Sirius Real Estate has announced a proposed £150m capital raise. The placing of shares at an offer price of 94p is in line with its adjusted NAV at 31 March 2024.
The capital raise will enable the company, which owns business parks in Germany and the UK, to execute on its ongoing acquisition strategy.
Up to £2.5m can be raised from retail investors through the PrimaryBid online platform.
Background to and reasons for the Capital Raising
The proposed equity raise follows a £147m (€165.3m) capital raise in November 2023, which was used to fund its acquisition pipeline. It has acquired three German assets (Cologne, Göppingen and Klipphausen) for a total of €53.6m, with an average net yield and average gross yield of 9.4% and 10.2%, respectively, and eight assets in the UK (Barnsley & Liverpool, the North London Portfolio of three assets, Banbury, Wembley and Vantage Point Business Park), totalling £121.0m at an average net yield of around 9.1%.
It says that it will use the proceeds to acquire business parks across the UK and the seven largest German cities by population (Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf). It is seeking mixed-use properties, primarily light industrial units, business parks or office buildings outside the city centres, or on the edge of the cities, in locations which have a high density of commercial and industrial activity and good transport links.
It has an acquisition pipeline worth almost £160m. Of the identified indicative near-term pipeline, two assets are located in Germany and would require around €32.9m (circa £27.9m) to acquire, and three are in the UK and would require approximately £30.2m (circa €35.6m). These should be acquired at a range of net initial yields of 0.5% to 9.4% and occupancy rates of between 21% and 100%.
The company has identified an additional pipeline of more than €100m of potential acquisitions in Germany and in the UK, including a number of sizeable opportunities, which could be executed on into the medium term.
Financial benefits of the capital raising
Execution on the acquisition pipeline has the potential to grow funds from operations (FFO) to €150m per annum and will be accretive to net asset value (NAV) in the medium term. The company expects to maintain net loan-to-value (LTV) below 40%, post completion of the capital raising.
Commenting on the capital raise, Andrew Coombs, chief executive of Sirius Real Estate, said:
“Having successfully invested the €165m of capital we raised last November into a number of well-timed acquisitions, in the UK and Germany, that offer the potential for value creation through the Sirius platform, we have continued to build a pipeline of similar opportunities. The proceeds of this additional capital raise will allow us to progress these transactions in order to continue to expand our carefully assembled portfolio, at an opportune time in the market cycle, while making a strong contribution to helping us achieve our medium term goal of growing FFO to over €150m.”