AXA tie-up puts Sirius Real Estate on a path to growth
German property owner Sirius has joined forces tied up with AXA Investment Managers
Sirius Real Estate which is the only German-focused property stock on the JSE, says it looks set to double its asset base in that country in about two years following a tie-up with one of the world's largest asset managers.
The joint venture has set Sirius on a new growth path and the company now wants to double its asset base from €1bn to €2bn in a maximum of two years, because it has partnered with AXA Investment Managers, an investment manager which already manages €730bn worth of assets across the world, and which is enabling it to bid for larger deals.
The join venture is called Titanium, and it was established in February. The venture has already acquired €230m (R3.65bn) worth of assets in just two months.
Sirius, which is also listed on the London Stock Exchange and invests in flexible office space and storage facilities in the world's fourth-largest economy, released a trading statement for the year to March on Monday in which it detailed its progress in working with AXA.
CEO Andrew Coombs said the quality of assets it had acquired with the help of AXA was exceptionally high and Sirius's profile had been raised significantly by being in the joint venture.
Sirius said it would grow its income 6.2% in euro terms, breaching 5% growth for the fourth year in a row. This would translate to growth in Sirius's dividend of between 4% and 4.5% in euros.
This was while South African invested property funds have warned in the recently completed financial results season that their dividends will at best grow between 0% and 2% in rand terms, if at all, with a few funds warning that their dividends will shrink.
South African investors have supported Sirius since it listed, because it pays dividends in euro and acts as a currency hedge. It owns an asset portfolio worth more than €1bn and has been a consistent performer since it listed on the JSE's Alternate Exchange, later moving to the main board of the borse.
Sirius's share price had climbed 96% since it listed at R6 on December 5 2014, after it closed 7.31% higher at R11.75 on Monday.
Chris Segar, a portfolio manager at Ivy Asset Management, said Sirius was an attractive investment which he had backed for a few years.
"They are still demonstrating that they can effectively recycle mature assets and deploy the capital to achieve enhanced returns. I like the acquisitions that they made in Freiburg and Hamburg recently; these are great nodes for them. However, I would like to get more information about Titanium, to better understand how it will work in practice," he said.
Segar said credit needed to be given to management for achieving rental growth of 6%, which was far above Germany's inflation rate of 1.2%.