Our core strategy is the acquisition of business parks in Germany which have either attractive yields, value-add potential, or both. Sirius transforms these business parks into higher-quality assets through investment and intensive asset management.
Once sites are mature and net income and values have been optimised, Sirius may then refinance the sites to release capital for investment in new sites or consider the disposal of sites in order to recycle equity into assets which present greater opportunity to deploy the Sirius team’s assset management skills.
There are five key value drivers:
- Active Portfolio Management – increasing rental and capital value through active portfolio management.
- Transforming and Converting Vacant Space - subdividing and improving existing space so that it can be marketed directly to occupiers using the different Sirius products.
- Occupancy and Rental Growth – transforming assets by delivering improvements to tenant mix, occupancy levels and rents.
- Improvement of Service Charge Recovery – delivering best-in-class cost recovery by utilising advanced measurement and cost allocation techniques.
- Growth Through Acquisition and Asset Recycling – optimising value and recycling equity into assets which present greater opportunity for active asset management.
The primary focus is on Germany’s seven largest cities: Berlin, Hamburg, Düsseldorf, Köln, Frankfurt, Stuttgart and München. With a secondary focus on a selection of key border towns such as Aachen, Saarbrücken, Mahlsdorf and Frieburg.
We look for mixed use properties, primarily light industrial units, business parks or office buildings outside city centres, or on the edge of towns, in neighbourhoods which have a high density of commercial and industrial activity and good transport links. By revitalising, providing and actively-managing the optimum spaces for our tenants, we help them expand, move and multiply.
Sirius harnesses its in-house asset and property management platform through a stringent acquisitions process. This is followed by an intensive capital investment and asset management plan which focuses on transforming vacant and sub-optimal space into high-quality conventional and flexible workspace.
The Sirius operating platform offers a number of benefits including, direct sourcing of new asset acquisition opportunities, reduced reliance on commercial agents and local brokers, higher cost recovery, greater lead generation and more efficient new tenant acquisition, increased optionality in terms of space configuration as well as enhanced control, focus and speed in developing space. Taken as a whole this means lower risk and higher returns.
When assets have been fully transformed some are held for their stable income and some are recycled into opportunistic assets with value-add potential. The type of asset that we acquire and develop to unlock potential can be divided into three categories:
- Traditional industrial business parks
- Modern mixed-use business parks
- Out of town office buildings
Traditional industrial business parks
Typically large production sites built many years ago by owner/occupiers and developed for their specific needs.
Modern mixed-use business parks
Typically higher quality office, service and warehouse properties built for multi-tenants in the 1980s and 1990s.
Typically good quality office buildings in secondary or tertiary locations near the big seven major office markets in Germany.
Titanium – Our Joint Venture
In August 2019, Sirius completed the ‘Titanium’ joint venture (JV) with AXA Investment Managers – Real Assets (AXA IM – Real Assets). You can read more about the detail of the JV here.
The JV will allow Sirius to accelerate delivery of our strategy. In previous years Sirius has focused solely on acquiring opportunistic assets, and whilst that will continue, because of the JV we are now also able to buy stabilised properties with lower vacancies and some new build potential.
With access to greater levels of capital, Sirius can now increase its volume of transactions, and complete transactions of greater size and value. Typically, we have purchased single assets, but now we are also able to purchase portfolios. There’s also a slight shift in the value of the assets we now consider. Generally, we want to stop buying assets that are going to be worth less than €10 million and increase the average value of assets we own to more than €20 million per asset. We will continue to focus primarily on out of town mixed-use light industrial assets and offices.