Analysts at Peel Hunt have repeated their 'buy' rating and 115p share price target on Sirius Real Estate Ltd following the firm's latest trading update released ahead of next month’s interims which they said showed another period of strong operating performance.
The analysts noted that Sirius RE's like-for-like rent roll grew in both Germany and the UK, with rate the driving factor, alongside nearly 95,000 square metres of new lettings.
Sirius RE saw its annualised rent roll in Germany jump by 2.4% to €115.2mln, while that in the UK advanced 4.1% to £46.5mln in the six months to September 30, 2022. The leading owner and operator of branded business and industrial parks in the two countries had a 12-month rolling cash collection rate of 98% and 99.3% respectively.
The strong performance came despite many large tenants vacating in the first half, similar to patterns over recent years, Sirus RE said.
Despite the rise in risk-free rates, the strong performance and the portfolio’s higher yields mean the company expects September values to be ahead of March, the Peel Hunt analysts noted.
The analysts concluded: "With our forecasts unchanged, boosted by 'strongest ever' operational cash flows, the shares are now very cheap: at 10x 2023E earnings, a prospective 6.6% yield, and a c.29% discount to our NTA forecast, we see plenty to go after."