Trading Statement

RNS Number : 1436P

Sirius Real Estate Limited

22 October 2012

 



Sirius Real Estate Limited

("Sirius" or "the Company")

Trading Update

Sirius Real Estate Limited is pleased to provide the following update for the six months to 30 September 2012 ("the period"). 

This has been a positive trading period for the Company. Improved rates from new lettings and renewals increased rental income and with lower than anticipated costs, this combined to deliver a good trading performance ahead of management expectations for the first six months of the financial year. In addition, the Company benefitted from a surrender premium of €1.1 million.

Demand has remained good amongst the German SME market for flexible office, logistics and light industrial space. As a result, the Company has secured new lettings of 59,175 sqm at an average rate of €5.32 per sqm in the period.  This increased rate is higher than the average rate per sqm across the portfolio and is critical to improving the profitability of the business.

Throughout the period there was around 57,000 sqm of tenant move outs reflecting the previously announced move outs of 4 sizeable tenants.  The rental rate of the vacating tenants was under €4.15 per sqm which is significantly below the rate of new lettings.  Occupancy, as at 30 September 2012, was 76%** (31 March 2012 77%*) however, the higher rates achieved on new lettings and renewals has mostly offset the impact of these move outs. 

* adjusted for disposals

** occupancy has reduced despite new lettings matching move outs because of the timing of when the new lettings move in.

The process of internalising the management team is complete and the benefits of operating the business from a single unified platform are coming through both financially through a lower cost base and operationally with the management team better aligned to all stakeholders. Good progress is also being made with the selective disposal programme of non-core and mature assets and in the period, Sirius has completed the disposal of Munich Hoffmanstr site for €6.8 million and notarised a further €3.2 million disposals. The disposals have been achieved with the support of PCO Real Estate Asset Management Ltd in line with the Advisory Services Agreement.

The Company has been in positive discussions with ABN AMRO ("ABN") over a short-term extension to the existing loan facility. As part of finalising these discussions, the management has agreed a standstill agreement to 30 November 2012 on the existing loan facility which expired on 15 October 2012. ABN has granted the standstill in order to finalise the terms and conditions of the extension. The facility has an outstanding balance of €80.7m and is secured over the 14 remaining properties.

The strategy remains focused on paying down the loan through a combination of disposing or refinancing the properties secured under this facility.The progress made on this plan to date is as follows:

·    Since the disposals programme begun a year ago two sites and five parcels of land or buildings which form part of the portfolio financed by ABN have been sold or notarised. These disposals will generate proceeds of €13.4m of which €10.4m will be repaid to ABN.

·    ABN has agreed to release two properties from the facility for immediate refinancing.  The Group's management has been active in marketing the remaining 12 properties within the ABN facility and the interest for these assets is encouraging.

The loan facility with BerlinHyp matures in stages between March 2013 and December 2013. The Company is in discussions with BerlinHyp concerning refinancing of the loan facility.  The Board look forward to announcing the half year results in December 2012.

Enquiries:

Sirius                         

Andrew Coombs, CEO                                                                       [phone]

Alistair Marks, CFO

Peel Hunt

Capel Irwin                                                                                                      020 7418 8900

Alex Vaughan

Cardew Group                                             

Tim Robertson                                                                                                020 7930 0777 

Georgina Hall

 

END

 

 

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