Sirius Facilities
The Sirius Business Park Berlin-Gartenfeld
Sirius Real Estate, a prominent player in the industrial park and flexible workspace sector, has once again underlined its resilience and growth potential by posting a 32% increase in annual pretax profit. The company, which operates extensively in Germany and the UK, continues to attract the attention of investors with its strategic acquisitions, robust financial performance, and consistent dividend growth.
Sirius Real Estate Ltd, listed on both the London and Johannesburg stock exchanges, is a property investor focused on owning and operating business parks, offices, and industrial complexes. The company’s business model centres around transforming underutilised properties into multi-tenant business parks offering flexible workspaces to a wide diversity of clients, ranging from small and medium-sized enterprises (SMEs) to larger corporations.
Financial Highlights
For the financial year ending March 31, 2024, Sirius Real Estate reported a significant rise in pretax profit to €115.2 million, up from €87.0 million the previous year. The 32% increase was primarily driven by a valuation gain of €12.4 million, compared to a loss of €9.8 million previously. Revenue climbed 6.9% to €288.8 million, and funds from operations (FFO) saw a 7.9% rise to €110.2 million.
Earnings per share (EPS) jumped 28% to 8.75 cents, while headline EPS increased by 6.6% to 8.12 cents. The company's consistent performance allowed it to declare a final dividend of 3.05 euro cents, bringing the total payout for the financial year to 6.05 cents, a 6.5% increase from the previous year. It also marks the 10th year in a row of rising dividends.
Andrew Coombs, CEO of Sirius Real Estate, highlighted the company's robust performance, stating, "Sirius has delivered another very positive set of annual results, with a strong operational performance driving FFO, valuation and dividend growth."
Strategic acquisitions and growth
In November 2023, Sirius raised €165.3 million in equity to capitalise on property acquisition opportunities in both Germany and the UK. The company subsequently acquired assets worth €160 million over the past six months, including the notable purchase of Vantage Point business park in Gloucestershire, UK, for £50.1 million (€58.6 million). This acquisition is the largest since Sirius's purchase of BizSpace in November 2021.
Sirius said it is continuing to explore further growth options on an opportunistic basis. The company’s asset recycling programme remains on pace, with €60 million of non-core or mature assets recycled during the period. These strategic moves are expected to contribute significantly to the company's future growth and stability.
Operational and financial resilience
Sirius’s operating platform has been pivotal in driving rental and FFO growth. The company reported a 2% like-for-like rent roll growth to €188.7 million, underpinned by strong organic growth and high occupier demand in both Germany and the UK. The portfolio's valuation increased to €2,210.6 million, with a net portfolio valuation gain of €12.4 million, despite the broader market's valuation yield expansion.
Sirius has maintained a strong balance sheet, with cash at bank amounting to €214.5 million and a low net loan-to-value (LTV) ratio of 40.9%. The company’s net debt to EBITDA ratio stands at 5.6x, and only 2.9% of its total debt is set to expire within the next two years, providing ample capacity for future acquisitions and investments.
Sirius said it is also making strides in sustainability, establishing a dedicated team in Berlin to work with its Chief Impact Officer, Kremena Wissel. This team is focused on managing and executing the company’s sustainability agenda, ensuring that Sirius remains at the forefront of sustainable real estate practices.
Chairman Daniel Kitchen summarised the company’s outlook, stating, “There remain many levers we can pull to unlock value and grow occupancy and rental income within our current portfolio through our successful asset management programme. We remain well positioned to fuel our accretive pipeline, supporting our next phase of growth and delivering attractive returns for shareholders.”
REFIRE has long believed Sirius Real Estate presents a compelling case. The company’s consistent financial performance, strategic acquisitions, and robust balance sheet have made it a reliable investment since its near-demise following the financial crisis of 2008-2010. But under Andrew Coombs, the company's focus on sustainable growth and ability to adapt to market conditions have steadily enhanced its appeal. As the company continues to expand and innovate, it should continue to offer investors a stable and promising opportunity in a less well-understood sector of the real estate market.
