Sirius Real Estate Limited
Andrew Coombs - Sirius Real Estate
According to Sirius CEO Andrew Coombs, "As with our other two recently completed acquisitions, we were again able to take advantage of a significant yield gap making these transactions immediately earnings-enhancing."
The AIM-listed Sirius Real Estate, which focuses on German light industrial property and flexible workspaces, has concluded the purchase of two further business parks (out of the five it announced it was targeting in November of last year). A fifth asset it was planning to buy is now not going ahead, with the company looking at alternative sites.
The two new business parks are in Aachen and Bonn, with Sirius paying €21.8m for both, inclusive of costs. The Aachen park, just next to the Dutch and Belgian borders, has a total lettable area of 27,000 sqm and is currently 73% let to a mix of office and light industrial tenants. The Bonn park has 9,800 sqm and is likewise 76% let to a mix of office, service and retail businesses. The sites generate annual rental income of €2.2m and net operating income of €1.9m, giving a combined (EPRA) net initial yield of 9.02%.
The acquisitions were paid for by the proceeds from Sirius’s recent €40 million private placement announced last November and a drawdown of the remaining €9.9 million from its new €36 million, 5-year debt facility. The monies drawn down have a 2.85% fixed annual interest charge and an initial amortisation rate of 2.00% per annum. Taking account of the financing, the initial cash on cash return is 14.53%.
Sirius has now finished buying four of the key sites of the five targeted last November, paying a total of €71m (including all costs) , or nearly all of the €76 million acquisition portfolio discussed at the time. The remaining potential €4.5 million acquisition of a business park in Mahlow is now not going ahead, and Sirius said in a statement it is currently reviewing alternative options.
According to Sirius CEO Andrew Coombs, "As with our other two recently completed acquisitions, we were again able to take advantage of a significant yield gap making these transactions immediately earnings-enhancing. In addition, we are confident we can enhance the vacant space and attract new tenants to further increase returns to shareholders."
