Sirius Real Estate, owner and operator of branded business parks in Germany and the UK, said its like-for-like rent roll had increased by 7.7% for the six months to September 30, in line with its expectations.
The group said in a trading update yesterday – the interim results are expected to be released on November 20 – that it continued to see strong trading, despite a backdrop of negative headlines, referencing challenging economic conditions in both Germany and the UK.
In Germany, occupancy remained stable and rental growth ahead of inflation was achieved as the group used its proprietary asset management platform to maximise the value of its space.
“The sale of Kassel at above book value, which we announced on 3 October 2023, together with strong trading across the German portfolio, underpins our expectation that valuations for the period end will again outrun any negative yield expansion,” Sirius’s directors said in a statement.
In the UK, the focus was to drive value from BizSpace. “Rent roll growth is ahead of our German operations, reflecting the ongoing demand for our affordable, well-located space and the higher inflationary backdrop in the UK,” the group said.
Occupancy in the UK was higher than six months prior, and the UK rent roll had exceeded £50 million for the first time, buoyed by a record new business sales month in September.
The group balance sheet remained “robust” with cash reserves of £112 million (R2.6 billion) of which £88m was unrestricted, the group said.
The group remained active on acquisitions and disposals, with two UK acquisitions running at a 9.6% net initial yield (NIY) and a disposal in Germany at a 6.0% NIY completed during the period.
“Our disposals strategy remains opportunistic and focused on non-core or mature assets with little upside, where we have continued to achieve returns in excess of book value. We… see a healthy pipeline of potential opportunities across Germany and the UK,” they said.
During the period, Chris Bowman was appointed as chief financial officer (CFO), as Alistair Marks, who had been interim CFO, stepped down from the Sirius board in July, and would be leaving the group at the end of March 2024 having been with Sirius since inception in 2007, and becoming CFO in 2012, following internalisation, and more recently as chief information officer (CIO).
“Succession plans are well advanced through internal promotion to ensure Alistair’s CIO responsibilities are seamlessly taken forward. The management team wishes Alistair and his family well in their new life abroad,” the group’s directors said.
CEO Andrew Coombs thanked Marks for his contributions. He said the group’s performance in the first half, trading in line with expectations against the backdrop of challenging conditions in both markets, demonstrated “the strength of the Sirius platform and our people”'
Sirius’s share price slipped 0.5% to R19.88 on the JSE yesterday afternoon, but the price is more than 40% above the R14.19 that it traded at the same time last year.