Sirius completes jv with AXA Investment Managers
1 August 2019
Sirius Real Estate Limited
("Sirius Real Estate", "Sirius" or the "Company")
Sirius completes German business park joint venture with AXA Investment Managers - Real Assets
Sirius Real Estate, the leading operator of branded business parks providing conventional space and flexible workspace in Germany, announces that, further to its announcement on 1 March 2019, having fulfilled all the closing conditions, it has completed the formation of the Titanium real estate investment joint venture (the "JV" or "Titanium" ) with clients represented by AXA Investment Managers - Real Assets ("AXA IM - Real Assets").
Titanium has been formed through the acquisition by AXA IM - Real Assets, on behalf of its clients, from Sirius, of a 65% stake in five business parks across Germany, of which two are located in Berlin (Berlin Borsig and Berlin Tempelhof) and the remainder in Mainz, Nurnberg and Bayreuth. Sirius will retain the remaining 35%.
The ongoing operation and management of the assets contained in the JV is governed by an Operational Management Contract, which ensures Sirius will continue to act as operator of the assets, on a fee basis. The JV will also be able to draw on the expertise of AXA IM - Real Assets' team of local in-house experts.
Sirius has provided guarantees and warranties to AXA IM - Real Assets which are customary for a transaction of this nature. The transaction also includes standard drag-along rights in favour of the majority shareholder, as well as tag-along rights in favour of Sirius, and dispute resolution clauses. The business parks forming the JV provide a combination of office, warehouse, industrial and storage space. The implied property value of €168 million equates to a gross yield for the portfolio of 6.2% and reflects a premium to the book value as at 30 September 2018, being the last valuation date prior to the transaction being agreed, which was €141.1 million. Following the refinancing of the JV portfolio with a loan of €84 million at a fixed interest rate of 1.38%, the total cash commitment from AXA IM - Real Assets amounts to €43.9 million. The transaction is expected to generate total cash proceeds of more than €70 million for Sirius after refinancing and expected related costs.
Subject to suitable investment opportunities, AXA IM - Real Assets and Sirius may consider opportunities to grow the JV's portfolio primarily through the acquisition of larger stabilised business park assets and portfolios of assets with strong tenant profiles and occupancy. Sirius will continue to grow its wholly owned portfolio through acquisitions of more opportunistic assets, where it can capitalise on its asset management expertise to maximise utilisation of the space, grow occupancy and improve quality of the tenants. The strategies have been clearly defined so that the JV will not conflict with Sirius's existing business.
Andrew Coombs, Chief Executive Officer of Sirius Real Estate, said: "To be partnering with such an important institution as AXA IM - Real Assets underlines the professionalism and expertise within Sirius. The relationship represents a major opportunity for both parties and gives Sirius key advantages in an increasingly competitive market and through the real estate cycle. This transaction boosts our ability to create value for both our shareholders and the JV, from which we will benefit as both the manager and as an equity partner."
John O'Driscoll, European Head of Transactions at AXA IM - Real Assets, commented: "Titanium provides us with immediate scale in an important and growing asset class through the acquisition of a majority stake in a highly attractive portfolio in Europe's largest economy, alongside a best in class operator. We now look forward to working with the team at Sirius to add further value to this portfolio and on future opportunities."
For further information:
Sirius Real Estate
Andrew Coombs, CEO/Alistair Marks, CFO
Tel: +49 (0)30 285010110
Berenberg (Joint Broker)
Chris Bowman/Toby Flaux/Marie Stolberg
Tel: +44 (0)20 3207 7800
Peel Hunt (Joint Broker)
Capel Irwin/Carl Gough/Harry Nicholas
Tel: +44 (0)20 7418 8900
Tavistock (Financial PR)
Jeremy Carey/James Verstringhe
Tel: +44 (0)20 7920 3150
Email: siriusrealestate@tavistock.co.uk
NOTES TO EDITORS
About Sirius Real Estate
Sirius is a property company listed on the main market and premium segment of the London Stock Exchange and the main board of the Johannesburg Stock Exchange. It is a leading operator of branded business parks providing conventional space and flexible workspace in Germany. The Company's core strategy is the acquisition of business parks at attractive yields, the integration of these business parks into its network of sites under the Company's own name as well as offering a range of branded products within those sites, and the reconfiguration and upgrade of existing and vacant space to appeal to the local market, through intensive asset management and investment. The Company's strategy aims to deliver attractive returns for shareholders by increasing rental income and improving cost recoveries and capital values, as well as by enhancing those returns through financing its assets on favourable terms. Once sites are mature and net income and values have been optimised, the Company may take the opportunity to refinance the sites to release capital for investment in new sites or consider the disposal of sites in order to recycle equity into assets which present greater opportunity for the asset management skills of the Company's team.
For more information, please visit: www.sirius-real-estate.com
Follow us on LinkedIn at https://www.linkedin.com/company/siriusrealestate/
Follow us on Twitter at @SiriusRE
LEI: 213800NURUF5W8QSK566
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