Sirius Real Estate Limited · LSE:SRE
Sirius Real Estate — FY2017 Earnings Presentation
38 slides from Sirius Real Estate's earnings presentation, Mar 31, 2017
Slide 1: Year End Results 2017
Year End Results 2017 Sirius Real Estate Limited Year Ended 31 March 2017
Slide 2: What We Do
What We Do We provide flexible and conventional workspace to companies across Germany 2 Sirius Real Estate Limited Year End Results 2017
Slide 3: Highlights
Highlights Strong shareholder returns » Total shareholder return of 15.3% (2016: 16.0%)** 15.3% » Adjusted PBT +54% to €35.3m (31 March 2016: €22.9m)^^^^ » FFO 4.50c per share^^^ (2016: 3.43c) and Basic EPRA EPS 3.18c per share *** Shareholder return (2016: 1.88c) EPRA NAV^ +10% to 57.84c per share
Slide 4: Financials – Income Statement
Financials – Income Statement As at Mar 17 As at Mar 16 Movement €m €m €m Rental income 67.9 55.8 12.1 Service charge irrecoverable costs (5.7) (5.1) (0.6) Non-recoverable maintenance (1.7) (1.1) (0.6) Net Operating Income 60.5 49.6 10.9 Corporate costs and overheads (15.9) (14.8) (1.1) Recurring EB
Slide 5: Earnings Per Share
Earnings Per Share 4.25cps Adjusted EPS 4.50cps FFO per share cps 7.0 -1.99 6.0 7.41 -0.92 5.0 -0.25 4.0 4.50 3.0 4.25 2.92 2.0 NOI Overheads Interest & tax Funds from Amortisation of Adjusted Dividend Per Operations Facility Fees & Earnings Share (65% of Depreciation After tax FFO) Note: All items
Slide 6: Financials – Statement of Financial Position
Financials – Statement of Financial Position As at March 2017 As at March 2016 Movement €m €m €M Assets Investment properties (including assets held for sale) 823.3 687.5 135.8 Plant and equipment 2.6 1.9 0.7 Goodwill 3.7 3.7 - Deferred tax asset 0.2 0.2 - Trade and other receivables 14.3 11.9 2.4 D
Slide 7: NAV Growth March 2017
NAV Growth March 2017 58.82cps March 2017 adjusted NAV 9.69cps Recurring PBT + Surplus in valuation Adjusted NAV per share 62 -2.53 60 5.67 -0.98 58 56 54 4.02 57.84 -0.86 58.82 53.35 -0.83 52 50 31-Mar-16 Equity raise + Convertible Loan Recurring profit Surplus on Scrip & Cash Adjusted NAV EPRA * E
Slide 8: Completed Acquisitions
Completed Acquisitions* €80.4m* Total cost of seven acquisitions 8.1% EPRA net initial yield 34% Vacancy 14% Initial cash-on-cash yield Forecast Total Cost Per Rental Income @ Net Operating EPRA Net Initial Site Geared Occupancy Investment € Sqm € Acquisition € Income € Yield 5Y IRR Krefeld 13,475,0
Slide 9: Completed Acquisitions – Pictures
Completed Acquisitions – Pictures* KREFELD MARKGRÖNINGEN DRESDEN WIESBADEN KREFELD II DREIEICH FRANKFURT* * Including one acquisition completed post period end 9 Sirius Real Estate Limited Year End Results 2017
Slide 10: Valuation: Acquisitions Completed in Prior Years
Acquisitions Completed in Prior Years - Valuation and Rent Roll Valuation Increase Since Acquisition 40 Millions 17% 35 Acquisition 30 4% Cost 22% 20% 25 15% Valuation - -4% Mar'17 Valuation 20 34.2 15 29.4 34% 23.7 25.1 26.1 22.4 21.0 -3% 10 19.6 122% 18.7 -2% 18.3 18.4 17.7 5 7.4 10.0 7.2 3.1 6.8
Slide 11: Organic Growth - Rental Income Analysis
Organic Growth - Rental Income Analysis Rent Roll (LFL) 70 Thousands +1.8% 65 +2.6% +0.9% -0.3% MAR-16 MAR-17 CHANGE 60 55 Rent Roll (LFL) €62.4m* €65.6m* 5.1% Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Rent Roll (Acquisitions) €5.4m** Rate per sqm (LFL) Occupancy (LFL) 80%* 82%* 2% 5.20 0.6% Occupancy 80%
Slide 12: Organic Growth - Rent Movement Analysis
Organic Growth - Rent Movement Analysis €71.0m RENT ROLL AT MARCH 17 €10.9m €5.4m* TOTAL MOVE-INS IN PERIOD RENT ROLL INCREASE DUE €8.5m MOVE-OUTS IN PERIOD TO ACQUISITIONS €m 72 -0.7 70 5.4 68 1.0 66 64 62 8.7 71.0 60 -8.5 58 63.0 56 2.2 54 52 50 31-Mar-16 Move Outs Capex Move-Ins Other Move-Ins Up
Slide 13: Like-for-like Valuation Movement
Like-for-like Valuation Movement Mar 17 Book Value - €m Core 720.0 Acquisitions 84.3 Non-Core 19.0 CORE Portfolio Valuation Increases TOTAL 823.3 740 V a 720 Core Portfolio l 28.4 u 700 As at 31 March 2016: a 680 34.9 Gross Yield = 8.7% t 720.0 Net Yield = 7.9% i 660 o As at 31 March 2017: n 640 656
Slide 14: Value-add Portfolio Split
Value-add Portfolio Split Book value Rent roll NOI Capital value Occupancy Rate psm Vacant space Gross yield Net yield €M €M €M psm € % € sqm Core Value-add 435.6 € 38.3 33.2 8.8% 7.6% 569 79% 5.49 156k Core Mature 368.7 € 29.7 28.2 8.0% 7.6% 716 93% 5.43 34k Non-core* 19.0 € 3.0 1.5 15.9% 7.9% 105
Slide 15: Value-add – Vacant Space Analysis
Value-add – Vacant Space Analysis Mar 2017 % SqM CAPEX ERV (post invest) of Total Space Sub Optimal Space Subject to Major Capex Programme 43,154 6,413,660 2,509,880 Recently vacated spaces up for investment 9,210 735,687 399,576 New Acquisition Vacancy 41,503 8,333,115 2,856,806 Flexilager Vacancy
Slide 16: Capex Programme
Capex Programme Completed in Period: 50k sqm VACANT SPACE FULLY REFURBISHED €5m INVESTED €2.2m ANNUALISED RENT 78% OCCUPANCY OF FULLY ROLL ADDED TRANSFORMED SPACE BUDGET ACHIEVED TO DATE Invest per Invest Rent Investment Rent improvement Rate Investment Rate Sqm sqm Occupancy per sqm € improvement O
Slide 17: Completed Acquisitions Sub-Optimal Space Opportunity
Completed Acquisitions* Sub-Optimal Space Opportunity 45k TOTAL SQM OF SUB-OPTIMAL SPACE TO BE €8.3m TO BE INVESTED 35% ROI TRANSFORMED Sub-Optimal Vacant Site Total Vacant Sqm Expected Investment - € Expected Rent - € Expected Occupancy (for Capex Plan) Markgröningen 15,963 14,180 1,166,000 445,000
Slide 18: Asset Recycling
Asset Recycling DISPOSALS EPRA Site Proceeds Sqm Occupancy Rent S/Charge Maintenance NOI NOI Munich RMS 85,000,000 58,585 88% 5,420,217 -105,484 -32,500 5,282,233 5.9% Düsseldorf 11,000,000 16,607 96% 883,612 -24,585 -8,430 850,597 7.2% Merseburg 5,870,000 13,610 74% 726,201 -209,060 -21,020 496,121
Slide 19: Asset Recycling - Notarised Acquisitions – Pictures
Asset Recycling - Notarised Acquisitions – Pictures GRASBRUNN MAHLSDORF II NEU-ISENBURG NEUSS COLOGNE * * Including one acquisition completed post period end 19 Sirius Real Estate Limited Year End Results 2017
Slide 20: Financing
Financing » New seven year €137m debt facility with BerlinHyp/PBB 1.64% INTEREST RATE syndicate to refinance the €110.4m facility and partly finance the (blended) two acquisitions Krefeld and Markgröningen; €94.5m:fixed Refinanced facility interest rate of 1.66%, €42.5m:floating rate over 3-month EU
Slide 21: Banking
Banking 31 March 2017 31 March 2016 5.8 years WEIGHTED AVERAGE DEBT EXPIRY Bank borrowings €349m €295m Net LTV 38.0% 41.5% Gross LTV 42.3% 42.8% Weighted average interest rate 1.99% 3.0% 1.99% Average cost of debt NOI interest cover 8.5x 5.7x Weighted average debt expiry 5.8years 4.7years Historical
Slide 22: Conclusion
Conclusion » Solid organic growth seen in period with LFL rents & service charge recovery improving » Capex initiatives delivering good returns, with more to come » Valuations continue to increase from organic growth & yield compression » Significant accretive acquisitions completed in the period, a
Slide 23: Appendices
Appendices 23 Sirius Real Estate Limited Year End Results 2017
Slide 24: Small and Medium Sized Businesses in Germany
Small and Medium Sized Businesses in Germany 24 Sirius Real Estate Limited Year End Results 2017
Slide 25: Case Study - Aachen
Case Study 1 - Aachen At Valuation Business Plan Target Total Expected Aachen - February 2015 Acquisition March 2017 to March 2018 Improvement Total Cost/Valuation 18,692,656 22,400,000 24,671,652 5,978,996 Invested Equity 8,990,656 - - - Annualised Rental Income 1,752,882 2,103,843 2,268,615 515,73
Slide 26: Case Study – Aachen Pictures
Case Study 1 – Aachen Pictures Before After 26 Sirius Real Estate Limited Year End Results 2017
Slide 27: Case Study - Ludwigsburg
Case Study 2 - Ludwigsburg Ludwigsburg - September At Valuation Business Plan Target to Total Expected 2015 Acquisition Mar-17 Sept-18 Improvement Total Cost/Valuation 7,442,986 9,950,000 16,120,271 8,677,285 Invested Equity 5,082,986 - - - Annualised Rental Income 969,305 1,213,794 1,570,365 601,06
Slide 28: Case Study – Ludwigsburg Pictures
Case Study 2 – Ludwigsburg Pictures Before After 28 Sirius Real Estate Limited Year End Results 2017
Slide 29: Case Study - Mahlsdorf
Case Study 3 - Mahlsdorf At Valuation Business Plan Target to Total Expected Mahlsdorf – December 2014 Acquisition Mar-17 Mar-18 Improvement Total Cost/Valuation 19,559,417 23,700,000 24,278,012 4,718,595 Invested Equity 9,665,569 - - - Annualised Rental Income 1,786,063 2,080,537 2,117,011 330,948
Slide 30: Case Study - Mahlsdorf Pictures
Case Study 3 - Mahlsdorf Pictures Before After 30 Sirius Real Estate Limited Year End Results 2017
Slide 31: Acquisitions Completed In Prior Years
Acquisitions Completed In Prior Years Acquisition March 2017 Valuation Acquisition March 2017 Rental Income Site Cost € Valuation € Increase Rental Income € Rental Income € Increase Mahlsdorf 19,573,781 23,700,000 21% 1,786,063 2,080,537 16% Potsdam 29,352,527 34,200,000 17% 2,346,622 2,554,400 9% B
Slide 32: Like-for-like Valuation Movement
Like-for-like Valuation Movement VALUE AS AT 31 MARCH 2016 OR ACQUISITION COST: Rent Vacant Space Book value NOI Gross yield Net yield Capital value €/psm Occupancy Roll sqm Core assets ^ €656.8m €57.0m €52.0m 8.7% 7.9% 593 86% 153k Acquisitions* €76.0m €7.9m €6.4m 10.4% 8.5% 490 68% 54k Non-core as
Slide 33: Property Valuations and Book Value
Property Valuations and Book Value Net Capital Value Vacant Space Book Value Rent Roll NOI Gross Yield Occupancy Yield €/Psm Sqm Core Assets €804.3m €68.0m €61.4m 8.5% 7.6% 628 85% 190k Non-core Assets* €19.0m €3.0m €1.5m 15.9% 7.9% 105 51% 82k Other -€1.5m Total € 823.3m^ € 71.0m €61.4m 8.6% 7.5% 5
Slide 34: Our Portfolio as at March 2017
Our Portfolio as at 31 March 2017 €71m Annualised rent roll 81% Occupancy 44 Total properties owned Usage Mix of Total Available SQM Office 7% 6% 26% Storage Production 26% Smartspace Other 35% 34 Sirius Real Estate Limited Year End Results 2017
Slide 35: Total Portfolio Rental Analysis – March 2017
Total Portfolio Rental Analysis – 31 March 2017 €71m RENT ROLL AS AT MARCH 2017 4,089 TOTAL NUMBER OF TENANTS AT 2.5 yrs AVERAGE LEASE LENGTH REMAINING* 81% OCCUPANCY MARCH 2017** No. Of Occupied Annual Rent Rate Per % Of Total Tenants Sqm € % Sqm € Top Ten Tenants Rent Roll GKN Aerospace Deutschlan
Slide 36: Core Portfolio Renewals Analysis to March
Core Portfolio Renewals Analysis to March 17 247k* SQM UP FOR RENEWAL €17.7m* ANNUAL INCOME UP FOR RENEWAL Core Up for Renewal (Sqm, Income & No. Tenants) 2017/18 Thousands € No. of Tenants 350 450 400 300 350 250 300 200 250 150 200 150 100 100 50 50 0 0 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oc
Slide 37: Enquiries/Viewings/Sales
Enquiries/Viewings/Sales Enquiries 1,500 1,360 1,179 1,225 1,232 ENQUIRIES 1 1,006 1,052 1,065 1,073 1,082 1,056 Average Per Month 1,027 940 1,184 Twelve months Twelve months 1,000 1,110 1,023 1,078 1,037 1,109 to March 2016 to March 2017 1,014 1,000 1,020 1,011 1,042 2015/16 794 2016/17 1,038 1,105
Slide 38: SmartSpace (SmSp) Products
SmartSpace (SmSp) Products INCREASED TO: INCREASED TO: 17k** SQM COVERTED TO SMSP IN PERIOD €1.1m INCREASE IN SMSP RENT ROLL €6.65* 68% SMSP OCCUPANCY SMSP RATE PER SQM SmSp Rate Total SmSp SQM Occupied SmSp SmSp Occupancy Annual SmSp Rent % Total SmSp PSQM € (Exc. SQM % € (Ex S/Charge) Annual Rent