Sirius taps market for £150m to spend on acquisitions

Sirius Real Estate has raised £150m through a new share placing. The funds will be used to expand the group’s portfolio across the UK and Germany. The group is looking for mixed-use assets, primarily light industrial, business parks or office buildings on the edge or outside cities across the UK and Germany. German assets will typically have €10m to €50m site value, a higher vacancy and under-rented opportunity. While UK assets will typically comprise multi-let industrial, studios and workspaces of £5m to £30m site value with high gross yields and asset management potential. Sirius said it would also consider larger opportunities where appropriate to drive shareholder value. Once sites are mature and net income and values have been optimised, the group said it may take the opportunity to refinance sites to release capital for investment in new sites or consider the disposal of sites in order to recycle equity into assets which present a greater opportunity for asset management. Sirius said that its planning acquisition drives was based on its belief in a resilient and well diversified economy in Germany spread across several large autonomous markets, a strong SME market, high replacement costs for light-industrial buildings and levels of investment, provide a strong backdrop to pursue its organic and acquisitions-led growth strategy over the medium term. In the UK it said the market dynamics remained positive and were characterised by strong rental growth potential, UK government regional investment commitment, increased level of near-shoring, structural undersupply of UK multi-let assets and resilient market conditions for light industrial assets. The group said it had identified an indicative pipeline of attractive acquisition opportunities which meet the it acquisition criteria and was launching the capital raise to execute further on that pipeline into the medium term. Of the identified indicative near-term pipeline, two assets are located in Germany and would require approximately €32.9m to acquire, and three are in the UK and would require approximately £30.2m. There is an average investment size of approximately £11.6m across the indicative pipeline with a range of deal sizes from £8.9m to £15.7m and a range of net initial yields of 0.5% to 9.4% and occupancy rates of between 21% and 100%. The vendors of the assets are a mix of private sellers, private equity and corporate sellers.