Sirius set for sparkling growth
JSE-listed Sirius Real Estate, which owns business parks and personal and commercial storage in Germany, is on track to deliver doubledigit growth for the year to March.
JSE-listed Sirius Real Estate, which owns business parks and personal and commercial storages in German, is on track to deliver double-digit growth for the year to March.
CEO Andrew Coombs said on Monday, after the release of a trading statement for the year to end-March, that the landlord had sailed through the pandemic, with its rent roll rising by more than 5% for the seventh consecutive year on a like-forlike basis. Rent roll refers to income due from rentals.
“We will return double-digit total returns in the year to March, as we promised. We have done this successfully each year since listing,” Coombs said.
“I think our strong performance is tantamount to our strong business model. In the pandemic, our storage businesses did well as, for example, people couldn’t travel on holiday so they stored holiday equipment with us. Similarly, companies could not export all of their goods, so they stored them with us,” he said.
Sirius listed in December 2014 with €428m (R7.42bn) in assets, and has since grown to more than €1.7bn.
The company reported strong cash collection at 98.2% in the reporting period, while its total annualised rent roll grew 7.6% to €97.2m.
Coombs said the company had managed to hold on to a majority of its tenants despite them being under pressure during the pandemic.
Tenants had been able to access government support initiatives and adapt their space to ensure employees worked safely and efficiently, he said.
Sirius was less affected by the work-from-home trend given that many of its properties lay on the outskirts of German towns as opposed to in densely populated cities. People were less nervous about working in an office or at a factory when there was less density.
“We are finding that many of our tenants have continued to use our spaces. We rent to a large range of tenants, many of them in manufacturing and other production and they need to be in factories in our business parks to operate,” said Coombs.
Sirius reported its seventh consecutive year of growth of more than 5% on a like-for-like basis, which excludes the effects of acquisitions or disposals.
After a modest reduction in occupancy in the first half of the financial year, Sirius grew likefor-like occupancy by 1.7% to 86.9% by the year end, while total company occupancy amounted to 87.0%.
The largest contributor to the increase in annualised rent roll came from a 3.5% increase in like-for-like average rental rate per square metre, with the total rental rate increasing 3.2% to €6.17.
Letting inquiries during the year rose 18.5% to 17,536, though its sales conversion ratio decreased from 14% to 13%.
With the investment market in Germany constrained by the pandemic, acquisition activity in the first half of the financial year was subdued, the group said.
However, as confidence in the market returned, the company bought four assets totalling €35.2m, the deals for which have been completed, and one for €10.7m, which has been notarised and is set to be completed shortly.
Keillen Ndlovu, head of listed property funds at Stanlib, said Sirius’s trading update was strong. “Sirius seems to operate like there’s no lockdown. The benefits of a niche, diverse and defensive business run by proactive management has become more evident in this tough environment,” he said.
Miranda Cockburn, an analyst at British investment bank Panmure Gordon, said Sirius’s disciplined management continued to yield strong results.
Sirius pays its dividends in euros, which means it can act as a rand hedge for investors.
The share price closed 1.98% higher on Monday at R19.05 and is up 126.42% on a five-year basis.
MANY OF OUR TENANTS HAVE CONTINUED TO USE OUR SPACES. WE RENT TO A LARGE RANGE OF TENANTS
Andrew Coombs Sirius Real Estate CEO