Sirius Real Estate has completed the sale of its Rupert Mayer Strasse business park in Munich for EUR85 million to Munich based Fiduciary Capital and the agreement to lease back and manage the asset for six years. Notarisation of this transaction was first announced on 6 January 2017.
Rupert Mayer Strasse business park has approximately 72,000 sqm of office and warehouse space and was acquired by Sirius in 2008. Since then Sirius’s asset management activity has increased net operating income from EUR4.4 million to EUR5.3 million with the value of the asset increasing by 48% from the EUR57.5 million it cost to acquire.
The sale has been structured as a sale and leaseback with a lease of six years and a rent payable by Sirius of c. EUR5.0 million per annum for the first five years and then in the final year at a cost equal to the net operating income of the site. Sirius will continue to receive the net operating income of the site for the term of the lease which is currently at around EUR5.3 million.
The leaseback enables Sirius to retain the difference between the rent it pays and the income from the site in addition to an annual management fee of EUR100,000 per year for the term of the lease.
Andrew Coombs Chief Executive Officer of Sirius Real Estate, said “Rupert Mayer Strasse is an excellent example of the Sirius business model. We have successfully repositioned this site through the replacement of a single tenant with multiple tenants on higher rents, invested in transforming sub-optimal spaces, increased net operating income by 30% and now we have completed the sale at a 9% premium to book value. In addition, we have agreed a management contract extending income from this site through to 2023.
We now have the opportunity to recycle this capital into higher opportunity assets where we can increase income levels and capital values and thereby increase total returns to shareholders.”
SRE : Sirius in sale and leaseback of Munich business park