Sirius Real Estate has announced the formation of a real estate investment joint venture with clients represented by AXA Investment Managers – Real Assets. The joint venture will be called Titanium.
AXA Investment Managers will act on behalf of its clients, owning a 65% interest and Sirius will own the balance of 35%.
The joint venture will initially be formed by AXA Investment Managers – Real Assets acquiring a 65% stake from Sirius in five single asset special purpose vehicles through which it currently owns two business parks located in Berlin and one in each of Mainz, Nurnberg and Bayreuth. The business parks provide a combination of office, warehouse, industrial and storage space. The implied property value of €168 million equates to a gross yield for the portfolio of 6.2% and reflects a premium to the last reported book value as at the 30th of September 2018 which was €141.1 million. Total cash commitment from AXA Investment Managers – Real Assets amount to €43.9 million. The transaction is expected to generate total cash proceeds of more than €70 million for Sirius after refinancing and expected related costs.
Sirius has signed an agreement to continue the operation of the assets by using its fully integrated operating platform on a fee basis. The joint venture may seek to acquire further assets in Germany with a clearly defined strategy that will not conflict with the company’s existing business.
As a result of entering the joint venture, Sirius will have significant resources to invest both for itself and the joint venture. Through the newly established relationship with AXA Investment Managers – Real Assets, the company may be able to consider much larger assets and portfolios of assets with a wider range of return profiles which it might have previously overlooked or have been unable to pursue whilst allowing the company to derive further benefits of scale. Proceeds from the transaction, together with additional lending, will provide Sirius with an estimated €140.0 million of acquisition firepower to continue expanding its own portfolio.
Andrew Coombs, Chief Executive Officer of Sirius Real Estate, said:
“Sirius is delighted to be partnering with one of the world’s largest real asset managers and the fact that Sirius is going into partnership with such an important institution as AXA IM – Real Assets underlines the professionalism and expertise that has been developed within Sirius over the last five years in particular. The formation of this relationship represents an important opportunity for both parties and it will give Sirius key advantages in an increasingly competitive market and through the real estate cycle”.
“This will increase the Company’s ability to create value for both its investors and the JV from which the Company will benefit as both the manager and as an equity partner”.
John O’Driscoll, European Head of Transactions at AXA IM – Real Assets, commented:
“This transaction allows us to invest in an attractive portfolio of assets and provides us with immediate scale in this important asset class in Germany, a geography that we are actively growing in. This transaction also enables us to establish a long-term joint venture with Sirius Real Estate, a leading operator and investor in branded business parks in Germany. We look forward to working with them on this portfolio and on future opportunities.”