Sirius

 

Sirius Real Estate represents a unique opportunity for investors to gain exposure, through a UK REIT, to the attractive light industrial business park and out-of-town office sectors in Germany and more recently, in the UK, managed by a growing market leading owner and operator with a strong and long track record of value creation.

Having entered the UK market in November 2021 via the acquisition of BizSpace, a leading provider of regional flexible workspace, Sirius now intends to apply its proven asset management skills to this new market, having already increased BizSpace’s like-for-like annualised rent roll by 7.5% within the first 4.5 months of ownership.

Delivering a stable and attractive return profile

  • Sirius has delivered a double-digit total shareholder accounting return in excess of 13% over the last three years
  • The Group’s policy of distributing 65% of FFO as dividends ensures it maintains a well-covered dividend and provides the head-room to flex pay-out ratios as required
  • Full covered dividend, with consistent dividend growth over past 8 years, including throughout the Covid-19 pandemic
  • Defensive gross yield of 7% with valuation gains mainly resulting from income growth generated by asset management
  • Further value and income enhancement to come from a combination of asset recycling, filling vacant space in recently acquired assets, implementation and completion of accretive capex investment programmes and reductions in service charge leakage

Sirius has a well-structured, well-located portfolio…

  • Sirius owns and manages a portfolio of over €2.5 billion of property assets comprising industrial, manufacturing, office and storage assets in edge of town locations
  • Mixed-use assets are situated in strategic locations: in and around the “big seven” German markets(1) and in core regional hotspot clusters across the UK
  • Sirius has a well-diversified tenant base. In Germany, its top 50 tenants generate 45% of annual income. In the UK, 26% of annual income is generated by the top 100 tenants
  • Future value enhancement to come from developing and letting more than 118,000 sqm of vacant space in Germany and more than 45,000 sqm of vacant space in the UK
  • Sirius maintains overall group LTV at 45% or less, financing new acquisitions with up to 50% LTV using long-term, low interest debt and subsequently blending them with unencumbered assets in the portfolio

…in two highly attractive markets with strong, long-term fundamentals

  • The German economy is the largest in Europe: characterised by long term GDP growth, low unemployment and high levels of investment and consumer spending, it is forecast to grow by c. 1.9% in 2022 and 2.4% in 2023. 99% of German companies are SMEs - the core customer of Sirius
  • The UK’s regional flexible workspace and industrial market is characterised by chronic supply constraints, offering potential for significant rental growth and consolidation due to high levels of market fragmentation
  • Industrial assets can be acquired at attractive yields and at capital values well below replacement cost
  • Sirius seeks to buy assets with the potential to create value, predominantly through the asset management process by filling vacant space and converting space to higher value uses

Operating with a proven business model and solid track record

  • Sirius has proven capability in transforming assets through its capex investment programmes, which deliver returns in excess of 40% and enhance income and capital values. The Company also has a strong track record for growing its income and has delivered like-for-like rent roll growth in excess of 5% for the last eight consecutive years (within its German platform)
  • Unlike its competitors, Sirius has a fully integrated operating platform incorporating in-house marketing and sales functions that targets prospective tenants directly using online and offline techniques that lower risk and increase returns
  • Dedicated service charge team delivers best-in-class cost recovery by utilising advanced measurement and cost allocation techniques
  • The Company is led by a team of highly experienced individuals who have been tested over the full real estate investment cycle

Platform synergies help drive value creation

  • Industrial and out of town office markets in the UK and Germany share similar characteristics
  • BizSpace structure and internal operating platform complements Sirius’ existing German business, allowing for meaningful operational and financial synergies to drive value creation for Sirius shareholders
  • Sirius will apply its proven asset management skills to this new market and has already increased BizSpace’s like-for-like annualised rent roll by 7.5% within the first 4.5 months of ownership

 

Note 1: “Big seven” German markets identified as Frankfurt, Berlin, Munich, Hamburg, Dusseldorf, Cologne and Stuttgart

 

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