Sirius expands Germany portfolio, sells non-core UK asset

(Sharecast News) - Sirius Real Estate announced the expansion of its German portfolio on Thursday, with the acquisition of a light industrial property in Geilenkirchen for €12.9m, while also disposing of a non-core UK asset as part of its ongoing capital allocation strategy. The FTSE 250 firm said the German asset was acquired through a sale-and-leaseback deal with a precision engineering firm specialising in sheet metal processing.

It said the tenant had signed a triple net lease on the entire site, with the deal reflecting a net initial yield of 9.3% on a property less than 25 years old.

The site is located in the Euregio Maas-Rhine region, west of Düsseldorf and close to the Belgian and Dutch borders, an area known for its strong industrial base and economic resilience, partly supported by the presence of a NATO airbase in Geilenkirchen.

"This acquisition provides us with a well-located asset at an attractive yield and further strengthens our footprint in the Euregio Maas-Rhine industrial region," said chief executive Andrew Coombs.

"With Geilenkirchen being home to a key NATO airbase, it is also in line with our ambition of ensuring that Sirius' portfolio is well placed to benefit from an increased focus on defence investment, particularly following the news earlier this week that Germany's defence spending is now heading towards a new target of 5% of GDP."

Coombs added that, following on from the Reinsberg and Monchengladbach acquisitions announced earlier in the year, the new acquisition presented Sirius with another sale and leaseback opportunity in a strong location at an attractive yield.

"The purchase helps another business owner to extract value from its property assets while maintaining operations on site, while delivering strong income returns for the company."

Alongside the acquisition, Sirius said it had exchanged contracts to sell a non-core asset in Huddersfield for £1.55m to a private individual.

The sale price represented a 7% premium to the property's most recent book value, reflecting a disposal yield of 8.1% on standard purchaser costs.

Proceeds from the sale would be reinvested into higher-yielding opportunities across the group's portfolio.

Coombs said Sirius remained well positioned to pursue further accretive acquisitions in both Germany and the UK, supported by last year's equity raise, bond issuances, and a recently secured €150m unsecured revolving credit facility.

At 1317 BST, shares in Sirius Real Estate were down 0.1% at 96.15p.

Reporting by Josh White for Sharecast.com.