Trading Statement

 

TIDMSRE TIDMPCX 
 
RNS Number : 7917J 
Sirius Real Estate Limited 
07 April 2010 
 

                           Sirius Real Estate Limited 
                          ("Sirius" or "the Company") 
 
                                 Trading Update 
 
Sirius Real Estate Limited, the real estate company with a portfolio of 38 large 
mixed-use commercial sites in Germany, which have been significantly upgraded 
into modern, flexible workspaces, today provides an update on trading. 
 
The Company expects its trading performance for the 12 months to 31 March 2010 
to be in line with market expectations. During the period the Company completed 
the development phase of the business and has moved on to focusing primarily on 
increasing occupancy and efficiency levels across the portfolio. 
 
Under the direction of Andrew Coombs, CEO of Sirius Facilities GmbH, the 
Manager's local subsidiary, who was appointed in December 2009, a number of 
structural changes have been made in Germany. The lettings team has more than 
doubled from 20 to 50 people, whilst the total headcount decreased from 190 to 
150. This has had an immediate impact on lettings in Q4 and will produce an 
annual cost saving of approximately EUR1 million to Sirius. 
 
The expansion of the lettings teams has been further augmented with the 
introduction of new marketing initiatives, including a significantly expanded 
online strategy. This has resulted in the doubling of sales inquiries from 500 
in October to 1,000 in the month of March producing  a strong uplift in lettings 
in Q4, totalling circa 43,000 sqm (against move outs of 19,500 sqm) at above the 
passing rent for the portfolio. This compares with 17,534 sqm let (against 
44,290sqm of move outs) in Q3, which is traditionally a quieter period. As at 31 
March 2010, occupancy was 71% (1 January 2010: 68%). 
 
In February 2010 we reported that large tenant move outs at two sites reduced 
the Company's interest cover ratio ("ICR") on its RBS loan facility. The ICR 
cover, as tested in January, remained above the covenanted level of 125% but 
fell below the 'cash trap' level of 130%. The Company has been in close 
discussions with RBS, the result of which is the enforcement of the cash trap on 
the rent accounts of the companies within the RBS facility. However it has been 
agreed that funds in the rent accounts of companies with surpluses can be 
transferred to those with deficits so that the impact of the cash trap will be 
minimal. 
 
The team is closely monitoring any potential future tenant move outs to ensure 
it proactively manages any impact should move outs occur. Importantly, should 
the interest cover in the RBS loan facility fall further, the Company has cash 
of EUR32 million and EUR48.7 million of uncharged properties which can be used to 
avoid any potential covenant breach and therefore the Board is confident that it 
has the flexibility to manage the Company's financial position. 
 
In summary, market conditions have remained broadly stable during the period, 
with the German SME sector showing a resilience which has translated into steady 
levels of demand; however, since the beginning of 2010 substantial improvements 
have been made in the way the portfolio is marketed, and the Company is able to 
offer well located workspace which has been upgraded to suit the flexible needs 
of the Company's core SME client base. The board looks forward to providing a 
more detailed analysis of the Company's trading performance in its final results 
in June 2010. 
 
 
Enquiries: 
 
Principle Capital Sirius Real Estate Asset Management Limited 
 
Kevin Oppenheim, CEO 
            020 7632 4130 
Alistair Marks, CFO 
Mark Whitfeld, Investor Relations 
            020 7240 3222 
 
J.P. Morgan Cazenove 
Robert Fowlds 
                   020 7588 2828 
Bronson Albery 
 
Cardew Group 
Tim Robertson 
                   020 7930 0777 
Catherine Maitland 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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