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

Press Release

DIC Asset AG boosts Q1 results of 2014

Frankfurt, 12.05.2014

• FFO up 7 per cent, to EUR 12.0 million (Q1 2013: EUR 11.2 million)
  
• Volume of disposals already at EUR 36 million
  
• Forecast for 2014 FFO confirmed, at EUR 47 million to EUR 49 million

DIC Asset AG (German Securities ID A1X3XX / ISIN DE000A1X3XX4) today presented its interim report for the first three months of the 2014 financial year. Driven by continued momentum in its operating business, the Company posted a good start into the new year and achieved its first milestones for the year, on schedule.

Results driven by operative strength
DIC Asset AG's gross rental income rose during the first quarter, to EUR 36.8 million, up 21 per cent (Q1 2013: EUR 30.3 million). Rental income from the joint-venture portfolio acquired at the end of 2013 more than compensated for the loss of rental income due to disposals.

At EUR 12.0 million, the FFO (funds from operations, defined as earnings before interest and taxes, and excluding profits from disposals and development projects) for the first three months of the year was a notable 7 per cent higher than in the same period of the previous year (Q1 2013: EUR 11.2 million). Main contributors to this increase were the higher rental income as well as increased earnings contributions from the funds business. FFO per share (including the share capital increase) amounted to EUR 0.18 (Q1 2013: EUR 0.24). Profit for the period of EUR 2.0 million (Q1 2013: EUR 3.7 million) mainly reflected lower profits on property disposals.

Forecast for the full year
DIC Asset AG confirms its FFO forecast of EUR 47 million to EUR 49 million for the 2014 financial year (2013: EUR 45.9 million). Assuming a stable vacancy rate by year-end, at the previous year's level of 10.7 per cent, the Company expects rental income of between EUR 145 million and EUR 147 million (2013: EUR 125.2 million).

Strengthened financial situation
Total financial liabilities rose to EUR 1.73 billion as at 31 March 2014, (31 March 2013: 1.47 billion), reflecting the portfolio take-over. The average interest rate on financial debt stood at an attractive 4.1 per cent as at 31 March 2014, compared to 4.0 per cent a year earlier. The average maturity of DIC Asset AG's financial debt was 4.2 years as at 31 March 2014 (31 March 2013: 3.3 years).

The loan-to-value ratio (LTV) based on the portfolio market value stood at 66.9 per cent (31 March 2013: 68.0 per cent). The net debt equity ratio (based on net liabilities, and adjusted for effects of derivatives) rose to 32.8 per cent as at 31 March 2014 (31 March 2013: 32.3 per cent).

DIC Asset AG's interest expenses rose to EUR -20,0 million (Q1 2013: EUR -15.2 million), due to last year’s portfolio acquisition and the higher volume of bonds issued (which subsequently increased by EUR 100 million). Compared with the prior-year figure, interest income declined by EUR 0.2 million to EUR 2.2 million due to a lower level of loans to related parties. As a consequence, this has reduced the net interest result to EUR -17.8 million (Q1 2013: EUR -12.8 million).

Cash and cash equivalents totalled approximately EUR 81 million at the end of the period under review (31 March 2013: EUR 78 million).

Strong operative business
DIC Asset AG's letting performance during the first quarter of 2014 comprised contracts with an aggregate annualised rental income of some EUR 6.8 million (Q1 2013: EUR 3.0 million), including EUR 3.9 million in new rentals and EUR 2.9 million in renewed rental agreements. Also with this performance, the vacancy rate improved year-on-year, to 11.1 per cent (Q1 2013: 11.6 per cent). Reflecting the higher level of contract expirations (which is a typical feature at the beginning of each year), the rate increased slightly – as expected – during the first quarter of 2014 (12m 2013: 10.7 per cent).

At EUR 36 million year-to-date (Q1 2013: EUR 26 million), DIC Asset AG already realised almost a quarter of the target volume of disposals for the full year, achieving an average mark-up of selling prices of around five per cent above the most recent market value determined.

 
Strategic move in the funds business
The Company's funds business developed favourably, in line with expectations. Thanks to the acquisitions made in 2013, FFO contributions from the funds business further increased during the first quarter, to EUR 1.4 million (Q1 2013: EUR 1.1 million). The Company is currently preparing its third investment fund ("DIC Office Balance II"), with initial purchases expected for the second half of 2014.
    
Moreover, DIC Asset AG is strengthening the equity-efficient growth of its funds business: the reduction of joint-venture portfolios in the Co-Investment business will allow more flexible equity investments in the future. The target stake of fund investments most likely will be set at around 5 to 10 per cent; for this reason, DIC Asset AG's equity stake in the “DIC Office Balance I” Fund was cut from 20 to 10 per cent in April. This approach reduces the amount of equity tied up in each investment and thus enhances the efficiency of equity investments, despite a temporary reduction in the contribution to FFO.

Ulrich Höller, CEO of DIC Asset AG, said: "The successful start into the year provides a solid indication that DIC Asset AG will continue to pursue its stable growth path throughout 2014."

Key financial indicators >>

Interim report Q1 2014 >>

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. Real estate assets under management currently amount to approx. EUR 3.4 billion, comprising around 250 properties. The Company's investment strategy is geared to the continued development of a high-quality, highly profitable and regionally diversified portfolio. The real estate portfolio is structured in two segments: the Commercial Portfolio (EUR 2.2 billion) comprises existing properties with long-term rental contracts generating attractive rental yields. The Co-Investments (pro-rata share of EUR 0.3 billion) comprises fund investments, joint-venture investments, and interests in development projects. DIC Asset AG provides a direct service to tenants through its own real estate management teams in six branch offices located at the regional hubs within the portfolio. This provides DIC Asset AG with an edge in terms of market presence and expertise, and builds the foundation for maintaining and increasing income - and the value of its real estate assets. DIC Asset AG has been included in the SDAX® segment of the Frankfurt Stock Exchange since June 2006. The Company's shares are also included in the EPRA index, which tracks the performance of the most important European real estate companies.

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