TIDMSRE
RNS Number : 4641J
Sirius Real Estate Limited
14 April 2020
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 EUR90.3 million (31
March 2019: EUR87.8 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
EUR81.2 million (31 March 2019: EUR76.5 million)
-- 162,607 sqm of new lettings signed at an average rate of EUR6.55 per sqm
-- Like-for-like occupancy increased to 87% (31 March 2019: 85%)
and average rent to more than EUR6.07 per sqm (31 March 2019:
EUR5.83)
-- EUR120.0 million of acquisitions completed providing a mix of stable income and opportunity
-- Titanium joint venture with AXA Investment Managers - Real
Assets completed - EUR168.0 million seed portfolio transferred from
Sirius and first new acquisition of EUR58.9 million in March
2020
-- Average cost of debt reduced to 1.52% and first unsecured
Schuldschein facility for EUR50 million completed
-- Increase in number of unencumbered assets to 15 with book
value of approximately EUR115.0 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 EUR90.3
million
-- Like-for-like annualised rental income increased by 6.1%,
from EUR76.5 million to EUR81.2 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 EUR5.83 to EUR6.07 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 EUR168.0 million, generating net proceeds
for Sirius in excess of EUR70.0 million.
On 1 March 2020, the Company completed the first external
acquisition for Titanium, of Itterpark, a business park in Hilden
near Düsseldorf for EUR58.9 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
EUR225.0 million of assets and has drawn down on EUR84.0 million of
debt facilities.
Financing
During the period Sirius agreed three new debt facilities
amounting to EUR171.9 million, including the Company's first
unsecured debt facility for EUR50.0 million of which EUR30.0
million was drawn down as at 31 March 2020. Additionally, the
Company repaid EUR77.7 million of debt upon executing the Titanium
joint venture and made EUR10.1 million of scheduled debt
amortisation payments during the year. Total debt increased from
EUR386.1 million at the start of the period to EUR485.8 million as
at 31 March 2020, with unrestricted cash and undrawn facilities of
EUR129.7million. 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:
-- EUR115.4 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;
-- EUR50.0 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;
-- EUR6.5 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
EUR115.0 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 EUR190.0 million of financial resources for
acquisitions. Seven properties were acquired during the year with
total acquisition costs of EUR120.0 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:
Acquisitions Total investment Total Acquisition Acquisition Annualised Annualised
(incl. acquisition acquisition occupancy vacant acquisition acquisition
costs) sqm % sqm rental roll NOI
EUR000 EUR000 EUR000
Completed
Teningen 6,497 20,062 88% 2,486 806 542
Buxtehude 8,690 28,532 0% 28,532 - (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
Total 119,981 188,674 73% 50,207 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 EUR10.1 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 EUR1.2 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 EUR121.0
million, EUR96.6 million of which is unrestricted. In addition, the
Company has EUR33.1 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
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END
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