TIDMSRE
RNS Number : 1281O
Sirius Real Estate Limited
06 October 2021
SIRIUS REAL ESTATE LIMITED
(Incorporated in Guernsey)
Company Number: 46442
JSE Share Code: SRE
LSE (GBP) Share Code: SRE
LEI: 213800NURUF5W8QSK566
ISIN Code: GG00B1W3VF54
6 October 2021
Sirius Real Estate Limited
("Sirius Real Estate", "Sirius" or the "Company")
TRADING UPDATE: STRONG H1 ORGANIC GROWTH, TRANSFORMATIONAL BOND
ISSUANCE AND PROGRESS ON ACQUISITIONS
Sirius Real Estate, the leading owner and operator of branded
business and industrial parks providing conventional space and
flexible workspace in Germany, provides an update on trading for
the six months to 30 September 2021.
Highlights
-- 2.5% increase in like-for-like annualised rent roll to
EUR98.9 million (March 2021 EUR96.5(1) million) driven by a 2.6%
increase in like-for-like rate per sqm to EUR6.33 (March 2021:
EUR6.17).
-- Increase in total annualised rent roll to EUR99.7 million
(September 2020: EUR89.2 million/+11.8%, March 2021: EUR96.5*
million/+3.3%).
-- Completion of EUR400.0 million oversubscribed corporate bond
issuance in June 2021 attracting a coupon of 1.125% until maturity
in June 2026.
-- Repayment of EUR170.7 million of secured debt leading to an
increase in the number of unencumbered properties, with a book
value of approximately EUR1.0 billion.
-- Weighted average cost of debt reduced to 1.2% (March 2021:
1.5%) and weighted average term of debt extended to 3.7 years
(March 2021: 2.7 years).
-- Acquisitive growth continued with eight on balance sheet
business park assets and one land parcel completed or notarised in
the period amounting to EUR153.9 million in aggregate.
-- Total cash balance of approximately EUR187.5 million, of
which EUR174.5 million is unrestricted, providing capacity for
further acquisitions and investment.
-- Net loan-to-value ratio (net LTV) of approximately 38.3% prior to impact of H1 valuation.
-- Trading in line with consensus and management expectations for the full year.
Strong H1 lettings and rental growth
The Company is pleased to report a six-month trading period that
has seen an increase in like for like annualised rent roll of 2.5%
to EUR98.9 million, from EUR96.5(1) million at March 2021. This was
driven by a 2.6% increase in like-for-like average rental rate
highlighting strong occupier demand and the reversionary potential
within the portfolio.
Total annualised rent roll increased by 3.3% to EUR99.7 million
and, with a modest contribution in the first half of the financial
year due to the timing of completions, the impact from acquisitions
is expected to be greater in the second half. Like-for-like
occupancy remained broadly flat at 86%, whilst total occupancy
reduced to 85% (March 2021: 87%) primarily as a result of the
acquisition of 23,000 sqm of vacant space within the Essen and
Ohringen assets that completed within the period. In line with its
strategy, the Company intends to utilise its asset management
platform to increase occupancy and net operating income at these
assets.
The effectiveness of the Company's internal operating platform
was demonstrated again during the period with an average of 1,339
enquiries generated per month relating to its on-balance sheet
assets, of which 77% were converted into viewings. A total of
84,000 sqm of space was let in the period across 1,051 deals
resulting in a sales conversion rate of 13.1%. Renewal rates
increased to 71% (September 2020: 68%).
The cash collection rate for the six-month period to 30
September 2021 was approximately 97.4%, with EUR2.0 million
outstanding rent and service charges from total billing of EUR76.7
million, the majority of which the Company expects to collect
within 12 months. The 12-month trailing cash collection rate was
98.2%. A total of seven write-offs with a combined value of less
than EUR50,000 relating to the period under review were
recorded.
(1) Excludes EUR0.7m of annualised rent roll relating to the
expected Daimler moveout in the Fellbach 2 asset that was acquired
in March 2021.
Transformational inaugural bond issuance
As previously communicated to shareholders the Company had been
assessing opportunities to optimise its funding structure to
support its future growth ambitions. The Company's inaugural bond
issuance was significantly oversubscribed and successfully
completed in June 2021 following the award of a BBB stable
investment grade credit rating from Fitch in May 2021. Bonds
totalling EUR400.0 million were issued attracting a coupon of
1.125% with a maturity date of June 2026.
The bond issuance coupled with the repayment of EUR170.7 million
of existing secured debt provides the Group with a number of
benefits including:
-- strong financial capacity to fund acquisitions and other investment opportunities;
-- reduction in the Group's weighted average cost of debt to
1.2% (31 March 2021: 1.5%) and increase in weighted average term of
debt to 3.7 years (31 March 2021: 2.7 years);
-- increase in the number of unencumbered assets to 48, with a
book value of approximately EUR1.0 billion.
Following the bond issuance and related secured debt repayments,
the Company has a total debt of EUR698.2 million of which EUR450.0
million or 65% is unsecured (March 2021: 11%). The transformation
of the Company's financing arrangements is expected to positively
support Sirius' operations and make asset recycling notably easier
and less expensive. Net LTV, which excludes restricted cash
balances, was approximately 38.3%.
Progress with acquisitions
Building on the momentum achieved when the investment markets in
Germany reopened at the end of last year, the Company made good
progress in terms of capital deployment. A total of EUR153.4
million was committed to eight on balance sheet business park
acquisitions, with two assets completing in the period and the
remaining six notarised for completion post period end. In
addition, the Company completed the purchase of a land parcel
adjacent to an existing business park asset for EUR0.5 million.
The acquisition assets are located in areas underpinned by
strong micro market demand that in some cases are complementary to
the Company's existing business parks. With total annualised net
operating income of EUR7.5 million the acquisition assets provide
attractive and well-diversified cashflows. Additionally, the assets
provide potential to add value through the selective investment
into, and subsequent let up of, vacant space which amounts to
approximately 82,000 sqm.
The Company also completed the previously announced acquisition
of a business park in Augsburg for EUR79.9 million through its
Titanium venture with AXA IM Alts, which now comprises seven assets
with a combined value of approximately EUR325.0 million.
Half Year Results
Sirius will announce results for the six months to 30 September
2021 on Monday, 8 November 2021, at which time there will be a
conference call for analysts and investors.
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: "As the vaccination
programme continues to be successfully rolled out across Germany,
trading conditions have begun to normalise and confidence is
returning. As with many countries, corporates in Germany are now
focused primarily on the re-organisation of their supply chains to
within European borders and adapting to more flexible ways of
working. Both of these challenges play to the strengths of Sirius'
portfolio and will help drive demand to our out of town business
parks which offer a range of storage, warehouse, manufacturing
spaces and out of town offices. We remain confident that the
experience and service levels of our operating platform, the
quality and affordability of our assets, as well as the diversity
and resilience of our tenant base will continue to underpin the
Company's growth.
"While the attractive yields available from our asset class have
continued to drive competition in the investment markets, we are
also pleased with the strong progress we have made in deploying
capital into new opportunities throughout the first half. However,
we have kept our focus fixed firmly on acquiring assets which are
either under managed and/or underutilised where we are confident
our specialist asset management teams can extract value and drive
net operating income. The success of our inaugural bond issuance
underlines the belief capital markets investors have in our
strategy and puts us in a good position to fund further acquisitive
growth."
Conference Call
There will be a conference call for analysts/investors hosted by
Andrew Coombs, Chief Executive Officer of Sirius Real Estate,
Alistair Marks, Chief Financial Officer of Sirius Real Estate and
Diarmuid Kelly, Group Finance Director of Sirius Facilities GmbH,
at 08:30 BST (09:30 CET/SA time) today, 6 October 2021.
Details as follows:
Dial-in UK: Local: +44 (0)330 336 9126/ Toll-Free: 0800 358
6377
Dial-in Germany: Local: +49 (0)69 2222 25574 / Toll-Free: 0800
589 4609
Dial-in South Africa: Local: +27 11 844 6054 / Toll-Free: 0800
998 654
Participant access PIN (for all participants): 9986131
For further information:
Sirius Real Estate
Andrew Coombs, CEO / Alistair Marks, CFO
+49 (0) 30 285 010 110
FTI Consulting (Financial PR)
Richard Sunderland / Claire Turvey / James McEwan / Talia
Jessener
+44 (0) 20 3727 1000
SiriusRealEstate@fticonsulting.com
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 purpose is to create and manage
optimal workspaces that empower small and medium-sized businesses
to grow, evolve and thrive. Sirius seeks to unlock the potential of
its people, its properties, and the communities in which it
operates, so that together we can create sustainable impact, and
long-term financial and social value.
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.
Sirius also has a venture with clients represented by AXA IM
Alts. Titanium was formed through the acquisition by AXA IM Alts,
on behalf of its clients, from Sirius, of a 65% stake in five
business parks across Germany. Sirius retained the remaining 35%.
The venture seeks to grow primarily through the acquisition of
larger stabilised business park assets and portfolios of assets
with strong tenant profiles and occupancy. As well as its equity
interest, Sirius acts as operator of the assets in the venture, on
a fee basis. 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
venture 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
JSE Sponsor
PSG Capital
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END
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