Providing space for business Sirius Real Estate Business Presentation 2014 1
Sirius Real Estate Group History • Listed on the London AIM on 4 May 2007 • Acquired 38 business parks between 2006 and 2008 currently own 30 properties valued by DTZ at €434m in Sept 2013. Currently financed by BerlinHyp (€115m), Macquarie (€61m), K-Bonds • (€52m) • Externally managed by PCSREAM till Jan 2012, now asset management team internalised • Currently employs 150 people to perform all aspects of asset management and property management
Business Model To acquire large under-utilised and under- occupied office/industrial properties (typically 30,000-100,000 m²) for conversion into improved higher yielding workspace in well-established business locations targeted specifically at the Small and Medium sized enterprises.
Business Model • To purchase off-market directly from private investors, corporates, banks and institutions across the country Retain or add core anchor tenants (Siemens, GKN, VAG) • • Transforms the property through branding and renovation • Drive occupancy and rental growth through in-house sales & marketing platform • Creates highly yielding flexible workspace through a range of products • Reduce direct costs and significantly improve service charge recoverability Maximise value of surplus land through appropriate development or • disposal
Typical Sirius Business Park • 40-50% of space let to core anchor tenant/tenants with long- term good covenanted income • 40% of space let on conventional basis to Mittelstand • 10-20% Flexible space housing Sirius product range • Market leading in-house letting/re-letting space in all categories above • Market leader in managing and recovering service charge costs from multi-tenant, mixed-use business parks
Sirius Product Range Dec-13 Total Income Total Rate per SqM - Total Occupancy SqM - Vacant (All Inclusive) SqM SMSP Office 17,557 69% 5,500 1,596,534 11.03 SMSP Flexilager 32,318 33% 21,765 929,221 7.28 SMSP Storage 7,676 58% 3,211 419,398 7.83 SMSP Workbox 3,739 76% 899 264,460 7.76 Conferencing 5,593 100% 765,500 11.41 TOTAL 66,883 53% 31,285 3,975,113 9.31
Sirius Product Range
Operational Performance – Last 5 Years (adjusted for post year end items) Mar-10 Mar-11 Mar-12 Mar-13 Sep-14 (6 mths) Rent 41.8 42.1 43.2 43.1 21.0 Surrender Premiums 0.0 1.7 0.9 1.0 1.7 Other Income 2.0 1.4 1.0 1.3 0.6 TOTAL INCOME 43.8 45.1 45.1 45.4 23.3 Service Charge Irrecs (10.9) (9.3) (8.2) (7.1) (3.6) Maintenance (1.0) (1.2) (1.1) (1.2) (0.5) NOI 31.9 34.6 35.7 37.2 19.2 Overheads & Bad Debts (16.2) (15.2) (13.4) (12.4) (5.6) EBITDA 15.7 19.4 22.3 24.7 13.6 Interest & Finance Costs (17.8) (17.9) (17.6) (15.0) (6.1) Depreciation (0.6) (0.9) (0.9) (1.0) (0.6) PBT (2.8) 0.7 3.8 8.7 6.9
The Team Senior Management Team Information Finance Asset Services Sales IT Operations Legal Marketing HR Tax Management SAP Service SAP Sales ROM Development Area Sales Conferencing Charge Team In-bound Manager Technical Operations Center Operations Technical Manager Manager Managers
The Operating Platform • Sales & Marketing division generating > 1,000 enquiries per month and converting 100,000sqm (circa €7m income) of new lettings per year On-line Marketing team responsible for fully integrated online marketing strategy • Dedicated renewals team focused on tenant retention • • Service Charge Reconciliation division with advanced allocation tools and methods • Internally trained on-site management dealing with all aspects of property management • Highly advanced rent collection systems, procedures and resources • Dedicated internal legal, accounting and tax services • In-house development team to manage capex projects and investment
Sales & Marketing A Marketing division that has produced a 300% increase in enquiries over the last • 4 years. In-house expertise responsible for creating, developing and managing nearly 7,000 • live on-line promotions. Daily management of 150 live Google pay per click campaigns. • Managed presence across 25 on-line German specialist property portals. • Contact database of over 70,000 records with increased propensity to purchase • Sirius products. A website consisting of 100,000 relevant keywords making the Sirius brand • unavoidable to relevant on-line enquirers throughout Germany.
Sales & Marketing (continued) A trainable and measurable 10 step Sirius specific structured sales process. • A 100 point mystery shopping formula that enables accurate measurement of sales • activity. A Customer Relationship Management System that can measure how quickly • salespeople deal with sales leads and help to forecast future sales results. A sales force that conducts over 6,000 viewings per year resulting in the • acquisition of over 1,000 new customers per annum and the sale of more than 100,000 sqms of commercial space per year.
Service Charge A dedicated in-house Service Charge Balancing team. • In-house tools & knowledge for management and control of external • facility management suppliers. In-house expertise and implementation of effective utilities metering and • control. Advanced tools for cost allocation to improve cost recovery. • Reduced irrecoverable costs on SRE portfolio from €12m to €7.5m in 2 • years;
Total SRE Portfolio at Feb 14 Usage Split Business Parks 30 Industrial/Logistic/Storage 13% 13% Usage Split Property value (DTZ) € 428m Office 23% 64% Net lettable area 1.0 m Other 23% 64% Usage Split - by Revenue Annual rent €40.9m 15% Industrial/Logistic/Storage Average rate € 4.47 Office 56% 29% Occupancy 75% Other
Key Facts – Portfolio Lease Expiry Portfolio - lease expiry by Annual Rent (Feb 14) to First Break Clause 14 € - Millions 12 10 8 6 29% 24% 4 18% 17% 2 6% 6% 0 < 1 Yr 1 - 2 Yrs 2 - 3 Yrs 3 - 4 Yrs 4 - 5 Yrs > 5 Yrs Feb-14 11,920,624 10,114,526 7,365,425 2,406,361 2,550,788 6,981,030
30 Business Parks Magdeburg Bayreuth Berlin Maintal Bonn Mannheim Bremen Merseburg Düsseldorf München Nürnberg Hannover Kassel Offenbach Kiel Pfungstadt Kirchheim Rostock Köln Solingen Wuppertal
Current SRE Major Tenants Space - Sqm Monthly Rent % Of Total Rent Average Lease Length Remaining - Yrs 1 Siemens 40,646 195,879 5.6% 2.3 2 GKN Aerospace Deutschland GmbH 41,314 150,923 4.3% 7.7 3 MAN Diesel & Turbo SE 38,813 130,717 3.8% 2.9 4 Daimler AG 26,556 130,163 3.7% 2.4 5 VAG-Armaturen GmbH 35,476 122,034 3.5% 6.8 6 ASM Assembly Systems GmbH & Co 17,452 120,049 3.4% 2.3 7 Dematic GmbH 28,293 101,447 2.9% 1.3 8 Bopp & Reuther Sicherheits 19,859 85,546 2.5% 2.4 9 Borsig GmbH 34,076 79,823 2.3% 3.2 10 Brinkmann Tabakfabriken GmbH 31,380 78,928 2.3% 1.5
Case Study - Gartenfeld Details Acquisition Sep-13 Rental Income Analysis Acquisition Sep-13 Purchase Price/Valuation €5,670,000 €15,980,000 Sqm Occupied: Total SqM 29,686 30,929 Original Tenants 11,544 1,624 Occupancy 39% 79% New Tenants 22,808 Rate per SqM €3.17 €5.18 TOTAL 11,544 24,432 Capex €0 €4,895,665 Rental Income: Rental Income €439,328 €1,520,043 Original Tenants €439,328 €63,446 Irrecoverable SC & Maintenance -€460,000 -€209,898 New Tenants €1,456,596 NOI -€20,672 €1,310,145 TOTAL €439,328 €1,520,043 Space Split SqM Rental Income Rate Anchor Tenants 2,921 €210,446 €6.00 Conventional Leases 18,304 €983,009 €4.48 Products 3,208 €326,588 €8.48 Vacant - Products 381 Vacant 6,116 TOTAL 30,929 €1,520,043 €5.18 Products SqM Investment Cost per SqM ERV (Incl SC) Rate per SqM ROI (Incl SC) Smartspace Office 1,650 €257,633 €156 €226,492 €11.44 88% Smartspace Workbox 1,022 €368,632 €361 €113,167 €9.23 31% Conferencing 917 €115,783 €126 €130,000 €11.82 112% TOTAL 3,589 €742,047 €207 €469,659 €10.91 63% Sirius Real Estate Limited Half year presentation 2013 19
Case Study – Gartenfeld Pictures 2 Smartspace Office & Conferencing Workbox Newbuild Branding/lb Before After Sirius Real Estate Limited Half year presentation 2013 20
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