Monday 26 February 2018

Bolton a safer bet than Mayfair for UK Reit as Brexit looms

London isn't the only Brexit safe haven for real estate investors
London isn't the only Brexit safe haven for real estate investors

Aleksandra Gjorgievska

One of the best-performing UK real estate investment trusts this year is biting the Brexit bullet and doubling down on its home market.

Hansteen Holdings Plc, which in June sold its German and Dutch portfolios, says a booming e-commerce business and growth from small enterprises in the UK outweigh any anxieties surrounding Britain's exit from the EU. Shares of the London-based member of the FTSE 250 Index have outperformed its peers almost tenfold in 2017, and are trading at the highest level in a decade.

"We are very happy to be focused on the UK now," co-chief executive officer Ian Watson said in an August 25 interview. "At the moment, the Brexit worries don't seem to be affecting either our occupiers or investors. Our units are in regions which we think are a good place to be, mainly outside London and the southeast, and we're getting a new turbocharging by the whole e-commerce phenomenon. All the trends we are seeing play to our portfolio. Our marketplace is Bolton, not Mayfair."

Hansteen, which mainly invests in industrial properties in regions outside London, is benefiting from independent retailers seeking affordable space to grow their businesses. Some of its tenants use Inc.'s platform to sell their products, Watson said.

"Often when you press 'buy' on Amazon, the goods may not be in an Amazon shed, they may be with the retailer in another little unit, so they can come straight from there to your house. We have a lot of small units, basically just a square box, that are flexible and the least expensive of any commercial property type," he said.

Last year, Hansteen started recording whether new tenants retailed through Amazon, eBay Inc. or their own online retail platform. In 2016, 26pc of new tenants said they used one of those platforms; this year, that number has risen to 31pc.

The stock has proven a more lucrative bet this year than owners of UK shopping malls and office buildings bearing the brunt of Brexit. The shares have also outperformed peers like Tritax Big Box Reit Plc and LondonMetric Property Plc, which have also beaten the FTSE 350 Real Estate Investment Trust Sector Index this year.

Hansteen reported 2.8pc growth in net asset value per share for the six months ended June 30, citing strong demand and higher rents.

The company increased its interim dividend, saying it plans to return up to Stg£580m to shareholders by the end of 2017 from the proceeds of the German and Dutch sale.


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