PCX Principle Cap.

 

TIDMSRE TIDMPCX 
 
RNS Number : 2744A 
Sirius Real Estate Limited 
06 October 2009 
 

 
 
 
 
Sirius Real Estate Limited 
 
 
Trading Update 
 
 
Sirius Real Estate Limited (the "Company" or "Sirius"), the real estate company 
established to acquire large mixed-use commercial sites for upgrading to 
flexible workspaces in Germany, is pleased to provide a trading update for the 
period ended 30 September 2009. 
 
 
Key Highlights 
 
 
  *  Returns from the investment into the portfolio being evidenced by further 
  increases in rental values, with new lettings in the period averaging EUR5.20 psm 
  up from EUR4.50 psm in the previous year; 
 
  *  Positive market data from the German SME sector where the majority of tenants 
  are drawn from; 
 
  *  Approval on debt restructuring ensuring the Company has good financial 
  flexibility going forward. 
 
 
 
Sirius continues to offer flexible, affordable, high quality workspace to 
tenants. During the six months to 30 September 2009, the Company invested 
approximately EUR18 million in its ongoing programme of upgrading the portfolio, 
the benefits of which are being evidenced by higher rental rates achieved and a 
significant increase in the number of new enquires being converted into 
lettings. 
 
 
In the six month period, 45,283 sqm of new leases were signed with an average 
rent of EUR5.20 psm, compared to 55,900sqm signed at EUR4.50 psm for the full year 
to 31 March 2009.  52,807 sqm of space was vacated in the period which was being 
let for around EUR3.26 psm. At this stage in the development of the portfolio it 
is this rental increase which best demonstrates the increasing appeal of our 
sites. 
 
 
According to an index published by German state owned bank KfW, sentiment 
amongst the German SME sector improved by a record amount in August 2009. Driven 
by a sharp increase in business expectations, the indicator rose by 5.5 points 
to a positive balance of 6.8. The rise was the fifth in a row and the strongest 
since 1991, the starting point for the data. The SME sector accounts for the 
vast majority of firms in Germany and around 70 per cent. of the country's 
workforce. 
 
 
This has translated into continued healthy demand for office, storage and 
production space from the SME sector. In April 2009, the 'smartspace' campaign 
was launched, offering very small units for office, light industrial and storage 
purposes. This product targets start-up companies and small businesses and is 
proving successful having achieved lettings of 2,788 sqm at an average of EUR8.40 
psm which represents a significant premium above conventional letting rates. The 
smartspace product is now available at ten sites across the portfolio with the 
intention of expanding the service across the board. The Sirius team continues 
to monitor and adapt to local market trends, and our flexibility combined with 
the high quality and affordable space we offer remains a key advantage in the 
current market. 
 
 
Developing on surplus land on a pre-let basis continues to be an important 
component of the Group's strategy, and three new deals have been signed since 31 
March 2009: with Burger King at Pfungstadt, ZK Glasbau in Maintal and OPC in 
Dusseldorf. A total of nine pre-let development deals have now been signed, 
creating an additional 5,877 sqm of pre-let space at a net initial yield on cost 
of 12.4 per cent. 
 
 
The Company is pleased to announce that it has received approval following 
negotiations to consolidate its two portfolios financed with ABN Amro Bank N.V. 
("ABN") for a non material one off fee. As previously announced, while one of 
the two portfolios has significant headroom, the other was believed to be in 
breach of its LTV covenant based on the Company's valuations. Following the 
consolidation of these portfolios, the new LTV covenant is 85 per cent., 
creating the headroom to accommodate a 16% drop in property values.  In addition 
a cure provision has been added such that should a financial covenant be 
breached it can be cured by paying down the loan.  Consequently all of the 
Company's banking facilities are within their respective covenants and the 
Company has sufficient cash to fund its planned capital expenditure programme 
for the foreseeable future. 
 
 
Kevin Oppenheim, Chief Executive Officer of the Asset Manager, said: "Although 
the environment for real estate companies remains challenging, the resilience of 
the Sirius model is apparent as our transformation process is enabling us to 
achieve substantially higher rents. Tenant demand from the SME sector remains 
robust and as the market leader in our specialist sector we are ideally 
positioned to capitalise on any increase in demand for flexible, affordable, 
high quality workspace." 
 
 
 
 
Enquiries: 
 
 
Principle Capital Sirius Real Estate Asset Management Limited 
Kevin Oppenheim, CEO    07973 821 008 
 
 
J. P. Morgan Cazenove 
Robert Fowlds    020 7588 2828 
Bronson Albery 
 
 
Cardew Group 
Tim Robertson    020 7930 0777 / 
Shan Shan Willenbrock07900 927 650 
Catherine Maitland 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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