Sirius Real Estate Limited · LSE:SRE

Sirius Real Estate — H1 FY24 Earnings Presentation

54 slides from Sirius Real Estate's earnings presentation, September 2023

  1. Slide 1: Half Year Results Presentation

    HALF YEAR RESULTS PRESENTATION 30TH SEPTEMBER 2023 www.siriusfacilities.com

  2. Slide 2: Owner and operator of multi-let industrial and business parks in Germany and the UK

    Owner and operator of multi-let industrial and business parks in Germany and the UK 2 Öhringen | Germany Willenhall | UK Sep 2023 Half Year Results

  3. Slide 3: Germany and UK at a glance

    Germany UK 3  69 sites, clusters around the edge of all 7 major cities  70 sites around the edge of major cities  5,754 tenants across those sites  3,494 tenants  Ranging from blue chip (GKN, Honeywell) to 100‘s of  Typically flexible terms with higher rate in return for flexibility SME's  £3

  4. Slide 4: Interim Results FY23/24

    4 FY23/24 INTERIM RESULTS Sep 2023 Half Year Results

  5. Slide 5: Highlights – Period ended September 2023

    Highlights – Period ended 30 September 2023 Rental growth delivers further FFO and Dividend Increase 5 Financial Performance FFO: €53.0m | +9.3% (2022: €48.5m) EPRA NTA per share: 108.51c | +0.4% (Mar 2023: 108.11c) +16.7% +11.1% +0.6% EPRA EPS of 4.12c Increase in Dividend Adjusted NAV (2022: 3.53c

  6. Slide 6: Consolidated Income Statement

    Consolidated Income Statement Group | Adjusted PBT +20% 6 Sep 23 Sep 22 Movement €m €m % €m Rental Income 89.1 79.2 13% 9.9 Titanium income 3.5 3.5 - Service charge irrecoverable costs (6.0) (3.7) (2.3) Non-recoverable maintenance (3.5) (2.5) (1.0) Net Operating Income 83.1 76.5 9% 6.6 Corporate cos

  7. Slide 7: Earnings & Dividend per share

    Earnings & Dividend per share 7 13.48 6.44 (2.58) 11.02 4.71 (0.99) (1.65) (0.58) (0.4) 6.79 (0.21) 0.16 (0.52) 3.14 6.39 5.84 2.93 5.61 5.87 5.63 3.09 4.41 3.80 2.04 Note: All items in the chart above are calculated on the weighted average number of shares in issue during the period Sep 2023 Half Y

  8. Slide 8: Consolidated Statement of Financial Position

    Consolidated Statement of Financial Position 8 Sep 23 Mar 23 Movement €m €m % €m Assets Investment properties (owned assets) 2,112.8 2,107.3 0% 5.5 Investment properties (leased assets) 24.0 24.5 (2)% (0.5) Investment in associate 69.3 71.0 (2)% (1.7) Plant and equipment 11.3 11.3 - - Trade and othe

  9. Slide 9: Adjusted NAV per share growth

    Adjusted NAV per share growth 9 c Sep 2023 Half Year Results *EPRA adjustments add back deferred tax relating to investments in associates and intangible assets. **Adjusting items includes property valuation gains relating to investment in associates and non-recurring items.

  10. Slide 10: Financing | No significant re-financings until 2026

    Financing | No significant re-financings until 2026 10 1.4%** Average cost of debt Sep 23 Unsecured Borrowings €715.0m Secured Borrowings €239.2m Total Borrowings €954.2m 4.2 years*** Weighted average debt expiry Net LTV* 40.8% Weighted average interest rate** 1.4% Interest cover at EBITDA level 8.6

  11. Slide 11: Organic Growth | Germany

    Organic Growth | Germany 11 Site Sep 23 Sep 22 Change Rent Roll (LFL) €122.5m €114.5m 7.0% Occupancy (LFL) 83.8% 83.8% 0.0% Rate psm (LFL) €7.02 €6.55 7.2% New Lettings* 77,421sqm 79,872sqm (3.1)% New Letting Rate psm* €9.30 €8.63 7.8% Move-Outs Rate psm* €7.67 €7.40 3.6% Move-Outs* 82,709sqm 91,963

  12. Slide 12: Enquiries | Viewings | Sales | Germany

    Enquiries | Viewings | Sales | Germany For the Period Apr 23 – Sep 23 12 Enquiries/Viewings/Sales Averages 1,800 250 Apr 23 – Sep 23 1,600 Enquiries 1,317 200 Viewings 800 1,400 1,200 Sales 162 150 1,000 800 100 600 400 50 Conversion 200 Enquiries Viewings 60.7% 12.3% 0 0 Apr-23 May-23 Jun-23 Jul-23

  13. Slide 13: Like-for-Like Valuation Movement | Germany

    Like-for-Like Valuation Movement | Germany Rental Increases more than offsetting c.10 bps yield expansion 13 m€ Portfolio Valuation Increases Existing Portfolio 1,800 As at 31 Mar 2023: Gross Yield = 7.3% Net Yield = 6.5% As at 30 Sep 2023: (15.7) 1,700 36.0 Gross Yield = 7.4% (90.0) Net Yield = 6.6

  14. Slide 14: Property Valuations & Book Values | Germany

    Property Valuations & Book Values | Germany 14 Book Value Annualised NOI Gross Net Capital Rate Vacant Space Sep 23 Occupancy €m * Rent Roll €m €m Yield Yield Value psm € psm € sqm Total Portfolio 1,701.1 125.5 114.5 7.4% 6.7% 924 83.3% 7.06 296,446 Other - - (1.8) - - - TOTAL 1,701.1 125.5 112.7 7.

  15. Slide 15: Organic Growth Plan | Germany

    Organic Growth Plan | Germany Transition Assets into Mature 15  Organic growth plan focused on investment into Value-Add Assets  Increased Income AND Capital Value Capital value Sep-23* Book value €m^ Rent roll €m NOI €m Gross yield Net yield Occupancy Rate psm € Vacant space sqm psm € Value-Add 1

  16. Slide 16: Investment Capex Programmes

    Investment Capex Programmes 16  Previous Sirius vacant space capex programmes have seen c€73.8m invested to achieve €27.6m rent improvement  37% ROI on capex spend  Current capex programmes are focused on:  Vacant space: - Planned investment €3.3m in FY24 - Target rental ROI: >35%  New Acquisit

  17. Slide 17: Organic Growth | UK

    Organic Growth | UK 17 Site Sep 23 Sep 22 Change Rent Roll LFL £50.7m £46.5m 9.0% Occupancy (LFL) 87.7% 87.0% 0.7% Rate psft (LFL) £13.78 £12.64 9.0% Move-Ins* 475,952sqft 392,927sqft 21.1% Move-Ins Rate psqft* £16.43 £20.30 (19.1)% Move-Outs Rate psqft* £18.08 £15.58 16.0% Move-Outs* 418,996sqft 54

  18. Slide 18: Enquiries | Viewings | Sales | UK

    Enquiries | Viewings | Sales | UK For the Period Oct 22 – Sep 23 18 Enquiries/Viewings/Sales Averages 1,800 140 Oct 22 – Sep 23 1,600 120 Enquiries 1,379 1,400 100 Viewings 361 1,200 Sales 100 1,000 80 800 60 600 40 400 20 Conversion 26.2% 200 Enquiries Viewings 7.3% 0 0 Oct-22 Nov-22 Dec-22 Jan-23

  19. Slide 19: LFL Rent Roll Movement | UK (£m)

    LFL Rent Roll Movement | UK (£m) LFL Rent Roll increased 9.0% 19 60.0 50.0 3.6 40.0 (16.8) 17.4 30.0 50.7 46.5 20.0 10.0 0.0 Sep 22 Move Outs Move Ins Ints Uplifts on existing tenants Sep 23 Sep 2023 Half Year Results

  20. Slide 20: Like-for-Like Valuation Movement | UK

    Like-for-Like Valuation Movement | UK Yield Expansion partially offset by Strong Rental Growth 20 Like for Like Assets As at Mar 2023: Gross Yield = 13.2% Net Yield = 9.3% (15.7) 4.4 Capital Value per sqft = £88 As at Sep 2023: Gross Yield = 14.3% Net Yield = 9.7% Capital Value per sqft = £85 Net yi

  21. Slide 21: Growth Plan

    Growth Plan 21 Since acquisition in November 2021  Focused on driving rate higher (+25% in FY23)  Occupancy stable  Implemented 'Sirius' marketing and sales techniques Nottingham | UK Going forward  Targeted investment capex – e.g. Doncaster, Nottingham  Non-core assets disposed  Acquisitions

  22. Slide 22: Asset Recycling @ 14% Collective Premium to Book Value

    Asset Recycling @ 14% Collective Premium to Book Value | Group 22  Eight disposals completed at or above a collective 14% premium to book value  Acquisitions provide 30% more income on day 1  Acquisitions provide >21k sqm of vacancy opportunity Date Total Sales Price SQM Rental Income Occupancy G

  23. Slide 23: Acquisitions Strategy

    Acquisitions Strategy 23  Germany  Focus on multi-let industrial and business parks in areas where we have critical mass (and IP)  €10-50m site value  Typically with vacancy, under-rented, opportunity  Less competition to buy (particularly in this market)  UK  Multi-let industrial, studios, w

  24. Slide 24: Group FFO Ambition

    Group FFO Ambition Journey to €115m FFO | Mid-Term 24 Increase FFO to €115m already in sight through existing initiatives (12% increase from short term ambition)  €5.4m contribution relating to capex investment programmes in Germany 150 140  €5.4m contribution from the let up of vacant space in Ge

  25. Slide 25: Investment case | Growth and Income

    Investment case | Growth and Income 25  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 €115m, long term to €150m  Strong acquisition pi

  26. Slide 26: Our track record

    Our track record 26 Total Return over the past 10 years Dividends 1000 3.5 2.98 3.00 800 3 2.7 SRE 2.37 FTSE 250 2.5 600 1.98 2.04 FTSE EPRA Developed Europe 2 1.73 1.77 1.80 1.82 1.53 1.56 1.6 1.63 400 1.5 1.3 1.39 1 0.77 0.84 0.84 200 0.5 0.3 0 0 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Se

  27. Slide 27: Interim Results Summary

    Interim Results Summary Continue to trade in line with market expectations 27 Strong Organic Growth  FFO growth of 9.5% y-o-y  7.7%* increase in LFL Group rent roll Strong Balance Sheet  Net LTV of 40.8%  Net debt / EBITDA 6.9x  No major re-financings until 2026 Acquisition pipeline strong  Ma

  28. Slide 28: Appendices

    Appendices 28  Market Dynamics and Portfolio - Germany  Financing Appendix I Appendix VI  Market Dynamics and Portfolio - UK  Debt Maturity Appendix II  Covenants  Geographical Split and Financials  Sirius Group Platform Appendix III Appendix VII  Consolidated income statement  Integrated p

  29. Slide 29: Market Dynamics + Portfolio Germany

    29 APPENDIX I MARKET DYNAMICS + PORTFOLIO GERMANY Sep 2023 Half Year Results

  30. Slide 30: Germany

    Germany 30 Economy spread across several Well diversified economy The "Mittelstand" large autonomous markets Machinery, automotive, The SME market makes up over 50% of the Frankfurt, Berlin, Munich, Hamburg, chemical, medical, German economy in terms of both employment Düsseldorf, Cologne & Stuttgar

  31. Slide 31: Diversified Portfolio | Germany

    Diversified Portfolio | Germany Tenants 31 Tenant Split by Rent Roll 5,754 Tenants Top 50 Anchor Tenants 39% 55% SmartSpace SME Tenants 6% Other SME Tenants 2.6yrs Portfolio WALT No. of tenants Occupied Sqm Annualised rent roll Rate Type of tenant @ 30 Sep 23 ‘000’s €m psm € Top anchor tenants 50 67

  32. Slide 32: Diversified Portfolio | Germany

    Diversified Portfolio | Germany Assets 32 Traditional Mixed-Use Modern Mixed-Used Out of Town Industrial Business Parks Business Parks Office Buildings International blue-chip Warehouse/Workshop, Quality assets corporations Office, Storage in secondary locations Large scale Long-term SME‘s + Retail

  33. Slide 33: Market Dynamics + Portfolio UK

    33 APPENDIX II MARKET DYNAMICS + PORTFOLIO UK Sep 2023 Half Year Results

  34. Slide 34: Market Dynamics | UK

    Market Dynamics | UK 34 Market synergies Strong rental growth potential Regional Investment remains a Industrial/out of town office market in the High levels of market fragmentation and Government priority UK presents similar characteristics to its structural supply constraints offer potential The L

  35. Slide 35: Diversified Portfolio | UK

    Diversified Portfolio | UK Tenant risk low 35  Structural shortage of our space Annualised Rent Roll 3,494 Tenants  More than 3,000 tenants across every industry 32% 23%  No single tenant risk Top 100  No single industry risk Next 900 1.1yrs Remaining Clients Portfolio WALT  Represents the back

  36. Slide 36: Diversified Portfolio | UK

    Diversified Portfolio | UK Assets 36 Industrial Assets Office Buildings Mixed Use Assets Warehouse/Workspace Offices Offices & Workshops Office, Storage SME’s & Large scale SME’s & Conventional & SME’s & Conventional & growing businesses workspace growing businesses flexible office spaces growing bu

  37. Slide 37: Geographical Split and Financials

    37 APPENDIX III GEOGRAPHICAL SPLIT AND FINANCIALS Sep 2023 Half Year Results

  38. Slide 38: Consolidated Income Statement | Geographically Split

    Financials | Consolidated Income Statement | Geographically Split 38 Germany UK Group Total Sep 23 Sep 23 Sep 23 €m €m €m Rental Income 63.0 26.1 89.1 Titanium income 3.5 - 3.5 Service charge irrecoverable costs (1.1) (4.9) (6.0) Non-recoverable maintenance (2.1) (1.4) (3.5) Net Operating Income 63.

  39. Slide 39: Consolidated Statement of Financial Position | Geographically Split

    Consolidated Statement of Financial Position | Geographically Split 39 Germany UK Group Total Sep 23 Mar 23 Sep 23 Mar 23 Sep 23 Mar 23 €m €m €m €m €m €m Assets Investment properties (owned assets) 1,701.1 1,689.6 411.7 417.7 2,112.8 2,107.3 Investment properties (leased assets) 10.1 10.8 13.9 13.7

  40. Slide 40: ESG

    40 APPENDIX IV ESG Sep 2023 Half Year Results

  41. Slide 41: Embedding ESG Into Our Future

    Embedding ESG Into Our Future 41  Continued progress in embedding ESG into the business and strategy, concentrating on material drivers  Economic viability and long-term sustainable performance is central to all decision-making and actions  Decarbonisation plans continue to develop: - Confidence

  42. Slide 42: Titanium

    42 APPENDIX V TITANIUM Sep 2023 Half Year Results

  43. Slide 43: Titanium | Sirius & AXA IM Alts

    Titanium | Sirius & AXA IM Alts 43  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 yi

  44. Slide 44: Titanium Balance Sheet

    Titanium Balance Sheet 44 €358.6m Titanium Investment Sirius 35% Share property value €m Investment property 125.6 Other assets 1.9 36.3% Cash 6.6 Net LTV Total assets 134.1 7 Bank loans (52.2) No of assets Other liabilities (7.3) Deferred tax (7.4) Total liabilities (66.9) €24.4m Annualised rent ro

  45. Slide 45: Titanium Organic Growth | Rental Income Analysis

    Titanium Organic Growth | Rental Income Analysis * 45 Site Sep 23 Sep 22 Change Rent Roll €24.4m €22.5m 8.4% Occupancy 89.5% 89.8% (0.3)% Rate psm €6.58 €6.03 9.1% Sep 2023 Half Year Results * Based on Headlease level

  46. Slide 46: Financing

    46 APPENDIX VI FINANCING Sep 2023 Half Year Results

  47. Slide 47: Debt Maturity

    Debt Maturity 47 Debt Maturity 4.2 years* 600 Weighted average maturity 500 2.1%* 400 Average cost of debt € in million 300 528 €0.0m 200 400 Scheduled repayments within 1 year 100 - 29 - €29.0m - < 12 months 13-24 months 25-36 months 37-48 months > 49 months Maturing between 1 & 2 years Debt Maturi

  48. Slide 48: Covenants

    Covenants 48 Loan Expiry Secured Facility Covenants Date Sep 23 Position Hard Covenant DSCR* DYR* LTV*** DSCR DYR LTV Berlin Hyp AG 2.06 x n/a 49.5% 1.40x n/a 65.0% Oct-30** Sparkasse 3.31 x n/a n/a 2.00x n/a n/a Feb-25 Deutsche Pfandbriefbank AG n/a 16.6% 45.4% n/a 8.0% 57.5% Dec-23** Loan Expiry U

  49. Slide 49: The Sirius Group Platform

    49 APPENDIX VII THE SIRIUS GROUP PLATFORM Sep 2023 Half Year Results

  50. Slide 50: Integrated Operating Platform | Germany

    Integrated Operating Platform | Germany 50 Total No. Employees in >75 Locations Acquisitions Team Acquire assets 295 3 Service Charge Team Marketing Team Cost recovery Lead generation 13 11 Finance, IT, People & Talent, Legal, ESG Asset & Property Mgt. Execution & support Sales Inbound Team Strategi

  51. Slide 51: Integrated Operating Platform | UK

    Integrated Operating Platform | UK 51 Total No. Employees in 70 Locations Marketing Team Lead generation 148 2 Finance, IT, People & Talent, Sales Inbound Team Asset & Property Mgt. Strategic & operational Legal, ESG Lead conversion to viewings Execution & support 5 28 28 National Sales Team Viewing

  52. Slide 52: Share Register

    52 APPENDIX VIII SHARE REGISTER Sep 2023 Half Year Results

  53. Slide 53: Share Register | September 23

    Share Register | September 23 Top 10 Shareholders 53 Owner by Sector Top 10 Shareholders Shares (m) % Holding 4% BlackRock 117.8 10.0% 9% Mutual Funds abrdn 99.0 8.4% Pension, Insurance & SWF Columbia Threadneedle Investments 57.9 4.9% 20% 43% Retail Cohen & Steers 51.0 4.3% Investment Trusts Public

  54. Slide 54: Disclaimer

    Disclaimer 54 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 a

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