The DIC Group is one of the leading investors in the German market for commercial real estate

Press Release

DIC Asset AG braves the crisis, posting sound consolidated net income of EUR 18.5 million

Frankfurt, 12.11.2008

DIC Asset AG (German Securities ID 509840 / ISIN DE0005098404) today presented its interim report for the nine months of the 2008 financial year. The company withstood an increasingly challenging market environment, posting consolidated net income of EUR 18.5 million for the first nine months of 2008. DIC Asset AG has thus once again generated an attractive return of 13 per cent after taxes. Rental income was the main contributor to this result, with another strong (57 per cent) increase, to EUR 101.0 million (9m 2007: EUR 64.4 million).

EBITDA (earnings before interest, income taxes, depreciation and amortisation) grew by a remarkable 32 per cent, to EUR 92.0 million (9m 2007: EUR 69.8 million). Cash flow from operating activities (after interest and taxes paid) rose by EUR 6.8 million, to EUR 29.3 million (9m 2007: 22.5 million).

FFO (funds from operations, earnings before depreciation and amortization, taxes and profits from sales, development projects and dividend income) was up strongly year-on-year, growing 32 per cent to EUR 38.9 million (9m 2007: EUR 29.4 million). FFO per share increased to EUR 1.24 (9m 2007: EUR 1.03). Operating profit before depreciation and amortisation (EBDA) thus rose by 4 per cent, to EUR 39.5 million, equivalent to operating profit per share of EUR 1.26 (9m 2007: EUR 1.32). Reflecting the development of consolidated net income, earnings per share declined to EUR 0.59 (9m 2007: EUR 0.83).

The decline in consolidated net income, to EUR 18.5 million (9m 2007: EUR 24.0 million) was predominantly attributable to a change in sales strategy, which was adapted to the prevailing market environment, as DIC Asset AG successfully focused on sales of small-to-medium sized properties, with smaller transaction sizes. In a market that was obviously difficult during the first nine months of 2008, a total of 12 properties with an aggregate value of EUR 56 million were sold.

The lower level of sales was the main contributing factor to a 16 per cent decrease in total revenues for the first nine months of 2008, to EUR 140.6 million (9m 2007: EUR 167.4 million). In contrast, the strong increase in rental income, to EUR 101.0 million (up 57 per cent), reflected the expansion in the real estate portfolio as well as successful letting activities. New rentals for a total of 158,300 square metres of floor space were contracted during the first nine months of 2008 – up 71 per cent on the same period in 2007, and equivalent to EUR 16.6 million in annual rental income. Rental income increased by approx. 1.5 per cent compared to the beginning of 2008.

DIC Asset AG further optimised its operating efficiency as it continues to grow the business, thanks to cost-cutting measures and economies of scale. Total expenses were reduced by 38 per cent, to EUR 69.6 million (9m 2007: EUR 111.4 million), mainly due to lower asset disposals reflecting the lower volume of sales. At the same time, the 39 per cent increase in staff and administrative expenses, to around EUR 11.0 million, was clearly lower than growth in rental income.

DIC Asset AG’s total assets increased by 4 per cent, to EUR 2.2 billion as at 30 September 2008, with net liquidity of EUR 69.2 million.

Long-term assets rose from EUR 1.9 billion at the 2007 year-end to EUR 2.1 billion. DIC Asset AG has secured its long-term financing: long-term fixed interest rate agreements are in place for 86 per cent of financial debt of EUR 1.6 billion, with close to 60 per cent having a maturity of over five years. Amounts due in the next 12 months only amount to approx. EUR 37.3 million (2.4 per cent), EUR 19 million (1.2 per cent) maturing in the next 1-2 years, and EUR 30.2 million (1.9 per cent) in the next 2-3 years.

Outlook: DIC Asset AG already achieved 90 per cent of its rental budget for 2008 after the first nine months, and expects to exceed its target level of 175,000 square metres of let floor space by the end of the year. At the same time, the company will continue to pursue its selling activities; given the prevailing market problems, it will focus on small-to-medium-sized properties. Taking into account the business performance seen to date, DIC Asset AG affirms its forecast published after the first half of 2008, expecting consolidated net income for the full year at an attractive level of between EUR 25 million and EUR 27 million. At EUR 54 million to EUR 56 million, full-year operating profit before depreciation and amortisation (EBDA) will be in line with the EUR 55.9 million figure reported in 2007.

Ulrich Höller, Chairman of the Management Board of DIC Asset AG, commented on the results: "The high quality of our portfolio secures stable cash flows: clearly, this affirms our business model. Furthermore, we anticipate equity investor demand for businesses with sustained value once the current crisis is over. It is particularly during turbulent times – such as the situation we are currently experiencing – that our sound, long-term financing structure and our sustainable cash flows show their true value."

About DIC Asset AG:
Established in 2002, DIC Asset AG, with registered offices in Frankfurt/Main, is a real estate company with a dedicated investment focus on commercial real estate in Germany, pursuing a return-oriented investment policy. DIC Asset AG’s real estate portfolio includes around 1.3 million m² of floor space, spread over approx. 340 properties. The portfolio is divided into three segments: the Core portfolio includes the proprietary portfolio held on a long-term basis and offering stable, attractive rental yields; the Value-Added portfolio contains real estate with promising performance potential over the medium term; while the Opportunistic Co-Investments portfolio is comprised of real estate investments that have a more pronounced risk/return profile, which are placed with third parties following a repositioning under an individual business plan. Real estate assets under management currently amount to approx. EUR 3.5 billion. DIC Asset AG has been included in the SDAX® segment of the Frankfurt Stock Exchange since June 2006.

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