Sirius Real Estate has reported higher full-year earnings as its operating platform continues to drive rental and funds from operations growth.
The group has highlighted increased defence spending in the UK and Germany as potential growth opportunities.
The group reported profit after tax for the year ended March grew to €178.2m from €107.9m a year ago and a 6.3% rise in like-for like rent roll growth to €205.6m, driven by continued strong organic growth and occupier demand in Germany and the UK.
Funds from operations (FFO) increased 11.8% to €123.2m and operating profit increased by 65.2% to €215.9m, the group said on Monday.
A second half dividend of 3.09c per share was declared, taking the total dividend for the year to 6.15c, up 1.7%.
During the year, the owner and operator of branded business and industrial parks in Germany and the UK, spent €270m on acquisitions and disposed of €46.3m of assets, at a premium to book value, it said.
It invested £141.5m in six UK acquisitions, adding £12.8m of annualised net operating income at an average gross yield of 10.7% and 93.2% occupancy, as well as €101.3m in Germany in six acquisitions at a 9.9% average gross yield, with 77.2% occupancy presenting an opportunity for future rental growth.
The group disposed of four assets in the UK with limited further growth opportunities.
Last week the group announced the disposal of a mature asset in Pfungstadt for €30m at premium to book value.
“This has been another strong year of performance for Sirius during which we have delivered for shareholders our 23rd consecutive increase in dividend over a 12-year period that has included a number of significantly challenging macro events,” CEO Andrew Coombs said.
The group successfully raised capital both in the debt and equity markets allowing it to take advantage of market timing and make some €270m of accretive acquisitions, he added.
“These have both added day one operating income and materially increased the pipeline of organic value creation opportunities within our portfolio.”
He added that the group would continue to focus on extracting the latent value within its existing portfolio, though its overriding priority for the year ahead is ensuring it fully capitalises on the remaining window of opportunity to make acquisitions before the next cycle begins in earnest, “given we may well either be at or near, and in some areas past, the bottom of the current cycle”.
The group is also working hard to ensure it is well placed to benefit from the recently announced increases in defence spending to 2.5% of GDP in the UK and Germany, where the government has outlined an expected €400bn on defence spending of a total €900bn security and infrastructure investment package.
“We believe that even if only a small part of this flows into our asset classes, defence has the potential to become a major growth sector and driver of demand for warehouse and manufacturing space, where the rent is ultimately government derived. We are actively positioning our offering to attract some of this expected business,” Coombs said.
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