Sirius Real Estate upbeat after first half

Sirius Real Estate reported a 14.5% rise in funds from operations (FFO) to €60.7m in its half-year results on Monday, supported by a strong operational performance.

The FTSE 250 company said total revenue for the six months ended 30 September increased 11.7% year-on-year to €156.5m, while its annualised rent roll grew by 14.9%, reflecting continued demand across its business and industrial parks in Germany and the UK.

Net operating income rose 13.7% to €92.4m, and profit before tax surged 53.8% to €61.2m.

Adjusted profit before tax, excluding property valuations, increased 17% to €58.4m.

Despite the growth, adjusted earnings per share dipped slightly to 4.19 euro cents, reflecting dilution from recent equity raises.

The interim dividend per share was hiked by 2% to 3.06 cents, representing 71% of FFO.

Sirius said its investment property portfolio grew to €2.35bn, with a valuation uplift of €11.5m in Germany offsetting a €7.9m reduction in the UK.

Group EPRA net initial yield remained stable at 6.9%, while like-for-like occupancy held steady at 84.1%.

The company invested €141.5m in acquisitions since April, including €126.1m during the reporting period, targeting assets in both Germany and the UK.

Notable post-period acquisitions included a strategic land parcel near Oberhausen, Germany, and a business park in Carnforth, UK.

On the financial front, Sirius raised €174.6m in equity during July and secured an additional €59.9m via bonds due in 2028, maintaining a net loan-to-value ratio of 30.5%.

The weighted average cost of debt was stable at 2.1%, and cash at bank totaled €297.6m .

Fitch reaffirmed the company’s BBB investment-grade rating with a stable outlook.

“Sirius has continued to deliver robust performance over the first six months of the financial year, achieving like-for-like rent roll growth well in excess of inflation and a 14.5% year-on-year increase in FFO,” said chief executive officer Andrew Coombs.

“This has underpinned our decision to make our 22nd consecutive dividend increase and is testament to Sirius' proven ability to drive organic growth through intensive asset management initiatives, reinforced by resilient occupier demand for space within our portfolio, alongside the contribution from a series of well-timed acquisitions.

“The equity and bond financings during the period demonstrate continued support from shareholders and debt partners to finance the company's operations throughout the property cycle.”

Coombs said that with nearly €300m of cash and a net loan-to-value ratio of 30.5%, Sirius had “significant sufficient firepower” to “act opportunistically” and make earnings accretive acquisitions.

“Whilst mindful of an evolving political landscape in our two markets, the company's outlook remains positive: our dynamic business model, diversified offering and strong cash position mean we are ideally positioned to continue building scale.

“There remain a number of levers at our disposal that can be pulled to unlock value and grow rental income within the current portfolio which, combined with an active asset recycling programme and the ability to fuel our pipeline, provides us with confidence in our prospects.”

At 1219 GMT, shares in Sirius Real Estate were down 1.92% at 86.85p.

Reporting by Josh White for Sharecast.com.