Stenprop: Disposal of Berlin Retail Park for €27.0M

16th July 2020 | Stenprop Limited

STENPROP ANNOUNCES DISPOSAL OF NEUCÖLLN CARRÉE RETAIL PARK, BERLIN FOR €27.0M

-Sale of the asset is a further step forward for UK Multi-let Industrial focussed strategy-

Stenprop, the UK multi-let industrial (“MLI”) property company, announces that it has exchanged contracts on the sale of its long leasehold interest in the Neucölln Carrée retail park in Berlin, Germany to Hamburg-based real estate investment manager Union Investment, acting on behalf of one of its institutional property funds for €27.0 million. The disposal price reflects a €3.6 million^ premium to the 31 March 2020 book value.

Providing 13,364 sq m of gross lettable space the 14-unit retail park is anchored by an Edeka supermarket and provides a range of other convenience-led retail. The weighted average rental is currently circa €107 per sqm.

The disposal is in line with Stenprop’s strategy to become a 100% UK MLI business via the sale of all non-core properties in its portfolio and the reinvestment of the proceeds into UK MLI properties. As at 31 March 2020, approximately 58% of Stenprop’s portfolio was made up of UK MLI estates. On completion of the disposal, assuming no further purchases of MLI estates, the MLI percentage of the portfolio will rise to 60%, based on Stenprop’s total property asset valuations as at 31 March 2020.

Net proceeds from the sale after deduction of anticipated transaction costs, repayment of debt and property taxes is expected to be €15.5 million. Stenprop intends to use the net proceeds from the disposal to fund further acquisitions in the MLI sector.

Completion of the disposal is expected to occur at satisfaction of the last conditions precedent described below and by no later than 15 January 2021, following which the disposal price will be paid to the seller. Failure to complete due to a default by the purchaser will result in the seller retaining the deposit amount of €2.7 million which was paid by the purchaser into an escrow account on 15 July 2020. Either party may terminate the disposal agreement should the property suffer significant structural damage resulting in rent losses exceeding 40% over a period of six months or should certain major tenants become insolvent prior to completion. The seller believes the chances of these events occurring to be remote given the trading history of these tenants.

The disposal agreement contains market standard representations and warranties for a deal of this size and nature. A limited 12-month guarantee capped at €540,000 was provided by a company of the Stenprop group to the purchaser in respect of claims against and for liabilities of the seller under the disposal agreement.

Completion of the disposal is subject to the following conditions precedent:

  • approval of the disposal by the owner of the freehold;
  • registration of a priority notice in favour of the purchaser in the land register; and
  • the current lender having deposited cancellation documents for the existing land charges on the property.

Paul Arenson, CEO of Stenprop, commented:

“The sale of this asset at an attractive premium to valuation is a great result for the business and enables us to continue to deliver our strategy and focus on becoming the leading Multi Let Industrial business in the UK. We continue to make good progress with the sale of our other German retail assets and expect to be in a position to report on further progress soon.”

The Property was valued at €23.4 million at 31 March 2020 by Carsten Meinhardt and Anke Muller of Jones Lang LaSalle Proprietary SE, who is an external independent valuer registered as a professional in terms of the Property Valuers Profession Act, No.47 of 2000 and with the Royal Institution of Chartered Surveyors. The net operating profit attributable to the property for the year ended 31 March 2020 was €1,094,249. This information has been extracted from Stenprop’s audited results for the year ended 31 March 2020 which were prepared under International Financial Reporting Standards.

Stenprop has a primary listing on the Main Board of the Johannesburg Stock Exchange and a listing on the Specialist Fund Segment of the Main Market of the London Stock Exchange. This disposal is classified as a category 2 transaction in terms of the JSE Listings Requirements. Accordingly, it is not subject to approval by shareholders.

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