Hansteen Hldgs plc HSTN Interim Management Statement

  Hansteen Hldgs plc (HSTN) - Interim Management Statement

RNS Number : 2802R
Hansteen Holdings plc
16 November 2012




16 November 2012



                            Hansteen Holdings PLC

                        ("Hansteen" or the "Company")

                                      

Hansteen Holdings (LSE:HSTN), the UK and Continental property investment
company, announces its Interim Management Statement for the period from 1 July
to 16 November 2012.



Highlights:



- £26.4 million of acquisitions in the period with an annualised rent roll of
  £2.4 million reflecting 10.6% initial yield
- Over £250 million of acquisitions since fundraising in April 2011
- £14.1 million committed to two pre-let developments in Germany
- 13 sales totalling £17.8 million in the period, 27 sales totalling £45.6
  million year to date
- 244 new leases and lease renewals to 31 October 2012 securing £5.4 million
  rent per annum
- Annualised rent roll, on wholly owned portfolio, increased to £66.47
  million, at 31 October (30 June 2012: £65.7 million)





For further information:

Ian Watson/ Morgan Jones Jeremy Carey / Amy Walker
Hansteen Holdings PLC    Tavistock Communications
Tel: 020 7408 7000       Tel: 020 7920 3150





Overview



Since the Interim Statement for June  2012 Hansteen's key indicators have  all 
been positive.  Cash  flow has  been  strong, with  normalised  income  profit 
continuing to  grow  in  line  with the  Board's  expectations.  Absolute  and 
like-for-like occupancy and rental income  on the wholly owned portfolio  have 
all  improved.  We   believe  that   our  business   model  demonstrates   the 
attractiveness of  high-yielding secondary  property. Providing  that you  buy 
carefully and have the capacity to manage vigorously, our experience continues
to be that a large, diversified portfolio of high-yielding industrial property
produces a strong and reliable income with the genuine prospect of substantial
capital growth when markets recover.



During the period, Hansteen has acquired £26.4million of property with a  rent 
of £2.4 million reflecting  a yield of 10.6%.  This takes gross  acquisitions, 
since our £147  million fundraising in  April 2011, to  over £250 million.  So 
far, these  acquisitions are  performing  in-line with,  or better  than,  our 
projections at the time of acquisition.  In addition, we have committed  £13.6 
million to  two substantial  pre-let developments  in Germany  which will,  on 
completion, produce running yields of around 10%, from strong tenants on long
leases.



Liquidity in the industrial property investment market is improving  slightly, 
particularly in Germany and we have taken advantage of this to make a  further 
13 sales, totalling £17.8  million since the half  year. This brings sales  to 
date this year to 27 with a total value of £45.6 million. The overall yield on
properties sold so far  this year is 4.9%.  For the year to  date all of  the 
sales were made at a surplus to the valuation with one exception. In the  UK, 
we sold one of the larger remaining Kilmartin assets at a £1.2 million deficit
to book as we  decided that the value  and potential returns were  diminishing 
and long term redevelopment value  was becoming more uncertain. We  therefore 
chose to realise the capital and to reinvest it in new projects.



Operationally, there has continued to be  a high level of activity  throughout 
this period. Hansteen completed 244 new  leases and lease renewals between  30 
June and 31 October  2012, securing rental income  of £5.4 million per  annum. 
The total rent roll, on the  wholly-owned portfolio, has increased from  £65.7 
million, at 30 June  2012, to £66.47  million at 31  October 2012. During  the 
period, adverse  exchange  rate  movements  reduced  the  Sterling  equivalent 
annualised rent roll  by £0.3 million,  sales reduced the  rent roll by  £1.18 
million per annum and acquisitions added £2.4 million.



In addition to the current operations,  we are seeing increasing new  business 
opportunities to invest our capital in each of the areas in which we operate.
Hansteen's pan-European  asset  management  structure is  proving  a  valuable 
resource, both for Hansteen's own portfolio and for the possibilities that  it 
provides to  work  out distressed  portfolios  throughout Europe.  The  Board 
believes  that  this  infrastructure   and  evident  expertise  will   provide 
opportunities for the business in the future.



UK



Across the UK  wholly-owned portfolio,  like-for-like vacancy  was reduced  by 
7.5% or 6,560  sq m,  and, following the  acquisition of  West Horndon,  which 
included 19,459 of void space, vacancy stands at 99,401 sq m, that is  31.5% 
of our UK  portfolio (30  June 2012: 86,502  sq m,  33%). Like-for-like  rent 
increased, albeit  not proportionately  to the  reduction in  vacancy as  some 
vacant properties were sold  during the period. The  rent roll at 31  October 
now stands at £10.1 million (30 June 2012: £9.2 million).

Within the HPUT portfolio, vacancy increased by 12,322 sq m to 70,529 sq m  or 
20.4% (30 June  2012: 59,903  sq m,  16.8%), reducing  the HPUT  rent roll  by 
£771,000 per annum. The bulk of this vacancy increase can be attributed to the
BBC vacating  two large  units at  the Treforest  Industrial Estate.  We  were 
aware, when we acquired  this estate in  2010, that the  BBC would be  leaving 
these units when their lease expired and this was reflected in our acquisition
business plan.



There continues to  be a good  level of letting  activity in the  UK where  47 
lettings were concluded up to the end of October, generating £0.6 million  per 
annum of income.



Since the half year, there have been 5 sales, totalling £6.2 million from  the 
UK wholly-owned portfolio and 5 sales for £4.1 million from the HPUT.



Benelux



In the Benelux  region, vacancy reduced  on a like-for-like  basis by 5.4%  or 
8,388 sq m to 148,249 sq m, that is 32.3% of the Benelux portfolio (30th  June 
2012 156,637sq m, 34.1%). Likewise, the  rent roll increased from €14  million 
to €14.2  million.  We  do not  believe  that  this is  a  reflection  of  any 
improvement in the occupational market for industrial property in the  Benelux 
but that  our local  asset management  team has  worked hard  to generate  and 
convert more enquiries.



Germany



The occupational market in Germany is still strong, although vacancy increased
fractionally to 197,863 sq m (14.2%) (30 June 2012: 169,165 sq m, 13.8%), with
the like-for-like  rent roll  similarly  shading down.  The actual  rent  roll 
remained stable at €55.8 million.



There was 88,598 sq m of new lettings and lease renewals to 149 tenants during
the period,  representing rental  income  of €4.1  million per  annum.  Three 
properties were sold,  all profitably, for  a total of  €11.8 million, with  a 
rent roll  of  €0.8  million.  There  was  one  acquisition  comprising  three 
individual units  in Uhingen,  Henstedt-Ulzburg  and Grevenbroich  during  the 
period, with a combined rent  of €1.17 million per annum  and a cost of  €10.1 
million.



Work commenced on two substantial pre-let developments. In Hanau an  existing 
empty office block is being completely  redeveloped in order to provide  8,316 
sq m of top  quality offices for Heraeus,  a substantial German occupier.  The 
project, which will cost approximately €9 million, commenced in February  2012 
with completion expected in October 2013.  Heraeus has signed a 10 year  lease 
at an initial rent of €0.9  million per annum. This development will  enhance 
the entire Hanau property which comprises 40,764 sq m.



The second  development is  in Bremen  where we  are building  a 20,000  sq  m 
institutional quality distribution  building for the  logistics company,  LIT. 
The expected  construction cost  is €9.5  million and  the rent  committed  on 
completion, expected in April 2013, is €1.0 million per annum.



Currency



Hansteen reports its results in sterling although it is exposed to investments
in the Euro zone. Between 30^th June and 31^st October the Euro fell  against 
the sterling by  0.6%. As  reported in  our Interim  Statement, Hansteen  has 
currency hedging in place with €200 million currency hedges representing  some 
two thirds of the current Euro denominated net assets and €70 million of Euro
income hedged in four tranches over 2 years.



Outlook



Hansteen's regional asset management offices are enjoying considerable success
in retaining  existing  occupiers,  attracting  new  occupiers  and  achieving 
profitable sales. Having our own people on the ground close to the properties,
marketing the vacant space  directly, is giving  us a significant  competitive 
edge.



We are seeing an increasing number of interesting acquisition opportunities in
all of our core regions. Acquisition opportunities in this market take a long
time to  conclude  and  are often  complex  but  there has  recently  been  a 
noticeable increase in such discussions in  all of our geographic regions  and 
in several  situations we  are in  detailed due  diligence albeit  this is  no 
guarantee that a deal will be consummated.



Whilst it is  possible that valuations  of high-yielding secondary  industrial 
property will come under pressure in  the short-term, the Board believes  that 
today's values represent fundamental worth. The current value per sq m of  the 
portfolio is around half replacement cost without taking account of any  value 
in the  land. Furthermore,  the income  derived from  the portfolio  is  high, 
resilient and well diversified. In addition to that income, Hansteen continues
to enjoy  the  twin  drivers  for  growth  of  further  capital  capacity  and 
approximately 500,000 sq m of  vacant space to let or  sell. As a result,  the 
portfolio and  the  business should  continue  to generate  high  and  growing 
returns over the  next few years  which is  expected to manifest  itself in  a 
progressive, but prudent, dividend distribution.



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IMSBIBDBXDBBGDU -0- Nov/16/2012 07:00 GMT