Wrap Text
Private Placement Raising of up to €50 million, Proposed acquisition of €58 million mixed use German property portfo
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company Number: 46442
Share Code: SRE
ISIN Code: ISIN GG00B1W3VF54
("Sirius Real Estate" or the "Company")
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR
INTO THE UNITED STATES OR TO US PERSONS, AUSTRALIA, CANADA OR JAPAN OR ANY
OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION IS UNLAWFUL.
04 June 2015
Private Placement Raising of up to €50 million,
Proposed acquisition of €58 million mixed use German property portfolio and
Refinancing of €56 million existing bank facility.
Sirius Real Estate, the leading operator of branded business parks providing conventional and
flexible workspace to the German market, is pleased to announce the proposed raising of up to €50
million by a private placement (“Private Placement”) of new ordinary shares (“Private Placement
Shares”) to fund:
- the proposed acquisition of five mixed-use business parks (“the Acquisition Portfolio”) with an
all-in cost of €58.2 million, annualised rental income of approximately €5.4 million and net
operating income of €4.7 million on a total lettable area of 103,610 sqm. The Acquisition
Portfolio will have an overall net initial yield of 8.1%, a vacancy of 16.4% and a weighted average
lease length remaining of 3.6 years.
o The purchase of the Acquisition Portfolio will be met in part by the funds raised from the
Private Placement and the balance will be initially funded by an €18 million bank facility
currently under negotiation, with an expected fixed interest rate of around 2.5%.
- the early repayment of two Macquarie loans totalling €56 million. At the same time, the
Company intends to enter into a new ten year debt facility of €56 million with a margin of 135
bps over 3 month Euribor. This proposed new debt facility has been credit committee agreed by
a European bank which will become a new lender to the Group. The refinancing is expected to
result in:
o an annual interest saving of at least €2.4 million and a further cashflow saving of
approximately €2.0 million from the removal of the cash sweep and reduced
amortisation requirements.
o two non-core assets with a value of €25 million as at 31 March 2015, which are currently
being marketed for sale becoming unencumbered.
- The combination of the equity raise, acquisitions and refinancing is expected to be around 16%
accretive to the annual dividend per share and approximately 2.5% dilutive to NAV per share. It
will also see the Group’s LTV reduce to 46%.
Andrew Coombs, Chief Executive of Sirius, said, “The proposed acquisitions fit very well into our
existing portfolio and are located within key markets near Stuttgart and North Rhine Westphalia in
which we are looking to grow our presence. On completion these will generate immediate returns
for shareholders as we exploit the yield gap between the new portfolio’s cash generation and our
low cost of borrowings. As with the €71 million of acquisitions that we have completed since our
last equity raise of €40 million in December 2014, this portfolio presents significant opportunities for
Sirius to increase net operating income through our asset management initiatives including
expanding the tenant base and introducing our higher margin SME focused products. Over time we
also expect them to add further to the capital value of the portfolio.
The equity raising also provides us with the opportunity to replace the two most expensive loan
facilities in our overall debt package totalling €56 million with a long-term, low cost 10 year facility
which will result in significant annualised improvements to the Company’s earnings and cashflow.
Sirius as a Group is gaining momentum and we are looking forward to demonstrating the bottom
line benefits of the significantly enlarged business.”
Further details on the Private Placement
The Private Placement is being conducted, subject to the satisfaction of certain conditions, through a
bookbuild (the "Bookbuild") which will be launched immediately following this Private Placement
announcement (the "Announcement"). The Company expects to announce the results of the Private
Placement on Monday 8 June 2015.
Peel Hunt has been appointed sole bookrunner in respect of the UK element of the Private
Placement and PSG Capital has been appointed sole bookrunner in respect of the South African
element of the Private Placement.
Peel Hunt and PSG Capital will consult with the Company and in their absolute discretion will
determine potential participants in the Private Placement. Every participant in the Private
Placement will do so on and subject to the terms and conditions set out in the Irrevocable
Undertakings which each participant will be required to enter into in connection with his or her
agreement to subscribe for Private Placement Shares.
The Private Placement Shares will not be eligible to receive the final dividend of 0.84 Euro cents
declared in respect of the twelve months ending 31 March 2015 or to participate in the scrip
dividend alternative in relation to that dividend. The Private Placement Shares will rank pari passu in
all respects with existing issued shares of the Company including the right to receive all dividends
and other distributions declared after Admission.
Application will be made for the Private Placement Shares to be admitted to trading on the AIM
market of the London Stock Exchange Plc and to be listed on the ALTx of the Johannesburg Stock
Exchange ("Admission").
The Private Placement is conditional, inter alia, on Admission becoming effective. It is expected that
Admission of the Private Placement Shares will become effective and that dealings will commence in
the Private Placement Shares on or around 15 June 2015; at 8 a.m. (GMT) on AIM and at 9 a.m.
(CAT) on ALTx.
Further details on the Acquisition Portfolio
It is expected that around €40 million of the funds raised in the Private Placement together with an
€18 million loan facility currently under negotiation will be used initially to fund the €58.2 million
(all-in cost) purchase of the Acquisition Portfolio. Sale and purchase agreements have been
notarised and due diligence successfully completed for two of the five business parks comprising the
Acquisition Portfolio. These agreements remain however subject to outstanding conditions
precedent and formal completion. In respect of the other three business parks, due diligence has
also been successfully completed and exclusive negotiations are now at an advanced stage. We
would anticipate completion of the acquisition of the business parks to occur in the first half of the
current financial year, except for one which is expected to complete in December 2015.
The Acquisition Portfolio has an overall EPRA net initial yield of 8.1%, a vacancy of 16.4% and a
weighted average lease length remaining of 3.6 years. With the initial €18 million financing, the
Acquisition Portfolio will have an initial cash-on-cash yield of 11%, which would move to 12% if
financed to a 40% LTV or 13% at a 50% LTV. The Company will determine the appropriate level of
financing in light of potential further investment opportunities and its overall LTV objectives.
The Acquisition Portfolio currently generates recurring rental income of approximately €5.4 million
per annum and net operating income of €4.7 million on a total lettable area of 103,610sqm.
The five business parks are all in strong locations for Sirius – two are located in Stuttgart, one in the
greater Stuttgart region and two in North Rhine Westphalia. The business parks are being acquired
from four different vendors. The Directors believe there is also potential for significant value
creation over the next few years and with the assets being well located and of good quality, they
should provide the Company with greater flexibility in relation to future debt refinancing.
Further details on the Refinancing
The Company is also pleased to confirm that it has received a credit agreed term sheet to refinance
the two loan facilities with Macquarie Bank totalling €56 million. The loan facilities were due to
expire in January 2017. In accordance with the terms of the Macquarie facility agreements, an early
redemption will require the Company to pay all interest and exit fees that would be due on the loan
upon repayment. These payments along with other costs associated with the refinancing are
expected to amount to around €7.5 million. The Macquarie loans will be replaced with a much lower
cost, long-term 10 year facility from a new European bank lender to the Group, with an all-in fixed
interest charge expected to be less than 2.5%. As a result, the Company will generate an annual
saving of at least €2.4 million on interest costs and a further €2.0 million saving on the annualised
amortisation and cash sweep payments making a total ongoing annualised cash flow improvement
of some €4.4 million.
For further information:
Sirius Real Estate
Andrew Coombs, CEO +49 (0)30 285010110
Alistair Marks, CFO
Peel Hunt
Sole UK Bookrunner
Capel Irwin +44 (0)20 7418 8900
Hugh Preston
Jock Maxwell Macdonald +44 (0)20 7418 8960
PSG Capital
Sole SA Bookrunner
David Tosi +27 (0)21 887 9602
Willie Honeyball
Novella
Tim Robertson +44 (0)20 3151 7008
Ben Heath
Images of Sirius
https://www.flickr.com/photos/128710739@N05/
Company Website
www.sirius-real-estate.com
IMPORTANT NOTICE
Peel Hunt LLP ("Peel Hunt") which in the United Kingdom is authorised and regulated by the
Financial Conduct Authority, is acting solely for the Company in relation to the Bookbuild and Private
Placement and no-one else and will not be responsible to anyone other than the Company for
providing the protections afforded to clients of Peel Hunt nor for providing advice in relation to the
Private Placement or any other matter referred to in this announcement.
PSG Capital Proprietary Limited ("PSG Capital") is acting solely for the Company in relation to the
Bookbuild and Private Placement and no-one else and will not be responsible to anyone other than
the Company for providing the protections afforded to clients of PSG Capital nor for providing advice
in relation to the Private Placement or any other matter referred to in this announcement.
This announcement and the information contained herein is restricted and is not for release,
publication or distribution, in whole or in part, directly or indirectly, in or into the United States or to
US Persons, Australia, Canada or Japan or any jurisdiction into which the publication or distribution
would be unlawful.
This announcement is for information purposes only and does not constitute or form part of any
offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any
Private Placement Shares in the United States or to US Persons (as such term is defined in the US
Securities Act 1933, as amended (the "Securities Act"), Australia, Canada or Japan or any jurisdiction
in which such offer or solicitation would be unlawful. Any failure to comply with these restrictions
may constitute a violation of the securities laws of such jurisdictions. The securities have not been
and will not be registered under the Securities Act and may not be offered, sold or transferred,
directly or indirectly, within the United States or to US Persons unless registered under the Securities
Act except pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and the securities laws of any state or other jurisdiction of the
United States. No public offering of the shares referred to in this announcement is being made in the
United States, Australia, Canada or Japan or any jurisdiction in which such public offering would be
unlawful. No public offering of shares referred to in this announcement is being made in the United
States, the United Kingdom, South Africa, Australia, Canada or Japan or elsewhere.
The information in this announcement may not be forwarded or distributed to any other person and
may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction, or
disclosure of this information in whole or in part is unauthorised. Failure to comply with this
directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions.
This announcement includes statements that are, or may be deemed to be, "forward-looking
statements". These forward-looking statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates",
"expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or
comparable terminology. These forward-looking statements include matters that are not historical
facts. They appear in a number of places throughout this announcement and include statements
regarding the current intentions, beliefs or expectations of the directors ("Directors") of the
Company concerning, among other things, the Company's results of operations, financial condition,
liquidity, prospects, growth, strategies and the Company's markets. By their nature, forward-looking
statements involve risk and uncertainty because they relate to future events and circumstances.
Actual results and developments could differ materially from those expressed or implied by the
forward-looking statements. Forward-looking statements may and often do differ materially from
actual results. Any forward-looking statements in this announcement are based on certain factors
and assumptions, including the Directors' current view with respect to future events and are subject
to risks relating to future events and other risks, uncertainties and assumptions relating to the
Company's operations, results of operations, growth strategy and liquidity. Whilst the Directors
consider these assumptions to be reasonable based upon information currently available, they may
prove to be incorrect.
These forward-looking statements speak only as at the date of this document. Save as required by
applicable law or regulation, or by the AIM Rules, Prospectus Rules, the Disclosure and Transparency
Rules and the JSE Listing Requirements, none of the Company, its agents, employees or advisers
undertakes any obligation to update or revise any forward-looking or other statements, whether as
a result of any change in the Directors' expectations or to reflect events, conditions or circumstances
after the date of this announcement or otherwise and none of the Company, Peel Hunt or PSG
Capital or their respective directors, officers, employees, agents, affiliates and advisers, or any other
party undertakes or is under any duty to update this document or to correct any inaccuracies in any
such information which may become apparent or to provide you with additional information.
This announcement has been issued by and is the sole responsibility of the Company. No
representation or warranty, express or implied, is or will be made as to, or in relation to, and no
responsibility or liability is or will be accepted by Peel Hunt or PSG Capital or by any of their affiliates
or agents as to, or in relation to, the accuracy or completeness of this announcement or any other
written or oral information made available to or publicly available to any interested party or its
advisers, and any liability therefore is expressly disclaimed.
The price of shares and any income expected from them may go down as well as up and investors
may not get back the full amount invested upon disposal of the shares. Past performance is no guide
to future performance, and persons needing advice should consult an independent financial adviser.
The contents of this announcement are not to be construed as legal, financial or tax advice. If
necessary, each recipient of this announcement should consult his, her or its own legal adviser,
financial adviser or tax adviser for legal, financial or tax advice. Each placee should consult with its
own advisers as to legal, tax, business and related aspects of an acquisition of Private Placement
Shares.
Members of the public are not eligible to take part in the Private Placement. This announcement is
directed only at: (a) persons in the United Kingdom who are 'Qualified Investors' falling within the
meaning of article 2(1)(e) of the Prospectus Directive (which means Directive 2003/71/EC and
includes any relevant implementing directive measure in the UK) who (i) have professional
experience in matters relating to investments falling within article 19(5) ("Investment professionals")
of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the
"Order"); or (ii) fall within article 49(2)(a) to (d) ("High net worth companies, unincorporated
associations, etc") of the Order; or (b) persons to whom it may otherwise be lawfully
communicated. Insofar as this announcement relates to the South African Private Placement, it is
directed only at persons in South Africa who (i) fall within the categories of persons set out in section
96(1)(a) of the South African Companies Act or (iii) are persons who subscribe, as principal, for
Private Placement Shares at a minimum aggregate placing price of R1 000 000, as envisaged in
section 96(1)(b) of the South African Companies Act, 2008 (such persons being referred to as "South-
African Eligible Investors"). All such persons in contemplated in (a) or (b) and the South-African
Eligible Investors are together being referred to as "Relevant Persons"). This announcement must
not be acted on or relied on by persons who are not Relevant Persons. Any investment or
investment activity to which this announcement or the Private Placement relates is available only to
Relevant Persons and will be engaged in only with Relevant Persons.
By participating in the bookbuilding process and the Private Placement, placees and prospective
placees will be deemed to have read and understood this announcement in its entirety.
Neither the content of the Company’s website nor any website accessible by hyperlinks on the
Company’s website is incorporated in or forms part of this announcement.
Date: 04/06/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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