HSTN.L Regulatory News (HSTN)

19 May 2010 

Hansteen Holdings PLC

("Hansteen" or, the "Company", the "Group")

INTERIM MANAGEMENT STATEMENT

Hansteen Holdings (LSE: HSTN), the UK and Continental European property investment company announces its Interim Management Statement for the period from 31 December 2009 to 19 May 2010.

Highlights of the period:

·; Acquisition of German industrial property portfolio for €330 million

·; Acquisition of Kilmartin property portfolio for £80.4 million

For further information:

Overview

The period since 31 December 2009 has been very busy with two major acquisitions which have underlined the future growth of the Group by using Hansteen's financial strength to take advantage of the market's weakness. Hansteen has acquired two property portfolios during the period, a German industrial property portfolio for €330 million and, in the UK, the Kilmartin property portfolio for £80.4 million. Each offers the opportunity to add significant value and improves our position in the market, and both demonstrate the value of our close relationship with UK and Continental banks.

HBI Portfolio

On 9 April 2010, Hansteen completed the acquisition of an 861,000 sq m German industrial portfolio from HBI Holding S.àr.l and HBI Delta GP S.àr.l for an effective acquisition cost of approximately €330 million showing an annualised rent of €30.3 million, financed by approximately €70 million from existing cash resources and the balance of approximately €260 million of non-recourse debt, lent on very beneficial terms.

The Board believes that this is a particularly attractive acquisition. The Hansteen team knows the portfolio well, as it was acquired during the time they were assembling Hansteen's German portfolio and the two portfolios are very compatible. The HBI portfolio has suffered significant capital constraints and management changes, and Hansteen is buying it at an historical low point in relation to both value and occupancy.

Applying an active asset management strategy to this portfolio - improving occupancy, evaluating sales and change of use potential and prudent capital investment - should create significant added property value. Despite the current economic pressures, the Board believes that this acquisition, coupled with the new five-year loan on very attractive terms, negotiated as a part of the transaction, should add shareholder value.

Kilmartin Portfolio

On 16 April 2010, Hansteen exchanged contracts to acquire a 1.2 million sq ft multi-sector portfolio of 61 freehold and leasehold assets from various subsidiaries of Kilmartin Holdings Limited (in Receivership), Kilmartin Group Limited (in Receivership) and Annfield Assets Limited (in Administration) for £80.4 million. The acquisition of the portfolio was funded from the Group's existing cash resources. Three freehold industrial properties from the portfolio were completed by the new Hansteen Property Unit Trust, formation of which was announced in August 2009, for a total consideration of £9.5 million, with the rest of the portfolio completed by Hansteen for £70.91 million.

The net annual rent receivable from the properties was £5.6 million and 58.3% of the portfolio is vacant.

The portfolio is highly compatible with Hansteen's intensive management approach and Hansteen's extensive experience across the UK market. The Board believes that it provides a great opportunity to create significant added value through improving occupancy levels and utilising the Company's intensive management approach.

Kenmore European Industrial Fund

Following the acquisition of a 12% interest in Kenmore European Industrial Fund (KEIF) in November last year, Hansteen announced it was considering an offer for KEIF. However, as we became close to finalising the HBI acquisition we decided not to pursue this opportunity. In mid April, Hansteen subsequently disposed of the entirety of its interest in KEIF at a small premium to the original cost of the shares.

Outlook

As at 19 May 2010, the annualised rent roll for the Group's wholly owned portfolio is £63.4 million, showing a yield of 8.25%, with an overall vacancy level of 26%. This compares with an annualised rent roll at 31 December 2009 of £36 million and an overall vacancy level of 17%. The Hansteen Property Unit Trust has £18 million of properties with a rent roll of £822,000 per annum and a vacancy level of 50%. Our initial work on the UK portfolio is positive and we are hopeful of making progress in lettings and some onward sales.

We have also been enhancing our management team to accommodate the extra work involved with the HBI portfolio in Germany. Progress on this portfolio is good and today the annualised contracted rent roll has increased to €30.6 million per annum (€30 million excluding rent free incentives).

Despite the economic uncertainty which looks set to continue for some time, the Board remains confident about the outlook for industrial property as a first class investment medium. The Group is very well positioned with secure debt and a strong diversified income flow. It has started to benefit from the casualties of the weak property market and expects that investment opportunities will continue to present themselves.

The Group's investments are denominated in Euros and in Sterling. At 19 May 2010 approximately 75% of the Group's net assets are denominated in Euros. Both currencies have been volatile in recent weeks and Hansteen does not currently hedge its currency exposure but this continues to be under active review.

Whilst the occupier market will remain challenging in the short term, our high yield compared to borrowing costs, coupled with the substantial additional upside in the medium term from letting the vacant properties, means the prospects for the Group are encouraging.