Sirius Real Estate unveils placing to fund German portfolio acquisiton

The group said the portfolio it was acquiring has an annualised rental income of approximately €5.4m and net operating income of €4.7m, while the portfolio will have a net initial yield of 8.1% and a vacancy rate of 16.4%.

Sirius said the acquisition will be partly met by an €18m bank facility the group was negotiating and by the share placing.

"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,” said group chief executive Andrew Coombs.

“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.”

Meanwhile, the group has also said it expected to repay its two most expensive loans in its debt portfolio.

The loans with Macquarie Bank are worth a combined €56m and will be replaced by a new 10-year facility, provided by an unnamed European bank, worth the same amount with a margin of 135 basis points over the three-month Euro Interbank Offered Rate.

The group said the refinancing is expected to result in annual interest saving of €2.4m and cashflow saving of €2m which, combined with the equity raise and acquisition, is expected to add 16% to Sirius' annual dividend per share and approximately 2.5% dilutive to net asset value per share.

Sirius shares were down 2.54% to 0.480p at 09:10 on Thursday.