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Pre-Listing Announcement, Results Of Private Placement And Secondary Listing Of Sirius On The Altx of the JSE
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company Number: 46442
Share Code: SRE
ISIN Code: ISIN GG00B1W3VF54
(“Sirius” or “the Company”)
PRE-LISTING ANNOUNCEMENT, RESULTS OF PRIVATE PLACEMENT AND SECONDARY
LISTING OF SIRIUS ON THE ALTERNATIVE EXCHANGE (“ALTX”) OF THE JSE
LIMITED (“JSE”)
1. INTRODUCTION
Sirius is a leading operator and owner of multi-tenant, mixed-
use, branded business parks, providing conventional and flexible
workspace to the German property market. Sirius owns and
operates properties that are spread throughout Germany and over
the years has created a market-leading nationwide operating
platform to manage its property portfolio.
Sirius has its primary listing on the AIM Market of the London
Stock Exchange Plc (“AIM”). Sirius’s ordinary shares were
admitted to trading on AIM on 4 May 2007. AIM is considered to
be an “accredited exchange” as defined in the Listings
Requirements of the JSE. Sirius is not listed on any other
exchange.
The JSE has granted approval to Sirius for a secondary listing,
by way of the fast-track listing process, of all its issued
ordinary shares, being 632,257,837 ordinary shares, on the AltX
of the JSE in the “Real Estate Holding & Development” sector,
under the abbreviated name “Sirius”, share code “SRE” and ISIN
code GG00B1W3VF54, with effect from the commencement of trading
on Friday, 5 December 2014 (“Listing Date”).
In conjunction with the secondary listing of Sirius on the AltX
(“Listing”), Sirius has raised €40 million by private placement
of 105,263,158 ordinary shares (“Private Placement Shares”) at
an issue price of €0.38 cents per share (“Private Placement”),
in both South Africa and the United Kingdom. Sirius will have an
anticipated market capitalisation of approximately €238 million
on the Listing Date, subsequent to the issue of the Private
Placement Shares.
2. OVERVIEW OF SIRIUS
After its initial public offering on AIM in 2007, with
approximately €300 million of funds raised, the Company acquired
38 business parks in 2007 and 2008. The majority of these
acquisitions were initially financed with five year banking
facilities all of which expired in 2012 and 2013 and have
subsequently been refinanced. Sirius has invested in its
business parks through branding, changing use, reconfiguring and
upgrading space, in particular to appeal to the German SME
market, whilst retaining its key larger tenants.
Sirius was initially managed by an external vehicle owned by
Sirius’s founders and in January 2012 the management platform
was purchased by the Company and brought in-house thereby
aligning the interests of management with shareholders.
After the management internalisation, Sirius undertook a capital
restructuring, including refinancing its banking arrangements.
This involved (between 2012 and 2014) entering into new banking
facilities, disposing of 8 business parks and a number of land
packages as well as conducting two equity placements which
raised in aggregate €46.5 million. Consequently, the Sirius
group’s (“Group”) loan to value was reduced from 65% in March
2013 to 48% as at 30 September 2014. As at the same date, the
new banking facilities had an average term remaining of 4.8
years.
Today Sirius owns 30 business parks throughout Germany with a
combined book value of €459 million, of which one has been
notarised for sale and two other non-core sites remain for sale.
The Company has an adjusted net asset value, which excludes the
provision for deferred tax and derivative financial instruments,
of €247 million or €0.473 cents per share, a market
capitalisation (at its closing price as at close of business on
27 November 2014) of approximately €198 million (representing a
19.8% discount to adjusted net asset value) and is now
generating funds from operations (“FFO”) of approximately €12.4
million per year (annualised for the 12 months ended 30
September 2014). The above excludes the proceeds and the effects
of the Private Placement.
3. PROPERTY PORTFOLIO
Sirius has a diversified property portfolio with approximately
one million square metres (“sqm”) of lettable space. The
portfolio is currently valued by Cushman & Wakefield at €463.6
million and has a book value of €459 million after director
write-downs and adjustment for rent-free provision accounting.
The current annual rental and ancillary income generated from
the full portfolio is approximately €43 million, which
translates to approximately €36 million net operating income,
after irrecoverable service charge costs and landlord
maintenance costs are subtracted. The core portfolio is valued
with a net yield of 8.1% (based on rental income less service
charge, irrecoverable costs and landlord maintenance, divided by
valuation). The current vacancy of the core portfolio is 20%, of
which approximately 3% is structural vacancy, 9% is space which
requires investment before it can be let and 8% is the running
void of space which is ready to let.
A summary of the key statistics of the current portfolio as at
30 September 2014 are as follows:
Business Parks 30
Property Value €459.0m
Net Lettable Area sqm 1.0m
Annual Rent (excluding
ancillary income) €42.2m
Average Rate m² € 4.53
Occupancy 76%
Occupancy of core portfolio^ 80%
^ Excludes three non-core sites that will be disposed of in due
course.
The usage split by revenue of the current portfolio as at 30
September 2014 is as follows:
Office 30%
Industrial/Storage 55%
Other 15%
The current split of Sirius’s rental income between the top 50
tenants and the flexible high-yielding tenants, as at 30
September 2014, is as follows:
% Total
No. of Occupied Annual Rent Annual Rate Per
Tenants sqm Rent sqm
Top 50
Tenants 50 477,245 €25,595,217 61% €4.47
SmartSpace
Tenants 949 34,615 €2,498,157 6% €6.01
Other
Tenants 1,429 264,230 €14,060,747 33% €4.43
Total 2,428 776,091 €42,154,121 100% €4.53
The current split of income between usage, as at 30 September
2014, is as follows:
Total Occupied Annual % Rate
Available Sq Mt Occupancy % Rent Total Per Sq
Sq Mt Annual Mt
Rent
Office 221,158 169,525 76.65% €11,311,145 27% €5.56
Storage/Produ 635,883 496,330 78.05% €22,241,204 53% €3.73
ction
SmartSpace 69,317 34,615 49.94% €2,498,157 6% €6.01
Other 92,634 75,621 81.63% €4,338,899 10% €4.78
Non Occupancy
Related - - - €1,764,716 4% -
Total 1,018,992 776,091 76.16% €42,154,121 100% €4.53
4. ACQUISITION PORTFOLIO
The funds raised in the Private Placement will be used to fund,
in part, the acquisition of a 5 asset portfolio comprised of
mixed use business parks for a total acquisition cost of €75.6
million, in respect of 4 of which agreements have been reached,
due diligence successfully completed but which agreements are
subject to outstanding conditions precedent and formal
completion and in respect of the fifth property, negotiations
are ongoing (“Acquisition Portfolio”). A term sheet with the
Company’s existing bankers relating to a new debt facility of
€36.0 million for 5 years at an initial all-in fixed interest
rate of less than 3% has been secured to fund the Acquisition
Portfolio alongside the Private Placement proceeds.
5. FINANCIAL EFFECTS OF THE PRIVATE PLACEMENT AND THE ACQUISITION
OF THE ACQUISITION PORTFOLIO
The Acquisition Portfolio has a current net initial yield of
8.1% (based on the total purchase price plus costs other than
financing costs), a vacancy of approximately 17.1%, a cash on
cash yield of 12.9%, a current recurring rental income of €6.8
million, a recurring net operating income of €6.1 million per
annum and a weighted average lease length remaining (WALE) of
3.9 years. The acquisition is expected to be immediately 16.4%
accretive to earnings and dividends per share and only 1.5%
dilutive to adjusted net asset value per share after factoring
in the uplift from the Cushman & Wakefield valuation of the
Acquisition Portfolio over its total cost of acquisition. The
Acquisition Portfolio has a total lettable area of 111,476 sqm.
Three of the properties in the Acquisition Portfolio are located
on the outskirts of Berlin, one is in Bonn adjacent to an
existing Sirius site and one is located in a new location for
Sirius in Aachen near the Dutch and Belgian border. The
directors believe that there is potential for significant value
creation in the Acquisition Portfolio over the next few years.
6. ASSET MANAGEMENT
The Sirius asset management capabilities have taken many years
to develop and are now one of the key assets of the business,
providing Sirius with a competitive advantage over its
competitors. Sirius directs its focus towards multi-tenant,
mixed-use properties which most others in Germany struggle to
manage effectively. The key element is the fact that most of
its property management responsibilities are performed
internally by Group employees with very little reliance on
external suppliers. This is necessary due to the high level of
detailed, management intensive functions required to manage this
asset class effectively.
The Group’s asset management platform includes 165 employees and
focuses on the following:
• Marketing and multi-letting up vacant space as well as newly
created space and renewing existing tenants at higher rental
rates – undertaken by a dedicated lettings, renewals and
marketing team;
• Lease creation, debt collection and all legal issues –
undertaken by legal & debt collection teams;
• Comprehensive financial reporting – internal reporting as
well as statutory and bank reporting – undertaken by the
finance team;
• Effective service charge recovery where the percentage
recovery of costs is higher than the occupancy rate –
undertaken by a dedicated service charge team in conjunction
with the finance team;
• Facility & utilities management including the control of
supply & purchasing, metering, allocation and recovery –
undertaken by on-site operations and regional operations
managers;
• Sourcing appropriate properties off-market or through
intermediaries fitting all necessary criteria – undertaken
by a dedicated acquisitions team; and
• Creating and building innovative workspace solutions within
the acquired business parks to cater for local demand –
undertaken by a dedicated development & marketing team.
7. BANK FACILITIES
Sirius and its subsidiaries (“the Group”) have entered into four
bank facilities totalling €222 million and a convertible bond
with a face value of €5 million. The bank facilities expire
between January 2017 and July 2023 and have an average unexpired
term of 4.8 years. The average cost of debt is currently
approximately 4.6%.
The first facilities due for renewal are two with Macquarie Bank
(due for renewal in January 2017), which currently total €57
million, and which the Company believes can be refinanced on
better terms which if achieved will reduce the average cost of
debt of the Group.
8. DIVIDEND POLICY
The Company has adopted a policy of paying 65% of FFO in each
financial year as a cash dividend with a scrip alternative. The
dividend is paid on a semi-annual basis. The dividend declared
for the six months ending 30 September 2014 was 0.77 cents per
share.
9. PROSPECTS
Following the completion of the internalisation of Sirius’s
management and capital restructuring, optimisation of its
portfolio and further advances to its operating platform, the
opportunities for income generation and value enhancement are
compelling.
Sirius is firmly established as one of the leading operators of
business parks in Germany, with strong support from equity and
debt funders even with the backdrop of difficult European real
estate markets brought about by the global financial crisis, the
European sovereign debt crisis and resultant economic and
funding constraints. Given the success Sirius has had in funding
its business, strengthening its capital structure and reducing
its cost of capital, the Sirius board of directors believe in
its ability to fund future growth, both organic and acquisitive.
Listing on the AltX should further enhance this. The Company
has historically been well supported by South African investors
while equity and debt funding conditions have been difficult in
Europe and it is expected that this support will be enhanced
with its AltX listing.
Considering the progress that the Company has made over the last
5 years and the significant growth opportunities available to
it, the future prospects of the Company are encouraging.
10. RATIONALE FOR THE SECONDARY LISTING ON THE ALTX
The rationale for the secondary listing on the AltX is to:
- raise capital to fund, in part, the acquisition of the
Acquisition Portfolio alongside the new debt facility;
- increase the liquidity and tradability in the Company’s
shares;
- give existing and new South African investors an opportunity
to participate in the Company’s income and value generation
potential;
- provide South African investors with an additional local
platform to invest and trade in the Company’s shares; and
- further diversify the Company’s shareholder base.
11. RESULTS OF PRIVATE PLACEMENT
In terms of the Private Placement that closed on 26 November
2014, Sirius successfully placed a total of 105,263,158 ordinary
shares, representing 20% of the Company’s current issued share
capital (excluding treasury shares), of which 90,008,658 Private
Placement Shares were placed on the South African register and
the balance onto the United Kingdom register at an issue price
of €0.38 cents per share, for an aggregate subscription amount
of €40 million. All ordinary shares will be eligible for trading
on both AIM and AltX provided they are on the UK or South
African register respectively at the time of trading. All
ordinary shares are fully fungible and may therefore be
moved from one register to the other for purposes of trading,
save for any exchange control restrictions that may be
applicable.
The Company received applications for a total subscription
amount of €71.9 million and the board is pleased that the
Private Placement was well oversubscribed.
Successful applicants will be notified of their allocations on
Monday, 1 December 2014.
12. SECONDARY LISTING ON THE ALTX OF THE JSE
The financial surveillance department of the South African
Reserve Bank has approved both the secondary listing of Sirius
and the Private Placement.
The JSE has granted Sirius a secondary listing, by way of the
fast-track listing process, of all its issued ordinary shares on
the AltX of the JSE in the “Real Estate Holding & Development”
sector, under the abbreviated name “Sirius”, share code “SRE”
and ISIN code GG00B1W3VF54 with effect from the commencement of
trade on the Listing Date.
13. COMPANY INFORMATION
The Company was incorporated under the Companies (Guernsey) Law
1994, as amended, under number 46442 on 20 February 2007, with
its registered address situated at PO Box 119, Martello Court,
Admiral Park, St Peter Port, Guernsey GY1 3HB, Channel Islands.
The Company is not registered as an external company in South
Africa. Following its management internalisation and corporate
restructuring, Sirius confirmed with the Guernsey Financial
Services Commission (“GFSC”) that it no longer required
registration as an authorised collective investment scheme. At
the Company’s request the GFSC withdrew its registration with
effect from 17 June 2014.
The Company has its financial year-end at 31 March.
The Company has appointed Computershare Investor Services
Proprietary Limited (Registration Number 2004/003647/07) as its
transfer secretaries in South Africa with its main place of
business at Ground Floor, 70 Marshall Street, Johannesburg,
2001. The Company has appointed Capita Asset Services (a trading
name of Capita Registrars Limited) (Registration Number 2605568)
as its Registrar in the United Kingdom with its main place of
business at The Registry, 34 Beckenham Road, Beckenham, Kent BR3
4TU, United Kingdom.
14. SHARE CAPITAL
The authorised and issued share capital of Sirius prior to the
Private Placement is as set out in the table below:
Number of shares
Authorised share capital
Ordinary shares of no par Unlimited
value
Issued and fully paid
Issued ordinary shares 522,012,895
Issued ordinary shares held in 4,981,784
treasury
526,994,679
The authorised and issued share capital of Sirius on Listing
Date, after the issue of the Private Placement Shares will be as
set out in the table below:
Number of shares
Authorised share capital
Ordinary shares of no par Unlimited
Issued and fully paid
Issued ordinary shares 627,276,053
Issued ordinary shares held in 4,981,784
treasury
632,257,837
On the Listing Date all shares in issue, including those issued
in the Private Placement, shall rank pari passu with each other
in all respects, including in respect of voting rights,
dividends and other distributions declared after the Listing
Date and none will have any restrictions in relation to
transferability. The Private Placement Shares will not be
eligible to receive the dividend or participate in the scrip
dividend alternative in relation to the interim dividend
declared in respect of the six months ending 30 September 2014.
15. FINANCIAL INFORMATION
All relevant historical financial information of the Company is
available on the Company’s website (www.sirius-real-estate.com
/investor-relations/financial-information/).
Set out below are the basic, diluted, adjusted and headline
earnings (as defined in terms of The South African Institute of
Chartered Accountants Circular 2/2013) per share of Sirius for
the six months ended 30 September 2014 and the twelve months
ended 31 March 2014:
(Unaudited) (Unaudited)
six months six months (Audited)
ended ended twelve
30 30 months ended
September September 31 March
2014 2013 2014
€000 €000 €000
Earnings
Basic earnings 12,637 10,283 28,927
Diluted earnings 12,762 10,283 29,184
Headline
Basic earnings 12,637 10,283 28,927
Add back revaluation surplus,
net of related tax (9,212) (4,679) (21,171)
Add back (gain)/loss on sale of
properties (1,084) 336 1,687
Headline earnings 2,341 5,940 9,443
Add back change in fair value
of derivative financial
instruments 2,567 (81) 128
Add back non-recurring items (49) 852 1,235
Adjusted earnings 4,859 6,711 10,806
Number of shares
Weighted average number of
ordinary shares for the purpose
of basic earnings per share 520,244,292 328,708,966 395,758,526
Weighted average number of
ordinary shares for the purpose
of diluted earnings per share 541,077,625 349,542,300 416,591,859
Weighted average number of
ordinary shares for the purpose
of headline and adjusted
earnings per share 520,244,292 328,708,966 395,758,526
Basic earnings per share 2.43c 3.13c 7.31c
Diluted earnings per share 2.36c 2.98c 7.01c
Headline earnings per share 0.45c 1.81c 2.39c
Diluted headline earnings per
share 0.46c 1.74c 2.30c
Adjusted earnings per share 0.93c 2.04c 2.73c
The number of shares has been adjusted for the 4,919,284 shares
held by the Company as Treasury Shares.
In addition to costs for the migration of the Company’s tax
domicile from Guernsey to the UK (€124k), land tax charges for
prior years (€88k) and fees associated with refinancing (€14k),
the non-recurring items include costs for shares issued under
the long-term incentive scheme (€227k) and interest income
received from prior years (€502k). The directors have chosen to
disclose adjusted earnings per share in order to provide a
better indication of the Group’s underlying business
performance; accordingly, it excludes the effect of non-
recurring items, deferred tax and revaluation surpluses and
deficits on investment properties and derivative instruments.
Set out below is the net assets per share of Sirius as at 30
September 2014 and at 31 March 2014:
(Unaudited) (Unaudited)
30 30 (Audited)
September September 31 March
2014 2013 2014
€000 €000 €000
Net assets
Net assets for the purpose of
assets per share (assets
attributable to the equity
holders of the Parent) 238,123 167,936 226,280
Deferred tax arising on 6,566 3,172 4,200
revaluation of properties
Derivative financial
instruments 2,228 116 (504)
Adjusted net assets
attributable to equity holders
of the Parent 246,917 171,224 229,976
Number of shares
Number of ordinary shares for
the purpose of net assets per
share 522,075,395 349,750,547 518,900,307
Net assets per share 45.61c 48.02c 43.61c
Adjusted net assets per share 47.30c 48.96c 44.32c
The number of shares has been adjusted for the 4,919,284 shares
held by the Company as Treasury Shares.
Save as disclosed in the half year results for the six months
ending 30 September 2014, any shares which are required to be
issued pursuant to the scrip dividend alternative in respect of
the interim dividend declared in respect of the six months
ending 30 September 2014, the 1,575,641 shares issued pursuant
to the scrip dividend alternative in respect of the final
dividend for the financial year ended 31 March 2014 and the
Private Placement, no significant change in the financial or
trading position of Sirius has occurred since 31 March 2014, the
end of the last financial period for which audited financial
statements of the Company have been published.
16. SIRIUS DIRECTORS
The full names, ages, business addresses and capacities of the
directors of Sirius are provided below:
Full name Age Capacity Business Address
Andrew James 49 Chief Lennestr 3, Berlin
Coombs executive 10785, Germany
officer
Alistair Brian 45 Chief Lennestr 3, Berlin
Marks financial 10785, Germany
officer
Robert Archibald 65 Non-executive Trafalgar Court
Gilchrist chairman 2nd Floor, East Wing
Sinclair Admiral Park
St Peter Port
Guernsey
GY1 3EL
Rolf Elgeti 38 Non-executive Obotritia Capital
director KGaA
Foersterweg 2
14482 Potsdam
Wessel Johannes 41 Non-executive 26 Throgmorton
Hamman director Street, London,
United Kingdom, EC2N
2AN
Andrew James 44 Non-executive 63 Grosvenor Street,
Peggie director London W1K 3JG
17. MAJOR SHAREHOLDERS
The following shareholders will, directly or indirectly,
beneficially hold more than 5% of the issued share capital of
the Company on the Listing Date:
Shareholder Number of shares % of the issued
share capital
Karoo Investment Fund 128,611,451 20.5%
Premier Fund Managers Ltd 49,493,547 7.9%
Taube Hodson Stonex 38,133,473 6.1%
Partners
Total 216,238,471 34.47%
Note: Excluding treasury shares
18. DIRECTORS’ STATEMENTS
The directors of Sirius have no reason to believe that the
working capital available to the Group will be insufficient for
at least 12 months from the Listing Date.
The directors of Sirius hereby confirm that Sirius has, to the
best of their knowledge and belief, adhered to all legal and
regulatory requirements of AIM.
19. SALIENT DATES RELATING TO THE PRIVATE PLACEMENT AND THE LISTING
The salient dates relating to the Private Placement and the
Listing are set out below:
Results of the Private Friday, 28 November 2014
Placement released on SENS
on
Publication of the pre- Friday, 28 November 2014
listing announcement
Notification of allotments Monday, 1 December 2014
on
Anticipated listing date on Friday, 5 December 2014
the AltX
Accounts at CSDPs or brokers Friday, 5 December 2014
updated and CREST accounts
credited in respect of the
Private Placement Shares at
the commencement of trade on
the AltX and on AIM
Note: The above times and dates are subject to change. Any
such change will be notified on SENS.
20. AVAILABILITY OF DOCUMENTS
Documents, such as financial statements, public announcements
and investor presentations which Sirius has made public over the
last two years and the constitutional documents of Sirius are
available on the Company’s website at www.sirius-real-
estate.com/investor-relations/.
Guernsey
28 November 2014
Transaction adviser, sole bookrunner and sponsor in relation to the
listing on AltX and the Private Placement in South Africa: PSG
Capital (Pty) Ltd
Sole bookrunner and nomad in relation to the AIM Rules and private
placing in the UK: Peel Hunt
Legal Adviser as to English and South African law: Norton Rose
Fulbright
Date: 28/11/2014 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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