Sirius Real Estate achieved an 8.2% increase in overall rent roll for the year ended March, as management improved both rates and occupancy across the portfolio in spite of the wider macroeconomic conditions.
The owner and operator of branded business and industrial parks said rent roll was up 7.2% on a like-for-like basis. Cash collection has remained robust at above 98% on a rolling 12-month basis.
The group said in a trading update on Monday it expected to deliver full-year results in line with market expectations.
In Germany, rent roll benefited from greater occupancy as the group focused efforts on selling vacant space and improving tenant retention.
“With inflation now having fallen significantly since last year, we have again demonstrated the strength of our in-house asset management platform to manage product mix and occupancy carefully alongside rates, with the aim of generating the best overall returns from our space,” it said.
While it expects to see some slight yield expansion in the year-end property valuations for Germany, it anticipates the strong operational performance will translate into an increase in value of the German portfolio.
In the UK, the group continues to achieve above inflation rate increases in rent, albeit at slightly lower levels than in the recent past. As with Germany, the group has successfully focused its efforts on occupancy, where we have delivered an improvement.
Recent UK acquisitions have had a “materially positive effect” on the absolute rent roll given their materiality in the context of the business, it said.
“We expect to see valuation yields continue to expand in the UK, albeit our continued operational focus on driving rental income will offset much of the effect of yield changes on the portfolio valuation.”
Overall, it expects to announce a positive valuation movement at group level at the year end.
In November 2023, Sirius completed an oversubscribed equity fundraising of €165m to provide funds to execute on a pipeline of acquisition opportunities.
“We have successfully executed on that pipeline in the second half of the financial year, notarising or acquiring approximately €150m of assets. €96m of which were in the UK.”
The group made four acquisitions in Germany totalling €55m. Disposals in the second half amounted to €51m.
Sirius said its balance sheet remains strong with free cash reserves of about €220m as of end-March.
“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 CEO 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,” he said.
Sirius will release annual results on June 3.
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