Sirius Real Estate profit up on strong workspace demand

The AIM-listed Sirius Real Estate, which owns and operates self-storage facilities, business parks, industrial complexes and offices across Germany, said its pretax profit rose in the first half of 2015 thanks to property revaluation gains, but its like-for-like profit also improved amid good demand for its workspace.

Pretax profit for the company, including gains made on the revaluation of the property in its portfolio, rose to €28.3 million in the six months to the end of September from €15.3 million a year earlier. Like-for-like recurring profit for the group, however, also rise, up to €6.9 million from €5.1 million amid good demand for its properties.

Sirius said its like-for-like gross annual rent roll rose to €50.1 million in the half from €50.0 million, as strong demand for its workspace helped offset a higher-than-usual number of tenant moves in the period.

The total valuation of the company's portfolio rose to €615.2 million from €550.0 million in the half, while the company’s net asset value per share increased 5.5% to €50.13 as of Sept. 30, compared to €47.51 at the end of March. Sept. 30 marks the first six months of its 2016 fiscal year. The company is paying an interim dividend of 0.92 cents per share.

In its recent statement, Sirius said it is rolling out a capital-expenditure program to increase the amount of leasable storage space across its real estate portfolio. The company’s Smartspace offering includes self-storage and office space targeted primarily at small businesses.

"The most significant element of our capex investment initiatives is the transformation of difficult space into our Smartspace products," CEO Andrew Coombs told analysts during a conference call. Rentable space under the Smartspace service begins at 4 sqm.

As of Sept. 30, the company had converted 74,235 square meters, or 6.7% of leasable space, across the company’s holdings into rentable Smartspace. "We would expect this to increase to closer to 8% after the completion of the capex investment initiatives," Coombs said.

Demand for office space by small businesses and self-storage from commercial and residential tenants is rising across Germany. Coombs indicated facilities converted to Smartspace office and storage has exceeded €9 per square meter in its core markets. "The demand for both these offerings is very pleasing, and generally, 12 months after the space becomes ready to let, we are consistently seeing these become more than 90% occupied in our core locations," he said.

Sirius Real Estate operates a diversified property portfolio across Germany with more than 1 million sqm of leasable space. The company specializes in business parks but also offers portable-storage containers, flex office and warehouse-storage space as well as more traditional office and self-storage services through Sirius Facilities GmbH. Sirius Facilities operates 38 commercial locations, with its primary self-storage offering branded as Smartspace.