File picture: James White
File picture: James White

Stenprop upbeat about multi-let industrial market prospects

By Edward West Time of article published Nov 25, 2019

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CAPE TOWN – Stenprop, the UK-based property group kept its dividend stable at 3.375 pence (64c) per share in the six months to September as it continued to make progress on growing into the multi-let industrial (MLI) market.

Net rental income came to £15.8 million (2018: £16m). Taxed profit was static at £13.2m.

Headline earnings for the period amounted to 3.02 pence per share, compared with 4.96 pence in 2018. Loan to value stood at 41.3 percent, and came to 38.2 percent if unrestricted cash was included.

Chief executive Paul Arenson said in a presentation: “Our conviction regarding the growth prospects of the UK MLI asset class grows stronger as we gain more exposure to the sector. The increasing occupational demand, coupled with restricted supply, continues to produce significant rental growth each time we renew or re-let any MLI units.” He said he saw no sign of this trend slowing in the future.

Like-for-like growth in the total portfolio valuation was 3.5 percent for the six-month period, of which the MLI portfolio was 2.5 percent.

Ninety new lettings/lease renewals in the MLI portfolio were completed for an average 4.36 years at an average rent that was 19.7 percent above the passing rent previously payable on those units. Some 52 percent of rental income was from the MLI portfolio, versus 32 percent in the same period a year ago.

MLI assets comprise 45 percent of the portfolio, in line with a target of 60 percent by year end. Targeted loan to value was 40 percent by year end. The longer-term strategy was to transition to 100 percent MLI over 12 to 18 months.

Eight MLI estates were acquired for £23.9m in the interim period.

The sale of the German assets was being accelerated.

“The MLI occupational market remains strong with demand outstripping supply,” said Arenson.

The vacancy rate stood at 6.1 percent, down from 6.2 percent as at March 31, 2019.

“We have sold most of our UK non-MLI assets, and are left primarily with our German assets to sell. Given that transactional volumes and valuations in Germany are strong, we believe it is a good time to be disposing of our remaining German assets,” he said.

Stenprop shares closed 0.05 percent lower at R21.59 on Friday.


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