Sirius Real Estate Limited · LSE:SRE
Sirius Real Estate — H1 FY2020 Earnings Presentation
42 slides from Sirius Real Estate's earnings presentation, September 2019
Slide 1: Half Year Results - 30 September 2019
Sirius Real Estate Ltd Half Year Results - 30 September 2019
Slide 2: Sirius Assets
Half Year Results – 30 September 2019 2 Industrial Business Parks What We Do: Sirius Assets We provide flexible and conventional workspace to companies across Germany
Slide 3: Highlights
Half Year Results – 30 September 2019 3 Highlights » Total profit before tax of €79.7 million (Sept 2018: €78.2m) €79.7m Six month PBT » Funds from operations increased by 16.3% to €27.1 million (Sept 2018: €23.3 million) €170.0m » Interim dividend increased 8.6% to 1.77c per share (Sept 18: 1.63c)
Slide 4: Financials – Income Statement
Half Year Results – 30 September 2019 4 Financials – Income Statement As at Sep 19 As at Sep 18 Movement €m €m €m Rental and other income * 43.9 40.4 3.5 Service charge irrecoverable costs (2.7) (3.3) 0.6 Non-recoverable maintenance (1.1) (0.8) (0.3) Net Operating Income 40.1 36.3 3.8 Corporate cost
Slide 5: Earnings Per Share
Half Year Results – 30 September 2019 5 Earnings Per Share cps 8 7 6 5 4 6.86 (0.84) (0.43) 3 (0.14) (0.07) 3.92 2 2.65 2.51 2.44 2.44 1.77 1 0 Basic EPS NOI Overheads Interest & Funds from Amortisation of Adjusted Adjusting items EPRA earnings Dividend per current tax operations facility fees, earn
Slide 6: Financials – Statement of Financial Position
Half Year Results – 30 September 2019 6 Financials – Statement of Financial Position As at Sep 19 As at Mar 19 Movement €m €m €m Assets Investment properties 1,064.8 1,132.5 (67.7) Prepayments for investment properties 2.3 0.4 1.9 Plant and equipment 4.1 3.4 0.7 Goodwill 3.7 3.7 - Right of use asset
Slide 7: Adjusted NAV per share
Half Year Results – 30 September 2019 7 NAV Growth Sep 19 90 Adjusted NAV per share 80 5.65 2.46 (1.76) (0.91) 70 (1.32) 60 50 80.20 40 75.17 79.29 30 20 10 0 Adjusted NAV per Share awards and Recurring profit Surplus on Scrip & Cash Adjusted NAV per EPRA * EPRA Net Assets share non-recurring after
Slide 8: Available Resources for Acquisitions
Half Year Results – 30 September 2019 8 Available Resources for Acquisitions €m €21.9m Sources Disposals* 10.0 Three acquisitions completed in H1 Titanium venture** 70.0 Berlin Hyp extension*** 90.0 Total available 170.0 Acquisitions €64.6m Teningen (completed) 6.5 Two acquisitions notarised Buxtehu
Slide 9: Completed & Notarised Acquisitions
Half Year Results – 30 September 2019 9 Completed & Notarised Acquisitions Annualised €86.5m Date Total acquisition Annualised Acquisition EPRA net Site acquired/ investment Cost psm acquisition rental income occupancy initial yield Total cost of five acquisitions notarised €m NOI €m completed or no
Slide 10: Completed & Notarised Acquisitions
Half Year Results – 30 September 2019 10 Completed & Notarised Acquisitions Buxtehude Bochum II Teningen Buxtehude Hallbergmoos * Alzenau Bochum II Alzenau * Hallbergmoos Teningen * Notarised in the period
Slide 11: Organic Growth – Rental Income Analysis
Half Year Results – 30 September 2019 11 Organic Growth – Rental Income Analysis Site Sep-19 Mar-19 Sep-18 Change Rent Roll €78.5m €87.8m €82.0m (10.6)% Rent Roll (Disposals) €(11.3)m * €(3.0)m - - - Rent Roll (Acquisitions) €1.3m €5.8m - - - Rent Roll (LFL) €77.2m €76.5m €73.6m ** 0.9% Occupancy (L
Slide 12: Organic Growth – Rental Movement Analysis
Half Year Results – 30 September 2019 12 Organic Growth – Rental Movement Analysis 90 1.3 €m 0.9 88 86 4.9 (11.3) (6.2) 84 1.1 82 80 87.8 78 76 78.5 74 72 70 31-Mar-19 Move Outs Capex Move-Ins Other Move-Ins Uplifts on Existing Acquisitions Titanium Venture 30-Sep-19 Tenants
Slide 13: Like-for-Like Valuation Movement
Half Year Results – 30 September 2019 13 Like-for-Like Valuation Movement €m Portfolio Valuation Increases 1,100 1,000 61.4 EXISTING PORTFOLIO* Book Value 9.3 As at 31 Mar 2019: Sept 19 - €m 900 Gross Yield = 7.9% Existing Portfolio * 1,043.5 800 1,043.5 Net Yield = 7.0% Acquisitions 21.3 972.8 As a
Slide 14: Value-Add Portfolio Split
Half Year Results – 30 September 2019 14 Value-Add Portfolio Split Capital value Mar-19 * Book value €m Rent roll €m NOI €m Gross yield Net yield Occupancy Rate psm € Vacant space sqm psm € Value-Add 574.5 46.2 39.5 8.0% 6.9% 683 79.0% 5.98 170,993 Mature 398.4 30.3 28.4 7.6% 7.1% 814 95.8% 5.62 19,
Slide 15: Value-Add – Vacant Space Analysis
Half Year Results – 30 September 2019 15 Value-Add – Vacant Space Analysis Sep-19 Ending Position Total space – sqm 1.3m Occupancy 83% Occupied space – sqm 1.1m Vacant space - sqm 0.2m Sep 19 Capex ERV (post invest) % of Total space Sqm Sub optimal space €m €m Original major capex programme 5,497 1.
Slide 16: Original Capex Programme
Half Year Results – 30 September 2019 16 Original Capex Programme Completed in period 4.1k sqm €0.3m 51% Vacant space refurbished in period Invested in period Return on cost Budget Achieved to date Capex Investment Rent Rent Programme Progress Investment Invest Rate Investment Invest Rate Sqm Improv
Slide 17: New Acquisition Capex Programme
Half Year Results – 30 September 2019 17 New Acquisition Capex Programme Completed in Period 20.1k sqm €1.9m €0.8m Vacant space refurbished in period Invested in period Annualised rental income increase Budget Achieved to date Capex Investment Rent Rent Programme Progress Investment Invest Rate Inve
Slide 18: Potential of FY 19/20 Acquisitions
Half Year Results – 30 September 2019 18 Potential of FY 19/20 Acquisitions Business Plan 3 Yr Acquisition Potential €31.6m 37% Total Cost €86.5m Valuation €118.1m NOI €4.6m €3.1m NOI €7.7m 67% Occupancy 67% Occupancy 89% 22% 3 Yr Returns €m Investment €m 14.9* Operating Profit Equity Invested 41.8
Slide 19: Banking – Transactions
Half Year Results – 30 September 2019 19 Banking – Transactions* €68.9m €0.8m Net additional lending Reduction in annual interest Outstanding Annual Movement Outstanding Annual Interest debt Mar 19 Interest Rate Interest in period debt Sep 19 Interest Rate €'000 €'000 €'000 €'000 €'000 K-Bonds I 47,
Slide 20: Banking
Half Year Results – 30 September 2019 20 Pro-forma Sep 19 Mar 19 Banking Bank borrowings Sep 19 ** €455.0m €339.6m €386.1m Net LTV * 38.0% 30.6% 32.4% 3.9 Yrs Gross LTV 39.4% 31.9% 34.1% Weighted average interest rate 1.5% 1.7% 2.0% Weighted average debt expiry NOI interest cover 11.2x 12.2x 10.1x W
Slide 21: Conclusion
Half Year Results – 30 September 2019 21 Conclusion » Well on track for another year of greater than 15% Total Accounting Return » Financing deal agreed in the period which will be highly accretive when funds are invested » Positive organic annualised rent roll growth despite impact of expected move
Slide 22: Appendices – Case Studies & Property Stats
Half Year Results – 30 September 2019 22 Appendices – Case Studies & Property Stats
Slide 23: Case Study – Buxtehude: Site Plan & Impression
Half Year Results – 30 September 2019 23 Case Study 1 – Buxtehude Site Plan & Impression
Slide 24: Case Study – Buxtehude: Property Overview
Half Year Results – 30 September 2019 24 Case Study 1 – Buxtehude Property Overview » Former headquarters of multinational drinks manufacturing business located in the strong Hamburg market that Sirius knows well » Asset acquired on an unencumbered basis however financing will be considered once suf
Slide 25: Case Study – Buxtehude: Financials & Returns To Date
Half Year Results – 30 September 2019 25 Case Study 1 – Buxtehude Financials & Returns To Date Business Plan Expected 2.5 year At Return Analysis Return to Mar 22 Target Total Expected Improvement €m May-19 Acquisition To Mar 22 Retained Profit ** 1.3 Total Cost/Valuation € 8.7m € 17.7m € 9.0m Valua
Slide 26: Case Study – Bochum: Site Plan & Impression
Half Year Results – 30 September 2019 26 Case Study 2 – Bochum Site Plan & Impression
Slide 27: Case Study – Bochum: Property Overview
Half Year Results – 30 September 2019 27 Case Study 2 – Bochum Property Overview » Asset acquired at 8.9% net initial yield due to impending move out of the anchor tenant occupying 25,898 sqm of space and paying €3.18 per sqm » Increased annualised rent roll in first six months of ownership by €150k
Slide 28: Case Study – Bochum: Financials & Returns To Date
Half Year Results – 30 September 2019 28 Case Study 2 – Bochum Financials & Returns To Date Business Plan Expected 2.5 year At Returns Analysis Return to Mar 22 Target Total Expected €m Improvement Acquired Mar-19 Acquisition To Mar 22 Retained Profit ** 6.5 Valuation Increase 6.1 Total Cost/Valuati
Slide 29: SRE – Key Metrics Development
29 SRE – Key Metrics Development Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Sep-19 Portfolio book valuation (€m) 441.1 545.6 687.4 823.3 967.3 1,132.5 1,064.8 Rent roll (€m) 41.5 50 60.5 71 79.5 87.8 78.5 Gross yield (%) 9.4 9.2 8.8 8.6 8.2 7.8 7.4 Like-for-like rent roll increase (%) 5.1 5.2 5.9 5.1
Slide 30: SRE - NAV and DPS Development
30 SRE - NAV and DPS Development (to Mar-19) Total Accounting Return 13.0% 16.0% 15.3% 17.0% 19.3% 80 3.5 » Consistent double digit accounting returns 75 Adjusted NAV per share cents 3.0 » Progressive dividends paid semi annually 70 2.5 » Dividends policy to pay out 65% of FFO 65 DPS cents 60 2.0 »
Slide 31: Property Transactions Jan-12 to Sep-19
Half Year Results – 30 September 2019 31 Property Transactions Jan-12 to Sep -19 Core Disposals (20) * Disposal Acquisitions (35) Sep-19 Value €288.2m €325.0m Price Total Cost €454.9m Valuation €603.6m Uplift 33% Gross Yield 7.1% Uplift 13% Total Sqm 401k Occupancy 85% Gross Yield 8.9%** Gross Yield
Slide 32: Acquisitions Owned >1yr – Returns Achieved
Half Year Results – 30 September 2019 32 Acquisitions Owned >1yr – Returns Achieved Acquisition Sep-19 30 Total Cost €397.0m €148.7m Valuation €545.7m 37% Assets acquired & owned for > 1 year Gross Yield 8.9%* Gross Yield 7.6% €8.3m Rent Roll €33.2m Rent Roll €41.5m 25% 3.0 yrs. Occupancy 70% Occupa
Slide 33: Acquisitions Owned >1yr – Valuation & Rent Roll
Half Year Results – 30 September 2019 33 Acquisitions Owned >1yr – Valuation & Rent Roll Total Acq. Cost Sep 19 Valuation Acq. Rental Sep 19 Rental Rental Income Acq. Sep 19 Occupancy Capex Since Site € Valuation € Movement Income € Income € Movement € Occupancy Occupancy Movement Acq. €m Potsdam 29
Slide 34: Acquisitions Owned >1yr – Valuation & Rent Roll
Half Year Results – 30 September 2019 34 Acquisitions Owned >1yr – Valuation & Rent Roll Rent Roll Increase Since Acquisition Rent Roll m € 4 3 Acquisition 2 Sep-19 1 0 Valuation Increase Since Acquisition Valuation m € 50 40 30 Acquisition Sep-19 20 10 0
Slide 35: Property Valuations & Book Value as at 30 Sep 19
Half Year Results – 30 September 2019 35 Property Valuations & Book Value as at 30 Sep 19 Annualised Book Value Gross Net Capital Rate Vacant Sept-19 Rent Roll NOI €m Occupancy €m Yield Yield Value psm € psm € Space sqm €m Total Portfolio 1,064.8 78.5 68.7 7.4% 6.5% 769 83.0% 5.90 226,960 Other - -
Slide 36: Portfolio at a glance - Sep 19
Half Year Results – 30 September 2019 36 Properties Portfolio at a glance - Sep 19 No. of % of Total Rate psm Annualised Book Sep-19 Occupancy Portfolio Gross Yield Properties Sqm m € Rent €m By Rent Value €m Frankfurt 13 302.6 87.7% 5.88 18.0 23% 235.6 7.7% Berlin 4 106.7 95.5% 6.92 8.2 10% 122.8 6
Slide 37: Total Portfolio Rental Analysis – 30 Sep 19
Half Year Results – 30 September 2019 37 Properties Total Portfolio Rental Analysis – 30 Sep 19 Tenant split by revenue 2.6Yrs 4,603 Top 50 Anchor Tenants 49% 44% Portfolio WALT No. of tenants SmartSpace SME Tenants 7% Usage split Other SME Tenants 8% Office Historical rental movement Annual rent 6%
Slide 38: Portfolio Renewals Analysis to Mar 20
Half Year Results – 30 September 2019 38 Properties Portfolio Renewals Analysis to Mar 20* Thousands Up for Renewal (Sqm, Income & No. Tenants) 2019/20 No. Tenants € 300 180 160 250 140 200 120 100 150 80 100 60 40 50 20 0 0 TOTALS Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Sqm 29,462 9,692 15,162 44
Slide 39: Enquiries/Viewings/Sales
Half Year Results – 30 September 2019 39 Enquiries/Viewings/Sales 1,500 enquiries1,395 1,472 1,325 1,308 1,391 1,285 Average per Month ENQUIRIES 1,184 1,245 1,191 1,404 1,032 1,413 1,103 Twelve months 1,279 1,230 1,184 1,196 1,244 1,179 to Sep 19 1,000 1,112 1,103 1,023 1,055 18/19 922 19/20 500 Oct
Slide 40: SmartSpace (SmSp) Products
Half Year Results – 30 September 2019 40 SmartSpace (SmSp) Products Annualised rent roll % of total annualised Rate per sqm (excl. SmartSpace product type Total sqm Occupied sqm Occupancy % (ex. service charge) SmSp rent roll service charge) € €’000 First Choice Office 2,677 1,649 62% 396 8% 20.01 S
Slide 41: Banking
Half Year Results – 30 September 2019 41 Banking Covenants as at 30 Sep 19 Actual Covenant ICR DSCR DYR LTV ICR DSCR DYR LTV Bayerische Landesbank 14.47 x 6.27 x n/a 29.8% n/a 2.50x n/a 65.0% SEB AG I 10.56 x 4.84 x n/a 36.2% 6.20x n/a n/a 55.0% SEB AG II 3.43 x 1.97 x 8.6% 50.0% n/a n/a 1.9% 61.5%
Slide 42: Disclaimer
Half Year Results – 30 September 2019 42 Disclaimer This presentation may contain forward-looking statements with respect to the financial condition, performance and position, strategy, results of operations and businesses of Sirius Real Estate Limited (“Sirius”). Such statements and forecasts invol