Storage assets help Sirius ride out lockdown storm
German business park owner Sirius Real Estate says it is managing the negative effect of the Covid-19 lockdown and has collected most of its rental payments for April and May.
The company said it had received a small number of requests for rent deferrals.
Sirius owns storage assets, which have grown in popularity in Germany, where many people live in rented apartments.
The group, which owns a portfolio of properties worth €1.18bn, said its focus on a tenant base that is diversified across industries remained a competitive advantage for the group.
“The effect of Covid-19 to date on the company has, thus far, been manageable and related mainly to a small number of requests for rent deferrals,” the group said.
CEO Andrew Coombs said many Germans had put goods in storage so they could house family members during the Covid-19 lockdown.
Companies that have been unable to export goods have needed to store those products for longer.
Holidaymakers who have been unable to travel have had to store leisure equipment for longer periods.
“While we look to the future with caution, due to the uncertainties created by Covid-19, I believe the company is wellplaced to endure the economic difficulties created by the crisis and also take advantage of opportunities with our strong balance sheet,” said Coombs.
Sirius has not received state assistance. Profit after tax in its year to end-March fell about 23.7% to €98.1m, with the group seeing higher valuation gains in the prior comparative period.
It raised its total dividend for the year to 3.57c, from 3.36c previously.
Chris Segar, of Ivy Asset
Management, said Sirius’s results were strong in a challenging global environment.
Sirius “demonstrated their ability to grow income organically as shown by the strong rent roll improvement. Management’s vertically integrated leasing model, linked to their capability in recycling mature assets, has resulted in a very satisfactory performance,” he said.
“While their storage model would be quite defensive during the Covid-19 pandemic, we eagerly await to see the performance for the next six months to September 2020 in order that we can get more certainty on how their SME [small and medium-sized enterprises] tenants have fared during the pandemic,” Segar.
Brendon Hubbard, a portfolio manager at ClucasGray, said Sirius had released a strong set of results. “This is another brilliant result from Sirius. It is important to point out that the capital expenditure programme has generated a yield on cost of 45%, which is the benefit of a lower payout ratio of 65%,” he said.
Ahmed Motara, a senior fund manager at Stanlib, said as businesses in Germany went back to work, tenant trading would take time to reach trading levels evident before Covid. The 2021 financial year is likely to see a greater impact from Covid on Sirius’s operations,” he said.
The strategy of continuing to recycle assets and the unlocking of acquired vacancies would assist in driving rental growth beyond 2020, Motara said.
The company was the bestperforming property stock last year, with a total return of 52.2%, including capital growth and dividends in 2019, while the FTSE/JSE SA Listed Property Index managed a measly 1.93%.
Sirius’s share price rose 1.81% to R16.90.