Summit Germany signs on two further deals for €95m

Another Germany-focused AIM-listed company is Summit Germany, which invests exclusively in commercial properties in the country's largest cities. It has been busy these past weeks, signing on a couple of interesting deals.

It has just signed an agreement to buy a loan facility on a portfolio of six office properties for about €40m plus expenses, having previously owned the portfolio which is leased to Deutsche Telekom. The loan facility has a face value of €78m, and by buying the loan, Summit Germany regains full control of the asset.

The six properties are described as 'in good locations', including Heidelberg, Düsseldorf and Potsdam, with an aggregate net lettable area of 63,000 sqm and are 72% occupied. They currently generated net annual rent of about €5.5m, reflecting a yield of 13.8% on costs.

The company, which is majority-controlled by Israeli investor Zohar Levy, had earlier in June bought an office complex in the southwest German city of Stuttgart at an average net yield of 7.5% p.a. The total price of €55m included an agreement to buy an adjacent smaller property at a later time. The property is thought to be part of the Xcel Business Campus area in the Zuffenhausen district, whose previous owner was developer Freo.

The 135,000 sq.m. site has lettable area of 63,000 sq.m. and rights to further development of another 55,000 sq.m. The properties are multi-let with 95% occupancy and nine years average lease life. Current net rent is around €4.5m at a 7.5% yield, and net operating income is €4.1m.

The deals bring to over €800m the amount the company has invested in Germany. The company has offices in Frankfurt and Berlin with 50 staff managing its portfolio of storage, office, retail and logistics properties spread throughout Germany.

Like light-industrial specialist Sirius Real Estate, Summit Germany is another pure play on German commercial real estate. It earned €73.98m last year on turnover of €43.36m, and currently has a market cap of €421m. Its assets are yielding about 10% on operating cash flow.

The company announced a dividend of 0.77 cents per share for the first quarter of 2015. Its quarterly dividend payments amounted to 2.85 cents in 2014, equivalent to an annualised yield of 5.42% on the 63 cents pricing of its initial public offering. The company is targeting a yield of 7% on IPO price.

Summit raised €35 million when it listed on AIM in February 2014 and a further €120m million in February this year.