Wrap Text
Trading Update and Notice of Full Year Results
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company Number: 46442
JSE Share Code: SRE
LSE (GBP) Share Code: SRE
LSE (EUR) Share Code: ESRE
LEI: 213800NURUF5W8QSK566
ISIN Code: GG00B1W3VF54
14 April 2020
Sirius Real Estate Limited
("Sirius Real Estate", “Sirius” or the "Company")
Trading Update and Notice of Full Year Results
Sirius Real Estate, the leading operator of branded business parks providing conventional
space and flexible workspace in Germany, provides the following trading update for the twelve
months to 31 March 2020 (the “period”), ahead of the announcement of its full year results on Monday
1 June 2020 (Covid-19 permitting). Further to its announcement on 25 March 2020, the Company is
also providing a further update on current trading in the light of Covid-19.
The Company confirms that the results for the twelve-month period are expected to be in line with
market expectations.
Highlights for the year to 31 March 2020
• Total annualised rent roll increased to €90.3 million (31 March 2019: €87.8 million) in spite of
sale of a seed portfolio to the Titanium joint venture
• Like-for-like annualised rent roll increased by 6.1%, to €81.2 million (31 March 2019: €76.5
million)
• 162,607 sqm of new lettings signed at an average rate of €6.55 per sqm
• Like-for-like occupancy increased to 87% (31 March 2019: 85%) and average rent to more
than €6.07 per sqm (31 March 2019: €5.83)
• €120.0 million of acquisitions completed providing a mix of stable income and opportunity
• Titanium joint venture with AXA Investment Managers - Real Assets completed – €168.0
million seed portfolio transferred from Sirius and first new acquisition of €58.9 million in
March 2020
• Average cost of debt reduced to 1.52% and first unsecured Schuldschein facility for €50 million
completed
• Increase in number of unencumbered assets to 15 with book value of approximately €115.0
million
Lettings
This was another successful year of letting activity for the business with stronger than anticipated
organic rental growth in the second half offsetting the impact of the expected large move-outs at the
start of the year. Continued strong occupier demand during the year was reflected with 162,607 sqm
of new lettings recorded in the period.
The annualised rent roll highlights are as follows:
• Total annualised rent roll, which includes the effect of acquisitions and disposals in the period,
increased to €90.3 million
• Like-for-like annualised rental income increased by 6.1%, from €76.5 million to €81.2 million
in the period, the sixth consecutive year of increases greater than 5%
• Like-for-like rent roll growth was driven by a 4.0% increase in average rental rate from €5.83
to €6.07 per sqm, plus an increase in occupancy from 85% to 87%
Joint Venture/Acquisition
The Company completed its Titanium joint venture with AXA Investment Managers - Real Assets
(“Titanium”) in July 2019 through the sale of 65% of its interest in five business parks at an implied
property value of €168.0 million, generating net proceeds for Sirius in excess of €70.0 million.
On 1 March 2020, the Company completed the first external acquisition for Titanium, of Itterpark, a
business park in Hilden near Düsseldorf for €58.9 million including acquisition costs. Sirius continues
to own 35% of Titanium, as well as providing asset management services to the joint venture, which
now owns over €225.0 million of assets and has drawn down on €84.0 million of debt facilities.
Financing
During the period Sirius agreed three new debt facilities amounting to €171.9 million, including the
Company’s first unsecured debt facility for €50.0 million of which €30.0 million was drawn down as at
31 March 2020. Additionally, the Company repaid €77.7 million of debt upon executing the Titanium
joint venture and made €10.1 million of scheduled debt amortisation payments during the year. Total
debt increased from €386.1 million at the start of the period to €485.8 million as at 31 March 2020,
with unrestricted cash and undrawn facilities of €129.7million. The Company estimates net LTV at the
year end to be below 35%, subject to the current valuation process.
Details of the three new debt facilities agreed in the period are as follows:
• €115.4 million increase to an existing facility with BerlinHyp which matures in October 2023.
The extension incurs an all-in fixed interest rate of 0.9% and requires amortisation payments
of 1.25% per annum;
• €50.0 million unsecured Schuldschein debt facility at a blended interest rate of 1.60%, with an
average maturity of 3.7 years and no amortisation. This debt instrument is the Company’s first
unsecured loan facility and was subscribed to by a number of German and international
investors;
• €6.5 million extension of the existing facility with Deutsche Pfandbriefbank which matures in
December 2023 with a floating interest rate of 1.20% above 3-Month Euribor floored at zero
which requires 2.0% amortisation per annum.
The Company reduced its weighted average cost of debt to 1.52% at year-end and despite the increase
in total debt Sirius was able to reduce its annual interest charge. Furthermore, the Company was able
to increase the number of unencumbered assets on its balance sheet from seven to fifteen, with a
book value in the region of €115.0 million. Sirius’s interest cover from net operating income also
increased from 10.1x to in excess of 11.0x in the period.
Acquisitions/Disposals
The combination of Titanium, the new debt facilities and disposals of non-core assets provided the
Company with approximately €190.0 million of financial resources for acquisitions. Seven properties
were acquired during the year with total acquisition costs of €120.0 million. The acquisitions represent
an attractive mix of stable income and value-add opportunity in locations in and around where Sirius
already has a strong presence.
Further details of acquisitions completed in the period are outlined in the table below:
Total investment (incl. Acquisition Acquisition Annualised acquisition Annualised
Total acquisition
Acquisitions acquisition costs) occupancy vacant rental roll acquisition NOI
sqm
€000 % sqm €000 €000
Completed
88%
Teningen 6,497 20,062 2,486 806 542
2
Buxtehude 8,690 28,532 0% 8,532 - (479)
Bochum II 6,686 4,231 100% - 428 369
Alzenau 44,458 59,925 94% 3,897 4,072 3,455
Hallbergmoos 20,178 19,562 54% 9,001 946 675
Neuss II 19,135 34,000 81% 6,291 1,300 1,038
Neuruppin 14,337 22,362 100% - 1,333 1,238
5
Total 119,981 188,674 73% 0,207 8,885 6,838
In addition, the Company notarised the sale of a single tenant asset located in Weilimdorf which
completed on 1 April 2020 generating proceeds of €10.1 million.
Covid-19 Update
The Company continues to assess the impact of Covid-19 on a daily basis. Our primary focus is the
health, safety and wellbeing of our employees, whilst supporting our tenants and suppliers during this
difficult period. The Sirius team continues to operate despite the fact that 75% of the workforce are
currently working from home with the necessary access to our systems and communications network.
Since the beginning of the crisis letting enquiry levels understandably have decreased, which has had
an impact on viewings and new lettings. However, over 13,000 sqm of new lettings have been
completed since 1 March 2020, generating €1.2 million of annualised rent. The collection of rent and
service charge income for the month of April 2020 has remained relatively robust with over 75% of
billing collected by working day 7 (9 April 2020), representing circa 90% of the normal working pattern.
There are a small number of tenants who are facing Covid-19 related financial difficulties who have
requested deferral of rental and service charge payments. These cases will be addressed on a case by
case basis.
The Company completed the financial year with a strong balance sheet supported by total cash
balances in excess of €121.0 million, €96.6 million of which is unrestricted. In addition, the Company
has €33.1 million of undrawn debt facilities.
While the Sirius portfolio has in place lease agreements with more than 5,000 tenants, the top 50
tenants make up 44% of the rent roll and include some of the world’s best known multi-national
companies. 7% of its tenants are government agencies, and 35% of the portfolio is storage space,
where an increase in enquiries has been seen since the start of the crisis. Additionally, a large portion
of the rent roll comes from Germany’s Mittelstand (SMEs) which operate across a wide range of
industries and these are the companies that the German Government’s funding package is intended
to support. While it is expected that some rent payments for the next few months will be deferred,
the Company is using its extensive platform across Germany to manage the impact to cash flow and
will work with tenants to minimise any long-term impact to profits.
However, while the lockdown in Germany continues and there is no certainty on how or when it may
end, it is not possible for the Company to assess accurately the impact of Covid-19 on the business
and the overall financial performance of the Group and as such the Board are unable to provide future
financial performance guidance at this time.
Andrew Coombs, Chief Executive Officer of Sirius Real Estate, said:
”We are maintaining a close eye on the situation as it evolves daily with the welfare and interests of
our staff and tenants very much in the forefronts of our minds.
“Sirius operates a particularly well diversified portfolio of properties together with a strong operating
platform across Germany and we are well placed to maintain operational continuity through the
duration of the crisis”.
Conference call
A conference call for analysts will be held at 09.00 (BST)/10:00 (SA/CET) today. If you wish to dial in,
the details are:
Participant access code (for all participants): 59043920#
UK Dial-In: Toll-Free: 08003589473 / Toll: +44 3333000804
SA Dial-In: Toll-Free: 0800111446 / Toll: +27 216724118
Germany Dial-In: Toll-Free: 08006270729 / Toll: +49 6913803430
All other countries:
http://events.arkadin.com/ev/docs/NE_W2_TF_Events_International_Access_List.pdf
For further information:
Sirius Real Estate
Andrew Coombs, CEO/Alistair Marks, CFO
+49 (0)30 285010110
Tavistock (Financial PR)
Jeremy Carey
+44 (0) 7836 734 625
James Verstringhe
+44 (0) 7769 698 105
siriusrealestate@tavistock.co.uk
NOTES TO EDITORS
About Sirius Real Estate
Sirius is a property company listed on the main market and premium segment of the London Stock
Exchange and the main board of the Johannesburg Stock Exchange. It is a leading operator of branded
business parks providing conventional space and flexible workspace in Germany. The Company's core
strategy is the acquisition of business parks at attractive yields, the integration of these business parks
into its network of sites under the Company's own name as well as offering a range of branded
products within those sites, and the reconfiguration and upgrade of existing and vacant space to
appeal to the local market, through intensive asset management and investment. The Company's
strategy aims to deliver attractive returns for shareholders by increasing rental income and improving
cost recoveries and capital values, as well as by enhancing those returns through financing its assets
on favourable terms. Once sites are mature and net income and values have been optimised, the
Company may take the opportunity to refinance the sites to release capital for investment in new sites
or consider the disposal of sites in order to recycle equity into assets which present greater
opportunity for the asset management skills of the Company's team.
In July 2019, the Company completed the formation of its Titanium real estate investment joint
venture with clients represented by AXA Investment Managers - Real Assets. Titanium was formed
through the acquisition by AXA IM - Real Assets, on behalf of its clients, from Sirius, of a 65% stake in
five business parks across Germany. Sirius will retain the remaining 35% and will act as operator of the
assets, on a fee basis. Subject to suitable investment opportunities, AXA IM - Real Assets and Sirius
may consider opportunities to grow the JV’s portfolio primarily through the acquisition of larger
stabilised business park assets and portfolios of assets with strong tenant profiles and occupancy.
Sirius will continue to grow its wholly owned portfolio through acquisitions of more opportunistic
assets, where it can capitalise on its asset management expertise to maximise utilisation of the space,
grow occupancy and improve quality of the tenants. The strategies have been clearly defined so that
the JV does not conflict with Sirius's existing business.
For more information, please visit: www.sirius-real-estate.com
Follow us on LinkedIn at https://www.linkedin.com/company/siriusrealestate/
Follow us on Twitter at @SiriusRE
LEI: 213800NURUF5W8QSK566
JSE Sponsor: PSG Capital
Date: 14-04-2020 08:00:00
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