Dec 11, 2017:
Stenprop took major steps in advancing the strategic decisions taken at the beginning of the period to invest significantly in the U.K. multi-let industrial sector, to actively pursue a listing on the London Stock Exchange and to convert to a UK REIT.
We had been looking for a sector that had real potential to deliver sustainable growth in earnings for some time, as we didn’t see value in the sectors where we had historically invested. The multi-let industrial sector met all our criteria. There is a clear supply-demand imbalance, with long-term structural demand growth and static, or in some cases falling, supply. While we were excited about the rental growth possibilities, we recognised that we needed scale and a top-class management team and platform to properly take advantage of the opportunity. The £130 million acquisition of the industrials.co.uk portfolio and C2 Capital management team, which completed in June, delivered all of these. In a single transaction, we were able to acquire a portfolio of 25 estates with over 400 tenants and an expert and experienced management team.
– Paul Arenson, CEO of Stenprop
The company intends funding further acquisitions of multi-let industrial properties by recycling out of assets with lower growth prospects. In line with this strategy it has concluded a number of disposals (including the £80.9 million post balance sheet disposal of the Company’s Pilgrim Street London office property) which will collectively generate £71.0 million of proceeds to fund purchases and reduce debt.
Although the company does not anticipate raising equity capital in the short term, a liquid share and access to a broader pool of investors are important long-term components of Stenprop’s strategy. In this context Stenprop has made good progress on its intention to list on the LSE and convert to a UK REIT. The company is in the process of appointing a UK financial advisor and expects to be in position to secure a listing on the Specialist Fund Segment of the LSE and to convert to a UK REIT in the first half of its next financial year.
We expect that, after the REIT conversion and LSE listing, Stenprop will appeal to a broader investor base, particularly in the UK.
Over time we are confident that this will improve our liquidity and access to equity.