Sirius Real Estate increases dividend on strong interims

Sirius Real Estate, the German operator of branded business parks, continued to please shareholders with its interim income statement, which showed income and assets rising, even as it said the business was facing fresh challenges relating to political and economic uncertainty.

Still, the company booked a pre-tax profit of €79.7m for the six-month period ended 30th September, 2% higher than in the same period last year, as gains from property revaluations rose by 4% to €58.2m.

Revenue rose 7% to €72.2m as the like-for-like annualised rent roll edged up 1% to €77.2m and service charge income improved 6% to €24.9m. Funds from operations (FFO) grew 16% to €27.1m and the company's net asset value per share rose 7.3% to 76.18c.

However, the contribution from the company's €21.9m-worth of new acquisitions was slightly lower than anticipated due to high vacancy levels, though Sirius said it had significant funds available to buy up further properties in the second half of the year.

In addition to a steady rise in the share price, Sirius raised its half-year dividend by 9% to 1.77 cents per share, from last year’s 1.63 cents. The company is listed on both the London and the Johannesburg stock exchanges.

The company is planning two more acquisitions totaling €64.6m being completed in the second half, while it’s in exclusive talks on a further €57.8m of acquisitions.

CEO Andrew Coombs issued a bullish statement on the results, tempered with caution: 'Despite political uncertainty and economic headwinds, Sirius' value-add business model continues to flourish due to the diversity that comes from intensive asset management and our wide range of products. Occupier demand for both conventional and flexible space remains strong while investor appetite for exposure to the German light industrial market continues to drive yields down.'

'Part of this is fuelled by the low rates of financing available, of which we are strongly positioned to take advantage. With significant vacancy in our value-add portfolio and a defensive portfolio gross yield of 7.4%, there remains considerable potential to increase rent roll and capital values.'

'Following the completion of the acquisitions that were notarised in the period, we have around €80m of financial resources to fund future acquisitions on our own balance sheet or within the joint venture with AXA Investment Managers - Real Assets. As such, we are well positioned for a busy and progressive second half of the financial year.'

Sirius owns or manages 60 business parks around Germany and its portfolio had a book value of €1.06bn at the end of the half-year, about a 6% decline in the book value versus the prior half-year.

Over the half, it completed acquisition of three sites for €21.9m, with two more assets notarised for €64.6m, and a further three in exclusivity for €57.8m. The company has further funds of about €80m for further acquisitions or other ventures.