TIDMSRE
RNS Number : 2028D
Sirius Real Estate Limited
08 October 2018
8 October 2018
Sirius Real Estate Limited
("Sirius", "Sirius Real Estate" or the "Company")
Trading Update
Sirius Real Estate, the leading operator of branded business
parks providing conventional space and flexible workspace in
Germany, is pleased to provide the following trading update for the
six months to 30 September 2018.
This has been another good trading period for the business,
underpinned by strong occupier demand for conventional and flexible
space and positive letting activity, which together have resulted
in an encouraging increase in organic rental growth despite some
large expected move outs at the start of the year. The Company has
made significant progress in deploying the proceeds of the March
2018 EUR40.0 million equity raise, having completed the acquisition
of three investment properties totalling EUR39.3 million before or
immediately after the period end and with another EUR57.5 million
of property in exclusivity.
Sirius continues to improve the quality of its real estate and
realise significant returns from its assets through its highly
accretive capital investment programme. The Company is primarily
focused on the capex investment opportunities within the
acquisitions it has completed over the last two financial years,
whilst still finalising the few remaining projects from the
original programme started in January 2014. These investments are
expected to make a strong contribution to results over the second
half of the financial year.
We are pleased to report that the Company is trading in line
with management expectations.
The main highlights for the period include:
- Total annualised rental income, including acquisitions and
disposals within the period, increased by EUR2.5 million to EUR82.0
million from EUR79.5 million at the start of the period.
- Like for like annualised rental income increased by 2.6% to
EUR79.7 million compared to EUR77.7 million at the start of the
period, despite the impact of several large expected move outs
which occurred at the start of the period.
- Organic growth in the period was driven by an average like for
like rental rate increase of 2.5% from EUR5.62 to EUR5.76 per sqm
whilst like for like occupancy was broadly flat at 81%. This
demonstrates the strength of the Company's asset management
capabilities and ability to deal with large move outs effectively.
Sirius continues to generate the vast majority of its leads through
its internal operating platform, which provides much greater
flexibility and the ability to achieve higher rental rates.
- Growth through acquisitions and portfolio optimisation through
asset recycling continues to be a focus for the Company. In the
period, the Company acquired a combination of assets with stable
income and higher value add assets where the Company's asset
management initiatives through its internal operating platform can
grow both income and capital values. Alongside this, Sirius was
able to complete the sale of one non-core site and notarise the
sale of the last remaining non-core site, as well as sell some
non-income producing land and a residential building. This activity
is expected to be particularly accretive to shareholders over the
next few years. The specific details of these transactions are
outlined below:
o On 1 August 2018, the Company completed the acquisition of
Sirius Business Park Friedrichsdorf, located in Friedrichsdorf,
near Frankfurt for a total consideration of EUR17.8 million. The
site offers around 17,300 sqm of lettable space comprising 8,200
sqm of offices, 8,100 sqm of warehouse space and 1,000 sqm of other
space. At the time of acquisition, the asset was 91.8% let to 18
tenants producing an annual rental income of EUR1.4 million and net
operating income of EUR1.3 million.
o On 1 August 2018, the Company completed the acquisition of a
business park located in Sirius Business Park Fellbach, near
Stuttgart for a total consideration of EUR12.1 million. The site
provides around 25,500 sqm of lettable space, comprising 2,100 sqm
of offices, 15,100 sqm of warehouse space and 8,300 sqm of other
commercial space. At the time of acquisition, the asset was 79.0%
let to 19 tenants producing an annual rental income of EUR1.0
million and net operating income of EUR0.9 million.
o On 1 October 2018, the Company completed the acquisition of a
second business park located in Mannheim, for a total consideration
of EUR9.6 million. The site offers around 15,000 sqm of lettable
space comprising 7,050 sqm of offices, 4,950 sqm of warehouse space
and 3,000 sqm of other space. At the time of acquisition, the asset
was 68.9% let to 57 tenants producing an annual rental income of
EUR0.8 million and net operating income of EUR0.6 million.
o On 1 May 2018, the Company completed the sale of the non-core
Sirius Business Park Bremen Brinkmann for EUR15.5 million, in line
with book value and generating net operating income of EUR0.7
million.
o On 4 June 2018, the Company notarised the sale of Sirius
Business Park Bremen Hagstrasse, the final non-core site, which is
expected to complete in October 2018.
o On 1 June 2018, the Company completed the sale of a plot of
non-income producing land and also the sale of a non-income
producing residential building, which together generated proceeds
of EUR1.8 million.
The Board looks forward to providing a more detailed report on
the Company's trading performance and outlook when it announces
half-year results in late November 2018.
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.
Andrew Coombs Chief Executive Officer of Sirius Real Estate,
said:
"We've made excellent progress deploying the proceeds from our
fund raise in March and recycling capital from the sale of the
portfolio's non-core assets into an attractive mix of stable income
producing assets and those with value-add opportunity. The new
assets fit well within our investment criteria, and provide
stability through well covenanted long-term tenants as well as
opportunity through sub-optimal vacancy and leases.
"The ability of our operating platform to deal with large move
outs and attract, secure and retain tenants on favourable terms is
highlighted by the strong increases in like for like income that we
have seen again over the last six months. During the period, we
also signed several significant long-term tenancy agreements, which
included leases with a leading German sports car manufacturer based
in Stuttgart and CARE Deutschland-Luxembourg, as well as getting to
the advanced stages of negotiations on a significant five-year
renewal with Daimler-AG. The fact that we are able to secure these
big deals alongside the many smaller tenants that we sign up every
month highlights the diversity of our lettings capabilities.
"In September, the Company was pleased to sponsor and
participate in the EPRA 2018 conference in Berlin, taking part in
panel discussions and hosting investor tours around some of its
sites.
"The Company was also delighted to welcome Danny Kitchen to the
Board as non-executive chairman. Danny has more than 25 years of
property and finance experience in both public and private markets
and we look forward to working with him as we continue to deliver
our future growth ambitions."
For further information:
Sirius Real Estate
Andrew Coombs, CEO
Alistair Marks, CFO
+49 (0)30 285010110
Tavistock (financial PR)
Jeremy Carey
James Verstringhe
Kirsty Allan
+44 (0)20 7920 3150
siriusrealestate@tavistock.co.uk
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.
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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London Stock Exchange. RNS is approved by the Financial Conduct
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END
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