Hansteen reports drop in first half profits

The investor in UK and continental European industrial property said pre-tax profit fell to £54.8m in the six months to 30 June from £103.7m the previous year. The company said the decrease in profits was “largely due to the high property revaluation in the first half of 2015 that was not repeated in the first half of 2016”.

Chairman James Hambro said light industrial property is one of the few areas of the property sector which has not yet surpassed its previous value highs.

“Yields are still high relative to the cost of money. Hansteen's portfolio has a simple yield of 7.6% (passing rent divided by value) and our all-in cost of borrowing is 3.2%,” he said.

“That yield has consistently translated into one of the highest earnings amongst the REIT sector and wrapped in the yield and earnings is around 450 acres of undeveloped land and 5.3 million sq ft of vacant space, both of which does not produce income but will in time produce further value."

Meanwhile, diluted EPRA earnings per share were 3.4p, up from 0.4p last year. Adjusted EPRA NAV per share increased 8.4% to 120.5p from the end of 2015.

Normalised income profit rose 28.1% to £29.2m while normalised total profit climbed 2.3% to £30.8m. ]

Hansteen benefitted from a weaker pound against the euro following Britain’s vote to leave the European Union.

“Of course there are significant risks at present ranging from the uncertainty surrounding Brexit, the economic and political issues around the Eurozone, the economic slowdown of China and a range of geo-political risks around the globe,” said Hambro.

“However, accepting the world that we are in, Hansteen is in a good place. Light industrial property is generally accepted as one of the most attractive of the property sectors with high yields and robust occupational demand. ”

During the period, the group refinanced its UK portfolio with a new £330m five-year loan facility at an all-in cost of 2.7% per year. The Netherlands portfolio was also refinanced with a new €145m five-year facility at an all-in cost of 2.6% per year.

Hansteen purchased a further 3.8% stake in the Ashtenne Industrial Fund for £10.2m, increasing its ownership to 85.6%. The group also bought the remaining 50% of units in Hansteen Saltley Unit Trust for £9.3m, assuming full ownership.

Looking ahead, Hansteen said it believes the next few years will present a “challenging landscape for investors”. However, it believes it is well placed with a diverse portfolio in a number of different markets.