Sirius Real Estate raises dividend as full-year profit rises

(Sharecast News) - Sirius Real Estate reported higher full-year profit and raised its dividend for a 25th consecutive distribution on Monday, as rental growth, acquisitions and valuation gains supported the business parks operator's performance.

The FTSE 250 company, which owns and operates branded business and industrial parks in Germany and the UK, said profit before tax rose 4.9% to €211.4m for the year ended 31 March, from €201.6m a year earlier.

Profit after tax increased 29% to €229.8m, helped by the release of deferred tax liabilities in its German portfolio following a phased reduction in the country's corporate tax rate.

Like-for-like annualised rent roll grew 6.4% to €224.2m, reflecting what Sirius described as strong organic growth and occupier demand in both Germany and the UK.

Funds from operations increased 8.4% to €133.5m, while FFO per share rose 4.5% to 8.82 cents.

Sirius said it was progressing towards its near-term €150m FFO target and had launched a new target of €175m.

EPRA earnings per share fell 7.8% to 7.43 cents, mainly because of realised foreign exchange translation effects and financing fees linked to recent refinancing activity.

Basic earnings per share rose 24.3% to 15.16 cents.

The company declared a second-half dividend of 3.22 cents per share, up from 3.09 cents a year earlier, taking the total dividend for the year to 6.40 cents, a 4.1% increase from 6.15 cents.

Sirius said the payout marked its 25th consecutive progressive dividend distribution.

The value of the owned investment property portfolio rose 20.5% to €2.97bn, including assets held for sale.

Sirius said €111.3m of the uplift came from asset management, while €369.9m came from acquisitions.

Adjusted net asset value per share increased 5% to 124.78 cents, ahead of consensus expectations.

During the year, Sirius completed or notarised €463.3m of acquisitions, including nine assets in Germany for €271.1m and four UK transactions worth £166.2m, or €192.2m.

The German assets added €19.8m of annualised net operating income at an average gross yield of 8.2%, while the UK deals added £10.6m, or €12.2m, at an average gross yield of 6.7%.

Three of the acquired assets, worth €155.8m, had a strong defence-related tenant base, which Sirius said was aligned with its strategy.

The company said defence and self-storage represented particularly attractive growth opportunities in both the UK and Germany.

Sirius ended the year with €372.7m of cash and an undrawn €300m revolving credit facility, providing liquidity ahead of the repayment of a €400m bond due in June.

Net loan-to-value rose to 36.1% from 31.4%, while net debt to EBITDA increased to 6.6 times from 5.2 times.

The company completed a €105m tap of its 2028 bonds in September and an oversubscribed €88.3m equity raise in February, generating €85.9m net of costs.

It also doubled the size of its undrawn revolving credit facility to €300m and added Barclays to its banking syndicate alongside ABN Amro, BNP Paribas and HSBC.

The weighted average cost of debt was 2.5%, down from 2.6%, with a weighted average debt expiry of 3.2 years.

Chief executive Andrew Coombs said Sirius had delivered another strong performance, demonstrating "the continued effectiveness of the group's asset management programme in driving growth and value, even during times of volatile market conditions".

"The 38% average return on investment we have generated from upgrading 250,000 sqm of space just through our value add capex programme in the last three years is a real testament to the strength of our team in this respect," he said.

Coombs said the company had invested more than €463m into 13 assets during the year, including around €155m into properties with strong defence-related or adjacent tenant bases.

"The projected rise in UK and German government defence spending is expected to have a material effect on demand for the types of industrial space Sirius provides, with the urgency of need making existing stock the only feasible option at scale," he said.

Sirius said trading in the new financial year was in line with management expectations. It said it was monitoring the recent conflict in the Middle East but had not yet seen any impact on occupier demand.

Coombs said the company remained confident in its ability to deliver accretive growth, supported by its balance sheet and continued access to equity and debt markets.

At 1031 BST, shares in Sirius Real Estate were up 1.07% at 99.35p.

Reporting by Josh White for Sharecast.com.

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