Our opinion on the current state of SIRIUS(SRE)Here is the text with paragraphs added:
Sirius (SRE) is a real estate investment trust (REIT), listed on the JSE and the London Stock Exchange (LSE), which specialises in office, manufacturing, and warehousing properties in Germany. The company owns 141 assets with a book value of about 2 billion euros. Obviously, this is a well-managed and growing rand-hedge, which was benefiting directly from the recovery of the German economy before COVID-19.
The company has formed a joint venture (JV) with AXA Investment Managers, in terms of which AXA will own 65% and Sirius will own 35%. The JV (called "Titanium") acquired 5 business parks from Sirius for 168 million euros - which is a 19% premium to their book value. The JV will allow Sirius to double the value of its assets over the next two years.
In its results for the year to 31st March 2024, the company reported funds from operations up 7.9% and headline earnings per share (HEPS) up 6.6%. The company said, "Cash at bank of €214.5m, providing capacity for further acquisitions and investment (2023: €99.2m) • 33.9% net LTV (March 2023: 41.6%) and Net Debt to EBITDA of 5.6x."
In a trading update for the 6 months to 30th September 2024, the company reported a 14.9% increase in the rental roll, including acquisitions, and the raising of €180 million. The company said, "The Group's balance sheet remains strong with free cash reserves of approximately €297 million as at 30 September 2024 and no significant debt maturities until June 2026."
Technically, the share has been falling, and we recommended applying a trendline and waiting for a convincing upward break. That break came on 17th November 2022 at a price of 1622c, and the share then moved up to 2396c before beginning what looks like a new downtrend. At current levels, it is on an earnings multiple of 14.68 - which makes it one of the most highly rated REITs on the JSE and therefore vulnerable. It is also, obviously, a rand hedge.
On 7th April 2024, the company announced that it had made acquisitions in Germany and the UK for over 100 million euros.