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Sirius Real Estate Limited
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== Risks== As with any investment, investing in Sirius carries a level of risk. Overall, based on the Sirius' market beta (i.e. 1.06), the degree of risk associated with an investment in Sirius is 'medium'. Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more/most accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of between 0.5 and 1.5. Further information about the beta ratings can be found in the appendix section of this report. The key risks that could affect the group's medium-term performance can be found in the table below.<ref>Sirius Real Estate Limited.</ref> {| class="wikitable" !Risk area !Principal risk(s) |- | rowspan="4" |Financing |Availability and pricing of debt |- |Compliance with loan facility covenants |- |Availability and pricing of equity capital |- |Reputational risk |- | rowspan="2" |Valuation |Property inherently difficult to value |- |Susceptibility of property market to change in value |- | rowspan="3" |Markets |Participation within two geographically diverse markets |- |Reliance on specific industries and the SME market |- |Reduction in occupancy |- | rowspan="2" |Acquisitive growth |Decrease in number of acquisition opportunities coming to market |- |Failure to acquire suitable properties with desired returns |- | rowspan="3" |Organic growth |Failure to deliver capex investment programmes |- |Failure to refuel capex investment programmes |- |Failure to achieve targeted returns from investments |- | rowspan="4" |Customer |Decline in demand for space |- |Significant tenant move-outs or insolvencies |- |Exposure to tenants' inability to meet rental and other lease commitments |- |Tenant affordability |- |Regulatory and tax |Non-compliance with tax or regulatory obligations |- |People |Inability to recruit and retain people with the appropriate skillset to deliver the Group strategy |- | rowspan="3" |Systems and data |System failures and loss of data |- |Security breaches |- |Data protection |- | rowspan="5" |Macro-economic |Impact of the Covid-19 pandemic |- |Inflationary pressure leading to increased costs |- |Interest rate movements impacting the commercial real estate market |- |Delays in cash collection and tenant insolvencies |- |Energy supply shortages caused by a variety of economic and geopolitical factors |- | rowspan="4" |ESG |Unforeseen costs relating to physical and transition risks associated with climate change |- |Reputational risk |- |Failure to meet shareholder and societal requirements or expectations |- |Restricted access to financing market due to higher requirements ("green financing") |- |Foreign currency |Financial impact of uncontrollable foreign currency fluctuation on earnings and net asset value |}
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