The improvement in demand could not come at a better time.Sirius was hit late last year by two large tenant move-outs which,it warned recently, could cut profits below expectations in thefinancial year just ended in March. But founder and CEO KevinOppenheim is optimistic that the surge in demand across theportfolio – 38 separate German business parks of 11.8 millionsquare feet of mixed-used flexible-workspace real estate - meansthe worst is over.

|

Sirius has invested $66.5 million of capital expenditure tomodernize and upgrade, and the strategy is paying off, Oppenheimsays. "What we've essentially achieved is Phase 1, which includedbuilding up the existing portfolio and the management team, andcreating the regional platform in Germany, really spending thecapital to procure the transformation from tired old buildings intomodern new vibrant multi-let branded business parks. We've createda lot of product, put our brand in the market, and Phase Two, whichwe've now entered, is what I call a drive towards occupancy andefficiency."

|

He says Phase Two is taking the portfolio from the current levelof occupancy which is circa 71%, up to 80%-plus. Sirius has setthis benchmark to allow it to move forward in a third phase towardrealizing value for shareholders, and maximizing profits. "We'vebeen very lucky on timing because what we're seeing now is a levelof inquiries and demand for our product way above anything we'vehad previously," Oppenheim says.

|

Sirius is registered in Guernsey. Its main investors are led bythe South Africa-based alternatives investment manager PrincipleCapital, whose head, Brian Myerson, was Oppenheim's main backersetting up the firm in the middle of the last decade. Principle nowholds an equity stake of just under 10%. Other large shareholdersare mainly opportunity and hedge funds: Clearance Capital, LaxeyPartners, F & C Asset Management, Hound Partners, Staracre,Weiss Capital, Alpine Woods Capital and Kleinwort Benson.

|

Subsidiary Sirius Facilities CEO Andrew Coombs says the Germanmarketplace is shifting: "The shape of the market is fundamentallydifferent from 18 months or two years ago. What we're seeing isthat decision-making in larger corporate clients is taking longerand has become far more tactical. This means our proposition hasbecome particularly strong because people that maybe were lookingat a 10 to 15-year workspace decision before are now tending tolook at 12-to-18 month stop-gaps. At the opposite end, we areseeing SME demand growing at an exponential rate from people thatleft large corporations or are subsidized by government funding inGermany to help with employment," Coombs says.

AllanSaundersonis a managing editor of PropertyInvestor Europe and a contributor to GlobeSt.com.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.