Sirius Real Estate has announced that it has completed the acquisition of a business park in Bochum in the Ruhr region of Germany, for a total consideration of €25.7 million, which equates to an EPRA net initial yield of 8.9%. The seller is a fund managed by DOBA-Grund Beteiligungs, Munich, which is part of the Doblinger Group, a German based development company. The purchase has been funded using a combination of capital raised from the placing in March 2018 and a part of a €56 million, five year debt facility with a total all-in fixed interest rate of 1.4%, from pbb Deutsche Pfandbriefbank.
Andrew Coombs, Chief Executive Officer of Sirius Real Estate, says that the “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 exiting 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.
Bochum Business Park
The Bochum Business Park consists of approximately 56,000 square metres of mixed-use lettable space of which 65% is warehouse, 29% is office and 6% is other space. The site will initially generate €2.6m of gross rental income with 95% occupancy, let to 31 tenants including Pilkington, a subsidiary of the Japan-based NSG Group; and GfR, a telecommunication and call centre operator that is part of Thomas Cook Group.
The site was acquired with a high yield because Pilkington will be vacating the 26,600 sqm that it occupies at the end of its lease on 31 May 2019. However, Sirius says that it has already signed a new lease commencing on 1 June 2019 on 12,600 square metres of the space being vacated, at a higher rent per square metre and with fixed annual uplifts. The new lease, which terminates on 31 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.
Location, location, location….
Bochum is located mid way between Dortmund and Essen, in North Rhine-Westphalia, the third-largest urban area in the European Union. Sirius says that 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.
About Sirius Real Estate
Sirius is a property company listed on the main market and premium segment of the London Stock Exchange and the main board of the Johannesburg Stock Exchange. It describes itself as a leading operator of branded business parks providing conventional space and flexible workspace in Germany.
The Company explains its core strategy as being the acquisition of business parks at attractive yields, the integration of these business parks into its network of sites under the Company’s own name as well as offering a range of branded products within those sites, and the reconfiguration and upgrade of existing and vacant space to appeal to the local market, through intensive asset management and investment.
The Company says that it aims to deliver attractive risk adjusted returns for shareholders by increasing rental income and improving cost recoveries and capital values, as well as by enhancing those returns through financing its assets on favourable terms. It says that, once sites are mature, and net income and values have been optimised, Sirius may consider their disposal in order to recycle equity into assets which present greater opportunity for the Group’s asset management skills.
Sirius Real Estate moves to a Premium Main Market listing on the LSE and a secondary listing on the JSE : SRE