Sirius Real Estate (LSE: SRE), which operates branded business and industrial parks in Germany and the UK, has reported another strong year of performance for the 12 months to 31 March 2025, delivering its twelfth consecutive annual dividend increase and continuing to build scale through targeted acquisitions.
The group’s funds from operations (FFO) increased by 11.8% to €123.2m, underpinned by like-for-like rent roll growth of 6.3% to €205.6m. This growth reflects continued strong occupier demand across both markets and Sirius’s active asset management approach. However, FFO per share dipped slightly to 8.44c (from 8.95c) due to the timing lag between equity raised in late 2023 and mid-2024 and the full deployment of those proceeds into income-generating assets.
Sirius’s profit before tax jumped 75% to €201.6m, driven in part by an €81m asset management-led valuation gain. Operating profit rose 65.2% to €215.9m, while EPRA net tangible assets (NTA) per share increased 7.1% to 117.61c, underscoring the resilience of the portfolio in a still-cautious investment market.
The company has declared a second-half dividend of 3.09c, taking the full-year payout to 6.15c – a 1.7% increase on the prior year and marking its 23rd progressive dividend since adopting its current strategy.
Significant transactional activity
Sirius was notably active in capital markets and acquisitions over the year. It completed €270m of new acquisitions – €168.7m across six assets in the UK at a 10.7% average gross yield and €101.3m in Germany at a 9.9% yield. These deals added a combined €14.3m in annualised net operating income and came with high occupancy rates and value-add potential. Importantly, Sirius sees further rental reversion opportunities in the German assets, which are 77.2% occupied on average.
Disposals totalled €46.3m, including four UK assets and a post-year-end sale in Germany, all transacted at a premium to book value. This highlights the group’s ability to recycle capital efficiently into higher-yielding, more strategic opportunities.
Sirius also raised €180.9m in equity (net €174.5m) and issued €410m in long-dated bonds, helping boost its cash position to €571.3m by year-end and reducing net LTV to 31.4% (from 33.9%). This leaves the group well-capitalised heading into a period where management sees a narrowing window of opportunity to acquire quality assets at favourable pricing, ahead of the next market upturn.
Outlook
Sirius says trading in the new financial year is in line with expectations, and its focus remains on maximising income and capital value from its enlarged portfolio. The company is also positioning itself to benefit from increased defence and infrastructure spending in Germany and the UK – particularly in industrial sectors with long-term government-related demand.
Chief executive Andrew Coombs noted: “We are actively positioning our offering to attract some of this expected business. 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.”
[QD comment MR: This is another solid performance from Sirius Real Estate, which continues to execute its strategy effectively across two of Europe’s largest industrial and business space markets. It shows that it can grow rents, generate valuation gains, and maintain high occupancy – even while raising and deploying significant capital. The slight dip in FFO per share highlights the dilution from equity raises, but hopefully this will unwind as the acquisitions bed in. Perhaps most interesting is the group’s positioning for a potential upswing in defence-related demand. If this materialises, Sirius could be well-positioned given both its flexible model and existing government-aligned tenants, especially at a time when logistics and industrial space remain in structural demand.]
