13/08/2007
German commercial property investment fund Dawnay Day Sirius is adding another cluster of business parks to its portfolio and expects to be fully invested by autumn next year.
The company’s strategy is to acquire large swathes of German commercial real estate and convert them into ‘flexible workspaces’ for small and medium enterprises (SMEs), known locally as Existenzgründungen. To this end, Dawnay Day raised €270m at float and is leveraging that cash with debt at generous German rates.
At IPO, the management stated their intention to build a £750m portfolio by around October 2008. With these five new transactions – providing an average net yield of 7.7% – poised to be completed for a combined €102.9m (£69.7m) it will take the total funds invested up to €336.1m.
Kevin Oppenheim, of the fund’s asset manager Dawnay Day Sirius Real Estate, believes that, based on a ‘strong’ pipeline of further acquisitions, the team is ‘confident’ of completing its stated plans on time. He adds that all five of the sites will be re-branded into ‘vibrant business parks’ under the Sirius brand to attract new and existing tenants.
Joint house broker Cazenove calculates that the shares are trading at a 12% discount to its forecast NAV for 2008 and yield a prospective 2.7% on its estimated dividend of 2.4c (1.6p) per share.
Through no fault of the company, the €0.90 shares are 10% below their May issue price, suppressed by macroeconomic concerns. Although the company looks good value, this uneasiness could hold the shares back, making any investment speculative.
| Market cap: | 295m |
| PE Forecast: | n/a |
| Share price: | 0.90 |
| AIM | 0pm |
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