Sirius Real Estate in first sale-and-leaseback as it targets new listings
Regular REFIRE readers will know that we have been bullish on the AIM and Johannesburg-listed Sirius Real Estate for some time and have been following the company closely since its near-demise some years ago and its return to health with new management and more solid funding.
Sirius, which is focused on German business parks for light industrial properties, posted good first half figures just before Christmas, and sweetened its appeal to investors by increasing the interim dividend. FFO and dividend per share both rose by 51%, while NAV rose by 4% in the period.
Earlier this month it said it has notarised the sale of its Rupert Mayer Street business park in Munich, Germany for €85.0 million to Fiduciary Capital, and agreed to lease back and manage the property for six years.
Since it purchased the business park eight years ago, it has increased the net operating income of the site to €5.3 million from €4.4 million, with the value of the asset increasing by 48% from the €57.5 million it cost to buy.
"The sale of the Rupert Mayer business park in Munich is significant, as it is our first sale of a major mature core site under our strategy to recycle capital into higher opportunity assets where we can increase income levels and capital values and thereby increase total returns to shareholders," said CEO Andrew Coombs.
The €85.0m sale price represents a 9.0% premium to Sirius's book value of €78.1m as at September 30 and an EPRA net initial yield for the purchaser Fiduciary Capital of 5.7%.
There is a secured loan of around €42.0m outstanding on the asset for which Sirius has the option of repaying with a small penalty fee or substituting the Munich asset with other assets in the facility.
The company said the leaseback enabled Sirius to retain the difference between the rent it pays and the income for the site in addition to an annual management fee of €100,000 per year for the term of the lease. Completion of the deal is expected in April.
In addition, Sirius reported the acquisition of four business parks including a property totaling more than 20,000 sqm in Cologne. This site was bought for €22.9mn at an 8.1% net initial yield. The group says it still has about €70m for targeted acquisitions.
The company is listed on the junior boards in both London (AIM) and Johannesburg (AltX), where it remains the only pure-play German commercial real estate stock for South African investors. In both jurisdictions Sirius is targeting a full listing on the main boards, perhaps as early as March 2017 in Johannesburg, where the company would be exposed to larger institutional investors.