Sirius Real Estate Limited · LSE:SRE
Sirius Real Estate — FY2016 Earnings Presentation
30 slides from Sirius Real Estate's earnings presentation, Mar 31, 2016
Slide 1: Year End Results 2016
Year End Results 2016 Sirius Real Estate Ltd Year ended 31 March 2016 Providing space for business
Slide 2: Who Are We
> Who Are We We are the largest branded provider of mixed-use conventional and flexible workspace in Germany Sirius Real Estate Limited Year End Results 2016 2
Slide 3: Highlights
> Highlights €104.9m* 2.2% €22.9m ** 6% 10.9% INCREASE IN LIKE-FOR-LIKE INCREASE IN LIKE-FOR-LIKE COMPLETED ACQUISITIONS RECURRING PROFIT BEFORE TAX WEIGHTED AVERAGE COST OF DEBT ANNUALISED RENT ROLL VALUATION OF THE PORTFOLIO » 8 new acquisitions for a total cost of €104.9m, NOI of €8.7m and EPRA n
Slide 4: Completed Acquisitions
> Completed Acquisitions* €104.9m 8.3% 14.6% 13.9% TOTAL COST OF 8 ACQUISITIONS EPRA NET YIELD OF ACQUISITIONS VACANCY CASH-ON-CASH YIELD RENTAL TOTAL COST PER NET OPERATING SITE INCOME AT NOI YIELD GEARED 5Y IRR INVESTMENT SQM INCOME ACQUISITION CÖLLNPARC 18,585,679 1,362 1,468,505 1,355,195 7.3% 1
Slide 5: Completed Acquisitions – Pictures
> Completed Acquisitions – Pictures* CÖLLNPARC HEIDENHEIM KREFELD* LUDWIGSBURG MAINZ MARKGRÖNINGEN* WEILIMDORF WÜRSELEN II * Including 2 acquisitions completed in May16 Sirius Real Estate Limited Year End Results 2016 5
Slide 6: Financing
> Financing 1.84% INTEREST RATE 1.66% INTEREST RATE 1.58% INTEREST RATE 1.66% INTEREST RATE NEW BANKING FACILITY NEW BANKING FACILITY NEW BANKING FACILITY REFINANCED (MAY 2016) » New 7 year €59m debt facility with SEB with a fixed interest rate of 1.84% to refinance two Macquarie facilities » New 5
Slide 7: Organic Growth - Rent Movement Analysis
> Organic Growth - Rent Movement Analysis €60.5m €10.2m €7.5m RENT ROLL INCREASE DUE RENT ROLL AT MARCH 16 TOTAL MOVE-INS IN PERIOD TO ACQUISITIONS 62.0 €m 60.0 58.0 7.5 56.0 54.0 1.1 52.0 4.9 60.5 50.0 ‐2.8 48.0 46.0 50.0 5.3 ‐5.5 44.0 42.0 40.0 31‐Mar‐15 Extra Ordinary Other Moveouts Capex Move‐In
Slide 8: Organic Growth - Rental Income Analysis
> Organic Growth - Rental Income Analysis 150,864 sqm 13,751sqm €5.33psqm NEW LETTINGS POST-YEAR LETTINGS* NEW LETTINGS RATE » Like-for-like^ and total occupancy as at March 2016 was 80% (March 2015: 79%) » Like-for-like^ rate psqm as at March 2016 increased to €4.99 (March 2015: €4.75). Company rat
Slide 9: Acquisitions Completed In Prior Year
> Acquisitions Completed In Prior Year €391k 6.1% €867k INCREASE IN RENT ROLL SINCE INCREASE IN RENT ROLL SINCE ACQUISITION CAPEX SPENT SINCE ACQUISITION ACQUISITION TOTAL ACQUISITION MARCH 16 IMPROVEMENT CAPEX ACQUISITION RENTAL RENTAL RENTAL RENTAL SINCE SITE COST € INCOME € INCOME € INCOME € INCO
Slide 10: Service Charge Recovery
> Service Charge Recovery €5.1M 87.8% IRRECOVERABLE COSTS RECOVERY IN PERIOD RECOVERY ACHIEVED MAR 10 MAR 11 MAR 12 MAR 13 MAR 14 MAR 15 MAR 16 €m €m €m €m €m €m €m SERVICE CHARGE RECOVERY 24.8 26.6 29.4 31.3 33.1 34.0 36.7 SERVICE CHARGE COSTS (35.7) (35.9) (37.6) (38.4) (39.6) (40.3) (41.8) IRRECO
Slide 11: Property Valuations & Book Value
> Property Valuations & Book Value €687.5m 10.4% 8.5% LIKE-FOR-LIKE INCREASE IN BOOK PORTFOLIO BOOK VALUE VALUE GROSS YIELD ON CORE PORTFOLIO VALUATION RENT ROLL NOI GROSS NET CAPITAL VALUE OCCUPANCY VACANT » Portfolio book value of €545.6m at 31 March 2015 (2014: €440.7m*) YIELD YIELD €/PSM SPACE S
Slide 12: Adjusted NAV per share
> NAV Growth March 15 To March 16 53.35 cps 5.87 cps 3.16 cps MARCH 16 ADJUSTED NAV SURPLUS IN VALUATION ADJUSTED EPS ON AVERAGE SHARES Adjusted NAV per share 56.0 ‐1.02 5.87 ‐1.61 54.0 52.0 50.0 3.04 48.0 ‐0.43 53.35 46.0 47.51 44.0 42.0 40.0 31‐Mar‐15 Equity raise + Recurring Surplus on Non‐recurr
Slide 13: Earnings Per Share
> Earnings Per Share 3.16 cps 3.43 cps 2.22 cps ADJUSTED EPS FFO PER SHARE DIVIDEND PER SHARE cps 10.0 9.0 8.0 7.0 6.0 ‐2.03 5.0 ‐1.35 4.0 6.81 3.0 ‐0.27 2.0 3.43 2.22 1.0 3.16 0.0 NOI Overheads Interest & tax Funds from Amortisation of Adjusted Earnings Dividend Per Operations Facility Fees & Share
Slide 14: Main Opportunities Going Forward
> Main Opportunities Going Forward » Further organic growth through capex programme » Further valuation increases through organic growth and capex programme » Further banking deals » Asset recycling – non-core and mature assets Sirius Real Estate Limited Year End Results 2016 14
Slide 15: Capex Programme
> Capex Programme 54% 51% 18 Months RENTAL INCOME RETURN ON TIME EXPECTED TO COMPLETE OF SPACE COMPLETED INVESTMENT PROGRAMME RESULTS TO DATE…. » Programme commenced in January 2014 » Increased the scope of the original 100,000 sqm programme to 200,000 sqm » Invested €9.8 million to date and complet
Slide 16: Original Capital Investment Programme
> Original Capital Investment Programme March 16 100k sqm €13.1m €4.1m 64% VACANT SPACE IDENTIFIED FOR MAJOR CAPEX PLANNED CAPEX INVESTMENT REALISED MATURE RENTS OF SPACE FULLY TRANSFORMED BUDGET ACHIEVED TO DATE Invest Rent Invest Rent SqM Investment € per SqM Improvement Rate € Occupancy Investmen
Slide 17: Other Capex Programmes
> Other Capex Programmes – March 16 101k sqm €9.6m €5.3m 45% ADDITIONAL VACANT SPACE PROJECTS IDENTIFIED FURTHER CAPEX INVESTMENT ADDITIONAL MATURE RENTS COMPLETED MAJOR SPACES VACATED IN YEAR BUDGET ACHIEVED TO DATE Invest Rent Invest Rent Investment Investment SqM per SqM Improvement Rate € Occupa
Slide 18: Valuations Potential
> Valuations Potential VALUATION METRICS AS AT MARCH 16 AS AT MAY 16 Actual C&W Estimated C&W NET OPERATING INCOME 52,474 48,176 54,500 50,176 BOOK VALUE 687,453 695,190 709,700 717,390 GROSS YIELD (based on rental income) 8.8% 8.7% 8.9% 8.8% NET YIELD 7.6% 6.9% 7.7% 7.0% POTENTIAL VALUATION UPLIFTS
Slide 19: Banking
> Banking 5.5 years* 2.2%* 7.1x* WEIGHTED AVERAGE DEBT EXPIRY AVERAGE COST OF DEBT INTEREST COVER FROM NOI » Bank borrowings as period end €294m (2015: €260m) LTV Historical Gearing Ratios ICR » LTV reduced to 42.8% at 31 March 16 and moved 70% 6.0 x to 45.8% after deals completed in May16 65% 5.5 x
Slide 20: Banking Facilities
> Banking Facilities INCOME/CASH FLOWS AS AT 31 MARCH 2016 PORTFOLIO LOAN RENTAL SCHEDULED CASH VALUE AMOUNT INCOME NOI ANNUAL INTEREST AMORTISATION CONTRIBUTION (AFTER DEBT SERVICE) €m €m €m €m € % € % BERLIN HYP/PBB 269.9 110.4 21.8 20.1 4.0 3.7% 2.7 2.5% 13.3 BERLINHYP 75.8 35.1 6.5 6.0 1.0 2.9%
Slide 21: Asset Recycling
> Asset Recycling €35m €3.89 NON-CORE ASSETS RATE PER SQM OF NON-CORE ASSETS ANNUAL BOOK VALUE BOOK VALUE SITE RENTAL NOI € OCCUPANCY RATE PSM € € NOI YIELD INCOME € NON-CORE ASSETS MERSEBURG 6,800,000 740,176 513,041 7.5% 81% 5.72 BREMEN BRINKMANN 20,043,450 2,310,260 1,605,947 8.0% 59% 2.93 BREMEN
Slide 22: Conclusion
> Conclusion EXCELLENT FINANCING TERMS COMPLETED ACCRETIVE VALUES AND DIVIDENDS COMPLETED ACQUISITIONS INCREASING » Significant accretive acquisitions completed in period and healthy pipeline for further purchases » Improved financing terms completed for acquisitions and refinancing and potential fo
Slide 23: Appendices
> Appendices Æ Sirius Real Estate Limited Year End Results 2016 23
Slide 24: Our portfolio as at March 2016
> Our portfolio as at 31 March 2016* We offer conventional lettings as well as sub-dividing large mixed-use commercial real estate assets into flexible workspaces, offering a range of high quality managed properties The portfolio is split into core** (35 assets) and non- core properties (4 assets),
Slide 25: Total Portfolio Rental Analysis
> Total Portfolio Rental Analysis – 31 March 16 €60.5m 3,596 2.6 yrs 80% TOTAL NUMBER OF TENANTS AT RENT ROLL AS AT MARCH 16 MARCH 16** AVERAGE LEASE LENGTH REMAINING* OCCUPANCY NO. OF OCCUPIED ANNUAL RENT % RATE PER TOP 10 TENANTS % OF TOTAL TENANTS SQM € SQM RENT ROLL GKN Aerospace Deutschland Gmb
Slide 26: Enquiries/Viewings/Sales
> Enquiries/Viewings/Sales enquiries 1,344 Enquiries 1,179 1,206 1,199 1,184 1 1,188 1,170 1,142 1,109 1,027 1,029 AVERAGE PER MONTH 1,000 1,078 1,056 1,135 1,110 1,122 12MONTHS 12MONTHS 794 1,002 1,000 1,023 1,020 1,011 1,042 TO MARCH 15 TO MARCH 16 1,123 1,038 2014/15 762 2015/16 500 Apr May Jun J
Slide 27: Core Portfolio Renewals Analysis
> Core Portfolio Renewals Analysis to March 17 220,477* €13.7m* SQM UP FOR RENEWAL ANNUAL INCOME UP FOR RENEWAL Thousands 250 450 No. of € Core Up for Renewal (Sqm, Income and No. Tenants) 2016/17 400 Tenants 200 350 300 150 250 200 100 150 50 100 50 0 0 TOTALS Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep
Slide 28: SmartSpace Products
> SmartSpace Products Over 79k €3.7m €6.33 62% SQM COVERTED TO SMSP RENT ROLL RATE PSM OCCUPANCY TOTAL SQM OCCUPIED SQM OCCUPANCY (%) ANNUAL RENT € % TOTAL ANNUAL RATE PSQM (EX S/CHARGE) RENT (EX S/CHARGE) SMSP OFFICE 28,519 22,107 78% 1,991,067 53% 7.51 SMSP WORKBOX 3,518 3,012 86% 220,137 6% 6.09
Slide 29: Financials – Profit Before Tax
> Financials – Profit Before Tax As at March 16 As at March 15 Movement €m €m €m Rental income 55.8 44.5 11.3 Service charge irrecoverable costs (5.1) (6.3) 1.2 Non-recoverable maintenance (1.1) (1.1) 0.0 Net rental income 49.6 37.1 12.5 Corporate costs and overheads (13.2) (10.9) (2.3) Recurring EB
Slide 30: Financials – Statement of Financial Position
> Financials – Statement of Financial Position As At March 16 As At March 15 Movement €m €m €m Assets Investment properties 687.5 545.6 141.9 Plant and equipment 1.9 1.7 0.2 Goodwill 3.7 3.7 0.0 Deferred tax asset 0.2 - 0.2 Trade and other receivables 11.9 9.5 2.4 Derivative financial instruments 0.