Sirius Real Estate has exchanged contracts to acquire a business park and development opportunity in Southampton for a total £40.5m.
The company has agreed to acquire Chalcroft Business Park for £36.5m, representing a net initial yield of 5.5%, as well as an adjoining 4.5 acre piece of development land with outline planning permission, for £4.0m.
The acquisitions are being funded from the proceeds of the company’s £152m (€181m) capital raise last July.
Chalcroft Business Park comprises 267,073 sq ft of predominantly warehousing space alongside 126,511 sq ft of outdoor industrial storage. The 56-acre site also includes a 1.2-acre solar farm, benefiting from a 2013 government Feed-in Tariff (FIT) expiring in 2038 which produces a third of the estate’s power requirements.
The asset is 80% occupied, with the only two vacant units having recently reached practical completion following an extensive refurbishment. It will be operated by Sirius’s operating platform, BizSpace, and is complementary to the company’s existing site in nearby Fareham.
The business park currently produces a net operating income of £2.1m, with a WAULT of 4.0 years to break, while the vacant units should add a further £500,000 to the rent roll once let.
The main site also has planning consent for approximately 69,000 sq ft of new industrial space with the potential to deliver £800,000 of additional rental income.
The development land plot adjacent to the main estate that has also been acquired has outline planning permission for approximately 40,000 sq ft of commercial space, providing a further development opportunity in the future.
Since its equity raise last July, Sirius has successfully acquired over €100m of income producing properties at a 7.1% average yield. Comprising assets in Carnforth, Munich, Reinsberg, Oldham and now Chalcroft, these acquisitions will add €7.1m to the company’s annual funds from operations run rate, once complete.
Andrew Coombs, chief executive of Sirius, commented: “The acquisition of Chalcroft Business Park adds a strong, income-generating asset to our portfolio, with strong sustainability credentials and significant potential for further value creation. By leveraging the combined expertise of the Sirius and BizSpace platforms, we aim to enhance existing revenues while unlocking new income streams through hands-on asset management and development. Since our equity raise last July, we have continued to acquire properties at attractive yields, demonstrating our ability to identify and secure strategic opportunities that drive rent roll growth and, in many cases, also offer interesting additional development opportunities. With a robust and active pipeline of prospects across the U.K. and Germany, as well as additional capital available for investment, we remain well positioned to complete the acquisition programme initiated last summer.”
