Sirius Real Estate’s share price increased 3.18% on the JSE Thursday after the owner of branded business parks said it had acquired a light industrial property in Geilenkirchen, Germany for €12.9 million (R267.4m).
The acquisition was in line with Sirius’ “strong acquisition pipeline,” the group management said in a statement. The share price increased to R23.37 on the JSE in the afternoon, continuing a rise in the price over three months, when it was trading at R20.19.
The acquisition comes a day after Sirius announced it had secured a new €150m unsecured revolving credit facility, with an initial three-year term, and with the option to upsize by up to an additional €100m.
The additional funding would allow the company to continue to take advantage of current market conditions and its strong acquisition pipeline, as well as managing cash balances efficiently as it passes through bond refinancing windows.
The Geilenkirchen asset was acquired by way of a sale-and-leaseback transaction, with a precision engineering business that specialises in processing sheet metal using laser technology, which had entered into a triple net lease on the entire property.
The acquisition reflected a net initial yield of 9.3% on a property that is less than 25 years old, Sirius’ management said.
The property is west of Düsseldorf, 33km from Sirius’ existing site in Aachen. In close proximity to the Belgian and Dutch borders, the area is one of Europe’s most dynamic economic regions, benefitting from a strong industrial base.
Meanwhile, as part of the ongoing UK portfolio optimisation, Sirius also exchanged contracts for the disposal of a small non-core asset in Huddersfield to an individual, for £1.55m. The transaction was concluded at a 7% premium to the asset’s most recent book value and reflected a disposal yield of 8.1%.
CEO Andrew Coombs said the acquisition provided them with a well-located asset at an attractive yield, and further strengthened their footprint in the Euregio Maas-Rhine industrial region.
He said with that Geilenkirchen also home to a NATO airbase, the acquisition may benefit from defence investment, particularly after news this week Germany’s defence spending would head towards a new target of 5% of GDP.
The acquisition follows the Reinsberg and Monchengladbach acquisitions announced earlier this year. “We have the flexibility and resources to continue to make accretive acquisitions at this opportune point in the market cycle,” said Coombs.
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