Stenprop buys UK property estate for R408m

Stenprop, the JSE-listed UK real estate investment trust has acquired Bradley Hall Trading Estate in Wigan, England.

The company has spent £20.6m (R408m) on the property located in the North West of the UK and aims to be 100% exposed to multi-let industrial (MLI) parks by the end of March 2022.

The MLI parks sector is thriving in the UK as companies prefer to rent MLI units, which they use as hybrid office, manufacturing and assembly space. This is in contrast to renting an office in one building and a factory in another.

A landlord manages each park, which includes providing electricity, cleaning and security.

Bradley Hall comprises 275,079 square feet of terraced MLI units, ranginig in size from 344 square feet to 28,896 square feet, and 230,062 square feet of income-producing yard areas.

The property is fully let to a various local and national businesses, and generates a total annual passing rent of £1.4m, or an average rent of £4.61 per square foot on the built units and £0.61 per square foot on the yard areas.

This compares favourably with the average passing rent of £5.46 per square foot on Stenprop’s current portfolio of 5.6m square feet.

As much as 99% of rent due at the estate in first half of 2021 has been collected, reflecting the importance of the units to the estate’s occupiers, said Will Lutton, Stenprop's head of investment.

“The estate also offers potential for Stenprop to grow income and value through asset management, with several lease events due in the near term, as well as potential development opportunities to increase the low site density,” he said.

Bradley Hall is located in an established commercial hub five miles north of Wigan town centre. The estate has good transport connections, with Junction 27 of the M6 and Junction 6 of the M61 a short drive away.

Lutton said the UK’s North West has been one of the strongest performing industrial and logistics regions in recent years.

“The market has been characterised by a growing demand-supply imbalance, in particular for small and medium enterprises or MLI units between 1,000 and 20,000 square feet, which has been exacerbated by a lack of speculative development,” he said.

He said Stenprop now owns  more than 1.5m square feet after several recent acquisitions, representing about 26% of its MLI portfolio.

With the latest purchase MLI accounts for 75% of Stenprop's total portfolio, and the company remains on track to be 100% MLI by the end of the present financial year.

By March 2022, Stenprop intends to own a £550m (R10.9bn) portfolio of MLI parks that it plans to double to £1.1bn through raising equity and partnering with international institutions.

CEO Paul Arenson said the was experiencing growing demand, with a post-vaccination recovery in the UK economy offering further positives.

andersona@businesslive.co.za