 2022 and 31 March 2021 relates solely to the LTIP.
The LTIP payment is capped at three times the average annual management fees paid from 7 February 2020 to the Second
Calculation Date. Based on current Company forecasts the cap is c.£17 million.
If there is a change of control, the LTIP will be assessed by applying the relevant offer price to the EPRA NAV element and
the share price element calculations at the date of the change of control.
The LTIP will be settled, at the Board’s discretion, in either shares of Urban Logistics REIT plc, or cash, or a combination
of both.
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
101
15. Dividends
31 March 31 March
2022 2021
£’000 £’000
Ordinary dividends paid
2020: second interim dividend: 3.85 pence per share — 3,378
2021: first interim dividend: 3.25 pence per share — 6,130
2021: second interim dividend: 4.35 pence per share 11,0 94 —
2022: first interim dividend: 3.25 pence per share 10,560 —
Total dividends paid in the year (£’000) 21,654 9,508
Total dividends paid in the year (per share) 7.60p 7.10p
Total dividends declared in respect of the financial year (per share) 7.60p 7.60p
On 11 November 2021, the Company declared an interim dividend for the first half of the financial year ended 31March2022
of 3.25 pence per Ordinary Share. The dividend was paid as a property income distribution on 17December2021 to
shareholders on the register on 11 November 2021.
On 23 June 2022, the Company declared a second interim dividend of 4.35 pence per Ordinary Share in respect of the six
months to 31 March 2022. The dividend will be paid as a property income distribution on 22 July 2022 to shareholders on
the register on 1 July 2022. The second interim dividend has not been recognised in the Financial Statements for the year
ended 31 March 2022.
16. Investment properties
In accordance with IAS 40: Investment Property, investment property is carried at its fair value as determined by an
external valuer. This valuation has been conducted by CBRE and has been prepared as at 31 March 2022, in accordance
with the RICS Valuation – Professional Standards UK January 2020 (the “Red Book”).
The valuations have been prepared in accordance with those recommended by the International Valuation Standards
Committee and are consistent with the principles in IFRS.
Investment Investment
properties properties Development
freehold leasehold properties Total
31 March 2022 £’000 £’000 £’000 £’000
At 1 April 2021 399,311 107,760 500 507,571
Property acquisitions through corporate acquisitions 1,270 — — 1,270
Property acquisitions 268,129 32,476 15,183 315,788
Capital expenditure 4,088 3,214 37,452 44,754
Property disposals (8,160) — — (8,160)
Revaluation surplus 114,689 22,955 15,830 153,474
Transfer of completed development properties 34,230 — (34,230) —
At 31 March 2022 813,557 166,405 34,735 1,014,697
Add: tenant lease incentives 4,400 1,021 — 5,421
Investment properties excluding head
lease ROU assets at 31 March 2022 817,957 167,426 34,735 1,020,118
Add: right-of-use asset — 8,953 — 8,953
Total investment properties at 31 March 2022 817,957 176,379 34,735 1,029,071
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
102
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
16. Investment properties continued
Investment Investment
properties properties Development
freehold leasehold properties Total
31 March 2021 £’000 £’000 £’000 £’000
At 1 April 2020 151,559 46,020 9,400 206,979
Property acquisitions through corporate transactions 84,118 10,589 — 94,707
Property acquisitions 109,369 60,555 1,390 171,314
Capital expenditure 3,802 1,902 24,821 30,525
Property disposals (18,198) (4,006) — (22,204)
Revaluation surplus in year 18,263 7,448 539 26,250
Transfer of completed development properties 35,650 — (35,650) —
Reclassification between freehold and leasehold 14,748 (14,748) — —
At 31 March 2021 399,311 107,760 500 507,571
Add: tenant lease incentives 991 287 — 1,278
Investment properties excluding head
lease ROU assets at 31 March 2021 400,302 108,047 500 508,849
Add: right-of-use asset — 6,945 — 6,945
Total investment properties at 31 March 2021 400,302 114,992 500 515,794
The allocation between Freehold and Leasehold investment properties as at 31 March 2021 has been updated to reflect a
reclassification where £14,748,000 has been reallocated to freehold investment property when it was previously allocated to
leasehold investment property. This reclassification has no impact on the total investment property value recognised in the
Consolidated Statement of Financial Position.
Total rental income for the year recognised in the Consolidated Statement of Comprehensive Income amounted to
£36.6million (31 March 2021: £23.2 million).
Tenant lease incentive at 31 March 2022 totalled £5.42 million (31 March 2021: £1.28 million).
Investment property – level 3
The Group’s investment property assets are classified as level 3, as defined by IFRS 13, in the fair value hierarchy. Level 3
inputs for the asset or liability that are derived from formal valuation techniques include inputs for the asset or liability that
are not based on observable market data.
The valuation has been prepared on the basis of fair value (“FV”), in accordance with IFRS 13, which is defined as:
“The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.”
Fair value, for the purpose of financial reporting under IFRS 13, is effectively the same as market value, which is defined as:
“The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and
a willing seller in an arm’s length transaction, after proper marketing and where the parties had acted knowledgeably,
prudently and without compulsion.”
The table below analyses:
•
the fair value measurement at the end of the reporting year;
•
a description of the valuation techniques applied;
•
the inputs used in the fair value measurement, including the ranges of rent charged to different units within the same
building; and
•
for level 3 fair value measurements, quantitative information about significant unobservable inputs used in the fair value
measurement.
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
103
Valuation techniques
The yield capitalisation approach is used when valuing the Group’s commercial investment properties which uses market
rental values with a market capitalisation rate. The resulting valuations are cross-checked against the net initial yields and
the fair market vales based on recent market transactions.
For investment properties under development, properties are valued using a residual method approach. The fair value is
calculated by estimating the fair value of the completed property using the yield capitalisation approach less estimated
costs to complete and a risk premium.
The key unobservable inputs made in determining the fair values are as follows:
Key
Fair value Valuation unobservable
31 March 2022 £’000 technique inputs Range
Completed 979,962
Yield capitalisation
ERV £30,000-£3,033,446 per annum
investment Equivalent yield 3.8%-12.2%
Development 34,735 Residual method Various
property
1,014,697
Key
Fair value Valuation unobservable
31 March 2021 £’000 technique inputs Range
Completed investment 507,071
Yield capitalisation
ERV £64,125-£2,043,000 per annum
property Equivalent yield 4.0%-12.0%
Development 500 Residual method Various
property
507,571
Sensitivities
Significant increases/decreases in the ERV (per sq ft per annum) and rental growth per annum in isolation would result in a
significantly higher/lower fair value measurement. Significant increases/decreases in the long-term vacancy rate and
discount rate (and exit yield) in isolation would result in a significantly higher/lower fair value measurement.
Generally, a change in the assumptions made for the ERV (per sq ft per annum) is accompanied by:
•
a similar change in the rent growth per annum and discount rate (and exit yield); and
•
an opposite change in the long-term vacancy rate.
A 5% increase in estimated rental value (“ERV”) would increase the completed property portfolio valuation by £50.7 million
and a 5% decrease would decrease the completed property portfolio valuation by £50.7 million. Similarly, a decrease in net
initial yield (“NIY”) by 0.25% would increase the completed property portfolio valuation by £49.8 million and an increase of
0.25% would decrease the completed property portfolio valuation by £45.3 million.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
104
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
17. Acquisition of subsidiaries
On 16 December 2021, the Group obtained sole control of Urban Logistics Dundee Limited, a property investment company
incorporated in Scotland, through the acquisition of the entire issued share capital. The company was acquired for £1 and
then in turn acquired the investment property.
The Directors considered whether this acquisition meets the definition of the acquisition of a business or the acquisition
ofa group of assets and liabilities. It was concluded that the acquisition did not meet the criteria for the acquisition of a
business as outlined in IFRS 3 as it did not have an integrated set of activities and assets that were capable of being
conducted and managed for the purpose of providing a return in the form of dividends, lower costs or other economic
benefits directly to investors.
The table below sets out the initial fair values to the Group in respect of this acquisition.
Redemption Fair value
Book value of liabilities adjustments Total
£’000 £’000 £’000 £’000
Investment properties — — 1,270 1,270
Total — — 1,270 1,270
Net cash outflow arising on acquisition
Total consideration 1,270
Less: cash and cash equivalents acquired —
Cash consideration net of cash acquired 1,270
18. Investments
Investments are analysed as follows:
Group Company
£’000 £’000
At 1 April 2021 — 297,766
Additions — 255,000
At 31 March 2022 — 552,766
The Company additions in the year related solely to capitalised inter-company debt.
Details of the Group’s subsidiary undertakings as at 31 March 2022, all of which are included in the consolidated Financial
Statements, are given below:
Company name Country of incorporation Principal activity Effective Group interest
Urban Logistics Holdings Limited England and Wales Holding Company 99.99%
Urban Logistics Acquisitions 1 Limited England and Wales Holding Company 99.99%
Urban Logistics Acquisitions 2 Limited England and Wales Property Investment 99.99%
Urban Logistics Acquisitions 3 Limited England and Wales Property Investment 99.99%
Urban Logistics Acquisitions 4 Limited England and Wales Property Investment 99.99%
Urban Logistics Acquisitions 5 Limited England and Wales Property Investment 99.99%
Urban Logistics Acquisitions 6 Limited England and Wales Property Investment 99.99%
Urban Logistics Acquisitions 7 Limited England and Wales Property Investment 99.99%
Urban Logistics Acquisitions 8 Limited England and Wales Property Investment 99.99%
Urban Logistics Acquisitions 9 Limited England and Wales Property Investment 99.99%
Urban Logistics Prop Co 1 (AC) Limited England and Wales Property Investment 99.99%
Urban Logistics Hoddesdon Limited England and Wales Property Investment 99.99%
Urban Logistics K Holdings Limited England and Wales Holding Company 99.99%
Urban Logistics K Properties Limited England and Wales Property Investment 99.99%
Urban Logistics Dundee Limited Scotland Property Investment 99.99%
EOS Property Unit Trust Jersey Property Investment 99.99%
Sheds General Partner 2 Limited
1
England and Wales Dormant 99.99%
Sheds GP Nominee Co. 1 Limited
1
England and Wales Dormant 99.99%
Sheds GP Nominee Co. 2 Limited
1
England and Wales Dormant 99.99%
1. At 31 March 2022, these companies were in liquidation.
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
105
Unless otherwise stated, the registered office address for companies incorporated in England and Wales: 124 Sloane Street,
London, SW1X 9BW.
Registered office address of the trustees of the EOS Property Unit Trust incorporated in Jersey: 47 Esplanade, St Helier,
Jersey, JE1 0BD.
Registered office address of the company incorporated in Scotland: 5th Floor, 1 Exchange Crescent, Conference Square,
Edinburgh, Scotland, EH3 8UL.
Registered office address for Urban Logistics Acquisitions 9 Limited is 3rd Floor, 19-20 Bond House, Woodstock Street,
London, W1C 2AN
Pacific Industrial LLP, an affiliate of the Manager, owns 0.001% of the issued share capital in Urban Logistics Holdings Limited.
These shares have no right to dividends; therefore, no amounts have been recognised within non-controlling interests.
19. Trade and other receivables
Group Company Group Company
31 March 31 March 31 March 31 March
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Trade receivables 3,992 — 1, 211 2
Other receivables 15,234 114 33,372 —
Amounts due from Group undertakings — 109,174 — 34,387
Prepayments 1,231 86 773 87
Licence fee receivable 508 — 55 —
Total 20,965 109,374 35,411 34,476
Trade receivables are due within 30 days of the date at which the invoice is generated and are not interest bearing in
nature. All trade receivables relate to amounts that are less than 30 days overdue as at the year-end date. Due to their short
maturities, the fair value of trade and other receivables (including licence fee receivable) approximates their book value.
Amounts due from Group undertakings have been issued without terms and are interest free; therefore, the full amount
has been recognised within trade and other receivables due within one year.
Trade receivables comprise rental income which is due on contractual quarter days. At 31 March 2022, £4,021,745
(31March2021: £1,210,520) was due from tenants. Trade receivables are written off when there is no reasonable expectation
of recovery. During the year, the Group has written off £29,764 (31 March 2021: £15,200), equivalent to 0.05% (31 March 2021:
0.07%) of all rent demanded over the year.
Included within Other receivables is £13,300,560 (31 March 2021: £1,850,584) due from HMRC in relation to VAT recoverable
arising from investment properties acquired close to the year end which did not qualify as transfers of a going concern
(“TOGC”), as such VAT was charged on the transaction. The full amount was recovered post year end.
20. Cash and cash equivalents
Group Company Group Company
31 March 31 March 31 March 31 March
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Cash and cash equivalents 127,379 27,695 60,459 1,791
Total 127, 379 27,695 60,459 1,791
Group cash and cash equivalents available include £5.70 million (31 March 2021: £4.13 million) of restricted cash in the form
of rental deposits held on behalf of tenants.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
106
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21. Trade and other payables
Group Company Group Company
31 March 31 March 31 March 31 March
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Falling due in less than one year
Trade and other payables 3,092 17 3,077 1,130
Social security and other taxes — 369 — 51
Accruals 13,586 2,299 2,813 76
Amounts owed to Group companies — 1,600 — —
Lease liability 262 — 218 —
Other creditors 6,812 141 1,376 59
Total 23,752 4,426 7,484 1,316
The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.
Due to their short maturities, the fair value of trade and other payables, accruals and lease liabilities approximates their
bookvalue.
22. Bank borrowings and reconciliation of liabilities to cash flows
from financing activities
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised
in profit or loss over the period of the borrowings using the effective interest method.
Bank
borrowings
31 March 2022 £’000
Balance at 1 April 2021 196,354
Bank borrowings drawn in the year 40,000
Loan arrangement fees paid (1,300)
Non-cash movements:
Amortisation of loan arrangement fees 1,086
Total bank borrowings per the Consolidated Group Statement of Financial Position 236,140
Being:
Drawn debt 239,364
Unamortised loan arrangement fees (3,224)
Total bank borrowings per the Consolidated Group Statement of Financial Position 236,140
Bank
borrowings
31 March 2021 £’000
Balance at 1 April 2020 74,696
Bank borrowings drawn in the year 199,364
Bank borrowings repaid in the year (75,701)
Loan arrangement fees paid (2,670)
Non-cash movements:
Amortisation of loan arrangement fees 665
Total bank borrowings per the Consolidated Group Statement of Financial Position 196,354
Being:
Drawn debt 199,364
Unamortised loan arrangement fees (3,010)
Total bank borrowings per the Consolidated Group Statement of Financial Position 196,354
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
107
On 7 August 2020, the Group entered into a new £151.0 million loan facility with Barclays Bank plc, Santander UK plc and
Lloyds Bank plc, to replace the existing loan facility totalling £75.7 million, which was due to expire in 2022. This facility
provides a three-year term, with the option to extend for a further two years. Interest is charged at a fixed margin of 2.10%
plus GBP SONIA.
On 7 August 2020, the Group drew £122.4 million from the new loan facility. A further £25.0 million was drawn on
15February 2021. On 26 February 2021, the remaining £3.6 million of loan facility was drawn.
The £151.0 million facility is hedged by way of interest rate swaps, on a notional loan amount of £89.3 million. The weighted
average capped rate at 31 March 2022 was 0.74% (31 March 2021: 0.74%).
On 12 March 2021, the Group entered into a new £48.4 million loan facility with Aviva Investors (“Tranche A”). This facility
provides a seven-year term at a fixed cost of 2.34%. The loan facility includes an accordion, allowing the total loan facility
to increase to a maximum of £200.0 million.
On 21 December 2021, the Group drew a further £40.0 million from the existing facility with Aviva Investors (“Tranche B”).
Tranche B is an extension to the existing seven-year facility and has a fixed cost of 2.26%.
The bank borrowings from both facilities are secured over the investment properties owned by the Group.
23. Interest rate derivatives
The Group has used interest rate swaps to mitigate exposure to interest rate risk. The total fair value of these contracts is
recorded in the Statement of Financial Position. The interest rate derivatives are marked to market by the relevant
counterparty banks on a quarterly basis. Any movements in the fair value of the interest rate derivatives are taken to
changes in fair value of interest rate derivatives in the Statement of Comprehensive Income.
Year ended Year ended
31 March 31 March
2022
2021
£’000 £’000
Non-current assets/(liabilities): derivative interest rate swaps:
At beginning of year (1,060) (1,347)
Change in fair value in the year 2,663 287
Total 1,603 (1,060)
24. Financial risk management
Financial instruments – Group
The Group’s financial instruments comprise financial assets and liabilities that arise directly from its operations: cash and
cash equivalents, trade and other receivables, trade and other payables, lease liabilities and accruals, interest rate
derivatives and bank borrowings. The main purpose of these financial instruments is to provide finance for the acquisition
and development of the Group’s investment property portfolio.
Book value Fair value Book value Fair value
31 March 31 March 31 March 31 March
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Financial assets
Trade and other receivables 6,176 6,176 32,732 32,732
Cash and short-term deposits 127,379 127,379 60,459 60,459
Interest rate derivatives 1,603 1,603 — —
Financial liabilities
Trade and other payables (23,490) (23,490) (11, 6 0 9) ( 11, 6 0 9)
Bank loans (239,364) (239,364) (199, 364) (199,364)
Lease liabilities (8,982) (8,982) (6,748) (6,748)
Interest rate derivatives — — (1,060) (1,060)
Amounts totalling £14,789,932 have been deducted from Trade and other receivables in relation to prepayments, VAT and
other debtors. These have been deducted as there is either no contractual right to receive cash or relate to a right to receive
goods or services in the future.
An amount totalling £261,677 has been deducted from Trade and other payables in relation to lease obligations due in less
than one year, which has instead been included in this table within Lease liabilities.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
108
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
24. Financial risk management continued
Credit risk
Credit risk is the risk of financial loss to the Group if a client or counterparty fails to meet it contractual obligations.
The Group’s credit risk is primarily attributable to its trade receivables. The Group has implemented policies that require
appropriate credit checks on potential tenants before lease agreements are signed. The amount of exposure to any
individual counterparty is subject to a limit, which is reassessed annually by the Board.
Outstanding trade receivables are regularly monitored. The maximum exposure to credit risk at the reporting date is the
carrying value of each class of financial asset.
There is also credit risk attributable to the Group’s cash and short-term deposits. The Board considers the credit risk of
banks and only utilises appropriately rated institutions.
Trade receivables
Trade receivables mainly consist of amounts invoiced for tenant rentals, and are presented in the Statement of Financial
Position net of loss allowances. Trade receivables are written off when there is no reasonable expectation of recovery.
During the year, the Group has collected 99.95% (31 March 2021: 99.93%) of all rent demanded, and 0.05% (31 March 2021:
0.07%) was written off. Calculation of the loss allowance as at 31 March 2022 and 31 March 2021 has not been disclosed
based on the closing allowance being immaterial.
Interest rate risk
The Group has both interest-bearing assets and interest-bearing liabilities. Interest-bearing assets comprise only cash and
cash equivalents which earn interest at a variable rate. The Group’s debt strategy is to minimise the effect of a significant
rise in underlying interest rates by utilising interest rate swaps.
The Group has not provided sensitivity analysis on interest rates in this note as the impact would not be material for both
financial years.
The Directors will revisit the appropriateness of this policy should the Group’s operations change in size or nature.
Details of the terms of the Group’s borrowings are disclosed in note 22.
Market risk
Market risk is the risk that the fair values of financial instruments will fluctuate due to changes in market prices. The
financial instruments held by the Group that are affected by market risk are principally the Group’s cash balances along
with an interest rate cap entered into to mitigate interest rate risk.
Foreign exchange risk
There is no foreign exchange risk to the Group and Company as all trading is by GBP.
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
109
Liquidity risk
The Group actively maintains a medium-term debt finance that is designed to ensure it has sufficient available funds for
operations and committed investments. The Group monitors its levels of working capital to ensure that it can meet its debt
repayments as they fall due.
The following table details the Group’s remaining contractual maturity for the Group’s non-derivative financial liabilities
with agreed maturity periods. The table has been drawn based on undiscounted cash flows of the financial liabilities based
on the earliest date on which the Group can be required to pay. The tables include both interest and principal cash flows:
Six months Six to One to Two to More than
or less twelve months two years five years five years Total
£’000 £’000 £’000 £’000 £’000 £’000
31 March 2022
Bank borrowings 3,115 3,098 6,248 155,065 88,364 255,890
Lease liabilities 143 132 291 861 40,531 41,958
Trade and other payables 23,752 — — — — 23,752
Rent deposits — — 756 568 4,374 5,698
27,010 3,230 7,295 156,494 133,269 327,298
Six months Six to One to Two to More than
or less twelve months two years five years five years Total
£’000 £’000 £’000 £’000 £’000 £’000
31 March 2021
Bank borrowings 2,236 2,223 4,471 152,228 48,364 209,522
Lease liabilities 113 113 226 678 20,989 22,119
Trade and other payables 7,484 — — — — 7,484
Rent deposits — — — 1,087 3,038 4,125
9,833 2,336 4,697 153,993 72,391 243,250
Included within the contracted payments is £16.53 million (31 March 2021: £10.16 million) bank interest payable up to the
point of maturity across both facilities.
Financial instruments – Company
The Company’s financial instruments comprise amounts due from and owed to Group undertakings, cash and cash
equivalents, other receivables (including licence fees), and trade and other payables.
Book value Fair value Book value Fair value
31 March 31 March 31 March 31 March
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Financial assets
Trade and other receivables 109,288 109,288 34,388 34,388
Cash and short-term deposits 27,695 27,695 1,791 1,791
Financial liabilities
Trade and other payables (3,964) (3,964) (1, 317) (1, 317)
Fair value hierarchy
The Company uses the following hierarchy for determining the fair value of financial instruments:
Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities.
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
or indirectly.
Level 3: inputs for the asset or liability that are derived from formal valuation techniques that include inputs for the asset or
liability that are not based on observable market data.
Interest rate derivatives are classified as level 2 financial instruments. There were no transfers between levels 1, 2 and 3 fair
value measurement during the current or prior year.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
110
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
25. Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order
to provide returns for shareholders and continue to qualify for UK REIT status.
The Group defines capital as being share capital plus reserves. The Board of Directors monitors the level of capital as
compared to the Group’s debt facility and adjusts the ratio of debt to capital as is determined to be necessary, by issuing
new shares, reducing or increasing debt, paying dividends and returning capital to shareholders.
The Directors intend that the Group will maintain a conservative level of aggregate borrowings with a medium-term target
of 30-40% of the Group’s gross assets.
26. Capital commitments
The Group has entered into contracts with unrelated parties for the construction and refurbishment of warehouses with a
total value of £60.4 million (31 March 2021: £22.8 million). At 31 March 2022, £40.6 million of such commitments remained
outstanding (31 March 2021: £5.6 million).
27. Share capital
31 March 31 March
2022 2022
Number £’000
Authorised, issued and fully paid up at 1 pence each 471, 975 , 411 4 ,7 20
At beginning of period 255,045,821 2,550
Issued and fully paid 13 July 2021 69,870,766 699
Issued and fully paid 7 December 2021 147,058,824 1,471
At 31 March 2022 471,975,411 4,720
On 13 July 2021, the Company raised £108 million through the issue of 69,870,766 Ordinary Shares at an issue price of 155.00
pence per share.
On 7 December 2021, the Company raised £250 million through the issue of 147,058,824 Ordinary Shares at an issue price
of 170.00 pence per share.
28. Share premium
Share premium relates to amounts subscribed for share capital in excess of nominal value less any associated issue costs
that have been capitalised.
31 March 31 March
2022 2021
£’000 £’000
Balance brought forward 89,644 228,764
Share premium on the issue of Ordinary Shares 356,130 91,672
Share issue costs (7,356) (2,032)
Transfer to capital reduction reserve — (228,760)
438,418 89,644
29. Capital reduction reserve
31 March 31 March
2022 2021
£’000 £’000
At beginning of the year 228,760 —
Transfer from share premium — 228,760
228,760 228,760
On 8 August 2020, the Company, by way of a Special Resolution, cancelled the then value of its share premium, by an Order
of the High Court of Justice, Chancery Division. As a result, £228.8 million was transferred from the share premium reserve.
The capital reduction reserve is classified as a distributable reserve.
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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Annual Report and Accounts 2022
111
30. Leases
The Group as lessor
Future aggregate minimum rentals receivable under non-cancellable operating leases are:
< One Two to > Five
year five years years Total
£’000 £’000 £’000 £’000
31 March 2022 45,896 146,854 173,959 366,709
31 March 2021 26,506 85,741 83,805 196,052
The Group as lessee
The Group’s minimum lease payments under non-cancellable leases are as follows:
< One Two to > Five
year five years years Total
£’000 £’000 £’000 £’000
31 March 2022 262 973 7,747 8,982
31 March 2021 218 809 5,939 6,966
The total cash outflow in the year in respect of the lease liability was £294,000 (31 March 2021: £115,504). The incremental
borrowing rate applied was 3.0% (31 March 2021: 3.0%).
The total gross lease payments under non-cancellable leases are £41,958,197 (31 March 2021: £22,119,207) over a period from
the balance sheet date to December 2908 (31 March 2021: January 2156).
Reconciliation of lease obligations
£’000
Brought forward 6,966
Cash movements (294)
Non-cash movements 2,310
Carried forward 8,982
31. Retained earnings
Retained earnings relates to net gains and losses less distributions to owners not recognised elsewhere.
Group Company
31 March 31 March
2022 2022
£’000 £’000
Balance at the beginning of the year 66,150 11,424
Retained profit for the year 171,773 19,323
Second interim dividend year ended 31 March 2021 (11,0 94) (11,0 94)
First interim dividend year ended 31 March 2022 (10,560) (10,560)
At 31 March 2022 216,269 9,093
32. Related party transactions
The terms and conditions of the Investment Management Agreement are described in the Management Engagement
Committee Report. During the year, the amount paid for services provided by PCP and PCP2 Ltd (the “Manager”) totalled
£5.43million (31 March 2021: £2.95 million). The total amount outstanding at the year end relating to the Investment
Management Agreement was £1.96 million (31 March 2021: £1.07 million).
Long-term incentive plan
Under the terms of the Company’s long-term incentive plan, at 31 March 2022, Pacific Industrial LLP, an affiliate of
PCP2Ltd, had subscribed for shares in Urban Logistics Holdings Limited, a subsidiary of Urban Logistics REIT plc. Further
details have been provided in note 14.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
112
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
32. Related party transactions continued
M1 Agency LLP
During the year, the Group incurred fees totalling £2,004,105 (31 March 2021: £2,104,427) from M1 Agency LLP, a partnership
in which Richard Moffitt is a member. These fees were incurred in the acquisition, letting and sale of investment properties.
The total amount outstanding at the year end relating to M1 Agency LLP was £323,358 (31 March 2021: £909,341).
For the transactions listed above, Richard Moffitt’s benefit derived from the profit allocation he receives from M1
Agency LLP as a member and not from the transaction.
The Board, with the assistance of the Manager, excluding Richard Moffitt, reviews and approves each fee payable to
M1 Agency LLP, and ensures the fees are in line with market rates and on standard commercial property terms.
Transactions with subsidiaries
Under IFRS, we are required to disclose all inter-company transactions that took place for all subsidiary undertakings of the
Company. Transactions between the Company and its subsidiaries are in the normal course of business. Such transactions
are eliminated on consolidation.
During the year, fees of £7,673,294 (31 March 2021: £4,112,308) were charged to Urban Logistics Acquisitions 1 Limited, a
subsidiary undertaking incorporated in England and Wales, from Urban Logistics REIT plc. At 31 March 2022, £3,085,378
(31March 2021: £nil) was due from Urban Logistics Acquisitions 1 Limited.
During the year, Urban Logistics REIT plc carried out transactions with Urban Logistics Holdings Limited, a subsidiary
undertaking incorporated in England and Wales. The total amount of these transactions was a net loan increase of
£74,219,611 (31 March 2021: increase of £107,466,666). At 31 March 2022, Urban Logistics REIT plc was due £108,078,039
(31March 2021: £33,858,428) from Urban Logistics Holdings Limited.
During the year, Urban Logistics REIT plc received a dividend of £23,040,000 from Urban Logistics Holdings Limited
(31March 2021: £16,000,000).
Remuneration of key management personnel
Key management personnel for the Group and Company comprise the Non-Executive Directors. Key management
personnel interests and compensation are outlined in note 9.
33. Net asset value per share (“NAV”)
Basic NAV per share is calculated by dividing net assets in the Consolidated Statement of Financial Position attributable
to Ordinary Shareholders by the number of Ordinary Shares outstanding at the end of the period.
Net asset values have been calculated as follows:
31 March 31 March
2022 2021
£’000 £’000
Net assets per Consolidated Statement of Financial Position (£’000) 892,632 387,455
Adjustment for:
Fair value of interest rate derivatives (£’000) (1,603) 1,060
Intangible assets (£’000) (47) (12)
EPRA net tangible assets (£’000) 890,982 388,503
Ordinary Shares:
Number of Ordinary Shares in issue at period end 471, 975 ,411 255,045,821
IFRS NAV per share (basic and diluted) 189.12p 151.92p
EPRA NTA per share 188.78p 152. 33p
34. Post balance sheet events
On 21 April 2022, the Group exercised a right to pay down £51 million in respect of the Barclays loan facility. The Company
has the contractual right to redraw this debt on ten days’ notice.
On 29 April 2022, the Group acquired a portfolio of five assets for a total consideration of £13.7 million at a 5.8% NIY.
On 12 May 2022, the Group acquired a site totalling 6,742 sq ft, on a 1.34 acre plot, in Papworth for a consideration of
£1.4 million at a 5.1% NIY.
On 18 May 2022, the Group acquired a 13,301 sq ft property in Nottingham for a consideration of £3.3 million at a 4.2% NIY.
On 31 May 2022, the Group entered into a new £47 million loan facility with Aviva Investors. This facility provides a ten-year
term at a fixed cost of 3.52%.
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
113
SUPPLEMENTARY INFORMATION
EPRA Aligned Supplementary Sustainability
Information and Index of Indicators
We have chosen to report our material environmental, social
and governance data in alignment with EPRA Sustainability
Best Practices Recommendations (“sBPR”). We describe our
assessment of materiality in the “Our Material Impacts”
section on page 39. This will enable a comparison against
our peers and help set clear benchmarks for the Company
moving forwards.
Our reporting response has been split into three sections:
•
overarching recommendations;
•
environmental performance measures; and
•
social and governance performance measures.
EPRA overarching recommendations
Organisational boundaries
Our EPRA reporting covers the properties owned by the
Group, which at 31 March 2022 included a portfolio of 113
industrial and logistics properties. An operational control
approach has been adopted for greenhouse gas foot
printing as it reflects the REITs ability to effect change
implement operating policies. Urban logistics REIT has
nodirect employees and is externally managed by the
investment management team from PCP2 Ltd.
The PCP2 Ltd investment management team receives
instructions from the Board of the REIT to establish and
implement policies including for ESG issues, and as such,
has been included for this reporting within the operational
control approach.
The reporting of Scope 3 emissions from tenant-obtained
energy consumption is additional to EPRA’s Core
requirements. We chose to do so because we recognise
that as our portfolio comprises of FRI assets, emissions from
tenant-obtained energy supplies are the most significant to
our carbon footprint. We will continue to communicate and
work collaboratively with tenants on carbon emissions, as
this will be fundamental to improving the data coverage of
our portfolio and helping to identify key opportunities to
minimise our carbon footprint.
We do not yet have data for embodied carbon associated
with development works completed in the reporting year
and so are unable to report it.
In 2021/22, Urban Logistics has reported absolute
performance for GHG emissions. 2020/21 is the base year for
reporting on GHG emissions and is used for like-for-like data
comparison.
Coverage
All our properties within our direct and indirect operational
control are included within this report. We state the data
coverage for Environmental Performance Measures by floor
area in our data notes for each of the performance
measures reported below.
Estimation of landlord and tenant
utility consumption
Where data is not available for the full reporting period,
then the missing data has been estimated to fill the gaps.
These estimates were made using known consumption for
the supply in question in the preceding periods and
annualising the data on a pro rata basis.
Landlord-obtained energy and water data has been
estimated using known consumption where data gaps
exist, typically between last invoice and tenant taking
occupation or last invoice and year end. No like for like
Landlord-obtained energy performance measures have
been estimated.
The following proportion of tenant data is estimated for the
period ended 2022:
•
electricity 17%;
•
fuels 17%;
•
GHG 17%; and
•
water 14% .
Head office energy was estimated using floor areas and
theBetter Building Partnership’s Real Estate Environmental
Benchmark (REEB) Typical Conditioned Office
Benchmark2021.
Third-party assurance
All data is subject to review by our ESG consultants, CBRE’s
Investor ESG team, but we do not currently have third-party
verification in place.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
114
SUPPLEMENTARY INFORMATION CONTINUED
EPRA Aligned Supplementary Sustainability
Information and Index of Indicators continued
EPRA overarching recommendations continued
Boundaries – reporting on landlord
and occupier consumption
Performance measures reported as Landlord-obtained
refers mostly to properties that are vacant and includes one
property where the landlord procures 100% of the energy
and water which consumed by the tenants, this property
does not have an active fuel supply. Landlord-obtained
energy supplies are provided to 13 assets within the portfolio
covering 84,523 sq m (11%) of the total floor area of the REIT.
All other properties are leased to single occupiers on FRI
(Full Repairing and Insuring) leases which obtain all their
own energy, water and waste supplies independent of the
landlord. All lease agreements within the portfolio are FRI
leases, only one site had a service charge including utility
consumption throughout the reporting period. The
Manager of Urban Logistics actively engages with tenants
on ESG, and so in keeping with good practice, we are
disclosing tenant-obtained consumption from these FRI
sites where tenants have replied to data sharing requests.
The reporting of tenant-obtained performance measures is
additional toEPRA’s Core requirements, we chose to do so
because werecognise that as our portfolio comprises
wholly of FRI assets, tenant-obtained emissions are the
most significant to our environmental performance. We will
continue to communicate and work collaboratively with
tenants on ESGissues, as this will be fundamental to
improving the data coverage of our portfolio and helping to
identify key opportunities to minimise our environmental
impact.
In 2021/22, Urban Logistics has reported absolute
performance for energy and water consumption for areas
under the landlord’s operational control. 2020/21 is the base
year for reporting on energy and water consumption and is
used for like-for-like data comparison.
Normalisation
We normalise all data by floor area, using the square meter
(m
2
) area for the whole building at unit level as this is
considered most appropriate for the portfolio.
Segmental analysis – by property
type, geography
Our portfolio is located entirely in the UK and consists
ofasingle asset type. For this reason, analysis by sector
orgeography is not considered appropriate.
Disclosure on own offices
Urban Logistics is an externally managed REIT – managed
by PCP2 Limited (the Investment Manager) – and therefore
does not have a Head Office or direct employees. However,
Urban Logistics has a high degree of influence over the
Investment Manager’s operations and so Urban Logistics
REIT plc has instructed the Investment Manager to provide
data on its Head Office and Employee Performance
Measures for those employees who are engaged on
working for the Investment Manager.
Narrative on performance
We provide commentary on past performance and plans
for managing future performance throughout this report.
We explain additional factors affecting consumption trends
where appropriate including in the “Narrative on
performance” sections in the Environmental and Social
Performance Measure tables below.
Location of EPRA Sustainability
PerformanceMeasures
All EPRA sBPR 2017 environmental performance measures
are included on page 115 except ‘Cert-Tot, which is on
page117, and, all social and governance performance
measures are included on page 118.
Reporting period
The reporting period is from 1 April 2021 to 31March2022.
Like-for-like performance measures are reported for the two
most recent years that we are able tocollect consumption
data (2021 and 2020).
Data materiality
We have excluded a number of metrics from our reporting,
where a review has shown them to be wholly immaterial.
The following have been excluded:
•
district heating or cooling (“DH&C”)-absolute & DH&C-like
for like: No DH&C is procured across our portfolio; and
•
H&S-Asset and H&S-Comp: Due to the nature of our
leasearrangements, all health and safety assessments
are conducted by our tenants and Urban Logistics REIT
does not have operational oversight.
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
115
Environmental performance measures
Absolute like-for-like
Performance % change
EPRA code measure Unit Scope 2022 2021 2022 2021 like-for-like
Elec-Abs; Total electricity Landlord-obtained
Elec-LfL consumption kWh electricity 674,233 943,349 295,939 311,208 (5)%
Tenant-obtained
electricity 10,433,876 4,945,763 4,833,435 4,945,763 (2)%
Head office
of the Manager 14,792 13,078 N/A N/A N/A
Total 11,122, 900 5,902,190 5,129,374 5,256,971 (2)%
Fuels-Abs; Total fuel Landlord-obtained
Fuels-LfL consumption kWh fuels 63,826 265,565 N/A N/A N/A
Tenant-obtained
fuels 5,706,541 1,328,885 1,387,782 1,328,885 4%
Head office of
the Manager 5,356 4,735 N/A N/A N/A
Total 5,775,723 1,599,185 1,387,782 1,328,885 4%
Waste-Abs; kg Landlord waste
Waste-LfL — — N/A N/A N/A
kg Tenant waste 505 569 301 314 (4)%
kg Head office of
kg the Manager — — N/A N/A N/A
Total 505 569 301 314 (4)%
Energy-Int Energy intensity kWh/ Building energy
m
2
/year intensity 108 147 145 147 (1)%
GHG-Dir-Abs Total direct
greenhouse
gas emissions t CO
2
e Scope 1 13 50 N/A N/A N/A
GHG-Indir-Abs Total indirect
greenhouse
gas emissions tCO
2
e
(Scope 2) m
2
/year Scope 2 146 223 63 73 (14)%
GHG-Indir-Abs Total indirect
greenhouse gas
emissions from
tenant-obtained
energy (Scope 3) tCO
2
e Scope 3 3,261 1,397 1,280 1,397 (8)%
GHG-Int Greenhouse gas
(GHG) emissions
Intensity from
landlord-obtained tCO
2
e/
energy m
2
/year GHG Intensity 0.02 0.03 0.03 0.03 (0)%
Water-Abs; Total water m
3
Landlord-obtained
Water-LfL consumption water 1,193 496 328 494 (34)%
m
3
Tenant-obtained
water 20,049 6,018 3,309 6,018 (45)%
m
3
Head office of
the Manager 2,890 2,555 N/A N/A N/A
m
3
Total 24,132 9,069 3,637 6,512 (44)%
Water-Int Water intensity m
3
/
m
2
/year 0.24 0.24 0.13 0.24 (46)%
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
116
SUPPLEMENTARY INFORMATION CONTINUED
EPRA Aligned Supplementary Sustainability Information and Index of Indicators continued
Environmental performance measures continued
Data notes
•
Absolute landlord-obtained environmental data is reported for following percentages of total floor area: electricity 11.0%,
fuels 4.6%, water 2.1% and waste 0%. Like-for-like landlord-obtained electricity and water data is reported for one
property, 0.5% of floor area. The natural gas supply to this property was capped off in 2019 and so no like-for-like
landlord-obtained fuel consumption is reported.
•
Absolute tenant-obtained environmental data has been reported for the following percentages of total floor area:
electricity 19.7%, fuels 19.7%, water 11.1% and waste 1.9%. Like-for-like tenant-obtained data is reported for following
percentages of total floor area: electricity 7.0%, fuels 5.8%, water 3.5% and waste 0.5%. Tenant data collection is ongoing
and further coverage is likely to be reported to GRESB.
•
Data has been estimated in line with the processes described in the “Estimation of landlord and tenant utility
consumption” section above. Estimates are only made for a small part of the reporting year and have been applied to
the following parts of the data:
•
Landlord-obtained data: ten units which represent 6.6%% of the whole portfolio by floor area, and 60.0% by floor area
of the assets for which data has been reported.
•
Tenant-obtained data: four units, which represent 2.4% of the whole portfolio by floor area, and 12.4% by floor area of
the assets for which tenant data has been reported.
•
No off-site renewable sources have been identified for landlord-obtained Energy Performance Measures. Solar panels
have been installed at 3% of our sites and reduce tenant-obtained electricity impacts.
•
Greenhouse gas emissions have been calculated using UK government conversion factors from BEIS and the Corporate
Greenhouse Gas Protocol location-based methodology.
•
Water and Energy Intensities are calculated based on units for which complete twelve month data is available.
Commentary
The reduction in landlord-obtained absolute energy consumption is predominantly caused by the letting of vacant
properties. Like-for-like landlord-obtained electricity consumption fell by 4.9% due to a nine-month vacancy in one unit.
The increase in tenant-obtained absolute energy consumption is predominantly caused by the expansion of the portfolio
through acquisition. The reduction in like-for-like tenant-obtained electricity is supported by significant reductions in
consumption at three large units. The increase in like-for-like tenant-obtained fuels is caused by an 18.8% increase in
consumption at the largest unit for which like-for-like data is available.
No landlord-obtained waste supplies exist within the portfolio. The increase in absolute waste production results from
increased data availability. Tenant-obtained like-for-like data is only available for one site which has seen a reduction in
waste production of 13.26 tonnes.
The increase in landlord-obtained and tenant-obtained absolute water consumption is predominantly caused by the
expansion of the portfolio through acquisition. The substantial reduction in tenant-obtained like-for-like water
consumption is caused by an 86% reduction at one asset which resulted from a water leak which has now been resolved.
Total landlord (Scope 1 & 2) GHG emissions have fallen because of reduced landlord electricity consumption and grid-
electricity GHG intensity reductions. Absolute Scope 3 GHG emissions have increased primarily through acquisition but
like-for-like has decreased as a result of reduced tenant electricity consumption and reduced grid electricity intensity.
We are committed to reducing our energy consumption and GHG emissions through a combination of EPC aligned
retrofits, development of high performing new assets and the installation of solar photovoltaic panels at our sites. We look
forward to reporting more fully on this in coming years.
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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Annual Report and Accounts 2022
117
Building certifications
BREAAM Green certificates for new developments are an important performance indicator for us, but are only applicable
for new developments. As developments are a small part of our total portfolio, the majority of the portfolio does not have
BREAAM certification.
BREEAM Rating Excellent Very Good
Number of certificates 1 6
Floor area coverage 0.2m sq ft 0.3 sq ft
Percentage of portfolio by floor area 2.1 % 3.7%
EPC ratings by band
The below table provides an overview of the EPC ratings of the portfolio. All reporting is based on lodged and valid
ratings.The portfolio includes some assets in Scotland, which are reported using the EPC Band they would have achieved if
assessed using the EPC methodology for England and Wales. The EPC totals sum to more than the number of assets in the
portfolio as some sites require multiple EPCs per asset.
Floor area Floor area % of % of
Count Count (m
2
) (m
2
) Floor area Floor area
LFL Count
(March-22) (Mar ch -21) (March-22) (M arch -21) (March-22) (March-21 March-22 March-21 % change
A 15 6 55,062 18,387 7% 4% 9 6 50%
B 24 9 155,235 73,641 20% 17% 17 9 89%
C 70 49 375,516 255,593 49% 57% 44 49 (10)%
D 45 18 179,603 94,427 23% 21% 13 18 (28)%
E 2 2 4,673 2,764 1% 1% 1 2 (50)%
F — — — — — — — —
G — — — — — — — —
Unknown — — — — — — — —
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
118
SUPPLEMENTARY INFORMATION CONTINUED
EPRA Aligned Supplementary Sustainability Information and Index of Indicators continued
Social and governance performance measures
Urban Logistics REIT considers good governance to be fundamental to its business and so discloses here with the aim of
providing transparency on its specific processes.
In the near term, Urban Logistics REIT assesses social performance on a monitor and report basis. This follows our
materiality review and the nature of our assets.
EPRA code Performance measure Unit Result
Diversity-Emp Employee gender diversity Gender ratio of the Board as a percentage Male: 83%
Female: 17%
Gender ratio of the managing company Male: 53%
as a percentage Female: 47%
Diversity-Pay Salary ratio of men to women Gender pay gap % 48%
Emp-Training Employee training Average hours/year/employee 24
and development
Emp-Dev Employee performance % 100%
appraisals
Emp-Turnover New hires and turnover Total number of new employee hires 3
Rate of new employee hire 20%
Total number of employee turnover 1
Rate of employee turnover 7%
H&S-Emp Employee health and safety Absentee rate 0.005
H&S-Asset Asset health & safety % of assets N/A
assessments
H&S-Comp Asset health & safety % N/A
compliance
Comty-Eng Community engagement, % of assets that have 7%
impact assessments implemented community
and development engagement
programmes
Gov-Board Composition of highest Number of executive Board members 0
governance body
Number of non-executive Board members 6
Average tenure on the governance
body (years) 5.2
Number of non-executive 1
Board members with competencies
relating to ESG topics
Gov-Select Process for nominating and Please refer to
selecting the highest page 65 in
governance body the Annual Report
Gov-Col Process for managing Please refer to
conflicts of interest page 64 in
the Annual Report
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
119
Data notes
In line with Urban Logistics REIT PLC’s ability to control operating policies of the Investment Manager, we disclose the
Manager’s Social Performance Measures for all EPRA sBPR Employee Social Performance Measures.
Urban Logistics REIT PLC does not have direct employees. Instead all employees of the Invesment Manager who work
wholly on the REIT are considered as employees for the disclosure of Social Performance Measures. This means that the
employee related Performance Measures are based on the 17 employees of the Investment Manager who dedicate 100%
of the time they are contracted to working on the REIT.
Diversity-Pay is calculated from basic salary. The Manager is structured as a partnership, and any drawings taken from the
partnership are treated as salary in these calculations. All team members have either a share-based or a profit share based
additional pay, which is not included in these calculations.
As explained above, Social Performance Measures H&S-Asset and H&S-Comp are not applicable to our assets which are
held entirely on FRI leases.
Reconciliations between the non-GAAP financial information disclosed in the Annual Report to the nearest comparable
IFRS measurement, where appropriate, are disclosed. The definition of each of the non-GAAP financial information can be
found in the Glossary of Terms.
Narrative on Performance
This is the first time we have disclosed our Social Performance. We are actively recruiting for the Board and in a way that is
mindful of Board diversity and appropriate FCA guidance. For further information see the Report of the Nomination
Committee on page 65. We are also mindful of the importance of the diversity of the investment management team and
the need to address the gender pay gap.
Our community engagement efforts have included installing an outdoor gym for community use as part of a new
development and raising and distributing aid for Ukraine. We are committed to monitoring our Social and Governance
Performance Measures going forward and will keep our performance in this area under continual review.
Reconciliations between the non-GAAP financial information disclosed in the Annual Report to the nearest comparable.
IFRS measurement, where appropriate, are disclosed. The definition of each of the non-GAAP financial information can be
found in the Glossary of Terms.
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
120
I. EPRA performance measures summary
31 March 31 March
Notes 2022 2021
EPRA earnings per share II 5.40p 6.62p
EPRA net tangible asset value III 188.78p 152.33p
EPRA net reinstatement value III 203.19p 165.66p
EPRA net disposal value III 189.12p 151.92p
EPRA net initial yield IV 4.4% 5.2%
EPRA “topped up” net initial yield IV 4.5% 5.2%
EPRA vacancy rate V 6.9% 6.9%
EPRA cost ratio (including vacant property costs) VI 21.8% 21.3%
EPRA cost ratio (excluding vacant property costs) VI 20.0% 18.9%
II. Income statement
31 March 31 March
2022 2021
£’000 £’000
Gross revenue 37, 811 24,181
Property operating costs (1,262) (1,307)
Net rental income 36,549 22,874
Administrative expense (7,159) (4,230)
Other income 1,021 159
Long-term incentive plan charge (4,114) (295)
Operating profit before interest and tax 26,297 18,508
Net finance costs (6,840) (3,988)
Exceptional items (459) —
Profit before tax 18,998 14,520
Tax on EPRA earnings — —
EPRA earnings 18,998 14,520
Weighted average number of Ordinary Shares 351,533,233 219,191,930
EPRA earnings per share 5.40p 6.62p
III. Balance sheet
31 March 31 March
2022 2021
£’000 £’000
Investment properties 1,029,071 515,794
Other net assets 99,701 68,015
Net borrowings (236,140) (196,354)
Total shareholders’ equity 892,632 387,455
Adjustments to calculate EPRA NTA:
Fair value of interest rate derivative (1,603) 1,060
Intangible assets (47) (12)
EPRA net tangible assets 890,982 388,503
Ordinary Shares in issue at year end 471, 975,411 255,045,821
Dilutive shares in issue at year end — —
471, 975 ,411 255,045,821
EPRA NTA per share 188.78p 152.33p
SUPPLEMENTARY INFORMATION CONTINUED
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
121
The Group has adopted EPRA NTA as its primary measure of net asset value, as it considers it to be the most relevant
measure for its operating activities. A reconciliation of the three EPRA net asset value measurements from IFRS NAV is
provided in the table below.
EPRA NTA EPRA NRV EPRA NDV
31 March 2022 £’000 £’000 £’000
IFRS equity attributable to shareholders 892,632 892,632 892,632
Fair value of interest rate derivatives (1,603) (1,603) —
Intangible assets (47) — —
Real estate transfer tax — 67,985 —
EPRA net asset value 890,982 959,014 892,632
Diluted shares (number) 471,975,411 471, 975 ,411 471, 975 ,411
EPRA net asset value per share 188.78p 203.19p 189.12p
EPRA NTA EPRA NRV EPRA NDV
31 March 2021 £’000 £’000 £’000
IFRS equity attributable to shareholders 387,455 387,455 387,455
Fair value of interest rate derivatives 1,060 1,060 —
Intangible assets (12) — —
Real estate transfer tax — 34,007 —
EPRA net asset value 388,503 422,522 387,455
Diluted shares (number) 255,045,821 255,045,821 255,045,821
EPRA net asset value per share 152.33p 165.66p 151.92p
IV. EPRA net initial yield and “topped up” net initial yield
31 March 31 March
2022 2021
£’000 £’000
Total properties per Financial Statements 1,029,071 515,794
Less head lease right-of-use asset (8,953) (6,945)
Less development properties (34,735) (500)
Completed property portfolio 985,383 508,349
Add notional purchasers’ costs 66,021 34,059
Gross up completed property portfolio valuation (A) 1,051,404 542,408
Annualised passing rent
1
46,315 28,562
Less irrecoverable property outgoings (390) (467)
Annualised net rents (B) 45,925 28,095
Contractual rental increases for rent-free period 936 231
“Topped up” annualised net rent (C) 46,861 28,326
EPRA net initial yield (B/A) 4.4% 5.2%
EPRA “topped up” net initial yield (C/A) 4.5% 5.2%
1. Annualised passing rent excludes short-term lettings and licences.
V. EPRA vacancy rate
31 March 31 March
2022 2021
£’000 £’000
Estimated rental value of vacant space 3,753 2,316
Estimated rental value of the whole portfolio 54,529 33,498
EPRA vacancy rate 6.9% 6.9%
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SUPPLEMENTARY INFORMATION CONTINUED
VI. Total cost ratio/EPRA cost ratio
31 March 31 March
2022 2021
Total cost ratio £’000 £’000
Costs
Property operating expenses 1,262 1,307
Administrative expenses 7,159 4,230
Less: service charge income (193) (118)
Less: service charge costs recovered through rents but not separately invoiced — (355)
Less: ground rents (83) (44)
Total costs including vacant property costs (A) 8,145 5,020
Group vacant property costs (685) (563)
Total costs excluding vacant property costs (B) 7,460 4,457
Gross rental income
Gross rental income 37,811 24,181
Less: ground rents paid (229) (102)
Less: service charge income (193) (118)
Less: service charge costs recovered through rents but not separately invoiced — (355)
Total gross rental income (C) 37,389 23,606
Total cost including vacant property costs (A/C) 21.8% 21.3%
Total cost excluding vacant property costs (B/C) 20.0% 18.9%
31 March 31 March
2022 2021
EPRA cost ratio £’000 £’000
Total costs (A) 8,145 5,020
Long-term incentive plan crystallisation — —
EPRA total costs including vacant property costs (D) 8,145 5,020
Vacant property costs (685) (563)
EPRA total costs excluding vacant property costs (E) 7,460 4,457
EPRA cost ratio (including vacant property costs) (D/C) 21.8% 21.3%
EPRA cost ratio (excluding vacant property costs) (E/C) 20.0% 18.9%
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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123
VII. EPRA capital expenditure analysis
31 March 31 March
2022 2021
£’000 £’000
Acquisitions 301,875 264,631
Development 52,935 26 , 211
Capital expenditure:
– no incremental lettable space 7,002 5,704
Total 361,812 296,546
VIII. EPRA like-for-like net rental income
31 March 31 March
2022 2021
£’000 £’000 Change
Like-for-like net rental income 10,700 10,806 -1%
Properties acquired 22,521 9,053
Properties sold 403 1,902
Development properties 2,925 1,113
Net rental income 36,549 22,874
IX. Total Accounting Return
31 March 31 March
2022 2021
£’000 £’000
Opening EPRA NTA 152.33p 137.89p
Closing EPRA NTA 188.78p 152. 33p
Change in EPRA NTA 36.45p 14.44p
Dividends paid 7.60p 7.10p
Total growth in EPRA NTA plus dividends 44.05p 21.54p
Total return 28.9% 15.6%
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124
INVESTMENT POLICY
Investment Objectives and Policy
Urban Logistics’ Investment Objectives and Policy, as adopted in December 2021 is as follows:
Asset selection is central to the successful implementation of our strategy
Our acquisition criteria balance a range of factors to ensure we buy the right assets at the right price; and that there are
opportunities for us to add value through our active asset management approach.
Investment Objective
The Investment Objective is to deliver total investment returns through both income, with regular dividends providing
Shareholders with a sustainable income stream that will grow over the medium term, and targeted capital growth which the
Company believes will enhance Shareholders’ total return over the long term.
Portfolio
The Company intends to achieve the Investment Objective by investing in and growing a diversified portfolio of primary and
secondary grade industrial and logistics properties within the UK, and by engaging in active asset management to leverage and
enhance returns.
The Company will invest in assets that comprise an interest in freehold or leasehold property (other than by way of
security), which meet the following criteria:
•
UK industrial or logistics properties (typically single let);
•
modern (typically post-1980) constructions; and
•
representing average lot value across the portfolio at acquisition of up to £15 million (increased by RPI from Admission).
The Company will seek to invest in strategically located, single let, last mile industrial and logistics properties that have
good underlying features, including:
•
the opportunity for rental growth and out-performance;
•
strong tenant financial covenant;
•
lease terms focusing on duration and rental growth; and
•
positive geographical characteristics, including age and repair, location, building quality, site cover, transportation links,
workforce availability, environmental performance and internal operational efficiencies.
The properties will be located in established logistics regions, such as the Midlands’ “Golden Triangle”, and in locations
where the Company sees medium and long-term potential.
The Company may acquire properties directly or through holdings in SPVs and properties may be held through limited
partnerships, trusts or other vehicles with third party co-investors.
Borrowing and gearing policy
The Company will seek to use gearing to enhance returns over the long-term and, in addition, will seek to fix its borrowing
rates. Gearing, represented by borrowings as a percentage of gross assets, will not exceed 57.5% at the time of investment.
It is the Directors’ intention to target gearing of 30% to 40% of Gross Asset Value in the medium term and to comply with
the REIT condition relating to the ratio between the Group’s ‘property profits’ and ‘property finance costs’.
Use of derivatives
The Company may enter derivative contracts for efficient portfolio management. In particular, the Company may engage
in interest rate hedging or similar instruments to mitigate the risk of interest rate increases.
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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125
Investment restrictions
The Company will invest and manage its assets with an objective of spreading risk through the following investment
restrictions which, in each case, apply at the time of investment:
(I) the Company will derive its rental income from a portfolio of not less than ten properties;
(II) the Company will have a maximum exposure of 25% of its rental income derived from any single tenant;
(III) the Company may invest up to 10% of its Gross Asset Value in non-income producing properties with pre-let
tenancies (or otherwise guaranteed income) in place, but which are requiring development or re-development (such
as extending, reconfiguring and refurbishing existing assets), to realise that income, with the intention of holding any
completed development as an investment. The investments in this category will not be undertaken speculatively,
although the Company may take options over adjacent land/property. The Company may finance these assets using,
inter alia, forward funding arrangements;
(IV) the Company may invest up to 10% of its Gross Asset Value in assets (including development assets), which are not
producing income at the time of acquisition, including assets that do not have pre-let tenancies (or otherwise
guaranteed income) in place;
(V) at least 90% by value of the properties directly or indirectly owned by the Company shall be in the form of freehold or
long leasehold (over 60 years remaining at the time of acquisition) properties or the equivalent; and
(VI) the Company will not invest in closed-ended investment companies.
The Directors currently intend, at all times, to conduct the affairs of the Group so as to enable it to qualify as a REIT for the
purposes of Part 12 of the CTA 2010 (and the regulations made thereunder).
In the event of a breach of the investment guidelines and restrictions set out above, a notification will be made to a
Regulatory Information Service if the Directors consider the breach to be material.
No material change will be made to the Investment Objective or the Investment Policy without the approval of the FCA
and Shareholders by ordinary resolution at any general meeting, which will also be notified by a RIS announcement.
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GLOSSARY OF TERMS
Energy performance certificate (“EPC”)
A measure of the energy efficiency of a property on a
scale of A (most efficient) to G (least efficient) and is a
legal requirement for a building to be sold, let or
constructed. Once obtained, an EPC is valid for ten
years.
EPRA cost ratio
Administrative and operating costs (including and
excluding costs of direct vacancy) divided by gross
rental income.
EPRA earnings per share (“EPS”)
Earnings from continuing operational activities divided
by weighted average number of shares in issue during
the year.
EPRA net disposal value (“NDV”)
Represents the shareholders’ value under a disposal
scenario, where deferred tax, financial instruments and
certain other adjustments are calculated to the full
extent of the liability, net of any resulting tax.
EPRA net initial yield
Annualised rental income based on the cash rents
passing at the balance sheet date, less non-recoverable
property operating expenses, divided by the market
value of the property, increased with (estimated)
purchasers’ costs.
EPRA net reinstatement value (“NRV”)
Assumes that entities never sell assets and aims to
represent the value required to rebuild the entity.
EPRA net tangible assets (“NTA”)
Assumes that entities buy and sell assets, thereby
crystallising certain levels of unavoidable deferred tax.
EPRA topped-up net initial yield
EPRA net initial yield adjusted for expiration of rent-free
periods or other unexpired lease incentives such as
discounted rent periods and step rents.
EPRA vacancy rate
Estimated market rental value (“ERV”) of vacant space
divided by ERV of the whole portfolio.
Estimated rental value (“ERV”)
The estimated annual market rental value of lettable
space as assessed by the external valuer.
European Public Real Estate Association
(“EPRA”)
The European Public Real Estate Association (“EPRA”) is
the industry body for European Real Estate Investment
Trusts (“REITs”).
Gross to net renal income ratio
Net property operating expenses expressed as a
percentage of rental income.
Loan to value (“LTV”)
The Group’s net debt expressed as a percentage of the
investment property portfolio.
Net debt
The Group’s bank loans net of cash balances at the
period end.
Net initial yield (“NIY”)
Annual rents on investment properties as a percentage
of the investment property portfolio valuation having
added notional purchasers’ costs.
NTA
Net tangible assets.
Occupancy rate
The ERV of the let units as a percentage of the total ERV
of the investment property portfolio.
Property income distribution (“PID”)
Dividends from the Group’s tax-exempt property business.
REIT
UK Real Estate Investment Trust.
Total Accounting Return (“TAR”)
Represents the movement in EPRA NTA per share plus
dividends paid during the period expressed as a
percentage of EPRA NTA per share at the beginning of
the period.
Total Property Return (“TPR”)
Capital growth in the portfolio, plus net rental income and
profit or loss on the sale of investment properties
expressed as a percentage return on the capital employed
during the year; however, this excludes acquisitions.
Weighted average unexpired lease term
(“ WAULT”)
The average lease term remaining to expiry across the
portfolio weighted by contracted rental income.
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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127
COMPANY INFORMATION
Directors
Nigel Rich CBE FCA Chairman
Jonathan Gray Director
Heather Hancock Director
Richard Moffitt Director
Bruce Anderson ACMA FCIOBS Director
Mark Johnson Director
Company Secretary
Link Company Matters Limited
Central Square
10th Floor
29 Wellington Street
Leeds
LS1 4DL
Registered Office
6th Floor
65 Gresham Street
London
EC2V 7NQ
Manager and AIFM
PCP2 Limited
124 Sloane Street
London
SW1X 9BW
Joint Brokers
Singer Capital Markets LLP
One Bartholomew Lane
London
EC2N 2AX
Panmure Gordon
1 New Change
London
EC4M 9AF
Legal Advisers to the Company
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
Financial Adviser
Kinmont Limited
5 Clifford Street
London
W1S 2LG
Depositary
Indos Financial Limited
The Scalpel, 18th Floor
52 Lime Street
London
EC3M 7AF
Auditor and Reporting Accountant
RSM UK Audit LLP
25 Farringdon Street
London
EC4A 4AB
Commercial Property Valuer
CBRE Limited
Henrietta House
Henrietta Place
London
W1G 0NB
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Bankers
Santander UK PLC
2 Triton Square
Regent’s Place
London
NW1 3AN
Barclays Bank PLC
1 Churchill Place
London
E14 5HP
Lloyds Bank PLC
25 Gresham Street
London
EC2V 7HN
Aviva PLC
St Helen’s
1 Undershaft
London
EC3P 3DQ
Website
www.urbanlogisticsreit.com
URBAN LOGISTICS REIT PLC
Annual Report and Accounts 2022
128
FINANCIAL INFORMATION
July 2022 Interim dividend
20 July 2022 Annual General Meeting
30 September 2022 Half year end
November 2022 Announcement of half-year results
31 March 2023 Year end
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