Sirius Real Estate Limited · LSE:SRE
Sirius Real Estate — H1 FY2018 Earnings Presentation
39 slides from Sirius Real Estate's earnings presentation, September 2017
Slide 1: Half Year Results September 2017
Half Year Results September 2017 Sirius Real Estate Limited Half Year Results – September 17
Slide 2: What We Do
What We Do We provide flexible and conventional workspace to companies across Germany 2 Sirius Real Estate Limited Half Year Results – September 2017
Slide 3: Highlights
Highlights Acquisition & asset recycling progressing well 10.4% Shareholder return » Completed the disposal of €103m of mature assets with limited further upside » Completed €25 million equity raise in August 2017 » Completed on €83.7m* of acquisitions up to Sept 17 with average vacancy of 47% and €
Slide 4: Financials – Income Statement
Financials – Income Statement As at Sept 17 As at Sept 16 Movement €m €m €m Rental income 34.8 32.6 2.2 Service charge irrecoverable costs (3.4) (4.5) 1.1 Non-recoverable maintenance (1.0) (0.6) (0.4) Net Operating Income 30.4 27.5 2.9 Corporate costs and overheads (8.2) (6.7) (1.5) Adjusted EBITDA
Slide 5: Earnings Per Share
Earnings Per Share 1.94cps Adjusted EPS 2.07cps FFO per share Note: All items in the chart above are calculated on the weighted average number of shares in issue during the period 5 Sirius Real Estate Limited Half Year Results – September 2017
Slide 6: Financials – Statement of Financial Position
Financials – Statement of Financial Position As at September 2017 As at March 2017 Movement €m €m €M Assets Investment properties (including assets held for sale) 857.4 823.3 34.1 Plant and equipment 2.8 2.6 0.2 Goodwill 3.7 3.7 - Deferred tax asset 0.6 0.2 0.4 Trade and other receivables 18.2 14.3
Slide 7: NAV Growth September 2017
NAV Growth September 2017 61.87cps September 2017 EPRA NAV 6.39cps Recurring PBT + Surplus in valuation NAV per share -1.41 64 -0.46 4.49 -1.53 62 - 60 1.1.900 0.07 58 61.87 63.40 56 58.82 54 52 50 31-Mar-17 Equity raise + Recurring profit Surplus on Scrip & Cash Non Recurring Adjusted NAV EPRA EPRA
Slide 8: Completed Acquisitions
Completed Acquisitions €83.7m Total cost of seven acquisitions 3.8% EPRA net initial yield 47% Vacancy 148% Potential increase in NOI Date Total Cost per Annualised Annualised Acquisition EPRA Net Site Acquired Investment sq.m Acquisition Rental Acquisition NOI Occupancy Initial Yield €m Income €m €
Slide 9: Completed Acquisitions – Pictures
Completed Acquisitions – Pictures FRANKFURT I COLOGNE GRASBRUNN MAHLSDORF II NEU-ISENBURG NEUSS FRANKFURT II 9 Sirius Real Estate Limited Half Year Results – September 2017
Slide 10: TAC Vs Valuation
Acquisitions Completed in Prior Years - Valuation and Rent Roll Rent Roll Increase Since Acquisition 5% 3 19% Millions 12% 27% 15% 6% 2 Rent Roll 1% 4% 35% 0% 2.9 Acquisition 2.8 2.8 2.3 2.5 Sep-17 2.2 2.2 1 2.1 2.0 1.8 1.8 1.8 -27% 0% 1.5 1.5 5% 1.4 1.3 1.3 1.2 1.2 1.0 0.5 0.5 0.5 0.5 0.6 0.4 0 Pot
Slide 11: Organic Growth - Rental Income Analysis
Organic Growth - Rental Income Analysis SEPT-17 MAR-17 SEPT-16 CHANGE RENT ROLL €69.7m €71.0m €67.2m - RENT ROLL (DISPOSALS) €0.0 -€7.0m €0.0 - RENT ROLL (ACQUISITIONS) €4.5m €0.0 €0.0 - RENT ROLL (LFL)* €65.2m €64.0m €62.4m** 2.0% OCCUPANCY (LFL)* 80.4% 79.8% 78.8%** 0.8% OCCUPANCY 78.8% 80.5% 80.0
Slide 12: Organic Growth - Rent Movement Analysis
Organic Growth - Rent Movement Analysis €69.7m RENT ROLL AT SEPTEMBER 17 €6.0m TOTAL MOVE-INS IN PERIOD €4.5m RENT ROLL INCREASE DUE €5.4m MOVE-OUTS IN PERIOD TO ACQUISITIONS 80 €m 4.5 75 -7.0 0.7 3.9 70 -5.4 2.1 65 71.0 60 69.7 55 50 31-Mar-17 Move Outs Capex Move-Ins Other Move-Ins Uplifts on Acqu
Slide 13: Like-for-like Valuation Movement
Like-for-like Valuation Movement Sept 17 Book Value - €m CORE 756.4 ACQUISITIONS 82.1 NON-CORE 18.9 TOTAL 857.4 CORE Portfolio Valuation Increases Valuation (m) 800 CORE PORTFOLIO As at 31 March 2017: 750 36.2 Gross Yield = 8.7% 18.9 Net Yield = 7.8% 700 756.4 As at 30 September 2017: 650 701.2 Gros
Slide 14: Value-add Portfolio Split
Value-add Portfolio Split Book value Rent roll NOI Gross Capital value Occupancy Rate psm Vacant space March 2017^ Net yield €M €M €M yield psm € % € sqm Core Value-add 435.6 38.3 33.2 8.8% 7.6% 569 78.9% 5.49 155,390 Core Mature 265.7 22.6 21.4 8.5% 8.0% 638 93.3% 5.03 26,792 Non-core* 19.0 3.0 1.5
Slide 15: Value-add – Vacant Space Analysis
Value-add – Vacant Space Analysis SEPT 2017 % ERV (post SqM CAPEX of Total Space invest) Sub Optimal Space Subject to Major Capex Programme 30,157 5,907,794 2,089,081 New Acquisition Vacancy 67,097 17,261,239 5,003,864 Flexilager Vacancy to be converted 4,915 795,945 357,936 Flexilager Vacancy 1,816
Slide 16: Capex Programme
Capex Programme Completed in Period: 15k sqm VACANT SPACE FULLY REFURBISHED €2.0m INVESTED €1.1m ANNUALISED RENT 83% OCCUPANCY OF FULLY ROLL ADDED TRANSFORMED SPACE BUDGET ACHIEVED TO DATE Invest Rent Invest Rent Investment Rate Investment Rate Sqm per sqm improvement Occupancy per sqm improvement O
Slide 17: Acquisitions Capex Programme
Acquisitions Capex Programme* 79k SQM OF SUB-OPTIMAL SPACE TO BE TRANSFORMED €19.5m TO BE INVESTED €6.7m Expected Rent Roll Increase Total Vacant Sub-Optimal Vacant (for Expected Expected Expected SITE Sqm Capex Plan) Investment € Rent € Occupancy MARKGRÖNINGEN 19,091 13,553 1,186,650 567,336 81% KR
Slide 18: Asset Recycling & Acquisitions
Asset Recycling & Acquisitions DISPOSALS: Sqm – Annualised Rent – Site Proceeds - €m Occupancy NOI - €m EPRA NOI 000’s €m Munich RMS 85.0 58.6 88% 5.4 5.3 5.9% Düsseldorf 11.0 16.6 96% 0.9 0.8 7.2% Kiel 7.0 10.1 90% 0.6 0.6 7.4% TOTAL 103.0 85.3 90% 6.9 6.7 6.2% ACQUISITIONS: Annualised Rent – Site
Slide 19: Acquisitions Potential
Acquisitions Potential Annualised Business Plan 3 Yr Improvement Site Acquisition NOI - Potential NOI - Potential NOI - €m €m €m Cologne 1.8 1.9 0.1 Mahlsdorf II 0.4 0.7 0.3 Grasbrunn (0.2) 1.7 1.9 Neu-Isenburg 0.4 1.0 0.6 Frankfurt I 0.1 0.5 0.4 Frankfurt II 0.4 0.5 0.1 Neuss 0.4 1.6 1.3 Sub-Total
Slide 20: Banking
Banking 5.3 years 31 March 2017 30 Sept 2017 WEIGHTED AVERAGE DEBT EXPIRY Bank borrowings €349m €298.2m * Net LTV 38.0% 33.3% * Gross LTV 42.3% 34.8% * 2.05% Average cost of debt Weighted average interest rate NOI interest cover 1.99% 8.5x 2.05% 10.0x Weighted average debt expiry 5.8 years 5.3 years
Slide 21: Banking
Banking INCOME/CASH FLOWS AS AT 30 SEPTEMBER 2017 PORTFOLIO LOAN RENTAL SCHEDULED ANNUAL LOAN EXPIRY VALUE AMOUNT INCOME NOI ANNUAL INTEREST AMORTISATION DATE €M €M €M €M € % €M % DG HYP 28.3 14.0 2.5 2.3 0.2 1.59% 0.3 2.2%March 21 BAYLB 59.8 24.4 5.3 4.7 0.4 1.66% 0.5 2.1%October 20 BERLINHYP/PBB 2
Slide 22: Conclusion
Conclusion » Solid results despite loss of income from disposals » Asset recycling and acquisitions progressing well despite strong competition for assets » Strong organic growth on rental income; » Capex programme continuing to deliver high returns and opportunity has been significantly enhanced wi
Slide 23: Appendices
Appendices 23 Sirius Real Estate Limited Half Year Results – September 2017
Slide 24: Case Study - Potsdam
Case Study 1 - Potsdam At At Total Improvement Potsdam – December 2014 to date Acquisition Sept 2017 Total Cost/Valuation €29,352,527 €37,200,000^ €7,847,473 Invested Equity €13,452,527 - - Annualised Rental Income €2,346,050 €2,796,986 €349,235 Annualised NOI €2,192,092 €2,698,681 €506,589 Occupanc
Slide 25: Case Study - Potsdam
Case Study 1 - Potsdam Lettable Rental Purchase Capex Gross Space Income Price/Valuation Potsdam Sqm € € € Yield Acquisition (Occupied) 30,497 2,346,050 0 27,780,000 8.4% Development & Letting of 3,440 319,103 445,223 3,798,845 8.4% Sub-Optimal Space Replacement of Major (2,264) (247,263) 5,898 1,77
Slide 26: Case Study – Potsdam Pictures
Case Study 1 – Potsdam Pictures Before After 26 Sirius Real Estate Limited Half Year Results – September 2017
Slide 27: Case Study – Wiesbaden
Case Study 2 – Wiesbaden At At Wiesbaden – November Business Plan Total Expected 2016 Target to Sept-18 Improvement Acquisition Sept-17 Total Cost/Valuation 17,658,382 21,000,000 ^ 33,276,365 15,617,983 Invested Equity 11,658,382 - - - Annualised Rental Income 1,877,793 1,906,126 2,723,871 846,078 A
Slide 28: Case Study - Wiesbaden
Case Study 2 - Wiesbaden Rental Lettable Space Capex Valuation/Cost Gross Wiesbaden Income Sqm € € € Yield Acquisition (Occupied) 12,657 1,877,793 - 16,250,000 11.6% Development & Letting 4,785 846,078 2,516,226 7,293,776 11.6% Yield Shift - - - 10,364,606 (3.4%) Expected As At 17,442 2,723,871 2,51
Slide 29: Case Study – Wiesbaden Pictures
Case Study 2 – Wiesbaden Pictures Before After 29 Sirius Real Estate Limited Half Year Results – September 2017
Slide 30: Case Study – Dresden
Case Study 3 – Dresden At At Dresden– November Business Plan Total Expected 2016 Target to Sept-19 Improvement Acquisition Sept-17 Total Cost/Valuation €28,600,275 €30,000,000^ €43,313,624 €14,713,349 Invested Equity €12,600,275 - - - Annualised Rental €2,781,105 €2,890,348 €3,762,370 €981,265 Incom
Slide 31: Case Study - Dresden
Case Study 3 - Dresden Lettable Rental Capex Valuation/Cost Gross Dresden Space Income Sqm € € € Yield Acquisition (Occupied) 37,843 2,781,105 - 27,250,000 10.2% Development & Letting of 14,438 981,265 6,510,874 9,620,245 10.2% Suboptimal Space Yield Shift - - - 7,239,353 (1.5%) Expected As At 49,41
Slide 32: Case Study – Dresden Pictures
Case Study 3 – Dresden Pictures Before After 32 Sirius Real Estate Limited Half Year Results – September 2017
Slide 33: Acquisitions Completed In Prior Years
Acquisitions Completed In Prior Years Rental Acquisition Sep-17 Valuation Acquisition Sep-17 Income Rental Income Rental Increas Site Cost €m Valuation €m Increase €m Income €m e Mahlsdorf 19.6 25.5 30% 1.8 2.1 15% Potsdam 29.4 37.2 27% 2.3 2.8 19% Bonn II 3.3 6.9 107% 0.5 0.4 -27% Aachen I 18.7 24.
Slide 34: Property Valuations and Book Value as at September 2017
Property Valuations and Book Value as at 30 September 2017 Net Capital Value Vacant Space Book Value Rent Roll NOI Gross Yield Occupancy Yield €/Psm Sqm Core Assets €838.5 €67.0m €60.0m 8.0% 7.1% 663 82.9% 209.1k Non-core Assets* €19.0m €2.7m €1.1m 14.4% 5.7% 104 49.3% 85.6k Other -€1.6m Total € 857
Slide 35: Our Portfolio as at September 2017
Our Portfolio as at 30 September 2017 €69.7m Annualised rent roll 79% Occupancy 48 Total properties owned 7% 6% 28% Office 25% Storage Production Other 34% SmartSpace 1 35 Sirius Real Estate Limited Half Year Results – September 2017
Slide 36: Total Portfolio Rental Analysis – September 2017
Total Portfolio Rental Analysis – 30 September 2017 €69.7m RENT ROLL AS AT SEPTEMBER 2017 3,996 TOTAL NUMBER OF TENANTS AT 2.6 yrs AVERAGE LEASE LENGTH REMAINING* 79% OCCUPANCY SEPTEMBER 2017** No. Of Occupied Annual Rent Rate Per % Of Total Tenants Sqm € % Sqm € Top Ten Tenants Rent Roll GKN Aerosp
Slide 37: Core Portfolio Renewals Analysis to Sept 18
Core Portfolio Renewals Analysis to Sept 18 109k* SQM UP FOR RENEWAL €7.2m* ANNUAL INCOME UP FOR RENEWAL Thousands No. Tenants € 250 H2 Core Up for Renewal (Sqm, Income & No. Tenants) 2017/18 250 200 200 150 150 100 100 50 50 0 0 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Sqm 10,170 3,041 20,490 21,7
Slide 38: Enquiries/Viewings/Sales
Enquiries/Viewings/Sales enquiries 1,360 1,225 1,232 1,224 1,204 1,250 1,237 ENQUIRIES 1,179 1,214 1,120 1,056 AVERAGE PER MONTH 940 1,184 1,000 1,109 1,110 1,073 Twelve months to Twelve months to 1,037 1,042 1,052 1,065 1,082 1,014 Sept 2016 Sept 2017 1,006 2015/16 1,049 1,185 794 2016/17 Increase
Slide 39: SmartSpace (SmSp) Products
SmartSpace (SmSp) Products INCREASED TO: INCREASED TO: 3.5ksqm SQM COVERTED TO SMSP IN PERIOD €0.4m INCREASE IN SMSP RENT ROLL ** €6.70* 71% SMSP OCCUPANCY SMSP RATE PER SQM SmSp Rate Occupied SmSp SmSp Occupancy Annual SmSp Rent % Total SmSp SmartSpace Product Total SmSp SQM PSQM € (Exc. SQM % € (E