A haven in uncertain investment times
Hansteen is a real estate investment company with a portfolio mainly in industrial properties in continental Europe and the UK. Its estate ranges across the Netherlands, Germany, Belgium, France and the UK.
The latest results, at the interim stage, showed a total return of 8% in the first half, the net asset value in line and earnings ahead of expectations. Germany, representing 48% of the portfolio, saw an improvement of just under 3% despite the rather challenging economic environment in the region, while the UK (31% of the portfolio) increased by 5%.
The Benelux portfolio, representing 31%, grew by 4%. The individual assets, collectively, look conservatively valued by the market as Hansteen is happy to acquiring its portfolio at discounted prices, often from distressed sellers, and as occupier markets continue to improve, this should benefit the group’s yield shift.
At present, the portfolio represents around 17% of “voids” that is unlet premises, but this figure could fall sharply over the next 12 to 18 months in the improving property climate, with a proportionately significant benefit to the group’s revenue stream.
Hansteen recently sold a UK industrial property portfolio, in which it owned one-third, in two separate transactions for a total consideration of £146m. The total price is split across two separate transactions and is worth around £48m to the company.
Not only was the sale above book value it also secured an exit yield of around 6.8%. At the same time, in another joint venture Hansteen purchased Saltley Business Park in Birmingham for £35.6m, offering an 8.4% contracted yield. Hansteen’s shares offer a yield prospective of well over 5% and I think they are a relatively safe haven in these uncertain times, certainly rather more attractive than cash as an asset class.
Bryan Johnston is a director at Brewin Dolphin in Edinburgh
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