Sirius Real Estate plc (LON:SRE), the leading owner and operator of branded business and industrial parks providing conventional space and flexible workspace in Germany and the U.K., has today provided an update on trading for the six months to 30 September 2022.
Strong balance sheet and continued rental growth
Rental growth underpins FFO growth and dividend increases
• Total revenue increased by 47.7% to €130.6 million (30 September 2021: €88.4 million)
• Like-for-like annualised rent roll increased by 2.4% in Germany during the period, to €115.2 million (31 March 2022: €112.5 million), and 4.1% in the UK, to £46.5 million (31 March 2022: £44.7 million)
• 47.0% growth in funds from operations¹ to €48.5 million (30 September 2021: €33.0 million)
• Profit before tax of €75.7 million (30 September 2021: €78.2 million) with a 78.7% uplift in underlying profit to €47.9 million (30 September 2021: €26.8 million) when adjusted for €27.8 million of property valuation gains
• Adjusted earnings per share, which excludes valuation movements as well as exceptional items, increased 26.6% to 3.71c per share (30 September 2021: 2.93c) reflecting the positive year on year operational development
• 32.4% increase in dividend per share to 2.70c (30 September 2021: 2.04c)
• Continued valuation and NAV growth with NAV per share increasing 1.8% to 103.90c (31 March 2022: 102.04c) with adjusted NAV per share increasing by 2.0% to 110.72c (31 March 2022: 108.51c)
• Valuation increase of €20.3 million and £6.3 million (€7.5 million) representing a 1.8% and 2.1% like-for-like valuation growth in Germany and the UK respectively
• Increase in owned investment property to €2,081.4 million (31 March 2022: €2,074.9 million)
Early loan refinancing further strengthens balance sheet
• Completed the early financing of the new €170 million Berlin Hyp AG loan facility approximately one year ahead of maturity, with a seven year facility available 1 November 2023 to 31 October 2030 at a 4.26% fixed interest rate which increases the Company’s weighted average debt maturity to five years upon its availability
• Book value of unencumbered properties remaining at €1.6 billion (31 March 2022: €1.6 billion)
• Weighted average cost of debt decreasing to 1.3% in the period (31 March 2022: 1.4%)
• Net LTV of 41.0% (31 March 2022: 41.6%), including unrestricted cash balance of €138.6 million (31 March 2022: €127.3 million)
• Fitch reaffirmed its BBB investment grade rating with “Stable Outlook” on 4 November 2022
Successful asset recycling
• Disposal of two mature assets at a premium to book value in Magdeburg, Germany, for €13.8 million and Camberwell, UK, for €18.8 million which together represent a 9.4% premium to book value at the time of agreeing the sale
• These proceeds will be recycled into two value-add acquisition assets in the second half of the financial year amounting to €43.7 million in Düsseldorf (€39.8 million) and Dreieich (€3.9 million)
Outlook
• Sirius remains resilient and well positioned to navigate the current macro-economic climate due to its intensive asset management initiatives and the fixed priced contracts it has secured for a significant portion of its utility demands in both Germany and the UK, which should shelter its diverse tenant base from some of the higher operating costs that most industrial companies are facing
• As such, the Company continues to expect to trade in line with consensus and management expectations for the full year
Commenting on the period, Andrew Coombs, Chief Executive Officer of Sirius Real Estate, said:
“It has been another solid six months for the business, with our portfolio continuing to demonstrate its resilience in both Germany and the UK. Dividend and FFO growth is being supported by strong trading, with continued demand for space at our properties leading to rent roll increases and a robust leasing pipeline taking this positive momentum into the second half. There are also many opportunities within our portfolio to unlock value and grow rental income through our successful asset management platform.
The Company has taken a number of proactive measures to identify and mitigate against future potential risks in light of current market conditions. These include securing the Company’s €170m Berlin Hyp AG facility one year in advance of its due date, as well as agreeing fixed price contracts for a significant proportion of our utilities and slowing our acquisition pipeline. These early and strategic efforts enable the business to remain extremely-well positioned going forwards and we remain focused on growing our FFO organically, in order to continue to deliver attractive risk-adjusted returns to shareholders.”
1 See note 25 of the Interim Report 2022.
2 Interim dividend representing 65% of FFO (30 September 2021: 65% of FFO).
3 See note 11 of the Interim Report 2022.
