Sirius Real Estate is pleased to announce the Company has notarized the sale of its Rupert Mayer Str. business park in Munich for €85 million and has agreed to lease back and manage the asset for six years.
The Company also provides an update on progress being made towards the completion of two further disposals for €7.4 million as well as the acquisition of four further business parks for €34.9 million.
Sale of Rupert Mayer Str.
The Company continually reviews its portfolio with a view to disposing of mature and non-core assets and recycling equity into assets with higher opportunities, in order to increase total returns from the portfolio. Over the eight years since the Rupert Mayer Str. site was acquired, Sirius’s asset management activity has increased net operating income from €4.4 million to €5.3 million with the value of the asset increasing by 48% from the €57.5 million it cost to acquire.
The asset was purchased from Siemens who occupied almost 100% of the site when acquired and subsequently completely vacated the business park. The Sirius asset management team has successfully filled the site with a mixture of conventional and flexible work space leases and it is now 88% occupied.
The sale price of €85.0 million represents a 9% premium to Sirius’s book value of €78.1 million as at 30 September 2016 and an EPRA net initial yield for the purchaser of 5.7% (including acquisition costs). The purchaser is Fiduciary Capital based in Munich. The sale has been structured as a sale and leaseback with a lease of six years, with a rent of c. €5.0 million per annum for the first five years and in the final year at a cost equal to the net operating income of the site. Sirius will continue to receive the net income of the site for the term of the lease which is currently at around €5.3 million.
There is a secured loan of around €42m 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 into the facility.
The leaseback enables Sirius to retain the difference between the rent it pays and the income from the site in addition to an annual management fee of €100,000 per year for the term of the lease. Completion is expected to be in April 2017.
Two further disposals
In September 2016, the Group notarised the sale of one of its non-core assets in Merseburg for €5.9 million and this is progressing well with an expected completion date of March 2017. In October 2016 the Group notarised the disposal of 8,155 square metres of land at its CöllnParc site for €1.5 million which represents a 41% uplift on the book value as at 30 September 2016. The sale of this land was completed at the end of November 2016.
In October 2016, the Group notarised the purchase of an asset located in Krefeld for a total consideration of €2.9 million. It is being acquired on a 13.1% EPRA net initial yield (equating to €457 per sqm of capital value) and is expected to complete at the end of January 2017.
In November 2016, the Group notarised the purchase of an office building located in Dreieich for a total consideration of €4.6 million. The site contains significant under-utilised and vacant space which represents an excellent development opportunity. It is being acquired on a 0.9% EPRA net initial yield (equating to €355 per sqm of capital value) and is expected to complete in February 2017.
Being announced today:
In December 2016, the Group notarised the purchase of an asset in Frankfurt for a total consideration of €4.5 million. This is a multi-let office building providing office space with some warehousing in the basement and is currently 28% occupied, is producing annual income of €0.2 million and has a weighted average lease term of 1.5 years. This is another site with significant development opportunity and is being acquired on a 1% EPRA net initial yield (equating to €1,107 per sqm of capital value) and is expected to complete in March 2017.
In November 2016, the Group also notarised the purchase of an asset in Cologne for a total consideration of €22.9 million. The site offers 20,342 square metres of gross lettable space, of which 93.6% is office space, and is currently 99% let to multi-tenants. The largest tenant occupies over 50% of the gross lettable area and has 2.9 years remaining on their lease. The total tenant base has a weighted average lease length term of 2.4 years. The asset is being acquired on an 8.1% EPRA net initial yield (equating to €1,126 per sqm of capital value) and is expected to complete in May 2017.
Funds available for investment
Following the completion of the above acquisitions and disposals the Company should have approximately €70 million from existing cash resources and debt facilities for further acquisitions whilst maintaining the Company’s stated LTV target. The Company continues to see a healthy acquisition pipeline of assets on which it can use its considerable asset management skills to drive value for shareholders.
Andrew Coombs Chief Executive Officer of Sirius Real Estate, said, “The sale of the Rupert Mayer Str. 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. It is particularly encouraging to have achieved a sale price of 9% above book value for this site. The four new acquisitions provide us with significant value-add opportunities and we are looking forward to incorporating these into our asset management and investment activities and getting to work on deriving significant additional value from them all”.
“As we have said, we are making good progress towards moving up to the main markets of both the London and Johannesburg Stock Exchanges and expect to complete these moves in or just before March 2017.”