Sirius Real Estate, the owner and operator of business parks in Germany, has provided a strong trading update for the six months April to September.
The highlights includes collecting 97.2% of rents in the period, letting enquiries up 17.4% on the same period in 2019, a 1.1% like-for-like increase in average rent to €6.03 per square metre.
The increase in enquiry levels, from 7,054 in the same period last year to 8,284 this year, was in particular due to a rise in the number of enquiries for storage, which makes up 36% of the company’s total lettable space. Sirius said this was coming from new commercial tenants as well as from new self-storage customers.
Conversion of enquiries to lettings was 13.4% in the period, compared to an internal target of 15%. However, the month of April saw the conversion ratio fall below 10% due to the COVID-19 pandemic, but since June the level has progress substantially.
While the group recorded a modest increase in the number of new lettings year on year (from 1,035 to 1,110), the volume of square metres let reduced by around 11% compared to last year (from 83,270 sqm to 74,095 sqm).
Total annualised rent roll of €89.2m reduced from €90.3m as at 31 March 2020 primarily as a result of the disposal of the Weilimdorf asset which generated €0.7m of annualised rent roll. Like for like annualised rent roll at 30 September 2020 remained broadly flat with a modest 0.4% decrease. On a year on year basis annualised rent roll has increased by 13.6% from €78.5m as reported at 30 September 2019.
The company experienced a small reduction in like for like occupancy of approximately 1.3% between 31 March 2020 and 30 September 2020, however this was partially offset by a 1.1% increase in average rental rates to €6.03 per sqm (31 March 2020: €5.96).
Rent collection
At the end of the six-month period €2m of rent and service charge remained uncollected, representing a cash collection rate of 97.2%. Of the total outstanding debt €83,000 relates to insolvency cases and €250,000 relates to 11 deferred payment plans.
Sirius has written off rent amounting to €171,000 and said it expects to collect the majority of the outstanding debt for the period April to September over the next 12 months.
Acquisitions and disposals
In September 2020 the company notarised the acquisition of the Norderstedt asset near Hamburg International Airport within the wider Hamburg market where Sirius has been increasing its presence. The mixed-use asset is fully let to 12 tenants and generates €783,000 of annualised rent roll.
In addition, the company completed the disposal of the Weilimdorf asset in April 2020 which it acquired in the financial year ending 31 March 2016 for a purchase price of €5.2m. The asset, an office building let to a single tenant operating within the car manufacturing industry, was sold for total proceeds of €10.1m, representing an EPRA net yield of 6.3% including estimated purchaser’s costs.
Balance sheet
The company has drawn down the final €20.0m tranche of its new €50.0m Schuldschein unsecured facility, which is charged with a fixed interest rate of 1.6%, maturing in July 2023.
As at 30 September 2020, the company held total cash balances of around €128.0m, of which around €113.0m is unrestricted. The company holds 12 of its business park assets on an unencumbered basis, has a net loan to value (LTV) of around 33%, a weighted average cost of debt of 1.5% and interest cover in excess of 10x at net operating income level.
SRE : Sirius Real Estate reports jump in letting enquiries