Hansteen sells UK industrial property fund for €187m

European industrial REIT Hansteen has sold its 2009-vintage UK property fund - which focused on distressed assets and bank sell-offs - for a total of £146 mln (€187 mln) in two transactions.

All but one of the 42 assets held by Hansteen UK Industrial Property Unit Trust (HPUT) were acquired by a fund advised by London-based Brockton Capital in a partnership with UK private property company Dunedin Property for £110.5 mln.

A separate 50-50 joint venture between Brockton Capital and Hansteen acquired Saltley Business Park in Birmingham for a net price of £35.6 mln. Hansteen will continue to manage the park, which HPUT had acquired in January 2011 out of receivership for £23 mln, representing a net initial yield of 9.62%.

HPUT was launched in July 2009 with £90 mln of equity from Hansteen and five institutional investors. On exit it comprised 42 assets across England, Wales and Scotland with a combined floor area of 3 million square feet (282,000 m2) and a void rate of 9.65% (27,220 m2), a passing rent of £10.0 mln per annum, equating to average rents across the portfolio of £3.68 per square foot, and a contracted rent of £11.5 mln. The fund also had 25.7 acres of development land.

The 41 assets sold within the fund have a passing rent of £7.6 mln per annum, a contracted rent of £8.5 mln per annum and a void rate of 13.5% (272,724 sq ft). Saltley Business Park comprises 1 million sq feet (93,000 m2). The park has a passing rent of £2.4 mln per annum, a contracted rent of £3 mln per annum and a void of 2.05% (1,860 m2).

Mark Ovens, director for the UK at Hansteen, commented: 'We launched HPUT to take advantage of the economic downturn which had resulted in high levels of distress throughout the sector. Acquisitions were made up to December 2011, predominantly from situations where banks were involved. Intensive asset management and some smaller sales followed before the final exit. It is tremendously satisfying to have launched the fund, met the investment return objectives and returned the capital to unit-holders within the timescale envisaged at the outset.'

James Havery, also a UK director at Hansteen, added that the success of HPUT led to a second fund, HPUT II, being established in May 2013 and the re-capitalisation of the Ashtenne Industrial Fund (AIF) in August 2013, which he said was 'the third successful example of co-investing alongside institutional investors'.

The Brockton-Dunedin JV plans further acquisitions of light industrial real estate in the UK, according to Tony Edgley of Brockton Capital.