Half Year Results Sirius Real Estate Limited Half Year Results 30 September 2015

Transcription

1 Half Year Results 2015 Sirius Real Estate Limited Half Year Results 30 September 2015

2 Who Are We We are the largest branded provider of mixed-use conventional and flexible workspace in Germany 2

3 Highlights 8.6m 35% RECURRING PROFIT BEFORE TAX 0.92c DIVIDEND PER SHARE FOR PERIOD 5.5% INCREASE IN NAV PER SHARE 9.9m 60 % FUNDS FROM OPERATIONS^^» Successful equity placement for 50m in June 2015» 5 new acquisitions for a total cost of 57.24m, NOI of 4.7m and EPRA net initial yield of 8.1% (3 completed in the period and 2 in October 15)» Completed new 5 year 25.4m debt facility with BayernLB against 4 of the new assets with a fixed interest rate of 1.66% for 5 years» Completion of a new 7 year 59m debt facility with SEB with a fixed interest rate of 1.84% for 7 years to refinance the 2 Macquarie facilities» Valuation of the existing portfolio increased to 581.4m** (Mar 2015: 550.0m) (including 3 completed acquisitions: valuation 615.2m)» Adjusted NAV^ per share increased by 5.5% to 50.13c (Mar 2015: 47.51c)» Major Capex programme well underway to transform 100,000 sqm of unlettable or under-utilised space, adding 2.3m to rent roll to date.» Recurring profit before tax increased to 8.6m with like-for-like* recurring profit before tax increasing to 6.9m (2014: 5.1m)» Dividend of 0.92c per share declared * excluding acquisitions in Potsdam, Mahlsdorf, Aachen, Bonn, Ludwigsburg, Weilimdorf & Heidenheim **excluding recent acquisitions Ludwigsburg, Weilimdorf & Heidenheim ^ excluding provisions for deferred tax and financial derivatives ^^ recurring earnings after tax, adj. for depreciation, amortisation of debt arrangement fees 3 3

4 Acquisitions 57.24m 34% TOTAL COST OF 5 ACQUISITIONS 8.1% 4.1 EPRA NET YIELD OF ACQUISITIONS BayernLB NEW BANKING FACILITY 10.5%» Acquired 5 new sites for a total cost of 57.24m with an EPRA net yield of 8.1% (3 completed in the period)» New 5 year debt facility with Bayern LB for 25.4m with a fixed interest rate of 1.66% to finance four of the acquisitions» These assets produce initially 5.33m of annualised rent roll (taking the total rent roll as at November 2015 to 55.4m) and NOI of 4.7m» The expected initial cash on cash yield is 14.6%» The portfolio has an initial vacancy of 17%» 3 Year plan to invest 2.0m into 72% of vacant space to increase the rent by 0.8m 4 4

5 Our portfolio as at 30 Sept 2015* 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** (32 assets) and noncore properties (4 assets) with the majority of the non-core properties having already been disposed between the years m ANNUALISED RENT ROLL 77% OCCUPANCY 36 TOTAL PROPERTIES 4.85m 2 RATE PSM * Map depicts 38 properties owned as at November 2015, Aachen II & Cöllnparc completed post period ** Core based on a focus on key locations 5

6 Lettings Update 70,201 sqm 19,961 sqm 3.78 psqm NEW LETTINGS POST HALF YEAR LETTINGS* MOVEOUTS RATE» Like-for-like^ occupancy as at September 2015 was 77% (March 2015: 79%). Total company occupancy as at September 2015 was 77%.» Like-for-like^ rate psqm as at September 2015 increased to 4.91 (March 2015: 4.75). Company rate including latest acquisitions was 4.85.» New lettings in period of 70,201 sqm at 5.10 psqm, like-for-like^^ lettings 62,886 sqm at 4.86 psqm (2014: 54,713 sqm at 5.11 psqm)» Move outs in the period of 90,470 sqm at 3.78 psqm, like-for-like^^ move outs of 89,211 sqm in period at 3.75 psqm (2014: 40,521 sqm at 5.34 psqm).» Like-for-like^^ post half year lettings** of 19,961 sqm at 5.78 psqm (2014: 11,024 sqm** at 4.49 psqm) * For total portfolio for October 2015 ** For the month of October ^ Excluding recent acquisitions in Ludwigsburg, Weilimdorf & Heidenheim ^^ Excluding acquisitions in Potsdam, Mahlsdorf, Aachen and Bonn and recent acquisitions in Ludwigsburg, Weilimdorf & Heidenheim 6

7 Total Portfolio Rental Analysis 30 Sept m 34% RENT ROLL AS AT SEPT 15 3, TOTAL NUMBER OF TENANTS AT SEPT 15** 2.5 yrs AVERAGE LEASE LENGTH REMAINING* 77% OCCUPANCY 10.5% NO. OF TENANTS OCCUPIED SQM ANNUAL RENT % RATE PER SQM TOP 50 TENANTS ,985 27,921,732 52% 4.96 SMARTSPACE TENANTS 1,439 45,518 3,335,937 6% 6.11 OTHER TENANTS 1, ,075 22,116,465 42% 4.58 TOTAL 3, ,578 53,374, % 4.85 Top 10 Tenants % of Total Rent Roll GKN Aerospace Deutschland GmbH 3.7% ASM Assembly Systems GmbH & Co 3.3% MAN Diesel & Turbo SE 3.1% Daimler AG 3.1% VAG-Armaturen GmbH 2.9% Epcos AG 2.8% Siemens AG 2.1% Bopp & Reuther Sicherheits 1.9% NuCellSys GmbH 1.9% Borsig GmbH 1.8% Total 26.5% Historical Rental Movement (Total Portfolio Excluding Acquisitions) Year Annual Rent - CAGR Mar ' m - *Including DDS Headleases & not DDS Subleases (DDS contracts with SmartSpace, Flexilager & conferencing clients) **Same tenant counted multiple times if in occupancy on multiple sites Sept m 2.3% 7

8 Rent Roll Movement - Mar/Sept m 34% RENT ROLL AT SEPT m 4.1 MOVE INS IN PERIOD 3.3m RENT ROLL INCREASE DUE TO ACQUISITIONS 10.5% m Mar-15 Extra Ordinary Moveouts Other Moveouts Move Ins Uplifts on Existing Tenants Acquisitions 30-Sep

9 Service Charge Recovery 3.3M 34% IRRECOVERABLE COSTS RECOVERY IN PERIOD % RECOVERY ACHIEVED 10.5% MAR 10 m MAR 11 m MAR 12 m MAR 13 m MAR 14 m MAR 15 m SEP 15 m SERVICE CHARGE RECOVERY SERVICE CHARGE COSTS (35.7) (35.9) (37.6) (38.4) (39.6) (40.3) (19.2) IRRECOVERABLE COSTS (10.9) (9.3) (8.2) (7.1) (6.6) (6.3) (3.3) RECOVERY PERCENTAGE 69.5% 74.1% 78.2% 81.5% 83.4% 84.4% 82.8% AVERAGE OCCUPANCY 72.0% 76.0% 77.0% 77.0% 75.0% 76.0% 76.0% RECOVERY RATE 96.5% 97.5% 101.5% 105.8% 111.2% 111.1% 108.9%» Recovery of almost 83% achieved against average occupancy of 76% 9 9

10 Earnings Per Share 1.25 cps 34% ADJUSTED EPS 1.41 cps FFO PER SHARE cps DIVIDEND PER SHARE cps 10.5% NOI Overheads Interest & tax Funds from Operations Amortisation of Facility Fees & Depreciation Adjusted Earnings Dividend Per Share Note: All items in the chart above are calculated on the weighted average number of shares in issue during the period except for the dividend per share which is calculated on the period end number of shares in issue

11 Capital Investment Programme as at Sept 15 94k sqm 34% VACANT SPACE IDENTIFIED FOR MAJOR CAPEX 10.5% 12.6m 4.1 PLANNED CAPEX INVESTMENT 4.7m EXPECTED MATURE RENTS 51% SPACE FULLY TRANSFORMED AREA INVESTMENT RENTAL INCREASE Occupancy Rate Sqm Budget Actual Budget Achieved to Date Budget Achieved to Date Budget Achieved to Date COMPLETED 48,160 5,561,000 4,258,769 2,489,645 2,245,798 81% 65% IN PROGRESS 28,765 3,955, ,963 1,385,426 21,986 80% 2% TO BE COMMENCED 16,915 3,056,800 62, , % 5.18 TOTAL 93,840 12,573,900 4,945,162 4,716,422 2,267,784 81% 34% » The Capex initiative was initially focused on approx. 100,000sqm of unlettable or under-rented space and this covered more than 40% of the vacant space at the time» Major projects on space that was vacant & unlettable or occupied & significantly under-rented» Approx. 82% of major projects completed or commenced» Total investment programme to be completed by June 2016 with full rental returns expected March

12 Other Capex Programmes as at Sept 15 82k sqm ADDITIONAL VACANT SPACE PROJECTS IDENTIFIED 7.3m MAJOR SPACES VACATED THIS YEAR FURTHER CAPEX INVESTMENT 3.2m ADDITIONAL MATURE RENTS» A further 3.9m of Capex to be spent on the recently vacated space to generate 1.7m additional rental income» A further 3.5m of Capex to be spent on vacant space in recent acquisitions to generate 1.5m of additional rental income 16% COMPLETED AREA INVESTMENT RENTAL INCREASE Occupancy Rate Sqm Budget Actual Budget Achieved to Date Budget Achieved to Date Budget Achieved to Date COMPLETED 9, , , , ,824 86% 100% IN PROGRESS 19,503 2,210, , , % TO BE COMMENCED 24,525 2,080,000 1, , % ,207 4,465, ,585 2,108, ,824 79% 4.18 ACQUISITIONS AREA INVESTMENT RENTAL INCREASE Occupancy Rate Achieved to Achieved Achieved to Sqm Budget Actual Budget Date Budget to Date Budget Date COMPLETED 4, , , , ,451 94% 85% IN PROGRESS 3, , , , % TO BE COMMENCED 21,074 3,066, ,275, % TOTAL 28,788 3,979, ,213 1,844, ,451 83%

13 Smart Space Products Over 74k 34% SQM COVERTED TO SMSP 3.3m RENT ROLL RATE PSM 61% OCCUPANCY 10.5% TOTAL SQM OCCUPIED SQM OCCUPANCY (%) ANNUAL RENT (EX S/CHARGE) % TOTAL ANNUAL RENT RATE PSQM (EX S/CHARGE) SMSP OFFICE 24,806 18,369 74% 1,636,402 49% 7.42 SMSP WORKBOX 4,748 4,256 90% 293,250 9% 5.74 SMSP STORAGE 18,666 14,027 75% 844,506 25% 5.02 FLEXILAGER 26,015 8,866 34% 561,779 17% 5.28 SMSP TOTAL 74,235 45,518 61% 3,335, % 6.11» SMSP currently represents 6.7% of total lettable area* with plans to get to 8% on completion of the Capex investment programme * Excluding recent acquisitions in Ludwigsburg, Weilimdorf & Heidenheim 13

14 Property Valuations & Book Value 610.1m PORTFOLIO BOOK VALUE 5.6% LIKE FOR LIKE INCREASE IN BOOK VALUE 8.6% GROSS YIELD ON CORE PORTFOLIO VALUATION RENT ROLL NOI GROSS CAPITAL VALUE OCCUPANCY VACANT» Portfolio book value of 545.6m at 31 March 2015 (2014: 440.7m*) YIELD /PSM SPACE SQM CORE ASSETS 576.6m 49.6m 44.6m 8.6% % 154k NON-CORE ASSETS^ 33.5m 3.8m 2.0m 11.3% % 124k OTHER - 1.0m TOTAL 610.1m 53.4m 45.6m 8.7% % 278k VALUATION MOVEMENT IN YEAR MILLIONS CARRYING 31 March % CHANGE ACQUISITIONS % VALUATION UPLIFT FROM EXISITING PORTFOLIO % VALUATION UPLIFT FROM ACQUISITIONS BOUGHT AT A DISCOUNT % IMPAIRMENTS/WRITEBACKS % LEASE INCENTIVES % CARRYING 30 SEPTEMBER % VALUATION RECONCILIATION TO BOOK VALUE MILLIONS CUSHMAN & WAKEFIELD * DIRECTORS WRITE DOWNS -3.1 ADJUSTED FOR RENT FREE PAYMENTS & STEPPED RENTS -2.0 BOOK VALUE * after full provision of purchasers costs ^ Bremen Brinkmann, Bremen HAG, Merseburg, Magdeburg 14

15 NAV Growth March/Sept cps 34% SEPTEMBER 15 ADJUSTED NAV 3.62 cps 4.1 SURPLUS IN VALUATION 1.25 cps ADJUSTED EPS ON AVE SHARES 10.5% Adjusted NAV per share Mar-15 Equity raise Share Awards Scrip & Cash Dividend Paid Recurring profit before tax Surplus on revaluation Non-recurring items 30-Sep Note: All items in the chart above are calculated on the period end number of shares in issue. 15

16 Banking as at Sept m 34% BANK BORROWINGS 3.3% 4.1 AVERAGE COST OF DEBT 14.1m CASH 10.5%» Bank borrowings as period end 261m (2015: 260m)» New 7 year 59.0 million facility to refinance Macquarie debt closed Sept 15» New 5 year 25.4 million facility to finance million of acquisitions closed post period end» Weighted average interest rate at 30 Sep % (2015: 4.3%) LTV 70% 65% 60% 55% 50% 45% 40% Historical Gearing Ratios 4.5 x 4.0 x 3.5 x 3.0 x 2.5 x 2.0 x ICR» Weighted average debt expiry at 30 Sep years (2015: 4.8 years) LTV ICR» Further refinancing opportunities exist 16

17 Banking Facilities PORTFOLIO VALUE LOAN AMOUNT INCOME/CASH FLOWS AS AT 30 SEPTEMBER 2015 RENTAL INCOME NOI ANNUAL INTEREST SCHEDULED AMORTISATION m m m m % % CASH CONTRIBUTION (AFTER DEBT SERVICE) BERLIN HYP/PBB % % 12.8 BERLINHYP % % 3.7 K-BONDS % % 3.9 SEB % % 6.3 UNENCUMBERED % 0.0% 6.2 CONVERTIBLE BOND % % (0.2) TOTAL % % 32.7 COVENANTS AS AT 30 SEPTEMBER 2015 ACTUAL COVENANT ICR DSCR LTV ICR DSCR LTV BERLIN HYP/PBB 4.63 x 2.98 x 43% n/a 1.40 x 60% BERLINHYP 5.43 x 3.17 x 48% n/a 1.40 x 60% K-BONDS 3.33 x 2.25 x 57% 2.50 x n/a n/a SEB 7.90 x 3.79 x 51% 4.30 x n/a 70% UNENCUMBERED TOTAL 5.23 x 3.37 x 42% 17

18 Conclusion EXCELLENT FINANCING TERMS AGREED 34% COMPLETED ACCRETIVE ACQUISITIONS 4.1 VALUES AND DIVIDENDS INCREASING 10.5%» Significant accretive acquisitions completed in period» Improved financing terms secured for acquisitions and refinancing» Significant valuation increases seen in the period» Recurring Profits continue to increase, mainly from organic rental growth» Highly accretive Capex initiatives progressing well» 0.92c per share of dividend declared for the period» Strong financial base from which to grow» Strong economic conditions for the SME sector 18

19 Appendices 34% % 19

20 Enquiries/Viewings/Sales 1,000 enquiries 1,135 1, , ,245 1,123 1,170 1,122 1,142 1,027 1,020 1,002 1,344 1,179 1,206 1,188 1,029 1,078 1,000 1,023 1,020 1,011 Enquiries 1 AVERAGE PER MONTH 12MONTHS TO SEPT14 12MONTHS TO SEPT Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 13/14 14/15 1,088 1, viewings 906 Viewings Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 13/14 14/15 AVERAGE PER MONTH 12MONTHS TO SEPT14 12MONTHS TO SEPT new deals Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 13/14 14/15 Sales AVERAGE PER MONTH 12MONTHS TO SEPT14 12MONTHS TO SEPT

21 Core Portfolio Renewals Analysis H2 112,879* 34% SQM UP FOR RENEWAL m* ANNUAL INCOME UP FOR RENEWAL 10.5% 200 Thousands CORE TENANTS UP FOR RENEWAL (SQM, INCOME & NO. TENANTS) H2 2015/ Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Sqm 22,151 3,566 26,513 10,425 16,816 33,407 Monthly Income 116,582 12, ,489 59,178 79, ,455 No. Tenants No. Tenants Total 112, , *Including DDS Headleases & not DDS Subleases (DDS contracts with SmartSpace, Flexilager & conferencing clients) 21 21

22 Financials Profit Before Tax 6 Months to Sept 15* 6 Months to Sept 14 MOVEMENT m m m Rental income Service charge irrecoverable costs (3.3) (2.7) (0.6) Non-recoverable maintenance (0.5) (0.5) 0.0 Net rental Income Corporate costs and overheads (6.6) (6.0) 1.1 Recurring EBITDA Bank interest (5.4) (5.5) 0.1 Current tax 0.2 (0.2) 0.4 FFO Amortisation of financing fees (0.8) (0.8) 0.0 Depreciation (0.3) (0.5) 0.2 Add back current taxes (0.2) 0.2 (0.4) Recurring profit before tax Non-recurring items (7.5) 0.1 (7.6) Surplus/Deficit on revaluation of investment properties (Loss)/Gain on disposal of investment properties (0.1) 1.1 (1.2) Change in fair value if derivative financial instruments 0.3 (2.6) 2.9 Profit before tax * Acquisitions contributed 3.5m in rents and 1.7m recurring profit before tax

23 Financials Statement of Financial Position As At Sept 15 As At Mar 15 MOVEMENT m m m Assets Investment Properties Plant and equipment Goodwill Trade and other receivables Derivative financial instruments Cash and cash equivalents (6.0) Total Assets Liabilities Trade and other payables (26.5) (26.3) (0.2) Interest bearing bank loans (256.3) (254.8) (1.5) Deferred tax liabilities (9.5) (9.0) (0.5) Deriivative financial instruments (1.9) (2.3) 0.4 Total Liabilities (292.2) (292.4) (1.8) Net Assets NAV per share 48.62c 45.73c ADJUSTED NAV per share 50.13c 47.51c 23