UK REIT Watch: Warner Estate to Appoint Administrators

on Aug 29, 2013
Listen Thursday, August 29th: British real estate investment trust (REIT) Warner Estate (LON:WNER), owner of Liverpool’s Cavern Walks shopping centre, has announced that it would enter administration and suspend its trading securities.

In a statement to the London Stock Exchange, Warner Estate yesterday declared its intention to appoint administrators from CCW Recovery Solutions, after lender Aviva Investors withdrew its support for the company’s management of Aviva’s £460-million Ashtenne Industrial Fund (AIF).
Warner Estate, which had previously warned in an interim management statement of possible insolvency to come, as it struggled with debts resulting from the 2008 financial crash, said that Aviva Investors’s move would have a “significant” effect on its cash flow.

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“The withdrawal of this support has significant implications for the Group’s cash flow headroom particularly given that this asset management agreement accounts for over 90 percent of the Group’s current revenue,” the REIT said in the statement, adding that its directors believe that calling in administrators would be in the best interest of creditors.

**Hansteen to Take Asset Management Role and Buy Stake in AIF**
Following the appointment of administrators, AIF will terminate the asset management agreement with Warner Estate and enter into a contract with rival Hansteen Holdings (LON:HSTN) for Hansteen to provide the asset management services.
Hansteen, which invests in continental European and UK industrial property, yesterday said in a separate statement that it intended to purchase a 26.3 percent stake in the AIF. This includes the intended subscription for £42.5 million of new units and (following the cancellation of Warner’s listing) the intended purchase of its current 5.3 percent stake.

Hansteen also intends to become asset manager of the APIA Regional Office Fund and Norwepp Limited Partnership. APIA owns eight regional office properties, including Sunlight House in Manchester and Yorkshire House in Leeds. Norwepp is a joint venture between the Homes and Communities Agency and AIF, and it owns industrial property and two office properties in the North West of England.

Morgan Jones, Joint Chief Executive Officer of Hansteen, said in the company statement: “We are delighted with this transformational opportunity, which would more than double the properties we have under management in the UK, would complete our UK management platform and would be both NAV and earnings enhancing.”
**Hansteen’s First-Half Profit Declines**
!m[Industrial REIT Hansteen Holdings Reports Drop in H1 Profit ](/uploads/story/5186/thumbs/pic1_inline.jpg)
Hansteen today reported a decrease in first-half profit to £14.9 million from £23.6 million a year ago. After tax, profit attributable to equity holders of the company was £11.7 million, down from £20.2 million last year. Excluding profit from sales of properties, valuation movements and one-off items, normalised income profit increased 29 percent to £18.9 million from £14.7 million last year. Revenues increased to £41.9 million from £40.1 million the prior year.
Hansteen’s board increased interim dividend by six percent to 1.9p per share. Chairman James Hambro commented on the REIT’s performance: “The first half of 2013 was a busy period for Hansteen resulting in strong profits, a large number of sales and new acquisitions.”
**The Hansteen share price was £99.50p as of 13:07 BST on 29.08.2013.**
**The Warner Estate share price was £0.90p as of 13:07 BST on 29.08.2013.**


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