Trading Statement

RNS Number : 0000T

Sirius Real Estate Limited

09 October 2017

 

The Company considers this announcement to contain inside information which is disclosed in accordance with the Market Abuse Regulation

9 October 2017

Sirius Real Estate Limited

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

Trading Statement

Sirius Real Estate, the leading operator of branded business parks providing conventional space and flexible workspace in Germany, is pleased to announce the following trading statement for the six months to the 30^th September 2017.

This has been a successful trading period for the business alongside continued investment in improvements of the asset base and the raising of equity capital to support the acquisition of new business parks. Lettings activity has been good, driven by strong occupational demand from the German SME market for both conventional and flexible workspace. The Company is trading in line with management expectations.

The main highlights for the period include:

·     Like for like annualised rental income increased by 2% to €65.2 million compared to €64.0 million at the start of the period.  A significant contributor to the annualised rental income increase has been from the Company's major capex investment programme through which sub-optimal space is transformed into either prime lettable space or one of the Company's premium Smartspace products. 

·    Like for like average rate per sqm notably increased from €5.11 to €5.17, demonstrating the Company's ability to secure rate increases through active asset management. Unlike other property companies Sirius does not depend on external brokers for attracting new tenants with instead the vast majority coming from leads generated in-house.

·   In July 2017, the Company completed a successful equity fundraising of €25 million which, combined with proceeds from disposals made as part of its strategy of asset recycling, has provided the Company with significant resources to invest in new opportunities.   The Company has already made excellent progress on the deployment of this capital and is pleased to announce today the notarisation of four additional acquisitions as follows:

o  On 14 September 2017, Sirius notarised the acquisition of an office building asset located in Hamburg-Hummelsbüttel for €8.4 million (including acquisition costs). The site has 11,222 sqm of lettable space and is currently 100% vacant. Hamburg is a market Sirius has been looking to enter for some time and this site, in close proximity to the airport, represents an attractive entry point with substantial upside potential.

o  On 23 September 2017, Sirius completed the acquisition of an office building asset located in Röntgenstraße, Frankfurt for €6.1 million (including acquisition costs), representing a 7.3% EPRA net initial yield. The site contains 5,035 sqm of lettable space, is currently 87% occupied and generating €0.5 million of annualised rental income. The stable income characteristics of this core location asset make it an attractive substitution for the disposal of the Kiel asset that was completed in August.

o  On 29 September 2017, Sirius notarised the acquisition of a business park asset located in Schenefeld (near Hamburg) for €15.1 million (including acquisition costs), representing a 7.8% EPRA net initial yield. This site contains 42,220 sqm of lettable space, is currently 71% occupied and generating €1.5 million of annualised rental income.  Aside from growing occupancy and income the Company intends to benefit from operational synergies with the site located in Hamburg-Hummelsbüttel. 

o  On 29 September 2017, Sirius notarised the acquisition of a business park asset located in Krefeld (near Dusseldorf) for €9.2 million (including acquisition costs) representing a 6.7% EPRA net initial yield. This is a market the Company knows well as this site, which has 10,398 sqm of lettable space, is the third site in Krefeld which the Company has acquired. With occupancy of 72% and annualised rental income of €0.7 million, the Company is confident of delivering improvement by utilising its existing local market insight and experience.

·    In addition, the Company is pleased to announce today that on 21 August 2017 the Company notarised the sale of non-income producing land on the outskirts of the Tempelhof business park in Berlin.  The land is being for sold for €950,000 representing a significant premium to book value.

The Board looks forward to providing a more detailed report on the Company's trading performance when it announces its half year results in late November 2017.

Andrew Coombs Chief Executive Officer of Sirius Real Estate, said:

"We continue to grow the business in terms of the number of properties we own and manage. Following the completion of the notarised acquisitions announced today we will own and manage a portfolio of 51 properties (48 as at 30 Sept 2017) compared to 43 at the end of H1 2016 with more expected to follow in the second half of this financial year. All our acquisitions are selected to enable us to use our operating platform to transform underutilised space and thereby drive occupancy and rental rates.

Economically Germany is in a favourable position relative to other comparable economies. In the third quarter of this year, output in Germany expanded at its fastest pace since April 2011 supported by export gains and strong growth in manufacturing.  This tallies with the strong occupational demand for the Company's mix of conventional and flexible workspace we are experiencing and we believe bodes well for the Company's strategy of acquiring assets with increased vacancy and higher value add opportunity."

For further information:

Sirius Real Estate Andrew Coombs, CEO Alistair Marks, CFO	[phone]
Novella Tim Robertson Toby Andrews	[phone]

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.

 For more information, please visit: www.sirius-real-estate.com 

Images of the Sirius property portfolio are available from: https://www.flickr.com/photos/sirius_re/

LEI: 213800NURUF5W8QSK566

 

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