Sirius announces proposed raising of up to €20 million by private placement

Sirius Real Estate, the leading operator of branded business parks providing conventional and flexible work space to the German market, is pleased to announce the proposed raising of up to €20 million by a private placement of new ordinary shares to fund:

– Further acquisitions with an all-in cost of up to €55.8 million of which €29.1 million is in exclusivity and €26.7 million is under negotiation. The Acquisition Portfolio is expected to be acquired with an EPRA net initial yield of 8.1% and would contribute approximately €5.3 million to annualized rental income and €4.5 million to net operating income.

– The refinancing of an existing €39.6 million facility currently with an interest rate of 2.68% and a 3.5 year remaining term, with a new €77 million 7-year bank facility with an expected fixed interest rate of around 1.6% with the same lender.

– The purchase of the Acquisition Portfolio will be met in part by the net funds raised from the Private Placement and the balance will be funded by the proposed new banking facility currently under negotiation.

– The Acquisition Portfolio is expected to increase the Company’s annualized rental income to in excess of €68 million and the whole transaction is expected to be approximately 7.6% accretive to the annual dividend per share when all transactions are completed, whilst only being very marginally dilutive to Adjusted NAV per share. Overall the Acquisition Portfolio is expected to generate an IRR over 5 years of more than 15%.

Andrew Coombs, Chief Executive of Sirius, said, “Our ability to acquire German mixed use property portfolios yielding in excess of 8%, combined with the availability to us of 7 year debt at very low interest rates, creates an opportune time for the Company to be expanding and locking in these valuable opportunities for our shareholders, for the longer term.

The potential acquisition portfolio with a net initial yield of 8.1% is attractive and this has the potential for significant further improvement through the introduction of Sirius’s product range into the vacant space which is around 33% of the total lettable space.

We are pleased to be able to bring this opportunity to the market as we see significant benefits, both short-term and longer-term, for our shareholders with these transactions. Reflecting the Company’s ambitions and the interest from investors, the Company is making plans currently to seek a main market listing in London and Johannesburg and expects to provide an update on these plans later in the year.”

Further details on the Private Placement

The Private Placement is being conducted, subject to the satisfaction of certain conditions, through a book build which will be launched immediately following this Private Placement announcement. The Company expects to announce the results of the Private Placement on 10 June 2016.

Peel Hunt and Canaccord Genuity have been appointed joint book runners in respect of the UK element of the Private Placement and PSG Capital has been appointed sole book runner in respect of the South African element of the Private Placement.

Peel Hunt, Canaccord Genuity and PSG Capital will consult with the Company and in their absolute discretion will determine potential participants in the Private Placement. Every participant in the Private Placement will do so on and subject to the terms and conditions set out in the Irrevocable Undertakings which each participant will be required to enter into in connection with his or her agreement to subscribe for Private Placement Shares.

The Private Placement Shares will not be eligible to receive the final dividend of 1.30 Euro cents declared in respect of the twelve months ending 31 March 2016 or to participate in the scrip dividend alternative in relation to that dividend. The Private Placement Shares will rank pari passu in all respects with existing issued shares of the Company including the right to receive all dividends and other distributions declared after Admission.

Application will be made for the Private Placement Shares to be admitted to trading on the AIM of the London Stock Exchange Plc and to be listed on the AltX of the Johannesburg Stock Exchange.

The Private Placement is conditional, inter alia, on Admission becoming effective. It is expected that Admission of the Private Placement Shares will become effective and that dealings will commence in the Private Placement Shares on on AltX.

Secondary Placement

PSG Capital have also been appointed by Clearance Capital Limited in respect of the sale of up to 27 million Ordinary Shares of Sirius held by Clearance Capital funds including the Karoo Investment Fund S.C.A. SICAV-SIF (“Karoo”). Karoo is a fixed life opportunistic real estate securities fund with a scheduled termination date of 31 July 2016. Karoo owned 17.9% of the Sirius issued shares on 31 December 2015 but commenced a programme to distribute the Sirius shares to its shareholders. The first leg of this in-specie distribution completed in January 2016 and the second leg will complete on 24 June 2016. The shares being sold in the Secondary Placement represent those shares over which the Karoo shareholders have elected not to receive an in-specie distribution, as well as shares held by other Clearance Capital funds. These shares are currently held on the South African register of Sirius and are being sold to South African based investors simultaneously with the South African element of the Private Placement.

Following the placement Karoo will no longer hold any Sirius shares. The Private Placement is conditional upon the Secondary Placement occurring at the same time.