HSTN increased its interim dividend by 5%, with 2.1x coverage
Hansteen Holdings (LSE: HSTN), announced its Half Year Results this morning achieving record levels in both its normalised profit and EPRA* NAV per share. Interim dividends increased a healthy c.5% and rent growth continues its positive momentum.
Normalised Income Profit rose 28.1% to £29.2m (H1 2015: £22.8m) while Normalised Total Profit was flat YoY at £30.8m. EPRA* NAV per share was up 11.9% to 124.4p and allowing for the convertible bond, Adjusted EPRA NAV per share increased 8.4% to 120.5p (31 December 2015: 111.2p).
*EPRA earnings exclude changes in values of investment properties. Hansteen earnings H1 2016
Hansteen increased the interim dividend (to be paid 18 November) by 4.8% to 2.2p per share (November 2015: 2.1p per share). Looking at interim earnings of £50m and dividend distributions of £23.4m, Hansteen has decent dividend cover of over 2.1x.
The property portfolio value increased 1% (£16.1m) on a like-for-like constant currency basis from end 2015. The portfolio comprised 3.8 million sq m with a 7.6% yield on the passing rent. Rent growth has been encouragingly positive over the last three 6-month periods:
"The strength of the business is reflected in the growth of the annual rent roll over the last year rising from £116.8 million at 30 June 2015 and £120.2 million at 31 December 2015 to £126.5 million at 30 June 2016.."
Management confirm that the effect of Brexit on tenants demand has been minimal but, as expected, the sterling devaluation has boosted net assets and income:
"To date we have not noticed any significant effect on our tenants demand for industrial space from the outcome of the Brexit vote earlier this year. The one significant effect however has been a 11.2% devaluation of sterling against the euro which has served to enhance our net assets and income."
Shares are up small today on the open (c.1%) and have rebounded 22% from the Brexit low in late June.
James Hambro, Chairman, commented:
"Light industrial property is one of the few areas of the property sector which has not yet surpassed its previous value highs. Yields are still high relative to the cost of money. Hansteen's portfolio has a simple yield of 7.6% (passing rent divided by value) and our all-in cost of borrowing is 3.2%. That yield has consistently translated into one of the highest earnings amongst the REIT sector and wrapped in the yield and earnings is around 450 acres of undeveloped land and 5.3 million sq ft of vacant space, both of which does not produce income but will in time produce further value."