25 April 2017 Sirius Facilities GmbH - Providing space for business - - PowerPoint PPT Presentation

Sirius Facilities GmbH - Providing space for business

25 April 2017

Sirius Facilities GmbH - Providing space for business

Andrew Coombs CEO

Sirius Facilities GmbH - Providing space for business

Welcome & Housekeeping

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Sirius Facilities GmbH - Providing space for business

Introductions

Andrew Coombs, Group CEO Alistair Marks, Group CFO Rudiger Swoboda, Sales Director, Sirius Facilities GmbH Kremena Wissel, Marketing Director, Sirius Facilities GmbH Diarmuid Kelly, Finance Director, Sirius Facilities GmbH Martin Belik, Cushman & Wakefield

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Sirius Facilities GmbH - Providing space for business

Agenda

10:00 Introduction Andrew Coombs, Group CEO 10:05 German Real Estate market Martin Belik, Cushman & Wakefield 10:30 Sirius In-house Model Kremena Wissel, Marketing Director Rüdiger Swoboda, Sales Director Diarmuid Kelly, Finance Director Q&A 11:10 Break and Refreshments 11:30 Growth Strategy & Case Studies Andrew Coombs, Group CEO Alistair Marks, Group CFO Kremena Wissel, Marketing Director Rüdiger Swoboda, Sales Director Q&A 12:30 Lunch 14:30 Close

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Sirius Facilities GmbH - Providing space for business

Journey

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Sirius Facilities GmbH - Providing space for business

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Returns

Sirius Facilities GmbH - Providing space for business

Marketing

Kremena Wissel Marketing Director

Sirius Facilities GmbH - Providing space for business

Sirius Marketing Structure

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In-house 8 experts

Sirius Facilities GmbH - Providing space for business

Capturing Demand: Enquiries per Month

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<300

2010

>1,000

2017

Sirius Facilities GmbH - Providing space for business

Marketing Performance: Enquiries

>90%

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Online

Sirius Facilities GmbH - Providing space for business

What Makes Us Unique?

Clear line of sight to the customer Online lead generation

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Sirius Facilities GmbH - Providing space for business

10 Brands

Brands vs. Products and Services

12 Products & Services

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Sirius Facilities GmbH - Providing space for business

Sirius Customers: Blue Chip Companies

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• TOP 50 tenants (Siemens, GKN, MAN)
• Long leases
• Predominantly industrial space

50%

• f the revenue in 16/17

Sirius Facilities GmbH - Providing space for business

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Sirius Customers: SMEs

• 3,650 tenants
• Flexible leases
• Comprehensive range of space

and value-added services

50%

• f the revenue in 16/17

Sirius Facilities GmbH - Providing space for business

Case Study: Office

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Sirius Facilities GmbH - Providing space for business

Case Study: Storage

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Sirius Facilities GmbH - Providing space for business

Sirius Integrated Marketing Process

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Sirius Facilities GmbH - Providing space for business

Marketing Tactics: Organic Search

• In-house
• 7 websites
• 6,506 landing pages
• 100,000 potential

keywords

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25% of all enquiries

Sirius Facilities GmbH - Providing space for business

Marketing Tactics: Affiliates

• In-house
• 20 property portal affiliates
• 450 listings/portal
• 9,000 online listings
• Managed on a daily basis

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30% of all enquiries

Sirius Facilities GmbH - Providing space for business

Marketing Tactics: Google Campaigns

• In-house
• 433 campaigns per month
• >10,000 keywords
• Managed on daily basis

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25% of all enquiries

Sirius Facilities GmbH - Providing space for business

Marketing Tactics

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Remaining 20% of all enquiries

Sirius Facilities GmbH - Providing space for business

Sirius Marketing Success Factors

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Do not have to rely on agents to fill the space Clear line of sight to the customer Controlling enquiries flow- ability to turn up and down flow of enquiries with immediate effect Optimizing cost of enquiry

Sirius Facilities GmbH - Providing space for business

Sales

Rüdiger Swoboda Sales Director

Sirius Facilities GmbH - Providing space for business

Sirius − Sales Performance 2010

Conversion Rate Deals Per Month

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Sirius Facilities GmbH - Providing space for business

Sirius − Sales 2010

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Structure Reporting KPIs Training Quality Control Vision/ Mission Broker

✔

Sirius Facilities GmbH - Providing space for business

Sirius − Sales Performance Today

Conversion Rate Deals Per Month

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Sirius Facilities GmbH - Providing space for business

What Makes Sirius Unique?

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Sirius Facilities GmbH - Providing space for business

Sirius − Regional Structure

Key Account Manager Regional Sales Manager ✓ 11 Properties Regional Sales Manager ✓ 11 Properties Regional Sales Manager ✓ 8 Properties Regional Sales Manager ✓ 11 Properties National Key Account Manager Key Account Manager 11 Centre Managers 6 Centre Managers 6 Centre Managers 7 Centremanager Marketing

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Sirius Facilities GmbH - Providing space for business

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Nike ✓ 510,232 Sqm ✓ 1,631 Tenants Manuel ✓ 192,482 Sqm ✓ 647 Tenants Christian ✓ 244,967 Sqm ✓ 843 Tenants Doris ✓ 446,958 Sqm ✓ 708 Tenants

• Training
• Coaching
• New sales
• Retention
• Rent roll
• P&L

Sirius − Regional Sales Managers

Sirius Facilities GmbH - Providing space for business

1 National Key Account Manager TOP 60 TENANTS ✓ 677,060 Sqm ✓ €42,616,677 rent roll

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2 Key Account Managers ✓ New sales & expansions > 600 Sqm ✓ Build and maintain regional brokers network

Key Account Managers

Sirius Facilities GmbH - Providing space for business

Sirius − Telesales Team

1 Team Leader 5 Team Members

• Schedule viewings
• Detailed information is gathered from all

enquiries and saved into the CRM system

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Sirius Facilities GmbH - Providing space for business

Sirius − Process Flow

Marketing Telesales Team Centre Manager

GENERATING LEADS

✓ 1,000 leads per month

CONVERTING LEADS

✓ Answering enquiries ✓ Scheduling viewings ✓ Collect Data

CONSEQUENTIAL TASKS

✓ Viewings ✓ Sales ✓ Customer relations ✓ Renewal ✓ Debt collection ✓ Lead generation Every staff member has monthly performance targets Gets monitored on a daily basis Mystery shopped in order to ensure compliance with policies and objectives

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Sirius Facilities GmbH - Providing space for business

Enquiry & Scheduling Viewing Welcome & Relationship Building Presentation & Guided Tour Final Discussion & Recommen- dation ‘Quick Quote’ & Sales Closure Follow Up

Sirius − 10 Step Sales Process

Telesales Centre Manager

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Sirius Facilities GmbH - Providing space for business

Sirius − Sales Metric

Enquiries at least of all enquiries should be personally answered (Contact Ratio)

95 %

Viewings

70 %

at least should be appointed to our sites (Appointment Ratio)

60 %

at least should actually show up for the viewing (Viewing Ratio) Letting

25 %

at least of all viewings should rent a space (Closing Ratio)

Target: Overall Sales Conversion of 15 %

2016 ~ 12%

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Sirius Facilities GmbH - Providing space for business

Sirius − Telesales Metric

Enquiries to VIEWING SCHEDULED VIEWING HELD to Enquiries Enquiries to DEALS

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2016 ~ 73% 2016 ~ 58 % 2016 ~ 12 %

Sirius Facilities GmbH - Providing space for business

Sirius − Telesales Performance

Outgoing Calls Per Month Incoming Calls Per Month Total Calls Per Year

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✓ Answering all enquiries within 20 working minutes ✓ Up to 10 follow up activities for 1 lead ✓ Using phone calls, SMS and e-mail

Sirius Facilities GmbH - Providing space for business

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Sales Process

• Evaluate adherence to sales process

Enquiries And Viewings

• Ensure a consistent approach to handling enquires and viewings

Sales Performance Increase

• Performance increases naturally, if employees know they are being monitored

Conversion Rate

• Increase our conversion rates

Return on Investment

• Maximise the return on investment

Sirius − Mystery Shopping

Sirius Facilities GmbH - Providing space for business

Sirius − Mystery Shopping Minimum Standards

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Sirius Facilities GmbH - Providing space for business

In Addition − Relationship With Brokers

Broker framework contracts

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Sirius Facilities GmbH - Providing space for business

Sirius − On Site Service

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31 Operations Managers

✓ Manage needs of customers ✓ Repair & maintenance ✓ Provider relations ✓ Service charges

Sirius Facilities GmbH - Providing space for business

✓ Quality and Quantity of input determines the output ✓ Sales Process ✓ Mystery Shopping ✓ Managed through KPIs ✓ Monitored daily ✓ Sirius Training Academy ✓ Incentives with Sales Commission ✓ Largest Industry Sales Force ✓ 31 Centre Managers ✓ Everything Inhouse ✓ 3,829 Tenants

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In Summary

Sirius Facilities GmbH - Providing space for business

Service Charge

Diarmuid Kelly Finance Director

Sirius Facilities GmbH - Providing space for business

Service Charge Improvement

• Since 2010 Sirius has built a highly specialised in-house team that

has delivered tangible results

• Irrecoverable service charge costs have decreased by 53% over 6

years which equates to a €5.8m annual benefit

44 March 2010 March 2016 Change Service Charge Income (€m) 24.8 36.7 48% Service Charge Costs (€m) (35.7) (41.8) 17% Irrecoverable Costs (€m) (10.9) (5.1)

• 53%

Recovery Percentage 69.5% 87.8% 26% Average Occupancy 72.0% 80.0% 8%

• No. of Service Charge Employees

6 7

Sirius Facilities GmbH - Providing space for business

What are Service Charge Costs?

Service charge costs include all costs directly related to the ongoing running of our properties – 27 cost positions

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Property management Facility management Running costs Utilities €3.5m €11.5m €21.5m €5.3m

• Garden care
• Technical

maintenance

• Cleaning
• Snow

removal

• Security
• Land tax
• Insurance
• Public

services

• Sewage water
• Fresh water
• Heating
• Electricity

2016 annual cost €41.8m

Sirius Facilities GmbH - Providing space for business

How Does Sirius Increase Recovery?

Transparency Understanding Satisfaction

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Customer

Cost Control Measure & Allocate Increase Prepayments

Sirius

• Market practice is to recover in line with occupancy
• Sirius recovers in excess of occupancy

Recovery

Sirius Facilities GmbH - Providing space for business

Recovery in Action

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Cost Control

• Scope of services
• Bulk buying power
• On-site management

Measurement & Allocation

• Installation of more than 11,000 meters to accurately

measure consumption since 2010

• Inventory lists of technical equipment created for all sites to

drive cost allocation

Sirius Facilities GmbH - Providing space for business

Recovery in Action

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Increase Prepayments

• Prepayments as a percentage of service charge costs have increased from

60% to 89%

• Number of service charge disputes decreased by 50%

Team

• Full time dedicated team of seven – incentivised with annual targets per site

to further improve recovery 2010 2011 2012 2013 2014 2015 2016

Prepayments (€m)

19.3 25.9 27.7 30.9 31.5 34.5 37.0

Service charge costs (€m)

32.2 33.7 36.0 39.3 38.6 39.2 41.8

Prepayment coverage

60% 77% 77% 79% 82% 88% 89%

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Service Charge – The Future

• 87.8% recovery of costs as at March 2016
• Annual benefit to Sirius of €5.8m per year
• Over time we will continue to implement and benefit from our recovery

strategies

• Further improvements to come from occupancy and implementation
• f recovery strategies – every 1% increase in recovery equates to

c.€470k of extra recurring profit

• Our model is scalable with no additional cost required to reach 60

sites

Sirius Facilities GmbH - Providing space for business

Growth Strategy

Andrew Coombs Group CEO

Sirius Facilities GmbH - Providing space for business

Sirius Growth Strategy

• The portfolio has doubled in the last three years and is now

valued at c.€800 million

• Platform engineered to manage €1.2 billion of German real estate
• The business benefits from increased scale – gross to net ratios

continue to improve as we move closer to the €1.2 billion objective

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Sirius Facilities GmbH - Providing space for business

Sirius Growth Strategy

Organic Recycling Acquisitions Joint Venture

Low-risk exposure to large projects Assets with stable income & value add potential Mature assets into

• pportunistic

acquisitions Target 40% ROI

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Sirius Facilities GmbH - Providing space for business

Organic Growth

ACHIEVED TO DATE SQM INVESTMENT € INVEST PER SQM € RENT IMPROVEMENT € RATE € OCCUPANCY COMPLETED 139,900 10,823,356 77 7,627,219 5.82 78%

• Programme continues to deliver good returns
• 45,000 sqm of sub-optimal space identified for the development

programme expected to add a further c.€3 million of annualised rent

• Around 13,000 sqm of recently vacated space also identified for

improvement

• Significant investment opportunities for the recent Dresden, Wiesbaden,

Krefeld, Dreieich and Frankfurt acquisitions

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Sirius Facilities GmbH - Providing space for business

Recycling – Mature To Opportunistic

Sales Previous opportunistic acquisitions

• Bonn II annualised return on equity of 76%
• Ludwigsburg annualised return on equity of 44%

Date of Acquisition Site Cost Equity Profit since Acquisition Capex since Acquistion Valuation at Sep-16 Feb-15 Bonn II €3,316,230 €3,316,230 €787,819 €78,510 €6,900,000 Sep-15 Ludwigsburg €7,442,986 €5,082,986 €852,854 €331,282 €9,520,000

• Sale of mature assets and non-core assets (Munich, Dusseldorf,

Merseburg) at blended 10% premium to book value

• Sale of land (Colln Parc land) at 81% premium to book value
• Total proceeds of €103m

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Sirius Facilities GmbH - Providing space for business

Acquisitions

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Site Capex Since Acquisition to Sep 2016 Occupancy Increase Market Value Increase Annualised NOI Increase € % % % Mahlsdorf 524,163 5% 16% 19% Potsdam 235,413 11% 17% 11% Bonn II 78,510 17% 108% 99% Aachen I 352,337 12% 18% 17% Ludwigsburg 331,282 6% 28% 25% Weilimdorf — — 4% 4% Heidenheim 60,031 2% 13% 3% Total 1,581,736 7% 19% 17%

• €19.5m valuation gain
• €1.5m increase in net operating income
• Good momentum, ahead of business plan

Owned for more than 1 year

Sirius Facilities GmbH - Providing space for business

Joint Venture

• A strategic partnership
• Specifically for larger opportunities – typically over €50 million
• Sirius would be a minority partner
• Sirius Facilities GmbH would be the asset manager, thereby

attracting management fees

• Targeting larger transactions with cash-on-cash returns of 20%+

including management fees

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Sirius Facilities GmbH - Providing space for business

In Conclusion

• The platform can sustain significant growth from here
• We will continue to recycle mature assets...
• ...and to invest in sites with investment management opportunities
• We will also consider joint ventures as a low risk way of gaining

exposure to larger assets

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Sirius Facilities GmbH - Providing space for business

Munich Rupert-Mayer Strasse Business Park

Sirius Facilities GmbH - Providing space for business

Acquisition – July 2008

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• Owner occupied by Siemens
• Leaseback of 100% of space to Siemens
• Located in Munich
• 72k SQM of office & warehouse space
• Total purchase price - €57.5m
• Net yield 7.4%

Sirius Facilities GmbH - Providing space for business

Asset Transformation – Change of Tenant Mix

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At Exit

• Replaced single tenant
• Secured core anchor tenants
• n conventional long term

contracts

• Total of 109 tenants

Siemens 100%

Tenant Mix - At Acquisition

ASM 32% BECKMAN 11% UNIFY 10% SMART SPACE 13% OTHER SMEs 34%

Sirius Facilities GmbH - Providing space for business

4.00 4.20 4.40 4.60 4.80 5.00 5.20 5.40 5.60 5.80 6.00 €m

TOTAL INCOME

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Asset Transformation – Income

Post Acquisition Replace and Reposition Grow & Recycle ▪ Siemens Move Out over 4 year period ▪ Anchor Tenants Move Ins & Expansions: ASM, Beckmann, Unify ▪ Investment in vacant space – creation of SMSP products ▪ Average rate €7.41 ▪ Occupancy 88% ▪ Average rate €8.25 ▪ Occupancy 90% ▪ Average rate €6.66 ▪ Occupancy 74% ▪ Average rate €5.92 ▪ Occupancy 100%

Sirius Facilities GmbH - Providing space for business

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Developing Sub-Optimal Space

Annual Rent €170k Total Sqm 1,561 Investment €101k Before SmartSpace Conferencing SmartSpace Storage - Basement After SmartSpace Office Annual Rent €300k Total Sqm 1,634 Investment €108k Annual Rent €60k Total Sqm 616 Investment €70k

Sirius Facilities GmbH - Providing space for business

40 45 50 55 60 65 70 75 80 85 90 €m

VALUATION

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Disposal

• Increased average rate

from €5.92 to €8.28

• Improved service charge

recovery by €600k

• Notarised for sale at

€85m, 9% premium to Sep 16 book value 49% premium to acq costs

• 5.7% EPRA Net Initial

Yield for purchaser

• Management contract in

place for 6 years

75% increase in value from low point in 2012 Notarised for sale at €85m

Sirius Facilities GmbH - Providing space for business

Crystallising Profit

• Replaced single tenant with multiple tenants on higher rents
• Invested into sub-optimal space to create higher yielding products to

drive income and value

• 30% increase in Net Operating Income
• Successfully re-positioned asset and sold at premium to book value
• Management contract expected to deliver income through to 2023

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Sirius Facilities GmbH - Providing space for business

Ludwigsburg Business Park

Sirius Facilities GmbH - Providing space for business

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Ludwigsburg – Acquisition Rationale Opportunistic

• Purchase in region around Stuttgart

(June 2015)

• Operational synergies
• Space to develop
• High tenant demand
• Purchased at a discount to market

value

Sirius Facilities GmbH - Providing space for business

Ludwigsburg

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Ludwigsburg – Investment Case

OPPORTUNITY

• 28k Sqm of Storage, Production & Office

Space

• Located in Ludwigsburg (pop. 90k), 12km

north of Stuttgart

• Total purchase price: €7.4m
• Net yield 10.3%, €266/Sqm

Sirius Facilities GmbH - Providing space for business

Ludwigsburg – Asset Integration/Transformation

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NOTARIZATION

• Sales & marketing plan
• Services integration plan
• CAPEX plan

09/2015 KPIs AT ACQUISITION Value: €7.4m SC Irrecs: €(0.20m) Occupancy: 76% NOI: €0.77m Rent Roll: €0.97m Rate/Sqm: €3.96 COMPLETION

• Branding
• Staffing

INTEGRATION

• CAPEX investment
• Space transformation
• Lead generation

06/2015 12/2015

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EXAMPLE – Before Investment

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EXAMPLE – After Investment

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EXAMPLE – Investment Details

Space Investment Finished Conversion Forecasted Rental Improvement Actual Achieved Rent Roll 03/17 755 Sqm Product Sirius branded SmSp offices €285k, €377/Sqm 30/11/2016 €58k p.a. at 80% occupancy €28k p.a. at 41% occupancy ROI 20%

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Ludwigsburg – Lead Flow (As at Mar 31 2017)

into converted

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Rent Roll €1.21m + €0.24m Rate/Sqm €4.64 + €0.68 Asset Value €9.95m + €2.55m

Ludwigsburg – Asset Management Summary

Occupancy 77.1 % + 1.1 % €0.97m €3.96 €7.4m 76%

June 2015 March 2017

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Plan after 3 years

09/2018

Ludwigsburg – Asset Integration/Transformation

KPIS AT ACQUISITION Value: €7.4m Occupancy: 76% Rent Roll: €0.97m SC Irrecs: €(0.20m) NOI: €0.77m Rate/Sqm: €3.96

IRR Geared = 60% Ungeared = 34%

KPIS AFTER 3 YEARS Value: €15.8m + €8.4m Occupancy: 97% + 22% Rent Roll: €1.57m + €0.60m SC Irrecs:€(0.05m) + €0.13m NOI: €1.52 m + €0.75m Rate/Sqm: €4.74 + €0.77

Sirius Facilities GmbH - Providing space for business

Aachen Business Park

Sirius Facilities GmbH - Providing space for business

Aachen Region Maas/Rhein

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Sirius Facilities GmbH - Providing space for business

Aachen

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Sirius Facilities GmbH - Providing space for business

Aachen

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Aachen – Acquisition Rationale VALUE ADD

✓ Location ✓ 24k Sqm of Office, Production & Storage space ✓ Good building conditions ✓ High tenant demand ✓ Space to develop (25%) ✓ Great availability of parking ✓ Purchased at a 14% discount to market value (€18.7m) ✓ Net yield of 8.3%

Aachen

Sirius Facilities GmbH - Providing space for business

Aachen – Asset Integration/Transformation

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NOTARIZATION ✓ Sales & marketing plan ✓ Services integration plan ✓ CAPEX plan 01/2015 KPIs AT ACQUISITION Value: €18.7m SC Irrecs: € (0.20m) Occupancy: 75% NOI: €1.54m Rent Roll: €1.75m Rate/Sqm: €7.95 COMPLETION ✓ Branding ✓ Staffing INTEGRATION ✓ CAPEX investment ✓ Space transformation ✓ Lead generation 03/2015 07/2015

Sirius Facilities GmbH - Providing space for business

EXAMPLE – Before Investment

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EXAMPLE – After Investment

Sirius Facilities GmbH - Providing space for business

EXAMPLE – Investment Details

Space Investment Finished building Forecasted rental improvement Actual achieved rent roll 3/17 843 Sqm Product 24 Sirius branded SmSp offices €104k, €123/Sqm Dec 2015 €73k p.a. (March´18) at 80% occupancy €65k p.a. at 71% occupancy, 17

• ut of 24 offices rented

ROI 62.5 %

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Aachen – Lead Flow (as at 31 Mar 2017)

14 %

into converted

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Rent Roll €2.1m + €0.35m Rate/Sqm €8.14 + €0.19 Asset Value €22.4m + €3.7m

Aachen – Asset Management Summary

Occupancy 89 % + 14 % €1.75m €7.95 €18.7m 75%

At acquisition 03/2015 Today 03/2017

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KPIS AFTER 3 YEARS Value: €27m + €8.3m Occupancy: 96% + 21% Rent Roll: €2.27m + €0.52m SC Irrecs: €(0.12m) + €0.08m NOI: €2.15 m + €0.60m Rate/Sqm: €8.20 + €0.25

Plan after 3 years

03/2018

Aachen – Further Upside Potential

KPIS AT ACQUISITION Value: €18.7m Occupancy: 75% Rent Roll: €1.75m SC Irrecs: €(0.20m) NOI: €1.54m Rate/Sqm: €7.95

IRR Geared 33% Ungeared 19%

Sirius Facilities GmbH - Providing space for business

Questions?

Q&A