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
Sirius Real Estate Limited
("Sirius Real Estate" or the "Company")
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 Placing 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 Placing 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 Placing 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 Placing 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 Placing 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, 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 Placing Shares.
Members of the public are not eligible to take part in the Placing. 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 and the terms and conditions set out in the Appendix relates to the South African Placing, it is directed only at persons in South Africa who are persons who subscribe, as principal, for Ordinary 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), (b) or (c) 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 Placing relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.
By participating in the bookbuilding process and the Placing, 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.
