Sirius Real Estate, a leading owner and operator of business parks, industrial complexes, and offices in the UK and Germany, has reported an 11.3% increase in overall rent roll for the half-year to end-September. The growth was driven by a combination of organic and acquisitive growth, with 5.1% coming from like-for-like rent roll growth. The company's performance was characterised by disciplined execution by its operating platform, with a focus on capturing asset management potential within its portfolio.
The company's UK and German businesses performed at broadly similar levels of organic growth, with Germany driving acquisitive growth. Sirius deployed approximately €150m into asset acquisitions at gross yields of more than 8%, with a focus on defence-related occupiers. These investments included business parks in Kiel and Fulda, Germany, which are home to Rheinmetall's land vehicle electrical systems testing business and a leading European ballistic protection manufacturer, respectively.
The investments enhance Sirius' exposure to locations supported by the growing requirements of the defence sector, driven by rearmament programmes across Europe. Germany intends to increase its military spending to €180bn in 2030, representing 3.5% of its GDP, and has released a €500bn 10-year infrastructure fund. This provides a supportive tailwind for the company's growth ambitions in the defence sector.
In addition to its defence-related investments, Sirius acquired a strategically located parcel of land adjacent to its existing Potsdam site near Berlin, providing potential for future self-storage development. The company is also developing its first standalone self-storage store at Berlin Gartenfeld and a new low-cost industrial storage concept on vacant non-income producing land at its Hanover site.
Sirius disposed of two smaller sites in the Sheffield area in the UK and plans to maintain a disciplined approach to rationalising its portfolio. The company will focus on recycling capital into larger assets with greater value-add opportunities in line with its industrial park model. Its acquisition pipeline remains strong, and it will remain disciplined in allocating capital into opportunities that meet its ambitious double-digit return targets.
CEO Andrew Coombs stated that the strong period of double-digit rent roll growth demonstrates the resilience and strength of the company's operating platform. He added that Sirius' diversified portfolio, vertically integrated platform, and disciplined approach leave it well-positioned to drive returns across its existing and recently acquired assets.
Sirius expects the base effects of the UK's high energy prices to pass through in early 2027 and anticipates a more benign environment for its UK business going into its 2028 financial year. The company will release its first-half results on November 16 and remains confident in its operating platform's ability to deliver double-digit total accounting returns despite potential rises in costs of debt.
Key points
- Sirius Real Estate achieves 11.3% rent roll growth in half-year to September
- Company invests €150m in asset acquisitions with focus on defence-related occupiers
- Sirius expects benign environment for UK business in 2028 financial year
