Stenprop continues to focus on its two-year transition plan

DUAL LISTED Stenprop continues to consolidate and roll out its two-year transition plan to become a focused UK multi-let industrial (MLI) business with an eye on further acquisitions.

Chief executive Paul Arenson said yesterday that the company, with a $25 million (R349.58m) multi-let portfolio, was well on track with its transition plan to have $65m multi-let by the year 2020 and $100m the year after that.

Stenprop was steadily reducing its debt, he said. It started off at 55 percent, was currently at 47 percent and was forecast to be at 45 percent by March and reduced to 40 percent in 2020.

Stenprop said: “In the period under review, Stenprop has delivered on its goal to convert to UK Reit status and to list on the LSE (London Stock Exchange). Its two-year transition plan to become a focused UK MLI business is progressing well, with targeted levels of acquisitions, sales and leverage all considered achievable.”

In the six months to September, Stenprop made acquisitions of six MLI estates, with a combined purchase price of £24.9m (R445.27m). A further estate had been acquired since the period ended for a purchase price of £4.8m.

As at September 30, 2018, MLI assets comprised 27 percent of Stenprop’s total portfolio, up from 20.1 percent at March 31, 2018, and overall loan to value was 47.3 percent.

Arenson said there were a number of portfolios currently in the market for sale and, “if we are successful in acquiring at least one of these, we are confident that we will exceed our target of £100m of acquisitions for the 12 months ending March 31, 2019”.

“We are not noticing any impact on Brexit. There is the obvious anxiety of course, but we are getting good prices on our sales and buying in a competitive environment. Our portfolios are all doing well,” he said, adding that the multi-let market was resilient with a lot of clients doing business within the UK. The company’s operating expenses significantly increased to £5.3m from £2.6m the prior year.

However, the hike was mainly due to the £0.9m one-off costs associated with Reit conversion on May 1, and listing on the LSE on June 15. Staff costs increased by £0.8m year-on-year, following the acquisition of the C2 Capital management platform in June 2017, the company said.

The JSE and London Stock Exchange listed group declared an interim dividend on Wednesday of 3.375 pence per share for the six months ended September 30, compared to 4p in the previous year, covered fully by property-related earnings, in line with guidance and payable on February 8.

Stenprop, which is de-scaling on its Swiss portfolio, has seen its German properties providing a natural hedge against Brexit.

Stenprop shares closed 0.74 percent lower at R20 on the JSE yesterday.