Update: Shareholders in Sirius Real Estate (SRE ) have backed a £145m cash call from the business park investor which has identified eight properties it wants to buy in the UK and Germany. 

In an accelerated book build yesterday, which included an offer to individual shareholders on the PrimaryBid app, the euro-denominated investment company raised £146.6m before expenses, slightly more than it was seeking from investors in the UK and South Africa.

Andrew Coombs, chief executive of the self-managed real estate investment trust, said Sirius was looking to buy €85m of properties in Germany and £45m in the UK.

Coombs said the eight target properties were all ‘under-utilised, multi-let, mixed-use properties primarily located outside city centres’ in areas of high density of commercial and industrial activity with good transport links. There was good potential to increase their rental yields through property improvements, he added.

He believed the successful fund raise was ‘a strong endorsement of our ongoing strategy for growth, as well as the track record of strong operational performance and value creation we continue to achieve’. 

Like most Reits, Sirius shares tumbled as interest rates and inflation rose. At 87.4p they stand 38% below their peak of 141p in December 2021, but have fared better than many rivals this year, with their price up over 13%, helped by Blackstone’s bid for Industrials Reit in April highlighting value in its sub-sector.

Yesterday the shares slipped 3.9% to 87.7p and eased a further 1.2% to 87.4p today after the company said it would issue over 170m new shares on Friday, increasing its share capital by 14%.

The shares were priced at 86p, 6% below their closing price of 91.4p on Friday and a 4% discount to the newly published net asset value (NAV) of 102.65 euro cents (89.6p) at 30 September. 

Good results

Half-year results to 30 September showed Sirius’ revenue increased 7.3% to €140m and profit before tax rose 2%, excluding property valuations. The value of the property owned by the fund edged higher to €2.11bn from €2.1bn.

Coombs said the group remained ‘on track to deliver its 10th consecutive year of greater than 5% like-for-like rent roll increases’. He said the rental growth helped ‘offset market-wide yield expansion’ that weighted on commercial property prices.

Borrowing stands at 40% of assets but with four years to run leaves Sirius less exposed to refinancing risk, he said. 

Earnings per share jumped 16.7% to 4.12 cents comfortably covering an 11% increase in the dividend to 3 cents per share.

After the six-month period, the company ‘recycled €100m of assets’ making €47.4m (£41.4m) of disposals in Germany and €52.9m of acquisitions in the UK, ‘highlighting our ability to crystalise returns from our mature assets’.

Two mixed-use industrial estates in Liverpool and Barnsley were bought for £10.1m, another £35.7m was spent on three multi-let studio sites in Islington and Camden in North London.

‘There are many further levers we can pull to unlock value and grow rental income through our successful management platform,’ Coombs said.