Sirius to convert its UK business to a Reit

Sirius Real Estate, the JSE-listed German flexible office specialist landlord, said on Tuesday it would convert its UK business to a real estate investment trust (Reit).

By entering the UK Reit regime, the property company will no longer be subject to UK corporation tax on income or gains from its property rental business and will be required to pay 90% or more of its UK property rental business income to shareholders annually as property income distributions.

The Reit conversion will take effect on April 1.

Sirius entered the UK market in November last year when it acquired BizSpace in a £245m (R4.8bn) deal. BizSpace provides regional flexible workspace, including light industrial, workshop, studio and out-of-town office units to a wide range of businesses across the UK.

The company said the Reit conversion will not affect its current dividend policy of paying out 65% of annual funds from operations (FFO), its main operating performance metric, as well as property income distributions.

“The proposed conversion to a UK Reit is a natural progression following the company’s transformational acquisition of BizSpace in the UK last year and provides greater comparability to other UK Reits in terms of our FFO and dividend yields for investment purposes,” CEO Andrew Coombs said in a statement.

Sirius, whose property portfolio value was €1.4bn as at September 2021, was less affected by the work-from-home trend given that many of its properties lie on the outskirts of German towns as opposed to densely populated cities. People were less nervous about working in an office or at a factory when there was less density.

mahlangua@business.co..za