Sirius Real Estate Regulatory News (SRE)

1 Oct 2008 07:00



Dawnay, Day Sirius Limited

Pre Close Trading Update

Dawnay, Day Sirius Limited (the "Company"), 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 30 September 2008.

Since the year end at 31 March 2008, in line with the Company's selective acquisition policy, the Company has announced the acquisition of nine properties:

Two properties in Düsseldorf acquired in April and June for €19.0 million at a net initial yield of 7.0%, including 37,900 sq m of vacant land for development purchased separately

Two portfolios comprising seven properties completed in July 2008 for €115.9 million at a net initial yield of 8.2%

Including these properties, Sirius has acquired a total of 38 properties across Germany since IPO, establishing the Company as the leading owner and operator of business parks in Germany for the SME market. The portfolio has a total combined lettable area of 1.1 million sq m with potential to create a further 80,000 sq m on the surplus land within the portfolio.

As previously announced, Principle Capital Partners Limited acquired 48 per cent. of the issued share capital in Dawnay, Day Sirius Real Estate Asset Management Limited, now renamed Principle Capital Sirius Real Estate Asset Management Limited, the Asset Manager of the Company. In addition Brian Alan Myerson has been appointed to the Board as a non-executive director. The Company has also proposed in a circular posted to shareholders to change the name of the Company to Sirius Real Estate Limited, at an Extraordinary General Meeting to be held on 10 October 2008.

Asset Management

In a period of extreme volatility and uncertainty in the global markets, the fundamentals that are important for the success of the Company's business plan remain strong. Tenant demand from the SME sector remains high and the transformation of space in existing buildings is progressing well. The Sirius transformation is now generating substantial rental growth across the portfolio which is well in excess of current market rates: at the Berlin Gartenfeld site, we recently signed a 7 year office lease at €7 per sq m, representing an approximate 40% increase from average office rents being achieved on this site pre-transformation. Since the March 2008 year end, we have signed an additional 47,000 sq m of new leases. We are continually seeing more evidence that the value adding business model is working extremely well in a robust and resilient market in Germany.

Developing on surplus land is also a key part of the Company's strategy and we are seeing continued high demand for new build developments across the portfolio. Six pre-let development deals have now been signed, and construction work has been completed on two of these sites and is underway at the other four. All of these deals generate between 11% and 16% annual returns on cost. The total additional income generated from all six deals is expected to be over €0.5m per annum.

To meet the demands of the growing portfolio the Asset Management team now totals 112, increased from 27 at IPO.

Finance 

During the period the Company has drawn down credit facilities totalling €179 million with Berlin-Hannoversche Hypothekenbank AG and we have credit approval for a further €63 million facility. 

It is extremely encouraging to have the credit facility with Berlin-Hannoversche Hypothekenbank AG at a time where capital markets are proving difficult to access for many real estate investors.

Kevin Oppenheim, Chief Executive Officer of the Asset Manager said:

"In turbulent global market conditions, the German economy remains relatively robust, and we continue to see strong occupational demand from the SME sector. We have acquired a portfolio with the potential for significant enhancement, the benefits of which are already starting to come through. We have now demonstrated that we can achieve significant rental premiums as a result of the Sirius transformation, and the new build development opportunities are being exploited across the country. We continue to focus on asset managing the current portfolio to maximize value and returns."

Enquiries

Principle Capital Sirius Real Estate Asset Management Limited

Kevin Oppenheim, CEO 07973 821 008

JPMorgan Cazenove

Robert Fowlds 020 7588 2828

Bronson Albery

Cardew Group

Tim Robertson 020 7930 0777 / 

Shan Shan Willenbrock 07900 927 650

Catherine Maitland 

Principle Capital Advisors Ltd

Anne Dalen 020 7240 3222