Sirius forms business parks joint venture with AXA Real Assets

Germany-focussed business park operator Sirius Real Estate has formed a real estate investment joint venture with clients represented by AXA Investment Managers Real Assets, it announced on Friday, in which AXA Real Assets would own a 65% interest, and Sirius would own the balance of 35%.

The London-listed firm said the joint venture would be called Titanium, and would initially be formed by AXA Real Assets acquiring a 65% stake in five single-asset special purpose vehicles from Sirius, through which Sirius currently owned two business parks located in Berlin - at Borsig and Tempelhof - and one in each of Mainz, Nurnberg and Bayreuth.

It said the business parks provided a combination of office, warehouse, industrial and storage space.

The implied property value of €168m equated to a gross yield for the portfolio of 6.2%, and reflected a premium to the last reported book value as at 30 September, which was €141.1m.

Total cash commitment from AXA Real Assets amounted to €43.9m.

The transaction was expected to generate total cash proceeds of more than €70m for Sirius, after refinancing and expected related costs.

Sirius said it had signed an agreement to continue the operation of the assets, using its fully-integrated operating platform, on a fee basis.

The joint venture could seek to acquire further assets in Germany, with a clearly defined-strategy that would not conflict with Sirius's existing business, the board said.

As a result of entering the joint venture, Sirius said it would have “significant resources” to invest both for itself and for the venture.

Through the newly-established relationship with AXA Real Assets, the company said it could be able to consider much larger assets and portfolios of assets, with a wider range of return profiles that it might previously have overlooked, or have been unable to pursue while allowing the company to derive further benefits of scale.

Proceeds from the transaction, together with additional lending, would provide Sirius with an estimated €140m of acquisition firepower to continue expanding its own portfolio.

“Sirius is delighted to be partnering with one of the world's largest real asset managers and the fact that Sirius is going into partnership with such an important institution as AXA IM Real Assets underlines the professionalism and expertise that has been developed within Sirius over the last five years in particular,” said Sirius Real Estate chief executive Andrew Coombs.

“The formation of this relationship represents an important opportunity for both parties and it will give Sirius key advantages in an increasingly competitive market and through the real estate cycle

“This will increase the company's ability to create value for both its investors and the JV from which the Company will benefit as both the manager and as an equity partner.”

John O'Driscoll, Europe head of transactions at AXA IM Real Assets, added that the transaction allowed his firm to invest in an “attractive” portfolio of assets, and provided it with “immediate scale” in the asset class in Germany - a geography that AXA Real Assets was actively growing in.

“This transaction also enables us to establish a long term joint venture with Sirius Real Estate, a leading operator and investor in branded business parks in Germany.

“We look forward to working with them on this portfolio and on future opportunities.”