Sirius

 

As we start a new decade many people have been reflecting on the past ten years – their achievements, highlights and the challenges they’ve faced. I’ve been thinking about this too – and now seems like as good a time as any to review the decade for Sirius. Of course, 2020 is doubly poignant for me as it marks my tenth year as CEO. I think it’s fair to say that it’s been a remarkable few years!  

 

Emerging from the financial crisis

 

Casting our minds back to 2010, we remember Sirius in a very different place to today. Emerging from the global financial crisis, we had a market cap of less than £50 million, were faced with a cashflow crisis that prompted the breach of covenants on a large bank loan, and had just issued a profit warning. By 2011, our share price was plummeting and shareholders were receiving no dividends at all. 

 

Ringing the changes

 

From January 2010, we began reorganising the business, reducing headcount and increasing the proportion of the workforce in customer facing and business critical roles. Critically, in January 2012 CFO Alistair Marks and I negotiated the internalisation of Sirius‘ management company, in effect a reverse buyout. In doing so, we aligned the management of the company with the interests of the shareholders, and gave us the freedom to dispose of properties in order to improve our balance sheet. 

 

Journey to South Africa

 

In 2013, we took the Sirius story to investors in South Africa. By this point in our restructuring process, our share price was so highly discounted to net asset value, that it was almost uninvestable for the majority of institutions in London. South African investors, however, were interested in an off-shore London listed stock, allowing us to dual list between South Africa and London in 2014 – a move since followed by numerous household names, including Schroders. 

 

Road to recovery

 

By January 2015 Sirius was raising capital in both London and South Africa, and beginning once again to acquire new assets in Germany. Since then, Sirius has raised €166 million in capital across five separate placings, doubled the number of business parks we own to over 60, and in 2016 hit the milestone of 15% total shareholder return, which we have consistently continued since. 

 

Continued success

 

In 2017, Sirius moved up to the main markets in London and South Africa, and is now a constituent of the FTSE 250 as well as the FTSE EPRA NAREIT Global Index, the US NAREIT and the South African Property Index. 

In 2019 Sirius entered into a Joint Venture with AXA Investment Managers – Real Assets, with whom we own and manage a portfolio of German assets worth nearly €200 million. Sirius own and operate our own portfolio worth nearly €1.1 billion, as well as managing nearly €100 million in assets for third parties. 

Today Sirius boasts a shareholder register of institutional names including Blackrock, Allianz, Old Mutual, Schroders, BMO, Standard Life Aberdeen and Investec to name just a few, and shareholders have been experiencing consistent double digit returns for over five years.

 

Ongoing differentiation

 

I attribute much of our success at Sirius over the past ten years to the fact that Sirius is different from most property companies. Since 2010, we have focussed on two key areas of differentiation: the first, the fact that all our business parks are staffed, meaning that Sirius is not just a property business, but rather a combined proposition of property and services; and the second our emphasis on earnings growth rather than net asset value, having recognised that net asset value is not enough on its own. 

Going forward, we will continue to focus on growing earnings and Funds From Operations over the medium term, so that our impressive growth story can continue into the new decade.

The success we have achieved over the past decade is a true testament to the skills, talent and tenacity of my colleages. We’ve already achieved so much together, and as we enter the new decade, I am convinced we can achieve even more.