TIDMSTP
RNS Number : 7977M
Stenprop Limited
10 January 2019
STENPROP LIMITED
(Registered in Guernsey)
(Registration number 64865)
LSE share code: STP JSE share code: STP
ISIN: GG00BFWMR296
("Stenprop" or the "Company")
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF
SUCH JURISDICTION
DISPOSAL OF EUSTON HOUSE, 24 EVERSHOLT ST, LONDON
10 January 2019
1. Introduction
Shareholders are advised that Stenprop has reached agreement to
dispose of its London office building known as Euston House (the
"Property") via a sale of all the shares of a special purpose
vehicle (the "Property Company") owned by Stenprop to Erel 4
S.a.r.l (the "Buyer"), for a consideration which values the
Property at GBP95 million and which will release cash proceeds of
approximately GBP66.0 million after sales costs, rental top-ups and
the repayment of external debt (the "Disposal"). The Buyer is a
wholly owned subsidiary of Eurazeo, an investment management
business listed on NYSE Euronext Paris, in partnership with
investment and asset management business, Arax Properties.
Paul Arenson, CEO of Stenprop, said: "The sale of Euston House
is the last of our Central London offices to be sold and completes
a sales programme of more than GBP216.6 million of Central London
offices. The net proceeds will be used partly to reduce debt and
partly to acquire additional multi-let industrial ("MLI") assets in
line with our transition strategy into a 100% UK MLI business.
Following completion of the sale and before any further MLI
acquisitions, the MLI component of our portfolio will represent
more than 40% of our total assets and our overall debt will reduce
to a loan-to-value ratio of less than 45%. This sale represents
another important step in the implementation of our two-year
strategic transition plan communicated to shareholders, which
envisages being at 65% MLI by 31 March 2020 with no more than 40%
overall leverage".
2. Rationale for the disposal
Stenprop previously announced its strategic vision to become the
leading multi-let Industrial ("MLI") business in the UK. This
strategy entails selling all its non-MLI properties over time and
utilising the sale proceeds to acquire UK MLI properties which fit
its acquisition criteria, and to reduce debt. The disposal of the
Property, which is at a GBP14.5 million premium to its current book
value of GBP80.5 million, is in line with this strategy.
The net proceeds from the Disposal will be used to reduce the
short-term borrowings used to fund the acquisition of the portfolio
of MLI properties announced by Stenprop on 24 December 2018 and to
fund further acquisitions in the MLI sector.
3. Terms of the disposal
Completion of the Disposal is conditional upon Stenprop carrying
out a corporate reorganisation in respect of the entities that hold
the Property and Dekabank Deutsche Girozentrale ("Dekabank")
consenting to such reorganisation. Completion is expected to occur
by no later than 5 April 2019.
Failure to complete by this date due in certain circumstances to
a default by the Buyer will result in Stenprop (UK) Limited (the
"Seller"), a wholly-owned subsidiary of Stenprop, retaining the
deposit of EUR5 million (GBP4.50 million) which was paid by the
Buyer on exchange on 10 January 2019.
The Buyer will acquire the Property Company for an aggregate
initial consideration of GBP44.3 million, which is based on the
estimated net asset value of the Property Company (the "purchase
consideration"), which values the Property at GBP95 million. In
addition, the Buyer will fund the repayment of a shareholder loan
owing by the Property Company to the Seller of approximately
GBP22.9 million. The purchase consideration is subject to a further
post-completion adjustment to take account of any difference
between the actual and the estimated net asset value at
completion.
Normal warranties and indemnities for a transaction of this
nature have been provided by the Seller. However, as the Buyer is
proposing to obtain warranty and indemnity insurance, the Seller's
liability for breach of general warranties is capped at GBP1 under
the SPA.
4. Property specific information
Property name Geographic Sector NLA (sq.ft) Weighted average
location rental per
square foot
(GBP psf)
1 Euston House Central London Office 112,597 GBP39.80
-------------- --------------- ------- ------------ -----------------
The value attributable to the Property in Stenprop's
consolidated statement of financial position at 30 September 2018
was GBP80.5 million, being 12% of the total portfolio asset value,
and was determined in accordance with Royal Institution of
Chartered Surveyors standards by Roger Meeds, a director of Jones
Lang LaSalle Limited who is an external valuer registered with the
Royal Institution of Chartered Surveyors. This compares with the
value derived from the purchase consideration of GBP95 million. The
after-tax EPRA earnings attributable to the special purpose vehicle
owning the Property in Stenprop's consolidated statement of
comprehensive income for the six months ended 30 September 2018,
which was subject to an independent review by Deloitte LLP and
prepared under the International Financial Reporting Standards
("IFRS") in accordance with IAS 34 'Interim Financial Reporting',
was GBP1,202,606. The equivalent after tax IFRS earnings were
GBP2,192,955.
5. Stenprop portfolio
Following completion of the Disposal, and assuming no further
acquisitions, MLI assets will increase from 34% to over 40% of
Stenprop's total portfolio, with 54.7% of the total portfolio
located in the UK, 42.5% in Germany and 2.8% in Switzerland. Total
leverage will reduce from approximately 48% to under 45%.
6. Categorisation of the acquisition
The Disposal is classified as a category 2 transaction in terms
of the JSE Listings Requirements. Accordingly, it is not subject to
approval by shareholders.
Stenprop has a primary listing on the Main Board of the JSE and
a listing on the Specialist Fund Segment of the Main Market of the
LSE.
For further information:
Stenprop Limited +44(0)20 3918 6600
Paul Arenson
Patsy Watson
Julian Carey
Numis Securities Limited (Financial Adviser) +44(0)20 7260
1000
Hugh Jonathan
Vicki Paine
Tavistock (PR Adviser)
+44(0)20 7920 3150
James Whitmore
James Verstringhe
Kirsty Allan
Java Capital Trustees and Sponsors Proprietary Limited +27 (0)11
722 3050
(JSE Sponsor)
About Stenprop:
Stenprop is a Guernsey-registered UK REIT. 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.
MAR
The information contained within this announcement is considered
by the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No.596/2014. Upon the publication
of this announcement via a Regulatory Information Service, this
inside information will be considered to be in the public
domain.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
DISURSVRKWAAAAR
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