TIDMSRE
RNS Number : 4676H
Sirius Real Estate Limited
25 March 2020
25 March 2020
Sirius Real Estate Limited
("Sirius Real Estate", "Sirius" or the "Company")
Covid-19 update
Sirius Real Estate, the leading operator of branded business
parks providing conventional space and flexible workspace in
Germany, today issues an update on the impact of the Covid-19 virus
on the business.
Sirius's business model is built on the breadth of its offer to
occupiers and the adaptability of its mix of accommodation, ranging
across many different workspace segments, including conventional
office, flexible office, manufacturing, storage and self-storage.
In addition to this the portfolio is very well diversified in its
tenant base as well as from a geographical perspective.
Current trading
The Board does not expect any material impact to its trading
profit for the year ending 31 March 2020, as a result of
Covid-19.
In response to Covid-19, all meeting room and conference
facility hire has been put on hold until the end of April, which
will have a marginal impact on revenues and cash flow. The other
noticeable effect on the business to date has been a 50% reduction
in the run rate of core enquiries for new tenants, which we expect
will translate into a 10% reduction in new lettings in March and a
35% - 40% reduction in monthly new lettings throughout April and
into May. This could lead to a circa 1% reduction in underlying
occupancy.
On the positive side, the Company is seeing an increase in
demand for storage space from both new and existing commercial
tenants as well as new self-storage customers. Storage makes up
35%* of space in Sirius's portfolio.
Although it is still early on in the spread of Covid-19 in
Germany, to date there has been no increase in the level of
contract terminations or failure to meet rental payments above
normal levels.
Balance Sheet
Sirius has a strong balance sheet with total cash balances
currently in excess of EUR110 million, EUR90.0 million of which is
unrestricted. In addition, the Group has EUR39.3 million of undrawn
facilities and a further EUR10.1 million to be received on 1 April
2020, upon the completion of the disposal of the Weilimdorf asset
announced as part of the Group's interim review in November 2019.
Sirius's top 50 tenants make up 44% of the rent roll and comprise
some of the world's best known multi-national companies. Across the
board, the weighted average lease expiry is 2.8 years and only 6%
of the rent roll comes from the Company's flexible SmartSpace
products. It is also worth noting that 7% of the Company's total
rent roll is derived from government tenants, ranging from the
Ministry of Finance to local regional police forces.
The Company has significant covenant headroom and a capital
structure that is well placed to absorb a prolonged period of
uncertainty. The Company expects to report in its financial results
for the year ending 31 March 2020, a net LTV of around 35% and
approximately 10.5x interest cover on its debt.
Continuity plans and the German Government Response
The Company's immediate priority is the health and safety of its
employees, tenants and contractors, together with the need to
comply with the instructions from German central and local
government.
The Company activated its business continuity plan some weeks
ago, having recognised at an early stage the potential for the
Covid-19 situation to escalate and the ramifications that
government-enforced restrictions could have on the Company's
ability to operate. This means we are now better able to continue
the operation of the Company as the German government manages the
country's response to Covid-19.
In Germany, there are a number of financial protections in place
to help support businesses including 'Kurzarbeit' (the
short-working compensation scheme which covers a proportion of
workers salaries). In addition, the German government has promised
EUR550 billion of state-backed loans to support business continuity
through the crisis, as well as the opportunity for business to
defer billions of euros in taxes. The German finance minister has
said the government will provide unlimited liquidity assistance to
German companies hit by Covid-19.
Trading Update
The Company will be issuing a trading update for the twelve
months to 31 March 2020 in the second week of April.
Andrew Coombs, Chief Executive Officer of Sirius Real Estate,
commented: "We are maintaining a very close eye on the situation as
it develops with the interests of our staff and tenants very much
at the forefront of deliberations."
"Our platform across Germany is well placed to maintain the
operation of the Company throughout this difficult time and we will
continue to adapt and meet the evolving needs of our tenants
throughout the crisis period."
ENDS
*includes Smartspace Storage
For further information:
Sirius Real Estate
Andrew Coombs, CEO/Alistair Marks, CFO
Tel: +49 (0)30 285010110
Tavistock (Financial PR)
Jeremy Carey/James Verstringhe
Tel: +44 (0)20 7920 3150
Email: 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.
In July 2019, the Company completed the formation of its
Titanium real estate investment joint 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 the JV'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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END
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