Hansteen profits surge as property market 'plays to our strengths'

Industrial property investor Hansteen lifted full year profits 30.6% to £171.4m and said conditions in European markets remained ripe for it to continue to grow earnings.

Net asset value grew 9% to 111p after dividend payments of 8.1p per share, which included a special dividend of 3p per share, making a total return on capital of 17.6p per share, or 17.3%.

The full year dividend was increased by 5.0% to 5.25p per share, covered by basic earnings per share up 21% to 21.3p.

Transactions in the year included further units of the UK-focused Ashtenne Industrial Fund Unit Trust, with post-period purchases taking the holding in AIF to 82.8%.

Sales of properties, including the second UK Industrial Property Unit Trust, topped £278m and made a profit of £13.5m and more than £52m over acquisition cost.

The total value of the portfolio under management stood at £1.55bn, most of which is attributable to Hansteen, with the high levels of sales leading to the annual decline from £1.6bn despite the record valuation growth.

Germany, accounting for roughly 44% of Hansteen's attributable property investments with 105 properties, performed very well, with like-for-like income, occupancy and value all improving significantly during 2015.

The German portfolio's rent roll of £49.1m per year yields 7.7% with a vacancy rate of 10.7%.

UK properties account for approximately 39% of the group, an increase from 29.6% a year before, with an annual rent roll of £49.8m representing a yield of 6.4%, with a vacancy rate of 11.2%.

The region of Netherlands, Belgium and France accounted for roughly 17% at year end, with the year enjoying increases in value and like-for-like occupancy, although with like-for-like passing rent decreasing slightly.

Chairman James Hambro hailed another record year for total return and said the tough conditions in Europe played into the hands of the experienced management team, with industrial yields remaining significantly above both the long and short term cost of money.

"While we expect that the UK and European economies over the next few years will be subject to low interest rates and low growth, this environment should play to Hansteen's strengths.

"We pay a high dividend, well covered by earnings and we have the capacity to continue to grow these earnings through a combination of improving occupancy, rental growth and income enhancing trading; selling lower yielding properties and buying higher yielding properties."

The board expects June's vote on Britain's membership of the European Union will depress activity in the property investment market.

"Should the referendum result in a decision to remain, it is likely that the property market will normalise relatively quickly. If however the decision is to leave the EU, then there could be a protracted period of uncertainty as the details of both Britain's withdrawal and the aftermath are worked out. This may well result in turbulence in the financial markets and the property market for a period. The Board believes the Group is well positioned to weather any such turbulence due to the diverse tenant base, geographical spread of assets and exposure to both sterling and euro."