Germany-focused business park owner Sirius Real Estate (SRE) expects its dividend to rise 25% in the year to March thanks to new acquisitions and an effective capital expenditure programme.
The previous dividend for the year to March 2015 was 1.6 euro cents and Sirius’s expectation for March 2016 was 2c.
Sirius’s share price closed 5.79% higher on Monday‚ after it said annualised rental income would exceed €60m (R1bn) for the first time‚ when it releases financial results for the year to March.
Its share price has risen about 27% since it listed on the AltX in December 2014‚ and it was one of the best-performing AltX-listed companies last year in terms of share price growth.
Its market capitalisation is now R5.7bn and it is expected to move to the JSE main board later this year.
UK-based mid- and small-cap stockbroker Peel Hunt said Monday’s trading updates was positive and “could result in a decent circa 7% earnings per share and dividend per share upgrade for the next financial year to March 2017”.
Sirius was a pure German industrial play and it offered growing income exposure.
The company announced it had acquired a business park in Mainz in for €25.1m‚ which would add a further €2m to the group’s net operating income‚ for an 8% net yield.
The deal would be funded by a new €16m five-year loan at a low fixed-cost rate of 1.58%‚ which meant Sirius would achieve a 19% cash-on-cash return.
ClucasGray portfolio manager Brendon Hubbard said Sirius also had impressive refinancing plans‚ which boded well for future acquisitions.
“Importantly‚ Sirius is in discussions to refinance its largest bank facility of €111m‚ which expires in March 2019‚ with a lower cost of debt‚ and to increase the facility size to €137m to fund the new acquisitions‚” he said.
Sirius CEO Andrew Coombs said two potential acquisitions were under offer‚ one in Krefeld and one in Markgröningen‚ which should be completed by the end of the month‚ adding a further €2m of net operating income.
He said Sirius’s capital investment programme was also performing well.
“It continues to be the strongest driver of organic rental growth. At the end of March this year‚ around 65% of the original programme to transform approximately 100‚000 square metres of previously unlettable or under-rented space had been completed‚” he said.
“The most significant element of our capex investment initiatives is transforming difficult space into our Smartspace products‚” he said.
Smartspace refers to specialist office space and storage facilities for small businesses.
“This has been another good year for Sirius‚” Mr Coombs said.
“Prevailing market conditions remain supportive for the business. The German economy is robust and we continue to capitalise on the low interest rate environment to reduce our cost of debt significantly‚ diversify our lenders and extend the weighted average expiry of our funding.”
source" BDpro
