Stenprop transitioning into a 100% UK multi-let industrial business

Business 2

Stenprop has announced its full-year results for the year ended 31st of March 2020.

The Company made solid progress in the transition to become a 100% UK multi-let industrial business:

  • The multi-let industrial portfolio represents 58% of the total property portfolio, up from 42.7% a year earlier.
  • Acquisition during the year of ten multi-let industrial estates and a number of additional units on existing estates for a total purchase price of £38.8 million
  • Stenprop sold three small UK retail properties for an aggregate consideration of £4.60 million and the portfolio’s largest property, known as Bleichenhof located in in central Hamburg, for €160.15 million (£136.2 million).
  • The group’s loan-to-value ratio reduced to 40.8% (2019: 44.2%) on drawn facilities, or 27.7% when taking free cash into account.
  • The Company further invested in the multi-let industrial operating platform.
  • Stenprop completed 197 new lettings / lease renewals in the multi-let industrial portfolio for an average contractual term in excess of four years and 19% ahead of the previous passing rent for each unit.
  • On like-for-like basis, the valuation of the total portfolio increased by 2.8% over the prior year. The like-for-like increase on the multi-let industrial portfolio valuation was 3.7%.
  • The Company reported a strong balance sheet at 31st of March 2020 with £70 million of free cash and significant headroom for both interest cover and LTV loan covenants. Stenprop is well placed to cope with a prolonged period of uncertainty.
  • At 31 May 2020, 82% of the portfolio’s total rent invoiced and due had been received for the aggregate of the quarter commencing 25 March 2020 and the months of April and May 2020.

Financial results:

  • Declared final dividend on 11 June 2020 of 3.375 pence per share, which together with the interim dividend of 3.375 pence per share declared on 21 November 2019, results in a total dividend for the year ended 31 March 2020 of 6.75 pence per share (2019: 6.75 pence per share). The total dividend for the year is fully covered by earnings of 6.88 pence per share. Subject to the receipt of regulatory approvals, a scrip alternative will be offered, which the directors intend to match through the buyback of shares on the market.
  • Net rental income for the period of £33.0 million (2019: £33.9 million). Profit after tax of £15.6 million (2019: £23.8 million). Adjusted EPRA profit after tax was £19.7 million (2019: £25.2 million).
  • Diluted IFRS net asset value per share was £1.37 (31 March 2019: £1.36). Diluted EPRA net asset value per share of £1.39 (31 March 2019: £1.41).
  • Diluted IFRS earnings per share (‘EPS’) was 5.44 pence (2019: 8.35 pence). Diluted adjusted EPRA EPS was 6.88 pence (2019: 8.84 pence). The decline in earnings was a direct consequence of the previously communicated strategic decision to withdraw from all historic third-party fund management activity.

Paul Arenson, CEO of Stenprop, commented:

We are pleased to have met the key milestone targets articulated in late 2017 and expect to complete the transition into a 100% UK multi-let industrial business over the next two years. The new financial year is likely to be challenging with COVID-19 and Brexit headwinds, but we are well positioned to meet these challenges with exposure to resilient assets, a strong balance sheet and free cash of approximately £70 million. While we acknowledge the need for caution, we are keen to start taking advantage of the conditions to acquire additional MLI estates at attractive risk-adjusted pricing. We have full belief in our strategy of becoming a 100% UK MLI operating company and anticipate that many of the trends which have fueled the demand for this asset class from occupiers and investors over recent years will be accelerated by the current COVID-19 crisis”.