16 May 2013 07:00
16 May 2013
Hansteen Holdings PLC
("Hansteen" or the "Company")
Interim Management Statement
Hansteen Holdings (LSE: HSTN), the UK and Continental property investment company, announces its Interim Management Statement for the period from 1 January to 16 May 2013.
Highlights: | |
• | £63.2 million of acquisitions in the period with annualised rent roll of £6.7 million, reflecting 10.6% initial yield |
• | 11 properties sold totalling £16.7 million, and a further three sales totalling £7.2 million notarised and likely to complete before half year-end - £0.9 million (4.1%) above 31 December 2012 valuations |
• | 301 new lettings and lease renewals of 236,336 sq m with annualised rent roll of £10.2 million |
• | Total annual rent roll at 30 April 2013 of £92.8 million including HPUT (31 December 2012: £84.7 million) |
• | Net debt, as at 30 April 2013, of £406.5 million (31 December 2012: £325 million) |
• | Net debt to property value, as at 30 April 2013, of 44% (31 December 2012: 39%) |
• | Over £300 million invested since equity raise in April 2011 |
For further information:
Ian Watson / Morgan JonesHansteen Holdings PLCTel: 020 7408 7000 | Jeremy Carey / Amy WalkerTavistock CommunicationsTel: 020 7920 3150 |
Overview
In the period from the year end to 30 April, Hansteen has been active with a series of significant investment and leasing transactions across its portfolio. 11 sales completed with three further sales exchanged, along with three new purchases and 301 lettings.
Since 31 December 2012, the Sterling/Euro exchange rate has shown a favourable increase of 4.1% raising the year end value of the total portfolio by £43.2 million; equating to an approximate increase in NAV per share of 2.2p.
During the period, the total portfolio under management grew by £76.1 million or 7.6% to £1.08 billion and the total annualised rent roll grew from £84.7 million to £92.8 million per annum. £63.2 million of property was added to the portfolio, mostly through the £60 million acquisition of 32 industrial estates in the UK, completed in January 2013. The Group has invested over £300 million since the equity raising in April 2011.
Hansteen has continued to see the benefit that the direct marketing and local asset management teams have brought across the portfolio. Since the beginning of the year, 14 sales totalling £23.9 million have completed or notarised with an overall yield of 7.5%, giving rise to a £0.9 million profit above 31 December 2012 valuations.
Although like-for-like occupancy declined slightly in the first four months of the year, this is a function of the timing of a number of significant lease expiries and not a reflection of the market trend. In all three of Hansteen's core regions there has been positive occupier demand. Hansteen still considers Germany to be the stronger market but the UK has remained steady and, despite the continued tough environment, confidence remains that positive results will be achieved in the Benelux throughout the rest of the year.
Germany
The annual rent roll in Germany at 30 April was €60.6 million which is a like-for-like increase of €0.4 million or 0.8%. The value at 30 April was €665.8 million, a yield of 9.1%. The like-for-like vacancy rate across the portfolio increased from 14.0% to 15.3% due to some significant leases ending in the period but this is not seen as an indicator of performance for the full year.
In Berlin, Hansteen has completed the purchase of 36-38 Motzener Strasse from CA Immo for €4.0 million. The current annual rent roll is €773,000. Hansteen expects to have to spend around €1 million of capital on the building over the next three years.
During the period, three sales completed for a combined profit of €433,000 over the December 2012 valuation. At Aschaffenburg, a 3,436 sq m property was sold to a local investor for €2.29 million; in Weiterstadt, a 6,946 sq m property was sold to the main tenant for €8.05 million and at Neckarsulm, two industrial units totalling 3,440 sq m were sold for €2.75 million to a local investor. As well as being sold at a profit over both current book value and original cost, the properties have shown around a 10% per annum rental yield during the period that Hansteen has owned them.
The sales of a further three properties were notarised during the period at a combined profit of around €450,000; a unit at Maisach at a sale price of €4.6 million; a unit at Bad Schönborn at a sale price of €160,000; and a unit at Uhingen at a sale price of €3.75 million. All three sales are expected to complete before the half year-end. Active discussions are ongoing in relation to a number of additional sales.
UK
Both the wholly owned portfolio and the HPUT had a very successful start to 2013 with increases in occupancy and rental income. The overall like-for-like rent increased by £0.4 million per annum or 1.8% in the period and the occupancy improved by 7,700 sq m. The total portfolio stands at £355.4 million at 30 April.
Wholly owned
Occupancy levels have improved on the wholly owned UK portfolio by 830 sq m or 1% of the void at December 2012. The like-for-like passing rent has shown a marginal improvement of £52,000 per annum. In late January, the purchase of 32 assets from The Industrial Trust was completed for £60 million at a net initial yield of 10.14%. The total portfolio extends to 150,771 sq m, has a combined rent roll of £6.1 million per annum and a vacancy rate of 16.2%.
In January, the sale of Vale Park, Denbigh completed for £675,000. One of the assets recently acquired from The Industrial Trust, Waterfall Lane Trading Estate, Cradley Heath was sold in April to the occupier for £907,000 compared to a gross purchase price in January of £837,000.
HPUT
In addition to its wholly owned properties, Hansteen has a one third stake in the Hansteen Property Unit Trust (HPUT). The HPUT had a particularly successful first four months of 2013 with like-for-like rent increasing by £371,000 per annum and occupancy improving by 6,864 sq m or 10.7% of the opening void. Two profitable sales were completed in the period.
In March, the sale of 1,852 sq m at Aztec West to current tenant Edge Church International Ltd completed. The property, which was only yielding 3.13% due to a low stepped rent, was sold for £1.6 million against a December 2012 valuation of £1.4 million. The sale of a 287 sq m office unit at Buckingway Business Park, Cambridge completed for £360,000, bringing the total number of units profitably sold at the Business Park since it was purchased in 2010 to 18.
In South Wales, an agreement for lease has been entered into with transport and logistics company SDV Ltd on a 5,962 sq m unit at Treforest Industrial Estate. The lease which completes once a programme of works is finished, runs for a period of 10 years with a five year break, at a stepped rent rising to £220,000 pa.
Benelux and France
In Belgium, the passing rent increased from €2.0 million to €2.4 million per annum. Occupancy has also substantially increased over the first four months of 2013 resulting in the void rate dropping from 45% to 29%. A sale of a vacant property in Brussels completed in January at €800,000, slightly above the latest valuation.
Occupancy and rental in the Netherlands decreased during the period, nevertheless the Hansteen Benelux team remain confident that, during the course of 2013, the position will be reversed.
There has been no change to the portfolio in France and all three properties extending to 61,730 sq m remain fully let, with a current passing rent of €1.8 million per annum.
Outlook
At the time of announcing the full year results, Hansteen reported improving occupational demand to a greater or lesser extent across all regions. In addition, Hansteen reported early signs of improving investor sentiment towards industrial and logistics property in Germany and the UK in particular. Lastly, it was reported that the portfolio and management approach was producing secure, high and growing returns. The team's experience during the first four months of the year has served only to reinforce these views.