SRE : Transformative deal for Sirius Real Estate
Sirius Real Estate has announced that it is raising €40m through a private placing, getting a secondary listing on the Johannesburg Stock Exchange and acquiring a €76m mixed use German property portfolio.
Sirius has placed 105,263,158 new ordinary shares at a price of 38 cents per ordinary share to fund, in part, the proposed acquisition of five mixed use business parks, with an all-in cost of €76m. The balance will be funded by a new €36m borrowing facility to be provided by the Company’s existing bankers.
The JSE has granted approval to Sirius for a secondary listing, by way of its new fast-track listing process – Sirius real estate is actually the first company to make use of this since it was introduced on 30 September 2014. Sirius says it already has a large South African shareholder base but 90m of the Private Placement Shares were placed with new and existing shareholders in South Africa and the balance in the UK.
The acquisition is of 5 business parks with a total lettable area of 111,476 sqm. Three of these are on the outskirts of Berlin, one in Bonn adjacent to an existing Sirius site and one in Aachen near the Dutch and Belgian border. The portfolio is being acquired from four different vendors. Four of these deals have been agreed and the fifth is subject to due diligence. The parks have an overall net initial yield of 8.1%, a vacancy of 17.1%, a cash on cash yield of 12.9% and a weighted average lease length remaining of 3.9 years. They produce current recurring rental income of €6.8m.
They reckon the deal as a whole adds 16.4% to earnings but dilutes NAV by 1.5%. They also say the transaction will be “16.4% accretive to the… dividend per share”