Sirius Real Estate said it has notarised the sale of its Rupert Mayer Str. business park in Munich for €85 million and has agreed to lease back and manage the asset for six years.

The Company also provides an update on progress being made towards the completion of two further disposals for €7.4 million as well as the acquisition of four further business parks for €34.9 million.

Sale of Rupert Mayer Str.

The Company continually reviews its portfolio with a view to disposing of mature and non-core assets and recycling equity into assets with higher opportunities, in order to increase total returns from the portfolio.

Over the eight years since the Rupert Mayer Str. site was acquired, Sirius’s asset management activity has increased net operating income from €4.4 million to €5.3 million with the value of the asset increasing by 48% from the €57.5 million it cost to acquire.

The asset was purchased from Siemens who occupied almost 100% of the site when acquired and subsequently completely vacated the business park. The Sirius asset management team has successfully filled the site with a mixture of conventional and flexible workspace leases and it is now 88% occupied.

The sale price of €85.0 million represents a 9% premium to Sirius’s book value of €78.1 million as at 30 September 2016 and an EPRA net initial yield for the purchaser of 5.7% (including acquisition costs).

The purchaser is Fiduciary Capital based in Munich. The sale has been structured as a sale and leaseback with a lease of six years, with a rent of c. €5.0 million per annum for the first five years and in the final year at a cost equal to the net operating income of the site. Sirius will continue to receive the net income of the site for the term of the lease which is currently at around €5.3 million.

There is a secured loan of around €42m outstanding on the asset for which Sirius has the option of repaying with a small penalty fee or substituting the Munich asset with other assets into the facility.

The leaseback enables Sirius to retain the difference between the rent it pays and the income from the site in addition to an annual management fee of €100,000 per year for the term of the lease. Completion is expected to be in April 2017.

Source: Sirius Real Estate