Sirius, the leading owner and operator of branded business and industrial parks in Germany and the UK has seen income from rent increase due to high demand for its assets.
In a trading update for the six months ended September, like-for-like rent roll grew by 7.7% in the period.
The German portfolio has stable occupancies with rental growth above inflation achieved due to using the proprietary asset management to unlock value.
Sirius said on Monday that it continued to drive value from BizSpace, which provides regional flexible workspace, offering light industrial, workshop, studio and out of town office units to businesses across the UK.
“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,” CEO Andrew Coombs said.
Coombs said occupancies in the UK portfolio were higher than the previous six months period with rent roll exceeding £50m for the first time due to record new business sales in September.
The London and JSE-listed property group consistently delivers a stable and attractive return for investors.
Due to high demand for space in both Germany and the UK, the company is able to increase rentals with little resistance from tenants.
Sirius acquired two mixed-use industrial properties for £9.5m at a 9.6% net initial yield in the UK and disposed of the Kassel business park in the southwest of Germany for €7.3m at net initial yield of 6%.
“The sale of Kassel at above book value, together with strong trading across the German portfolio, underpins our expectation that valuations for the period end will again outrun any negative yield expansion.”
Coombs said the group’s disposal strategy remains opportunistic and focused on noncore or mature assets where they have continued to achieve returns in excess of book value.
“We remain disciplined in our approach to acquisitions and continue to see a healthy pipeline of potential opportunities across Germany and the UK,” Coombs said.
Sirius has €112m of cash reserves of which €88m is unrestricted. The group refinanced its Deutsche Pfandbriefbank (PBB) loan facility of €58.3m with a seven-year term at a fixed interest rate of 4.25% ahead of it its due date on December 31.
Additionally, Sirius repaid its expiring Schuldschein debt of €20m — and from commencement of the new PBB facility at the end of December — the group will have a weighted average cost of debt of 2.1% and a weighted average debt expiry of 4.2 years.
“Our performance in the first half, trading in line with expectations against the backdrop of challenging conditions in both our markets, demonstrates the strength of the Sirius platform and our people,” added Coombs.
The group welcomed Chris Bowman to CFO position following the handover from acting interim CFO Alistair Marks, who stepped down from the Sirius board in July 2023 and will leave the group at the end of March 2024.
Marks has been with the group since inception in 2007, becoming CFO in 2012, following internalisation and more recently as chief investment officer (CIO).
The group said succession plans are well advanced internally to fill the CIO position.
Sirius will announce results for the six months ended September November 20.
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