No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Business and industrial park specialist Sirius Real Estate said in an update on Monday that, despite prevailing macroeconomic challenges, it achieved a 8.2% increase in overall rent roll in the financial year just ended, or 7.2% on a like-for-like basis.
The FTSE 250 company said that marked the 10th consecutive year of achieving like-for-like rent roll growth of over 5%, with similar levels attained in both the UK and Germany.
It added that it maintained strong cash collection rates above 98% on a rolling 12-month basis for the year ended 31 March.
In Germany, enhanced occupancy rates contributed significantly to rent roll growth.
Despite a notable decrease in inflation compared to the prior year, Sirius said its in-house asset management platform managed its product mix and occupancy alongside rates, aiming for optimal returns.
Although slight yield expansion was expected in year-end property valuations for Germany, the firm said it anticipated a rise in the value of its German portfolio due to strong operational performance.
Similarly, in the UK, Sirius said it continued to achieve rent increases above the inflation rate, albeit at slightly lower levels than in recent years.
Efforts to bolster occupancy yielded positive results, with like-for-like rent roll growth ending the year at similar levels to Germany.
Recent acquisitions in the UK had significantly bolstered the absolute rent roll, with Sirius expecting valuation yields to expand, although its operational focus on driving rental income was poised to offset much of the effect of yield changes on the portfolio value.
Overall, Sirius said it expected to announce a positive valuation movement at the group level by year-end.
In November, Sirius completed an oversubscribed equity fundraising of €165m (£147m), fueling its acquisition pipeline.
Subsequently, it successfully executed about €150m worth of acquisitions in the second half of the financial year, with a focus on both the UK and Germany.
The board said efficient capital recycling remained integral to the company's strategy, with disposals in the second half amounting to €51m, completed at or above book value, primarily targeting mature assets in Germany.
Sirius reported free cash reserves of €220m as of 31 March, with no significant debt maturities until June 2026.
With a weighted average cost of debt of 2.1% and a weighted average maturity of 3.9 years following its refinancing, Sirius said it was confident in leveraging its assets to drive shareholder returns, despite expected higher interest expenses.
The board said expanding market yields presented attractive acquisition opportunities, aligning with its growth strategy in both the UK and Germany.
"Sirius has delivered another 12 months of strong operational performance, increasing rates and occupancy and quickly executing on our significant pipeline of acquisitions in both Germany and the UK, following our successful £147m equity raise last November," said chief executive officer Andrew Coombs.
"Raising capital at that time has proved to be opportune, allowing us to acquire high quality real estate on very attractive financial terms.
"Our acquisition pipeline remains strong and we believe there will continue to be opportunities to deploy our capital on an accretive basis in the coming year."
Coombs said that, as the company started to drive value from its recent asset acquisitions alongside its "focus on operational excellence", it was looking ahead confidently.
"The strength and breadth of our management team in being able to execute on acquisitions whilst still delivering good growth from our existing portfolio is encouraging, and I look forward to leading the business through the next stage of growth."
Reporting by Josh White for Sharecast.com.