Sirius Real Estate Regulatory News (SRE)

14 March 2019

Sirius Real Estate Limited

("Sirius Real Estate", "Sirius" or the "Company")

Sirius completes acquisition of business park in Bochum

Sirius Real Estate, the leading operator of branded business parks providing conventional space and flexible workspace in Germany, has completed the acquisition of a business park in Bochum in the Ruhr region of Germany, for a total consideration of €25.7 million, equating to an EPRA net initial yield of 8.9%. The vendor is a fund managed by DOBA-Grund Beteiligungs, Munich, part of Doblinger Group, a German based development company. The acquisition, notarised in November 2018, has been funded using a combination of capital raised from the placing in March 2018 and a part of a €56 million, five year debt facility with a total all-in fixed interest rate of 1.4%, from pbb Deutsche Pfandbriefbank.

The business park consists of approximately 56,000 sqm of mixed use lettable space of which 65% is warehouse, 29% is office and 6% is other space. The site will initially generate €2.6m of gross rental income with 95% occupancy, let to 31 tenants including Pilkington, a subsidiary of the Japan-based NSG Group; and GfR, a telecommunication and call centre operator that is part of Thomas Cook Group.

The site was acquired with a high yield because Pilkington will be vacating the 26,600 sqm that it occupies at the end of its lease on 31 May 2019. However, Sirius has already signed a new lease commencing on 1 June 2019 on 12,600 sqm of the space being vacated, at a higher rent per sqm and with fixed annual uplifts. The new lease which terminates on 31 May 2026, has been taken by the Eickhoff Group, a global, family owned business which mainly manufactures machinery and gearing technology for the mining and wind turbine industries. Eickhoff will be taking immediate occupation.

Bochum is located mid way between Dortmund and Essen, in North Rhine-Westphalia, the third-largest urban area in the European Union. The property is well situated in Bochum-Hofstede, north of the city centre and within walking distance of a U-Bahn with easy access to the A40 and A43 motorways.

Andrew Coombs, Chief Executive Officer of Sirius Real Estate, said: "This acquisition is our first foothold in the important Ruhr area which is one the major industrial regions of Germany. With relatively low site density, a flexible multi-tenant structure, the opportunity to replace the exiting major tenant and stabilise the rent roll in an area where take up is robust and rents are growing, this site is an exciting value-add opportunity for Sirius.

"This acquisition plays to the strengths of our integrated business model and track record of generating tenant demand, maximising space usage and achieving management efficiencies.

"We have already generated strong interest in this park and believe re-letting of the balance of the Pilkington space will be achieved ahead of business plan."

For further information:

Sirius Real Estate

Andrew Coombs, CEO/Alistair Marks, CFO

Tel: +49 (0)30 285010110

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.

On 1 March 2019, Sirius announced that, in a transaction anticipated to complete in June 2019, it had formed a real estate investment joint venture with clients represented by AXA Investment Managers - Real Assets in which AXA acting on behalf of its clients, will own a 65% interest and Sirius will own the balance of 35%. The JV is called Titanium. The JV will initially be formed by AXA acquiring, on behalf of its clients, from Sirius a 65% stake in five SPVs through which it currently owns two business parks located in Berlin (Berlin Borsig and Berlin Tempelhof) and one in each of Mainz, Nurnberg and Bayreuth. The business parks 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 last reported book value as at 30 September 2018 which was €141.1 million. 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. 

For more information, please visit: www.sirius-real-estate.com

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