Sirius getting fewer tenant enquiries


Sirius getting fewer tenant enquiries

Published Date: 2020-03-26 | Source: Stephen Gunnion | Author: Stephen Gunnion

Sirius getting fewer tenant enquiries

The German real estate group says underlying occupancies are likely to dip but demand for storage space is on the rise.

Sirius Real Estate says it is getting fewer enquires from new tenants as a result of the Covid-19 pandemic, which will result in a reduction in new lettings and lower occupancy rates in the months ahead. However, the German-focused real estate group says it doesn't expect any material impact to its trading profit for the year to end-March as a result of the virus.

Sirius operates branded business parks that provide conventional offices, flexible workspace, manufacturing and storage facilities across Germany. In an update, it said it had put all meeting room and conference facility hire on hold until the end of April, which would have a marginal impact on revenues and cash flow. The run rate or core enquiries for new tenants had reduced by 50%, which it expected to translate into a 10% reduction in new lettings this month and a 35-40% decline in monthly new lettings next month and into May. This could lead to a reduction of about 1% in underlying occupancy, it said.

Countering that, it reported increased demand for storage space from both new and existing commercial tenants, as well as new self-storage customers. Storage makes up just over a third of space in the group's portfolio.

Sirius said its balance sheet remained strong, with total cash balances currently in excess of €110 million, €90 million of which was unrestricted. In addition, it €39.3 million of undrawn facilities and a further €10.1 million to be received on 1 April from the disposal of a property in Weilimdorf. It said it had significant headroom within its current debt covenants and was well placed to absorb a prolonged period of uncertainty. The German government had also introduced a number of financial protection to help support businesses.

Sirius said it would issue a trading update in the second week of next month. Its shares closed 16% higher at R12.50 yesterday.

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