TIDMSTP
RNS Number : 1462X
Stenprop Limited
30 April 2021
STENPROP LIMITED
(Registered in Guernsey with registration number 64865)
LSE share code: STP JSE share code: STP
ISIN: GG00BFWMR296
30 April 2021
MLI trading update Q4 FY21 shows continued strong demand for
multi-let industrial
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
January 2021 to 31 March 2021 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 have had another excellent quarter of leasing activity,
during which we have captured strong rental uplifts averaging 20%.
Demand for MLI space across the UK is as high as we've ever
witnessed. Through our operating platform we are successfully
capturing and converting this into new customers, which is
reflected in the falling vacancy rate.
"The most recent lockdown has had an impact on rent collections,
although the impact has not been as severe as we witnessed in early
2020. We remain optimistic that the majority of rents due during
this latest lockdown period will ultimately be collected in line
with historic rental collection trends seen since the start of the
pandemic with amounts due now closing in on high 90% collection
levels.
"We are also pleased to have achieved our divestment and
investment targets for the year ending 31 March 2021. We completed
over GBP90 million of MLI acquisitions during the period. At the
same time our disposal programme continued to be materially ahead
of expectations, with our German retail sales transacting at an
average 15% premium to 31 March 2020 valuations.
"It has been a strong final quarter for the financial year, and
we look forward to reporting our annual results to 31 March 2021 on
11 June 2021, and to setting out a detailed schedule for our
transfer from the Specialist Fund Segment to the Premium Segment of
the Main Market of the LSE."
A record quarter for leasing drives improved occupancy and
higher rents
-- 24% average uplift on the previous passing rent on new
lettings and 15% on lease renewals (average: 20% across
both).(1)
-- GBP1.54 million per annum of rental income(1) contracted
through 50 new lettings (previous quarter: 39) and 33 lease
renewals (previous quarter: 18) over 212,533 sq ft.
-- 75% of leases contracted through Stenprop's short-form digital 'Smart Leases'.
-- 78% of leases signed included at least 3% annual uplifts in
rent throughout the term of the lease.
-- Like-for-like passing rent up 1.8% during the quarter
(previous quarter: 0.8%) and up 5.6% over 12 months. Average
passing rent up 1.5% to GBP5.46/sq ft (previous quarter: GBP5.38/sq
ft).
-- The estimated rental value of the portfolio increased 4.4%
during the quarter to GBP6.16/sq ft (previous quarter: GBP5.90/sq
ft), resulting in an increased 12.8% premium to the average passing
rent, providing enhanced scope for uplifts in rent at lease expiry
and renewal (previous quarter: 9.6% premium).
-- Rental incentives remain low on new lettings and renewals
with average rent-free incentives of under one month on an average
lease term of 4.25 years (3.0 years to earliest break).(1.)
-- Occupancy across the MLI portfolio increased to 93.7% as at
31 March 2021 as high demand continues to put pressure on vacancies
(31 December 2020: 93.1%, 30 September 2020: 93.3%, 30 June 2020:
92.0%, 31 March 2020: 91.0%).
-- Asset management highlight: In January 2021, a comprehensive
package of roof works was completed across 29 units totaling 25,028
sq ft at Old Mill Industrial Estate in Preston. The total project
cost was GBP270,000 and since completion our team has concluded six
lease renegotiations at rents reflecting a 30% premium to previous
passing rents and an 18% premium to our pre-work ERVs. These
transactions should enhance the value of the estate by c.
GBP500,000, demonstrating the value which can be created by
providing high quality, well-maintained MLI units in densely
populated areas.
Strong leasing demand results in a healthy pipeline of lettings
under offer
-- Average weekly leasing enquiries were 56% higher during Q4 2021 vs Q4 2020.
-- Industrials.co.uk website users up 35% over the quarter
(previous quarter: +2.2%), and up 75% year on year.
-- At quarter end there were 66 leasing transactions under offer
on over 234,000 sq ft of space (Q3: 70 transactions over 243,000 sq
ft of space), of which 101,000 sq ft related to new lettings and
133,000 sq ft to existing customer renewals.
-- A further six lease transactions had exchanged and were
awaiting completion on a total of 24,000 sq ft (previous quarter:
eight deals over 26,000 sq ft).
Rent collections robust despite lockdown
Stenprop can report the following rent collection statistics
which show the total rents collected for each period as at close of
business on 23 April 2021.
Monthly Rents (2020/2021) Quarterly Rents (2020/2021) Total
============= ================================ ================ ==================================== ======
Country Apr/ Jul/ Oct/ Jan Feb Mar Apr Apr Jul Sep Dec Mar
/ May/ Aug/ Nov/ to to to to to
Sector Jun Sep Dec Jun Sep Dec Mar June
============= ======= ======= ======= ===== ==== ==== ==== ====== ====== ===== ===== ====== ======
UK MLI 91% 89% 90% 83% 78% 79% 61% 95% 95% 94% 89% 73% 87%
------- ------- ------- ----- ---- ---- ---- ------ ------ ----- ----- ------ ------
UK Urban
Logistics 100% 100% 100% 100% 100% 100%
------- ------- ------- ----- ---- ---- ---- ------ ------ ----- ----- ------ ------
Guernsey
Office 100% 100% 100% 100% 100% 100%
------- ------- ------- ----- ---- ---- ---- ------ ------ ----- ----- ------ ------
Germany 99% 99% 98% 83% 83% 83% 97% 95%
------- ------- ------- ----- ---- ---- ---- ------ ------ ----- ----- ------ ------
Switzerland 17% 66% 62% 36% 0% 0% 0% 37%
------- ------- ------- ----- ---- ---- ---- ------ ------ ----- ----- ------ ------
Total 90% 93% 92% 80% 75% 76% 66% 96% 97% 96% 93% 82% 90%
------- ------- ------- ----- ---- ---- ---- ------ ------ ----- ----- ------ ------
Completed GBP26 million of new MLI acquisitions and EUR64
million of German retail disposals (3)
-- Acquisition of Lake Enterprise Park in Bromborough on 5
February 2021 for GBP4,150,000, reflecting a net initial yield of
6.7% and a capital value of GBP111 psf.
-- Acquisition of Newburn Riverside Industrial Estate in
Newcastle Upon Tyne completed on 25 February 2021, for
GBP10,900,000, reflecting a net initial yield of 6.8% and a capital
value of GBP93 psf following exchange of contracts on 2 December
2020.
-- Acquisition of Enterprise 5 Industrial Estate in Bradford on
5 March 2021 for GBP3,370,000, reflecting a net initial yield of
6.5% and a capital value of GBP106 psf.
-- Acquisition of Headlands Trading Estate in Swindon on 26
March 2021 for GBP7,375,000, reflecting a net initial yield of 7.1%
and a capital value of GBP70 psf.
-- Disposal of the Bikemax Portfolio, Germany completed on 31
March 2021 for EUR27 million, in line with 30 September 2020 book
value.
-- Disposal of Victoria Centre in Berlin completed on 31 March
2021 for EUR37,450,000, with contracts having exchanged on 21
December 2020.
In total, Stenprop has completed 14 separate UK MLI acquisitions
in the financial year to 31 March 2021, with an aggregate purchase
price before costs of GBP91.5 million vs an acquisition target of
GBP90 million.
As at 31 March 2021, MLI assets accounted for over 73% of
Stenprop's total portfolio based on September 2020 valuations.
Following the completion of the sale of Hermann Quartier (exchange
of contracts was announced on 29 December 2020), the percentage of
UK MLI within the Company's portfolio is expected to rise to over
75%.
As at 31 March 2021, Stenprop's net loan-to-value ratio(2) (LTV)
was approximately 29% when allowing for unrestricted cash.
Stenprop will announce its full year results for the 12 months
ending 31 March 2021 on 11 June 2021. At this time, the Company
will also set-out the schedule for its planned move from the
Specialist Funds Segment to the Premium Segment of the Main Market
of the London Stock Exchange, and the corresponding proposed change
from a Primary to a Secondary Listing on the Johannesburg Stock
Exchange.
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) As the roll out of our Smart Leases gains momentum, most new
leases now include annual 3% rent increases for the duration of the
lease. Considering this, we have decided to adopt a more
conservative approach to showing rental uplifts and incentives on
new lettings and lease renewals. Previously, we showed the uplift
in rent from previous passing rent to the highest contractual rent
in the new lease, with all rent less than that classed as
incentives.
Going forward, we will show the uplift in rent as the uplift
from previous passing rent to the rent payable immediately after
any rent-free period or discounted rents expire but before any
annual 3% rent uplifts (called the 'base rent'). We will in turn
only include in the calculation of the incentive any discounts in
rent from the base rent during the period prior to the first fixed
3% uplift. This will result in a more conservative uplift figure
being reported on leases which include annual fixed uplifts, but
also a lower rental incentive and we believe this will more
accurately reflect the rental trends during each reporting
period.
By way of example, using the old method the average rental
uplift during Q4 FY21 was 33% with an average rent incentive of 2.1
months vs an uplift of 20% and an average incentive of 0.9 months
under the new methodology. For a more in-depth explanation of this
change, please see our Trading Update presentation and/or
webinar.
(2) Calculated as gross borrowing less unrestricted cash,
divided by gross asset value based on our 30 September 2020
valuations adjusted for subsequent acquisitions and disposals and
changes in foreign exchange rates. Unrestricted cash is cash and
cash equivalents after deducting amounts for service charge, tenant
deposits and cash held in debt service accounts.
(3) The above transactions have already been announced on RNS
and SENS. For full details please visit
https://stenprop.com/investors/regulatory-news-service/
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 (CEO) paul.arenson@stenprop.com
Julian Carey (Managing Director) julian.carey@stenprop.com
James Beaumont (CFO) 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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