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Sirius hints at special dividend

The payout may otherwise be increased to more than 65 per cent of funds from operations, while disposal proceeds are put to work
June 26, 2017

Sirius Real Estate (SRE) delivered a very strong performance in the year to March 2017, benefiting from a strong commercial property market in Germany. However, funds from disposals totalled €110m (£96m), and rental income will be lower until the proceeds are put to work. To offset this, the dividend payout may be increased to above 65 per cent of funds from operations, or there may be a special dividend payment.

IC TIP: Buy at 59p

Rental income grew by nearly a quarter to €68.8m (£60m) and, unlike a majority of UK-focused property companies reporting this year, at €49.8m the valuation uplift on the portfolio was actually higher than in the previous year. All this meant that adjusted net asset value per share grew by a sector-leading 10.3 per cent to 58.8¢.

Growing demand for space helped to lift like-for-like occupancy from 80 per cent to 82 per cent, while rents per square metre rose from €5.06 to €5.27. The capital expenditure programme started just over three years ago focused on refurbishing sub-optimal space where there was little or no rental income. Around three-quarters of this has been completed, and the returns are high. For total capex of €14.2m, annualised rental income of €8.7m has been achieved, representing a return on investment of 61 per cent.

Analysts at Peel Hunt are forecasting adjusted net asset value at March 2018 of 63¢ a share.

SIRIUS REAL ESTATE (SRE)
ORD PRICE:59pMARKET VALUE:£518m
TOUCH:58-59p12-MONTH HIGH:79pLOW: 42p
DIVIDEND YIELD:4.9%TRADING PROPERTIES:€96m
PREMIUM TO NAV:19% 
INVESTMENT PROP:€727mNET DEBT:59%

Year to 31 MarNet asset value (¢)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (¢)
201347.6-29.5-9.5nil
201443.631.07.30.3
201545.732.74.81.61
201651.557.17.52.22
201756.476.48.12.92
% change+10+34+8+32

Ex-div:13 Jul

Payment:18 Aug

£1=€1.14