Sirius sells German industrial park, buys London portfolio

(Sharecast News) - Business and industrial property specialist Sirius Real Estate continued its asset recycling programme on Tuesday as it announced the disposal of an industrial park in Maintal, in Germany's southwest Hesse region, for €40.1m. The FTSE 250 company said the transaction represented a net initial yield of 5.7%, marking a successful exit strategy for Sirius.

It noted that it achieved the sale at about 6% above the last reported book value.

The Maintal industrial park, while offering little potential for further value creation for Sirius, had a strategic location that appealed to the purchaser.

Furthermore, Sirius, through its subsidiary BizSpace, completed the acquisition of a £33.5m portfolio comprising three assets in north London.

The assets are strategically situated in busy suburban areas, with two in the Borough of Islington and one in the Borough of Camden.

Collectively, the three assets encompass 103,962 square feet of primarily multi-let studio workspaces, with an occupancy rate just shy of 70%.

The board noted that the acquisition came with several promising aspects, including flexible leases and a weighted average unexpired lease term of 3.1 years.

It said the properties were well-maintained and boasted a diverse customer base, with the 10 largest customers occupying over 50% of the leased space.

Notably, the purchase price reflected a net initial yield of 7.3%, and with active asset management initiatives in place, it was expected to generate a running yield exceeding 10% at maturity.

"The Maintal disposal at a premium to book value has allowed us to capitalise on demand for this high quality property," said chief executive officer Andrew Coombs.

"The sale of this mature asset at a 5.7% net initial yield, coupled with the completion of our acquisition of the properties in London at a 7.3% net initial yield with only a 70% occupancy, represents a good example of our strategy of recycling capital from mature assets into those where we believe we can grow income and value through our operating platform."

Coombs said that in the current market, the company focused on improving rental levels and providing tenants with the flexibility and services needed.

"We are increasingly seeing attractive acquisition opportunities across both Germany and the UK and will continue to pursue our asset recycling activities to support the long term growth of the group."

At 1005 GMT, shares in Sirius Real Estate were up 0.35% at 86.5p.

Reporting by Josh White for Sharecast.com.