Sten­prop de­cides to go the MLI route

The Star Early Edition - - COMPANIES - Roy Cokayne

LISTED prop­erty fund Sten­prop, whose €848.1 mil­lion prop­erty port­fo­lio com­prises only of­fice and re­tail as­sets, could over time be­come a highly fo­cused multi-let in­dus­trial (MLI) prop­erty com­pany.

Paul Aren­son, the chief ex­ec­u­tive of Sten­prop, said yes­ter­day that they wanted to be­come a leader in the MLI es­tates prop­erty seg­ment in the UK and planned to build up this part of its port­fo­lio over the next three to five years through the ac­tive pur­suit of ac­qui­si­tion op­por­tu­ni­ties over time.

His com­ments fol­low Sten­prop, which has a pri­mary list­ing on the Ber­muda Stock Ex­change and a se­condary list­ing on the JSE, ear­lier this week re­port­ing that it had agreed to ac­quire a port­fo­lio of MLI prop­er­ties in the UK and C2 Cap­i­tal, the man­age­ment busi­ness that built up and man­aged the port­fo­lio, for a to­tal of £130.5m (R2.16 bil­lion).

The port­fo­lio com­prises 25 MLI es­tates across the UK with a gross let­table area of 200 000m² and a di­ver­si­fied base of more than 400 ten­ants. “We are very ex­cited about this trans­ac­tion. It pro­vides us with a strong strate­gic foothold, economies of scale and man­age­ment ex­per­tise in the MLI sec­tor.

“Our in­ten­tion is to build a much larger MLI port­fo­lio off this base, which we are con­fi­dent will de­liver sus­tain­able higher av­er­age an­nual rental growth go­ing for­ward,” he said.

He said there were many driv­ers of de­mand for MLI units, in­clud­ing the host of sup­pli­ers spawned by the In­ter­net and the favourable sup­ply and de­mand dy­nam­ics be­cause they were ex­pen­sive to build.

This had re­sulted in the de­mand for these unit in­creas­ing while there was no new sup­ply, be­cause it was un­eco­nomic to build them un­til the rentals im­proved. In ad­di­tion, Aren­son said the ac­qui­si­tion of C2 Cap­i­tal meant Sten­prop had the man­age­ment ex­per­tise to man­age these prop­er­ties.

“We think there is a big op­por­tu­nity to mop up the small own­ers of MLI units. There are thou­sands upon thou­sands of them. If it’s wildly suc­cess­ful, which we be­lieve it will be, its not be­yond the realms of pos­si­bil­ity that we be­come a highly spe­cialised fo­cused MLI com­pany,” he said.

He stressed that the ex­pan­sion into this sec­tor would be re­stricted to the UK.

Sten­prop’s cur­rent port­fo­lio is ge­o­graph­i­cally split be­tween three coun­tries, with 40 per­cent by value in the UK, 42 per­cent in Ger­many and 18 per­cent in Switzer­land.

How­ever, it ex­pects to have sold its en­tire €153m Switzer­land port­fo­lio by end-March next year.

Sten­prop yes­ter­day re­ported a 1.1 per­cent growth in to­tal div­i­dend a share for the year to March to 9 cents from 8.9c in the pre­vi­ous year.

Sten­prop shares gained 0.61 per­cent on the JSE yes­ter­day to close at R18.10.

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