Stenprop: Trading Update

6th August 2019 | Stenprop Limited

Stenprop, the UK multi-let industrial property company, today publishes a trading update for the period from 1 April 2019 to 30 June 2019.

Continued leasing success and significant rental growth

Multi-let industrial (MLI) portfolio lettings:

  • We completed 29 new lettings and 17 lease renewals, totalling 152,784 sq ft, at average rental uplifts of 24% and 16% respectively above the previous passing rent. The average rental incentive given across all new lettings and renewals was 1.92 months on a 4.09-year average term;
  • The average rent on the MLI portfolio is now £5.08/sq ft, which is 7.7% below the average estimated rental value of the portfolio of £5.50/sq ft;
  • The vacancy rate stands at 5.5% (excluding the space currently under refurbishment at Coningsby Park, Peterborough); and
  • The most significant transactions completed were a letting of 18,000 sq ft in Peterborough on a 10-year term with five months’ rent free and a letting of 16,000 sq ft in Glasgow for a 10-year term with two months’ rent free.

Non-MLI portfolio lettings:

  • We completed seven lettings, totalling 17,436 sq ft, which will provide total annual rent of £402,861. The average term on the new lettings was 7.5 years; and
  • The vacancy rate stands at 1.2%.

Non-MLI property disposals progressing well

  • We disposed of two small retail assets in the UK at Hemel Hempstead and Walsall for a combined sale price of £3.6 million, in line with the combined valuation at 31 March 2019; and
  • We now have only one remaining high street retail investment in the UK valued at £0.7 million, which is scheduled for sale before the end of the financial year.

Paul Arenson, CEO, said:

“Our MLI portfolio continues to deliver growth, with new rents consistently ahead of previous passing rents. Tenant demand for MLI units across the UK continues to grow and supply remains constrained.

“During the quarter we made no new acquisitions. We continue to be disciplined in our approach and will only buy if opportunities meet our defined acquisition and return criteria. We remain confident that suitable opportunities will unfold over the coming months. The investment market has been more muted in the first half of the year, but we have recently seen a noticeable increase in better-quality opportunities coming to market.”

Stenprop is transitioning its portfolio from a diversified, pan-European investor into a focused UK MLI company, with the aim of becoming the UK’s leading MLI business. Stenprop has set out a transition plan which involves transitioning the portfolio to at least 60% MLI and reducing overall leverage to a loan-to-value (LTV) ratio of no more than 40% by March 2020.

At 30 June 2019 MLI comprised 42% of Stenprop’s portfolio and Stenprop’s LTV was 43.9%. When unrestricted cash is added to this measure our overall LTV was 35.9% based on our 31 March 2019 valuations and exchange rates.

The financial information on which this trading updated is based has not been reviewed or reported on by the Company’s external auditors.

Stenprop’s Multi-Let Industrial Strategy – Video Interview

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Stenprop CEO Paul Arenson
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