Sirius Real Estate is pleased to provide the following update on the refinancing of its existing debt facility (“Existing Facility”) with BerlinHyp and Deutsche Pfandbriefbank (“PBB”) as well as the acquisition of two new business parks.
The Existing Facility of €110.4 million, which had a blended interest rate of 3.61% and an expiry term of three years, has now been refinanced with a new debt facility (“New Facility”), provided by
the same consortium of BerlinHyp and PBB. The New Facility of €137.0 million has been negotiated on more favorable terms for Sirius, with €94.5 million at an interest rate of 1.66%, fixed for the full 7-year term, and €42.5 million on a floating rate of 1.25% over 3 month Euribor (but not less than 0%).
Non-recurring costs associated with this refinancing, including early redemption fees and swap breakage costs on the Existing Facility, are expected to be around €5.6 million. Of this amount, €3.6 million is expected to impact upon Net Asset Value immediately, while the remainder, representing arrangement fees on the New Facility, will be amortised over the seven year term. The Company anticipates that the New Facility will reduce the annualized interest cost to the Group by approximately €1.7 million despite the increased loan size. The Group’s weighted average cost of debt following this refinancing will be around 2.25%, down from 3.3% as at 30 September 2015 and from 4.3% prior to the Macquarie refinancing in September 2015.
In addition, the Company is pleased to announce that the €26.6 million surplus from the New Facility will be used to complete the acquisition of two business parks in Markgroeningen and Krefeld, for a total consideration of €22.2 million, of which the former property completed on 4 May 2016 and the latter is expected to complete before the end of May. Once completed, the two assets are anticipated to add a further €2.5 million to annualised rental income and €2.0 million to Net Operating Income.
Markgroeningen is situated close to Sirius’s business parks in Stuttgart and Ludwigsburg. The property is being acquired on a 15.2% EPRA net initial yield (equating to €154 per sqm of capital value), a vacancy of 31.5% and a weighted average lease length remaining of 4.9 years. With the anchor tenant recently secured by Sirius for a five year term, Sirius has designed a capital investment programme for the vacant space across both warehouse, Smartspace, conventional office and manufacturing with a view to transforming the offering at the park.
Krefeld is located in Fichtenhain, near the Group’s existing assets in Dusseldorf and Essen. The property is being acquired on an 8.4% EPRA net initial yield (equating to €1,176 per sqm of capital value), a vacancy of 6.4% and a weighted average lease length remaining of 3.4 years. The site is a high-quality income producing site comprising flexible warehouse, manufacturing and office space.
Andrew Coombs, CEO of Sirius, comments, “I am very pleased to confirm BerlinHyp’s and PBB’s continuing support for Sirius and welcome the new facility which was agreed on more favourable terms which reflects well on the business. The fact that we have also been able to fund two new acquisitions with this long-term low-cost facility means that these transactions are significantly earnings enhancing. The two new sites at Markgroeningen and Krefeld will provide a good balance of earnings accretion and value-add opportunity.”
Sirius intends to announce its final results for the year ended 31 March 2016 on 23 May 2016.