In mid-November we announced our half-year results for the six months ended 30 September 2022, another strong set of numbers that highlighted the resilience of our business model. In this blog, I want to take some time to reflect on these and set out why we’re confident of continued resilience looking ahead to 2023.

To recap, we saw revenues increase 47.7% to €130.6 million, our like for like annualised rent roll increased 2.4% in Germany and 4.1% in the UK, and our underlying profit for the period increased by 78.7%. Just over half of this came from the acquisition of BizSpace in the UKand the rest from a mixture of organic and acquisitive growth in Germany.

We have seen funds from operations (FFO) grow 47% to €48.5m, which works out to a €97m annual run-rate – bringing our €100m FFO ambition within sight in the short term.

We also continued in our commitment to rewarding our shareholders with a progressive dividend, in this case a 32.4% increase in dividend per share which is over 1.5 times covered by earnings.

You can read more on the numbers in the release here.

Resilience baked in

Our business model is built to enable us to be flexible and resilient, in a number of ways.

Our asset management approach means we’re sensitive to tenant demand and needs, as well as highly attuned to the local markets in which our business parks are located across Germany and the UK.

We focus on acquiring and managing spaces where we can implement improvements to the space, together with the flexibility to quickly pivot towards local demand and alter spaces in order to best suit what tenants require, and adapt to macro trends such as the evolving working patterns brought about by the pandemic.

Moreover, we have secured fixed price contracts for a significant portion of our utility demands in both Germany and the UK, which will help insulate our tenants and us from turbulence in the global energy markets.

Finally, there’s the structural factor of our tenant base being diverse in terms of the sector, size and geography of our customers and properties, meaning that our exposure to any one business or economic area is strictly limited.

All told, this means we believe we’ll continue to be both resilient and well placed as we look ahead to next year.

Steady occupier demand

There are a number of key trends that we’re observing, that underpin steady demand for our spaces from occupiers in both Germany and the UK.

In Germany, more than 50% of the economy is made up by SMEs in terms of both employment and output, meaning a high level of diversity in terms of sectors, as well as the size and scale of end users.

The German economy as a whole has proven more resilient than most, with GDP growth expected to be positive in 2023, supported by an extensive energy relief package worth up to €200bn known in Germany as the Defence Shield.

In particular we’re seeing growing demand from customers in Germany for storage and industrial space, which we’re able to match with our flexible and adaptable spaces across the country.

In the UK, we’re seeing a sustained increase in demand for small out of town flexible office space, which is up 143% compared with before the pandemic and 64% compared with H1 2021. In Germany there’s also the longer-term shift to nearshoring production, which is underpinning strong demand for German light industrial spaces.

Looking ahead to 2023

We’re looking ahead to the next year with optimism, as we build towards and beyond our €100m FFO target and continue to empower our tenants to unlock the potential of their businesses, through the right spaces and support.

As always, I’d like to extend my thanks to everyone at Sirius in Germany and the UK for their continuing hard work and dedication, as well our register of shareholders throughout the UK, South Africa, USA and Europe.