Good morning, everyone, and welcome to today's presentation of Sirius Real Estate's interim results for the period ending 30 September 2024. My name is Andrew Coombs. I'm the Chief Executive Officer for the Sirius Group, and I'm joined this morning by Chris Bowman, who is our Chief Financial Officer. Together, we will take you through this morning's presentation, and if I could start by asking you to turn to page three and remind you that Sirius now operates in both German and U.K., markets. We are an on-balance sheet, best-in-class owner and operator of mixed-use light industrial business parks on the edge of key towns in both Germany and the U.K.. The group currently operates just over EUR 2.7 billion of property in Germany and the U.K., and just under EUR 2.4 billion of this is wholly owned by the group.
Moving to page four, let's start by looking at the key highlights for the group as a whole. Firstly, I am pleased to confirm that the group continues to trade in line with management expectations for the full year. And the highlights I would like to draw your attention to are as follows. Firstly, the 14.5% increase in FFO, funds from operations. This has been driven in part by the 5.5% increase in group like-for-like annualized rent roll. And this is now the 10th consecutive year that we have produced more than 5% like-for-like annualized growth in rent roll. This means that we are now announcing the 22nd consecutive increasing dividend of EUR 0.0306. And I'm happy to tell you that that is 1.4 times covered by earnings. We are also announcing a modest increase in the net asset value.
We have increased our NAV from just over EUR 1.11 to EUR 1.12, a 1.2% increase in NAV. What that means is that if you look at the dividend and if you look at the increase in NAV, and if you were to simply take those numbers and double them, we're looking at just over 8% total accounting return for this financial year. Then finally, we have just under EUR 300 million of firepower sitting on our balance sheet ready to invest. So four highlights: the 14.5% increase in FFO, the 5.5% increase in like-for-like annualized rent roll, the 22nd consecutive increase in dividend, as well as a strong balance sheet. Now let me hand over to Chris, who's going to start by explaining the group income statement on page five.
Thank you, Andrew. Good morning, everyone. Yeah, as Andrew says, I will run through the highlights on the P&L, and then I'll go through the same on the balance sheet before then handing back to Andrew to go through some of the key operational metrics. So starting on page five, looking down the income statement, at the top line you'll see we've grown rental income by 17.3% first half on first half. So we finished at EUR 104.5 million of rental income. All the numbers that I talk about today will be in Euros. We report in Euros. That 17.3% growth is a mix of both organic and acquisitive growth. So the portfolio is 11% larger than it was at the same point this time last year.
That's a reflection of the acquisitions that we've made in the last 12 months, which Andrew will come on and talk about later in the presentation, and then also, as we've already said, rent roll has grown by 5.5%, so that's the organic element of that growth as well coming through. Looking down the income statement, I'll just focus on the big changes, so particularly on service charge, you'll see has grown from EUR 6 million last year to EUR 11.5 million this year. That's a reflection of several moving parts in the business in Germany. Our utility hedging contracts, which were particularly favorable, came to an end at the end of last year. Those, therefore, our increased utility costs have started to flow through, and some of the benefit we were achieving on resale of those utilities has unfortunately come to an end.
We do still make a margin on utilities, just not as healthy as it has been in the past. In the U.K., where a lot of our business is sold on an all-in basis, we have been growing our U.K. business more than our German business on the acquisitions front. So it's roughly 30% bigger on an asset basis. That also then impacts the allocation through service charge. Moving on down to the next big moves, really, well, next less big move on the interest side. You'll be aware that since this time last year, we refinanced our secured lending. So our average cost of debt is 2.1%, roughly speaking on EUR 1 billion of bank debt. So on an annualized basis, the gross interest cost will be around EUR 21 million. You can see there that we've stayed flat year- on- year on the interest cost.
That's because we're benefiting from some very proactive treasury management of our cash balances, which is generating healthy interest income. As we put our acquisition firepower on the balance sheet to work, you will start to see that interest cost creep up going forwards. FFO, moving down to FFO, you can see is at 14.5% to 60.7 million. That's. I just come back to the acquisition firepower point. We still have nearly EUR 300 million of unrestricted cash on our balance sheet. So the FFO will still have essentially growth built into it from future acquisitions as we put that firepower to work. The only other number that I'd really highlight on here is in the bottom half of the page, the surplus on revaluation of investment properties, you can see has moved to a positive group level. So you can see EUR 3.4 million positive move.
That's over and above CapEx spend in the first half of EUR 22 million. So that's a reflection of what I call a stabilization of yield shift. We still have some yield expansion in the U.K., but we have now started to see the beginnings of yield contraction in Germany, which we'll talk about more as we move through the pack. So flipping on to page six, looking at those numbers on a per-share basis. So net operating income, EUR 93.6 million net operating income translates to 6.6 cents per share of NOI. Overheads of 1.7 cents per share. Interest plus the current tax of EUR 8.1 million translates to 0.6 cents per share, getting you down to an adjusted FFO of 4.3 cents per share for the first half. Some small adjusting items, principally finance fees and share-based payments charge, get you down to EPRA earnings of 4 cents.
We have declared a dividend of EUR 0.0306 per share for the first half. That reflects a 71% payout ratio. As most of you will be aware, we have an aim to be paying out 65% of FFO as dividend. The increase of 71% is a reflection of digesting the equity that we've raised during the period. As we put that capital to work, you will see our dividend payout ratio come back towards 65% going forwards. All of these numbers are based on weighted average number of shares in the period, which was 1.42 billion. Flipping on to the balance sheet on page seven. As I've just mentioned, there has been a growth in the underlying portfolio. We have grown the assets by EUR 162 million year- on- year. We've been net buyers of roughly EUR 125 million in the first half.
We've had the CapEx spend of EUR 22.7 million. A little bit of valuation uplift, EUR 12 million of FX gain gets you to that EUR 162 million uplift on the assets. I'd just highlight, before I get questions on it, the plant and equipment has grown by 65%, EUR 7 million. That's principally the solar panels at Vantage Point. So that's the PV there. You can see that's EUR 7 million increase.
Back in May, we tapped our bonds. So looking at the bottom half of the balance sheet, you can see the EUR 50 million increase in interest-bearing bank loans. That's a reflection of the net effect of tapping our bond for EUR 59.9 million of nominal value plus some amortization of the existing lending. That's just netting back current cash, as I've already mentioned, EUR 329 million on the balance sheet, of which just over 30 is restricted cash or tenant deposits.
So we've got EUR 297 million of essentially free cash. In terms of acquisition firepower within that, we have the dividend to pay that we've announced today. So that's EUR 46 million nominal amounts that will come off that cash balance. You should work on the basis that I'd look to keep roughly EUR 50 million of working capital on the balance sheet for short-term opportunistic acquisitions, short-term CapEx requirements, and to just fund the business day to day. So roughly speaking, we have EUR 200 million of acquisition firepower on the balance sheet. Coming right down to the bottom, NAV. We focus on adjusted NAV per share, but I've given you both the basic number and the EPRA number there. But all of those moved roughly in line. Adjusted NAV up to EUR 112.49. So that's an increase of 1.2% in the first half.
Looking at those numbers, flipping onto page eight, the bridge from EPRA net assets per share at the end of March through to EPRA net assets per share at the end of September, you can see those movements coming through. As I say, we focus on adjusted NAV per share, so EUR 111.12 at the beginning of the period. The benefits, principally of the recurring profit after tax in Germany, of EUR 42.6 million coming through. Valuation gain in Germany specifically was EUR 11 million. That then the NAV was helped by the U.K. profit after tax of EUR 16.7 million, which translates to EUR 0.0111 per share. We had the valuation loss in the U.K. of EUR 7.9 million. That's where you get the net effect of three at the group level, the 11 minus the 7.9. Some impact from the capital raise, which is principally fees.
That's the EUR 0.0038 coming off. Just a reminder, we raised our capital at NAV, so that's purely dilution from the cost of the raise. Then the dividend, which was paid during the period, comes out as EUR 0.0275. We actually paid EUR 0.0305, but because of the increased number of shares, that dilutes down to make the bridge work. The EPRA adjustments that come off are principally our deferred tax assets and liabilities within our structure, which comes down to an EPRA net assets per share at the end of the period of EUR 110.92. All of these numbers are based on the full number of shares outstanding, 1.51 billion shares at the end of the period. I'll hand over to Andrew to go through some of the KPIs from page nine onwards.
Thanks, Chris. So this slide focuses on the organic growth in Germany, and we have achieved a EUR 10 million increase in annualized rent roll. 75% of that comes from our like-for-like performance, and 75% of the like-for-like performance comes from rate. We are now selling new business at a rate that is 7.5% lower than it was last year, and that is absolutely consistent with our occupancy-led strategy. Remember, six months ago, we explained that we'd be moving from price-led to occupancy-led. A number of reasons for that, including the shape of both the U.K. and the German economy, where inflation six to eight months ago was fundamentally different from underlying inflation today. You will see that when we look at the U.K. business, we have increased price in the U.K. by 36% in three years.
Some of that, not all of it, some of it has been aided by the rate of inflation. Inflation is now going in the opposite direction. We think that it would be a mistake to drive price in the future as hard as we've been driving in the last couple of years. And therefore, what you're seeing here in the German business is a deliberate move to sell at slightly lower prices, 7.5% lower than last year. However, that does not mean prices in our business are going down. They are not. We are managing the price so that while we are selling 7.5% lower than the previous year, we are selling at 6.3% higher than the price people are moving out at, and we are selling at 9% higher than the underlying average in the portfolio. And we will continue to lift price in our business.
However, in an occupancy-led strategy, we will lift it less aggressively, but we will still develop a positive trend where price is concerned. Going forward, the priority in both the U.K. and Germany will be to lift occupancy while gently increasing price. And if we look at what the rent roll movement has been in Germany, I draw your attention in particular to the middle bars, the 17.3 million of like-for-like move-outs and the 20.2 million of like-for-like move-ins. Because as you can see, year- on- year, occupancy has not really changed very much. However, in terms of the people who've left and the people we've replaced them by, the rent roll has gone up by EUR 3 million. And that is my point. That will continue to happen in the future, but it will happen less aggressively than we've been seeing in the past.
We go across to page 11, and we talk about valuation. I am sorry because this slide is maybe a little bit unhelpful in as much as it explains in the like-for-like assets a gross yield of 7.5%, and it compares to a gross yield of 7.5% in September this year versus March this year. Actually, in March, it was 7.52, and today it is 7.49, underpinning the comment around a gross yield shift, a contraction in yield at gross level by three basis points.
So I'm pleased to tell you that unlike the U.K., what we're now seeing in Germany is rather than yields on industrial go out, yields are stable, if not coming in very, very slightly. What that has meant is that we've seen a EUR 65.4 million increase in valuation, and EUR 8 million of that has come from the yield shift that I talked about there.
55% of it has come from acquisitions, and roughly one-third of that EUR 65.4 million has come from the increased income that we've developed in the portfolio that has now been valued positively. So I'm delighted to tell you that rather than now fighting in Germany yield expansion, we're seeing a period of stabilization and looking forward to potential yield contraction at various different points in the future. If I go across to page 12, which talks about the sales ratios, what you can see is that we have been able to generate more inquiries in the period. However, they've resulted in less viewings. And a lot of that is really our June, July, August activity where we were keen to make sure that in the summer break, we didn't see a drop-off of inquiries.
What we've done is we've recruited some new channels, channels that are less strong in terms of their conversion to viewing, so you can see that when we look at the 940 viewings on 1,344 inquiries, it's actually less than 1,023 on 1,317, so what we've had to do to make sure that we sell at just under 13% overall inquiry-to-sales conversion is we've had to improve our viewing-to-sales ratio in this period, so what we've seen is more leads, but a 10% lower quality in terms of those leads' propensity to convert to viewings, but what we've been able to do is increase the efficiency of the viewing-to-sale ratio by 20%, and what that's resulted in is the sale of 85,000 square meters of space versus 77 the year before, which is a 10% increase in overall sales efficiency.
I'm sorry to go into such detail there, but I just know that people will want to look at those changes, and what I'm trying to do is give you the fullest explanation possible. Maybe I can now hand over to Chris.
Thanks, Andrew. So on slide 13, we move on to CapEx and looking at really what is one of the key pillars of Sirius's growth strategy and what has driven our historic growth over the last 10 years so effectively. Just focusing on our acquisitions CapEx program, so this is where we acquire properties that have opportunity in them. So as a reminder, we will acquire properties with vacancy in there or with upcoming move-outs, what other people would consider structural vacancy, and what would concern other potential buyers. But with our platform, we are confident in being able to unlock value to drive growth. So just on slide 13, these numbers have now been cut down just to look at the last five years. So I'm looking purely over the last five years. We have apologies, I'm jumping ahead.
Slide 13 is really underpinning the shift from value-add to mature, so on slide 13, you can see two-thirds of our portfolio is value-add, and it's all about getting it from the value-add to the mature, which I'll show you on the next slide, but why is that so important before you jump there? That's so important because look at what occurs when we are able to move our properties from value-add into mature. We achieve higher rate on the right-hand side. The 720 on average goes to 776. We take the occupancy on average from 79.8% up well over 90%, 93.9%. What does that do? That drives much higher capital values, so valuers look at sites on a much more we essentially institutionalize the sites and therefore drive those values from, on average, EUR 850 a square meter up over EUR 1,200 a square meter.
And we bring in the yields, gross yields from 7.9%, bring those in by 100 basis points to 6.9% and get the double benefit there of reducing service charge leakage, which is driven both by our own platform of recovering service charge more effectively, but also a byproduct of higher occupancy. So you have a much tighter net yield from 7% down to 6.6%, less leakage versus gross of 6.9%. So moving on to page 14, what is actually in the pipeline, particularly for acquisitions? So over the last five years, we have invested EUR 46.2 million in our acquisitions CapEx program. So that is, as I say, space that we have acquired, which we see opportunity for value-add. On average, our returns, pure cash return on investment, have been 36%. So that's less than a three-year cash payback on CapEx spent in this program.
I've picked out the acquisitions program in particular because, as we've already said, we are in acquisition mode right now. So you will see this program grow and grow over the coming months and years because as we acquire sites in Germany that have opportunity, you will see that opportunity reflected here. So just within the current portfolio, we have 44,000 sq m of opportunity with the opportunity to invest EUR 6.4 million in that space. And those opportunities are getting more exciting, not less. So we are being conservative in our ROI expectations here, but sites like Göppingen, particularly Klipphausen that we've acquired recently, these have opportunities to put relatively small amounts of CapEx into them and drive significant returns from that CapEx to fill the vacancy. I will move on. Slide 15, I'll hand back to Andrew.
Thanks, Chris. Now we're looking at the U.K. In the U.K., we've seen a EUR 15 million increase in annualized rent roll. A third of that has come from like-for-like organic growth, and the one-third is driven 100% by price. Price continues to be strong in the U.K. Again, we are emphasizing an occupancy-led strategy where we will soften price to increase volume. Let's not forget that the underlying rate in the portfolio in the U.K. is £12.62. We are selling at £17.91. I say that with a small kind of chuckle because our biggest problem in the U.K. is we are selling at too high a price. We need to soften that price to increase the volume. If you think about what we've done in the U.K., we have, in less than three years, increased our price by 36%.
Our biggest worry, our biggest concern was that whilst inflation we always knew was going to be more sticky than people were saying, it wasn't going to be sticky forever, and we are now in the period whereby inflation has come off, and therefore, we cannot continue to rely upon pushing price. What we've already done is we've churned in the underlying business that we bought most of the tenants who are not capable of paying increased pricing, but of course, what we've also done is we've acquired EUR 14 million of rent roll in the last 12 months in terms of new U.K. sites. Now, those tenants will need to be churned. Not all of them, but some of them will need to be churned, and that will create vacancy in the portfolio, and therefore, now the portfolio is not static.
It is absolutely essential that as we churn the occupancy from tenants that we need to replace, we are able to generate enough sales volume rather than holding out for price. So what I'm describing here is a U.K. business that, by nature of the acquisitions that have been made over the last 12 months, is going to have to accelerate its churn. The reason it needs to move towards and continue to develop its occupancy-led strategy is because that churn will create vacancy. And it's the occupancy-led strategy that won't actually put the occupancy up dramatically. What it will enable you to do is maintain your occupancy at 85% plus whilst you stabilize that new tenant base, after which you then move into a price-led strategy.
And just to give you an example of that, Gloucester Vantage Point that we bought in April, not only is that a very large site, but the largest tenant on that site, The Range, the people who are currently trying to buy Homebase, they account for 8% of the U.K.'s occupancy. Not the group's occupancy, the U.K.'s occupancy. Some of their rents are only just over EUR 1. We need to either get them to pay substantially more or churn those people out of occupancy. I suspect over the course of time, we will do a mixture of both. But what that means is you have to generate enough volume in the rest of your business in terms of occupancy to enjoy the advantage of being able to do that. What you can't do is hold out for price everywhere else and watch that volume of occupancy leave.
You have to preempt that if you're going to enjoy the benefit of being able to churn in that way. So I do not expect the underlying price in the portfolio to go down, but I do not expect us to continue to sell at nearly GBP 18 when we have an underlying rate of just under 13 in a market where we are probably going to churn up to 10% of our occupancy in quite a short space of time. If we then move on to page 16, again, I would draw your attention to the two bars in the middle, the like-for-like move-outs and the like-for-like move-ins. Now, what you would have seen from the previous page is we attracted volume of 326,000 sq ft.
And we saw move-outs in part because we are churning the tail end of tenants who are not capable of paying the rates that we require. We saw churn of 400. We saw a lack of volume. And you can see as a result of that, we lost GBP 17.7 million and we gained GBP 16.8. That is a pure and beautiful example of where price doesn't work over volume. You have to be able to generate the right amount of volume before you can enjoy a price-led strategy. And that, I think, underlines really well why we need to lower our new business pricing in the U.K. in order to attract more volume. That does not mean pricing the business will go down.
What it means is our aspirations in terms of the price we acquire new customers at is being lowered so that we can increase the volume of new customers that we acquire. Going across to page 17, in contrast to Germany, we are not yet seeing yield contraction in the U.K.. As you can see, whereas we've seen a small contraction in Germany, we've seen a small expansion in the U.K., and if you look at the total assets capital value per sq m, that's GBP 77 per sq ft versus the GBP 92 excluding the acquisitions.
I think what that should reflect to you is the highly discounted price at which we have acquired property in the U.K. over the last 12 months. You think of Vantage Point that we picked up in terms of the property GBP 42 million. It had previously been negotiated by a failed buyer at GBP 60 million.
You think about the North London assets that were sold for over GBP 50 million by Workspace three years previously to us buying them for GBP 33 million. What values will not do is immediately value these assets up. But look at the effect on the overall capital rate per sq ft from GBP 92 down to GBP 77. That GBP 77 reflects the double-digit yields that we've been buying at on assets that in the future are very unlikely to command a double-digit yield in terms of valuation. Chris, over to you.
Page 18, you've obviously just seen the metrics for Germany in terms of inquiries, viewing, sales. Very pleased looking at the U.K.. Looking at the headline, you'll see we've gone from 6.9% inquiries to sales conversions. We are very successfully pushing that up, and we've got to 8.1%. I think we've managed expectations in the past that in Germany, we're looking to get our conversion up to 15%. It is a much more fragmented market in the U.K., and we are trying to continue to push our direct marketing efforts to drive that lead conversion very successfully. So we now generate roughly half of our leasing events directly in the U.K.. We won't get up to 90% in the U.K.. It is a much more intermediated market, naturally, in the U.K., but we are seeing the benefits of our investment in a direct marketing team here.
So very pleased with that. We expect to continue to see some momentum there, but as I say, I think it will continue to be a little lower than Germany. But that is helping, obviously, to underpin the growth in the rent roll, the 4.9%, etc., and everything that Andrew has talked about. You can also see that we've done an average of 100 deals per month. The inquiries we finished particularly strongly at the end of the period, and that current trading has continued to be strong post the end of the period.
So I talked about some of these acquisitions, and you've heard a lot about them, whether we talk about Banbury, where we have two underlying tenants, and the opportunity to extend the lease profile in that property. And probably when we do, see a substantial increase in value, which may well lead to the recycling of that property. Wembley, where the opportunity is to drive rates in a center that's in a particularly vibrant area of London. And Carnforth, our most recent acquisition, where there's the opportunity not only to grow rents, but also to develop some of the areas of the site where we already have a waitlist of companies looking for new space. Very interesting companies, one of which is into battery technology and very much linked into some of the environmental initiatives that we see going on in the power sector.
And then if we look at what that's meant to the recycling overall, so a lot of information on this page, but if you just look at the top table, right-hand side, really simple terms, we've been selling at 7.1% gross yield. And if you were to work out how much vacant space are in those sales, we've sold about 9,000 square meters of vacancy, and we've sold all of those sites at a blended average of 7.1% gross yield. Now look at the bottom table, and what we've been doing is we've been buying at 10.5%. So a blended average of 10.5%. And what we've actually bought is we bought 34,000 square meters of vacancy, which is what most owners of property would run away from and what we run towards. We call that opportunity.
So what we think we've done is we think we've tripled our opportunity, and we basically sold at a certain rate and then gone on and bought at about half price in comparison to that rate. And as you can see, we've acquired over EUR 200 million of acquisitions at a blend of circa 10% gross yield. Half of those sites are at double-digit yields. Chris has talked about Klipphausen. Klipphausen doesn't tell the full story. When you hear Klipphausen, read Dresden. Dresden is the center of chip manufacture for the whole of the German market. You've got everyone from the Taiwanese to the Germans piling in there. We are buying a site in Dresden at 16.4% gross yield. I haven't seen a transaction like that in the industrial space in Germany since I saw Hansteen go out and buy Zeppelin Park.
16.4% from what I can see in terms of substantial industrial purchases in Germany by a public company, I think, is the highest and best transaction that I've ever seen in my career. Vantage Point, 10.2%. You know the story there. Some of you came to Gloucester. Carnforth at 12.2% is a really interesting asset. Just outside Preston, in a place where most people, because they don't understand the geography, would never even bother to go up and look. There are tenants on waitlists queuing to get more space in that property. We picked it up for over 12% gross yield. So I'm not promising this going forward. This time has passed. There aren't 16% deals out there at the moment. You have to work very, very hard to find stuff that's round about 9% or 10%. The window is closing, but it's not closed yet.
What you're seeing on this page is EUR 220 million of opportunity for the future. We now own it. We've selected it. We know exactly what to do with it. This will be our lifeblood in terms of organic growth for the next three to four years. We're not stopping there. We've got over EUR 200 million of firepower to go and find more of this stuff. It's probably more like 8%-10% than it is 10%-12%. The window is closing, but it's definitely not closed yet. Chris.
Yep. Page 21, start to look at what does the future hold. So just as a reminder, we have a very firm ambition to get to EUR 150 million of FFO. That ambition was set at the end of our 2023 financial year as a five-year target. As a reminder, back in 2020, we achieved EUR 56 million of FFO. At that time, the longer-term ambition was set as EUR 100 million. We achieved that in three years. As we sit here today, I just wanted to give an update on the journey through to EUR 150 million. You can see each of those boxes, we've touched on some of these points already. The CapEx program, for instance, the focus on occupancy, driving up our occupancy to let out the vacant space, both in the U.K. and Germany.
We have already been very successful at pushing rates, so pricing in the U.K. and Germany as well. And clearly, the EUR 20 million of acquisitions that you see on that bar chart is a significant contributor to the growth. I guess the one point which I, as a CFO, have been cautious on is the additional interest expense. And I'll come on and talk about refinancings in a second, but obviously, we have to digest the move back to market rate, particularly on our two bonds. What market rate is, has obviously been moving around, or perception has been that it's been moving around in the U.K. Just as a reminder, we are fully Euro-financed. Swap rates on the EUR o have remained relatively stable around the low twos.
I know there's been a lot of movement in the U.K. on the sterling swap rates and gilt rates, but certainly, I'm getting more confident about that additional interest expense number, so we have updated this slide for the purpose of these results to give you a vision towards the EUR 135. You should be looking at that as a midterm ambition, so over the next two years, I think, is a sensible basis for that. Moving on just to the financing slide, which I just touched on, the major next event is the refinancing of our 2026 bond. That is our EUR 400 million bond due in June 2026. You should expect us to have refinanced that by the time I next sit in front of you, so by the time of our June results, I would expect to be updating you on that.
You can see, if you pull up your Bloomberg screens, you'll be able to see where our current bonds trade. So our '26 bond trades at a low threes yield to maturity, but it's very short-dated now. Our '28 bond trades in the sort of high threes, so 3.8%-3.9% yield to maturity. A new bond will have a longer duration. So today, I would expect us to be in the low fours of percentages for interest cost on a bond refinancing. But as I say, I look forward to updating you more specifically on that next time we sit down. Just to flag, there are some small refinancings coming up in January, February, March of our Schuldschein and Sparkasse debt on our German portfolio. It's about EUR 28 million. We will refinance those loans, and those conversations are already well advanced.
They're not material to the balance sheet, but we have good support from both of those markets in Germany. Average cost of debt 2.1%. I'm very pleased to end the period at 30.5% net LTV. Once we've put the EUR 200 million of acquisition firepower to work over the next six to nine months, then you should expect to see that LTV will settle around 34%-35%. So there's still headroom as well in the balance sheet once we've put our cash to work that's on the balance sheet to potentially add in additional funding if required. Page 23, just to start wrapping up, just a reminder, if it hasn't come through already, we are razor-focused on income as a business. So we are very, very much focused on driving income today. It's not about jam tomorrow. You won't see us talk about ERVs.
You'll see us talk about how do we drive income today. That's the income that underpins our FFO. That FFO underpins our dividends. We have announced today, I think it's the 22nd consecutive increase in dividend. However, we are not just about income. As you've also heard, we are about growth. So we have the opportunity in our portfolio to drive that growth through the CapEx, through the intensity of the operational management platform, asset management in both the U.K. and Germany. As I said earlier, 71% dividend payout ratio gives you that income. We reinvest the remainder of the FFO principally into our CapEx programs. Those CapEx programs, you can see in the past, have generated over 30% ROI. We're very confident about being able to continue to do the same going forwards. You've seen us defend and now grow our valuations by driving that income growth today.
As I've just talked about, we have that ambition still very and very firmly, both internally and externally, to drive FFO up to EUR 150 million. We've talked about acquisition pipeline. It remains active, and you'll continue to see us active over the coming months. Really wrapping up on page 24 on the specifics, FFO up 14.5% to EUR 60.7 million, 5.5% increase in group like-for-like rent roll growth. U.K., 4.9%, Germany, 5.8%, increasing the dividend by 2% to 3.06 cents. Ended the year with very healthy cash balances. I've just talked about EUR 297 million, which equates to roughly EUR 200 million of acquisition firepower. LTV, 30.5%. The fundraising, which was very successful and well-supported back in the summer, EUR 181 million gross, leaves us really well placed to execute on those acquisitions. As I've just touched on, cost of debt, 2.1% with expiry three and a half on average.
Final slide. I'd like to finish by just reminding you of where I started, which is the group continues to trade in line with management expectations for the full year. In Germany and in the U.K., we will continue to drive for like-for-like increases that are above and beyond inflation. We are very, very pleased with our track record of achieving 5% or more for the last decade. We see no reason why that shouldn't continue in the future. In terms of Germany, we haven't really touched on that, but can I tell you, I for one am pleased that there is likely to be a German election in February of next year. Pleased on many fronts, including the front that the current coalition government in Germany is clearly not working.
The likelihood is that rather than listening to some of the press headlines about right-wing in Germany, please understand that the current coalition in Germany is a left-wing coalition. It's a left-wing coalition that has done its best to put the German car industry out of business, close down nuclear power stations, make some very, very illogical, non-business-friendly moves in Germany. It is highly likely that the next government, probably led by Merz, will be not a right-wing government, but a conservative government that is slightly right of center, that will probably have to go into partnership with a left-wing party. It will be very much balanced coalition politics. However, it will be conservative and business-friendly. The sooner that can happen, the better, because Merz is very likely to be able to unlock the German balance sheet.
Let's not forget that Germany has the strongest and biggest balance sheet in Europe. Because of its constitutional law around the debt brake, Germany's hands have been tied behind its back where its balance sheet is concerned. A new government has the opportunity to get 75% of the German parliament to agree to amend temporarily the debt brake, which in turn will unlock the balance sheet. That will do two things. It will give Germany the opportunity to introduce physical stimulus should they believe that's the right thing to do. And very importantly, something that cannot be ignored in the current environment, it will unlock Germany's ability to increase the money it spends on its own defense. And that in itself will increase the manufacturing industries in Germany.
So please, I know we're likely to see press headlines that might be negative between now and February, but I firmly believe that an election in February rather than in September of next year, when would have previously been the case, is a good thing for Germany because if it leads to the temporary lifting of the debt brake, it unlocks the true power of the German balance sheet. And that is likely to be pro-business on at least three fronts. And of course, in the U.K., we have a supportive economic outlook, and we have GDP forecast to grow. And Sirius as a group continues to look at further opportunities in both the U.K. and the German market. We see the challenges in each being different, but we see both markets, medium and long term, as being positive markets to operate in.
We need to drive occupancy in both markets, and this is likely to be more challenging in the U.K. than it is in Germany. And the reason for that is we are going to have to churn more of our tenants in the U.K., because we've been heavier on acquisitions as a proportion of rent roll in the U.K. than we have Germany. We have over EUR 200 million to invest, and we remain very, very keen to, as Chris has explained, get to that FFO goal of EUR 135 million. We will continue to focus on making sure we lift our rent roll by 5% or more.
And whilst we will be in occupancy-led strategies in both markets, that does not mean our prices will go down. It means that we will be recruiting customers at lower prices, albeit at higher than the underlying price in the portfolio as a whole. Thank you very much indeed for your time and attention this morning. Chris and I will now try and answer any questions you may have. Thank you.
Thanks. It's Max Nimmo. It's just a quick question on the asset recycling that you've done. And just to try and get a bit of an idea of sales and what constitutes to you guys a dry asset, because obviously, it's a platform business. You're obviously trying to generally scale up. What are the key things that we should be kind of looking for in terms of when you feel an asset is becoming dry and therefore needs to be recycled?
So thank you. Look, firstly, it's not as simple as which assets are dry and which are not, and when they're dry, do we just accelerate to sell them? I'll give you an example of an asset that we think is pretty dry, but we're not thinking of selling anytime soon. And that would be Munich-Neuaubing. Why are we not thinking of selling anytime soon? Because its value is about EUR 150 million, and we see long term in Munich it being ideal for residential development, and it's probably worth somewhere between EUR 250 and EUR 300 million in terms of resi development. So there is a dry asset that is not significantly challenged from a capital perspective going forward that we can see is worthy of alternative use. And in between times, we can get a very nice yield from that asset going forward.
In contrast, let's look at Banbury, which is a U.K. asset that we purchased reasonably recently. It's not massively multi-tenanted. It's got two tenants in there. They're strong tenants. But there's an obvious play here whereby we increase the lease lengths, and we can probably sell that asset for substantially more than we bought it for. If I look at some of the stuff that we have sold in the U.K., Hartlepool, Stoke, Letchworth, these are all assets that are going to be capitally challenged going forward. You're going to require a lot of money to be put into these assets. These are old assets. The life of these assets probably doesn't give you a great return on your capital over the remaining life. And therefore, these aren't even dry assets. These are challenged assets.
They might not be challenged right here today, but you can see they're going to be challenged in the future. So you want to clean your portfolio up by spinning those out and reinvesting the money in something else. If you look at Maintal, Maintal is an asset that we sold to a developer who wanted to develop it as a data center. Now, could we have continued to hold Maintal? Yeah, I think we probably could. Could we have got a yield out of it? Yes. Would it have been a yield that would have created a drag in the portfolio? Yes. Could we lift Maintal to a good enough yield not to create a drag? Would it have been a distraction in comparison to what we could have done with something like Klipphausen? Absolutely.
So let's take an intelligent approach, and let's put our efforts into the things that are going to get us the big return rather than the things that are going to really break our back for a very small margin. So what you're doing is you're taking your opportunistic assets, two-thirds of your portfolio, you're moving into that one-third mature, and then you're going through the mature and you're saying, "Right, what do we keep because it's alternative use? What do we sell because it's going to be capitally challenged in the future? And what actually can we afford to take a slightly different view on, which is no urgency to sell?" But you know what?
If somebody came along with the right kind of price, yeah, we'd definitely be open to recycling that." So I am sorry because I haven't given you a black and white answer to your decision. This isn't a science. This kind of asset management is a very dynamic viewpoint in markets that are changing very quickly. Remember, value is put a value on property. I think it's a willing seller and a willing buyer without being compelled to sell. We're not in that business. We're in the business of getting the highest possible value for our assets. That's why we continue to sell above valuation. And what that means is you have to be slightly opportunistic where your dry assets are concerned. You don't flood the market with those assets. You look for the right opportunities.
Maintal took three and a half years of saying yes, no, on the bus, off the bus, negotiating to get there. In that time, there were probably another seven dry assets that we had exclusive discussions on that we didn't even sell. This is not a precise science. We take an opportunistic view on this, but it's underpinned by some really sensible commercial thinking. Does that give you some sense, Max?
Morning. It's Matthew Saperia from Peel Hunt. Can I ask two questions, Andrew? The first one on the German CapEx program. I think you talked about, I think actually Chris, it was you that said that opportunities are getting more exciting, not less. Do you think there's an opportunity for you to work through those more quickly than perhaps you have done in the past? And then the second question, thinking about acquisitions, EUR 200 million of firepower, how's the competitive landscape? Is it harder now? I mean, you said the window is open, but it's still open, but it's closing. Who are you now coming up against in terms of the potential acquisitions, either in the U.K. or indeed in Germany? And if you were a betting man, that EUR 200 million, is that more likely to go into the U.K. or into Germany? Thank you.
Okay. Thanks, Matt. Just taking the CapEx point first, there is a balance on the CapEx. Okay. So yes, there is significant opportunity within the acquisitions. Typically, our acquisitions CapEx opportunities are some of the highest value, highest returning opportunities. So we will tend to prioritize those. But I still ensure that there is discipline within the CapEx budget, essentially, process. So we have a very, very, very long list of opportunities of putting CapEx into the portfolio and prioritizing those with our in-house teams in Germany to just focus on the highest returning ones. I think the very simplest way of doing that is to continue to ensure that we limit our CapEx to roughly be in line with a third of FFO so that as a business, we continue to be self-supporting, essentially.
So we ultimately should get to the end of each year and be washing our face from a cash perspective with both the dividend and our CapEx spend. So there is a natural discipline there that I am keen not to break and to keep sticking to, which is keep our CapEx to be an amount which we can continue to support from the underlying FFO, roughly a third of it. And that in itself, discipline means that we continue to focus on the highest returning opportunities. Now, within the CapEx spend, we have different programs. We have acquisitions. We have vacant space. We have ongoing sales CapEx, for instance, around upcoming move-outs or upgrades of space which we already own or where space is coming up to become vacant within the existing portfolio.
The acquisitions programs tend to be the highest opportunity, so it will tend to continue to be the highest priority. So yes, as I said earlier when I was going through it, you should expect, as I update this slide in future periods, you should expect the opportunity in here to grow because I'm allocating more capital to it with that discipline.
Can I just pick up on that? Because one of the things you said is, can you accelerate? And what Chris quite rightly said is we want to be self-sufficient, about a third of the FFO goes into the CapEx. There's almost a reason why we wouldn't want to speed up, and that's to do with the risk profile. Because if you said to me, Andrew, here's EUR 100 million. Can you go and spend it on CapEx in the next 12 months? I could find it at home. But the problem is the way I'd be executing that is I'd be taking whole buildings, five, six-story buildings, and I'd be putting all the CapEx in at the same time, which is not what we do at the moment.
What we do at the moment is we ask for planning and refurbishment development floor by floor all at the same time. The first floor to get approved is the floor that we start on. Before we invest the CapEx, we pre-sell 30% of it. And then when we're 60% occupied on that floor, we roll out the next one. And why is that important? Well, that's important because when COVID hits, when a national emergency hits, when something goes wrong, and you're all in on the whole building, you can't put the brakes on without going over the cliff. When you're floor by floor, you've got small increments of CapEx that's in play. And if you need to change plans on the other four floors, you can put the brakes on very, very easily.
So the first thing is that you don't want to be going so fast that when the cliff appears, you go straight over the edge of it. And that's part of the kind of low-risk profile of what we do. The other thing is the ability for the market to actually support what you're doing. If you're in a local town and you try and sell a whole building at once, unless you want one single occupier, it's pretty tough work. If you do it floor by floor over a period of two or three years, it's actually not that stressful. You get better quality of tenants. You get a better, less risky process. So to me, speed can be associated with risk. If you're going too fast, you're accelerating your risk.
We know exactly the speed whereby we can turn tight corners and brake quickly enough, and we really don't want to accelerate above that. But if I come to your second question about buying assets, it's certainly not getting easier. It might be getting harder, but it's certainly not getting easier. Why is it not getting easier? Well, actually, it's not because of the buyers. It's not because of the competition. It's not getting easier because there's lots and lots of people queuing. It's not getting easier because the buyer's, sorry, the seller's expectation is pivoting. The seller who was desperate eight or nine months ago, the seller who was worried about interest rates is now hopeful. When you start to say to a seller, "This is going to get worse.
How are you going to survive?" They project into the future and say, "Very well, thank you." Whereas six months ago, they were genuinely concerned about what they might lose. And you're actually in the period at the moment, certainly in Germany, whereby your seller's expectations are increasing, but people buying haven't accelerated into the market. So whereas Sirius has less competition in terms of buying at the moment in Germany, what has changed is the sellers have higher expectations than they had six months ago. I suspect the next thing we will see is more buyers coming into the market, and some of those buyers will meet the seller's expectation, and there's your natural flow. But we're not quite there yet. Does that answer the question?
Perfect.
Great.
Miranda Cockburn from Berenberg. Could you just talk a little bit more about demand for your German assets in terms of any sectors that you're seeing more or less demand from, any areas that you're concerned about at all?
Yeah. So we continue to lead on all things storage. So that is not to say that demand for storage is accelerating at this point, but it certainly hasn't receded. So we still see what I call COVID-level demands for storage, whether it be self-storage, whether it be commercial cold storage. But storage is definitely the leading player. Industrial is pretty stable. And we suspect with the change in government that it's the demand in industrial that's going to really grow. Office comes into about three different categories for us. Office associated with industrial factories, no real change there. And unsurprisingly, because people can't run their factories without their administration upstairs. Small office, micro SME demand is good there. If anything, it's probably increasing. The area of pain is the area where people have an office for 10 or more people, and that's all they take on our business park.
So they're not connected to a factory. They have got offices for 10 people. What we are seeing is those offices are now filling to capacity, but not every day. And we are actively not seeking more customers in that space. What we are doing is managing the customers in that space. And that's involving some downsizing. It's involving some repurposing of the space. But we are digesting that, and we don't have any concerns over it. But if you want to know where the pain point is in our German portfolio, that's where it is.
Hi, morning. Tim Leckie from Panmure Liberum. Just a quick one for me, hopefully. The German portfolio, like for like, given what we've heard in the market about concerns over the economy, that would appear to be quite a standout. Could you perhaps give more comments on how you've achieved that? And I guess with a follow-on is if you do get the election playing out with more government spending and the economy picks up, do you have is it that cake and eat it where you get the defensive downside, but will it go higher with a better economy as well, if that makes sense?
Yeah. Look, it could do. It remains to be seen what will happen. But if I go to the first question, I think what times such as now show is the strength of the platform in Germany. Because we are quietly content with our performance in Germany, but restless to improve it. We're able to produce these kind of results. We're able to grow rent roll by more than 5% in Germany when inflation is half of that because we have the asset management platform and because of the techniques we use within that platform. The Sirius business is not a mere reflection of the economy. The Sirius business seeks to buck the trend, buck the trend in terms of pricing increases versus inflation, buck the trend in terms of performance versus economy.
We are not here to simply hold hands in the crowd and do what the market tells us to do. We're here to beat the market. That is the purpose and the power of the platform. And I'm not going to sit here and bore you with the way in which we recruit customers through our online channels with direct line of sight into the market that enables us to shape our customer proposition in a way that's reflected by the search engine language that we see directly in the electronic channels that we use, or the fact that all our parks are manned and we have our own in-house professional sales force of over 100 people that's professionally managed with a proper sales process and a mystery shop program.
I'm not going to talk to you about the service charge reconciliation teams, all the other teams that we have in our business to focus on the customer and to focus on how we shape our proposition using property to what the customer in the market is demanding, and by doing that, what we're able to do is we're able to demonstrate real value to our customers at the same time as convincing them to pay a high margin in exchange for the relevant value that we give them, relevant because we know and watch what they are asking for. The power of our online channels is that we can see and analyze what customers are demanding. We're not listening to a local agent telling us who he went to dinner with yesterday and what he thinks the market looks like. We're looking at hard, empirical evidence.
And what you're seeing in our results is what you can achieve with that. We believe that is fundamentally different to the approach that any other company is taking in the market.
Thanks.
This is one question from the webcast from Nicholas Lisle at Stanley Asset Management who asked, "Can you tell us about the acquisition pipeline and how does it compare to the current portfolio in terms of typical occupancy rate, type, location, etc.?
I'm going to answer that question a slightly different way. I think there's a lot of teams that would be sitting here today with EUR 200 million of firepower desperate to rush out the door and spend it. We're not. The reason we're not is because that's exactly how you make the wrong decisions. I would say to you that I would like to see a stronger pipeline at the moment. I'd like to tell you that in the next six months, we're going to go and buy EUR 150 million-EUR 200 million of property. What I can tell you is I don't have a strong enough pipeline right now to be able to make that commitment. I'm not stressed about that. I'm not stressed about that because we're getting a decent interest rate on the money that's in the bank.
I'm not stressed about that because we can maintain our dividend commitments given the headroom that we've got for as long as it takes for us to deploy that capital, and most of all, I'm not stressed about it because when we do deploy that capital, we'll deploy it on assets that are accretive and assets that give us the right kind of opportunity. What we won't do is rush to spend that capital and then have to live on the sins of our past for the next three to five years, so given that, it's very, very difficult for me to go and answer Nicholas Lisle's question around what's the likely occupancy from the pipeline. What I can tell you is we're much less likely now to go and buy 100% empty asset. We're much more likely to look for the 30%-35% vacancy profile.
And if you were trying to model this, I would try and model our acquisitions on about a 30-35% vacancy level. I would try and value them at a capital rate per square meter that's probably maybe 10-15% below the capital rate per square meter that we've got in the respective portfolios at the moment because that's reflective of the kind of discounts that we want to go and try and buy at. Now, I think one of the reasons I'm saying this is because if you look at Germany as an example, I said it earlier, Germany is not flooded at the moment with lots and lots of buyers, but the sellers are changing direction. They've gone from despair to hope. And sometimes in a market, it just sits in suspended animation for a little while until that straightens out.
It's fools who rush in too quickly and find out that they're the first people to buy. And what we've got to do is be very, very patient and very selective in terms of understanding exactly what's going to happen to the market before we end up saying we've spent all of our firepower. By the time we've spent it, we need to know that we've spent that in the best possible way.
And that was actually easier when the market was at the bottom. Now it's started to climb a little bit. It's more difficult to understand where you are in that climb and therefore how you should deploy your capital. So I hope, Nicholas, that gives you some sense. I guess what I'm saying, 30%-35%. But what I'm also saying is we're going to be very patient in the way we deploy this capital at this point in the property cycle.
Any further questions?