Sirius Real Estate Sirius Real Estate, JSE and London listed owner of industrial parks in Germany and the UK, made 13 asset acquisitions through its financial year to March 31, 2025, and it began to focus on space where defence industry tenants might grow, given increased spending in this sector by governments.
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Sirius Real Estate has increased its rent roll by a strong 18.4% for the year to March 31 following asset acquisitions and strong demand for space in its branded business and industrial parks in Germany and the UK.
The JSE and London-listed Real Estate Investment Trust said in a trading update Monday that organic, like-for-like rent roll growth had also been strong at 6,4%. It is the 12th consecutive year where rental roll growth exceeded 5%. Thirteen asset acquisitions were made as strategy moved towards growing defence industry space requirements.
“We invested £464 million into primarily resilient, income-generating assets that also offer the opportunity to create value through our platform. Around a third of this was invested into business parks that bolster our portfolio of industrial assets let to defence-related businesses, which we expect to continue to benefit from increased government-led defence spending across Europe and further afield," said CEO Andrew Coombs.
In Germany, anticipated move-outs in the first half were more than offset by pricing gains on renewals and heightened occupier activity, particularly in the final quarter.
The in-house asset management platform was able to capture rate growth and occupancy gains. In spite of the volatile geopolitical backdrop, the increase in income was expected to convert into valuation growth in the German portfolio at the year end, supported by stable property yields.
In the UK, a solid performance was impacted by prolonged political uncertainty around the Chancellor's Autumn Statement, which was delayed to the end of November 2023.
This led to a slower occupational market in the final three months of calendar 2023, with weaker customer confidence leading to deferred decision-making, as well as the sale of smaller spaces due to occupiers noticeably reducing their propensity to factor in future growth ambitions.
However, following publication of the Autumn Statement, which restored some certainty into the market, “2026 started very strongly, with occupier sales metrics suggesting some catch-up and mitigation of the third quarter's weakness, nonetheless leading to reasonable like-for-like rent roll growth in the U.K. over the whole year,” said Coombs and CFO Chis Bowman in a statement.
Property valuations in the UK were likely to be maintained. Overall, the group anticipated a positive valuation movement at group level at the period end.
The asset acquisitions brought a total investment value of £464m Three of the assets, Bedford, Feldkirchen and Kiel, representing £155m in investment, have a significant defence component to their tenant base.
“These acquisitions fall in line with our strategy of building a portfolio of defence-related properties in Germany and the UK and are complementary to our traditional business parks,” Coombs and Bowman said.
Both countries announced material increases in defence spend, with Germany in particular seeking to grow spend to 5% of GDP through committed fiscal stimulus of around £400 billion.
“We believe this significant government funding will have a material effect on the demand for the types of industrial space that Sirius provides, with the urgency of the requirement making existing stock the only feasible option at scale,” the directors said.
Sirius maintained a strong balance sheet as demonstrated recently through the renewed and enlarged £300m revolving credit facility.
In February, a £77m equity fundraise was well oversubscribed, which was targeted at acquiring the asset in Kiel (with Rheinmetall as the anchor tenant) and one further defence-related asset together totalling £130m.
“We completed the acquisition of Kiel for a slightly improved price of £93.4m and did so within six weeks of the February capital raise and before the start of the new financial year.”
The group withdrew from the other transaction because the seller significantly increased their price expectations, but two alternative asset opportunities had been identified of about £30m, one of which was defence-related.
“We remain on track to generate the anticipated levels of funds from operations from the fundraise proceeds,” Coombs and Bowman said.
Sirius’ share price slipped 0.63% to R21.93 on Monday morning on the JSE, much in line with R21.27 a year ago. Sirius is expected to announce annual results on June 1, this year.
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