- Investors shrug-off raised dividend
- Recession risks keep investors in caution mode
- Analyst flags asset management ‘success’
German business park investor Sirius Real Estate (SRE) doesn’t seem to be convincing the market despite solid full-year performance, a higher dividend and in-line guidance on current trading.
Investors are clearly concerned about the economic backdrop and the shares were marked down 2.2% to 108.2p, extending year-to-date losses to nearly 25%.
The FTSE 250 constituent saw its rent roll from industrial parks and flexible workspace advance 73% to €167 million in the 12 months to 31 March. Funds from operations - equivalent to operating cash flow - increased 22.5% to €74.6 million.
This was supported by the €288 million acquisition of BizSpace, marking its entry into the UK market, and €201.9 million worth of deals in Germany. BizSpace seems to have made a good start under Sirius’ ownership with the like-for-like annualised rent roll up 7.6% in the four-and-half months since the deal completed in November 2021.
CONFIDENCE IN THE OUTLOOK
Marking some confidence in the outlook, management lifted the divided by 16.1% year-on-year to 4.41 (euro) cents and confirmed trading was on track with expectations in the first two-and-a-half months of the current financial year.
Berenberg analyst Kai Klose commented that the increase in the value of the portfolio ‘resulted from yield compression and higher rents and occupancy levels, reflecting the company’s success in asset and property management’.
He added: ‘We believe that the latter will also lead in the current fiscal year to a positive development in asset values, even as interest rates rise. Sirius noted that rental demand remained strong also in April and May.
‘Letting enquiries in Germany during the last fiscal year were above the previous year’s level for almost every month, while the retention rate of existing tenants increased by 300 basis points year-on-year to 75%.’
