Warehouse REIT buys property portfolio for £116m

Deal done

Industrial property investor Hansteen, which has a base in Warrington, has sold its Industrial Multi Property Trust portfolio for £116m to an entity owned by Chester-headquartered Warehouse REIT.

LSE-listed Hansteen acquired the portfolio through its successful offer for IMPT almost a year ago.

The portfolio consists of 51 UK multi-let properties offering about 500 leasable units with a total floor area of about 1.65 million sq ft and a passing rent roll of £8m a year at June 30, 2017.

The contracted rent roll is currently about £8.5m a year. About 93% of the space is used for light industrial work and 7% is workspace and offices.

The portfolio is being sold on a debt free basis for cash, and the value attributed to the portfolio is £116m payable upon completion of the transaction, which is expected to occur at the end of March 2018. There are no conditions to completion.

The acquisition will be funded from existing cash resources and enlarged debt facilities of £135 million (previously £65m), secured with HSBC.

HSBC has increased the Company’s current revolving credit facility from £35m to £105 m, for the same duration of five-years but at a reduced coupon of 2.25% above LIBOR (previously 2.40% above LIBOR).

The enlarged facility is on the same terms as the existing £30m fixed term loan with HSBC.

Neil Kirton, non-executive chairman of Warehouse REIT, said: “This acquisition provides us with a meaningful portfolio of good-quality and well-located assets that are perfectly aligned with Warehouse REIT’s investment strategy.

“The portfolio is well-known to management who have tracked it for some time and we are pleased to now be in a position to take ownership of it.

“The acquisition also allows the company to deliver on its business plan ahead of target, ensuring that for the year ending March 2019 the company continues to expect to pay a dividend of 5.5p covered by earnings.”

A statement released on behalf of Hansteen’s joint chief executives Ian Watson and Morgan Jones said: “In line with our intentions set out in the original IMPT offer document dated 22 February 2017, we absorbed the portfolio into our UK property asset management platform and were in the process of successfully increasing the occupancy and income across the portfolio.

“However, during the successful implementation of this strategy, we received an unsolicited approach from Warehouse REIT to acquire the portfolio at a level which provides a return in excess of our initial expectations and which we were willing to accept.

“In the short term we plan to use part of the proceeds to reduce the balance on our revolving debt facility. Going forward the board will consider new acquisition opportunities or distributions to shareholders.”