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23 Apr 2009 07:00
Sirius Real Estate Limited
("Sirius" or "the Company")
Trading Update
Sirius, the real estate company established to acquire large mixed-use commercial sites for upgrading to flexible workspaces in Germany, is pleased to provide a trading update for the period ended 31 March 2009.
As announced on 2 March 2009, the Company secured a new €45 million credit facility with Landesbank Berlin, the owner of BerlinHyp, during the period. The facility is secured against properties valued at €85 million. This, together with existing cash reserves, will mean the Company has approximately €70 million to fund its ongoing programme of upgrading and developing the portfolio as planned in order to drive rental growth and attract new tenants.
While market conditions in Germany remain challenging, the Sirius model continues to offer flexible, high quality and affordable workspace to tenants. Occupancy has remained broadly level and in line with management expectations since 30 September 2008 at around 77% with new tenants continuing to come in on higher rents. Not included in the occupancy number are the changes taking place at our Trippelsberg site in Dusseldorf, where the principal tenant, occupying 18,000 sqm, approximately 2% of the Company's total lettable area, has discontinued its lease. This site was acquired on the basis that the tenant would vacate to enable the site to be sub divided, refurbished and upgraded into multiple flexible work spaces providing the opportunity to increase rental income. Overall, we are continuing the trend of introducing new tenants on higher rents whilst at the same time substantially improving the quality and appeal of the portfolio.
Importantly demand from the SME sector is relatively resilient, and we believe this stems from the flexibility on size and length of leases that we offer. Our asset management team in Germany works very closely with current and prospective tenants and is focused on providing innovative solutions to support them in this more challenging market environment.
Developing on surplus land on a pre-let basis is a key component of the Company's strategy, and a new deal was signed on 20 December 2008 with Burger King at Pfungstadt. A total of seven pre-let development deals have now been signed, creating an additional 4,082 sqm of pre-let space at a net initial yield on cost of 12.5%.
Kevin Oppenheim, Chief Executive Officer of the Asset Manager, said: "Although market conditions in Germany remain difficult, since the period end we have enjoyed a strong period of new lettings as we benefit from our ability to offer tenants the flexibility of size and length of lease that they require. We are pleased to have secured the new facility with BerlinHyp which strengthens our financial position, and allows us to maintain our selective capex programme."
Enquiries:
Principle Capital Sirius Real Estate Asset Management Limited
Kevin Oppenheim, CEO 07973 821 008
J. P. Morgan Cazenove
Robert Fowlds 020 7588 2828
Bronson Albery
Cardew Group
Tim Robertson 020 7930 0777 /
Shan Shan Willenbrock 07900 927 650
Catherine Maitland
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