Business Update

RNS Number : 6698R

Sirius Real Estate Limited

01 July 2020

 

SIRIUS REAL ESTATE LIMITED

(Incorporated in Guernsey)

Company Number: 46442

JSE Share Code: SRE

LSE (EUR) Share Code: ESRE

LSE (GBP) Share Code: SRE

ISIN Code: ISIN GG00B1W3VF54

1 July 2020   

Sirius Real Estate Limited

("Sirius Real Estate", "Sirius" or the "Company")

Business Update

Sirius Real Estate, the leading operator of branded business parks providing conventional space and flexible workspace in Germany, today provides an update on the business during June 2020 following the relaxation of Covid-19 restrictions in early May 2020. Less than 10% of Sirius' on-site business park employees are now working remotely and staff at Head Office are working on a rotational basis, in line with Government guidelines for social distancing, with no more than 50% of Head Office staff present at any one time.

Highlights

· €20 million drawdown on unsecured Schuldschein loan due on 3 July 2020, giving €123 million of unrestricted cash and undrawn facilities

· June 2020 rent and service charge collection achieved 99.8% of normal levels

· Average monthly enquiry levels above 1,200 for April, May and June 2020

· 165 new lettings completed in June 2020 covering 11,242 sqm (May 2020: 130 new lettings/11,282 sqm), generating €877,000 of annualised rent roll

· Like-for-like annualised rent roll as at end of June 2020 in comparison to end of March 2020 has reduced by circa €478,000 (from €89.6 million at 31 March 2020)

· Dividend of 1.80c per share representing 65% of Funds from Operations (FFO) in respect of the second half of the financial year ended 31 March 2020, to be paid on 20 August 2020 - the ex-dividend date will be 8 July 2020

· Conferencing income returned to normal monthly levels in June 2020, with a shortfall from March 2020 compared to the prior year estimated at €200,000.

· The RICS Material Valuation Uncertainty Leaders Forum (UK) advised on 11 June 2020 that reporting 'material valuation uncertainty' may no longer be appropriate for UK based industrial and logistics assets. We await to see the position adopted in Germany with regard to our next valuations in September 2020.

Balance Sheet

On 3 July 2020, the Company will draw down the final €20 million tranche of its €50 million unsecured Schuldschein loan, announced on 5 March 2020. The unsecured Schuldschein loan was structured in tranches with maturities of three and five years (average maturity of 3.7 years) at a blended all-in interest rate of 1.60% and is made up of both fixed and floating rates. There is no amortisation. 

This draw down further strengthens Sirius' balance sheet increasing total cash balances to in excess of €135 million, €110 million of which is unrestricted, with undrawn facilities of €13 million also available. As at 31 March 2020, the Company's net LTV stood at 32.8%, the weighted average cost of debt was 1.49% and the interest cover on its debt was 11.0x.

Cash Collection

Following on from a strong cash collection performance compared with the normal working pattern in April and May 2020 of over 98%, cash collection for June 2020 achieved 99.8% of its normal working pattern.

The consistency of cash collection is reflective of the Company's breadth of tenant base, ability of its staff to engage with and manage its tenants and the decisive manner in which the Company has been managing throughout the crisis, as well as the efficiency with which the German Government has acted to support businesses.

A small number of tenants facing Covid-19 related financial difficulties have requested deferral of rental and service charge payments. These are being addressed on a case-by-case basis and have had very limited impact on cashflow at this point. 

 Enquiries/New Lettings

Following a previously reported brief reduction in the run rate of core enquiries at the end of March 2020 after making adjustments to the marketing strategy, enquiry levels have returned to normal levels of above 1,200 per month in April, May and June 2020.

These enquiry levels have led to 165 new lettings in June 2020 covering 11,242 sqm and generating €877,000 of annualised rental roll compared with 130 new lettings/11,282 sqm in May 2020 and 115 new lettings/8,025 sqm in April 2020.  Like-for-like annualised rent roll as at end of June 2020 in comparison to end of March 2020 has reduced by circa €478,000 (from €89.6 million at 31 March 2020).

The demand for space remains good with an increase in the demand for storage space. However, it is encouraging that of the 30,549 sqm of new lettings that were completed in April, May and June 2020, 40% of those new lettings relate to out of town conventional or flexible office space.

Dividend

On 1 June 2020, the Company announced that the Board had authorised a dividend in respect of the second half of the financial year ended 31 March 2020 of 1.80c per share, representing 65% of FFO and bringing the total dividend payment for the year to 3.57c per share, an increase of 6.3% on the prior year dividend payment. This dividend will be paid on 20 August 2020 and the ex-dividend date will be 8 July 2020. A scrip dividend alternative is being offered. A copy of the Company's scrip circular is available on the website www.sirius-real-estate.com.

Conferencing

Following the suspension of business in March owing to Covid-19, conferencing activity has successfully recommenced with positive booking levels reported across all applicable sites. The shortfall in revenue to the end of June 2020 compared to the prior year is estimated at €200,000. The facilities are open in line with Government social distancing guidelines and it is of note that some clients have taken larger conferencing facilities to be able to maintain those guidelines.

Andrew Coombs, Chief Executive Officer of Sirius Real Estate, commented: "Whilst the last few months have been a hugely challenging time for people both personally and economically, we have weathered the first phase of this crisis with relative success. This is thanks both to the co-operation of our tenants and the hard work and dedication of our staff."

"Our business model is built on the breadth of our offering to occupiers and the adaptability of our mix of accommodation, ranging across many different workspace segments, including out of town conventional and flexible office, manufacturing, commercial storage and self-storage. In addition, the portfolio is well diversified in terms of both geography and tenant base."

"Looking ahead, we are well positioned with a strong balance sheet to take advantage of opportunities in the market. We remain focused on delivering attractive risk-adjusted returns by way of active asset management throughout the economic and property cycles and we have significant cash resources to make acquisitions as well as further vacancy to develop and reversion potential to capture."

ENDS

For further information:

Sirius Real Estate

Andrew Coombs, CEO/Alistair Marks, CFO

Tel: [phone]

Tavistock (Financial PR)

Jeremy Carey/James Verstringhe

Tel: [phone]/+ 44 (0)7836 734 625

Email: [e-mail]

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 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 Titanium'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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