Stenprop year end March profit falls to EUR17.5 million

Stenprop said in its year-end March result that its net profit took a knock down to EUR17.5 million.

The company said its net rental income lowered to EUR30.3 million (EUR31.6 million). Profit from operations tumbled to EUR23.3 million (EUR63.2 million).

The company’s directors have declared a final dividend of EUR4.5 cents per share (2016: EUR4.7 cents) which, together with the interim dividend of EUR4.5 cents (2016: EUR4.2 cents) declared on 23 November 2016, results in a total dividend for the year ended 31 March 2017 of EUR9.0 cents (2016: EUR8.9 cents).

The final dividend will be a cash dividend. An announcement containing details of the dividend and the timetable will be made separately.

As part of its propsects, Stenprop announced the acquisition of the portfolio of 25 multi-let properties (the MLI portfolio) and the C2 Management Platform management business which has built up and managed the MLI portfolio provides Stenprop with a strategic platform in the multi-let industrial estates (MLI) sector that it believes will, on a sustainable basis, deliver increased earnings growth in the future.

Stenprop is confident that, in addition to delivering organic growth through ongoing asset management of the MLI portfolio, it will be able to add further MLI properties onto the platform through earnings enhancing acquisitions. Individual MLI properties tend to trade at higher yields than large portfolios as, on their own, they lack the diversification and necessary economies of scale to be efficiently operated. The opportunity to acquire individual MLI properties at higher yields and operate them efficiently through the C2 Management Platform should also contribute to overall growth. To achieve this, Stenprop intends to pursue further acquisition opportunities within the MLI sector with the objective of integrating additional properties and portfolios into its newly acquired MLI platform, with the intention of establishing itself as a leading player in the UK MLI space.

Results for the year ending 31 March 2018, whilst including nine months of earnings from the MLI portfolio, will also be impacted by acquisition and sales costs, as well as interim bridge funding costs, which will be influenced by the timing of the receipt of exit proceeds from the Swiss sales. On this basis, assuming average exchange rates of EUR1.18:GBP1:00 and EUR0.94:CHF1.00 and ignoring the potential positive impact of any further acquisitions in the MLI sector, Stenprop expects that diluted adjusted EPRA earnings per share for the year ending 31 March 2018 will remain at a similar level to the current year earnings of 10.28 cents.

Stenprop expects to maintain the current pay-out ratio and therefore expects to deliver a full year dividend for the year ending 31 March 2018 of not less than 9.00 cents per share. Stenprop’s objective is to continue to declare and pay a dividend every six months.

Following completion of the acquisitions referred to above, Stenprop intends to actively investigate the merits of a conversion to REIT status as well as a listing on the London Stock Exchange, and a possible change in its reporting currency from Euro to Sterling to reflect the relatively larger weighting of its UK portfolio following implementation of the acquisition and sales strategy.

Given the nature of its business, Stenprop has adopted distribution per share as its key performance measure, as this is considered more relevant than earnings, headline earnings or net asset value per share.

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