Hansteen's shares climb despite drop in net asset value

Hansteen Holdings' shares crept up on Monday after the value of its property portfolio grew despite Brexit uncertainty, though its net asset value (NAV) was diminished by a significant distribution to its shareholders following the sale of assets.

The UK-based industrial property investor reported that its like-for-like property valuation increased by 7% to £39.6m over 2018, led by gains in the Midlands and the North West, while it also book NAV per share of 102.7p, down from 130.6p a year earlier.

This followed the sale of £294.5m of assets above book value and the acquisition of £56.9m of property, which enabled the group to return £144.5m, or 35p per share, to shareholders.

Profit before tax fell 15% to £59.5m after substantial sales reduced normalised income profit, the company’s measure of underlying realised profits, to £25.8m for the year, from £31.3m seen a year earlier.

Melvyn Egglenton, chairman of Hansteen, said: "2018 was another very successful year for Hansteen with income growth, profit on sales and growth in NAV per share when adjusted for the material return of capital during the year. The Hansteen management platform is, we believe, among the best in the sector and is a significant asset to the Group. As a result of the quantity of property sold in the last few years, the size of the management platform has decreased, accordingly, we have reduced the cost of running the business in-line with the reduced capital base and the reduced property portfolio."

Cash and cash equivalents stood at £55.1m at the end of the year, down from £71.2m at the same point the year before.

The AIM traded company said the uncertain outcome of Brexit negotiations makes it difficult to assess the future impact but the board believes that the fundamentals of occupational supply and demand will continue to be strong despite the short-term economic and political volatility.

To date, Hansteen said it has not seen any negative impact on tenants' take-up of space with each of its regional offices reporting good levels of enquiries and good levels of new lettings so far in 2019.

"The team is well placed to manage the portfolio going forward. We believe that our diverse portfolio and management focus presents a rare combination in today's property sector that can achieve both income and capital growth," said Egglenton.

A note from analysts at Liberum said: "Hansteen remained a net seller through the year, with disposals achieved ahead of book, albeit at a slower pace to prior years. Hansteen continues to offer one of the best total return prospects in the sector, which will be helped by the conclusion of the longstanding LTIP."

Hansteen Holdings' shares were up 3.50% at 96.00p at 1639 GMT.