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6 Oct 2009 07:00
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Sirius Real Estate Limited
Trading Update
Sirius Real Estate Limited (the "Company" or "Sirius"),Β the real estate company established to acquire large mixed-use commercial sites for upgrading to flexible workspaces in Germany, is pleased to provideΒ a trading update for the period ended 30 September 2009.
Key Highlights
Sirius continues to offer flexible, affordable, high quality workspace to tenants. During theΒ six months to 30 September 2009,Β the Company invested approximately β¬18Β millionΒ inΒ its ongoing programme ofΒ upgrading the portfolio, the benefits of which are beingΒ evidencedΒ byΒ higherΒ rentalΒ rates achievedΒ and aΒ significant increase in theΒ number of new enquires being converted into lettings.Β
InΒ the six monthΒ period,Β 45,283 sqmΒ of new leases were signedΒ with anΒ average rentΒ ofΒ β¬5.20Β psm, compared toΒ 55,900sqm signed at β¬4.50 psm for the full year to 31 March 2009. 52,807 sqm ofΒ spaceΒ wasΒ vacatedΒ in the periodΒ which was being let for aroundΒ β¬3.26Β psm. At this stage in the development of the portfolio it is this rental increase which best demonstrates the increasing appeal of our sites.Β Β
According to an index published by German state owned bank KfW, sentiment amongst the German SME sector improved by a record amount in August 2009. Driven by a sharp increase in business expectations, the indicator rose by 5.5 points to a positive balance of 6.8. The rise was the fifth in a row and the strongest since 1991, the starting point for the data.Β The SME sectorΒ accounts for the vast majority of firms inΒ GermanyΒ and around 70 perΒ cent.Β of theΒ country'sΒ workforce.Β
This has translated into continued healthyΒ demandΒ forΒ office,Β storage and productionΒ spaceΒ from the SME sector.Β InΒ April 2009,Β theΒ 'smartspace' campaignΒ was launched,Β offering very small units for office, light industrial and storage purposes. This product targetsΒ start-up companies and small businessesΒ andΒ is proving successfulΒ havingΒ achieved lettings ofΒ 2,788 sqmΒ at an average of β¬8.40Β psmΒ which represents aΒ significantΒ premium above conventional letting rates.Β The smartspace product isΒ nowΒ available atΒ tenΒ sitesΒ across the portfolio with the intention ofΒ expandingΒ the serviceΒ across the board.Β The Sirius teamΒ continues to monitor and adaptΒ toΒ local market trends, and ourΒ flexibility combined withΒ the highΒ qualityΒ andΒ affordableΒ spaceΒ weΒ offerΒ remains a key advantage in the current market.
DevelopingΒ onΒ surplus land on a pre-let basis continues to be an importantΒ component of the Group's strategy, and three new deals have beenΒ signed sinceΒ 31 March 2009:Β with Burger King atΒ Pfungstadt, ZK Glasbau in Maintal and OPC in Dusseldorf.Β A total of nineΒ pre-let development deals have now been signed, creating anΒ additionalΒ 5,877Β sqm of pre-let space at a net initial yield on cost ofΒ 12.4Β per cent.
The Company is pleased to announce that it hasΒ receivedΒ approval followingΒ negotiations to consolidateΒ itsΒ two portfolios financed with ABN Amro Bank N.V. ("ABN")Β forΒ a non material one off fee.Β As previously announced, while one of the two portfolios has significant headroom,Β the other was believed to beΒ in breach of its LTV covenantΒ based on theΒ Company's valuations. Following the consolidation of these portfolios, the new LTV covenant is 85Β per cent.,Β creatingΒ theΒ headroomΒ to accommodate a 16% drop in property values.Β Β In addition a cure provision has been added such that should a financial covenant be breached it can be cured by paying down the loan.Β Β Consequently all of theΒ Company's banking facilities are within their respective covenantsΒ andΒ the Company has sufficient cash to fund its planned capital expenditure programme for theΒ foreseeable future.
Kevin Oppenheim, Chief Executive Officer of the Asset Manager,Β said:Β "AlthoughΒ the environment for real estate companies remains challenging, the resilience of the Sirius model is apparent as our transformation process is enabling us to achieve substantially higher rents. Tenant demand from the SME sector remains robust and as the market leader in our specialist sector weΒ areΒ ideally positioned to capitalise on any increase in demand forΒ flexible, affordable, high quality workspace."
Enquiries:
Principle Capital Sirius Real Estate Asset Management Limited
Kevin Oppenheim, CEO 07973 821 008
J.Β P.Β Morgan Cazenove
Robert Fowlds 020 7588 2828
Bronson Albery
Cardew Group
Tim Robertson 020 7930 0777 /Β
Shan Shan Willenbrock 07900 927 650
Catherine MaitlandΒ
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