Last checked at 4 Apr 2011 07:00
Sirius Real Estate Limited
("Sirius" or "the Company")
Trading Update
Sirius Real Estate Limited, the real estate company with a portfolio of 38 large mixed-use commercial sites in Germany, which it upgrades into modern, flexible workspaces, today provides an update on trading for the 12 months to 31 March 2011.
Key Highlights
·; Trading performance expected to be in line with management expectations.
·; Occupancy of 76% as at 31 March 2011, a 3% increase from 73% as at 30 September 2010.
·; Continue to successfully implement wide ranging cost savings and cost recovery programmes, which have resulted in a material reduction in group wide non-recoverable costs.
·; Strong financial position with cash balances of €23.6m.
During the year the asset management team successfully delivered against the targets set, by increasing occupancy and achieving cost efficiencies across the business. Building on the successful first half, sales momentum remained strong, with 72,455 sqm of new lettings achieved in the second half at a rate of €4.71 psm. There were move outs of 50,145 sqm at a rate marginally lower than the new lettings..
As at 31 March 2011 occupancy stood at 76%, increased from 73% as at 30 September 2010, and from 68% in January 2010. Improved marketing strategies have ensured that enquiry levels remain high and now average 957 per month compared to 544 for the same period last year.
During the period, occupancy in 30 of the 38 sites either increased or remained 100% and the Company remains focused on the initial target of achieving its portfolio occupancy of 80%. Current levels of demand indicate this target will be reached in the third quarter of this coming financial year despite the anticipated move outs of four tenants who together represent 2% of occupancy over the summer.
Sirius has introduced a range of innovative solutions to letting space, such as the highly successful Smartspace initiative. Across the portfolio 32,256sqm have now been converted into Smartspace which is let at an average of €9.01 psm. This includes a new low cost storage solution called Flexilager, utilising previously unlettable space which has proved very popular with existing tenants wishing to have storage facilities nearby. Alongside this, the Company has increased additional income, in particular, from letting meeting rooms.
Due to our successful reduction of service charge costs, metering of utilities, better allocation of facility management costs, an increase in the service charge prepayments received from tenants and reduced overheads, the Company's costs are expected to be significantly lower than last year. Furthermore, as mentioned in the interim statement one off write downs relating to prior year service charge balancing receivables and tenant debtors should be lower in the second half than the first half. The issue going forward is significantly reduced as the combination of higher service charge prepayments and lower service charge costs reduces the burden significantly of chasing large balancing charges post year end. At the same time we continue to streamline our cost efficiencies and drive occupancy through our online marketing efforts and initiatives.
Trading conditions in Germany are improving with demand from the SME sector for the flexible, affordable workspace offered by Sirius remaining resilient. The German economy posted growth of 3.6% in 2010 with a strong export led recovery, and in January raised its growth forecasts from 1.8% to 2.3% for 2011 due to expected strengthening domestic demand.
The Company looks forward to providing a further update with the announcement of its final results in June 2011.
Enquiries:
Principle Capital Sirius Real Estate Asset Management Limited
Kevin Oppenheim, CEO 020 7004 7150
Alistair Marks, CFO
Peel Hunt Ltd
Capel Irwin 020 7418 8900
Alex Vaughan
Nicholas Marren
Cardew Group
Tim Robertson 020 7930 0777
Georgina Hall