St. Modwen sells 34 properties to Hansteen in £54m deal

St. Modwen Properties has exchanged contracts for the disposal of a portfolio of 34 assets to Hansteen Holdings, it announced on Monday, for a total cash consideration of £53.7m.

The FTSE 250 firm said that, adjusted for assets held in joint venture, St. Modwen's share of the consideration was £47.3m, which compared to a book value for its share of the assets of £48.1m as of November last year.

It said the portfolio comprised 1.4 million square feet of lettable space, of which the majority was industrial use, let to more than 200 tenants.

The assets are predominantly located in the Midlands and North West of England, and had an overall vacancy rate of 6.1%.

St. Modwen said the contracted rental income on the overall portfolio stood at £5.25m.

Its share of net rental income received on its share of the assets during 2017 was £2.86m, with the board saying the disposal was expected to complete shortly.

“This disposal is in line with St. Modwen's strategic objective to refocus our portfolio on fewer, larger assets with a target to sell £150-175m of retail and small assets during 2018,” said St. Modwen’s property director of asset management Rupert Wood.

“We have now exchanged contracts to sell £144m of these assets so far this year and, combined with previous disposals, we have now sold £76m of the c. £100m of small assets earmarked for sale when we announced our new strategy just over a year ago.

“As planned, we intend to reinvest the disposal proceeds into our industrial/logistics pipeline which, with a yield on incremental capex of c. 9% and limited operating costs, is expected to deliver a marked pick-up in net rental income over the long term.”