Once again it has been a record year with the business making a total return to shareholders of 17.6p per share or 17.3%. While we expect that the UK and European economies over the next few years will be subject to low interest rates and low growth, this environment should play to Hansteen’s strengths. We pay a high dividend, well covered by earnings and we have the capacity to continue to grow these earnings through a combination of improving occupancy, rental growth and income enhancing trading; selling lower yielding properties and buying higher yielding properties.
Our reading of the current cycle continues to be that of a long, grinding, corrugated stretch of low interest rates and low returns which should play to the strengths of our business. Our portfolio is extremely diverse with over 5,000 tenants in five countries. Despite the tough environment, the fundamentals of occupational supply and demand continue to be positive. In all three of our regions, our properties are valued at less than replacement cost; hence there is little or no new supply of multi-let light industrial property coming to the market. Recent months have marked a tipping point on the demand side with increasing numbers of commentators taking the view that “industrial is the new retail”. The transfer of goods from shops to sheds is a trend that is not going to be reversed in the near future. Aside from this, light industrial property will continue to provide flexible, affordable, commercial space for the new occupiers of 2016 and beyond. Occupational strength will continue to underpin investment values and growth prospects. Equally importantly, the high and resilient income characteristics of well managed diverse pools of light industrial property ensure that this business continues to generate and distribute high returns to shareholders in an era where such returns are increasingly difficult to find. Our feeling is that these fundamentals will further strengthen values and liquidity this year, in all three of our regions.