Industrial portfolio set for growth under new deal
Commercial property REIT Hansteen Holdings has reassured shareholders it can generate growth from its potential acquisition of a rival.
The group is currently embroiled in a £25m attempt to secure the share capital of Industrial Multi Property Trust, which owns a string of industrial sites in the Midlands.
Under the terms of the offer – announced last month – IMPT shareholders will receive 300p in cash for each IMPT share held. An offer which values the entire issued ordinary share capital of IMPT at £25.2m.
Hansteen has since acquired 21.71% of IMPT’s share capital and at the first close for the offer on March 15, 2017 had received valid acceptances of 28.44%, which in aggregate represent 50.15% of IMPT’s share capital.
The offer is remaining open until 1pm tomorrow (Wednesday).
A potential spanner in the works is the opposition to the deal by IMPT’s largest shareholder, Alpha Real Trust.
The Alpha board has today (Tuesday) called for an emergency general meeting of IMPT shareholders to debate the offer, which Alpha maintains “grossly undervalues” the business.
It claims there is a serious conflict of interests because Hansteen operates in the same commercial property sector as IMPT.
Alpha is proposing resolutions that IMPT or its subsidiaries are barred from entering into any contract or commercial arrangement with Hansteen and that IMPT discloses to shareholders details of all matters where a conflict of interest with Hansteen could arise.
It adds that IMPT’s Investment Objective should be amended so that none of its assets can be sold to Hansteen without independent scrutiny and the approval of the non-Hansteen shareholders.
IMPT has a property portfolio valued at £85.3m, which is comparatively modest when compared to Hansteen’s £1.7bn. Consequently, Hansteen said the impact of the offer would have only a minimal impact on the business.
In its full year results statement, Hansteen said: “The IMPT portfolio consists of urban commercial and logistics properties very similar in nature to Hansteen’s own UK portfolio.
“We believe this can be absorbed easily into our asset management platform with limited additional cost. With experienced management teams in seven offices around the UK that build close relationships with tenants and local stakeholders, Hansteen is well positioned to be able to achieve sustainable growth in the portfolio’s rental income and occupancy through its intense asset management initiatives.
“Although we have paid a small premium to the December 31, 2016 NAV, we expect this acquisition to be materially accretive to our NIP (normalised income profit) from the outset and as we implement various asset management initiatives, we expect that it will also be NAV accretive.”
Hansteen’s results show rental income grew to £109.4m (2015: £81.2m), with normalised income profit up to £61.1m (2015: £47.2m).
Pre-tax profit was down to £120m (2015: £171.4m). This decrease was largely due to the high property revaluation on the total portfolio in 2015 (£131m) that was not repeated in 2016 (£45.8m).
Hansteen also used its results statement to reveal it had agreed to dispose of its German and Dutch portfolios for €1.28bn to entities owned by funds advised by affiliates of The Blackstone Group and M7 Real Estate.
The price represents a premium of approximately €76m (6%) to the year-end valuation of the portfolio, which itself included a valuation uplift of €34m over the December 31, 2015 valuation.
Hansteen said the disposal realised the value in the portfolios at a time when not only were they at historically high levels of occupancy and rent for the period of the REIT’s ownership but also the Euro/Sterling exchange rate was favourable.
Completion is expected to occur before the end of June 2017.
Conditions to Completion include Hansteen’s Shareholder approval and the Buyer obtaining anti-trust clearance in Germany.
Commenting on the transaction, Morgan Jones and Ian Watson, joint chief executives of Hansteen, said: “This is a compelling opportunity to crystallise both the revaluation gains from these German and Dutch assets achieved by our active asset management and the gains from foreign exchange movements. The value being realised is around 30% higher than the book value at December 31, 2015 when measured in sterling.
“The sale is in line with our long-term business and portfolio strategy of buying at a low point in the cycle, with low occupancy and rents, adding value through improved asset management and subsequently realising the investment at a higher point in the cycle.”
Hansteen was advised by JLL.
