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STENPROP LIMITED - Disposal of Euston House, 24 Eversholt ST, London

11 January 2019 - 06:05 AM
STP
Disposal of Euston House, 24 Eversholt ST, London

STENPROP LIMITED
(Registered in Guernsey)
(Registration number 64865)
LSE share code: STP JSE share code: STP
ISIN: GG00BFWMR296
("Stenprop" or the "Company")

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO 
OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION


DISPOSAL OF EUSTON HOUSE, 24 EVERSHOLT ST, LONDON


10 January 2019

1.   Introduction
     Shareholders are advised that Stenprop has reached agreement to dispose of its London office building known as Euston House (the
     "Property") via a sale of all the shares of a special purpose vehicle (the "Property Company") owned by Stenprop to Erel 4 S.a.r.l (the
     "Buyer"), for a consideration which values the Property at #95 million and which will release cash proceeds of approximately #66.0 million
     after sales costs, rental top-ups and the repayment of external debt (the "Disposal"). The Buyer is a wholly owned subsidiary of Eurazeo, an
     investment management business listed on NYSE Euronext Paris, in partnership with investment and asset management business, Arax
     Properties.

     Paul Arenson, CEO of Stenprop, said: "The sale of Euston House is the last of our Central London offices to be sold and completes a sales
     programme of more than #216.6 million of Central London offices. The net proceeds will be used partly to reduce debt and partly to
     acquire additional multi-let industrial ("MLI") assets in line with our transition strategy into a 100% UK MLI business. Following completion
     of the sale and before any further MLI acquisitions, the MLI component of our portfolio will represent more than 40% of our total assets
     and our overall debt will reduce to a loan-to-value ratio of less than 45%. This sale represents another important step in the
     implementation of our two-year strategic transition plan communicated to shareholders, which envisages being at 65% MLI by 31 March
     2020 with no more than 40% overall leverage".

2.   Rationale for the disposal
     Stenprop previously announced its strategic vision to become the leading multi-let Industrial ("MLI") business in the UK. This strategy
     entails selling all its non-MLI properties over time and utilising the sale proceeds to acquire UK MLI properties which fit its acquisition
     criteria, and to reduce debt. The disposal of the Property, which is at a #14.5 million premium to its current book value of #80.5 million, is
     in line with this strategy.

     The net proceeds from the Disposal will be used to reduce the short-term borrowings used to fund the acquisition of the portfolio of MLI
     properties announced by Stenprop on 24 December 2018 and to fund further acquisitions in the MLI sector.

3.   Terms of the disposal
     Completion of the Disposal is conditional upon Stenprop carrying out a corporate reorganisation in respect of the entities that hold the
     Property and Dekabank Deutsche Girozentrale ("Dekabank") consenting to such reorganisation. Completion is expected to occur by no
     later than 5 April 2019.

     Failure to complete by this date due in certain circumstances to a default by the Buyer will result in Stenprop (UK) Limited (the "Seller"), a
     wholly-owned subsidiary of Stenprop, retaining the deposit of 5 million (#4.50 million) which was paid by the Buyer on exchange on 10
     January 2019.

     The Buyer will acquire the Property Company for an aggregate initial consideration of #44.3 million, which is based on the estimated net
     asset value of the Property Company (the "purchase consideration"), which values the Property at #95 million. In addition, the Buyer will
     fund the repayment of a shareholder loan owing by the Property Company to the Seller of approximately #22.9 million. The purchase
     consideration is subject to a further post-completion adjustment to take account of any difference between the actual and the estimated
     net asset value at completion.

     Normal warranties and indemnities for a transaction of this nature have been provided by the Seller. However, as the Buyer is proposing to
     obtain warranty and indemnity insurance, the Sellers liability for breach of general warranties is capped at #1 under the SPA.
4.    Property specific information

                     Property name             Geographic location      Sector                   NLA (sq.ft)              Weighted average
                                                                                                                          rental per square
                                                                                                                          foot (# psf)
      1              Euston House              Central London           Office                   112,597                  #39.80


      The value attributable to the Property in Stenprop's consolidated statement of financial position at 30 September 2018 was #80.5 million,
      being 12% of the total portfolio asset value, and was determined in accordance with Royal Institution of Chartered Surveyors standards by
      Roger Meeds, a director of Jones Lang LaSalle Limited who is an external valuer registered with the Royal Institution of Chartered
      Surveyors. This compares with the value derived from the purchase consideration of #95 million. The after-tax EPRA earnings attributable
      to the special purpose vehicle owning the Property in Stenprop's consolidated statement of comprehensive income for the six months
      ended 30 September 2018, which was subject to an independent review by Deloitte LLP and prepared under the International Financial
      Reporting Standards ("IFRS") in accordance with IAS 34 'Interim Financial Reporting', was #1,202,606. The equivalent after tax IFRS
      earnings were #2,192,955.

5.    Stenprop portfolio
      Following completion of the Disposal, and assuming no further acquisitions, MLI assets will increase from 34% to over 40% of Stenprop's
      total portfolio, with 54.7% of the total portfolio located in the UK, 42.5% in Germany and 2.8% in Switzerland. Total leverage will reduce
      from approximately 48% to under 45%.

6.    Categorisation of the acquisition
      The Disposal is classified as a category 2 transaction in terms of the JSE Listings Requirements. Accordingly, it is not subject to approval by
      shareholders.

      Stenprop has a primary listing on the Main Board of the JSE and a listing on the Specialist Fund Segment of the Main Market of the LSE.



For further information:

Stenprop Limited                                                                            +44(0)20 3918 6600
Paul Arenson
Patsy Watson
Julian Carey

Numis Securities Limited (Financial Adviser)                                                +44(0)20 7260 1000
Hugh Jonathan
Vicki Paine

Tavistock (PR Adviser)                                                                      +44(0)20 7920 3150
James Whitmore
James Verstringhe
Kirsty Allan

Java Capital Trustees and Sponsors Proprietary Limited                                      +27 (0)11 722 3050
(JSE Sponsor)


About Stenprop:

Stenprop is a Guernsey-registered UK REIT. The objective of the Company is to deliver sustainable growing income to its investors. Stenprop's
investment policy is to invest in a diversified portfolio of UK multi-let industrial (MLI) properties with the strategic goal of becoming the leading
MLI business in the UK. For further information, go to www.stenprop.com.

MAR

The information contained within this announcement is considered by the Company to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No.596/2014. Upon the publication of this announcement via a Regulatory Information Service, this inside information
will be considered to be in the public domain.

Date: 11/01/2019 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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