Sirius Real Estate Regulatory News (SRE)

9 April 2018

Sirius Real Estate Limited

("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 twelve months to 31 March 2018.

Strong tenant demand combined with specific asset management initiatives has generated an encouraging increase in organic rental growth from the Group's business parks. The Company is pleased to confirm that it expects results for the twelve month period to be in line with market expectations, a particularly good performance given the disposal of €103.0 million of mature assets. Sirius is well placed for the new financial year and has identified significant income and capital growth opportunities in its newly acquired assets to support the Group's next phase of growth.

The main highlights for the period include:

· Total annualised rental income, including acquisitions within the period, increased by €4.8 million to €75.8 million as at 31 March 2018, in spite of losing €7.1 million of annualised rental income from disposed assets. Annualised rental income has since further increased to in excess of €79.0 million with the recent acquisitions completed on 1 April 2018.

· Like-for-like annualised rental income increased in excess of 5%, supported by continued occupier demand and organic rental income growth driven by the Company's internal operating platform.

· The original capex investment programme which commenced in 2014 continues to deliver strong results with more space completed in the period. Furthermore, the acquisitions capex investment programme is progressing well with additional sub-optimal space from newly acquired properties identified for investment being added to the programme since the half year.

· Significant transactional activity with proceeds from the sale of €103 million of mature assets and two capital raises, €15.0 million in March 2017 and €25.0 million in July 2017, part-funding the acquisition of 13 assets (2 shortly after period end) for €163.7 million including acquisition costs. Average occupancy of the acquired assets is in the region of 58% providing new rental income and capital growth opportunities.

· Sirius is pleased to announce the recent completion of the following acquisitions:

o On 31 March 2018, Sirius completed the acquisition of a business park with warehouse, office and production space in Frickenhausen for €11.2 million (including acquisition costs). The site has 29,000 sqm of lettable space and is currently 50% occupied. In 2017, the site generated €451,000 in NOI representing an EPRA net initial yield of 4.0%.

o On 1 April 2018, Sirius completed the acquisition of a business park in Saarbrucken for €28.1m (including acquisition costs). The site has 47,000 sqm of lettable space currently the majority is let as office space and it is 65% occupied. In 2017, the site generated €2.5 million of NOI representing an EPRA net initial yield of 9.0%.

o On 1 April 2018, Sirius completed the acquisition of a second business park in Dusseldorf for €8.1 million (including acquisition costs). This site has 9,000 sqm of warehouse and office space and is currently 80% occupied. In 2017, the site generated NOI of €536,000 representing an EPRA net initial yield of 6.6%.

· In March 2018, the Company successfully raised €40 million in new equity to acquire further assets, three of which are in advanced negotiations.

· The Company continues to secure advantageous long-term borrowing facilities on attractive terms with three new loan facilities being agreed in the period totalling €79.0 million as well as €15.0 million in capex facilities.  

· Sirius's continuing success has meant that it has qualified for inclusion in two important investment indices. In March 2018, the Company's shares qualified for inclusion in the FTSE EPRA/NAREIT Global Real Estate Index, Developed EMEA region and this followed the Company's entry into the FTSE/JSE SA Listed Property Index in December 2017.

The Board looks forward to providing a more detailed report on the Company's trading performance and outlook when it announces its results for the twelve months to 31 March 2018, in June 2018.

The financial information on which this trading update is based, has not been reviewed or reported on by the Company´s external auditors

Andrew Coombs Chief Executive Officer of Sirius Real Estate, said:

"Given a key focus in the period was on recycling capital from mature assets into new opportunities with greater value add potential, it is particularly pleasing to have sold and reinvested over €250 million of property whilst also delivering increases in rental income on a total and like-for-like basis.

I believe this reflects a number of key factors, namely: good occupational demand for our workspace products from the large German SME sector; the effectiveness and speed of Sirius's internal operating platform to source new tenants (instead of using third party brokers), the ability to incorporate the acquired assets and focus on maximising revenue potential; and the ongoing success of the Company's major capex investment programme through which sub-optimal space is transformed into either prime lettable space or one of the Company's premium Smartspace products.

We are starting the new financial year with 230,000 sqm of newly acquired property to which we can apply our asset management techniques to generate increased returns from and support the Group's next phase of growth."

For further information:

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 

Images of the Sirius property portfolio are available from: https://www.flickr.com/photos/sirius_re/

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LEI: 213800NURUF5W8QSK566