Sirius Real Estate Limited · LSE:SRE
Sirius Real Estate — H1 2020 Earnings Presentation
56 slides from Sirius Real Estate's earnings presentation, September 2020
Slide 1: Half Year Results - 30 Sep 2020
Sirius Real Estate Ltd Half Year Results - 30 Sep 2020
Slide 2: Investing In Industrial Business Parks In Germany
Half Year Results - 30 Sep 2020 2 Investing In Industrial Business Parks In Germany Leading owner and operator of business parks, What We Do: offices and industrial complexes in Germany
Slide 3: About Sirius
Half Year Results - 30 Sep 2020 3 About Sirius 1 Leading owner and operator Fully integrated operating Market capitalization of of business parks, out of town offices platform including 275 employees €1.0 bn (£0.9 bn) and industrial complexes in Germany in over 60 locations across Germany Not a REIT
Slide 4: About Germany
Half Year Results - 30 Sep 2020 4 About Germany 1 Several large Well diversified economy The Mittelstand autonomous markets Machinery, automotive & aviation The German SME market, over 50% Frankfurt, Berlin, Munich, Hamburg, chemical & medical of the German economy in terms of Dusseldorf, Cologne &
Slide 5: Interim Highlights
Half Year Results - 30 Sep 2020 5 Interim Highlights » Funds from operations increased by 7.4% to €29.1 million (Sep 2019: €27.1 million) €29.1m 1.82c » H1 dividend of 1.82c increase of 2.8% (Sep 2019: 1.77c*) 7.4% increase in FFO H1 dividend » 97.3% cash collection success rate €50.3m » €50.3m or 4
Slide 6: Financials – Income Statement
Half Year Results - 30 Sep 2020 6 Financials – Income Statement Sep 20 Sep 19 Movement €m €m €m Rental income 45.9 43.5 5.5% 2.4 Titanium income 2.3 0.4 1.9 Service charge irrecoverable costs (2.7) (2.7) - Non-recoverable maintenance (1.7) (1.1) (0.6) Net Operating Income 43.8 40.1 9.2% 3.7 Corporat
Slide 7: Earnings development – cents per share
Half Year Results - 30 Sep 2020 7 Earnings development – cents per share 6 cps 5.45 5 4 4.21 (0.97) (0.07) (0.44) 3 2.80 2.73 2.73 2 1.82 1 0 Profit after tax NOI Overheads Interest & Current Funds from Depreciation, Adjusted Earnings EPRA Earnings Dividend Per Share Tax Operations amortisation of a
Slide 8: Financials – Statement of Financial Position
Half Year Results - 30 Sep 2020 8 Financials – Statement of Financial Position As at Sep 20 €m As at Mar 20 €m Movement €m Assets Investment properties (owned assets) 1,225.6 1,186.2 39.4 Investment properties (leased assets) 17.7 17.8 (0.1) Investment in associate 51.6 49.5 2.1 Plant and equipment
Slide 9: NAV development - cents per share
Half Year Results - 30 Sep 2020 9 NAV development - cents per share 100 Cents per share 3.22 2.73 90 0.08 (1.76) (1.39) 80 70 85.81 84.42 81.54 60 50 Adjusted NAV per Adjusting items Recurring PAT Investment property Dividend & scrip Adjusted NAV per EPRA EPRA NTA per share share valuation gain shar
Slide 10: Titanium – Joint Venture Sirius & AXA Investment Managers
Half Year Results - 30 Sep 2020 10 Titanium – Joint Venture Sirius & AXA Investment Managers » AXA Investment Managers – trusted partner & 65% equity holder of Titanium » Sirius Real Estate – exclusive asset manager & 35% equity holder of Titanium » Seed portfolio sold into Titanium by Sirius in Jul
Slide 11: Titanium Joint Venture
Half Year Results - 30 Sep 2020 11 Titanium Joint Combined Balance Sheet Venture Titanium JV Sirius 35% Share Sirius Core Balance Sheet Combined €235.1m €m €m €m Investment property 82.3 1,243.4 1,325.7 Other assets 0.5 29.5 30.0 Total Investment Cash 3.5 128.4 131.9 Property Value Total assets 86.3
Slide 12: Income diversification through Titanium Joint Venture
Half Year Results - 30 Sep 2020 12 Income diversification through Titanium Joint Venture Sep 20 Run Post Financing Rate Run Rate* » Share of profit through 35% equity ownership Invested equity €47.4m €37.6m » Management fees through utilisation of operating platform PAT €4.0m €3.9m Management fees**
Slide 13: Organic Growth – Rental Movement Analysis
Half Year Results - 30 Sep 2020 13 Organic Growth – Rental Movement Analysis 92 €m 90 0.8 (0.7) 88 (6.7)* 4.4 86 90.3 89.2 1.1 84 82 80 31-Mar-20 Move Outs Capex Move-Ins Other Move-Ins Uplifts on Existing Disposal 30-Sep-20 Tenants * Includes €1.75m of known move-outs in recent acquisitions
Slide 14: Property Valuations & Book Value as at 30 Sep 20
Half Year Results - 30 Sep 2020 14 Property Valuations & Book Value as at 30 Sep 20 Annualised Book Value Gross Net Capital Rate Vacant Sep 20 Rent Roll NOI €m Occupancy €m Yield Yield Value psm € psm € Space sqm €m Total Portfolio 1,225.5 89.2 78.6 7.3% 6.4% 805 83.9% 6.03 237,308 Other - - (1.0) -
Slide 15: Portfolio Split – Value Add/Mature Assets
Half Year Results - 30 Sep 2020 15 Portfolio Split – Value Add/Mature Assets Capital value Mar 20 * Book value €m Rent roll €m NOI €m Gross yield Net yield Occupancy Rate psm € Vacant space sqm psm € Value-Add 680.0 54.7 46.8 8.0% 6.9% 675 80.1% 5.83 193,891 Mature 496.2 34.9 31.7 7.0% 6.4% 962 95.2
Slide 16: Like-for-Like Valuation Movement
Half Year Results - 30 Sep 2020 16 Like-for-Like Valuation Movement €m LFL Portfolio Valuation Increases Mar 20 to Sep 20 1,300 As at 31 Mar 20: ➢ Mar 20 valuation increases Gross Yield = 7.6% were supressed due to ‘material Net Yield = 6.6% uncertainty clause’ as a result 1,200 54.1 of COVID As at
Slide 17: FFO – Growth Potential
Half Year Results - 30 Sep 2020 17 FFO – Growth Potential 100 €m 19.4 90 » €100m medium term ambition 80 » Significant organic & acquisitive FFO 7.0 growth potential 5.0 70 » Deploy €70m of acquisition firepower 2.9 4.2 3.3 60 » Capture organic growth through active asset management 58.2 50 » Target
Slide 18: Balance Sheet Providing Support for Growth
Half Year Results - 30 Sep 2020 18 Balance Sheet Providing Support for Growth Complete notarised assets €124.0m Unencumbered Increase acquisition pipeline Assets (12) Invest into capex €70m acquisition fire power programmes 10x NOI Interest Cover Invest into vacated space 8x EBITDA Interest Cover 31
Slide 19: Banking
Half Year Results - 30 Sep 2020 19 Sep 20 Mar 20 Banking Bank borrowings €500.2m €485.8m Net LTV* 31.6% 32.8% 3.0 Yrs Gross LTV 40.8% 41.0% Weighted average interest rate 1.5% 1.5% Weighted average debt expiry NOI interest cover 10.3x 11.0x EBITDA interest cover 9.1x 9.1x 1.5% Weighted average debt
Slide 20: COVID-19 Summary & Outlook
Half Year Results - 30 Sep 2020 20 COVID-19 Summary & Outlook » Lockdown in Germany is much lighter than it is in the UK and will probably be extended for longer » Sirius will continue to work closely with its tenants to actively manage the situation throughout the crisis and beyond » Sirius has est
Slide 21: Conclusion
Half Year Results - 30 Sep 2020 21 Conclusion » Company successfully traded through a challenging six-month period supported by good cash collection rates and increased levels of enquiries » Strong balance sheet with 31.6% net LTV and €112.4m of unrestricted cash » Stable rent roll and occupancy lev
Slide 22: Appendices
Half Year Results - 30 Sep 2020 22 Appendices ➢ Portfolio Diversity & Resilience (See Appendix I, page 23 - 33) • Well diversified portfolio in terms of geography, industry type, size of tenant, type of space (usage) • 7.6% of rent roll made up of Governmental tenants • 97.3% cash collection rate th
Slide 23: Portfolio Diversity & Resilience
Half Year Results - 30 Sep 2020 23 Appendix I Portfolio Diversity & Resilience
Slide 24: Well diversified portfolio
Half Year Results - 30 Sep 2020 24 Well diversified portfolio 5,000+ Usage split Tenant split by revenue Tenants 7% Office Top 50 Anchor Tenants 6% 32% Storage 52% 42% Industrial SmartSpace SME Tenants 22% Smartspace 6% Other SME Tenants 3.0 Yrs 33% Other Portfolio WALT No. of tenants @ Occupied Ann
Slide 25: Diversified Portfolio
Half Year Results - 30 Sep 2020 25 Diversified Portfolio No. Of % of Total Rate Annualised Book Sep 20 Occupancy Portfolio Gross Yield Properties Sqm m psm € Rent €m By Rent Value €m Frankfurt 14 358.1 84.4% 6.17 22.4 25.1% 291.0 7.7% Berlin 4 103.4 97.7% 7.27 8.8 9.9% 135.6 6.5% Stuttgart 6 251.3 9
Slide 26: Portfolio Renewals Analysis to Mar 21
Half Year Results - 30 Sep 2020 26 Portfolio Renewals Analysis to Mar 21* € Up for Renewal (Sqm, Income & No. Tenants) 2020/21 Thousands No. Tenants 200 160 180 140 160 120 140 100 120 100 80 80 60 60 40 40 20 20 0 0 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 TOTALS Sqm 20,414 10,158 11,690 32,524 7,
Slide 27: SmartSpace (SmSp) Products
Half Year Results - 30 Sep 2020 27 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 4,399 1,822 41% 432 7% 19.78 SMSP Of
Slide 28: Sirius Resilience – H1 Enquiries & Sales - Month Comparison
Half Year Results - 30 Sep 2020 28 Sirius Resilience – H1 Enquiries & Sales - 6 Month Comparison 6 Month Enquiries Comparison to Sep 19/Sep 20 1,500 1,000 » 17.4% year on year increase in enquiries in the period 500 0 » 1,381 average enquiries per month in the period Apr May Jun Jul Aug Sep No. of e
Slide 29: Enquiries/Viewings/Sales – 2 Yr Comparison Oct 18 – Sep 20
Half Year Results - 30 Sep 2020 29 Enquiries/Viewings/Sales – 2 Yr Comparison Oct 18 – Sep 20 enquiries Average for 12 Months ENQUIRIES 1,750 1,622 1,404 1,417 1,368 1,392 1,477 Oct 19 - Sep 20 Increase on 12 month 1,325 1,279 1,184 1,202 1,248 1,242 No. of Enquiries Oct 18/Sep 19 period last year 1
Slide 30: Sirius Resilience – H1 Cash Collection
Half Year Results - 30 Sep 2020 30 Sirius Resilience – H1 Cash Collection €m Cash collection Apr 20 – Sep 20 14.00 100.0% » Experienced cash collection team 98.0% 12.00 96.0% » 97.3% cash collection success rate for the 10.00 94.0% period 8.00 92.0% 6.00 90.0% » €70.5m invoiced in period 88.0% 86.0%
Slide 31: Banking – Summary
Half Year Results - 30 Sep 2020 31 Banking – Summary Outstanding Interest Annual Interest Maturity Banking Facility debt Sep 20 Rate €'000 Date €'000 Bayerische Landesbank * 22,844 1.66% 379 Oct-20 SEB AG 53,100 1.84% 977 Sep-22 1.50 % Berlin Hyp AG/Deutsche Pfandbriefbank AG 60,571 1.66% 1,005 Apr-
Slide 32: Debt Maturity
Half Year Results - 30 Sep 2020 32 Debt Maturity €22.8m Debt Maturity €m Bayern LB facility repaid 250.0 post period end 200.0 67% Fixed rate debt 150.0 237.4 100.0 27% 50.0 95.6 91.3 Floating rate debt fixed via SWAP 53.1 22.8 0.0 <12 months 12-24 months 24-36 months 36-48 months >48 months 6% Floa
Slide 33: Banking
Half Year Results - 30 Sep 2020 33 Banking Facility Covenants Loan Expiry Date Sep 20 Position Hard Covenant ICR* DSCR* DYR* LTV ** ICR DSCR DYR LTV Bayerische Landesbank n/a 7.01x n/a 32.0% n/a 2.50x n/a 65.0% Oct 20 SEB AG 8.06x n/a n/a 32.9% 4.30x n/a n/a 70.0% Sep 22 SEB AG II n/a n/a 10.46% 45.
Slide 34: Portfolio Growth
Half Year Results - 30 Sep 2020 34 Appendix II Portfolio Growth
Slide 35: SRE – Key Metrics Development
Half Year Results - 30 Sep 2020 35 SRE – Key Metrics Development Sep-20 Mar-20 Mar-19 Mar-18 Mar-17 Mar-16 Mar-15 Portfolio book value (€m) 1,225.5 1,186.2 1,132.5 967.3 823.3 687.4 545.6 Rent roll (€m) 89.2 90.3 87.8 79.5 71.0 60.5 50.0 NOI (€m) 77.6 78.0 76.7 66.4 61.4 52.5 42.7 FFO (€m) 58.2* 55.
Slide 36: Organic Growth – Rental Income Analysis
Half Year Results - 30 Sep 2020 36 Organic Growth – Rental Income Analysis Site Sep-20 Mar-20 Sep-19 Difference Rent Roll €89.2m €90.3m €78.5m (1.2)% Rent Roll (Disposals) (€0.7m) - (€11.3m)* - - Rent Roll (Acquisitions) - €9.0m - - - Rent Roll (LFL) €89.2m €89.6m €76.5m** (0.4)% Occupancy (LFL) 83.
Slide 37: Transactions – No Acquisitions Completed in H1
Half Year Results - 30 Sep 2020 37 Transactions – No Acquisitions Completed in H1 Annualised Date Total Proceeds Annualised Disposal Disposal EPRA Net Initial Site Completed €m Price per sqm € Disposal Rental NOI €m Occupancy Yield * Income €m Disposals Completed: Stuttgart-Weilimdorf Apr-20 10.1 1,
Slide 38: Acquisitions Owned >1yr – Returns Achieved
Half Year Results - 30 Sep 2020 38 Acquisitions Owned >1yr – Returns Achieved Acquisition Sep-20 34 Total Cost €448.5m €192.4m Valuation €640.9m 43% Assets acquired & owned for > 1 year Gross Yield 8.9%* Gross Yield 7.6% Rent Roll €37.3m €11.7m Rent Roll €49.0m 31% 3.7 yrs. Occupancy 70% Occupancy 8
Slide 39: Acquisitions Owned >1yr – Valuation & Rent Roll per Financial Year Acquired
Half Year Results - 30 Sep 2020 39 Acquisitions Owned >1yr – Valuation & Rent Roll per Financial Year Acquired Sep 20 Total Acq. Sep 20 Valuation Acq. Rental Annualised Rental Acq. Sep 20 Occupancy Capex Since Financial Year Annualised Rental Cost € Valuation € Increase Income € Income Increase € Oc
Slide 40: Accretive Asset Recycling
Half Year Results - 30 Sep 2020 40 Accretive Asset Recycling Core Disposals (20) * Mar 12 - Sep 20 Disposal Value €288.2m €325.0m Acquisitions (38) Sep-20 Sep 14 - Sep 20 Price Gross Yield 7.1% Uplift 13% Total Cost €546.6m Valuation €739.6m Uplift 35% Total Sqm 401k Occupancy 85% Gross Yield 8.8%**
Slide 41: Vacant Space Analysis
Half Year Results - 30 Sep 2020 41 Vacant Space Analysis Sep-20 Ending Position Total space – sqm 1.47m Occupancy 84% Occupied space – sqm 1.23m Vacant space - sqm 0.24m Sep-20 Capex ERV (post invest) % of Total space Sqm Sub optimal space €m €m Original capex programme 0% 3,519 0.6 0.1 New acquisit
Slide 42: Opportunity within Vacancy
Half Year Results - 30 Sep 2020 42 Opportunity within Vacancy 33k sqm (2%) Structural vacancy Sub-optimal space % of total ERV Sqm Investment €m space €m Original capex investment programme 3,519 0% 0.6 0.1 New acquisition capex investment programme 43,232 3% 13.2 4.2 Vacated space 38,014 3% 9.9 2.9
Slide 43: Original Capex Programme
Half Year Results - 30 Sep 2020 43 Original Capex Programme Completed in period 0.1k sqm €0.2m 50%+ 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 44: New Acquisition Capex Programme
Half Year Results - 30 Sep 2020 44 New Acquisition Capex Programme Completed in Period 25.5k sqm €5.7m €1.1m 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 Investment
Slide 45: ESG
Half Year Results - 30 Sep 2020 45 Appendix IV ESG
Slide 46: Embedding Sustainability Into Our Business
Half Year Results - 30 Sep 2020 46 Embedding Sustainability Into Our Business Environment » Currently 86% renewable energy supplied to 91.55 % of our portfolio » From January 2021 – 99.4 % of electricity consumption of portfolio 100% certified green electricity sources » Analysing Scope 1 & 2 of GHG
Slide 47: Case Studies
Half Year Results - 30 Sep 2020 47 Appendix IV Case Studies
Slide 48: Case Study – Hallbergmoos: Site Plan & Impression
Half Year Results - 30 Sep 2020 48 Case Study 1 – Hallbergmoos Site Plan & Impression
Slide 49: Case Study – Hallbergmoos: Property Overview
Half Year Results - 30 Sep 2020 49 Case Study 1 – Hallbergmoos Property Overview » Modern office building in the immediate vicinity of Munich International Airport with a total of 18,552 sqm including 8,999 sqm of vacant space providing value add opportunity and acquired at an EPRA NIY of 3.3% » Ass
Slide 50: Case Study – Hallbergmoos: Financials & Returns To Date
Half Year Results - 30 Sep 2020 50 Case Study 1 – Hallbergmoos Financials & Returns To Date 3.25 Yr Expected Returns Returns Analysis €m Acquisition 3 Yr Business Total Expected Retained Profit *** 4.0 Sep 20 Dec 19 plan target Improvement Valuation Increase 12.8 Total Cost/Valuation € 20.2m € 20.5m
Slide 51: Case Study – Alzenau: Site Plan & Impression
Half Year Results - 30 Sep 2020 51 Case Study 2 – Alzenau Site Plan & Impression
Slide 52: Case Study – Alzenau: Property Overview
Half Year Results - 30 Sep 2020 52 Case Study 2 – Alzenau Property Overview » Well located industrial business park acquired at highly attractive gross yield of 9.8% due to required capex investment » Stable income streams from high occupancy and well covenanted tenants » Financed by fully hedged fa
Slide 53: Case Study – Alzenau: Financials & Returns To Date
Half Year Results - 30 Sep 2020 53 Case Study 2 – Alzenau Financials & Returns To Date 3.25 Yr Expected Returns Returns Analysis €m Business Total Expected Retained Profit *** 12.6 Acquisition Sep 20 plan target Improvement Dec 19 Valuation Increase 15.3 Capex (3.5) Total Cost/Valuation € 44.5m € 46
Slide 54: Share Register
Half Year Results - 30 Sep 2020 54 Appendix V Share Register
Slide 55: Share Register: Top Shareholders
Half Year Results - 30 Sep 2020 55 Share Register Top 10 Shareholders Top 10 Shareholders Shares (m) % Holding Aberdeen Standard Investments 131.2 12.5% BlackRock 112.2 10.7% BMO Global Asset Management / Thames River 51.4 4.9% Public Investment Corporation 46.1 4.4% Mstead Limited / Homestead Group
Slide 56: Disclaimer
Half Year Results - 30 Sep 2020 56 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 ris