Trading Statement

RNS Number : 9154G

Sirius Real Estate Limited

10 February 2010

 



Sirius Real Estate Limited

Trading Update

Sirius Real Estate Limited (the "Company" or "Sirius"), the real estate company established to acquire large mixed-use commercial sites for upgrading to flexible workspaces in Germany, today provides an update on the Company's latest position ahead of its results for the year ended 31 March 2010.

The Company has experienced some large tenant move outs at two of its 38 sites since the last reported results as at September 2009. While new lettings enquiries have increased substantially, the Board anticipate these move outs will affect the Company's profits for the current financial year ending 31 March 2010 and as a consequence the Company's trading performance could be   significantly below current market expectations.

These two sites are within the RBS loan facility and as a consequence the Company's interest cover ratio ("ICR") for this facility has declined since the last covenant test.  The impact of the tenant move outs is not only on rents but also on the associated irrecoverable service charge costs of these sites.  The ICR cover as tested in January remained above the covenanted level of 125% but fell below the 'cash trap' level of 130%.  The Company is currently in discussions with RBS as to whether the cash trap will be enforced.

The Board is monitoring the situation closely and expect that the cash trap will have a limited impact on Sirius.  Should the interest cover within this facility fall further, the Company has surplus cash and uncharged properties to cure a potential covenant breach and therefore the Board is confident that it has flexibility to manage the Company's financial position.

As stated previously the Company has a programme in place to significantly reduce its direct and non-recoverable costs which is progressing well and is expected to start taking effect in the next financial year.  It continues to experience a high level of new enquiries which reached a record 650 in January 2010 and lettings of circa 10,000 sqm, with substantial further deals in negotiation.

New Appointment

The Board is also pleased to announce the appointment of Andrew Coombs as Chief Executive Officer of Sirius Facilities GmbH, the German operating business of the asset manager of Sirius.  Andrew has significant experience in the "flexible workspace" industry, most recently at MWB Business Exchange as Director and General Manager, and  as Sales Director at Regus.  He will be responsible for the day to day operations of the German property management.  This will allow Ingo Spangenberg to focus on new lettings and the key tenant renewals of the business.

Kevin Oppenheim, Chief Executive Officer of Principle Capital Sirius Real Estate Asset Management Limited, said: "That these move outs occurred at a similar time is unfortunate and has had a magnified impact on the business. We are confident, given continuing demand from our core SME market, of re-letting the vacated space in due course. From a financial position, the Company has sufficient cash and uncharged properties to ensure we remain within our banking covenants.

Looking further ahead, we expect to benefit from our cost savings initiatives and we are excited about the opportunities our significantly expanded pipeline of new lettings represents. I would also like to welcome Andrew Coombs who will play a key role in implementing our strategy in Germany."

Enquiries:

Principle Capital Sirius Real Estate Asset Management Limited

Kevin Oppenheim, CEO    07973 821 008

Alistair Marks, CFO 020 76324130

J. P. Morgan Cazenove

Robert Fowlds    020 7588 2828

Bronson Albery

Cardew Group

Tim Robertson    020 7930 0777

Catherine Maitland

 

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