Sirius expands its footprint in Germany

Sirius expands its footprint in Germany

Sirius Real Estate has announced further progress in its asset recycling programme with the completion of three acquisitions in Germany for €44.6m in aggregate. These acquisitions were all notarised prior to the end of June and have been predominantly funded using capital recycled from three strategic disposals in Germany and the UK for a combined €33.6m. The disposals have been made at a premium to book value while Sirius has undertaken the acquisitions having identified a number of opportunities to drive future income and valuation growth through its asset management platform.


The three disposals were of assets that offered limited further growth opportunities due to location and/or condition, and comprised:

· The completion of the previously announced €13.75m sale of the Company’s asset in Magdeburg, Germany, which represented a 5.5% premium to the book value at the time of notarisation.


· Completion of the previously announced €18.3m (£16m) sale of a BizSpace business park in Camberwell, London, at 94% above the asset’s valuation at the time of Sirius’ acquisition of BizSpace.


· The notarisation of a €1m 3,200m² non-income producing land plot in Heiligenhaus, Germany which had a book value of €250,000 at the time of notarisation. This asset is being sold to a supermarket chain as part of its expansion plans, with the transaction expected to complete in January 2023.


The disposals generated an annualised €1.7m of rental income and €1.4m of net operating profit, while the three new acquisitions totalling €44.6m currently generate a combined total of €2.3m of rental income and €1.6m of net operating profit annually. The three acquired assets have a combined occupancy of just 54% and offer a range of avenues for Sirius to leverage its significant value creation expertise to grow rental income. The acquired assets comprise:


· A €39.8m (including costs) mixed-use property in Dusseldorf, Germany, situated 2.6 km from the city’s international airport. The property comprises mainly office and warehouse/light industrial space and is 55% occupied, offering good value add potential.


· A €3.9m (including costs) primarily warehouse asset located in a well-developed commercial area in Dreieich, Germany, that is strategically adjacent to an existing property owned by Sirius.  We intend to convert the property into a self-storage facility, adding to our existing SmartSpace Self-Storage brand that now exists in 32 locations across Germany


· A €0.9m (including costs) small 239m² vacant office building in Potsdam. The property is placed strategically at the entrance to one of the Company’s existing sites and directly adjacent to the world famous Babelsberg Film Studios.


Commenting on the transactions, Andrew Coombs, Chief Executive Officer of Sirius Real Estate, said: “The strategic disposal of these mature assets at a premium to their book value demonstrates our continued ability to drive value within our portfolio and then crystallise returns, which can be recycled into new opportunities where we can grow operating income through our asset management platform. We have identified a number of asset management initiatives within the three newly acquired properties which will allow us to grow rental income and occupancy by leasing into markets where we see continued strong demand for our products. Given the current uncertainty in the market, we now expect to slow our acquisition pipeline, however we are continuing to monitor numerous acquisition opportunities so that we remain poised to execute transactions at the appropriate time in the future. We will also continue to seek to dispose of non-core or mature assets as and when we feel the timing is right.”


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