REG - Sirius Real Estate - Trading Update

Sirius Real EstateAnnouncement

15/04/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240415:nRSO5067Ka&default-theme=true

RNS Number : 5067K  Sirius Real Estate Limited  15 April 2024

SIRIUS REAL ESTATE LIMITED

(Incorporated in Guernsey)

Company Number: 46442

JSE Share Code: SRE

LSE (GBP) Share Code: SRE

LEI: 213800NURUF5W8QSK566

ISIN Code: GG00B1W3VF54

 

15 April 2024

Sirius Real Estate Limited

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

 

Trading Update for financial year ended 31 March 2024

 

8.2%* increase in Group rent roll

 

Sirius Real Estate, the leading owner and operator of branded business and
industrial parks providing conventional space and flexible workspace in
Germany and the U.K., provides an update on trading for its financial year
ended 31 March 2024.

 

The Group has achieved an 8.2%* increase in overall rent roll (7.2%* on a
like-for-like basis), reflecting management's ability to improve both rates
and occupancy across the Group in spite of the wider macroeconomic conditions.
For the tenth consecutive year, the Group has achieved like-for-like rent roll
growth in excess of 5%, with similar levels achieved across both the U.K. and
Germany. Cash collection has remained robust at above 98.0% on a rolling
12-month basis. The Group expects to deliver full year results in line with
market expectations.

 

In Germany, rent roll particularly benefited from greater occupancy as we
focused efforts on selling vacant space and improving tenant retention. With
inflation now having fallen significantly since last year, we have again
demonstrated the strength of our in-house asset management platform to manage
product mix and occupancy carefully alongside rates, with the aim of
generating the best overall returns from our space. Whilst we expect to see
some slight yield expansion in our year end property valuations for Germany,
we expect our strong operational performance will translate into an increase
in value of our German portfolio.

 

In the U.K., we continue to achieve above inflation rate increases in rent,
albeit at slightly lower levels than in the recent past, but as with Germany
we have successfully focused our efforts on occupancy, where we have delivered
an improvement. Like for like rent roll growth in both countries ended the
year at broadly similar levels, and in the U.K., recent acquisitions have had
a materially positive effect on the absolute rent roll given their materiality
in the context of the business. We expect to see valuation yields continue to
expand in the U.K., albeit our continued operational focus on driving rental
income will offset much of the effect of yield changes on the portfolio
valuation. Overall, we expect to announce a positive valuation movement at
Group level at the year end.

 

In November 2023, the Company completed an oversubscribed equity fundraising
of €165 million (£147 million) to provide funds to execute on a pipeline of
acquisition opportunities. We have successfully executed on that pipeline in
the second half of the financial year, notarising or acquiring approximately
€150 million of assets (excluding acquisitions costs). €96 million (£84
million) (excluding acquisition costs) of these acquisitions were in the U.K.,
with a weighted average net initial yield (NIY) of 8.9%. We also made four
acquisitions in Germany, totalling €55 million (excluding acquisition
costs), which were acquired at a weighted average NIY of 9.3%.

 

Disposals in the second half amounted to €51 million. All sales were
completed at or above book value and focused predominantly on mature assets in
Germany at a weighted average NIY of 6.4%. Efficient capital recycling will be
a mainstay of Sirius' strategy as we continue to see attractive acquisition
opportunities that meet our acquisitions criteria in both the U.K. and
Germany, alongside opportunities to sell mature or non-core assets, with the
aim to do so at or above book value.

 

The Group's balance sheet remains strong with free cash reserves of
approximately €220 million as at 31 March 2024 (before completion of four
post balance sheet acquisitions totalling €91 million) and no significant
debt maturities until June 2026. The Group's weighted average cost of debt is
2.1% and the weighted average maturity is 3.9 years following last year's
successful re-financing of the 7 year €170 million Berlin Hyp AG facility at
4.26% and the 7 year €58.3 million Deutsche Pfandbriefbank AG facility at
4.25%.

 

Whilst the Group is mindful of the expected higher interest expense arising
from future re-financings, it is also confident that leverage will continue to
have a positive overall effect on shareholder returns, given the relatively
high yielding nature of the Group's assets and the continued growth in the
rent roll which will help to offset future increases in financing costs. The
higher interest rate environment is also reflected in expanding market yields
which has delivered some highly attractive acquisitions for the Group in the
last few months.

 

Commenting on trading during the period, Andrew Coombs, Chief Executive
Officer of Sirius Real Estate, said: "Sirius has delivered another twelve
months of strong operational performance, increasing rates and occupancy and
quickly executing on our significant pipeline of acquisitions in both Germany
and the U.K., following our successful £147 million equity raise last
November. Raising capital at that time has proved to be opportune, allowing us
to acquire high quality real estate on very attractive financial terms. Our
acquisition pipeline remains strong and we believe there will continue to be
opportunities to deploy our capital on an accretive basis in the coming year.

 

As we begin to drive value from our recent asset acquisitions alongside our
continued focus on operational excellence, we look ahead with confidence. The
strength and breadth of our management team in being able to execute on
acquisitions whilst still delivering good growth from our existing portfolio
is encouraging, and I look forward to leading the business through the next
stage of growth."

 

 

Full Year Results

 

Sirius will announce results for the financial year ended 31 March 2024 on
Monday, 3 June 2024, at which time there will be an in-person presentation and
virtual webinar for analysts and investors.

 

The financial information in this trading update has not been reviewed or
reported on by the Company´s external auditors or a reporting accountant.

 

*Group rent roll has been translated utilising a constant foreign currency
exchange rate of GBP:EUR 1.1695, being the closing exchange rate as at 31
March 2024.

 

 

For further information:

Sirius Real Estate

Andrew Coombs, CEO / Chris Bowman, CFO

+49 (0) 30 285 010 110

 

FTI Consulting (Financial PR)

Richard Sunderland / James McEwan / Talia Shirion / Millie James

+44 (0) 20 3727 1000

SiriusRealEstate@fticonsulting.com

 

NOTES TO EDITORS

About Sirius Real Estate

Sirius is a property company listed on the main and premium market of the
London Stock Exchange and the main board of the JSE Limited. It is a leading
owner and operator of branded business and industrial parks providing
conventional space and flexible workspace in Germany and the U.K. As of 30
September 2023, the Group's portfolio comprised 139 assets let to 9,248
tenants with a total book value of over €2 billion, generating a total
annualised rent roll of €184.2 million. Sirius also holds a 35% stake in
Titanium, its €350+ million German-focused joint venture with clients of AXA
IM Alts.

 

The Company's strategy centres on acquiring business parks at attractive
yields and integrating them into its network of sites - both under the Sirius
and BizSpace names and alongside a range of branded products. The business
then seeks to reconfigure and upgrade existing and vacant space to appeal to
the local market via intensive asset management and investment and may then
choose to refinance or dispose of assets selectively once they meet maturity,
to release capital for new investment. This active approach allows the Company
to generate attractive returns for shareholders through growing rental income,
improving cost recoveries and capital values, and enhancing returns through
securing efficient financing terms.

 

For more information, please visit: www.sirius-real-estate.com
(http://www.sirius-real-estate.com/)

 

Follow us on LinkedIn at https://www.linkedin.com/company/siriusrealestate/
(https://www.linkedin.com/company/siriusrealestate/)

 

Follow us on X (Twitter) at @SiriusRE

 

JSE Sponsor

PSG Capital

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTQKBBQPBKDFQD