Sirius Real Estate : Annual Report & Accounts 2023

Shaping

the future

Sirius Real Estate Limited

Annual Report and Accounts 2023

Organic and acquisitive growth delivering attractive returns

Sirius Real Estate Limited is a leading owner and operator of branded business parks providing flexible workspace in Germany and the UK.

Contents

Strategic report

1. Our purpose
2. Financial highlights
3. Operational highlights
4. At a glance

1. Investment review

1. Chairman's statement

1. CEO's Q&A

1. Business model

1. Our markets

1. Asset management strategy

1. Our portfolio

1. Key performance indicators

1. Asset management review
2. • Group highlights
3. Asset management review
4. • Germany

1. Asset management review - UK

1. Sustainability

1. TCFD

1. Financial review

1. Principal risks and uncertainties

1. Disclosures

Governance	Financial statements
84	Chair's introduction to governance	140	Independent auditor's report
86	Board of Directors	149	Consolidated income statement
88	Senior Management Team	149	Consolidated statement
89	Corporate Governance			of comprehensive income
98	Audit Committee report	150	Consolidated statement
		of financial position
104	Nomination Committee report
151	Consolidated statement
107	Sustainability and Ethics
		of changes in equity
		Committee report
		152	Consolidated statement
109	Directors' Remuneration report
		of cash flows
134	Statement of Directors'	153	Notes to the financial statements
		responsibilities	203	Business analysis
135	Directors' report
		(unaudited information)
					210	Annex 1 - Non-IFRS Measures
					216	Glossary of terms
					218	Corporate directory

For more information, please visit

www.sirius-real-estate.com

Sirius Real Estate Limited Annual Report and Accounts 2023

1

OUR PURPOSE

Empowering business, unlocking potential

Our purpose is to create and manage optimal workspaces that empower small and medium-sized businesses to grow, evolve and thrive. We seek to unlock the potential of our people, our properties and the communities in which we operate so that, together, we can create sustainable impact and long-term financial and social value.

Strategic report

Governance

Financial statements

2 Sirius Real Estate Limited Annual Report and Accounts 2023

FINANCIAL HIGHLIGHTS

FFO growth exceeds €100 million ambition

Highest ever like-for-like rental income growth supports substantial dividend growth

€102.1m			€87.0m			€2,107.3m
		36.9%							48.5%						0.9%
Funds from operations(1) at			Profit	before tax at			Portfolio book value(2) - owned
31 March 2023					31 March 2023			investment properties
2023			102.1		2023	87.0				2023	2,107.3
2022	74.6				2022			168.9		2022	2,088.7

5.68c				102.46c			41.6%
	28.8%					0.4%			Net loan to value ratio
Total dividend for the year			NAV per share
2023		5.68		2023	102.46		2023	41.6
2022	4.41			2022	102.04		2022	41.6

108.11c

0.8%

European Public Real Estate Association ("EPRA") NTA per share

Throughout this Annual Report and Accounts certain industry terms and alternative performance measures are used; see the Glossary, Business analysis and Annex 1

• non-IFRS measures within this Annual Report and Accounts for full explanations and reconciliations of alternative performance measures to IFRS numbers.

2023108.11

2022107.28

Sirius Real Estate Limited Annual Report and Accounts 2023

3

OPERATIONAL HIGHLIGHTS

Organic growth supports €100 million FFO milestone achievement

Despite a challenging economic backdrop in the year, the Company achieved its €100 million funds from operations(1) ("FFO") ambition which was set in FY18/19 when its FFO was below €50 million.

The €102.1 million FFO reported is a 36.9% increase on the prior year and has been driven by the 8.1%(3) increase in overall rent roll (7.7%(3) on a like-for-like basis) which reflects the Company's ability to continue to grow its rental income regardless of the market conditions. The Company also continued its asset recycling programme, completing over €90 million in deals in the period which was driven by €45.8 million of disposals at a 25% premium over book value, despite yields expanding. The performance in the period has resulted in dividends declared in the year totalling 5.68c per share, an increase of 28.8% on the prior year based on a 65% of funds from operations pay-out ratio in both years.

Strategic report

Governance

1. Organic rental growth across both German and UK platforms

The Company delivered its ninth consecutive year of like-for-like annualised rent roll growth in excess of 5.0% across the Group with this year's result of 7.7%(3) being the highest the Company has ever achieved. Sirius has achieved this impressive result despite the challenging markets which are continuing to be affected by instability from the Ukraine conflict and the cost of living crisis in both Germany and the UK. The main driver of the rental growth has been the ability of Sirius to capture inflationary increases in its contracted rental contracts as well as uplift tenants who are paying below market rates upon renewal. There has been some take-up of the refurbished space coming from the Group's capex programmes but a lot of this was offset by some large expected move-outs in the period. With occupancy levels remaining stable, the Company has been able to grow substantially whilst preserving the opportunity that remains within its vacancy.

2. €100 million FFO milestone drives dividend

The Company stated an ambition to achieve an FFO run-rate of more than €100 million per year in FY 2018/19 when it reported an FFO of €48.4 million. The Company's reported €102.1 million FFO this year means that it has achieved this target in its fourth year of trading after making this statement. Whilst a reasonable portion of this growth over the last four years has come from acquisitive growth, including the BizSpace acquisition, Sirius has reported continued like-for-like rental growth in excess of 5% over this period. During this time Sirius has only raised €159.9 million of new equity (to fund the BizSpace acquisition) meaning that its FFO per share has increased from 4.80c for the year ended 31 March 2019 to 8.74c for the year ended 31 March 2023. This has resulted in Sirius' dividend increasing from 3.36c per share in the year ended 31 March 2019 (based on 70% of FFO pay-out ratio) to 5.68c per share for the year ended 31 March 2023 (based on a 65% pay-out ratio).

3. Strong balance sheet

The Company maintains a strong and robust balance sheet with almost €1.2 billion of net assets and an adjusted NAV per share of 109.21c (31 March 2022: 108.51c). The total Group debt of €975.1 million is made up of 75% unsecured debt and 25% secured debt and only €49.3 million, or 5%, of total debt, expires within the next three years. In addition to

the new €170.0 million Berlin Hyp facility which was financed early by seven years to 31 October 2030, the Company further financed a new €58.3 million Deutsche Pfandbriefbank ("PBB") facility on

26 May 2023, extending its maturity by seven years to 31 December 2030 in advance of its maturity date of

31 December 2023. The financing of these two new secured facilities well in advance of their maturity is indicative of the strong relationships that Sirius has with its financiers. These facilities total €228.3 million and were finalised with interest rates higher than those currently in place. When these new interest rates commence at the end of 2023, it will take the Group's cost of debt from 1.4% to 2.1%, the average debt expiry will increase to 5.0 years from 3.3 years and Sirius will still maintain significant headroom on interest

Financial statements

1. Refer to glossary of terms in the Annual Report and Accounts 2023.
2. Including assets held for sale.
3. The Company has chosen to disclose certain Group rental income figures utilising a constant foreign currency exchange rate of GBP:EUR 1.1374, being the closing exchange rate as at 31 March 2023.

cover ratios. In addition to this, the Group maintains €99.2 million of cash at the bank net of tenant deposits and bank guarantees on the balance sheet as well as 125 unencumbered assets with a book value of €1.6 billion.