HSTN.L Regulatory News (HSTN)

 For release: 14 November 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 July to 14 November 2013.

For further information:

Overview

In the period from the half year to 14 November 2013, Hansteen has continued with the high levels of activity seen throughout the first half of the year with further significant investment and leasing transactions across its portfolio.

£53 million has been invested in a 27.5% stake in AIF at a discount of 22% to the 30 September 2013 NAV with Hansteen appointed as the Asset Manager to the Fund. 13 sales have completed, along with four purchases totalling £24.1 million and 401 lettings that have secured £10.4 million of rental income per annum. The €100 million convertible bond diversifies borrowings, allows flexibility when refinancing the existing debt and provides funds for future acquisitions.

The like-for-like vacant area has decreased by 34,000 sq m in the period across all three of Hansteen's core regions. Much of this improvement resulted from the sale of vacant properties and therefore although like-for-like rent increased, it was not proportional to the improvement in vacancy. The total annualised rent roll at the end of the period including the three UK funds is £136.9 million.

The portfolio is valued twice a year, at June 30 and December 31, and with the rent roll at 31 October 2013, the total portfolio yielded 8.9%, increased from 8.6% at the half year.

Hansteen has continued to see the benefit that the direct marketing and local asset management teams have brought across the portfolio. 13 sales totalling £12.3 million have completed with an overall yield of 2.6%, giving rise to a £1.3 million profit above valuation. The total value of sales so far in 2013 is £40.9 million.

Germany

The annual rent roll of the German portfolio at 31 October was €61.0 million which is a like-for-like increase since the half year of €0.75 million or 1.2%. The yield at 31 October was 9.2%. The like-for-like occupancy has increased by 23,000 sq m with a number of significant new lettings across the portfolio.

During the period, three sales completed for a combined price of €5.2 million and a profit of €1 million over valuation. The largest of these three sales was a plot of land at Offenburg which was sold to a local developer for €4.4 million, €0.8 million above valuation.

UK

Both the wholly owned portfolio and the UK funds have continued the improvement in occupancy seen throughout 2013 with a total like-for-like improvement of 10,800 sq m. The majority of this improvement has come in the wholly owned portfolio with the UK fund occupancy showing a slight improvement. Like-for-like rent has marginally decreased due to the regearing of a substantial lease at Saltley, at a stepped rent. The UK portfolio owned and under management stands at £820 million.

Wholly owned

The wholly owned portfolio has seen increases in both like-for-like occupancy and rental income in the period. Occupancy has improved by 10,168 sq m or 11% of the void at 30 June 2013. The like-for-like passing rent has shown an improvement of £130,000 per annum with the yield improving to 8.1%. The total portfolio extends to 336,398 sq m, has a combined rent roll of £11.7 million per annum and a vacancy rate of 23.7%.

In August, the sale of the vacant Swan House, Windsor completed profitably for £700,000 to an owner occupier.

HPUT

In addition to its wholly owned properties, Hansteen has a one third stake in the Hansteen Property Unit Trust (HPUT). Six sales have completed in the period for a combined consideration of £5.7 million. Most recently, part of Marian Mawr at Dollgellau has been sold for £972,500, generating a profit of £300,000 over valuation. Other sales include units at Treforest, Saltley, Weston Interchange and Kirkleatham with the total amount of property sold totalling 11,393 sq m or 3.2% of the portfolio. 56% of this space was vacant and £550,000 of profit has been generated from the sales.

 HPUT II

As the acquisition phase continues, three single estate purchases have completed for £9.9 million at an average yield of 10%. Contracts have also been exchanged for the purchase of 18 properties in the North West of England for a purchase price of £14.2 million. Passing rent stands at £1.49 million. This portfolio is in excess of 85,000 sq m and has a vacancy rate of 34.9%.

AIF

Hansteen has acquired a 27.5% stake in AIF during the period for approximately £53 million. AIF owns almost 1.4 million sq m of multi let industrial properties in the UK. The portfolio has over 3,000 units, on 240 individual estates, with an annual rent roll of £43.6 million and a current vacancy of 17.9 %. At 31 October 2013, the gross asset value of the properties was £456.4 million.

The management of AIF has been stabilised during the period with the UK Asset Management teams of Hansteen and Ashtenne being merged in single regional offices. The day-to-day property management has been outsourced to the existing Hansteen property managers with the asset management being undertaken by Hansteen employees. This will allow the asset management team more opportunity to increase occupancy, implement strategic asset management initiatives and take full advantage of any opportunities to add value.

Benelux and France

Like-for-like passing rent and occupancy on the Benelux portfolio have remained flat. There has been no change to the portfolio in France.

Outlook

The occupational markets in which the Company operates are either strong (Germany) or, to a lesser or greater extent, are improving (Benelux and the UK). The rent roll and the earnings are continuing to rise. The refinancing of the German facilities is on course, helped by the Convertible Bond issue, and the Company has significant fire power in HPUT II for further UK acquisitions.

Hansteen's pan European asset management platform is increasingly recognised by the market as among the best in class and we expect this to give rise to some interesting opportunities in the future.

Most significantly the re-rating of industrial property we hinted at in our 2012 full year results and identified more confidently at the half year has continued apace. The most dramatic yield compression has been seen in the big box logistics and prime multi-let space but there is increasing capital and appetite for our type of high-yielding secondary industrial property which seems likely to translate into improving values in due course. Despite the increasing market competition we continue to track a number of off market situations which the Board believes still present value.