Hello, welcome to the Sirius Real Estate Trading Update call. My name is Laura, and I will be your coordinator for today's event. Please note this call is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Andrew Coombs, to begin today's conference. Thank you. Good morning, everyone, and thank you, Laura. Thank you to everyone for taking the time this morning to listen to Sirius' trading update for the year ending March 2023. My name is Andrew Coombs. I'm the Chief Executive Officer for the Sirius Group, and I'm joined this morning by Alistair Marks, who is the group's interim CFO, as well as Tariq Khader, who is the Financial Director for BizSpace in the U.K. Maybe I can start by explaining that the group expects to deliver results in terms of our funds from operations that are in line with market expectations. One of the reasons for this is the fact that we've increased the group's rent roll for the period by more than 8%. Our balance sheet remains strong, bolstered by over EUR 120 million of cash. We have locked down around 90% of our lending for at least the next 3 years, and we're currently working on a further 6% of outstanding debt, which we intend to agree terms on in the near future. During the period in question, we have executed EUR 90 million of disposals and acquisitions, disposing of selected assets at a blended premium of 25% above their book value. In summary, we are growing our revenues, our balance sheet is strong, we have our lending under control, and we continue to demonstrate that we are able to sell assets in excess of valuation. The group is due to announce its audited accounts on Monday, the 5th of June, at which point we'll be able to present a lot more detail and depth. For now, Alistair, Tariq, and I are happy to try and answer whichever questions we can at this point. Thank you. Thank you. Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Thank you. We'll take our first question from James Carswell at Peel Hunt. Your line is open. Please go ahead. Good morning, and thanks for the call and the update. Just a quick question on the UK. I mean, you've obviously rotated some of the tenant mix and improved the tenant mix in order to really push that rate on. I'm just wondering how far through that process are we? Do you think most of that kind of rotation of tenants is now done? When we look over kind of the medium term in terms of that UK portfolio, are you still finding lots of really good opportunities in terms of you reconfiguring the buildings and doing more things or have most the, kind of the easy wins, so to speak, been done? I think if I think around the U.K., there are sort of really, you know, four things that, you know, aim to do. Four things that we had in mind when we purchased the business. If I think of two of those very specifically, two of them were to establish a very strong sales and marketing area that effectively mirrors the operation that we have in Germany. Now, it takes years to evolve that properly, but I think in the last year in particular, we have established a really good basis where that, you know, sales and marketing piece lies. For example, we are now attracting over 1,000 inquiries for new tenants in the U.K. We have doubled the sales conversion. We have, you know, business as usual now, more than 300 viewings per month. We are recruiting over EUR 1 million, sorry, over GBP 1 million of new tenants each month. 18 months ago, the business was recruiting about GBP 250,000 of new tenants. You know, we have begun to really get the sales and marketing platform in the U.K. moving. The reason that's so important is because of the two things I mentioned, the second one was price. You see, you can only really lift your price if you've got a very, very strong sales and marketing area. Unless you're gonna literally just follow the market, you can only sustain the lifting of your price. By having a very strong sales and marketing area. Those two things have been working in unison over the last 12 months. Whilst we still think there is more to go, we think we are beginning to close the gap between, you know, where the market is in the U.K. and where BizSpace has sort of trailed behind. I would say we're over 50% of the way through getting the benefits of that specific piece. In terms of the portfolio itself, in terms of, you know, selling assets and buying assets, you know, we demonstrated with Camberwell and the sale of, you know, that property at 2% that it was substantially undervalued within the portfolio. There are other assets that would fall into that category. Going forward, you know, there needs to be more recycling of assets in the U.K. business in order to get that portfolio where we really want that. Don't forget, we're still yet to reinvest the proceeds of places like Camberwell into the acquisition of new sites. We're really just waiting for the right point in the market to actually do that. I mean, I think the answer to your question is, we still think that there are a couple of years of progress that we have yet to make in terms of taking, I don't wanna say low-hanging fruit, but the low-hanging fruit out of you know, the U.K. business. We are by no means 100% of the way through the journey. If we look specifically at sales, marketing, and pricing, I would say we're over halfway through the journey, in terms of catch-up where that's concerned. Hopefully that gives you a bit of color, James. Yep. No, that's brilliant. Thank you. Then maybe just another question on in Germany and the investment market. I mean, obviously you've been very active in the market this year. I mean, what are you seeing on the ground today? I mean, are you seeing activity happening, or is it very much things are on hold at the moment? What I would say to you is the transactional volumes are probably about 25% of what we would expect them to be at this point in a normal calendar year. It is quite difficult to really track, because whereas two years ago, you know, if anybody so much as leased a piece of land, they wanted to tell the whole world about it. Now, if you're buying or selling, people tend to keep their cards quite close to their chest, because people are still not sure whether the market is going to bottom out or continue to fall. Not only is there a lack of transaction, there is more secrecy in the market than there normally would be. My sense is that that is you know, bottoming out now. I would be surprised if, looking forward, we didn't see some of that volume coming back, but there isn't any specific evidence of that at this point in time. Okay, brilliant. Thank you. Thank you. We'll now move on to our next question from Charlotte Adolpho at Panmure Gordon. Your line is open. Please go ahead. Morning. Thank you for the presentation. The good trading update this morning. Just a quick question. You mentioned qualitatively the German occupancy was stable and the U.K. occupancy, as you've just discussed, you're kind of happy to take some of that back in order to smooth pricing. I just wondered if you could give an indication of what the occupancy levels are in each country. Secondly, just on your leverage levels, note the comment that kind of you're comfortable with where you're at pretty much in terms of it's beneficial for returns, but whether you expect further capital recycling to kind of reduce that level down going forward? Yeah. Thank you, Charlotte. Tariq, maybe I can come to you in a second around the occupancy levels in the UK, but maybe I can take the question on leverage, first. Yes, we would expect more asset recycling. That is very much part of our model. We're not a, you know, an aggregator of assets who wants to sit on them forever. We believe that there are a number of different benefits in terms of recycling, one of which of course is proving the values. You know, we think that's very, very important, particularly at this point in the cycle. In terms of our leverage, it is a little bit higher on an LTV basis than we'd really like to see. With over 70% of our debt being corporate debt, it's actually the net debt to EBITDA ratio that we are particularly focused on. I'm delighted to tell you that we've improved that from around 8 at the beginning of the year to somewhere around a ratio of about 7.5x now. We are conscious of LTV. We do wanna bring it down. With 70% of our debt being corporate debt, and with the corporate debt markets focusing on that net debt to EBITDA ratio, we understand that that is really, really important. We've made quite substantial progress where that's concerned. Of course, you know, some of that progress has come from us being able to grow the EBITDA through raising the rent roll by over 8%. What I would say, around occupancy levels in Germany is they're relatively stable. They might be plus or minus, you know, 1%. Of course, the ability to drive price is much, much higher than that. There is more fluctuation in occupancy levels in the U.K. Tariq, maybe at this point, I can hand over to you to give a little bit of color on that. Sure. Good morning, everyone. Occupancy levels in the U.K. at March 2022 were 90.5%. That dropped to 87% at the half year and has dropped slightly further to 86.5% at March 2023. We saw a bigger drop in occupancy in the first half of the year and a smaller drop in the second half of the year. Part of that lowering in the second half of the year was probably what Andrew said earlier about the sales and marketing machine, improving our sales conversion, viewing numbers and driving more traffic through the business for lettings. In Q1 this year, we've had our strongest ever quarter of sales with approximately GBP 3 million of new tenants coming in and signing up during that period of the year. Tariq, can you just remind me, whilst we've moved backwards on the occupancy for the year, what have we increased the average rate per square foot that our customers are paying? The average rate per square foot has gone up by about 14%, across the year. We've achieved 14% in price and lost about 4% in occupancy, and net net are about 10% better off. Yeah, that's correct. Great. Okay. Charlotte, does that give you enough idea? Yeah, that's brilliant. Thank you so much. Thanks. Thank you. Once again, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We'll now move on to our next question from Kai Klose at Berenberg. Your line is open. Please go ahead. Yes, good morning. I've got a quick question on the 5% on 5% like-for-like when it was in Germany. Could you indicate how much was coming from improving leases for existing tenants and from new lettings? What was the spread between move in and move out rents? I'm not 100% sure we can give that detail in this period. Alistair, is there any way you can articulate that? Yes. If you look at the rent roll in Germany, it's roughly stated about 84% for the whole year. You'll see our rate per square metre has increased from about 6.3 at the start of the year. We got to just above 6.5 at the interim, and I think we'll end at just over 6.8. A big chunk of that is actually coming from contractual increases and capturing the inflation. I would roughly say we haven't done the full analysis, but I would say roughly half of the 8% is coming from contractual increases and uplifts on renewals, and the other half is coming from tenant churn, and just letting up spaces at higher rates than what they moved out at. That is just a bit of a rough guess at this stage. We will obviously give full color on that in our year-end presentation. Thank you very much. Very last one from my side. Could you maybe indicate from a kind of tenant segment or which industry, from which industry you see a little bit more or less demand in terms of space in UK and in Germany? We don't have a dependency on any single industry sector of more than 3%. You know, when I joined Sirius over 10 years ago, we had 35% dependency on 1 customer, Siemens. You know, you don't wanna know how many percentage points dependency we had on certain vertical segments. What we've sought to do over the last decade is diversify in every sense of the word, including the tenant base. What that means is that we've resisted the temptation of becoming too dependent on automotive, as, you know, many of our competitors have, you know, got dependency of double digits on sectors like that. We have actively sought to make sure that we have, you know, sub 3.5% dependency on any single sector. I could talk to you more confidently about whether, you know, we're getting demand from top fifty, whether it's, you know, Mittelstand core SME or whether it's micro SME. All I can tell you about vertical sectors is, you know, we make sure that we don't overly trade into any of them. Understood. Many thanks. Thank you. We have no questions in the queue currently. As a final reminder, if you would like to ask a question, please press star one on your keypad now. Thank you. Folks, in the absence of any other questions, could I again thank you all for attending the call this morning and just remind you that we will be announcing detailed audited results on Monday, June the fifth. I'd be delighted to talk to you all further together with Alistair and Tariq and give you more detail and color on these results. I think what you can see is that we are trading in line with expectations. We feel that we've had reasonable progress over the last six months as well as the full year, I look forward to talking to you all again on Monday, June the fifth. Right. We have one last question over here from Romney Fox at Aberdeen. Your line is open. Please go ahead. Thanks so much. Andrew, sorry to interrupt you. Can you hear me all right? I can. Thank you, Romney. Sorry, I did press the button before you gave your closing speech. Apologies for interrupting. It looks to me that there's been an acceleration, which is great, in rent like-for-like in Germany. At H1, you talked about a 6-month like-for-like growth of sort of just over 2, it was 2.4. Now if you're talking about 8, then, you know. That's normally annualized 2.4. Is that right? Has something materially changed, or is that just indexation benefits? What's going on? Well, first thing is that we're presenting those figures on a constant currency basis. At the beginning of the year, the exchange rate was 1.18. At the exit, it's 1.14. You know, one of the reasons why you see bracketed that 7.7% is because the group comes down from 8.1 to 7.7 on a constant currency basis. If you look at the mix of that, there is a difference between Germany and the U.K. The growth in terms of rates has been stronger in the U.K than it has in Germany. It has still been strong in Germany. It is still more than doubled in the second half. The reason for that is, I think it probably too.k us about six months, i.e., the first half of the year, to really start to get our processes right in terms of using the platform to more effectively capture inflation. I say capture inflation because we don't talk to our tenants about inflation. We sell in a different way. Changing the way we sell probably took about six months to bed itself in. You're only just now beginning to see the real effect and the real power of the platform in terms of the pricing power within the market that we can, that we can really extract. You know, whilst I'm very cautious of what happens as inflation comes off, 'cause everyone's worried about inflation you know, kicking in, my biggest fear is when inflation starts to come down aggressively, you know, how you deal with customers at that point. You know, if things continue as they are at the moment, I think you will see that momentum to continue for some time. Fantastic. Well done, this might seem a little odd to say this on a public forum. Just to say, I have no interest in you selling Sirius to Blackstone or anyone else for anything less than a top friendly good price. For anyone who's listening, that's I have no reason to think you are doing that, I'm obviously referencing what's happened elsewhere in the market. You know, well done, you know, looking forward to more good things from Sirius in the years to come. Thank you. Romney, can I just follow up on that? Because, you know, as a buyer of Sirius shares, in November 2021 at 141, not only do I have a personal interest in making sure this vehicle continues to go on and to, how can I put it, recoup the value that it had back in 2021, but I also look forward to, you know, many years of producing these kind of results, and returning double digits back to shareholders. Good stuff. Thank you, everyone. Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.