Sirius Real Estate is acquiring two multi-let business parks in Germany for €46.3 mln.
The deal comes after the branded business parks operator successfully completed a private placing in June 2016, raising €30 mln.
'After 10 years of focusing exclusively on this market we know exactly what we are looking for and what makes the best returns for our shareholders. These two sites fit neatly within our criteria as we are buying them at an EPRA net initial yield above 8%, financing the transaction with very attractive banking terms and purchasing enough vacancy to provide significant value-add opportunity,' said Andrew Coombs, CEO of Sirius. 'They will provide both an attractive immediate return and strong opportunity for income and valuation growth following a capex investment program to enable leasing of the current voids.'
The first asset, costing €28.6 mln and situated in Dresden, is located near the airport. The site has a 53,200 m2 GLA, comprising 45.9% offices and 39.3% warehouse space. The occupancy upon acquisition is 65.7% across a base of 60 tenants paying a total annual rental income of €2.78 mln (equating to €4.35 psm) with a weighted average lease length remaining of 3.3 years. It is being acquired on an 8.3% EPRA net initial yield (equating to €538 per m2 of capital value) and is expected to complete in October 2016.
The second business park, in Wiesbaden, represents a GLA of 19,602 m2 and will cost €17.7 mln. 64.6% of the office space is let to three tenants paying an annual rental income of €1.88 mln (equating to €7.99 psm) with a weighted average lease length remaining of 2.7 years. The business park is being acquired on a 9.1% EPRA net initial yield (equating to €901 per m2 of capital value) and is expected to complete in October 2016.
The purchase costs will be met in part by funds raised from the private placement, with the balance funded by a new €70 mln banking facility with BerlinHyp, expected to have with a seven year term and an interest rate priced at or around 1.6%.
The company said it still has circa €10 mln of cash from the June equity raise with which to fund further acquisitions.
