Trading Statement
10 February 2010 - 6:00PM
UK Regulatory
TIDMSRE TIDMPCX
RNS Number : 9154G
Sirius Real Estate Limited
10 February 2010
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, today provides an update on the Company's latest
position ahead of its results for the year ended 31 March 2010.
The Company has experienced some large tenant move outs at two of its 38 sites
since the last reported results as at September 2009. While new lettings
enquiries have increased substantially, the Board anticipate these move outs
will affect the Company's profits for the current financial year ending 31 March
2010 and as a consequence the Company's trading performance could be
significantly below current market expectations.
These two sites are within the RBS loan facility and as a consequence the
Company's interest cover ratio ("ICR") for this facility has declined since the
last covenant test. The impact of the tenant move outs is not only on rents but
also on the associated irrecoverable service charge costs of these sites. 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 is currently in
discussions with RBS as to whether the cash trap will be enforced.
The Board is monitoring the situation closely and expect that the cash trap will
have a limited impact on Sirius. Should the interest cover within this facility
fall further, the Company has surplus cash and uncharged properties to cure a
potential covenant breach and therefore the Board is confident that it has
flexibility to manage the Company's financial position.
As stated previously the Company has a programme in place to significantly
reduce its direct and non-recoverable costs which is progressing well and is
expected to start taking effect in the next financial year. It continues to
experience a high level of new enquiries which reached a record 650 in January
2010 and lettings of circa 10,000 sqm, with substantial further deals in
negotiation.
New Appointment
The Board is also pleased to announce the appointment of Andrew Coombs as Chief
Executive Officer of Sirius Facilities GmbH, the German operating business of
the asset manager of Sirius. Andrew has significant experience in the "flexible
workspace" industry, most recently at MWB Business Exchange as Director and
General Manager, and as Sales Director at Regus. He will be responsible for
the day to day operations of the German property management. This will allow
Ingo Spangenberg to focus on new lettings and the key tenant renewals of the
business.
Kevin Oppenheim, Chief Executive Officer of Principle Capital Sirius Real Estate
Asset Management Limited, said: "That these move outs occurred at a similar time
is unfortunate and has had a magnified impact on the business. We are confident,
given continuing demand from our core SME market, of re-letting the vacated
space in due course. From a financial position, the Company has sufficient cash
and uncharged properties to ensure we remain within our banking covenants.
Looking further ahead, we expect to benefit from our cost savings initiatives
and we are excited about the opportunities our significantly expanded pipeline
of new lettings represents. I would also like to welcome Andrew Coombs who will
play a key role in implementing our strategy in Germany."
Enquiries:
Principle Capital Sirius Real Estate Asset Management Limited
Kevin Oppenheim, CEO 07973 821 008
Alistair Marks, CFO 020 76324130
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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