Stenprop mulls London listing as it pursues UK prospects

23rd June 2017

By: Mia Breytenbach

Creamer Media Deputy Editor: Features

     

Font size: - +

Following the acquisition of a portfolio of 25 multilet industrial (MLI) properties in the UK earlier this month, JSE-listed property investment company Stenprop is considering the merits of a conversion to real estate investment trust status, as well as a possible listing on the LSE.

The company will also investigate a possible change in its reporting currency from the euro to the pound to reflect the relatively larger weighting of its UK portfolio, following implementation of the acquisition and sales strategy, Stenprop CEO Paul Arenson told Engineering News earlier this month.

“There is [significant] demand for our shares from UK investors, particularly following this transaction, as the parties involved are well known,” he said, pointing out that it would be advantageous for Stenprop to start to access capital in the UK.

Stenprop earlier this month announced the £130.5-million acquisition of the MLI portfolio, as well as C2 Capital, which has managed the portfolio since 2009.

The MLI portfolio, which is being acquired at well below replacement value, is made up of 25 separate estates located in or near densely populated nodes across the UK. The acquisition is scheduled for completion on June 30.

Arenson highlighted that the acquisition represented a strategic opportunity for Stenprop to invest significantly in an asset class that, based on a number of positive fundamentals, the company believes will deliver sustainable earnings.

He suggested the MLI sector to be “pregnant with growth”, owing to the increasing demand for MLI space from a growing range of occupiers. “The Internet and technology facilitate new MLI business with requirements such as properties as last-mile distribution hubs,” he reiterated.

There is also a constrained MLI supply, owing to a lack of historic development and the conversion of much of the existing MLI space to residential, owing to higher value.

“This transaction provides us with a strong strategic foothold, economies of scale and management expertise in the MLI sector. Our intention is to build a much larger MLI portfolio off this base, which we are confident will deliver sustainable higher average annual rental growth going forward. Our intent is to position Stenprop as a leading player in the UK MLI space through the active pursuit of acquisition opportunities over time,” Arenson said.

In-Line Performance
Despite tough global economic conditions and the impact of Brexit on the pound, Stenprop posted a total dividend of 9c a share, a 1.1% year-on-year increase for the year ended March 31.

The company further reported diluted adjusted European Public Real Estate Association (EPRA) earnings per share of 10.28c, a 1.2% decrease, compared with the previous year, and a €1.59 diluted adjusted EPRA net asset value (NAV) per share, a 4.7% decrease on the previous year.

The results are mostly attributable to the decline in the value of the pound, according to the company. Calculations showed that, without the depreciation of the pound against the euro, the EPRA earnings figure above would have increased by 5.6% and the NAV would have decreased by 1.5%, compared with the previous year. Based on the same currency rate as the previous year, dividends would have increased by 8.1%.

“Apart from the negative impact of the pound devaluation, our portfolio continued to perform in line with forecasts. We continue to pursue opportunities to recycle mature assets into new purchases likely to show enhanced growth in earnings, distributions and capital value over time,” Arenson said.

At the end of the reporting period, Stenprop owned an interest in 54 properties valued at €848.1-million, with 40.3% of the properties in the UK, 41.7% in Germany and 18% in Switzerland, by value.

Swiss Portfolio
Stenprop, meanwhile, expects to sell the remainder of its Switzerland portfolio in the financial year ending March 31, 2018.

It had already, in November 2016, sold some properties in Interlaken, Switzerland, for CHF6.8-million.

Contracts have also been signed for the disposal of the regional shopping centre, Nova Eventis, near Leipzig, in Germany, in which Stenprop owns a 28.42% share. The sale, for which all closing conditions have been met, was scheduled to be completed on June 22.

“This is in line with Stenprop’s strategy to actively monitor its existing portfolio and recycle capital into assets that support our objective of delivering sustainable and growing earnings, distributions and capital value to shareholders,” Arenson concluded.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION