Sirius Real Estate Regulatory News (SRE)

26 July 2019

Sirius Real Estate Limited

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

Sirius notarises two acquisitions totalling more than €50 million

Sirius Real Estate, the leading operator of branded business parks providing conventional space and flexible workspace in Germany, announces that it has notarised two acquisitions totalling €51.7 million including acquisition costs.

Alzenau

In Alzenau, 34km east of Frankfurt am Main, Sirius has acquired Alzenau Business Park for a total consideration of €44.5 million, to be settled in cash on closing, including expected acquisition costs of €2.5m which will produce an EPRA net initial yield of 7.9%. The acquisition will be funded using proceeds from recent asset recycling activity. The vendors are RWE Generation SE and GfV Gesellschaft für Vermögensverwaltung mbH represented by Innogy SE. The asset provides the Company with stable income from a well-diversified and covenanted tenant base.

The mixed-use property comprises eleven buildings constructed between 1985 and 2002 providing a total of circa 60,000 sqm of lettable space (47% warehouse/production space; 47% office space; and 6% other space) as well as 1,063 parking spaces on a total plot size of circa 197,000 sqm.

The asset is 93.5% let to 16 tenants with an annual total income of €4.1 million and annual net operating income of €3.5 million as at July 2019 based on figures made available by the vendor. The Company is satisfied with the quality of the figures provided by the vendor; however, shareholders are hereby informed that they are unaudited.

The asset has a weighted average rent of €5.51 per/sqm with a remaining WALT of 3.5 years. Tenants include Applied Materials, the global leader in materials engineering solutions for the semiconductor, flat panel display and solar photovoltaic industries; Bühler Alzenau GmbH, manufacturers of high-vacuum deposition equipment; and, Nukem Technologies GmbH, operating in the management of radioactive and hazardous waste, decommissioning of nuclear facilities as well as engineering and consulting services. There is also an 8,200 sqm plot of land let to Aldi until 2048 producing an annual income of €101,000.

The consideration of €42.0 million (excluding acquisition costs) payable in respect of the property is considered to be its fair market value, as determined by the directors of the Company as 25 July 2019. The directors of the Company are not independent and are not registered as professional valuers or as professional associate valuers in terms of the Property Valuers Profession Act, No. 47 of 2000.

Timetable

The transaction is expected to close and become effective after the last of the closing conditions have been fulfilled, which is anticipated in October 2019. The closing conditions are as follows:

1. The priority notice of conveyance (Auflassungsvormerkung) for the benefit of the Purchaser is registered in the land register;

2. The notary is in possession of:

• signed and sealed declarations by the authorities that statutory pre-emption rights do not exist or are not exercised;

• all other approvals, waivers or consents required for the validity and execution of the SPA, with the exception of the tax clearance certificate issued by the tax authorities;

• all declarations and approvals which are required to delete encumbrances in the land register which the Purchaser does not assume and enter post-completion;

3. Only regarding plot no. 6413/101 which is encumbered with a leasehold: The notary is in possession of a declaration by ALDI as the beneficiary of the leasehold that it does not exercise its registered right of first refusal to acquire this plot of land.

Bochum

In Bochum, a city in the Ruhr region of Germany, Sirius has notarised the acquisition of an office building for €6.7 million including expected acquisition costs of €0.6m reflecting an EPRA net initial yield of 5.5%. The acquisition, which will be settled in cash, will be funded using proceeds from recent asset recycling activity. The property is directly adjacent to the Company's 56,000 sqm Bochum Business Park acquired for €25.7 million in March 2019. As a result of the proximity of the asset to an existing site the Company benefits from a wider range of asset management options and operational synergies. The vendor is Häusser-Bau GmbH and completion is expected in September 2019.

The property, constructed in 1970, provides 4,200 sqm of lettable space (81% office space, 15% storage and 4% service space) and 71 parking spaces on a total plot size of circa 3,300 sqm. It is 100% let, producing an annual total income circa €428,000 and annual net operating income of €370,000 as of July 2019 based on figures made available by the vendor which management is satisfied with, reflecting a weighted average rent of €8.00 per/sqm with a remaining WALT of 2.2 years. The principal tenant is ThyssenKrupp Bilstein, a subsidiary of the giant ThyssenKrupp conglomerate which designs and manufactures shock absorbers.

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.

Commenting on the acquisitions, Andrew Coombs, Chief Executive Officer of Sirius Real Estate, said: "The acquisition of Alzenau Business Park is the largest single transaction since the current management took over at Sirius, reflecting a broader range of asset size as well as an increased strength in the pipeline since the announcement of the Titanium JV.

"We were attracted to this acquisition because of the opportunity to acquire it at an attractive running yield, which will support our strategy to grow our funds from operations. Furthermore, there is a good mix of long-standing tenants with strong covenants.

"Following on from the success of the other larger Bochum acquisition in March 2019, the acquisition of the adjacent property provides us with additional asset management possibilities as well as the opportunity to realise operational synergies."

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 July 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 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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