Sirius Real Estate (SRE) is looking to raise £145m in a placing. This will enable the company to acquire a near-term pipeline of opportunities, following the recent acquisition of assets in Liverpool, Barnsley and three in North London, for a total of £45m.
The capital raise will comprise an institutional placing that will be made available to new and existing eligible investors, a placing to selected qualified investors in South Africa and an offer of new shares for retail investors in the company on PrimaryBid.
The company said that it believes that the conditions in the German and UK light industrial, business park sectors present a significant near-term pipeline of attractive acquisition opportunities.
The company said: “The directors believe that the real estate market dynamics in Germany, characterised by a resilient and well diversified economy spread across several large autonomous markets, a strong SME market, high replacement costs for light-industrial buildings and levels of investment, provide a strong backdrop to pursue its organic and acquisitions-led growth strategy over the medium term. Similarly, the Directors continue to believe that the real estate market dynamics in the UK remain positive, characterised by strong rental growth potential, UK government regional investment commitment, increased level of near-shoring, structural undersupply of UK multi-let assets and resilient market conditions for light industrial assets.
“In executing its acquisition-led growth strategy, the Group is focusing on assets across both Germany and the UK which both fit the Group’s disciplined selection criteria and also provide the Group the opportunity to derive further value from those acquired assets through its organic growth initiatives, including its highly developed capex investment programme. Acquisition criteria across both jurisdictions will be focused on under-utilised, multi-let, mixed-use properties primarily located outside city centres, in locations which have a high density of commercial and industrial activity and good transport links. The Group typically seeks sites which offer pricing upside and/or can be transformed into higher yielding spaces with a value-add and opportunistic focus on asset management potential. German assets will typically have €10-50m site value, a higher vacancy and under-rented opportunity with relatively low competition of purchasers for such assets. Similarly, UK assets will typically comprise multi-let industrial, studios and workspaces of £5-25m site value with high gross yields and asset management potential.
“Against the current market conditions in the Group’s German and UK markets, and following the Company’s recent UK acquisitions, the Directors have identified a pipeline of eight attractive acquisition opportunities which meet the Group’s acquisition criteria and wish to launch the Capital Raise to execute further on that pipeline. These assets remain subject to detailed commercial and legal due diligence. Of the identified pipeline, four are based in Germany and would require approximately €85m of acquisition cost, and four which are based in the UK and would require approximately £45m. The vendors of the assets are a mix of both private individuals and institutional owners, and there is an average investment size of approximately £15m (approximately €17m) across the pipeline with a range of deal sizes from £4.2m (€4.9m) to £23.4m (€26.7m). The Directors believe that these identified sites have attractive attributes based on the Group’s ability to apply its expertise to drive growth through under-rent and service charge recovery, its understanding of local area and tenant churn and utilisation of targeted capex and other strategies to improve occupancy, pricing and/or asset values. The Directors believe each of the sites will benefit from strong tenant demand.”
SRE : Sirius Real Estate looks to raise £145m