Sirius Real Estate Limited · LSE:SRE
Sirius Real Estate — FY2020 Earnings Presentation
44 slides from Sirius Real Estate's earnings presentation, Mar 31, 2020
Slide 1: Year End Results - 31 March 2020
Sirius Real Estate Ltd Year End Results - 31 March 2020
Slide 2: Sirius Assets
Year End Results – 31 March 2020 2 Industrial Business Parks What We Do: Sirius Assets We provide flexible and conventional workspace to companies across Germany
Slide 3: Highlights
Year End Results – 31 March 2020 3 Highlights €110.8m » Total profit before tax of €110.8 million (2019: €144.7m) Total PBT » Like for like annualised rent roll increase of 6.1% to €81.2 million (2019: €76.5 million 15.1% 9.9% » Funds from operations increased by 15.1% to €55.7 million (2019: €48.4
Slide 4: Financials – Income Statement
Year End Results – 31 March 2020 4 Financials – Income Statement Mar 20 €m Mar 19 €m Movement €m Rental income* 88.8 83.6 5.2 Titanium income 2.4 - 2.4 Service charge irrecoverable costs (4.8) (5.3) 0.5 Non-recoverable maintenance (2.6) (2.3) (0.3) Net Operating Income 83.8 76.0 7.8 Corporate costs
Slide 5: Earnings Per Share
Year End Results – 31 March 2020 5 Earnings Per Share 12 cps 10 8 (1.92) (0.80) 6 9.55 (0.12) (0.17) 0.19 8.25 4 5.41 5.24 5.43 2 3.57 0 Profit after tax NOI Overheads Interest & Adjustment Funds from Depreciation, Adjusted Earnings Adjusting items EPRA Earnings Dividend Per Current Tax relating to
Slide 6: Financials – Statement of Financial Position
Year End Results – 31 March 2020 6 Financials – Statement of Financial Position As at Mar 2020 As at Mar 2019 Movement €m €m €m Assets Investment properties (owned assets) 1,186.2 1,132.5 53.7 Investment properties (leased assets) 17.8 - 17.8 Investment in associate 49.5 - 49.5 Plant and equipment 4
Slide 7: Titanium Combined Balance Sheet
Year End Results – 31 March 2020 7 Titanium Combined Balance Sheet €228.5m Sirius Titanium Combined Total Investment €m €m €m Property Value Investment property 1,186.2 228.5 1,414.7 Other assets 45.3 0.9 46.2 Cash 121.3 8.4 129.7 Total assets 1,352.8 237.9 1,590.6 Bank loans (480.2) (83.2) (563.4)
Slide 8: NAV Growth
Year End Results – 31 March 2020 8 NAV Growth Mar 20 100 Adjusted NAV per share (c) 90 5.75 (3.38) (0.92) 5.20 80 (1.20) 70 81.54 80.62 75.17 60 50 Adjusted NAV per share Share awards, deferred Recurring profit after Surplus on revaluation Dividend & scrip Adjusted NAV per share EPRA * EPRA Net Asse
Slide 9: Disposals
Year End Results – 31 March 2020 9 Disposals €178.1m Annualised Annualised Total Price per Disposal Disposal EPRA Net Site Date Sold Disposal NOI Total proceeds from Proceeds €m sqm € Rental Occupancy Initial Yield * €m six mature disposals Income €m Sale into Titanium: Bayreuth Aug-19 22.6 987 1.4
Slide 10: Acquisitions
Year End Results – 31 March 2020 10 Acquisitions €120.0m Date Total Annualised Acquisition Annualised Acquisition EPRA Net Site Investment Cost per sqm Acquisition Acquired Rental Occupancy Initial Yield Total cost of seven €m NOI €m Income €m acquisitions * Completed - Sirius Portfolio: Teningen Ju
Slide 11: Titanium Seed Portfolio & Completed Acquisitions
Year End Results – 31 March 2020 11 Titanium Seed Portfolio & Completed Acquisitions Berlin - Borsig Hilden * Berlin, Borsig Hilden * Berlin - Tempelhof Mainz Mainz Berlin, Tempelhof Nuremburg Bayreuth Nuremburg Bayreuth * Acquired 1 Mar 20
Slide 12: SRE Completed Acquisitions I
Year End Results – 31 March 2020 12 SRE Completed Acquisitions I Neuruppin Bochum II Bochum II Neuruppin Neuss II Neuss II Hallbergmoos Hallbergmoos
Slide 13: SRE Completed Acquisitions II
Year End Results – 31 March 2020 13 SRE Completed Acquisitions II Buxtehude Buxtehude Alzenau Alzenau Teningen Teningen
Slide 14: Organic Growth – Rental Income Analysis
Year End Results – 31 March 2020 14 Organic Growth – Rental Income Analysis Site Mar 20 Mar 19 Change Rent Roll €90.3m €87.8m 2.8% Rent Roll (Disposals) (€11.3m)* €(3.0)m - - Rent Roll (Acquisitions) €8.9m €5.8m - - Rent Roll (LFL) €81.2m €76.5m 6.1% Occupancy (LFL) 87.1% 85.2% 1.9% Occupancy 85.3%
Slide 15: Organic Growth – Rental Movement Analysis
Year End Results – 31 March 2020 15 Organic Growth – Rental Movement Analysis €m 105 100 8.9 (11.3) 95 1.7 90 9.4 85 (10.8) 4.4 80 90.3 75 87.8 70 65 60 31-Mar-19 Move Outs Capex Move-Ins Other Move-Ins Uplifts on Existing Acquisitions Sale of Assets to 31-Mar-20 Tenants Titanium
Slide 16: Like-for-Like Valuation Movement
Year End Results – 31 March 2020 16 Like-for-Like Valuation Movement €m Portfolio Valuation Increases 1,100 34.4 1,000 61.9 EXISTING PORTFOLIO* Book Value As at 31 Mar 2019: Mar 20 - €m 900 Gross Yield = 7.9% Existing Portfolio* 1,069.2 1,069.2 Net Yield = 7.0% Acquisitions 117.0 800 972.9 As at 31
Slide 17: Value-Add Portfolio Split
Year End Results – 31 March 2020 17 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 19,547 O
Slide 18: Value-Add – Vacant Space Analysis
Year End Results – 31 March 2020 18 Value-Add – Vacant Space Analysis Mar-20 Ending Position Total space – sqm 1.5m Occupancy 85% Occupied space – sqm 1.3m Vacant space - sqm 0.2m Mar-20 Capex ERV (post invest) % of Total space Sqm Sub optimal space €m €m Original major capex programme 0% 3,221 1.0
Slide 19: Original Capex Programme
Year End Results – 31 March 2020 19 Original Capex Programme Completed in period 5.1k sqm €0.2m 52% 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 Improvement
Slide 20: New Acquisition Capex Programme
Year End Results – 31 March 2020 20 New Acquisition Capex Programme Completed in Period 49.2k sqm €9.1m €3.6m 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 Investmen
Slide 21: Potential of FY 19/20 Acquisitions
Year End Results – 31 March 2020 21 Potential of FY 19/20 Acquisitions Business Plan 3 Yr Acquisition €43.1m Potential 36% Total Cost €120m Valuation €163.1m NOI €6.8m €3.8m NOI €10.6m 56% Occupancy 74% Occupancy 93% 19% 3 Yr Returns €m Investment €m 26.9 Operating Profit ** Equity Invested 50.2 43.
Slide 22: Banking – Transactions
Year End Results – 31 March 2020 22 Banking – Transactions €99.7 million €0.4m Net additional lending Reduction in annual interest Outstanding Annual Movement Outstanding Annual Interest debt Mar 19 Interest Rate Interest in period debt Mar 20 Interest Rate €'000 €'000 €'000 €'000 €'000 K-Bonds I 47
Slide 23: Banking
Year End Results – 31 March 2020 23 Mar 20 Mar 19 Banking Bank borrowings €485.8 €386.1m 3.6 Yrs Net LTV * 32.8% 32.4% Gross LTV 41.0% 34.1% Weighted average debt expiry Weighted average interest rate 1.5% 2.0% NOI interest cover 11.0x 10.1x 1.5% Weighted average debt expiry 3.6 Years 4.3 Years No.
Slide 24: Post Year End – COVID-19 Update & Outlook
Year End Results – 31 March 2020 24 Post Year End – COVID-19 Update & Outlook » In light of the on-going uncertainty with regards to the impact of COVID-19 in the current financial year, the Board does not consider it prudent to provide full year financial guidance but will continue to monitor the s
Slide 25: Conclusion
Year End Results – 31 March 2020 25 Conclusion » Company well positioned to deal with potential impact of COVID-19 » Strong balance sheet with 32.8% net LTV, 7.6% gross yield portfolio valuation and €129.7m of unrestricted cash & undrawn committed facilities available » Strong earnings growth with 1
Slide 26: Appendices – Case Studies & Property Stats
Year End Results – 31 March 2020 26 Appendices – Case Studies & Property Stats
Slide 27: Case Study – Heidenheim: Site Plan & Impression
Year End Results – 31 March 2020 27 Case Study 1 – Heidenheim Site Plan & Impression
Slide 28: Case Study – Heidenheim: Property Overview
Year End Results – 31 March 2020 28 Case Study 1 – Heidenheim Property Overview » Traditional business park with 46,909sqm acquired on attractive net initial yield of 8.2% and with high service charge costs. » Financed by a five year fully hedged facility at an interest rate of 1.66% maturing in Oct
Slide 29: Case Study – Heidenheim: Financials & Returns To Date
Year End Results – 31 March 2020 29 Case Study 1 – Heidenheim Financials & Returns To Date Returns at At At Return Analysis Total Mar 20 €m Improvement Acquisition Sept 15 Mar 20 Retained Profit *** 7.1 Valuation Increase 8.5 Total Cost/Valuation € 18.3m € 26.8m € 8.5m Capex (1.4) Total SQM 46,909 4
Slide 30: Case Study – Neu-Isenburg: Site Plan & Impression
Year End Results – 31 March 2020 30 Case Study 2 – Neu-Isenburg Site Plan & Impression
Slide 31: Case Study – Neu-Isenburg: Property Overview
Year End Results – 31 March 2020 31 Case Study 2 – Neu-Isenburg Property Overview » Well-located office building in close proximity to Frankfurt providing 8,259sqm of lettable space with opportunity to grow occupancy from 41% at acquisition date » Financed by a seven year fully hedged facility at an
Slide 32: Case Study – Neu-Isenburg: Financials & Returns To Date
Year End Results – 31 March 2020 32 Case Study 2 – Neu-Isenburg Financials & Returns To Date Business Expected Returns At At Returns Analysis to Mar 21 plan target Total Expected €m Acquisition Improvement Mar 20 To Mar 21 Retained Profit *** 1.6 Sept 17 Valuation Increase 4.9 Total Cost/Valuation €
Slide 33: SRE – Key Metrics Development
33 SRE – Key Metrics Development Mar-20 Mar-19 Mar-18 Mar-17 Mar-16 Mar-15 Portfolio book value (€m) 1,186.2 1,132.5 967.3 823.3 687.4 545.6 Rent roll (€m) 90.3 87.8 79.5 71 60.5 50 Gross yield (%) 7.6 7.8 8.2 8.6 8.8 9.2 Like-for-like rent roll increase (%) 6.1 7.1 6.2 5.1 5.9 5.2 Like-for-like val
Slide 34: Property Transactions Jan 12 to Mar 20
Year End Results – 31 March 2020 34 Property Transactions Jan 12 to Mar 20 Core Disposals (20) * Disposal Value €288.2m €325.0m Acquisitions (39) Mar-20 Price Gross Yield 7.1% Uplift 13% Total Cost €553.0m Valuation €714.7m Uplift 29% Total Sqm 401k Occupancy 85% Gross Yield 8.8%** Gross Yield 8.0%
Slide 35: Acquisitions Owned >1yr – Returns Achieved
Year End Results – 31 March 2020 35 Acquisitions Owned >1yr – Returns Achieved Acquisition Mar-20 32 Total Cost €432.4m €165.3m Valuation €597.7m 38% Assets acquired & owned for > 1 year Gross Yield 9.0%* Gross Yield 8.1% Rent Roll €36.5m €11.9m Rent Roll €48.4m 33% 3.3 yrs. Occupancy 72% Occupancy
Slide 36: Acquisitions Owned >1yr – Valuation & Rent Roll per Financial Year Acquired
Year End Results – 31 March 2020 36 Acquisitions Owned >1yr – Valuation & Rent Roll per Financial Year Acquired Financial Year & Total Acq. Mar 20 Valuation Acq. Rental Mar 20 Annual Annual Rental Acq. Mar 20 Occupancy Capex Since No. of Properties Cost € Valuation € Increase Income € Rental Income
Slide 37: Property Valuations & Book Value as at 31 Mar 20
Year End Results – 31 March 2020 37 Property Valuations & Book Value as at 31 Mar 20 Annualised Book Value Gross Net Capital Rate Vacant Mar-20 Rent Roll NOI €m Occupancy €m Yield Yield Value psm € psm € Space sqm €m Total Portfolio 1,186.2 90.3 79.2 7.6% 6.7% 775 85.3% 5.98 217,521 Other - - (1.2)
Slide 38: Portfolio at a glance – Mar-20
Year End Results – 31 March 2020 38 Properties Portfolio at a glance – Mar-20 No. Of % of Total Rate psm Annualised Book Mar-20 Occupancy Portfolio Gross Yield Properties Sqm m € Rent €m By Rent Value €m Frankfurt 14 358.1 87.6% 6.04 22.8 25.2% 280.1 8.1% Berlin 4 103.4 97.7% 7.14 8.7 9.6% 127.1 6.8
Slide 39: Total Portfolio Rental Analysis – Mar 20
Year End Results – 31 March 2020 39 Properties Total Portfolio Rental Analysis – Mar 20 Tenant split by revenue 2.9Yrs 5,031 Top 50 Anchor Tenants 51% 43% Portfolio WALT No. of tenants SmartSpace SME Tenants Usage split 6% Other SME Tenants 8% Office Historical rental movement Annual rent 6% CAGR 32
Slide 40: Portfolio Renewals Analysis to Mar 21
Year End Results – 31 March 2020 40 Properties Portfolio Renewals Analysis to Mar 21* Up for Renewal (Sqm, Income & No. Tenants) 2020/21 No. Tenants 000’s € 250 600 500 200 400 150 300 100 200 50 100 0 0 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 TOTALS Sqm 3
Slide 41: Enquiries/Viewings/Sales
Year End Results – 31 March 2020 41 Enquiries/Viewings/Sales Average per Month ENQUIRIES 1,500 1,391 1,404 1,417 enquiries 1,325 Twelve months 1,245 1,285 1,279 1,191 1,184 1,413 1,184 1,103 1,196 1,244 1,179 1,201 1,255 1,045 1,307 1,169 to Mar 20 1,000 1,103 1,023 1,055 922 No. of Enquiries 18/19
Slide 42: SmartSpace (SmSp) Products
Year End Results – 31 March 2020 42 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 1,912 71% 463 8% 20.16 SMSP O
Slide 43: Banking
Year End Results – 31 March 2020 43 Banking Facility Covenants Loan Expiry Date March 20 Position Hard Covenant ICR* DSCR* DYR* LTV ** ICR DSCR DYR LTV Bayerische Landesbank n/a 7.01x n/a 29.4% n/a 2.50x n/a 65.0% October 2020 SEB AG 7.32x n/a n/a 35.1% 4.30x n/a n/a 70.0% September 2022 SEB AG II n
Slide 44: Disclaimer
Year End Results – 31 March 2020 44 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 involve ri