Solid German assets boost Sirius dividend growth
The group has experienced strong growth for the past three years and wants to reward its South African shareholders who are seeking euro-denominated income
German business park and self-storage asset owner Sirius Real Estate has increased its dividend per share to 1.56c from 1.39c for the six months to the end of September, a 12.2% rise from the same period a year ago.
Sirius also temporarily raised its payout ratio of funds from operations from 65% to 75%.
The group has experienced strong growth for the past three years and wants to reward its South African shareholders who are seeking euro-denominated income. Sirius’s share price is up more than 50% year to date. The group has benefited from accretive acquisitions and strong performing German assets.
Funds from operations grew 8.2% to €18.5m during the six months, with a temporary increase in the payout ratio aimed at maintaining positive dividend growth and offsetting the loss of income from disposals, the company said.
Profit before tax in the period grew 44.5% year on year to €54.7m, with like-for-like annualised income increasing 2% to €65.2m.
Sirius’s adjusted net value per share increased 7.8% to 63.4c from 58.82c, excluding provisions for deferred tax and derivative financial instruments.
During the period the company disposed of three assets and, excluding these, its portfolio increased by €53m to €857m.
"The occupational demand for our space offerings continues to be strong and it is … pleasing to see our management platform is capitalising on this. We are also encouraged that, despite seeing stronger competition for assets in 2017, our recycling programme is progressing well and we expect to complete it by the financial year end," said CEO Andrew Coombs.
South African investors who bought Sirius shares early have praised the stock.
"Sirius have continued their growth path and have once again achieved more than satisfactory results. On the one hand German fundamentals have shown positive signs and on the other hand Sirius management have demonstrated that not only are they capable of structuring and building a quality property portfolio, but they are also capable of recycling mature assets in order to take advantage of more opportunistic acquisitions," said Chris Segar of Ivy Asset Management.
While some local real estate investment trusts were not increasing distributions, Sirius’s double-digit announcement was pleasing, he said.