News

Stenprop investing significantly in U.K. multi-let industrial sector

Paul Arenson, CEO of Stenprop.
Paul Arenson, CEO of Stenprop.

Stenprop Limited,  a property company with a primary listing on the Main Board of the Johannesburg Stock Exchange and a secondary listing on the Bermuda Stock Exchange, has announced its interim results for the six months ended 30 September 2017.

Summary:

  • £135 million investment in the multi-let industrial sector with a strong acquisition pipeline
  • £71 million proceeds from asset sales to fund the company’s multi-let industrial strategy
  • successful integration of the C2 Capital management team and industrials.co.uk platform
  • net rental income of £15.96 million
  • £785.0 million property portfolio located in the UK, Germany and Switzerland
  • Adjusted EPRA earnings increased from 4.35 pence to 4.87 pence per share
  • Headline earnings per share increased from 4.75 to 5.3 pence
  • declared an interim dividend of 4.0 pence per share

Stenprop took major steps in advancing the strategic decisions taken at the beginning of the period to invest significantly in the U.K. multi-let industrial sector, to actively pursue a listing on the London Stock Exchange and to convert to a UK REIT.

We had been looking for a sector that had real potential to deliver sustainable growth in earnings for some time, as we didn’t see value in the sectors where we had historically invested. The multi-let industrial sector met all our criteria. There is a clear supply-demand imbalance, with long-term structural demand growth and static, or in some cases falling, supply. While we were excited about the rental growth possibilities, we recognised that we needed scale and a top-class management team and platform to properly take advantage of the opportunity. The £130 million acquisition of the industrials.co.uk portfolio and C2 Capital management team, which completed in June, delivered all of these. In a single transaction, we were able to acquire a portfolio of 25 estates with over 400 tenants and an expert and experienced management team.

– Paul Arenson, CEO of Stenprop

The company intends funding further acquisitions of multi-let industrial properties by recycling out of assets with lower growth prospects. In line with this strategy it has concluded a number of disposals (including the £80.9 million post balance sheet disposal of the Company’s Pilgrim Street London office property) which will collectively generate £71.0 million of proceeds to fund purchases and reduce debt.

Although the company does not anticipate raising equity capital in the short term, a liquid share and access to a broader pool of investors are important long-term components of Stenprop’s strategy. In this context Stenprop has made good progress on its intention to list on the LSE and convert to a UK REIT. The company is in the process of appointing a UK financial advisor and expects to be in position to secure a listing on the Specialist Fund Segment of the LSE and to convert to a UK REIT in the first half of its next financial year.

We expect that, after the REIT conversion and LSE listing, Stenprop will appeal to a broader investor base, particularly in the UK.

Over time we are confident that this will improve our liquidity and access to equity.

– Patsy Watson, CFO of Stenprop