US Edition Hansteen
113½p+0.2
Questor says BUY
HANSTEEN the FTSE 250-listed UK and northern Europe property investment group made another big bet on UK industry with the announcement yesterday of a £42.3m deal to buy 17 industrial estates located outside London. The deal will bring 137 units that currently pay £3.4m a year in rent into the Hansteen UK Industrial Property Unit Trust II, in which the company owns a two-thirds stake alongside insurer Aviva.
The Hansteen property portfolio has a solid business model. The portfolio is mainly focused on Europe, with 55pc in Germany, 30pc in the UK and 15pc in the Benelux countries. The German properties are focused in the Mittelstadt – medium-sized, owner-managed businesses that form the industrial powerhouse of the European economy. The whole portfolio generates rental income of £93.5m and a yield of 8.6pc.
The last time Questor looked at the shares, the valuation and the 4.5pc forecast dividend yield was attractive. The contrarian property play of buying up unloved industrial estates around the UK also seems like a sensible idea. This most recent deal follows the purchase of a 26pc stake in the Ashtenne Industrial Fund in August last year. The £52m deal included a £460m portfolio of UK industrial properties.
The shares are currently trading on 18 times forecast earnings, falling to 16 times next year and are trading at a premium to the net asset value. However, this is a long-term property investment and with the shares up 15pc since we recommended them (Buy, 98.5p, August 30) the advice remains Buy.