Sirius Real Estate has announced that, following on from the successful private placing raising EUR30 million before expenses completed in June 2016, it has notarised and is near to completing the acquisition of two multi-let business parks, referred to at the time of the fundraising, for a total consideration of EUR46.3 million.
The first site being purchased is for a total consideration of EUR28.6 million and is located in Dresden, a prosperous industrial city where many international corporations are based. This multi-let business park is positioned next to the city’s airport and is well placed to continue to benefit from demand from Dresden’s successful commercial sector. The site has 53,200 sqm of gross lettable area of which 45.9% is offices and 39.3% is warehouse. The occupancy upon acquisition is 65.7% across a broad base of 60 tenants paying a total annual rental income of EUR2.78 million (equating to EUR4.35 psm) with a weighted average lease length remaining of 3.3 years. It is being acquired on an 8.3% EPRA net initial yield (equating to EUR538 per sqm of capital value) and is expected to complete in October 2016.
The second business park is being purchased for a total consideration of EUR17.7 million and is located in the heart of Wiesbaden’s commercial district known for being strong across the public administration, IT, construction and insurance sectors. The total gross lettable area of the property is 19,602 sqm of office space of which 64.6% is let to 3 tenants paying an annual rental income of EUR1.88 million (equating to EUR7.99 psm) with a weighted average lease length remaining of 2.7 years. The business park is being acquired on a 9.1% EPRA net initial yield (equating to EUR901 per sqm of capital value) and is expected to complete in October 2016.
The purchase costs of these two sites will be met in part by funds raised from the private placement and the balance will be funded by a new EUR70 million banking facility with BerlinHyp referred to at the time of the fundraising which the Company expects to be in place in October. As announced in June, this facility is expected to have a 7 year term and an interest rate priced at or around 1.6%. The Company still has circa EUR10 million of cash from the June equity raise with which to fund further acquisitions.
Andrew Coombs, Chief Executive Officer, said, “After 10 years of focusing exclusively on this market we know exactly what we are looking for and what makes the best returns for our shareholders. These two sites fit neatly within our criteria as we are buying them at an EPRA net initial yield above 8%, financing the transaction with very attractive banking terms and purchasing enough vacancy to provide significant value-add opportunity. They will provide both an attractive immediate return and strong opportunity for income and valuation growth following a capex investment program to enable leasing of the current voids.”
SRE : Sirius Real Estate updates on acquisitions