Sirius Real Estate has announced the completion of the acquisition of a business park in Bochum in the Ruhr region of Germany for a total consideration of €25.7 million equating to an EPRA net initial yield of 8.9%.
The vendor is a fund managed by DOBA-Grund Beteilllgungs, Munich which forms part of the Doblinger Group, a German based development company. The acquisition, notarised in November 2018, has been funded using a combination of capital raised from the placing in March 2018 and a part of €56 million, five-year debt facility with a total all-in fixed interest rate of 1.4% from pbb Deutsche Pfandbriefbank.
The business park consists of approximately 56 000 square meters of mixed-use lettable space of which 65% is warehouse, 29% office and the remaining 6% is other space. The sire will initially generate €2.6 million of gross rental income with 95% occupancy, let to thirty-one tenants including Pilkington, a subsidiary of the Japan-based NSG Group; and GfR, a telecommunication and call centre operator which is part of the Thomas Cook Group.
The site was acquired with a high yield because Pilkington will be vacating the 26 000 square meters which it occupies at the end of its lease on the 31st of May this year. However, Sirius has already signed a new lease commencing on the 1st of June on the 12 600 square meters of space being vacated, at a higher rent per square meter and with fixed annual uplifts. The new lease (which terminates on the 31st of May 2026) has been taken by the Eickhoff Group, a global family owned business which mainly manufactures machinery and gearing technology for the mining and wind turbine industries. Eickhoff will be taking immediate occupation.
Bochum is located mid-way between Dortmund and Essen, in North Rhine-Westphalia, the third largest urban area in the European Union. The property is well situated in Bochum-Hofstede, north of the city centre and within walking distance of a U-Bahn, with easy access to the A40 and A43 motorways.
“This acquisition is our first foothold in the important Ruhr area which is one the major industrial regions of Germany. With relatively low site density, a flexible multi-tenant structure, the opportunity to replace the existing major tenant and stabilise the rent roll in an area where take up is robust and rents are growing, this site is an exciting value-add opportunity for Sirius”.
“This acquisition plays to the strengths of our integrated business model and track record of generating tenant demand, maximising space usage and achieving management efficiencies”.
“We have already generated strong interest in this park and believe re-letting of the balance of the Pilkington space will be achieved ahead of business plan” says Andrew Coombs, Chief Executive Officer of Sirius Real Estate.