Alpha Real Trust : Report and Accounts for the year ended 31 March 2022

Annual report 2022

For the year ended 31 March 2022

Alpha Real Trust targets investment, development, financing and other opportunities in real estate, real estate operating companies and securities, real estate services, infrastructure, infrastructure services, other asset- backed businesses and related operations and services businesses that offer attractive risk-adjusted total returns.

Contents

1. Highlights
2. Company's summary and objective

1. Chairman's statement

1. Investment review

1. Directors
2. Directors' and corporate governance report

1. Directors' statement pursuant to the Disclosure and Transparency Rules
2. Independent auditors' report

1. Consolidated statement of comprehensive income
2. Consolidated balance sheet
3. Consolidated cash flow statement
4. Consolidated statement of changes in equity
5. Notes to the financial statements

1. Directors and Company information
2. Shareholder information

1. Financial calendar

www.alpharealtrustlimited.com

Alpha Real Trust Limited : Annual report 2022 1

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NAV per ordinary share 216.0p as at

31 March 2022 (31 March 2021: 207.7p).

Basic earnings for the year ended

31 March 2022 of 13.3p per ordinary share

(31 March 2021: earnings of 0.0p per ordinary share).

Adjusted earnings for the year ended

31 March 2022 of 4.0p per ordinary share

(31 March 2021: 3.4p per ordinary share)*.

Declaration of a quarterly dividend of 1.0p per ordinary share expected to be paid on 20 July 2022.

• The basis of the adjusted earnings per share is provided in note 9

Highlights

• Robust financial position: ART has been adopting a cautious approach to new investment and conserved cash as a result of the uncertainty that characterised the past financial year; this has placed the Company in a robust financial footing making it well positioned to take advantage of new investment opportunities.
• Investment targets: the Company is currently focussed on continuing to grow its loan portfolio whilst retaining scope to deliver attractive risk adjusted returns including potential capital gains through its wider real estate investment strategy.
• Diversified portfolio of secured senior and secured mezzanine loan investments: as at
  31 March 2022, the size of ART's drawn secured loan portfolio was £36.4 million, representing 27.3% of the investment portfolio.
• The senior portfolio has an average Loan to Value ('LTV')** of 59.1% based on loan commitments (with mezzanine loans having an LTV range of between 48.8% and 78.6% whilst the highest approved senior loan LTV is 72.9%).

• Loan commitments: including existing loans at the balance sheet date and loans committed post period end, ART's current total committed but undrawn loan commitments amount to £17.3 million.
• Sale of Cambourne Business Park: the sale of the business park, in which ART held a 10% interest in the owning joint venture, completed in December 2021 at a price in excess of the Company's latest book value; the investment returned an IRR of in excess of 14.4% p.a. during ART's ownership.
• Galaxia, India: conclusion of litigation in relation to past investment in India with the Supreme court permitting the release of funds to ART and such funds being fully received post year end.

** See page 4 for more details

2 Alpha Real Trust Limited : Annual report 2022

Company's summary and objective

Strategy

ART targets investment, development, financing and other opportunities in real estate, real estate operating companies and securities, real estate services, infrastructure, infrastructure services, other asset-backed businesses and related operations and services businesses that offer attractive risk-adjusted total returns.

ART currently focusses on asset-backed lending, debt investments and high return property investments in Western Europe that are capable of delivering strong risk adjusted cash flows.

The portfolio mix at 31 March 2022, excluding sundry assets/liabilities, was as follows:

	31 March 2022	31 March 2021
High return debt:	27.3%	26.1%
High return equity in property	18.8%	19.5%
investments:
Other investments:	13.1%	0.5%
Cash:	40.8%	53.9%

The Company currently plans to invest the majority of its cash into secured senior or secured mezzanine debt and grow

its diversified loan portfolio whilst retaining scope for further investments to deliver attractive risk adjusted returns including potential capital gains through its wider investment strategy.

Dividends

The current intention of the Directors is to pay a dividend and offer a scrip dividend alternative quarterly to all shareholders.

Listing

The Company's shares are traded on the Specialist Fund Segment ('SFS') of the London Stock Exchange ('LSE'), ticker ARTL: LSE.

Management

The Company's Investment Manager is Alpha Real Capital LLP ('ARC'), whose team of investment and asset management professionals focus on the potential to enhance earnings in addition to adding value to the underlying assets, and also focus on the risk profile of each investment within the capital structure to best deliver attractive risk adjusted returns.

The Company and the Investment Manager have extended the current management agreement for a further term of five years from the expiry of the current term on 21 December 2022. The Company believes this will provide the Company's shareholders with greater certainty going forward on the continued access to the management resources, and broader group support, of the Investment Manager which will assist the Company to continue to achieve its investment objectives. The annual management fee and performance fee arrangements remain unchanged.

Control of the Company rests with the non-executive Guernsey based Board of Directors.

216.0p 4.0p 4.0p

NAV per ordinary share 216.0p	Adjusted earnings per	Dividend per ordinary share
	ordinary share of 4.0p	paid during the year

Alpha Real Trust Limited : Annual report 2022 3

Company's summary and objective (continued)

Financial highlights

	12 months ended	6 months ended	12 months ended
	31 March 2022	30 September 2021	31 March 2021
Net asset value (£'000)	133,256	127,585	126,076
Net asset value per ordinary share	216.0p	208.5p	207.7p
Earnings per ordinary share (basic and diluted) (adjusted)*	4.0p	3.0p	3.4p
Earnings per ordinary share (basic and diluted)	13.3p	2.5p	0.0p
Dividend per ordinary share (paid during the period)	4.0p	2.0p	4.0p

• The adjusted earnings per share includes adjustments for the effect of the fair value revaluation of investment property and indirect property investments, capital element on Investment Manager's fees, the fair value movements on financial assets and deferred tax provisions: full analysis is provided in note 9 to the accounts.

Company's asset allocation by sector and investment (by percentage of Group's NAV, based on the balance sheet carrying values, excluding the Company's sundry assets/liabilities) as at 31 March 2022  (see page 8 for further details).

Hamburg 6.0%

Secured mezzanine debt 11.3%

H2O 12.8%

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Listed & authorised

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fund investments

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Galaxia

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40.8%

Realhousingco

0.4%

Cash

Cash 40.8%