Strong demand for flexible workspace in Germany helped Sirius Real Estate (SRE) deliver another strong performance in the six months to September 2017. A €41.6m (£37.2m) valuation uplift and a 2 per cent rise in like-for-like annualised rental income helped to push adjusted net asset value ahead by 7.8 per cent to 63.4¢ a share.
It also sold €103m of mature assets with little potential for further development and with average occupancy of over 90 per cent, and used the proceeds to invest in assets with much lower occupancy rates averaging 58 per cent.
Total annualised rental income was down €1.3m, but this was after €6.9m lost because of disposals. In fact, new lettings were signed at an average €6.39 per square metre; that’s 21.3 per cent above the portfolio average rate, and signifies significant reversionary potential.
Sirius continued to focus on acquiring assets on an off-market basis, such as deals that have failed to go through. This way it avoids having to outbid other competitors for assets that are becoming increasingly expensive.
To avoid the disposals impacting on shareholder income, the dividend payout has temporarily been increased from 65 per cent of funds from operations to 75 per cent. Analysts at Peel Hunt are forecasting adjusted net asset value at the March 2018 year-end of 64.8¢ per share (from 57.3¢ a year earlier).
| SIRIUS REAL ESTATE (SRE) | ||||
| ORD PRICE: | 63.5p | MARKET VALUE: | £588m | |
| TOUCH: | 63.5-64p | 12-MONTH HIGH: | 79p | LOW: 43p |
| DIVIDEND YIELD: | 4.3% | TRADING PROPERTIES: | €1m | |
| PREMIUM TO NAV: | 16% | NET DEBT: | 46% | |
| INVESTMENT PROPERTIES: | €856m | |||
| Half-year to 30 Sep | Net asset value (¢) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2016 | 53.6 | 37.5 | 4.1 | 1.39 |
| 2017 | 61.0 | 54.7 | 5.7 | 1.56 |
| % change | +14 | +46 | +39 | +12 |
| Ex-div: | 14 Sep | |||
| Payment: | 19 Jan | |||
| £1=€1.118 | ||||
