Sirius Real Estate Limited · LSE:SRE
Sirius Real Estate — FY2019 Earnings Presentation
46 slides from Sirius Real Estate's earnings presentation, Jun 3, 2019
Slide 1: Year End Presentation - 31 March 2019
1 Sirius Real Estate Ltd Year End Presentation - 31 March 2019
Slide 2: Sirius Assets
Year End Results – 31 March 2019 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 2019 3 Highlights Highlights 61.5% » Total profit before tax increased by 61.5% to €144.7 million (2018: €89.6m) Increase in PBT » Continued strong organic growth in like-for-like annualised rent roll with an increase of 7.1% (2018: 6.2%), total annualised rent roll incre
Slide 4: Financials – Income Statement
Year End Results – 31 March 2019 4 Financials – Income Statement As at Mar 19 As at Mar 18 Movement €m €m €m Rental income 83.6 71.1 12.5 Service charge irrecoverable costs (5.3) (5.7) 0.4 Non-recoverable maintenance (2.3) (1.9) (0.4) Net Operating Income 76.0 63.5 12.6 Corporate costs and overheads
Slide 5: Earnings Per Share
Year End Results – 31 March 2019 5 Earnings Per Share cps 14 12 10 8 12.78 (1.93) 6 (0.83) (0.21) (0.12) 7.56 4 4.80 4.59 4.47 2 3.36 0 Basic EPS NOI Overheads Interest & Current Funds from Amortisation of Adjusted Earnings Adjusting items EPRA Earnings Dividend Per Tax Operations Facility Fees & af
Slide 6: Financials – Statement of Financial Position
Year End Results – 31 March 2019 6 Financials – Statement of Financial Position As at Mar 2019 As at Mar 2018 Movement €m €m €m Assets Investment properties (including assets held for sale) 1,132.5 931.2 201.3 Prepayments for investment properties 0.4 35.6 (35.2) Plant and equipment 3.4 3.1 0.3 Good
Slide 7: NAV Growth March 2019
Year End Results – 31 March 2019 7 NAV Growth March 2019 80 (3.13) (0.35) 9.77 70 (1.70) 4.52 60 Adjusted NAV per share (c) 50 40 75.17 74.82 65.71 30 20 10 0 Adjusted NAV Share awards Recurring profit Surplus on Scrip & Cash Adjusted NAV EPRA * EPRA Net Assets per share and non- before tax revaluat
Slide 8: Completed & Notarised Acquisitions
Year End Results – 31 March 2019 8 Completed & Notarised Acquisitions Annualised €116.4m Site Date Acquired/ Total Investment Cost per sqm Acquisition Annualised Acquisition NOI Acquisition EPRA Net Initial Total Cost of 8 Acquisitions €m € Rental Income Occupancy Yield Notarised €m Completed or Not
Slide 9: Completed Acquisitions
Year End Results – 31 March 2019 9 Completed Acquisitions Friedrichsdorf Bochum Friedrichsdorf Fellbach Fellbach Mannheim Bochum Mannheim
Slide 10: Completed & Notarised Acquisitions
Year End Results – 31 March 2019 10 Completed & Notarised Acquisitions Buxtehude Düsseldorf II Saarbrücken Düsseldorf II Buxtehude* Teningen* Saarbrücken Teningen * Notarised in the period, completed post period
Slide 11: Organic Growth – Rental Income Analysis
Year End Results – March 2019 11 Organic Growth – Rental Income Analysis Site Mar-19 Mar-18 Change Rent Roll €87.8m €79.5m 10.4% Rent Roll (Disposals) * (€3.0m) - - Rent Roll (Acquisitions) ** €5.8m - - Rent Roll (LFL) *** €82.0m €76.5m 7.1% Occupancy (LFL) *** 85.8% 83.7% 2.1% Occupancy 86.1% 79.2%
Slide 12: Organic Growth – Rental Movement Analysis
Year End Results – 31 March 2019 12 Organic Growth – Rental Movement Analysis 90 (3.0) 5.8 €m 85 2.2 80 11.6 75 (11.6) 87.8 79.5 70 3.3 65 60 31-Mar-18 Move Outs Capex Move-Ins Other Move-Ins Uplifts on Acquisitions Disposal 31-Mar-19 Existing Tenants
Slide 13: Like-for-Like Valuation Movement
Year End Results – 31 March 2019 13 Like-for-Like Valuation Movement €m Portfolio Valuation Increases* 1.100 57.4 EXISITNG PORTFOLIO Book Value 1.000 As at 31 Mar 2018: 70,8 Mar 19 - €m 900 Gross Yield = 8.1% Existing Portfolio 1,068.3 1.068,3 Net Yield = 7.4% Acquisitions 64.2 800 940.1 As at 31 Ma
Slide 14: Value-Add Portfolio Split
Year End Results – 31 March 2019 14 Value-Add Portfolio Split Capital Value Mar-18 * Book Value €m Rent Roll €m NOI €m Gross Yield Net Yield Occupancy Rate psm € Vacant Space sqm psm € Value-Add 523.2 43.3 37.6 8.3% 7.2% 570 76.5% 5.71 194,384 Mature 416.9 33.2 32.2 8.0% 7.7% 764 95.1% 5.52 25,681 O
Slide 15: Value-Add – Vacant Space Analysis
Year End Results – 31 March 2019 15 Value-Add – Vacant Space Analysis Mar-19 Ending Position Total Space – sqm 1.5m Occupancy * 86% Occupied Space - sqm 1.3m Vacant Space - sqm 0.2m Mar-19 Capex ERV (post invest) % of Total Space Sqm Sub Optimal Space €m €m Original Major Capex Programme 9,493 1.8 0
Slide 16: Major Moveouts - Acquisition sites
Year End Results – 31 March 2019 16 Major Moveouts - Acquisition sites Impact of moveouts FY 18/19 At Acquisition Re-let at Mar 19 Move Out Rent Rate Rent Rate Capex Tenant Site Sqm Sqm Date €m € €m € € Dräger Safety AG & Co. KGaA Krefeld I Apr 18 4,760 0.6 9.80 3,422 0.2 5.01 33,692 Toshiba TEC Eur
Slide 17: Original Capex Programme
Year End Results – 31 March 2019 17 Original Capex Programme Completed in Period 8.8k sqm €5.1m €1.7m Vacant Space Refurbished in Period Invested in Period Annualised Rental Income Increase Budget Achieved to date Capex Investment Programme Rent Rent Progress Investment Invest psm Rate Investment In
Slide 18: New Acquisition Capex Programme
Year End Results – 31 March 2019 18 New Acquisition Capex Programme Completed in Period 28.8k sqm €9.1m €1.6m Vacant Space Refurbished in Period Invested in Period Annualised Rental Income Increase Budget Achieved to date Capex Investment Programme Rent Rent Progress Investment Invest Rate Investmen
Slide 19: Potential of FY 18/19 Acquisitions
Year End Results – 31 March 2019 19 Potential of FY 18/19 Acquisitions Business Plan 3 Yr Acquisition Potential €46.2m 38% Total Cost €116.4m Valuation €162.6m NOI €8.1m €3.3m NOI €11.4m 40% Occupancy 71% Occupancy 89% 18% 3 Yr Returns €m Investment €m 27.4* Operating Profit Equity Invested 57.7 46.
Slide 20: Banking
Year End Results – 31 March 2019 20 Banking Bank borrowings Mar-19 €386.1m Mar-18 €373.1m Net LTV* 32.4% 31.9% 4.3 Yrs Gross LTV 34.1% 38.6% Weighted Average Debt Expiry Weighted average interest rate 2.0% 2.0% NOI interest cover 10.1x 9.5x Weighted average debt expiry 4.3 Years 5.2 Years LTV & ICR
Slide 21: Joint Venture – Summarised
Year End Results – 31 March 2019 21 Joint Venture – Summarised Sirius continues Selective process of to operate and identifying partner manage the assets Sale of 65% interest 65% of 5 assets sold in five SPVs and new Joint with implied value of €168m Venture agreement created and gross yield of 6.2%
Slide 22: Conclusion
Year End Results – 31 March 2019 22 Conclusion » Total shareholder accounting return of 19.3% for the period » Strong organic annualised rent roll growth of 7.1% » Significant valuation increase from organic growth & yield compression » Portfolio valued on a defensive 7.8% gross yield » FFO per shar
Slide 23: Gross Asset Value looking back
Year End Results – 31 March 2019 23 Gross Asset Value looking back Gross Asset Value Growth »Sept 13 – Gross Asset Value € 1.200 Millions € 1.100 €434.3m € 1.000 € 900 »Mar 19 – Gross Asset Value € 800 €1,136.2m € 700 € 600 »What next?..... € 500 € 400
Slide 24: FFO Looking forward
Year End Results – 31 March 2019 24 FFO Looking forward FFO €m Funds From Operations (€m) » Medium term ambition €100m 120 100.0 » Reinvestment of JV proceeds 100 80 » Share of profit & fee income 60 53.1 56.2 48.4 40 37.1 38.4 » Impact of capex investment 25.0 programmes over next three years 20 14
Slide 25: FFO Looking forward – the Building Blocks
Year End Results – 31 March 2019 25 FFO Looking forward – the Building Blocks 100 Consider new FFO (€m) acquisitions 90 Realise organic 80 growth 70 Complete capex investment 60 programmes Reinvest proceeds 100.0 50 from JV 40 Complete current asset recycling 30 48.4 activity 20 10 0 FFO FFO March 1
Slide 26: Appendices
Year End Results – 31 March 2019 26 Appendices
Slide 27: Share Price Tracker
Share Price Tracker Year End Results – 31 March 2019 27 1 Mar 19 Period TSR 3M 12M 5yr 26 Jun 17 Announced JV Final results for FY 4 Jun 18 with AXA IM – Sirius 5.66% 7.86% 185.90% 2017, with 54% Final results for FY Real Assets FTSE All Share 9.41% 6.31% 34.30% 6 Mar 17 increase in 2018, EPRA NAV 7
Slide 28: Case Study – Dresden: Site Plan & Impression
Year End Results – 31 March 2019 28 Case Study 1 – Dresden Site Plan & Impression
Slide 29: Case Study – Dresden: Property Overview
Year End Results – 31 March 2019 29 Case Study 1 – Dresden Property Overview – to update » The business park in Dresden, acquired in September 16, provides 58,000 sqm of office and warehouse space spread across 19 buildings, with land available for further development » Financed by a seven year fixe
Slide 30: Case Study – Dresden: Financials & Returns To Date
Year End Results – 31 March 2019 30 Case Study 1 – Dresden Financials & Returns To Date Business Plan Expected 5 year At Actual Return Analysis Return to Sept 21 Target Total Expected Improvement €m Acquired Sept-16 Acquisition As At Mar 19 To Sept 21 Retained Profit ** 12.2 Total Cost/Valuation € 2
Slide 31: Case Study – Dresden: Before After
Year End Results – 31 March 2019 31 Case Study 1 – Dresden Before After
Slide 32: Case Study – Neuss: Site Plan & Impression
Year End Results – 31 March 2019 32 Case Study 2 – Neuss Site Plan & Impression
Slide 33: Case Study – Neuss: Property Overview
Year End Results – 31 March 2019 33 Case Study 2 – Neuss Property Overview » Well located office building, acquired in Sept 17, providing 18,000 sqm of lettable space with opportunity to grow occupancy from 38% at acquisition date » Financed by a seven year fixed rate facility at 1.48% interest rate
Slide 34: Case Study – Neuss: Financials & Returns To Date
Year End Results – 31 March 2019 34 Case Study 2 – Neuss Financials & Returns To Date Business Plan Expected 3 year At Actual Returns Analysis Return to Sept 20 Target Total Expected €m Improvement Acquired Sept-17 Acquisition As At Mar 19 To Sept 20 Retained Profit ** 1.8 Valuation Increase 8.4 Tot
Slide 35: Case Study – Neuss: Before After
Year End Results – 31 March 2019 35 Case Study 2 – Neuss Before After
Slide 36: Acquisitions Completed & Owned >1yr – Returns Achieved
Year End Results – 31 March 2019 36 Acquisitions Completed & Owned >1yr – Returns Achieved Acquisition Mar-19 27 Total Cost €356.2m €125.1m Valuation €481.3m 35% Assets Acquired and Owned for > 1 year Gross Yield 8.8%* Gross Yield 7.7% €7.6m Rent Roll €29.3m Rent Roll €36.9m 21% 2.9 yrs Occupancy 70
Slide 37: Acquisitions Completed in Prior Years (>1yr) – Valuation & Rent Roll
Year End Results – 31 March 2019 37 Acquisitions Completed in Prior Years (>1yr) – Valuation & Rent Roll Total Acq. Mar 19 Valuation Acq. Rent Roll Mar 19 Rent Rent Roll Acq. Mar 19 Occupancy Capex Since Site Cost €m Valuation €m Increase €m €m Roll €m Increase €m Occupancy Occupancy Increase Acq. €
Slide 38: Acquisitions Completed in Prior Years (>1yr) – Valuation & Rent Roll
Year End Results – 31 March 2019 38 Acquisitions Completed in Prior Years (>1yr) – Valuation & Rent Roll
Slide 39: Property Valuations & Book Value as at 31 March 2019
Year End Results – 31 March 2019 39 Property Valuations & Book Value as at 31 March 2019 Annualised Book Value Gross Net Capital Rate Vacant Mar-19 Rent Roll NOI €m Occupancy €m Yield Yield Value psm € psm € Space sqm €m Total Portfolio 1,132.5 87.8 78.4 7.8% 6.9% 717 86.1% 5.78 203,917 Other - - (1
Slide 40: Portfolio at a glance - March 19
Year End Results – 31 March 2019 40 Properties Portfolio at a glance - March 19 No. Of Annualised % of Book Total Rate Gross Mar-19 Occupancy Rent Roll Portfolio Value Properties Sqm m psm € Yield €m By Rent €m Frankfurt 14 0.3 87.4% 5.99 20.1 23% 258.8 7.8% Berlin 6 0.2 93.7% 5.86 13.5 15% 190.8 7.
Slide 41: Total Portfolio Rental Analysis – 31 March 2019
Year End Results – 31 March 2019 41 Properties Total Portfolio Rental Analysis – 31 March 2019 Tenant Split by Revenue 2.8Yrs 4,818 Top 50 Anchor Tenants 50% 44% Portfolio WALT No. Of Tenants SmartSpace SME Tenants 6% Usage Split Other SME Tenants Historical Rental Movement Annual Office CAGR 8% (Ex
Slide 42: Portfolio Renewals Analysis to March 2020
Year End Results – 31 March 2019 42 Properties Portfolio Renewals Analysis to March 2020* Up for Renewal (Sqm, Income & No. Tenants) 2019/20 No. Tenants €m 4 600 500 3 400 2 300 200 1 100 0 0 Apr 19 Mai 19 Jun 19 Jul 19 Aug 19 Sep 19 Okt 19 Nov 19 Dez 19 Jan 20 Feb 20 Mrz 20 TOTALS Sqm 22.481 10.304
Slide 43: Enquiries/Viewings/Sales
Year End Results – 31 March 2019 43 Enquiries/Viewings/Sales 1.395 1.472 Average per Month ENQUIRIES 1.500 enquiries 1.404 1.325 1.308 1.214 Twelve months 1.224 1.208 1.250 1.244 1.120 1.032 1.413 1.237 1.279 1.230 1.184 to Mar 19 1.000 1.196 1.179 1.112 1.103 1.055 1.023 17/18 922 1,194 18/19 500 A
Slide 44: SmartSpace (SmSp) Products
Year End Results – 31 March 2019 44 SmartSpace (SmSp) Products Annualised Rent % of Total Annualised Rate per sqm (excl. Smartspace Product Type Total sqm Occupied sqm Occupancy % Roll (excl. Service SmSp Rent Roll Service charge) € Charge) € First Choice Office 2,795 1,358 49% 329,000 6% 20.20 SMSP
Slide 45: Banking
Year End Results – 31 March 2019 45 Banking INCOME/CASH FLOWS AS AT 31 MARCH 2019 Portfolio Annualised Scheduled Annual Cash Loan Amount NOI Loan Expiry Date Value Rent Roll Annual Interest Amortisation Contribution (after debt €m €m €m €m €m % € % service) €m Deutsche Genossenschafts-Hypothekenbank
Slide 46: Disclaimer
Year End Results – 31 March 2019 46 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