Hansteen has EUR 300m firepower for distressed acquisitions

Hansteen, the UK REIT investing in continental European and UK real estate, has firepower totalling £254 mln (EUR 307mln) for 'distressed opportunities'.

So far this year Hansteen has carried out three acquisitions totalling more than EUR 450 mln in Germany and the UK. In addition, Hansteen Property Unit Trust (HPUT), managed by Hansteen, purchased £18.5 mln of properties in four transactions.

Announcing Hansteen's interim results to end-June 2010, chairman James Hambro said on Tuesday that there would more chances in the UK to buy properties from banks and administrators at prices that represent good value.

Joint CEOs Morgan Jones and Ian Watson told PropertyEU that Hansteen could invest another £100 mln comfortably but that would involve putting borrowing against the recent Kilmartin portfolio acquisitions and anything else they decided to buy. Hansteen is also 33% of HPUT which has a further £154 mln in firepower, assuming 'prudent' gearing.

'The chances are a growing part of our business will be in the UK. This not because we are unhappy with continental Europe but it is just that we see opportunities coming in the UK. This doesn't necessarily mean that on a pie-chart of assets we will have a lot in the UK. The hallmark of the Kilmartin deal is that we sold nearly half of it in three months. If we keep up that kind of rate we won't be amassing assets in the UK although we will be very active in the market,' Watson said.

Hansteen posted a pre-tax profit of £7.8 mln for the six months to end-June 2010, compared to a £9.7 mln loss in the same period last year. The value of Hansteen's portfolio has risen to £722 mln from £422.8 mln at end-June 2009. The annualised rent roll has risen to £58.2 mln from £36.7 mln in the period.

The diluted EPRA Net Asset Value fell 4 pence to 80 pence per share due to movement in the Euro/Sterling exchange rate. Hansteen announced a three-year hedging contract in July this year to protect against currency fluctuations.

Hansteen has committed to paying dividends twice per year, with a proposal to pay an interim dividend of 1.4 pence per share in November.

Jones said: 'With a portfolio yield of 8% and the cost of borrowing at 3% you can see we are throwing up quite a bit of spare cash and the idea is that is going to be distributed by prudently, progressive dividend.'