Sirius Real Estate PLC and AXA acquire business park in Augsburg

Sirius Real Estate PLC ()  the  Germany-focused business park owner, said its joint venture with insurance group AXA’s fund management arm has acquired the Sigma Technopark in Augsburg.

Titanium, the name of the joint venture, is acquiring the 113,000 square metre park for €80mln. The deal boosts the size of its portfolio to €317mln, almost double that when it launched in 2019.

The joint venture now has seven business parks, which are operated by Sirius, with the latest acquisition carried out through AXA IM Alts’ Real Assets platform.

Sigma Technopark is currently 90% let to 74 tenants ranging in size from blue-chip corporates and public bodies through to SMEs and start-ups.

Augsburg, in Bavaria, is in an area that is among the top logistics regions in Germany, noted Sirius Real Estate, and is a 30-minute drive from Munich.

In a statement, Andrew Coombs, Sirius Real Estate’s chief executive, said: “This acquisition is a great example of the type of assets in which we want to invest alongside AXA IM Alts in the Titanium joint venture. 

“It is a well located, large scale business park which offers both good quality day one income as well as an opportunity to grow rental income and create value through asset management.”

German industrial property demand healthy says broker

Berenberg notes that the net initial yield on the business park is 6.0%  and Sirius’s stake in JV is 35%.

Sirius, which receives various fees for sourcing and managing the fund’s assets, believes that there is potential to increase rents and the value of the property through capex investment.

The German broker adds that the new property is a good fit with the fund’s investment criteria, which are predominantly focused on sourcing stable, larger-than-average business parks with low vacancy rates rented to high-quality tenants.

With Augsburg, Sirius has carried out deals worth around €120m this year including the purchase of three properties in Norderstedt, Nuremberg and Mannheim for its own portfolio, announced on 4 January.

“The JV with AXA enables Sirius to widen its investment activities, although we note that the acquisition criteria for the fund and for its own portfolio are different, due to different return expectations.”

 As Sirius has increased its own portfolio’s regional and sector diversification in recent years, we would thus expect the company to see a larger deal flow overall, Berenberg said.

Letting volumes in the German logistics market reached 2.9m sqm in 2020 according to the advisor Colliers, which is an increase of 17% year-on-year, notes the broker.

Driven particularly by owner-occupied projects, the strongest uplift was in Munich (+62%), Cologne (+57%), Hamburg (+45%) and Leipzig (+35%).

Also, the levels of prime and average rents improved, particularly in Düsseldorf (8%), and with demand from occupiers still solid compared to the rather low new supply.

Berenberg, which has a buy rating and a price target of 100p, believes the positive trend of increasing rents and values will continue this year.

Shares rose 2.4% to 88.6p.

— adds share price, broker comment —