TIDMSTP
RNS Number : 2789N
Stenprop Limited
29 January 2021
STENPROP LIMITED
(Registered in Guernsey with registration number 64865)
LSE share code: STP JSE share code: STP
ISIN: GG00BFWMR296
29 January 2021
MLI trading update Q3 FY21: strong performance despite local and
national lockdowns
Stenprop Limited ("Stenprop" or the "Company"), the UK multi-let
industrial property company, today publishes a trading update on
its UK multi-let industrial ("MLI") portfolio for the period 1
October 2020 to 31 December 2020 and up-to-date information on
transactions and rent collections across the Company's whole
portfolio.
Commenting on the trading update Paul Arenson, CEO of Stenprop,
said:
"We are pleased to report another quarter of high rental growth
driven by continued demand for space in our MLI portfolio as well
as stable levels of occupancy and strong rental collections of 89%
for the financial year to date. We are also pleased to report the
exchange of contracts for the sale of our two remaining German
daily needs centres at values significantly ahead of our March
valuations. Our pipeline of acquisitions has also been strong with
GBP37 million of MLI acquisitions exchanged and/or completed during
the period and a strong pipeline of potential investments.
The MLI market has sustained itself well despite the recent
Coronavirus lockdown, and with Stenprop staff having already
visited around 80% of our sites so far in 2021, we can report that
the shutters are open and our customers are open for trade. This is
in marked contrast to the first lockdown in the Spring of 2020 and
explains why we haven't seen any material impact on rent collection
rates or new letting enquiries as a result. We have also continued
to deliver a strong letting performance across the UK with no
change to leasing incentives or terms.
2021 has also got off to a good start for our industrials.co.uk
leasing platform, with weekly enquiry levels up c. 80% vs the last
quarter of 2020 and resulting in over 110,000 sq ft of units going
under offer early in January. We remain cautiously optimistic for a
strong recovery for MLI once existing lockdown restrictions are
eased in a similar fashion to what we witnessed in the Summer of
2020.
Assuming the UK and German transactions which have exchanged go
on to complete, MLI will comprise 72% of the portfolio and keeps us
very much on track to becoming 100% MLI by March 2022."
Strong rent uplifts at lease expiry and renewal
-- 25% average uplift on the previous passing rent on new
lettings (previous quarter: 16%) and 24% on lease renewals
(previous quarter: 16%).
-- GBP1.51 million per annum of new rental income (1) contracted
through 39 new lettings (previous quarter: 58) and 18 lease
renewals (previous quarter: 19) over 236,701 sq ft.
-- Like-for-like passing rent up 0.8% during the quarter
(previous quarter: 2.5%) and up 3.6% over 12 months.
-- As at 31 December 2020, the estimated rental value of the
portfolio (GBP5.90/sq ft) remained at a 9.6% premium to the average
passing rent (GBP5.38/sq ft), providing continued potential for
uplifts in rent at lease expiry and renewal.
-- Rental incentives remain steady on new lettings and renewals
with average rent-free incentives of 2.8 months on an average lease
term of 4.7 years (3.5 years to earliest break) (previous quarter:
2.5 months on term of 3.6 years (2.6 years to earliest break)).
-- Occupancy across the MLI portfolio stable at 93.1% as at 31
December 2020 (30 September: 93.3%, 30 June: 92.0%, 31 March:
91.0%).
-- During the period we concluded significant lettings with two
of our top 10 largest Industrials customers:
o A lease renewal of 62,900 sq ft at Shire Court, in Mansfield,
on a ten-year term with a break in year five and a six-month
rent-free incentive at a rent 20.6% ahead of previous terms.
o A new letting at Kirkstall Industrial Park in Leeds on a
39,900 sq ft unit where the previous tenant had recently gone into
administration. The new lease is for a term of 15 years (with a
tenant break in year 10) with no rent free and at a rent reflecting
a 12.3% premium to the previous passing rate.
A promising start to 2021 for industrials.co.uk leasing and
enquiries
-- Industrials.co.uk website users up 2.2% over the quarter
(previous quarter: +19%), and up 68% year on year.
-- While total leads were down 8% for the quarter, as the second
wave of Coronavirus took hold, by 31 December 2020, 70 lease
transactions were under offer over a total of 243,000 sq ft of
space, outperforming the previous quarter (Q2: 49 deals on 208,000
sq ft).
-- A further 8 lease transactions had exchanged and were
awaiting completion on a total of 26,000 sq ft (previous quarter: 9
deals over 20,000 sq ft).
-- Average weekly enquiries in the first three weeks of January
were 80% higher than the previous quarter, which has led to over
96,000 sq ft of additional leasing transactions being placed under
offer in January.
-- As at 27 January 2021, there were over 300,000 sq ft of
leasing transactions under offer, of which 112,000 sq ft related to
new lettings on currently vacant space and the remainder relates to
lease renewals with existing customers.
Rent collections robust despite lockdown
As at close of business on 21 January 2021, Stenprop can report
the following rent collection statistics:
December monthly and quarterly collections remain on course to
equal or beat the best collection rates seen since the pandemic
struck in April 2020.
Exchange or completed GBP37 million of new MLI acquisitions and
GBP51 million of sales at a 19% premium to March 2020
valuations
-- Acquisition of Mandale Business Park in Durham on 10 November
2020 for GBP11,200,000, reflecting a net initial yield of 6.65% and
a capital value of GBP82 psf.
-- Acquisition of Phoenix Industrial Estate in West Bromwich on
13 November 2020 for GBP2,770,000, reflecting a net initial yield
of 7.2% and a capital value of GBP59 psf.
-- Acquisition of The Levels at Capital Business Park in Cardiff
on 3 December 2020 for GBP6,250,000, reflecting a net initial yield
of 6.3% and a capital value of GBP77 psf.
-- Acquisition of R6 Industrial Estate in Edinburgh on 17
December 2020 for GBP3,900,000, reflecting a net initial yield of
6.4% and a capital value of GBP122 psf.
-- Acquisition of Otterwood Square Industrial Estate in Wigan on
18 December 2020 for GBP1,670,000, reflecting a net initial yield
of 6.6% and a capital value of GBP89 psf.
-- Acquisition of Newburn Riverside Industrial Estate in
Newcastle Upon Tyne - on 2 December 2020, we exchanged contracts to
acquire this property for GBP10,900,000, reflecting a net initial
yield of 6.8% and a capital value of GBP93 psf. Completion is due
in February 2021 subject to closing conditions being met.
-- Disposal of Victoria Centre in Berlin - on 18 December 2020,
we exchanged contracts on the sale of this asset for EUR37,450,000,
reflecting a 19% (EUR6.05 million) premium to the 31 March 2020
book value and equating to the 30 September 2020 book value.
Completion of the sale is anticipated by the end of March 2021,
subject to closing conditions being met.
-- Disposal of Hermann Quartier in Berlin - on 28 December 2020,
we exchanged contracts on the sale of this asset for EUR30,800,000,
reflecting a 19% (EUR5.00 million) premium to the 31 March 2020
book value and equating to the 30 September 2020 book value.
Completion of the sale is anticipated by the end of March 2021,
subject to closing conditions being met.
Most of the above transactions have already been announced on
RNS and SENS. For full details please visit
https://stenprop.com/investors/regulatory-news-service/
Significant reduction in the cost of borrowing
During the period we completed two debt refinancings secured
against assets within our UK industrial portfolio:
1. On 4 December 2020 we refinanced an existing GBP61.5 million
senior loan with a new seven-year fixed rate GBP66.5 million (38%
LTV) loan from Reassure.
2. On 22 December 2020 we extended our senior debt facility with
Lloyds from GBP26 million to GBP50 million, raising additional
monies against the recently acquired MLI assets, together with
moving to a SONIA based loan.
Upon completion of these two new debt facilities the average
cost of senior debt on the UK industrial portfolio fell from 3% to
2% per annum, equating to an interest saving of approximately
GBP1.3 million per annum on a like for like basis.
As at close of business on 31 December 2020, Stenprop's
loan-to-value ratio (LTV) was 40% on drawn facilities, and
approximately 35% when allowing for free cash(2) .
Notes
The financial information on which this trading update is based
has not been reviewed or reported on by the Company's external
auditors.
(1) Contractual Rental Income represents the annual income
secured from a lease contract ignoring any incentives and break
options in the lease.
(2) Calculated as gross borrowing less available cash, divided
by gross asset value based on our 31 March 2020 valuations adjusted
for subsequent acquisitions and disposals and changes in foreign
exchange rates.
To receive details of all future announcements made by Stenprop,
please add your name and email address to our Investor News email
list at https://stenprop.com/media/stenprop-investor-news/
For further information:
Stenprop Limited
Paul Arenson ( paul.arenson@stenprop.com )
Julian Carey ( julian.carey@stenprop.com )
James Beaumont ( james.beaumont@stenprop.com )
Numis Securities Limited (Financial Adviser) +44 (0)20 7260
1000
Hugh Jonathan
Vicki Paine
FTI Consulting (PR Adviser) +44 (0)20 3727 1000
Dido Laurimore
Richard Sunderland
Richard Gotla
Neel Bose
Stenprop@fticonsulting.com
Java Capital (JSE sponsor) +27 (0)11 722 3050
About Stenprop:
Stenprop is a UK REIT listed on the LSE and the JSE. The
objective of the Company is to deliver sustainable growing income
to its investors. Stenprop's investment policy is to invest in a
diversified portfolio of UK multi-let industrial (MLI) properties
with the strategic goal of becoming the leading MLI business in the
UK. For further information, go to www.stenprop.com .
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END
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