Sirius Real Estate moves to senior listings, raises fresh capital
Regular REFIRE readers will know that we have been bullish on the previously-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 last quarter, 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.
Sirius began trading earlier this month on the London Main Board earlier this month from its AIM listing, and transferred from the Alt-X market to the main Johannesburg Stock Exchange in South Africa where it has a sizeable investor community.
CEO Andrew Coombs said the move was a reflection of the progress Sirius Real Estate had made and the momentum it has created in its niche in Germany. He said a listing on the main markets of both exchanges represented a more appropriate platform for the growth of the business, with a heightened profile and status.
"Looking ahead, there are good opportunities to increase our property portfolio and the broader trading platform of these two premier markets with their deeper pools of domestic and international investors will be key in helping achieve this", he said.
In tandem with the new listings, Sirius raised Stg£13.0 million through a private placement of 26 million shares at 50.00 pence each to a single unnamed UK institution, equal to around 3.0% of its issued share capital, at a 3.8% discount to the 52.00p per share closing price on the previous evening. This brings to 878.8 million shares in issue. It said the funds were expected to be used to pull forward the completion of its recent purchase in Cologne, as well as to accelerate its investment programme.
According to Coombs, "The German property market is benefiting from an increase in activity driven by a number of economic and political factors, as well as the continuing favourable lending conditions… We are seeing a strong flow of sites that fit within our specialist area of expertise and where we are confident of adding significant value."
Just this week the company announced the sale of one of its assets in Düsseldorf for €11m to a German institutional buyer, describing the asset as now 'mature'. The asset had been bought in 2008 and fully developed by Sirius with occupancy now at 96.2%. The sale price represents a 25% premium to book value of €8.7m (Sept. 2016), and will give the buyer an initial EPRA net yield of 7.2%.
Sirius said there is a secured loan of around €3.9 million outstanding on the asset, but under the terms of the loan Sirius has the option of substituting other assets into the facility in place of the Dusseldorf asset, which it expects to do. The sale will add to the Company’s cash resources and provide further support for acquisitions whilst maintaining the Company’s stated LTV target of 40%.