Yahoo Finance

• Funds From Operations (FFO): Increased by 14.5% to EUR60.7 million.

• Rental Income: Grew by 17.3% to EUR104.5 million.

• Net Asset Value (NAV): Increased by 1.2% to EUR112.49 per share.

• Group Like-for-Like Annualized Rent Roll: Increased by 5.5%.

• Dividend: Announced 22nd consecutive increase to EUR3.06 per share, with a payout ratio of 71%.

• Cash Balance: EUR297 million, with EUR200 million available for acquisitions.

• Cost of Debt: Average cost at 2.1%.

• Net Loan-to-Value (LTV): 30.5%.

• UK Rent Roll Increase: EUR15 million, with one-third from like-for-like growth.

• German Rent Roll Increase: EUR10 million, with 75% from like-for-like performance.

• Acquisition Firepower: EUR200 million available for future investments.

• Warning! GuruFocus has detected 6 Warning Signs with SRRLF.

Release Date: November 18, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sirius Real Estate Ltd (SRRLF) reported a 14.5% increase in funds from operations (FFO), driven by a 5.5% increase in group like-for-like annualized rent roll.

• The company announced its 22nd consecutive dividend increase, with a dividend of EUR3.06, which is 1.4 times covered by earnings.

• Sirius Real Estate Ltd (SRRLF) has a strong balance sheet with just under EUR300 million of firepower ready to invest.

• The company achieved a 17.3% growth in rental income, attributed to both organic and acquisitive growth, with the portfolio being 11% larger than the previous year.

• The net asset value (NAV) increased by 1.2%, reflecting a stable financial position and potential for future growth.

Negative Points

• The end of favorable utility hedging contracts in Germany led to increased utility costs, impacting service charge margins.

• In the UK, Sirius Real Estate Ltd (SRRLF) faces challenges with occupancy due to the need to churn tenants who cannot meet increased pricing.

• The company is experiencing a slight yield expansion in the UK, contrasting with the stabilization seen in Germany.

• There is a need to lower new business pricing in the UK to attract more volume, which may impact short-term revenue growth.

• The acquisition pipeline is not as strong as desired, and the company is cautious about rushing into new purchases, which could delay capital deployment.

Q & A Highlights

Q: Can you provide insights into the asset recycling strategy and what constitutes a "dry" asset for Sirius Real Estate? A: Andrew Coombs, CEO, explained that determining a "dry" asset isn't straightforward. Some assets, like those in Munich, may seem dry but hold potential for future residential development, making them valuable long-term. Conversely, assets like Banbury, with fewer tenants, can be sold for a profit after lease extensions. The focus is on selling assets that may become capital-challenged and reinvesting in more promising opportunities. The approach is opportunistic, aiming to maximize value rather than flooding the market with sales.