As I write this we’ve recently published our latest trading update, in which highlights included continued rental roll growth and a strong balance sheet underpinning our business. This is also a time of ongoing macro uncertainty, so we’re pleased to once again demonstrate the resilience of our business model – part of which I want to explore in more detail in this blog.

Judicious assessment of opportunities to expand our portfolio of properties is a core driver of our growth and a pillar of our activity year-round, so in this blog I want to set out a little more detail about how we go about this, and some of the common threads we look for across markets in Germany and the UK.

What we look for

To recap, Sirius’ core strategy is the acquisition of business parks in Germany and the UK which have either attractive yields, value-add potential, or both.

Looking at this in more detail, we focus on three broad categories of business park: firstly, traditional industrial business parks, which are usually large production sites built many years ago by its original owners or occupiers and were developed for their specific needs.

Secondly, we also look at modern mixed-use business parks, which typically are higher quality office, service and warehouse properties built for multi-tenants in the 1980s and 1990s.

Finally, we also focus on out-of-town office buildings, which are office blocks of good quality in secondary or tertiary locations near major economic centres in Germany and the UK.

This brings me on to location, another key factor in our assessment of potential acquisitions. Germany and the UK are of course different markets with varying factors underpinning economic activity and therefore determining our target locations – but there are consistent themes that we look for in both markets.

In Germany, we focus on strategic locations: the top seven cities across the country, as well as a selection of key border towns where we can tap into tenant demand from both sides of the border.

In the UK our sites are in convenient, regional locations.

Across both, what’s important for us are a number of key factors: proximity to convenient transport links, and situation in or adjacent to neighbourhoods which have a high density of commercial and industrial activity.

You can take a look through an interactive map of our UK and Germany portfolio here.

Assessment of opportunities

Going beyond this, as you would expect we have a thorough process for assessing each potential acquisition opportunity.

There isn’t a one-size-fits-all approach, of course, and we undertake a painstaking review of each site that we may acquire before pressing ahead with an acquisition.

In Germany alone our investment team assessed nearly 1,000 opportunities resulting in a series of visits to 96 properties between April 2020 and March 2022, during which period we acquired 16 properties in Germany – illustrating just how selective our process is. In addition, we filter thousands of additional potential sites that arrive across our desks from our network of brokers each year, so the sites we visit are just a fraction of those we assess.

As mentioned above, what we’re looking for in each site – regardless of location or asset type – are opportunities to apply our asset management model and leverage our platform to enhance value. This could mean reconfiguring space to improve lettable area and efficiency, expanding or renovating existing buildings, working more closely with tenants to enhance value, and much more.

Taking a look at recent acquisitions

We’ve have paused the majority of acquisitions in recent months, however a small number of opportunities that we would have completed earlier in the year were delayed and have now completed in recent weeks – in October we announced the acquisition of three such sites in Germany: firstly, a €39.8 million mixed-use property in Düsseldorf, situated close to the city's international airport and comprising a mixture of mainly office, warehouse and light industrial space with good value add potential.

Secondly, we completed a €3.9 million primarily warehouse asset located in a well-developed commercial area in Dreieich, that is strategically adjacent to an existing property owned by Sirius.

We also acquired a €0.9 million vacant office building in Potsdam, that’s again situated strategically adjacent to one of existing sites, and also just next to the world famous Babelsberg Film Studios.

As you can see, each of these sites is different in scale, location, and asset type – but what’s common is the rigorous assessment process each underwent prior to acquisition to enable us to ascertain the value-add opportunity in each.

Enhancing value of the sites we acquire

I recently covered our value-add process in detail, but as a crucial part of our overall strategy for the sites we acquire, it’s worth reiterating here.

We transform the sites we acquire into higher-quality assets through enhancing the existing spaces to make them more fit for tenant needs, including investments in energy efficiency, reconfiguration of space and more, and also apply our intensive asset management model through looking closely at the tenant mix, occupancy levels and rents on an ongoing basis.

Our flexible platform means we’re able to be reactive to tenant need and market demand at each site, so we make the right changes at the right sites to maximise value.

Closing thoughts

Continuous assessment of opportunities to expand and ultimately recycle elements of our portfolio underpins the organic growth of our business as well as our ability to serve new markets as they grow – it’s a process that we have refined over the last 10 years and one that we continue to constantly refine, it remains core to our strategy going forward.