Sirius Real Estate and Senior: Big director share deals this week

Investors in listed real estate occasionally lament that management teams lack ‘skin in the game’, and that their long-term incentive programmes (LTIPs) prioritise balance sheet growth ahead of shareholder returns.

Participation is not an issue at Sirius Real Estate (SRE), where chief executive Andrew Coombs has recently added to his shareholding in the FTSE 250 real estate investment trust, buying up a further £48,000-worth of shares at 96p a share. This takes his overall shareholding to 0.81 per cent of the total issued share capital, or £16mn.

Coombs, who was in the market buying Sirius’s shares as recently as July, frequently buys the dip in the company’s shares. He often also makes disposals in late March ahead of the tax year-end.

Non-executive director Deborah Davis was also in the market last month, buying up £19,000-worth of shares.

Sirius has recently exited its close period after publishing first-half results for the six months ended 30 September. The company reported first-half funds from operations (FFO), a measure of cash flow, of €64.7mn (£56.9mn), a 6.6 per cent increase.

The company expects to meet analysts’ full-year FFO expectations of €133mn. It is targeting €175mn in the medium term.

Coombs’ LTIPs are weighted two-thirds towards balance sheet growth (net asset value per share plus dividends per share) and one-third towards total shareholder return (share price performance plus dividends) relative to a basket of mid-cap real estate peers. We would ideally like to see a greater weighting to the latter.

Aerospace has had a turbulent ride over the past few years, but there are definite signs that the industry is finally achieving a measure of stability. Senior (SNR) is a bellwether for the sector as its production is closely aligned with demand from the major manufacturers.

Therefore, it is notable that chair Ian King has increased his stake in the FTSE 250 engineering group with the purchase of 75,000 shares at an average price of 174p, spending £130,000 in the process to lift his total holding to 989,297 shares.

The transaction follows a period of steady operational progress. Recent trading updates have highlighted improving margins across Senior’s aerospace and flexonics divisions, supported by stronger volumes from large customers as global air traffic continues to rebuild.  

For example, Airbus (FR:AIR) has been lifting output steadily, with production of the A320 family heading towards 67 aircraft a month. It has a published target of 75 per month by 2027, notwithstanding last week’s recall and repair plans. Boeing’s (US:BA) 737 Max programme is also gradually stabilising, with medium-term production levels expected to be in the high 30s to low 40s per month, helping restore a more predictable flow of structural and fluid-handling components for Senior.

The defence side of aerospace has also picked up, with steady demand for thermal management and precision components across land, sea and air platforms. Geopolitical tensions and higher Western defence budgets are helping to balance more cyclical civil aerospace.

Management recently reiterated full-year guidance for profit growth and further margin improvement, despite lingering supply-chain constraints in North America. With the share price still below pre-pandemic levels, buying from the chair is a positive sign.