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29 May 2008 07:00
Dawnay, Day Sirius announces the acquisition of the Siemens Gewerbepark Portfolio of 5 business parks for €98m and the acquisition of two business parks in Kassel and Pfungstadt for €17.9m.
Dawnay, Day Sirius Limited (the "Company"), the real estate company established to acquire large mixed-use commercial real estate in Germany for upgrading to flexible workspaces, is pleased to announce that it has agreed to acquire five large industrial and commercial sites located in Munich, Nuremberg, Offenbach, Hannover and Berlin for a combined purchase price of €98 million. The net initial yield is 8.2% with a current occupancy rate of 89%, however, each site has opportunities for further development and in the case of Berlin, where occupancy is only 33%, for substantially increasing occupancy levels.
The portfolio is being acquired from Siemens who will continue to occupy 47.8% of the current total lettable space creating a secure and strong rental base for the next 5 years, the remaining space is let to in excess of 30 tenants, leaving 19,840 sqm vacant on acquisition for immediate upgrading and transformation to flexible workspace. The Company has already identified over 24,000 sqm of surplus land for new build, lease expiries will generate further opportunities for upgrading and increasing existing rents, and the management team are confident of introducing new tenants in conjunction with the Sirius "transformation" of the portfolio.
In addition, the Company is also pleased to announce it has separately agreed to acquire two freehold business parks in Kassel and Pfungstadt for a purchase price of €17.9 million. The net initial yield is 7.7% with a current occupancy rate of 94.2%. We have also agreed to acquire a smaller business park in Dusseldorf for €5.5 million, which is situated in a strong location and it is our second site in this city.
All eight sites are situated in excellent locations which will help to further increase the Company's market recognition within Germany. It is intended that each business park will be re-branded and where appropriate upgraded into modern flexible workspaces to be leased predominantly to small and medium sized enterprises ("SMEs"). These acquisitions significantly advance the Company in its objective to become the leading operator of business parks in Germany.
The Siemens acquisition will be funded through a mix of cash and a new debt facility for which credit approval has been received. The acquisition of the Kassel, Pfungstadt and Dusseldorf sites will be funded initially with cash. In addition the Company has drawn down €101 million on a new facility with Berlin Hyp. This facility is secured against the seven acquisitions the company made in 2007 post the initial portfolio.
Following these transactions, the Company has made good progress towards its' full investment target of €750 million having now acquired approximately €530 million of German property assets. Against these assets the Company will have total borrowings of €280 million which equates to a loan to value ("LTV") ratio, based on the proforma balance sheet before 31 March 2008 revaluation, of 53%. The Company anticipates that it will retain an LTV ratio at the lower end of the range set at IPO of between 60-80%.
Kevin Oppenheim, Chief Executive Officer of the Asset Manager said:
"These are strong additions to our growing portfolio, which will be immediately earnings accretive. With significant anchor tenants in place they will generate strong and stable cash flows providing us with the financial base to exploit their true potential. There exists substantial scope to increase rental values through re-banding and upgrading each site into flexible workspace for the growing SME market as well as providing significant opportunity for development on the 24,000 sqm of surplus land. These acquisitions further cement our position as the leading national operator of branded business parks for the German SME occupier market with 38 business parks in 26 locations across Germany. Looking ahead, we will continue to make acquisitions on a highly selective basis, avoiding sacrificing quality for quantity and choosing only those opportunities which can generate good returns for our shareholders."
Further Enquiries
Sirius Facilities Group Kevin Oppenheim 020 7861 0550
www.dawnaydaysirius.com Alistair Marks
JPMorgan Cazenove Robert Fowlds 020 7588 2828
Bronson Albery
KBC Peel Hunt Capel Irwin 020 7418 8900
Cardew Group Tim Robertson 020 7930 0777
Shan Shan Willenbrock
Catherine Maitland
Notes to Editors
The Company was admitted to AIM in May 2007 with an initial market capitalisation of €300 million. Its strategy is to acquire large mixed use commercial real estate in Germany suitable for upgrading into flexible workspaces for leasing to local business on a nationwide basis.
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