Sirius Real Estate, a leading operator of branded business parks providing conventional space and flexible workspace in Germany, is pleased to announce the completion of the sale of its Rupert Mayer Strasse business park in Munich for €85m 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 m² 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 €4.4m to €5.3m with the value of the asset increasing by 48% from the €57.5m 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. €5.0m 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 €5.3m.
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 €100,000 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.”
