Sirius Real Estate LON: SRE reported higher full-year funds from operations, rental income and dividends for the period ended March 31, 2026, as management said acquisitions and like-for-like rent roll growth offset macroeconomic pressure in the U.K. and Europe.
Group Chief Executive Officer Andrew Coombs said the owner and operator of mixed-use light industrial business parks delivered “another year of business as usual” despite “macroeconomic headwinds and political uncertainty.” Sirius operates more than EUR 3 billion of property across more than 160 sites and nearly 2,000 commercial buildings in Germany and the U.K., with 90% of the portfolio wholly owned.
For the year, funds from operations rose 8.4% to EUR 133.5 million, while FFO per share increased 4.5%. Rental income rose 11.4% to EUR 239.8 million, and Group Chief Financial Officer Chris Bowman said the company ended the year with rent roll “well in excess of EUR 250 million,” adding that “there is growth baked into our portfolio for the year ahead.”
The company declared a second-half dividend of EUR 0.0322 per share, bringing the total dividend for the year to EUR 0.064, up 4.1% from the prior year. Bowman said the increase marked the company’s 25th consecutive period of dividend growth.
Acquisitions Drive Rent Roll Growth
Sirius said group like-for-like rent roll increased 6.4%, while total rent roll grew by more than 11% as acquisitions contributed to the portfolio. Bowman said the company completed or notarized EUR 513 million of acquisition activity during the period, bringing EUR 36 million of net operating income, only about half of which was reflected in the fiscal 2026 profit and loss statement.
“We essentially have baked in growth to come from all of that acquisition activity,” Bowman said. He added that the acquisitions were made at an average 8.2% gross yield and 7.6% net yield, above the yields on the existing portfolio.
Investment properties increased by just over EUR 500 million, reflecting roughly EUR 400 million of completed acquisitions and a EUR 110 million valuation uplift. Bowman said yields were “essentially stable,” and the valuation gain reflected management’s focus on driving rental income. Profit before tax rose 5% to EUR 211 million.
Corporate costs and overheads increased 3%, below the rate of portfolio growth, which Bowman said demonstrated operational leverage. EBITDA rose 11.6% to EUR 158.3 million.
Finance expense remained the company’s “biggest headwind,” Bowman said, as Sirius moves from very low-cost debt toward what he called “more normal levels.” He guided to an incremental cost of debt of around 4%.
Germany Outperforms U.K. Amid Softer British Demand
In Germany, annualized rent roll rose nearly 18%, helped by acquisitions and 7.3% like-for-like organic growth. Coombs said occupancy and rates increased, while new business sales volume rose 12% from the prior year. He cautioned, however, that the company was “still having to work very hard” to keep move-ins, move-outs and expansions in balance.
German acquisitions highlighted by management included assets in Dresden, Geilenkirchen and Mönchengladbach, as well as defense-related properties in Feldkirchen, Kiel and Fulda.
In the U.K., annualized rent roll increased by nearly 20%, though Coombs said the business was more dependent on acquisitions and worked from a lower base than Germany. U.K. like-for-like rent roll rose 4.6% through increases in rate and occupancy.
Coombs said the U.K. was the weaker of the two markets during the period, particularly in the fourth quarter of the last calendar year, when political uncertainty around the U.K. budget affected tenant demand. New business sales in the U.K. were down by 22,000 square meters year over year, but the company offset that through churn management.
“The U.K. ended the financial year with strong momentum, and I’m pleased to tell you that momentum has continued into April and May,” Coombs said.
Self-Storage and Defense Become Larger Strategic Themes
Management reiterated its ambition to reach EUR 150 million of FFO, which Coombs said should be less than a year away, and then to pursue a longer-term ambition of EUR 175 million. He identified self-storage and defense-related property as two key contributors to that next stage of growth.
Sirius currently operates its Smartspace self-storage product in more than 30 locations in Germany, serving just over 4,000 customers, and in four U.K. locations. Coombs said the company has started building its first dedicated self-storage store in Berlin and will soon begin converting a small number of U.K. sites into dedicated stores. He said Sirius can see a path to more than doubling self-storage revenue, which currently exceeds EUR 6 million.
During the question-and-answer session, Coombs said the self-storage offering is differentiated by its ability to serve business customers across a broader “storage journey,” from small boxes to containers and larger storage halls. He said Sirius already owns land in locations where new residential development is occurring, including Berlin-Gartenfeld and Chalcroft, which could support additional storage demand.
On defense, Coombs said Sirius has acquired just over EUR 200 million of defense-related assets in the last 12 months at nearly a 9% gross yield. The company’s ambition is to build a defense-related property portfolio of around EUR 500 million before seeking third-party capital for a joint venture.
Coombs emphasized that defense would remain a minority portion of the business. “Sirius is never going to be a predominantly defense-related property company,” he said, while adding that the opportunity in defense-related industrial property is larger than Sirius could pursue with its own balance sheet alone.
Capital Spending and Balance Sheet
Bowman said Sirius invested EUR 48.8 million of capital expenditure during the year, roughly two-thirds in Germany and one-third in the U.K. In Germany, the company continues to convert value-add assets into mature sites by refurbishing vacant space, reconfiguring units and improving lettability.
Over the last three years, Sirius has spent EUR 29.2 million on German value-add capital expenditure and achieved an average return on investment of 38%, according to Bowman. He said the company is targeting at least 100,000 square meters of refurbishment each year for the next three years and expects to continue targeting returns above 30% on value-add spending.
Bowman also pointed to new-build projects, including three production halls at Gartenfeld that were fully rented immediately and achieved rates above budget. Sirius is targeting internal rates of return of around 20% on selected new-build opportunities.
At year-end, cash stood at EUR 410 million, down from EUR 604 million as capital was deployed into assets. Coombs said the company had more than EUR 700 million of undrawn facilities and cash on the balance sheet. Bowman said a bond maturing in the near term had effectively been addressed through existing liquidity, and he highlighted the company’s EUR 300 million undrawn revolving credit facility as a source of flexibility for future refinancing.
Management also said it expects to continue recycling capital. Coombs said Sirius has typically recycled EUR 30 million to EUR 50 million annually and expects to recycle more than that over the next 12 months, while avoiding pressure to sell fixed amounts. Bowman noted that the sale of Pfungstadt is expected to complete during the summer for EUR 30 million.
Looking ahead, Coombs said trading remained strong in both Germany and the U.K. through April and May, while noting that the company is cautious about geopolitical developments, including events in Iran. He said future growth should be supported by current operating momentum and the full-year contribution from more than EUR 500 million of recently acquired property.
About Sirius Real Estate LON: SRE
Sirius is a property company listed on the main market and premium segment of the London Stock Exchange and the main board of the Johannesburg Stock Exchange. It is a leading operator of branded business parks providing conventional space and flexible workspace in Germany. The Company's core strategy is the acquisition of business parks at attractive yields, the integration of these business parks into its network of sites under the Company's own name as well as offering a range of branded products within those sites, and the reconfiguration and upgrade of existing and vacant space to appeal to the local market, through intensive asset management and investment.
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