Johannesburg-listed property firm Stenprop said it has identified £460 mln (€520 mln) of assets to sell over the next two years as part of plans to refocus exclusively on UK multi let industrial (MLI) assets.
Stenprop, which owns a portfolio of 74 buildings situated in Germany, Switzerland and the UK with a combined value of £785 mln, of which £130 mln MLI property, intends to sell all of the non-MLI property over the next few years and invest the proceeds into additional MLI properties to become a specialist property company focused purely on the UK MLI sector.
'We have identified £460 mln of assets to sell over the next two years and have a target to acquire at least £220 mln of multi-let industrial assets from those proceeds, with the balance of equity realised being used to reduce overall debt levels to a loan-to-value ratio of less than 40%,' commented CEO Paul Arenson.
To facilitate our acquisitions, the firm has secured a new £50 mln loan from bank Investec. 'Through this we can fund purchases immediately, eliminating cash drag during the transition process. We expect UK multi-let industrial assets to comprise the majority of our total portfolio by the end of 2019 based on the current programme,' added Arenson.
The firm also plans to convert to a UK REIT and list its shares on the London stock exchanges within the next six to nine months. Arenson: 'We will continue to retain our current listing on the Johannesburg Stock Exchange. At this stage, there is no intention to issue shares when we list in London as we will first utilise the proceeds from sales to fund the acquisition pipeline.'
Stenprop has already signed its first sale with the divestment of 11 Pilgrim Street, London EC4, at above book value for £79.9 mln.
It also announced three separate MLI acquisitions worth £13.5 mln (€15 mln). Stenprop bought Souterhead Industrial Estate in Aberdeen from M&G Real Estate, Venture Park in Peterborough from Catalyst Capital and Coningsby Park in Peterborough from Thomas Cook, which together total more than 360,000 sq ft (33,500 m2).
The three estates comprise 63 purpose-built multi-let industrial units. In addition to the combined £13.5 mln purchase price, Stenprop will invest a further £4.5 mln into Coningsby Park in Peterborough as part of a refurbishment programme.
The acquisitions increase the size of Stenprop’s multi-let industrial portfolio to 2.36 million sq ft, which represents almost 20% of its total portfolio.
'Coningsby Park, Peterborough is a particularly exciting acquisition for us,' said Julian Carey, Group Property director of Stenprop. 'We were able to acquire the asset for a price reflecting largely vacant value, giving us the opportunity to use our asset management capabilities to reposition it to its former multi-let use enabling us to bring it back to market for letting. The Peterborough multi-let market has a sub 3% vacancy at present, and we are encouraged by the early demand we received from potential occupiers in advance of acquisition. Once fully let, this asset will be substantially yield enhancing for the overall portfolio.' He added: 'The other two estates are income producing and meet our earnings return targets, with the prospect of strong rental growth through asset management over time.'
