Ashtenne buys Mentmore unit for £183m

Ashtenne yesterday bought the serviced business space division of Mentmore for £183m, leaving the seller free to focus on its personal and document storage operations.

Mentmore will have to take a £62m exceptional charge, covering goodwill impairment, but it plans to return an unspecified amount of the proceeds from the deal to shareholders "when appropriate". The rest of the money will be used to cut debt and increase its personal storage and records management interests - it is currently bidding for the Hays document storage business.

Ashtenne, an industrial property group, does not currently have an arm which provides serviced accommodation to businesses. Ian Watson, joint chief executive of Ashtenne, made clear however that the acquisition did not represent a strategic move for his company. Ashtenne will be applying a very different business model than Mentmore to the assets it has bought.

Mentmore ran its Birkby business, which provides accommodation in business parks and office blocks to small and medium-sized enterprises, for its income stream. Ashtenne is a more traditional property company, interested in increasing the net asset value of its estate, rather on focusing on the rent roll.

Ashtenne will be looking to boost the value of the Birkby estate, made up of 167 properties - for instance by increasing the occupancy levels. It will sell the properties on once it has achieved that. Mentmore had no interest in selling Birkby properties. Mr Watson said: "We're the opposite to Mentmore. They're an earnings business, not focused on net assets and certainly not on selling properties. We'll be keen to realise selling opportunities."

Already Ashtenne announced a deal yesterday to sell around half the Birkby properties, for £91m to Ashtenne Industrial Fund - an investment vehicle in which it has a 22 per cent stake. Within the acquisition price, Ashtenne also got Mentmore's In Shops business, which leases large spaces in shopping centres.

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