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Hansteen ups stake in industrial fund

Hansteen has increased its stake in the Ashtenne Industrial Fund, management's former investment vehicle, at a keen price.
August 28, 2015

Industrial property landlord Hansteen Holdings (HSTN) continued to benefit from a strong investment market in the first half, but admitted that replacing properties sold for a big profit was becoming more of a challenge. Sales included the HPUT2 joint venture with Aviva (AV.) for £192m, which realised a gain of £31.7m, and a further £21.5m that generated an uplift of £1.8m over December 2014 valuations. The portfolio also enjoyed a valuation uplift of £79m.

IC TIP: Hold at 113.8p

Given the intensifying competition for larger portfolios, Hansteen secured something of a scoop by increasing its stake in the Ashtenne Industrial Fund (AIF) - a vehicle set up and then sold by Hansteen's management in 2005 (note the anagram). It purchased a further 35.7 per cent in an off-market deal costing £103.7m and taking the group's holding up to 76.5 per cent.

The purchase will be partly financed through a £40m share placing. Crucially, the price paid represents a 5 per cent discount to AIF's net asset value. Negotiations are also in place to acquire the remainder of the fund. AIF's portfolio was valued in June at £439m, with a rental yield of 8.3 per cent. And if all rents were marked to market, the so-called reversionary yield would be 10 per cent.

For Hansteen, analysts at Stifel are forecasting adjusted net asset value of 108p by December (from 102p in December 2014).

HANSTEEN HOLDINGS (HSTN)
ORD PRICE:113.8pMARKET VALUE:£779m
TOUCH:113.5-113.9p12-MONTH HIGH:126pLOW: 97p
DIVIDEND YIELD*:4.5%TRADING PROP:£38.1m
PREMIUM TO NAV:13%
INVESTMENT PROP:£1.08bnNET DEBT:57%

Half-year to 30 JunNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201493679.22
201510110412.82.1
% change+9+55+39+5

Ex-div: 22 Oct

Payment: 20 Nov

*Excludes special dividend of 3p a share