Germany-focused business park owner Sirius Real Estate is raising up to €20m by a private placement of new ordinary shares to fund various acquisitions.
The company, which plans to move to the JSE’s main board later this year, is in the process of acquiring a property portfolio in Germany.
The portfolio has all-in cost of up to €55.8m, of which €29.1m is in exclusivity, and €26.7m is under negotiation.
The real estate firm’s portfolio is expected to be acquired with a net initial yield of 8.1%, and would contribute about €5.3m to annualised rental income and €4.5m to the company’s net operating income.
Sirius is also planning to refinance an existing €39.6m facility that has an interest rate of 2.68%, and a 3.5-year remaining term, with a new €77m seven-year bank facility with an expected fixed interest rate of about 1.6% with the same financial lender.
The purchase of the acquisition portfolio will be met in part by the net funds raised from the private placement, and the balance will be funded by the proposed new banking facility under negotiation.
The portfolio was expected to increase the company’s annualised rental income to more than €68m. Overall, the acquisition portfolio was expected to generate an internal rate of return of more than 15% over the next five years.
"Our ability to acquire German mixed-use property portfolios yielding in excess of 8%, combined with the availability to us of seven-year debt at very low interest rates, creates an opportune time for the company to be expanding and locking in these valuable opportunities for our shareholders, for the longer term," said CEO Andrew Coombs.
"The potential acquisition portfolio, with a net initial yield of 8.1%, is attractive, and this has the potential for significant further improvement through the introduction of Sirius’s product range into the vacant space, which is around 33% of the total lettable space."
Coombs said he would like Sirius to move to the JSE’s main board from AltX in the fourth quarter of 2016.
Source: Business Day
