Sirius Real Estate Limited · LSE:SRE
Sirius Real Estate — FY2024 Earnings Presentation
62 slides from Sirius Real Estate's earnings presentation, June 2024
Slide 1: March 24 Year End Results
March 24 DÜSSELDORF SÜD, GERMANY
Slide 2: Leading owner and operator of branded business and industrial parks
LEADING OWNER AND OPERATOR OF BRANDED BUSINESS AND INDUSTRIAL PARKS PROVIDING CONVENTIONAL SPACE AND FLEXIBLE WORKSPACE IN GERMANY AND THE UK
Slide 3: Germany and UK portfolio at a glance
▪ 68 sites, clustered around the edge of all 7 major cities ▪ Occupancy of 85.2% ▪ 5,915 tenants across those sites ▪ Valued at a 6.8% net yield ▪ Ranging from blue chips to 100‘s of SME's ▪ Organic growth centred on ▪ €1.7bn gross asset value ▪ asset management ▪ €129.7m rent roll ▪ recycling capit
Slide 4: Group operational and financial performance highlights
FFO: €110.2m | +7.9% (2023: €102.1m) Adjusted NAV per share: 111.12c | +1.8% (Mar 2023: 109.21c) GROUP OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE RESILIENCE LFL Rent Roll Growth FFO per share: 8.95c Group Net Yield 7.3% 2.4% Germany: 6.8% Germany: 7.1% UK: 9.3% UK: 7.7% Dividend per share: 6.05c
Slide 5: FFO and earnings summary
MAR 24 MAR 23 MOVEMENT €m €m % €m 187.0 169.3 +10% 17.7 Titanium income 7.6 7.4 0.2 Service charge irrecoverable costs (18.7) (11.5) (7.2) Non-recoverable maintenance (7.1) (6.6) (0.5) 168.8 158.6 +6% 10.2 Corporate costs and overheads (43.3) (40.4) (2.9) 125.4 118.2 +6% 7.3 Bank interest (11.5) (13
Slide 6: Earnings per share (cents per share)
Cents per share Note: All items in the chart above are calculated on the weighted average number of shares in issue during the period * Adjusting items include adjustments relating to depreciation, IFRS 16, amortization of intangible assets and finance facility fees. ** EPRA adjusting items include
Slide 7: Balance sheet and NAV
MAR 24 MAR 23 MOVEMENT €m €m % €m Investment properties (owned assets) 2,186.7 2,107.3 4% 79,4 Investment properties (leased assets) *23.9 24.5 (2%) (0.6) Investment in associate 70.3 71.0 (1%) (0.7) Plant and equipment 11.1 11.3 (2%) (0.2) Trade and other receivables 59.0 50.3 17% 8.7 Cash and cash
Slide 8: NAV reconciliation
* Adjusting items includes property valuation gains relating to investment in associates and non-recurring items. ** EPRA adjustments add back deferred tax relating to investments in associates and intangible assets.
Slide 9: Germany site performance
SITE MAR 24 MAR 23 CHANGE Rent Roll €129.7m €123.1m 5.4% Rent Roll (LFL) €128.0m €119.5m 7.1% Occupancy (LFL) 85.2% 83.3% 1.9% Rate psm (LFL) €7.23 €6.90 4.8% Move-Ins 169,176sqm 154,110sqm 9.8% Move-Ins Rate psqm €8.81 €8.98 (1.9)% Move-Outs Rate psm* €8.20 €7.47 9.8% Move-Outs* 137,992sqm 164,562s
Slide 10: Germany LFL rent roll increase
LFL Rent Roll increased 7.1% driven by an increase in Rate and Occupancy M€
Slide 11: Germany portfolio valuation increases
PORTFOLIO VALUATION INCREASES LIKE FOR LIKE ASSETS €m As at 31 Mar 2023: Gross Yield = 7.3% Net Yield = 6.5% Capital value psm = €911 As at 31 Mar 2024: Gross Yield = 7.5% Net Yield = 6.8% Capital value psm = €949 ACQUISITIONS VALUATION INCREASES Gross Yield shift of 20 bps TOTAL ASSETS As at 31 Mar
Slide 12: Germany conversion rates up on stable enquiry levels
CONVERSION RATES UP ON STABLE ENQUIRY LEVELS MONTHLY AVERAGES 1,800 300 Apr 23 – Mar 24 Apr 22 – Mar 23 Enquiries 1,323 1,284 1,600 250 Viewing 835 978 1,400 Sales 179 148 1,200 200 Enquiries Viewings 63.1% 76.1% 1,000 Enquiries Sales 13.5% 11.5% 150 800 ▪ 1,323 average enquiries per month in FY24 6
Slide 13: Organic growth plan focused on Value-Add assets
▪ Organic growth plan focused on investment into Value-Add Assets BOOK VALUE RENT ROLL NOI GROSS YIELD NET YIELD CAPITAL VALUE OCCUPANCY RATE PSM VACANT SPACE MAR-24* €m €m €m psm € € sqm Value-Add 1,053.2 84.2 75.1 8.0% 7.1% 834 81.2% 7.06 229,087 Mature 671.8 45.7 43.7 6.8% 6.5% 1,216 94.4% 7.60 2
Slide 14: Capex programme completed and still to come
BUDGET ACHIEVED TO DATE RETURNS Investment Invest Rent Improvement Rate Occupancy Investment Invest Rent Improvement Rate Occupancy ROI % Sqm €m psm € €m € €m psm € €m € Completed 241,882 50.1 207 13.8 5.65 84% 46.8 186 16.8 7.67 76% 36% In Progress 19,773 4.6 231 1.8 8.82 85% - - - - - 39% Recent A
Slide 15: Acquisitions funded by November 2023 equity raise: Germany
15 In November 2023, we raised £147m (€165m) to fund an acquisition pipeline & we have successfully invested those proceeds: ▪ €53.6m in three German assets: Cologne Göppingen Klipphausen Acquisition Price: €20.0m Acquisition Price: €19.8m Acquisition Price: €13.8m Date of Acquisition: Mar 2024 Date
Slide 16: UK site performance
SITE MAR 24 MAR 23 CHANGE Rent Roll £55.6m £48.5m 14.6% Rent Roll (LFL) £51.9m £48.2m 7.7% Occupancy (LFL) 87.0% 86.4% 0.6% Rate psqft (LFL) £14.39 £13.49 6.7% Move-Ins 653,096sqft 593,345sqft1 10.1% Move-Ins Rate psqft £17.40 £19.941 (12.7)% Move-Outs Rate psqft £17.48 £14.931 17.1% Move-Outs 633,5
Slide 17: UK rent roll movement
RENT ROLL MOVEMENT UK LFL RENT ROLL INCREASED 7.7% DRIVEN BY ANY INCREASE IN RATE AND OCCUPANCY UK SM 60 4.0 (0.3) 40 30 (16.8) 20 10 Total Mar 23 Disposal LFL Mar 23 LFL Move-outs LFL Move-ins LFL Uplifts LFL Mar 24 Acquisitions Total Mar 24 Sirius Par
Slide 18: UK portfolio valuation
PORTFOLIO VALUATION INCREASES LIKE FOR LIKE ASSETS As at Mar 2023: Gross Yield = 13.3% Net Yield = 9.3% Capital Value per sqft = £88 As at Mar 2024: Gross Yield = 14.8% Net Yield = 9.9% Capital Value per sqft = £84 Net Yield shift of 60 bps TOTAL ASSETS As at Mar 2024: Gross Yield = 14.1% Net Yield
Slide 19: Increase in enquiries and conversion: UK
10% INCREASE IN ENQUIRIES AND CONVERSION MONTHLY AVERAGES Apr 23 – Mar 24 Apr 22 – Mar 23 2,000 140 Enquiries 1,426 1,293 1,800 Viewing 361 293 120 1,600 Sales 97 80 Enquiries Viewings 25.3% 22.6% 100 1,400 Enquiries Sales 6.8% 6.2% 1,200 80 ▪ 10% year on year increase in enquiries in the 1,000 peri
Slide 20: UK since acquisition and going forward
SINCE ACQUISITION IN NOVEMBER 2021 ▪ Focused on improving quality of income ▪ Rate increase of 35% ▪ Occupancy stable ▪ Implemented the 'Sirius' marketing and sales techniques GOING FORWARD ▪ Targeted investment capex – e.g. Doncaster, Nottingham ▪ Non-core asset disposal ▪ Acquisitions in the Siriu
Slide 21: Acquisitions in six UK assets
£91.3m (€106.7m) in six UK assets: 21 Barnsley & Liverpool (2) North London Portfolio (3) Vantage Point Business Park* (1) Acquisition Price: £9.5m Acquisition Price: £33.5m Acquisition Price: £47.0m Date of Acquisition: Oct 2023 Date of Acquisition: Nov 2023 Date of Acquisition: Apr 2024 Gross Yiel
Slide 22: Asset recycling: disposals and acquisitions
Five disposals completed at or above a collective 5% premium to book value, with proceeds recycled into the acquisition of nine sites offering significant opportunities for value creation from 36,000 sqm of vacant space DATE TOTAL SALES PRICE SQM ANNUALISED RENTAL INCOME ANNUALISED NOI OCCUPANCY GRO
Slide 23: Increase FFO to €128m already in sight
Increase FFO to €128m already in sight through existing initiatives ▪ €5.0m contribution relating to capex investment programmes in Germany 150 ▪ €5.0m contribution from the let up of €m (4.0) 140 vacant space in Germany 13.0 (8.0) 3.0 130 ▪ €7.0m of pricing initiatives in Germany 3.0 120 2.0 7.0 ▪
Slide 24: Net LTV, cost of debt and debt expiry
MAR 24 33.9% Net LTV Unsecured Borrowings €715.0m Secured Borrowings €240.4m €955.4M Net LTV* 33.9% 2.1% Average cost of debt Weighted average interest rate 2.1% Interest cover at EBITDA level 8.3x Weighted average debt expiry - years 4.0 Net Debt / EBITDA 5.6x 4.0 years Weighted average debt expiry
Slide 25: Dividend payout and reinvestment
▪ 65% FFO dividend payout ratio (1.5x covered) ▪ Remainder of FFO re-invested into organic growth ▪ 25-35%+ ROI on investment capex ▪ Organic growth countering yield expansion ▪ Medium term target to grow FFO to €128m, long term to €150m ▪ Strong acquisition pipeline FRICKENHAUSEN, GERMANY
Slide 26: Current trading and outlook
▪ The new financial year has started well and the Group continues to trade in line with management expectations ▪ In Germany the easing of energy price pressures continues to offset wider macro-economic concerns ▪ The company continues to assess further growth prospects in both Germany and the UK on
Slide 27: Dividends, total return and LFL rent roll increase
TOTAL RETURN OVER THE PAST 10 YEARS DIVIDENDS 2.98 3.00 3.05 1,000 3.5 SRE UK line 3.0 2.7 800 2.37 2.5 2.04 1.80 1.82 1.98 FTSE 250 600 2.0 1.53 1.56 1.6 1.63 1.73 1.77 1.3 1.39 FTSE EPRA Developed Europe 1.5 400 1.0 0.77 0.84 0.84 0.5 0.3 200 0.0 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2
Slide 28: Strong organic and dividend growth, strong balance sheet
STRONG ORGANIC & DIVIDEND GROWTH ▪ FFO growth of 6.5% to €110.2m ▪ 7.2%* increase in LFL Group rent roll (8.2%* Total Rent Roll) with Germany and the UK increasing by 7.1% and 7.7% respectively ▪ 6.5% increase in dividend to 6.05c (20th consecutive increasing dividend) STRONG BALANCE SHEET ▪ €244.5m
Slide 29: Appendix contents
▪ Market Dynamics and Portfolio - Germany ▪ Titanium Appendix I (P. 31 - P. 36) Appendix VI (P. 50 - P. 53) ▪ Market Dynamics and Portfolio - UK ▪ Total investment property value of €358.6m Appendix II (P. 38 - P. 40) ▪ Financing ▪ Portfolio Growth Appendix VII (P. 55 - P.56) Appendix III (P. 42 - P
Slide 30: Heidenheim, Germany
HEIDENHEIM, GERMANY
Slide 31: German market dynamics
Economy spread across several large Well diversified economy The "Mittelstand" autonomous markets Machinery, automotive, chemical, medical, energy, The SME market makes up over 50% of the German Frankfurt, Berlin, Stuttgart, Cologne, Munich, Düsseldorf environmental, consumer & service economy in te
Slide 32: Germany portfolio book value and valuation movement
Book Value Annualised Rent Roll NOI Net Capital Value Rate Vacant Space Mar-24 Gross Yield Occupancy €m €m €m Yield psm € psm € sqm Total Portfolio 1,725.0 129.7 118.8 7.5% 6.9% 950 85.2% 7.24 258,543 Other - - (1.7) - - - TOTAL 1,725.0 129.7 117.1 7.5% 6.8% 950 85.2% 7.24 258,543 VALUATION MOVEMENT
Slide 33: Tenant split and usage split: Germany
USAGE SPLIT BY SQM TENANT SPLIT BY REVENUE 5,915 Tenants Storage 2.7yrs Portfolio WALT 33% Top 50 Anchor 34% Production 38% Tenants 55% SmartSpace SmartSpace 7.9% Of total rent roll relate to Government Tenants SME Tenants Other Other SME 7% 6% 20% Office 7% Tenants 85.2% Occupancy NO. OF TENANTS OC
Slide 34: Locations
LOCATIONS NO. OF TOTAL SQM RATE ANNUALISED RENT % OF PORTFOLIO BOOK VALUE MAR 24 OCCUPANCY GROSS YIELD PROPERTIES ‘000’s psm € €m BY RENT €m 4 Frankfurt 16 339 85.8% 7.76 27.1 21% 344.1 7.9% Berlin 4 104 95.7% 9.00 10.7 8% 171.0 6.3% 4 Stuttgart 9 330 91.5% 5.63 20.4 16% 256.0 8.0% 15 Cologne 8 147
Slide 35: SmartSpace
SMARTSPACE ANNUALISED % OF TOTAL RATE RENT ROLL SMARTSPACE TOTAL OCCUPIED OCCUPANCY ANNUALISED per sqm (excl. (ex. service PRODUCT TYPE sqm sqm % SMSP RENT service charge) ROLL charge) € m€ SMSP Storage 53,713 38,642 72% 3.7 43% 7.97 SMSP Office 37,790 25,671 68% 3.1 36% 10.08 First Choice Office 7,
Slide 36: Assets: Germany
ASSETS Traditional Mixed Use Industrial Business Parks Modern Mixed Use Business Parks Out of Town Office Buildings Large scale Long-term lease lengths SME’s + Retail Customers Long & Short -term leases Multi-tenant SME’s + co- Conventional + Flexible workspace working office space 54% 28% 18%
Slide 37: Finsbury Park, UK
FINSBURY PARK, UK
Slide 38: UK market dynamics
Market synergies Strong rental growth potential Regional investment remains a political priority Industrial/out of town office market in the UK presents High levels of market fragmentation and structural supply The government has extended local investment zones to target 12 UK similar characteristic
Slide 39: UK usage split and tenant split
USAGE SPLIT BY SQFT TENANT SPLIT BY REVENUE 3,739 Tenants 0% 4% 1.2yrs Portfolio WALT Top 50 Office 14% 33% Workshop 34% 3.9yrs Average Tenure Next 950 Storage 63% Remaining 86.6% Occupancy 52% Other Clients ▪ Structural shortage of our space ▪ More than 3,700 tenants across every industry NO. OF TE
Slide 40: Assets: UK
ASSETS Industrial Assets Office Buildings Mixed Use Assets SME’s & growing Large scale SME’s & growing Conventional & flexible SME’s & growing Conventional & flexible businesses workspace businesses office spaces businesses office spaces 67% 15% 18% *Including Vantage Point Business Park
Slide 41: Teningen, Germany
ae > “4, ' ROWTH TENINGEN, GERMANY
Slide 42: Germany historical performance
MAR-16 MAR-17 MAR-18^ MAR-19 MAR-20 MAR-21 MAR-22 MAR-23 MAR-24 Portfolio book value (€m) 687.4 823.3 967.3 1,132.50 1,186.20 1,347.20 1,636.9 1,689.6 1,725.0 Rent roll* (€m) 60.5 71.0 79.5 87.8 90.3 97.2 113.7 123.1 129.7 NOI (€m) 52.5 61.4 66.4 76.7 78.0 87.7 101.5 108.6 125.3 FFO (€m) 26.7 37.0 3
Slide 43: UK historical performance since acquisition
NOV-21 MAR-22 MAR-23 MAR-24 Portfolio book value (£m) 345.5 382.2 367.2 394.7 Rent Roll* (£m) 41.9 45.1 48.5 55.6 NOI (£m) 27.51 30.52 31.7 35.0 FFO (£m) 4.31 13.32 20.43 23.8 Gross yield 12.1% 11.8% 13.2% 14.1% Like-for-like Rent Roll increase - 7.6% 8.5% 7.7% Like-for-like valuation increase - 10.
Slide 44: Appendix: Ludwigsburg, Germany
0800 707 082 000 APPENDIX: LUDWIGSBURG, GERMANY
Slide 45: Consolidated income statement by region
GERMANY GERMANY UK UK GROUP TOTAL GROUP TOTAL Mar 24 Mar 23 Mar 24 Mar 23 Mar 24 Mar 23 €m €m €m €m €m €m 127.3 121.4 59.7 47.9 187.0 169.3 Titanium income 7.6 7.4 - - 7.6 7.4 Service charge irrecoverable costs (2.4) (2.9) (16.3) (8.6) (18.7) (11.5) Non-recoverable maintenance (4.2) (4.1) (2.9) (2.5
Slide 46: Consolidated statement of financial position
GERMANY UK GROUP TOTAL MAR 24 MAR 23 MAR 24 MAR 23 MAR 24 Mar 23 €m €m €m €m €m €m Investment properties (owned assets) 1,725.2 1,689.6 461.5 417.7 2,186.7 2,107.3 Investment properties (leased assets) 9.8 10.8 14.1 13.7 23.9 24.5 Investment in associate 70.3 71.0 0.0 0.0 70.3 71.0 Plant and equipme
Slide 47: Essen, Germany
ESSEN, GERMANY
Slide 48: ESG progress and decarbonisation pathway
▪ Continued progress in embedding ESG into the business and strategy ▪ Consideration of economic viability and long-term sustainable performance is central to all decision-making and actions ▪ Decarbonisation plans continue to develop: ▪ Confidence in net zero pathway for the Group assets by 2045 in
Slide 49: Titanium
TITANIUM APPENDIX! HILDEN, GERMANY
Slide 50: Titanium venture overview
▪ AXA IM Alts – trusted partner & 65% equity holder of Titanium ▪ Sirius Real Estate – asset manager & 35% equity holder of Titanium ▪ €168m seed portfolio sold into Titanium by Sirius in August 2019 ▪ Targeting stabilised assets > €45.0m with attractive running yields ▪ €138.8m of acquisitions post
Slide 51: Titanium site performance
SITE MAR 24 MAR 23 CHANGE Rent Roll* €25.1m €22.8m 10.1% Occupancy* 89.7% 87.2% 2.5% Rate psm* €6.72 €6.31 6.5% * Based on Headlease level MAINZ, GERMANY
Slide 52: Titanium investment property value and Sirius 35% share
TITANIUM €360.7m Investment property value SIRIUS 35% SHARE €m Investment property 126.3 Other assets 3.0 36.8% Net LTV Cash 7.4 Total assets 136.7 Bank loans (52.2) 7 No. of assets Other liabilities (8.5) Deferred tax (7.4) Total liabilities (68.2) Net assets 68.5 €25.1m Annualised rent roll
Slide 53: Titanium income and movement in NAV
MAR 24 ▪ Share of profit through 35% equity ownership Invested equity €54.1m ▪ 1.2% decrease in NAV after payment of €6.0m dividend Profit after tax €2.2m ▪ Management fees generated Net management fees €5.4m from the provision of a range of property related services Total income €7.6m ▪ Attractive
Slide 54: Alzenau, Germany
ALZENAU, GERMANY
Slide 55: Debt maturity profile
600 4.0years Weighted average maturity 500 400 2.1% Average cost of debt 300 200 €28m Scheduled repayments within the next year 100 28 - 400 - 527 - < 12 months 13-24 months 25-36 months 37-48 months > 49 months €28m Maturing within the next year Excluding €59.9m Bond tap in May 2024
Slide 56: Covenants
DSCR* DYR* LTV** DSCR DYR LTV Berlin Hyp AG 2.05 x n/a 49.2% 1.40x n/a 65.0% Oct-30 Sparkasse 3.62 x n/a n/a 2.00x n/a n/a Feb-25 Deutsche Pfandbriefbank AG n/a 17.1% 46.1% n/a 8.0% 50.0% Dec-23 Unencumbered Asset to Unencumbered Asset to Net LTV Secured net LTV FCCR Net LTV Secured LTV FCCR Unsecur
Slide 57: Appendix
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Slide 58: Platform: employees in Germany
TOTAL NO. EMPLOYEES IN > 52 LOCATIONS 291 Acquisitions Team 3 Acquire assets Service Charge Team Marketing Team 11 8 Cost Recovery Lead generation Asset & Property Mgt. Sales Inbound Team 56 Finance, IT, People & 7 Strategic & operational Lead conversion to viewing 121 Talent Legal, ESG Execution &
Slide 59: Platform: employees in UK
TOTAL NO. EMPLOYEES IN > 74 LOCATIONS 154 Marketing Team Sales Inbound Team 1 6 Lead generation Lead conversion to viewing Finance, IT, People & 28 Talent Legal, ESG Execution & support Asset & Property Mgt. National Sales Team 31 88 Strategic & operational Viewing & conversion to deals
Slide 60: Grasbrunn, Germany
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Slide 61: Share register: owners by sector and geography
SHARES (m) % HOLDING OWNER BY SECTOR BlackRock 145.7 10.81% Mutual Funds 4% 4% Abrdn 120.6 8.95% 8% Pensions 37% Retail Public Investment Corporation (PIC) 73.0 5.42% 10% Other Vanguard Group 66.5 4.94% Inv Trusts Truffle Asset Management 59.7 4.43% 16% ETF 21% Individuals 49.8 3.70% Insurance Colum
Slide 62: 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 risk and uncertainty because they are based on cu