Business park and storage warehouse owner Sirius Real Estate wants to raise about £145m (R3.3bn) to buy more buildings in the short-term by issuing new shares, after recently acquiring new properties in Liverpool, Barnsley and three in the north of London for about £45m.
“The directors believe that the conditions in those markets currently present a significant near-term pipeline of attractive acquisition opportunities, and the [proposed] capital raise will provide the flexibility to execute on that pipeline and replenish funds to use opportunistically following several acquisitions in recent months,” the company, valued at about R23.5bn on the JSE, said on Monday.
The company’s portfolio comprises 139 properties in the UK and Germany, valued at more than €2.1bn, and includes offices, storage and warehouses.
It has identified eight properties that meet its criteria of underutilised, multi-let mixed-use properties mostly outside city centres in areas that have high commercial densities, industrial activity and good transport links.
“Of the identified pipeline, four are based in Germany and would require about €85m of acquisition cost, and four are based in the UK and would require about £45m,” it said.
CEO Andrew Coombs said on Monday in an interview that now is one of the best times to buy property at low prices, which can grow in the long-term.
“If you sit on your hands right now and don’t buy at cheap prices, and become a victim of those high interest rates that lock in for the future, I don’t know how you can make money in this business,” he said.
The final terms of the offer will be determined by a bookbuilding process, which involves collecting bids from investors for how many shares they want to buy and what price they are willing to pay, which was launched after Monday’s announcement.
In SA, PSG Capital will be the bookrunner and placing agent.
In its results for the six months to end-September, funds from operations (FFO) increased 9.3% to €53m (R1bn) and 9.4% to 4.54c per share.
Revenue grew 7.3% year on year to €140.1m and net operating income rose 11.1% to €81.3m as high demand means it can hike rentals with little resistance from tenants.
Its total rent roll improved 9% to €184.2m and 7.7% on a like-for-like basis to €181.2m, and the dividend was 11.1%-higher at 3c per share at a payout ratio of 66% of FFO.
The 0.3 percentage point decline in total occupancy was offset by the average per square metre coming in 8.4%-higher at €8.42.
Loan-to-value (LTV), which measures the ratio of loans to the value of assets, improved 0.8 percentage points over the last six months to 40.8%.
“We recycled about €100m of assets through four post balance sheet transactions, making €47.4m of disposals in Germany and €52.9m of acquisitions in the UK, highlighting our ability to crystallise returns from our mature assets,” CEO Andrew Coombs said.
“We continue to be mindful of the uncertain market backdrop; however, our asset management and marketing initiatives continue to give us confidence in the group’s growth prospects,” he added.
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