Urban Logistics Regulatory News (SHED)

Urban Logistics REIT plc

("Urban Logistics", the "Company" or the "Group")

Interim results for the six months ended 30 September 2019

Active asset management drives strong portfolio performance

Urban Logistics, (AIM: SHED) the specialist UK logistics REIT, issues its interim financial results for the half year ended 30 September 2019.

Financial

§ EPRA net asset value ("NAV") up to 145.20 pence per share

§ Total Accounting Return (NAV + dividends) of 8.2%

§ £195.0 million portfolio valuation with a 3.8% like-for-like increase since 31 March 2019

§ Interim dividend of 3.75 pence per share, up 25% on prior year

Property

§ Eight logistics properties with asset management potential acquired for £15.2 million

§ Disposals totalled £18.4 million representing an average profit on cost of 57.4%

§ Portfolio fully occupied

§ WAULT of 6.1 years (31 March 2019: 5.5 years)

Nigel Rich, Chairman, commented:

"The strong results reflect our specialist focus which is underpinned by a shift in retailing to e-commerce.

"We maintain a healthy acquisition pipeline which we expect to fund through equity raising and bank debt when we have the opportunity to do so.

"Looking forward we remain confident that our urban logistics portfolio will continue to deliver attractive returns for shareholders."

For further information contact:

About Urban Logistics REIT

Urban Logistics REIT plc is a property investment company, quoted on the AIM market of the London Stock Exchange, (AIM: SHED).

The Company invests in UK-based logistics properties with the objective of generating attractive dividends and capital returns for its shareholders. Its investment strategy focuses on strategically located smaller single let logistics properties servicing high-quality tenants. Investment returns will be generated by an experienced management team focusing on quality stock selection and active asset management.

Chairman's Statement

I am pleased to present the Group's consolidated results for its interim reporting period from 1 April 2019 to 30 September 2019.

Overview

The Group continues to assemble a diversified logistics portfolio of last mile properties that offer secure income from high quality tenants, with the prospect of an attractive total return through asset management initiatives undertaken by the Manager. The strong results achieved reflect our focus, which is underpinned by a structural shift in how consumers and businesses are procuring goods across the UK.

At the end of September, we owned a portfolio of 38 properties which were valued by CBRE at £195.0 million. As I write this, the Company's market capitalisation stands at just over £118 million.

The Portfolio

At 30 September 2019, the portfolio of properties was fully occupied with a WAULT of 6.1 years. A number of asset management initiatives were completed during the period which increased rents and lease terms. Contracted rent at 30 September 2019 increased to £12.2 million, compared with £10.7 million last year.

During the period, the Group continued to acquire properties suitable for logistics. We purchased a portfolio of parcel depots, leased to Tuffnells Parcels Express, offering 20-year income at a 7.0% net initial yield to the Group for £9.9 million, and two logistics properties which are let to DHL in the South East. In addition, three properties were sold in Nuneaton, Bedford and Dunstable for £18.4 million, with an average profit on original cost of over 57%.

Financial Results

Turning to our results for the interim period ended 30 September 2019, rental income increased to £5.9 million compared with £4.9 million at 30 September 2018. EPRA earnings are up to £3.4 million from £2.6 million, with EPRA earnings per share increasing to 3.92 pence from 3.13 pence. The increases reflect rents being received from purchased properties and increases in rental income as a result of renewals or new leases at higher rents.

Per CBRE's independent valuation, assets under management increased from £186.4 million at 31 March 2019 to £195.0 million which reflects an increase of 3.8% in the value of existing assets, plus the value of the new assets acquired. Our total return (NAV and dividend) for the six-month period was 8.2%.

Following the increase in total asset value, the loan to value ("LTV") at 30 September 2019 was 34.1%.

Dividend

The Company has declared a first interim dividend of 3.75 pence per Ordinary Share in respect of the financial year ended 31 March 2020. This will be paid as a property income distribution ("PID") on 20 December 2019 to shareholders on the register at the close of business on 22 November 2019. The ex-dividend date will be 21 November 2019.

Outlook

The outcomes of the upcoming General Election and ongoing Brexit negotiations will inevitably have an impact on the economic outlook for the UK.

Against this uncertain background Urban Logistics has continued to perform well, benefitting from the shift in retailing to e-commerce. We believe this structural change will continue to drive demand for last mile logistics properties in the coming years. Inevitably any major downturn in the economy could affect our tenants; however, we believe our portfolio is well positioned with no direct exposure to fashion retail.

We will continue to evaluate opportunities to raise capital to accelerate our growth and we hope that following the General Election the outlook for the UK will become more certain, enabling us to continue to build our well positioned business in this very attractive sector of the property market.

Nigel Rich CBE, Chairman

Manager's Report

The Group owns real estate in the urban logistics sub-sector of the UK commercial property market. The investment proposition is focused on last mile warehousing and parcel depots. Our facilities principally operate business-to-business delivery of domestic goods such as food or pharmaceuticals - not the historically volatile area of fashion retail.

At a macro level there is strong structural support from evolving consumer and business supply chain demands - led by e-commerce and online retail which is driving the need for a greater volume of warehouse space. Therefore, whilst we believe it is right to have concern over a traditional "late cycle" position in real estate, we see that current supply cannot meet changing patterns of consumer demand and therefore have constructed a portfolio to benefit from this secular growth.

Whilst there are a number of broader near-term risks, including continued Brexit uncertainty and a General Election, we remain optimistic for the future given continued occupier interest; particularly across the South East and Midlands of the UK where our portfolio is centred.

The market

Investor activity in the logistics sub sector of the UK real estate market has been robust. H1 2019 investment volumes stood at £1.5bn, which is 5% higher than the corresponding period last year (Savills briefing July 2019).

Structural changes, in particular e-commerce and the continuing development of modern technology, are the drivers of demand as well as a supply chain requirement to modernise and fulfil orders to urban areas nationally.

Regionally, the East Midlands saw the strongest take up in H1 2019, accounting for just over 38% of total take up. The Group is very well represented in this area.

Speculative building is continuing across the Midlands, particularly in the 'big box' space of over 400,000 sq ft. New build space also remains popular for occupiers with "design and build" in particular driving take-up due to their increasingly complex requirements.

Investment Activity

The Group acquired eight properties during the period, excluding development land, all of which are high quality logistics warehouses, with good geographical spread and an average WAULT of 15 years. The new properties all present a variety of asset management opportunities, which have the potential to drive income growth and capital appreciation.

*Purchase price excludes acquisition costs

Tuffnells portfolio

On 27 September 2019, a portfolio of parcel depots was acquired for £9.9 million. The acquisition was sourced at a net initial yield of 7.0%. The properties are close to established regional transport hubs in last-mile locations. These well specified parcel delivery hubs are leased to Tuffnells Parcel Express Limited, a business-to-business distributor specialising in irregular dimensions and weights, on fully repairing and insuring leases.

Thatcham and Sittingbourne

The Group acquired two logistics properties in Sittingbourne and Thatcham for a combined consideration of £5.3 million at a 5.9% blended net initial yield. The acquisitions further extend our portfolio's weighting across the South East of England where there is a chronic shortage of logistics properties in our size range. Both properties are let to DHL's UK Mail business.

Disposals

The Group completed the sale of three logistics properties located in Nuneaton, Bedford and Dunstable. The sales totalled £18.4 million, representing an average profit on cost of 57%. Taken together with the income returns generated during the Group's ownership the combined sale price represents a total property return of 50%.

*Purchase price excludes acquisition costs

Nuneaton

The building was purchased as part of a portfolio in September 2017 for £6.7 million. The unit was acquired with vacant possession and was subject to a rent guarantee until September 2019. The property was sold to an owner occupier, Cofresh Limited, in April 2019 and realised a Total Property Return of 23%.

Postley Road, Bedford

This property was purchased at IPO in 2016 for £5.6 million and comprises four industrial units with a piece of development land. After extensive asset management, increasing rents and lease terms, the fully occupied site was sold in May 2019 for £9.1 million and realised a Total Property Return of 73%. The land element has been retained and the purchaser has an option to acquire it for £0.5m if planning for redevelopment is granted.

Forward funding of new warehouses

We are forward funding, using the Group's internal resources, three properties suitable for urban logistics by providing funds to the developer, with further detail provided below.

Stone/M6

The site will provide a flexible gross internal floor area of 86,000 sq. ft. Stone Business Park is in an established logistics location and benefits from direct access to junctions 14 and 15 of the M6.

Hinckley/M1

The site will comprise two units with a total gross internal floor area of 63,500 sq. ft. Lime Kilns Business Park has direct access to the A5 and is close to junction 1 of the M69, enabling access to both the M1 and M6.

Southwater, Horsham

This development of 24,000 sq. ft. is located in a prime location in the South East and will comprise one unit.

Construction across all three sites is expected to commence shortly with completion expected in the second quarter of calendar year 2020. A number of pre-lets are at an advanced stage.

Pipeline

We seek to identify markets with high performance characteristics. For example, the East of England has just 3 months of supply in the 100-200,000 sq. ft. range. We note that 70% of 2018 take up was within this size range and we have a number of assets in our pipeline located in this region. Through our track record and experience, we are well-placed to continue sourcing attractive new opportunities and have a strong pipeline of similar product to our current portfolio.

Asset Management

During the interim period, the Group successfully completed three new lettings and settled two rent reviews, which in total generated £0.3 million of additional annual rental income. Shortly after the period end, two further rent reviews were agreed at 9% above ERV and further increased our annual contracted rent by £0.3 million. Therefore, like-for-like income growth across the interim period, including rent reviews settled post period end, was 3.1%.

*Includes two rent reviews settled shortly after the period end

Valuation and portfolio growth

CBRE independently valued the portfolio at 30 September 2019. The portfolio's market value was £195.0 million, compared with the assets' combined purchase price of £163.3 million, excluding purchaser costs. This represents an increase of £31.7 million, or 19.4%, when compared to the purchase prices. During the interim financial period, property values increased by 3.8% on a like-for-like basis, supporting our growth conviction. The valuation increase reflects our focus on asset management and buying well-located sites, in many cases off market.

Financial Review

The interim financial period to 30 September 2019 was a busy operational time for the Company with a focus on both asset management and investment activity.

The results demonstrate some significant achievements and how the stated strategy of the Group, namely adding scale whilst focusing on investment returns, continues to prosper. We expect the results to continue to improve as the Group achieves scale and undertakes its rent and lease driven asset management initiatives.

EPRA earnings for the period were £3.4 million (H1 Sep 18: £2.6 million), or 3.92 pence per share (H1 Sep 18: 3.13 pence per share). There were two principal drivers for this positive performance. The first was full capital utilisation, as acquisitions replaced sold properties and the portfolio was fully occupied. The second was successful asset management undertaken during the prior and current periods across a number of sites.

Administrative and other expenses, which include the Manager's fee and other costs of running the Group, were £1.1 million (H1 Sep 18: £0.18m). The EPRA cost ratio was 18.6% for the period (H1 Sep 18: 26.2%).

The Company has seen strong NAV growth over the period, up 5.2% from 137.96 pence at 31 March 2019, to 145.20 pence per share at 30 September 2019. With the Company fully invested, and a range of asset management initiatives ongoing, we expect earnings and capital growth to continue.

Financing and hedging

As at 30 September 2019, the Group had a senior debt facility with Santander and Barclays totalling £75.7 million. This is 72% hedged using interest rate swaps. It reflects a conservative loan to value (LTV) of 34.1% which is felt appropriate. The Group's target LTV is 35-40%.

Market Outlook

The Manager believes that this property sub sector continues to show resilience in a context of wider economic and political uncertainty.

The UK continues to be one of the fastest growing adopters of online retail sales and there is a requirement for tenants to develop their e-fulfilment capability accordingly. As such, key geographic regions across the UK are seeing buoyant leasing activity.

We also see a strong market for local delivery driven by 10% expected population growth across major UK conurbations by 2038 (source: Savills). Furthermore, supply in the 20,000-200,000 sq ft logistics space, where Urban Logistics is focused, has fallen by 36.0% since 2012 with land being lost to higher value uses.

Growth of online retail could account for up to 25% of all retail sales by 2021, creating yet more demand for distribution warehousing, particularly in our size range of unit.

Our focus will be to continue acquiring assets and implementing asset management initiatives with a focus on rental growth in light of the current market dynamic of diminishing supply and increasing occupier demand. We will also focus on maintaining and building existing tenant relationships with a view to extending the Group's reputation as the leader in the smaller lot size urban logistics market.

We will continue to build a pipeline of property acquisitions in the expectation that we will be able to raise new equity capital in the not too distant future.

Richard Moffitt

Independent Review Report to Urban Logistics REIT plc

1 Introduction

We have been engaged by Urban Logistics REIT plc (the "Company") to review the condensed set of financial statements in the interim report for the six months ended 30 September 2019 which comprise the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Cash Flow Statement and the Condensed Consolidated Statement of Changes in Equity and related explanatory notes.

We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information in the condensed set of financial statements.

2. Directors' responsibility

The interim report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim report in accordance with AIM Rule 18.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. It is the responsibility of the Directors to ensure that the condensed set of financial statements included in this interim report have been prepared on a basis consistent with that which will be adopted in the Group's annual financial statements.

3. Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim report based on our review.

4. Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom.

A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

5. Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim report for the six months ended 30 September 2019 is not prepared, in all material respects, in accordance with the requirements of the AIM rules.

6. Use of our report

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the AIM Rule 18. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this 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 for our review work, for this report or the conclusions we have reached.

Nexia Smith & Williamson

Statutory Auditor

Chartered Accountants

25 Moorgate

London

EC2R 6AY

Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Financial Position

Condensed Consolidated Cash Flow Statement

Condensed Consolidated Statement of Changes in Equity

Notes to the Interim 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 Wales and listed on AIM, part of the London Stock Exchange. The registered office address is 124 Sloane Street, London, SW1X 9BW.

2. Basis of preparation

The interim financial information in this report has been prepared using accounting policies consistent with IFRS as adopted by the European Union. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) on the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the Directors expect to be adopted by the European Union and applicable as at 30 September 2019. The Group has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing the interim financial information.

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 currency of the Group is considered to be pounds sterling as this is the currency of the primary environment in which the Group operates.

Non-statutory financial statements

Financial information contained in this document does not constitute statutory accounts for the year ended 31 March 2019 within the meaning of Section 434 of the Companies Act 2006. The statutory accounts for the year ending 31 March 2019 have been delivered to the Registrar of Companies. The audit report was unqualified and did not contain a statement under Section 498 of the Companies Act 2006 nor did it include references to any matters to which the auditor drew attention by way of emphasis.

Going concern

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.

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 Interim Report and financial statements.

Standards in issue and effective from 1 April 2019

IFRS 16: Leases

The Group has adopted IFRS 16: Leases for the six months ended 30 September 2019. On adoption the Group initially recognises the lease liability at the present value of the remaining lease payments, discounted using the Group's weighted average cost of debt. The associated right-of-use "(ROU)" assets were measured equal to the lease liability.

The leases are comprised of Head leases: A small proportion of the investment properties owned by the Group are situated on land held through leasehold arrangements, as opposed to the Group owning the freehold. The remaining lease terms for the leasehold arrangements range between 124 to 131 years.

The Balance Sheet impact of recognising the lease liability and associated ROU asset at 30 September 2019 is set out below. Opening balances have not been restated as the impact at 31 March 2019 was not material.

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 investment property in accordance with IAS 40 and the Group's accounting policy.

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.

Business combinations

The Group has acquired companies that own real estate. At the time of acquisition, 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.

Long-term incentive plan

In determining the fair value of the long-term incentive plan and the related charge to the Statement of Comprehensive Income, the Group makes assumptions about future events and market conditions. In particular, judgement must be formed as to the likely number of shares that will vest, and the fair value of each award granted.

The fair value is determined using a valuation model which is dependent on a number of assumptions of the Group's future dividend policy and the future volatility in the price of the Group's shares. Such assumptions are based on publicly available information and reflects market expectation. Different assumptions about these factors to those made by the Group could materially affect the reported value of the long-term investment plan.

Details of the Group's long-term incentive plan can be found in note 8.

Fair value of investment property

The fair value of investment property is market value as determined on a half-yearly basis, 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 valuers use recognised valuation techniques and the principles of IFRS 13. The valuations have been prepared in accordance with RICS Valuation - Global Standards July 2017 (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 are set out in note 10.

4. Principal accounting policies

The principal accounting policies applied in the preparation of these financial statements are consistent with those applied within the Company's Annual Report and Financial Statements for the year ended 31 March 2019, apart from IFRS 16: leases which is applied as below:

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 generally include fixed payments and variable payments that depend on an index (such as an inflation index). 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. 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 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 'Realised and unrealised property gain' in the Income Statement.

ROU assets are included in the heading Non-current assets, and the lease liability included in the heading non-current liabilities on the Balance Sheet.

Where the ROU asset relates to land or property that meets the definition of investment property under IAS 40, the ROU assets are included in the heading Investment properties, and the lease liability in the heading Non-current liabilities on the Balance Sheet.

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.

For the interim period to 30 September 2019, one tenant accounted for 11% Group's gross rental income. This tenant is XPO Logistics, one of the largest providers of logistics services globally.

6. Finance expense

7. 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.

8. Long-term incentive plan

The Company has a LTIP, accounted for as an equity settled share-based payment. At 30 September 2019, Pacific Industrial LLP, an affiliate of Pacific Capital Partners Limited, has subscribed for 1,000 B Ordinary Shares of £0.01 each and 1,000 C Ordinary Shares of £0.01 each issued in Pacific Industrial & Logistics Limited, a subsidiary of the Company.

The LTIP has an EPRA NAV element and a share price element and will be assessed on: i) 30 September 2020 (the "First Calculation Date") and ii) 30 September 2023 (the "Second Calculation Date"). The EPRA NAV element will be 10 per cent. of the excess of the EPRA NAV per Ordinary Share return, including dividends, over an annualised 9 per cent. hurdle, multiplied by the number of Ordinary Shares in issue at the relevant calculation date. The share price element will be 10 per cent. of the excess of the share price return, including dividends, over an annualised 9 per cent. hurdle, multiplied by the number of Ordinary Shares in issue at the relevant calculation date.

At the First Calculation Date, the share price element and the EPRA NAV element hurdle will be calculated by reference to the Placing Price of 115.0 pence.

At the Second Calculation Date, if a payment has been made at the First Calculation Date under either element, the hurdle for that element at the Second Calculation Date will be re-set to be based on the prevailing EPRA NAV per Ordinary Share/share price as at the First Calculation Date (as applicable). If no payment is made under an element at the First Calculation Date, then the hurdle for that element will continue to be calculated by reference to the Placing Price of 115.0 pence.

The LTIP will be paid in shares or, at the Board's discretion, in cash.

9. Dividends

The Company has declared a first interim dividend of 3.75p pence per Ordinary Share in respect of the financial year ended 31 March 2020. The total dividend of 3.75p pence per Ordinary Share will be paid as a property income distribution ("PID") on 20 December 2019 to shareholders on the register at the close of business on 22 November 2019. The ex-dividend date will be 21 November 2019.

10. 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 30 September 2019, in accordance with the RICS valuation - Professional Standards UK January 2017 (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 13.

Total rental income for the interim period recognised in the Condensed Consolidated Statement of Comprehensive Income amounted to £5.9 million (H1 Sep 18: £4.9 million).

11. Bank borrowings and reconciliation of liabilities to cash flows from financing activities

On 5 December 2018, the Group, Santander UK plc and Barclays Bank plc entered into a facility agreement pursuant to which Santander UK plc has agreed to provide the Group with a loan facility of £72.6 million for a term of five years.

On 23 August 2019, the loan facility was renegotiated so the Group could draw a further £10.8m. At 30 September 2019 the amount of drawn debt was £75.7m.

12. Interest rate derivatives

The Group has used interest rate swaps to mitigate exposure to interest rate risk. The total fair value of these contracts are recorded in the Statement of Financial Position. The interest rate derivatives are marked to market by the relevant counterparty banks on a quarterly basis in accordance with IFRS 9. Any movement in the fair value of the interest rate derivatives are taken to finance costs in the Statement of Comprehensive Income.

13. Share capital

On 10 May 2019, 61,000 warrant shares were redeemed for an issue price of 97.0 pence per share.

14. 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.

15. Related party transactions

The terms and conditions of the Investment Management Agreement are described in the Management Engagement Committee Report. During the interim period, the amount paid for services provided by Pacific Capital Partners Limited (the "Manager") totalled £587,568.

Long-term incentive plan

Under the terms of the Company's long-term incentive plan, at 30 September 2019 Pacific Industrial LLP, an affiliate of Pacific Capital Partners Limited, has subscribed for shares in Pacific Industrial & Logistics Limited, a subsidiary of Urban Logistics REIT plc. Further details have been provided in note 8.

Acquisition of investment properties

During the interim period, the Group incurred fees totalling £315,570 from M1 Agency LLP, a partnership in Richard Moffitt is a member. These fees were incurred in the acquisition and sale of investment properties.

For the transactions listed above, Richard Moffitt's benefit is 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, and excluding Richard Moffitt, review and approve each fee payable to M1 Agency LLP, and ensure the fees are in line with market rates and on standard commercial property terms.

16. Net asset value per share

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 at the end of the period.

Net assets have been calculated as follows:

Supplementary Information

i. EPRA performance measures summary

ii. Income statement

iii. Balance sheet

iv. EPRA net initial yield and 'topped up' net initial yield

v. EPRA Cost Ratio

1) Property operating expenses are cost of sales. These typically include Utilities, Business rates, Letting fees, and other direct costs.