Hansteen still has plenty of firepower after purchase

published 22 December 2011

Hansteen, the investor in UK and Continental European property, has bought up the entire property assets of The Spencer Group of Companies, a commercial property specialist.

Hansteen is paying £150m for some 88 assets totalling 4.1m square feet of predominantly industrial property located across the UK.

Hansteen is paying £75.2m for 44 of the assets,a price which gives an initial yield of 8.0%, or 8.51% excluding development land. The 44 assets have a combined current rent roll of £6.0m, after deduction of head rents, and a vacancy rate of 41.6%.

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The £75.2m price tag comprises £33.9m of cash and £41.3m of new debt facilities provided by Lloyds Banking Group.

The other assets have been acquired by Hansteen UK Industrial Property, a fund managed by Hansteen and in which the real estate investment trust is a co-investor.

The assets being acquired by Hansteen UK Industrial Property have a current rent roll of £6.4m, after deduction of head rents, and a vacancy rate of 17.2%. They are being acquired for £74.8m, representing an initial yield of 8.5%, using existing and new debt facilities provided by Royal Bank of Scotland.

Following this transaction, assuming gearing of 50% loan-to-value (LTV), Hansteen has firepower of around £300m for further acquisitions.

The Hansteen UK Industrial Property fund is now effectively fully invested with gross assets of £166m and debts of £76m.