Sirius Real Estate sees 98% of rent receivable with minimal write-offs

The London-and Johannesburg-listed Sirius Real Estate, which operates branded business parks across Germany, has made a number of acquisitions in the past two months. It has also issued a strong statement on the level of sales enquiries and rent collection after nine months of the COVID pandemic, offering a useful insight into how its many SME tenants are faring in the current climate.

Along with its partner AXA IM Alts in its Titanium joint venture, Sirius paid about €80m for the Sigma Technopark in Augsburg, from a special fund managed by Corestate Group. The net initial yield was 6.0%.

This brings the Titanium joint venture portfolio up to €317m, about double its value when the two partners launched the JV in August 2019. Then, AXA IM Alts bought- on behalf of clients, a 65 % stake in five German business parks from Sirius, which retained the remaining 35%.  The JV plans to grow by buying larger stabilised business park assets and portfolios with strong tenant profiles and occupancy.

This latest transaction follows Titanium’s acquisition in March 2020 of a German business park in Hilden, Düsseldorf, for €59 million. The seven business parks in the JV are operated by Sirius, and the Sigma Technopark will be rebranded as a Sirius business park.

The Sigma Technopark is a multi-tenanted business park with 113,000 sqm of space across a range of uses. In addition to over 1,500 parking spaces, the park also offers a range of onsite amenities including a canteen. It is currently 90% let to 74 tenants ranging in size from well-established blue chip corporates and public bodies through to SMEs and start-ups. Typical for Sirius’s business parks, the tenants are diversified across numerous sectors including electronic production, educational organisations such as universities, logistics and technology.

Sirius’s CEO Andrew Coombs said of the acquisition, “This acquisition is a great example of the type of assets in which we want to invest alongside AXA IM Alts in the Titanium joint venture. It is a well located, large scale business park which offers both good quality day-one income as well as an opportunity to grow rental income and create value through asset management.”

In December, Sirius wrapped up another deal for three further business parks for €26m. It completed on two business parks in Norderstedt and Hamburg for €9.1m, and a third in Nuremberg for €13.7m. The three parks have an EPRA net initial yield of 7.2% and generate a total of €9.1m of annualized net operating income.

The company has been very transparent from the beginning of the COVID pandemic as to how it, and its numerous tenants, were faring. In its most recent statement, Sirius said it had now collected almost all rent due from its portfolio of business parks despite the coronavirus. For the first nine months of its financial year, which ends on March 31st 2021, Sirius said it has received 97.7% of rents with 98% receipts for calendar year 2020. Write-offs had amounted to €205,000 out of a total rent and service charge invoicing of €141.2m.

Out of 5,000 tenants as of December 31, 2020, 43 tenants had been adversely impacted by the pandemic amounting to €0.4m, with 16 tenants on deferred payment plans.

The group's monthly cash collection in January was in line with previous months, it said, with 94.3% of rent and service charges billed received, compared to 95.0% for the same month in 2020.

CEO Coombs said that sales enquiries were now running about 20% higher than this time a year ago. “Our enquiries, sales and cash collection performance, as well as the robust commitment of the German government to supporting business throughout 2021, give us confidence in our ability to continue to trade well through the COVID-19 environment.”

“With total cash balances in excess of €70.0 million the company has the capacity to continue to make acquisitions as opportunities arise."