JSE-listed property investment company Stenprop will acquire 25 separate multilet industrial (MLI) properties, as well as the management business that has built up and managed the portfolio, C2 Capital, for a combined consideration of £130.5-million.
The MLI portfolio is situated in or near densely populated nodes across the UK, with a gross lettable area of 200 000 m2 and a diversified base of over 400 tenants. The C2 management platform, founded in 2009 by Julian Carey, specialises in the acquisition and active management of multilet industrial estates across the UK.
Stenprop believes the acquisition will help the company achieve higher growth, as MLI assets are attractively priced, generally trading at yields higher than other property classes in the UK. Further, build costs have gone up by 70% over the last ten years, while industrial rents have remained largely unchanged.
As a result, most MLI properties are currently trading well below their replacement cost.
The purchase price reflects a cost of around £65 per square foot, which is also less than the replacement cost of the assets, while occupier demand is growing in an environment of constrained supply.
The MLI Portfolio is owned by Industrials UK, which is, in turn, owned by Industrials Investment Unit Trust (IIUT) and Industrials UK GP. Stenprop will, through two wholly owned subsidiaries, acquire all the units in IIUT and all the shares in GP from Rebano Holdings and C2 Industrials for an effective aggregate purchase price of £58-million.
The purchase price is subject to a further adjustment to take account of any working capital in the structure at the time of completion.
The purchase consideration will ultimately be funded out of the proceeds from the sale of the Nova Eventis shopping centre, which is due for completion on June 22, and from the sale of certain of the properties in Stenprop’s Swiss portfolio that are in the process of being sold.
To ensure that it has the cash available to settle the purchase price on completion, Stenprop has secured a 12-month bridging finance facility of €3-million.
Stenprop will acquire the shares in C2 Capital for £3.5-million, settled through the issue of 3.2-million shares.