Sirius refinancing to reward shareholders

By Alistair Anderson

ANALYSTS are expecting a bigger dividend payout from German-based Sirius Real Estate, thanks to an extensive refinancing exercise.

Analysts are expecting dividend growth from the owner of German office and storage facilities to increase from 7% to 8% for the year to next March.

Sirius CEO Andrew Coombs said its existing facility of €110.4m, which had a blended interest rate of 3.61%, and an expiry term of three years, had been refinanced with a new debt facility provided by the same consortium of Berlin Hyp and Deutsche Pfandbriefbank.

The new facility of €137m was negotiated on more favourable terms, with €94.5m at an interest rate of 1.66%, fixed for a full 7-year term; and €42.5m on a floating rate of 1.25%.

"We anticipate that the new facility will reduce the annualised interest cost to the group by about €1.7m, despite the increased loan size.

"The group’s weighted average cost of debt following this refinancing will be around 2.25%, down from 3.3% as at September 30 2015, and from 4.3%, prior to the Macquarie refinancing in September 2015," Mr Coombs said.

Peel Hunt research said: "We can confirm our previously guided forecast upgrades, now that €22m of new acquisitions and the €137m refinancing are complete. We upgrade our earnings per share and dividend per share forecasts by 8% for full-year March 2017, and by 10% for full-year march 2018."

Sirius’s share price has risen 26.83% in the past year.

Chris Segar, portfolio manager at Ivy Asset Management, which has invested in Sirius, said he was pleased with the property fund’s recent progress. "All in all, we are pleased with the lowered cost of debt funding, as well as the earnings-accretive acquisitions, and both factors should contribute to improved dividends in the future," Mr Segar said.

Mr Coombs said he would continue to focus on German property, despite being offered opportunities in the Netherlands and elsewhere in Europe.

The AltX-listed company has grown its market capitalisation to R6bn, and Mr Coombs is hoping to move to the JSE main board later this year.

"The key is timing. I’d like to get to the main board in September, and we are working on the process.… Right now, we are managing about €700m worth of assets…. When we get to €1bn worth of assets, we’ll take strategic decisions about … where we do business," Mr Coombs said.

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