Donna Oosthuyse, Director, Capital Markets, Johannesburg Stock Exchange; Andrew Coombs, CEO, Sirius Real Estate Limited; James Peggie, Director, Sirius Real Estate Limited
Sirius Real Estate Limited, an owner and leading operator of mixed-use, multi-tenanted, branded business parks throughout Germany, today successfully débuted on the alternative equity exchange (AltX) operated and owned by the JSE . The Company has a primary listing on the Alternative Investment Market of the London Stock Exchange.
The first trade opened at R6.00, giving Sirius a market cap of approximately R3.8 billion on the local bourse.
“South African investors already owned approximately 40% of Sirius prior to listing. A secondary listing on AltX was a natural progression as it provides local investors an additional platform to invest and trade in our shares. We are delighted with the overwhelming support for the Private Placement,” Andrew Coombs, Chief Executive Officer said.
The event also signalled the JSE’s first fast-tracked listing, in terms of new rules instituted by the exchange.
“The JSE recently instituted a fast-tracking mechanism for secondary listings. If the applying company has a primary listing on an international exchange acknowledged by the JSE, the listing process can be completed within four to five weeks and a lot less documentation is required. The obvious savings in time and costs made a fast-track listing an obvious choice for our client,” explained Johan Holtzhausen, Managing Director of PSG Capital, the sole bookrunner, corporate advisor and sponsor to Sirius.
“The capital raised will support the proposed acquisition of an exciting new selection of German business parks for a total acquisition cost of €75.6 million,” commented Alistair Marks, Chief Financial Officer.
Proceeds from the Private Placement, together with a new debt facility, will be used to fund the acquisition of five business parks with a total lettable area of 111 476 m². The acquisition portfolio has a current net initial yield of 8.1% and a vacancy of 17.1%. The acquisition is expected to be immediately 16.4% accretive to earnings and dividends per share, generating a current recurring rental income of €6.8 million and a recurring net operating income of €6.1m per annum.
“In light of the excellent banking terms we have agreed, the portfolio will have an initial cash on cash yield of 12.9%. The properties fit very well within our existing network and we feel confident we can add significant further value through the opportunities within the vacant and other space in the assets,” added Marks.
Sirius is the first pure German property offering on the JSE with a portfolio independently valued at R6.4 billion. Apart from a rand hedge, investors in the company are exposed to a leading operator of 30 mixed-use, multi-tenanted branded business parks across Germany with over 1 million m² of lettable space.
“We don’t just buy assets – we have a unique ability to effectively unlock value through our internalised platform. Sirius offers a strong capital growth opportunity, combined with good income yield and excellent growth prospects,” continued Coombs.
The Company’s business model is to acquire high-yielding mixed-use business parks in Germany. Management then significantly adds value through Sirius’ unique internal operating platform by securing anchor tenants and improving lease terms. The Company’s top 50 tenants account for 61% of revenue, and include covenanted blue chip companies such as Daimler, MAN Diesel, Siemens, GKN Aerospace Deutschland.
30% of the portfolio’s income is derived from German SMEs with long to mid-term leases. By dividing space into customised, smaller units for this market, Sirius is able to achieve a rental uplift of between 50% and 100% on the original use. 10% of the Company’s income is from its flexible, high-yielding Smartspace product – a scalable, all-inclusive option aimed at smaller tenants which achieves rental uplift of 100-200% above rates achieved on original use.
Sirius would also apply its expertise in investing and converting previously unlettable/under-rented space, achieving price rates of three times that of the original use.
* EUR1:ZAR 13.74
