TIDMSRE
RNS Number : 4177O
Sirius Real Estate Limited
02 October 2019
2 October 2019
Sirius Real Estate Limited
("Sirius Real Estate", "Sirius" or the "Company")
Trading Update and Extension of Banking Facility
Six months to 30 September 2019
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 six months
to 30 September 2019 (the "period").
Highlights
-- Continued strong occupier demand, with total annualised rent roll of EUR78.5 million
-- Completed Titanium joint venture with AXA Investment Managers
- Real Assets - pipeline of opportunities
-- Major extension to banking facility with BerlinHyp to total
EUR180.2 million, fixed at 0.9% to October 2023
-- Total firepower of EUR170 million to invest into new assets
on the balance sheet, capex investment programme and further equity
into the Titanium JV
-- Attractive acquisitions including EUR66 million of assets
notarised and EUR22 million completed
-- Trading in line with management expectations for the full year
Lettings
This has been another promising six months of trading for the
business in spite of the large expected move-outs at the start of
the period and we are pleased to report that the Company is trading
in line with management expectations for the full year. Continued
strong occupier demand has supported positive letting activity with
more than 50,000 sqm of move-ins in the period, offsetting the
effect of vacating tenants, which included 25,000 sqm of move-outs
in recently acquired sites which were known to us prior to
acquisition. The annualised rent roll highlights are as
follows:
-- Total annualised rent roll, which includes the effect of
acquisitions and disposals in the period, was approximately EUR78.5
million compared to EUR76.5 million at the start of the period
-- Like-for-like annualised rent roll increased by approximately
0.9% to EUR77.2 million compared to EUR76.5 million at the start of
the period, despite the impact of the move-outs mentioned above
-- Organic rent roll growth in the period was driven by an
average like-for-like rental rate increase in the region of 1.6%,
from EUR5.83 to EUR5.92 per sqm, while like-for-like occupancy
remained flat at 85%
Joint Venture
In addition to the strong letting activity, the Company
completed its Titanium joint venture with AXA Investment Managers -
Real Assets in July 2019 through the sale of 65% of its interest in
five business parks generating net proceeds for Sirius in excess of
EUR70.0 million. The Company has identified a pipeline of potential
acquisition opportunities which fit with Titanium's investment
criteria, which it is discussing with its partners.
Extension to Banking Facility
The Company has agreed a EUR115.4 million increase in its
existing facility with BerlinHyp. This will increase the facility
from EUR64.8 million as it stands today, to EUR180.2 million after
the extension. As part of the extension agreement, the Company's
Nabern-Kirchheim asset will be added to the security portfolio. The
Nabern-Kirchheim asset was previously financed as part of the
K-Bonds facility and the Company repurchased the K-Bonds facility
upon the completion of Titanium. EUR24.6 million of the proceeds
from the completion of Titanium have been used to repay K-Bonds in
full. This will mean the Company will on a net basis have
approximately EUR90.0 million of surplus funds available from the
extended BerlinHyp facility after taking into account the K-Bonds
repayment. The new extended BerlinHyp facility expires on 31
October 2023, has an all-in fixed interest rate of 0.9% and
requires amortisation payments of 1.25% per year. The Company
expects, when it announces its half-year results on 25 November
2019 after drawing down the increased facility with BerlinHyp, to
remain at a net LTV of less than 40%.
Available Funds
Combining the funds remaining from last year's disposals, the
proceeds from the formation of Titanium and the new BerlinHyp
facility, Sirius has created approximately EUR170 million of
firepower to invest into new assets on its balance sheet, its capex
investment programme and further equity into Titanium. The Company
has made significant progress in acquisitions in the period,
completing three properties totalling EUR21.9 million and
notarising two additional properties for EUR65.7 million, which are
expected to complete shortly after the period end. The assets
acquired and notarised for completion provide an attractive blend
of stable income and opportunities to lease up vacant space and
undertake accretive capital investment. The Company is working on a
strong pipeline of opportunities to deploy the remaining funds
available to it.
Acquisitions
Details of completed or committed transactions are outlined
below:
-- On 18 July 2019, the Company notarised for acquisition a
property in Alzenau, east of Frankfurt, for EUR44.5 million
including acquisition costs. The mixed-use property comprises
eleven buildings constructed between 1985 and 2002 providing a
total of 60,000 sqm of lettable space (47% warehouse/production
space; 47% office space; and 6% other space) as well as 1,063
parking spaces, on a total plot size of 197,000 sqm. The asset is
93.5% let to 16 tenants with an annual net operating income of
EUR3.5 million with a weighted average lease expiry of 3.5 years.
The transaction is due to complete in October 2019.
-- On 24 September 2019, the Company notarised the acquisition
of a property in close proximity to Munich for total consideration
of EUR20.1 million. The single office building was built in 1993
and provides around 19,600 sqm of mostly office space and 336 car
parking spaces. The asset is 61% let to 31 tenants with an annual
net operating income of EUR684,000 with a weighted average lease
expiry of 2.3 years. The transaction is due to close in December
2019.
-- On 10th May 2019, the Company completed the acquisition of
Buxtehude Business Park south west of Hamburg, for a total
consideration of EUR8.7 million including acquisition costs. The
business park provides 28,532 sqm of lettable space (90% warehouse
/ production space; 6% offices; and, 4% of other space) on a plot
of 35,425 sqm and was acquired with full vacant possession.
-- On 1 September 2019, the Company completed the acquisition of
an office building adjacent to its Bochum Business Park, in Bochum.
The property was bought for a total consideration of EUR6.7 million
including acquisition costs. The property, constructed in 1970,
provides 4,200 sqm of lettable space (81% office space, 15% storage
and 4% service space) and 71 parking spaces on a 3,300 sqm plot. It
is 100% let, producing an annual net operating income of
EUR370,000, with a weighted average lease expiry of 2.2 years.
-- On 1 June 2019, the Company completed the acquisition of a
business park in Teningen, north of Freiburg, for EUR6.5 million
including acquisition costs. The property provides lettable space
of 20,000 sqm (40% warehouse/production space; 38% offices; 19%
laboratory; and, 3% of other space) on a 43,000 sqm plot. It is
currently leased to seven tenants, with occupancy at 88% and
produces annual net operating income of EUR542,000. The weighted
average lease expiry is 1.6 years.
Disposals
Alongside these acquisitions, Sirius notarised for sale a mature
asset as part of the continuing asset recycling programme, as
outlined below:
-- On 5 September 2019, the Company notarised for disposal an
office building in Stuttgart-Weilimdorf for a sale price of EUR10.1
million. The property comprises a net lettable area of 6,766 sqm,
which is predominantly office space. The property is 100% let to a
single tenant producing around EUR690k of annual net operating
income with the remaining lease being 4.0 years. The transaction is
due to complete in April 2020.
Half Year Results
The Board looks forward to providing a more detailed report on
the Company's trading performance and outlook when it announces
half--year results on 25 November 2019.
The financial information on which this trading update is based
has not been reviewed or reported on by the Company's external
auditors or a reporting accountant.
Commenting on trading over the period, Andrew Coombs, Chief
Executive Officer of Sirius Real Estate, said: "It has been another
encouraging six months for Sirius, during which we have completed
the Titanium joint venture transaction with AXA, secured a new debt
package at a historic low fixed interest rate for the Company of
0.9% and made considerable progress on identifying and securing
earnings enhancing acquisitions.
"While our like-for-like annualised rent roll is broadly flat
for this period, we are pleased at the speed we have been able to
secure enough new income to replace that lost from the known
move-outs that we highlighted in our Annual Report. The foundations
have been set for a strong second half to this financial year".
Conference Call
There will be a conference call for analysts/investors hosted by
Andrew Coombs, Chief Executive Officer of Sirius Real Estate, at
08:30 (UK time) today (Wednesday 2 October).
Tel: +44 (0)333 300 0804
PIN: 91653204#
For further information:
Sirius Real Estate
Andrew Coombs, CEO/Alistair Marks, CFO
Tel: +49 (0)30 285010110
Tavistock (Financial PR)
Jeremy Carey/James Verstringhe
Tel: +44 (0)20 7920 3150
Email: 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
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END
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