Stenprop will offload its non-core assets in the UK
STENPROP has said that it will sell all its non-core assets in the UK in the next few years. The group, with the recently converted UK Reit, said that offloading the non-essential businesses would help it to establish itself as a leader in the UK multi-let industrial (MLI) business.
It said it disposed of £210.4 million (R3.6 billion) worth of assets during the year to end-March, including £41.7m post year-end, yielding proceeds of £97.9m to fund the company’s investment in the MLI sector.
The group said it would also utilise the sale proceeds to build a focused UK MLI business and reduce total borrowings to less than 40 percent of its gross asset value by the end of March 2020.
“The company’s investment strategy for achieving this objective has always been to identify and invest in sectors and assets that have positive growth fundamentals and, where there is an opportunity, to add value and grow earnings through active asset management,” the group said.
Stenprop identified UK MLI in early 2017 as a sector likely to deliver superior long-term growth.
It said it required sufficient scale as well as an excellent management team and operating platform to exploit increasing tenant demand in the UK MLI sector, adding that this would translate into higher rental over time.
Stenprop has acquired industrials. co.uk multi-let industrial portfolio and C2 Capital management platform for £130.5m and invested £147.8m in MLI assets as part of its strategy to dominate the market.
It also bought a further £11m of MLI assets after the reporting period.
“This takes the total MLI component to 23 percent of total assets,” the group said. Stenprop will list on the London Stock Exchange next week.
The group said it was confident that its increasing investment in the MLI sector would yield results in time and achieve its core objective of delivering sustainable growing income to shareholders. Its portfolio includes office, retail and multi-let industrial sectors, which accounted for 35 percent, 26 percent and 24 percent respectively of rental income in the year to end-March.
The group reported an increase of 29 percent increase in net rental income from continuing operations to £32.9m, while diluted adjusted European Public Real Estate Association earnings a share increased by 1.1 percent to 9.09 pence a share, up from 8.99p. The board declared a final dividend of 4 pence a share.
Stenprop shares rose 2.35 percent on the JSE yesterday to close at R19.60.