Sirius Real Estate Limited (LON:SRET) (LSE:SRE, JSE:SRE, OTC:SRRLF)’s €13 million acquisition of a development site in the Bavarian capital of Munich comes with plenty of growth potential, according to brokers’ reactions to the news.
The deal, announced on Tuesday, currently generates a rent roll of approximately €740,000 per year, but Sirius plans to reposition the tenant base to increase income in the short term while exploring longer-term development options.
Given the site’s location 10 miles from central Munich, Peel Hunt (LON:PEEL) sees scope for adding a residential component to the site.
“In the interim, the platform is to aim to grow the net operating income from the asset, as (Sirius) has successfully done many times before,” said the broker’s analysts, who gave the stock a buy rating with a 115p price target.
Investment bank Jefferies also highlighted the site’s potential for “A number of value-add and development options in the future”, given how the site “benefits from a desirable micro-location, 10 miles from Munich city centre and one mile off the A99 motorway”.
Jefferies also has a 115p price target on Sirius shares. The stock is currently changing hands for 79.6p each, resulting in a forward price-to-earnings ratio of less than 12 times.