The Sirius Business Park Bochum
Sirius Real Estate, the operator of German and UK branded business parks and flexible workspace, said it had traded "in line with expectations" for the first six months of the year. In 'challenging conditions' in both markets, it raised its like-for-like rent roll by 7.7%. It also announced a new capital raise of €145m through a share placing to fund new acquisitions.
The London and Johannesburg-listed Sirius Real Estate said that occupancy in Germany had remained 'stable' over the period, with rental growth continuing to outstrip inflation. In the UK, with its recently-acquired BizSpace division, the rent-roll rose 9.0% and topped Stg 50.0 million pounds for the first time. This marks the 10th consecutive year of boosting the like-for-like rent roll past the 5% mark at the group level. For its last full year it boosted rent roll by 8.1%.
The company saw a 7.3% increase in total revenue to €140.1 million (£122.6 million), up from €130.6 million in the same period last year, thanks to the increased rents. The interim dividend is being increased by 11.1% to 3.0 cents per share.
Adjusted profit before tax increased by 2% to €49.9 million with adjusted earnings per share up 13.5% to 4.21 euro cents, reflecting positive operational developments year on year. A €6.1 million decrease in its UK holdings was offset by a €13.0 million increase in the German assets under management. The group's EPRA net yield improved to 6.7% and like-for-like group occupancy remained stable at 84.5%, with tenant retention in Germany increasing significantly.
Sirius's balance sheet remained "robust" with cash reserves of €112.0m, of which €88.0m was unrestricted; it said it that it was still active on both acquisitions and disposals, with two UK acquisitions in the period running at a 9.6% net initial yield and a disposal in Germany coming with a 6.0% net initial yield.
Sirius Real Estate
Andrew Coombs, CEO, Sirius Real Estate
But the company has not been immune from the overall gloom hanging over German commercial property, particularly office - even though Sirius's offering has many logistics and light-industrial elements to it which differentiates it from the classic office sector. So while adjusted pre-tax profit increased by 2% to €39.9m, on a reported basis profits fell 47% to €39.8m due to a €9.6m write-down of investment property valuations of owned assets, compared with a €27.8m gain last year.
The €145m capital raise is to fund a series of near-term acquisitions, of its favoured under-utilised, multi-let, mixed-use properties located in areas with high commercial activity and good transport links. Half will be in the UK, half in Germany. CEO Andrew Coombs said the capital raise "will involve a mix of institutional and retail offerings, including an accelerated book-building process, a South Africa placing, and a retail offer through PrimaryBid."
