June 5 2023
Sirius Real Estate, the JSE-listed owner operator of business parks in Germany and the UK as well as personal storage businesses, saw its share price climb 1.985% to R21.13 by the close of trade on Monday, after it released financial results for the year to end-March 2023.
The company which listed on the JSE in 2014 achieved a 36.9% increase in funds from operations (FFO) to 102.1m compared with €74.6m for the March 2022 financial year, surpassing the five year €100m FFO target within four years.
Sirius also achieved a 7.7% increase in group annualised like-for-like rent roll to €175.9m.
A 28.9% increase in FFO per share to 8.74c was achieved compared with 6.78c in the March 2022 year.
Then, a 1.1% or €22.9m increase in Sirius’ investment property book value to €2.123bn was clinched.
Finally, the second half of the year dividend rose 25.7% to 2.98c per share compared with 2.37c per share in the second half of March 2022. This led to a 28.8% uplift in the total dividend for the financial year to 5.68c compared with 4.41c. This was while the same pay-out ratio of 65% of FFO was maintained.
“Sirius has delivered another positive set of annual results, with sizeable rental growth underpinned by continued occupier demand for our high-quality and affordable products in both Germany and the UK. This is now the ninth consecutive year of like-for-like rental growth in excess of 5% in the year. This strong operational performance enabled us to deliver a significant increase to the annual dividend, which rose 29%, and to surpass our €100m FFO ambition, with a 37% increase over the prior year to €102.1m,” CEO Andrew Coombs said.
The company recycled €90m million assets over the past twelve months, including six disposals achieved at a 25% combined aggregate premium to book value. The adjusted net asset value (NAV) per share increased 0.7% to 109.21c compared with 108.51c in 2022.
At the end of the financial reporting period, Sirius’ market capitalisation sat at about R25bn, making it a large mid-cap property stock. The company has stood out as a consistently good performer for years. It has also managed to work through the economic uncertainty in Germany that was onset by the war in Ukraine. The country’s economy fell into recession in early 2023. Confidence in the Eurozone’s economy is weak. Economic analysis company, Sentix, on Monday June 5 said its monthly survey of investors’ views on the 20-member euro area, which gauges whether they are positive or negative about growth prospects, fell to minus 17 points for June, from minus 13.1 in May. Germans are spending less amid high inflation. They have been hot particularly hard by high energy prices, as they were relatively dependent on Russian gas pre the war.
Coombs said Sirius was a mature company and that its core assets, the German business parks business which served numerous SMEs across the country was thriving as was its secondary storage business. Sirius also had ac subsidiary in the UK which was growing. Sirius’s owned and managed property across Germany and the UK was worth €2.5bn, with €2.1bn of it owned. Sirius’ balance sheet was strong with only circa 5% of total debt expiring within the next three years.
A €170.0m facility with Berlin Hyp AG and a €58.3m Deutsche Pfandbriefbank facility were refinanced, the latter occurring post the reporting period, to 2030. This would increase the group weighted debt expiry to 5.0 years and increase the cost of debt to 2.1% from 1.4% at the end of March 2023.
“We will continue to pursue an opportunistic asset recycling programme where we see opportunities to crystalise returns and drive value,” said Coombs.
“Looking ahead, our outlook remains positive: our balance sheet is strong, with cash reserves of €124m and around 95% of the group’s debt secured at fixed interest rates for at least the next three years, and we continue to trade in line with market expectations. While we remain alert to the potential impact of ongoing global macro-economic uncertainty, Sirius remains well placed to continue to deliver attractive returns for shareholders,” he said.