Sirius Real Estate, the operator of branded German business parks, got a vote of confidence this week when it placed its inaugural corporate bonds, raising €350m. The bond issue came shortly after the company delivered good figures for its full-year.
Demand for the five-year bonds, which are paying a coupon of 1.125% was brisk, with the issue well oversubscribed. The company said it viewed this as "a strong endorsement by the capital markets" of its business model.
Sirius, whose shares are listed in London and Johannesburg, said it will use part of the proceeds to refinance certain existing secured debt facilities, while the remainder will be deployed towards the significant pipeline of potential acquisitions, as well as general corporate purposes.
Alistair Marks, chief financial officer of Sirius, said: ‘The successful issue of our first corporate bonds, which was heavily oversubscribed, is proof of the attractiveness and sustainability of our business model. We were particularly pleased to be able to successfully place the bonds with important institutional investors and establish new capital and funding sources on very attractive terms. The market has given us the clear signal that our balanced financing strategy, comprising secured and unsecured financing, is well regarded.'
The company recently reported a jump in full-year profit despite the difficulties presented by the COVID pandemic. Pretax profit was up 48% from €110.8m in 2019 to €163m for the year to this March 31st. Net operating income rose by 10% year-on-year to €93.8 million from €85.3 million.
The annualised rent roll increased by 7.6% to €97.2 million, a like-for-like increase of 5.2%, taking acquisitions into account. This marked the seventh consecutive year of growth exceeding the 5.0% mark. Occupancy rates for the company's properties reached 87.0% compared with 86.3% in the previous year.
The NAV per share as at March 31 increased by 14% to 88.31 euro cents compared to 77.35 euro cents the year prior. It also boosted its total dividend for the year to 3.80 cents, up 6.4% on the year before.
CEO Andrew Coombs commented on the results: “Against the challenging backdrop of the pandemic, Sirius has delivered a set of strong results providing a clear demonstration of our ability to utilise our operating platform in all market conditions to increase income and capital values. Our diverse €1.3bn portfolio of business and industrial parks located in and around Germany’s main cities offers a flexible range of uses that continue to be attractive to our broad occupier base which comprises both large domestic and international businesses, as well as the SMEs that are the engine room of the German economy. This is evidenced clearly by the rental increases we achieved this year, which have contributed to the strong growth in profitability.”
“Despite the continued degree of market uncertainty as a result of the pandemic, more confidence is breathed into the market every day as the vaccine is rolled out successfully in Germany and across Europe. We have ended the year with a strong balance sheet which will allow us to take advantage of acquisition opportunities as they arise and continue to grow income and capital values through selective investment.”
Sirius recently promoted Rudiger Swoboda, long-term joint managing director of Sirius Facilities, to the newly-created role of chief operating office of the group. It also appointed Joanne Kenrick to its board, who is currently a non-executive director at self-storage provider Safestore Holdings plc. Self-storage is an important part of Sirius's light-industrial property and business park portfolio.
Shareholders obviously like the steady stream of good news stories coming from Sirius as it continues to deliver steady growth figures to its constituents of UK and South Africa-based shareholders. The stock has more than made up the ground it lost at the outset of the pandemic last year, and (as we've reported a number of times in REFIRE), the company has been successful in managing its rent roll despite difficulties experienced by a small number of its tenants.
