Sirius Real Estate, the owner and operator of branded business and industrial parks providing conventional space and flexible workspace in Germany and the UK, saw rentals grow 2%-4% for the six months ended September.
In Germany, the like-for-like annualised rent roll rose 2.4% to €115.2m (R2.06bn), with the UK growing 4.1% to £46.5m (R955.4m).
“There are also many opportunities within our portfolio to unlock value and grow rental income through our successful asset management platform,” CEO Andrew Coombs said.
Coombs told Business Day that these opportunities include the organic growth programme that Sirius embarked on a few years ago. Through its active asset management and platform data, Sirius looks at demand and supply dynamics in different areas and how best to cater for these needs.
“A big driver is changing the space category, for example, turning a basement area into self-storage thereby turning it into a high-yielding space enabling us to charge higher rentals,” said Coombs.
Sirius is a property company listed on the London Stock Exchange and JSE. As of March 31, its portfolio comprised 140 assets let to 9,452 tenants with a total book value of more than €2bn and generating a total annualised rent roll of €167.1m.
About 7,554 enquiries for space within the Germany portfolio resulted in an average of 145 deals per month. In the UK, the 8,056 enquiries generated through the platform translated into 377 new deals in the first half of the year, an average of 63 per month.
Coombs told Business Day that due to strategic acquisitions last year, Sirius has over 200,000m2 of vacant space to meet growing demand from tenants.
“We continually identify and look for opportunities to upgrade space vacated each year as a result of move-outs.”
In the UK where demand outstrips available supply, when tenants paying £15/m2 move out, that same space can be re-let at £20/m2, said Coombs.
“The UK market suffers from chronic undersupply, and shortage of out of town industrial and office properties,” he said, adding that the company’s new pipeline was helping with that.
He said though there is oversupply of space in Germany, Sirius’s competitive advantage is its platform and range of product offerings enabling the company to attract tenants and increase rentals.
“We aim to reach rental growth of 10%, but in the current economic environment it will take us longer to reach this target, especially when Germany is still below 4% — we are most likely going to achieve 6%-7% if we consistently focus on what we are doing now,” said Coombs.
Coombs said BizSpace, acquired a year ago, continues to perform strongly while also achieving rental growth.
The company said it remained resilient and well positioned to navigate the existing macroeconomic climate due to its intensive asset management initiatives.
Interim revenue rose 47.7% to €130.6m, while funds from operations grew 47% to €48.5m. Dividend per share went up 32.4%to 2.7c per share.
Coombs said the group has paused acquiring new assets due to market uncertainty to focus on strengthening the balance sheet.
At the end of March, its net loan-to-value (LTV) reached 41% and Sirius intends reducing this to the 40% target range.
“As we navigate through a challenging macroeconomic climate in Europe, Sirius remains well positioned to continue growing due to its intensive asset management initiatives, diversified offerings as well as an effective and dynamic business model,” said Coombs.
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