Our opinion on the current state of SIRIUS(SRE)Sirius (SRE) is a real estate investment trust (REIT) listed on the JSE and the London Stock Exchange (LSE), focusing on office, manufacturing, and warehousing properties in Germany. The company owns 141 assets valued at approximately €2 billion, making it a significant player in the European property market.
Before the COVID-19 pandemic, Sirius was benefiting from the recovery of the German economy, and it continues to exhibit strong management and growth as a rand-hedge investment. The company has formed a joint venture (JV) with AXA Investment Managers, where AXA holds a 65% stake, and Sirius retains 35%. The JV, named "Titanium," acquired five business parks from Sirius for €168 million, representing a 19% premium to their book value. This partnership is expected to help Sirius double its asset value over two years.
In its results for the six months to 30th September 2024, Sirius reported a 14.5% increase in funds from operations and a loan-to-value (LTV) ratio of 30.5%. However, headline earnings per share (HEPS) declined by 1.7%. The company stated, "With nearly €300m of cash and a healthy net LTV ratio of 30.5%, we have significant sufficient firepower to act opportunistically and make earnings accretive acquisitions as they arise."
From a technical perspective, Sirius had been in a downward trend until a convincing upward break occurred on 17th November 2022 at 1622c. The share subsequently rose to 2396c before appearing to enter a new downtrend.
At current levels, Sirius trades on a price-to-earnings (P/E) multiple of 13.85, making it one of the most highly rated REITs on the JSE. While this valuation underscores investor confidence, it also renders the share potentially vulnerable to market corrections. As a rand hedge, Sirius offers diversification and exposure to the German property market, but investors should remain cautious of valuation levels and the broader economic environment.
