Hansteen buys portfolio from St Modwen – Hansteen has exchanged contracts to acquire a mixed-use portfolio of 34 properties. The properties are located throughout the UK with a focus on the North West and the West Midlands for £53.7m, reflecting a net initial yield after costs of 9.15% and a low capital value of £41 per sq ft. The vendor is St Modwen Properties PLC and the purchase will be funded with current cash resources and a drawdown under the revolving credit facility from the Royal Bank of Scotland.
The portfolio provides 1.4 million sq ft of accommodation, let to more than 200 tenants producing a current rent of £5.25m a year. Approximately 85,000 sq ft, 6.1%, is vacant and the weighted average unexpired lease term (WAULT) is 3.10 years to expiry and 2.75 years including break options. There is a diverse tenant base which includes Toolstation Limited, Pirelli UK Tyres Limited, Staffordshire County Council and British Steel Limited.
Morgan Jones and Ian Watson, joint chief executives of Hansteen, commented: “This portfolio fits perfectly with our buying criteria. There are a number of asset management opportunities and initiatives across the portfolio which provide us with the opportunity to increase the rent roll and create additional value“.
Rupert Wood, property director – asset management, St. Modwen, said: “This disposal is in line with St. Modwen’s strategic objective to refocus our portfolio on fewer, larger assets with a target to sell £150-175m of retail and small assets during 2018. We have now exchanged contracts to sell £144m of these assets so far this year and, combined with previous disposals, we have now sold £76m of the c. £100m of small assets earmarked for sale when we announced our new strategy just over a year ago. As planned, we intend to reinvest the disposal proceeds into our industrial/logistics pipeline which, with a yield on incremental capex of c. 9% and limited operating costs, is expected to deliver a marked pick-up in net rental income over the long term.”
HSTN / SMP : Hansteen buys portfolio from St Modwen