Stenprop has reached agreement to dispose of its London office building known as Euston House via a sale of all the shares of a special purpose vehicle for a consideration which values the Property at £95 million, This will release cash proceeds of approximately £66.0 million after sales costs, rental top-ups and the repayment of external debt. 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.
Following completion of the sale, 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%
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".
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.
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%.