Sirius Real Estate Limited · LSE:SRE
Sirius Real Estate — H1 2019 Earnings Presentation
38 slides from Sirius Real Estate's earnings presentation, Nov 28, 2018
Slide 1: Half Year Presentation - 30 September 2018
1 Sirius Real Estate Ltd Half Year Presentation - 30 September 2018
Slide 2: Sirius Assets
Half Year Results – September 2018 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 – September 2018 3 Strong shareholder returns Highlights » Total profit before tax increased by 43% to €78.2m (Sep 2017: €54.7m) » Total shareholder return for the period of 9.8% (Sep 2017: 10.4%)* 43% » 7.6% LFL book value increase of €69.3m in period; total portfolio book value i
Slide 4: Financials – Income Statement
Half Year Results – September 2018 4 Financials – Income Statement As at Sep 18 As at Sep 17 Movement €m €m €m Rental income 40.4 34.8 5.6 Service charge irrecoverable costs (3.3) (3.4) 0.1 Non-recoverable maintenance (0.8) (1.0) 0.2 Net Operating Income 36.3 30.4 5.9 Corporate costs and overheads (
Slide 5: Earnings Per Share
Half Year Results – September 2018 5 Earnings Per Share 8 cps 7 6 5 4 7.04 (0.90) (0.40) 3 (0.13) (0.05) 3.63 2 2.33 2.20 2.15 1 1.63 0 Basic EPS NOI Overheads Interest & Funds from Amortisation of Adjusted Adjusting items EPRA Earnings Dividend Per Current Tax Operations Facility Fees & Earnings af
Slide 6: Financials – Statement of Financial Position
Half Year Results – September 2018 6 Financials – Statement of Financial Position As at Sep 2018 As at Mar 2018 Movement €m €m €m Assets Investment properties (including assets held for sale) 1,048.8 931.2 117.6 Prepayments for investment properties 11.3 35.6 (24.3) Plant and equipment 2.9 3.1 (0.2)
Slide 7: Adjusted NAV per share (c)
Half Year Results – September 2018 7 NAV Growth September 2018 70 2.19 5.56 (1.56) (0.36) 60 (1.38) Adjusted NAV per share (c) 50 40 70.52 70.16 65.71 30 20 10 0 Adjusted NAV Share awards Recurring profit Surplus on Scrip & Cash Adjusted NAV EPRA * EPRA Net Assets per share 31- and non- before tax r
Slide 8: Acquisitions & Pipeline
Half Year Results – September 2018 8 Acquisitions & Pipeline Annualised €65.1m* Date Total Investment Cost per Acquisition Annualised Acquisition EPRA Net Total Cost of 4 Acquisitions Site Acquired/ Acquisition €m sq.m Rental Income Occupancy Initial Yield Completed or Notarised Notarised NOI €m €m
Slide 9: Completed Acquisitions Pictures
Half Year Results – September 2018 9 Completed Acquisitions* Pictures Friedrichsdorf Friedrichsdorf Fellbach Mannheim** Fellbach Mannheim * Excluding 2 acquisitions completed 1st Apr 2018 (Saarbrücken and Düsseldorf II) ** Completed 1st Oct 2018
Slide 10: Organic Growth – Rental Income Analysis
Half Year Results – September 2018 10 Organic Growth – Rental Income Analysis Site Sep-18 Mar-18 Sep-17 Change Rent Roll * €82.0m €79.5m €69.7m 3.1% Rent Roll (Disposals) (€1.8m) (€7.1m) - - - Rent Roll (Acquisitions) €2.4m €11.6m - - - Rent Roll (LFL) €79.7m €77.7m €67.5m** 2.6% Occupancy (LFL) 81.
Slide 11: Organic Growth – Rental Movement Analysis
Half Year Results – September 2018 11 Organic Growth – Rental Movement Analysis 86 €m 84 2.4 (1.8) 82 1.2 80 4.2 78 (5.8) 76 82.0 79.5 2.4 74 72 70 31-Mar-18 Move Outs Capex Move-Ins Other Move-Ins Uplifts on Acquisitions Disposal 30-Sep-18 Existing Tenants
Slide 12: Like-for-Like Valuation Movement
Half Year Results – September 2018 12 Like-for-Like Valuation Movement V Core Portfolio Valuation Increases a 1,000 l 950 43.6 u CORE PORTFOLIO ( 25.3 m 900 As at 31 Mar 2018: Book Value Sep 18 - €m a € 850 t Gross Yield = 8.1% Core 979.9 ) 979.9 i 800 Net Yield = 7.4% Acquisitions 65.1 910.9 o 750
Slide 13: Value-Add Portfolio Split
Half Year Results – September 2018 13 Value-Add Portfolio Split Book Value Rent Roll Capital Value Rate psm Vacant Space Mar-18 * NOI €m Gross Yield Net Yield Occupancy €m €m psm € € sqm Core Value-Add 485.9 40.0 34.6 8.2% 7.1% 551 75.7% 5.55 193,136 Core Mature 461.1 37.2 35.9 8.1% 7.8% 784 94.9% 5
Slide 14: Value-Add – Vacant Space Analysis
Half Year Results – September 2018 14 Value-Add – Vacant Space Analysis Sep-18 Ending Position Total Space - sqm 1,466,912 Occupancy * 81% Occupied Space - sqm 1,190,821 Vacant Space - sqm 276,091 Sep-18 Sub Optimal Space % of Total Space Sqm Capex ERV (post invest) Original Major Capex Programme 13
Slide 15: Original Capex Programme
Half Year Results – September 2018 15 Original Capex Programme Completed in Period 4.5k sqm €2.4m €0.6m Vacant Space Refurbished in Period Invested in Period Annualised Rental Income Increase Budget Achieved to date Capex Investment Programme Progress Investment Invest psm Rent Investment Invest psm
Slide 16: Acquisition Capex Programme
Half Year Results – September 2018 16 Acquisition Capex Programme* Sub-Optimal 119k sqm Total Vacant Vacancy (for Budgeted Budgeted Rent Budgeted Site Investment Roll Increase Sqm Capex Plan) Occupancy €m €m Sub-Optimal Space to be Refurbished Sqm Markgröningen 19,091 13,162 0.9 0.6 90% Krefeld 730
Slide 17: Potential of Acquisitions
Half Year Results – September 2018 17 Potential of Acquisitions Annualised Business Plan 3 yr Improvement NOI Site Acquisition NOI Potential NOI €m €m €m Cologne 1.8 2.0 0.1 Grasbrunn (0.2) 1.7 1.9 Mahlsdorf II 0.4 0.7 0.3 Neuss 0.4 1.6 1.3 Neu-Isenburg 0.3 1.0 0.6 Frankfurt 0.0 0.5 0.4 Frankfurt II
Slide 18: Banking
Half Year Results – September 2018 18 Banking Sep-18 Mar-18 Bank borrowings €368.1m €373.1m 4.7 Yrs Net LTV* 32.7% 31.9% Gross LTV 35.1% 38.6% Weighted Average Debt Expiry Weighted average interest rate 2.0% 2.0% NOI interest cover 9.7x 9.5x Weighted average debt expiry 4.7 years 5.2 years Historica
Slide 19: Conclusion
Half Year Results – September 2018 19 Conclusion » Total shareholder return of 9.8% for the six month period » FFO per share increased by 12.6% » Significant valuations increase from organic growth & yield compression » Portfolio still valued on a defensive 7.8% gross yield » Strong organic growth o
Slide 20: Appendices
Half Year Results – September 2018 20 Appendices
Slide 21: Case Study – Markgröningen: Site Plan & Impression
Half Year Results – September 2018 21 Case Study 1 – Markgröningen Site Plan & Impression
Slide 22: Case Study – Markgröningen: Property Overview
Half Year Results – September 2018 22 Case Study 1 – Markgröningen Property Overview » Industrial building of 58,993sqm acquired at attractive net initial yield of 10.4% with only 68% occupancy with large anchor tenant » Financed by seven year fixed rate facility charging 1.66% interest until maturi
Slide 23: Markgröningen Financials & 29 Month Returns
Half Year Results – September 2018 23 Case Study 1 – Markgröningen Financials & 29 Month Returns 29 months to Sep 18 At Actual Return Analysis Return Total Improvement €m Acquired May-16 Acquisition As At Sep 18 Retained Profit ** 2.7 Total Cost/Valuation € 8.7m € 19.3m € 10.6m Valuation Increase 10
Slide 24: Case Study – Markgröningen: Before After
Half Year Results – September 2018 24 Case Study 1 – Markgröningen Before After
Slide 25: Case Study – Aachen I: Site Plan & Impression
Half Year Results – September 2018 25 Case Study 2 – Aachen I Site Plan & Impression
Slide 26: Case Study – Aachen I: Property Overview
Half Year Results – September 2018 26 Case Study 2 – Aachen I Property Overview » Modern business park with 24,430sqm of lettable space acquired on an attractive net initial yield » Financed by seven year fixed rate facility charging 1.48% interest until maturity in October 2023 » Site 90% occupied
Slide 27: Aachen I Financials & Returns To Date
Half Year Results – September 2018 27 Case Study 2 – Aachen I Financials & Returns To Date 3.5 Years to Sep 18 At Actual Returns Analysis Total €m Improvement Retained Profit ** 5.8 Acquired Feb-15 Acquisition As At Sep 18 Valuation Increase 8.9 Total Cost/Valuation € 18.7m € 27.6m € 8.9m Capex (1.5
Slide 28: Case Study – Aachen I: Before After
Half Year Results – September 2018 28 Case Study 2 – Aachen I Before After
Slide 29: Acquisitions Completed & Owned >1yr – Returns Achieved
Half Year Results – September 2018 29 Acquisitions Completed & Owned >1yr – Returns Achieved Acquisition Sep-18 23 Total Cost €312.4m €98.4m Valuation €410.8m 32% Assets Acquired and Owned for > 1 year €5.6m Rent Roll €26.3m Rent Roll €31.9m 21% 2.6 yrs Occupancy 72% Occupancy 82% Weighted Average T
Slide 30: Acquisitions Completed in Prior Years – Valuation & Rent Roll
Half Year Results – September 2018 30 Acquisitions Completed in Prior Years (>1yr) – Valuation & Rent Roll Total Acq. Sep 18 Valuation Acq. Rental Sep 18 Rental Rental Income Acq. Sep 18 Occupancy Capex Since Site Cost €m Valuation €m Increase €m Income €m Income €m Increase €m Occupancy Occupancy I
Slide 31: Cost/Valuation
Half Year Results – September 2018 31 Acquisitions Completed in Prior Years (>1yr) – Valuation & Rent Roll Rent Roll Increase Since Acquisition 4 Millions 23% 11% 3 15% 30% 29% 25% 12% (8%) 2 37% 67% 5% Rent Roll (32%) 2.8 3.1 366% Acquisition 2.9 2.3 2.6 2.4 2.3 45% 2.2 36% 1.8 2.1 2.2 37% Sep-18 1
Slide 32: Property Valuations & Book Value as at 30 September 2018
Half Year Results – September 2018 32 Property Valuations & Book Value as at 30 September 2018 Capital Value Vacant Space Sept-18 Book Value €m Rent Roll €m NOI €m Gross Yield Net Yield Occupancy Rate psm € psm € sqm Core Assets 1,045 81.6 74.3 7.8% 7.1% 689 83.8% 5.76 228,408 Non-Core Assets * 3.8
Slide 33: Portfolio at a glance - September 18
Half Year Results – September 2018 33 Properties Portfolio at a glance - September 18 No. Of % of Total Rate psm Annualised Value Sept-18 Occupancy Portfolio Gross Yield Properties Sqm m € Rent €m €m * By Rent Frankfurt 13 0.3 88.5% 6.04 19.5 24% 241.4 8.1% Berlin 6 0.2 91.9% 5.63 12.7 15% 170.6 7.4
Slide 34: Total Portfolio Rental Analysis – September 2018
Half Year Results – September 2018 34 Properties Total Portfolio Rental Analysis – 30 September 2018 Tenant Split by Revenue 2.8Yrs 4,459 Top 50 Anchor Tenants Portfolio WALT No. Of Tenants 49% 45% SmartSpace SME Tenants 6% Usage Split Other SME Tenants Historical Rental Movement Annual Office CAGR
Slide 35: Banking
Half Year Results – September 2018 35 Banking INCOME/CASH FLOWS AS AT 30 SEPTEMBER 2018 Portfolio Loan Rental Cash Book Value Amount Income NOI Annual Interest Scheduled Annual Amortisation Contribution Loan Expiry Date (after debt €m €m €m €m €m % € % service) €m Deutsche Genossenschafts-Hypotheken
Slide 36: Core Portfolio Renewals Analysis to March 2019
Half Year Results – September 2018 36 Properties Core Portfolio Renewals Analysis to March 2019* Core Up for Renewal (Sqm, Income & No. Tenants) H2 2018/19 No. Tenants Thousands € 300 160 140 250 120 200 100 150 80 60 100 40 50 20 0 0 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Sqm 23,649 8,816 9,573
Slide 37: Enquiries/Viewings/Sales
Half Year Results – September 2018 37 Properties Enquiries/Viewings/Sales 1,500 enquiries 1,395 1,472 Average per Month 1,308 1,230 1,224 1,208 1,250 1,244 1,214 Twelve months to Twelve months to 1,250 1,112 1,360 1,120 Sept 17 Sept 18 1,032 1,225 1,232 1,237 1,196 1,179 1,186 1,179 1,196 1,000 1,10
Slide 38: SmartSpace (SmSp) Products
Half Year Results – September 2018 38 Properties SmartSpace (SmSp) Products Annualised Rental % of Total Annualised Rate per sqm (excl. Smartspace Product Type Total sqm Occupied sqm Occupancy % Income (excl. SmSp Rental Income Service charge) € Service Charge) € First Choice Office 1,317 1,075 82%