Sirius Real Estate
Reinsberg business park
Sirius Real Estate, the dual-listed owner and operator of business and industrial parks in Germany and the UK, has kicked off 2025 by expanding its German footprint with strategic acquisitions in Reinsberg and Munich, while simultaneously securing a heavily oversubscribed €350 million bond issue.
But while the company continues to execute its value-add strategy, questions remain about the rising cost of debt and macroeconomic challenges that could test its resilience in the coming years.
Sirius has continued its approach of acquiring assets where it can enhance value through active management. The latest example is the Reinsberg business park, acquired for €20.4 million. With 37,000 square metres of rental space, of which 78.4% is industrial production space, the property is currently 75% occupied. A sale-and-leaseback agreement with the seller ensures €1.5 million in annual rental income from a 10-year full repairing and insuring lease.
The Munich-Neuaubing acquisition, completed in late 2024 for €13.3 million, secures a development site adjacent to an existing business park, offering both immediate rental income and long-term redevelopment potential. By clustering assets in regions such as Saxony and Munich, Sirius aims to unlock operational efficiencies, leveraging economies of scale and local market expertise.
€350m senior unsecured bond five times oversubscribed
Sirius’s latest financing move—a €350 million senior unsecured bond—has drawn investor attention. With a 4% coupon and an eight-year maturity (2032), the bond was five times oversubscribed, demonstrating investor confidence in the company’s stability. Proceeds will be used for refinancing existing debt, including the €400 million bond maturing in 2026, supporting further acquisitions, and general corporate purposes. While Sirius has extended its debt maturity to 4.2 years, its average cost of debt has increased to 2.6% from 2.1% in September 2024, reflecting changing market conditions.
As of September 2024, Sirius’s total portfolio comprised 145 assets, generating an annualised rent roll of €214 million, with a total book value of €2.4 billion. The company’s net LTV remains within its 40% threshold, reassuring investors who are wary of excessive leverage. The reaffirmation of its AA ESG rating from MSCI reflects the growing importance of sustainability in real estate financing, particularly in securing favourable lending terms from institutional investors.
Despite these positives, Sirius faces several challenges. The 2026 bond maturity will be a key moment, testing the company’s ability to roll over debt without significantly higher costs. Vacancy risks also persist, with assets like Reinsberg still 25% vacant, requiring successful execution of its leasing strategy to deliver the anticipated returns. Germany’s commercial property market remains under pressure, with concerns over stagnating industrial demand and potential shifts in business tenant requirements.
Rising debt costs and refinancing pressures
Sirius Real Estate has built a reputation as a disciplined operator, combining acquisitions with active asset management and efficient refinancing. The Reinsberg and Munich purchases reinforce this strategy, while the oversubscribed bond issue indicates that investors still see Sirius as a reliable bet in the European commercial property market. However, rising debt costs and refinancing pressures will be key factors to watch. The company's ability to sustain its expansion while maintaining financial discipline will determine how well it weathers the shifting economic landscape.
With its dual listing on the London and Johannesburg Stock Exchanges, Sirius remains an important player in the European real estate market. However, the coming months will reveal whether the company can maintain its growth trajectory while effectively managing higher debt costs and operational risks. Investors will be watching key indicators, including occupancy rates in newly acquired assets, rental income growth, and the company’s ability to secure favourable refinancing terms for its 2026 bond maturity. The year ahead will be a test of how well Sirius can balance expansion with financial discipline in a more constrained lending environment.