Sirius Real Estate sees rent roll jump 12% as stock hits new highs

Sirius Real Estate, the operator of branded German business parks, said in a trading update that its annualised rent roll in the six months to September 30th was €99.7 million, up 12% from €89.2 million in the same period last year and up 3.3% from €96.5 million in the previous six months. 

The stock price has nearly doubled over the past twelve months as investors like the company's reports as to ongoing strong occupier demand and "reversionary potential with the portfolio". The like-for-like rent roll rose 2.6% - a very strong performance against the background of COVID, where rent collection is running at 98%.

The company, which is listed on the main boards in both London and Johannesburg, said that it had boosted first-half rent collections, putting it on track to meet its full-year projections.

Over the period the company has invested €153.4m in eight on-balance sheet business park acquisitions along with a parcel of land for development, with two of the assets completing and six now notarised for completion. 

The assets were in Oberhausen, Frankfurt-Ostend, Heiligenhaus near Düsseldorf, and Öhringen near Heilbronn. The land parcel was next to an existing asset in Neuruppin, in Brandenburg, north of Berlin. Sirius said they were financed out of its inaugural €400m corporate bond issued in June. It said the acquisitions together generated an immediate net operating income of €3.4m per annum.

The bond was issued in two tranches, and carries an effective interest rate of 1.125%, as against the average 1.5% cost of debt the company is carrying, according to its full-year March 2021 results presentation.

CEO Andrew Coombs said that trading so far is in line with expectations for the full year. "As with many countries, corporates in Germany are now focused primarily on the re-organisation of their supply chains to within European borders and adapting to more flexible ways of working. Both of these challenges play to the strengths of Sirius's portfolio and will help drive demand to our out-of-town business parks which offer a range of storage, warehouse, manufacturing spaces and out of town offices", he said.

"As the vaccination programme continues to be successfully rolled out across Germany, trading conditions have begun to normalise and confidence is returning", Coombs said.

The Sirius business model is to buy up underdeveloped or "unloved" industrial assets, often with high vacancy rates, which it then upgrades, adding in managed services such as telecoms and IT and then re-letting the space to clients with a variety of needs. While it has big tenants such as Daimler and defence group GKN, it also has lots of smaller clients from the German Mittelstand keen to rent mixed-use industrial space.