Sirius Real Estate (LON:SRE), the leading owner and operator of branded business and industrial parks providing conventional space and flexible workspace in Germany and the UK, has announced its consolidated financial results for the year to 31 March 2023.
Operating platform continues to drive rental and FFO growth
· 36.9% increase in Funds from Operations (“FFO”) to €102.1 million (2022: €74.6 million), exceeding five-year €100 million target set in 2018
· 7.7%* increase in Group annualised like-for-like rent roll to €175.9* million (2022: €163.3* million) driven by continued strong occupier demand in Germany and the UK
· 24.5% increase in adjusted profit before tax to €96.0 million (2022: €77.1 million). Profit before tax decreased 48.5% to €87.0 million (2022: €168.9 million) primarily as a result of €7.7 million valuation deficit in 2023 compared to a €140.9 million surplus in the previous year.
· 28.9% increase in FFO per share to 8.74c (2022: 6.78c)
· 17.2% increase of EPRA EPS to 7.55c (2022: 6.44c)
Strong operational performance supporting 28.8% increase in dividend and strong total return
· 25.7% increase in H2 dividend to 2.98c per share (2022: 2.37c per share), amounting to a 28.8% uplift in the total dividend for the financial year to 5.68c (2022: 4.41c), maintaining the same pay-out ratio of 65% of FFO
Income driven valuation gains
· 1.1% increase in investment property book value** to €2,123.0 million (2022: €2,100.1 million) as a result of strong income growth and investment offsetting yield expansion
· Gross yield of 7.3% (2022: 6.9%) in Germany and 9.3% net yield (2022: 8.0%) in the UK
· EPRA NTA per share increasing by 0.8% to 108.11c (2022: 107.28c) demonstrating the resilience of the portfolio
· Adjusted NAV per share increased 0.6% to 109.21c (2022: 108.51)
€90 million of asset recycling, with disposals achieved at 25% combined aggregate premium to book value
· €44.6 million of acquisitions with annualised NOI of €1.6 million and 54% occupancy completed across three new sites in Germany
· €45.8 million of disposals with annualised NOI of €1.8 million and limited further growth opportunity completed across six transactions (including the sale of two non-income producing land parcels in Germany), achieving a combined 25% aggregate premium to the last book value prior to each sale
Strong balance sheet with only c. 5% of total debt expiring within next 3 years
· Total cash balance of €124.3 million, of which €99.2 million of cash in is unrestricted, providing capacity for further acquisitions and investment (2022: €151.0 million total cash of which €127.3 million unrestricted)
· 41.6% net LTV (March 2022: 41.6%) and Net Debt to EBITDA of 7.7x
· 95% of total Group debt (€975.1 million) at fixed interest rates for a minimum of 3.25 years
· €170.0 million facility with Berlin Hyp AG and €58.3 million Deutsche Pfandbriefbank facility have been refinanced (the latter post period end) to 2030 extending the Group weighted debt expiry to 5.0 years and increase the weighted cost of debt to 2.1% (from 1.4% at 31 March 2022)
· €1.6 billion of unencumbered assets (2022: €1.6 billion)
Outlook
· The new financial year has started well, driven by continued strong occupier demand in both markets and the Group continues to trade in line with market expectations
· In Germany, stable occupancy rates and the easing of energy price pressures continue to offset wider macro-economic concerns
· Sirius continues to assess further growth options in both Germany and the U.K. on an opportunistic basis, including recycling of mature assets and reinvesting in value-add opportunities
· Organic growth opportunities remain strong, particularly with further investment into the portfolio as well as taking advantage of the high inflationary environment
Commenting on the results, Andrew Coombs, Chief Executive Officer of Sirius Real Estate, said: “Sirius has delivered another positive set of annual results, with sizeable rental growth underpinned by continued occupier demand for our high-quality and affordable products in both Germany and the UK. This is now the ninth consecutive year of like-for-like rental growth in excess of 5% in the year. This strong operational performance enabled us to deliver a significant increase to the annual dividend, which rose 29%, and to surpass our €100 million FFO ambition, with a 37% increase over the prior year to €102.1 million. The Company also recycled €90 million of assets over the past twelve months, including six disposals achieved at a 25% combined aggregate premium to book value. We will continue to pursue an opportunistic asset recycling programme where we see opportunities to crystalise returns and drive value.”
“Looking ahead, our outlook remains positive: our balance sheet is strong, with cash reserves of €124 million and around 95% of the Group’s debt secured at fixed interest rates for at least the next three years, and we continue to trade in line with market expectations. While we remain alert to the potential impact of ongoing global macro-economic uncertainty, Sirius remains well placed to continue to deliver attractive returns for shareholders.”
Notes:
*Group rent roll and rental income KPI’s have been translated utilising a constant foreign currency exchange rate of GBP:EUR 1.1374, being the closing exchange rate as at 31 March 2023.
** Including leased investment properties
