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

Press Release

DIC Asset AG exceeded its targets for 2015

Frankfurt, 01.03.2016

• FFO up 2 per cent, to EUR 49 million (2014: EUR 47.9 million)
• Target LTV of below 60 per cent achieved
• Consolidated profit for the period rose to EUR 20.7 million (2014: EUR 14.0 million)
• Funds business growing significantly – with approximately EUR 1.1 billion in assets under management – and continuously rising profit contributions
• NAV per share increased to EUR 12.89 (2014: EUR 12.61)
• Proposed dividend increase, to EUR 0.37 per share (2014: EUR 0.35 per share)

DIC Asset AG (German Securities ID A1X3XX / ISIN DE000A1X3XX4) presented today its report for the 2015 financial year. The Company achieved – and in some instances exceeded – the targets for its business. Thanks to successful management of the portfolio, operating profit increased once again. FFO rose by EUR 1.1 million, or 2 per cent, to EUR 49.0 million (2014: EUR 47.9 million, whilst leverage (expressed by the loan-to-value or LTV ratio) was lowered to 62.6 per cent as at 31 December 2015, and sank further to below 60 per cent at the beginning of 2016 (31 Dec 2014: 65.9 per cent). This means that the Company has achieved this key strategic objective a year ahead of schedule. Backed by the successful financial year 2015, and the good starting position for 2016, the Management Board proposes to increase the dividend by 2 cents a share, to EUR 0.37 per share (2014: EUR 0.35 per share). Based on the volume-weighted share price of 8.39 EUR since the beginning of 2015, this translates into an attractive dividend yield of around 4.4 per cent.

Aydin Karaduman, CEO of DIC Asset AG, said: "For DIC Asset AG 2015 was at both the operating and strategic levels a very successful year. We will share this success with our shareholders in the form of an attractive dividend. With the performance targets that were reached one year earlier than planned we now have an excellent base to further strengthen DIC Asset AG's position in the German commercial real estate market – in the interests of the Company’s shareholders.“

Operating target achievement above expectations
DIC Asset AG generated gross rental income of approximately EUR 136.7 million in 2015 (2014: EUR 147.5 million); the full-year result thus exceeded the anticipated range of between EUR 134-136 million. The year-on-year decline of approximately 7 per cent was almost inevitable, given the sales of properties from the Commercial Portfolio during the financial years 2014 and 2015. The volume of property disposals in 2015 totalled around EUR 220 million, exceeding the most recent forecast of EUR 180 million by more than 20 per cent The disposals achieved an average mark-up of around 5 per cent over the most recently determined market value. Accordingly, profits on property disposals rose to EUR 14.9 million (2014: EUR 6.8 million). Fees from real estate management also showed a marked increase, to EUR 7.3 million – up 40 per cent year-on-year. Total income amounted to EUR 372.4 million in 2015, up 34 per cent over the previous year’s figure of EUR 277.6 million. Consolidated profit for the period rose by 48 per cent year-on-year, to EUR 20.7 million (2014: EUR 14.0 million), thanks in particular to profits on disposals and to positive profit contributions from our development projects.

FFO of EUR 49 million was within the target corridor of between EUR 48 million and EUR 50 million, benefiting from a marked improvement in the net interest result and a higher FFO contribution from the growing funds business. FFO per share amounted to EUR 0.72 (2014: EUR 0.70).

Due to extensive disposals, the pro-rata market value of the portfolio declined to EUR 2.2 billion (2014: EUR 2.4 billion). The net asset value (NAV) increased to EUR 884.1 million at year-end (2014: EUR 864.8 million). NAV per share thus amounted to EUR 12.89 (2014: EUR 12.61).

DIC Asset AG’s letting performance during 2015 amounted to some 203,000 sqm (2014: 242,000 sqm), comprising around 136,000 sqm in renewed rental agreements and around 67,000 sqm in new rentals. Taking the increased volume of disposals into account, the vacancy rate was 11.3 per cent at the end of 2015 (2014: 10.9 per cent).

Funds business growing significantly
At EUR 160 million, the volume of purchases in the Company's very successful funds business exceeded the originally-planned range of between EUR 130 million to EUR 150 million by more than 20 per cent. At the same time, at the beginning of 2016, real estate worth approximately EUR 270 million – largely properties held by the Company – was placed with the new institutional real estate fund "DIC Office Balance III", bringing assets under management within DIC's funds business above the one billion euro threshold for the first time, to approximately EUR 1.1 billion (2014: EUR 650 million). The funds business contributes increasingly to operating profit: FFO contributions from fund real estate management and income from fund investments rose strongly, by 48 per cent, to EUR 8.3 million (2014: EUR 5.6 million).

Share of the profit of associates (co-investments in the funds business, project developments and other joint ventures) increased markedly on the previous year, to reach EUR 7.7 million (2014: EUR 5.2 million). Results of EUR 4.8 million from completed project developments realised in 2015 contributed materially to this figure.

Financing structure significantly improved
DIC Asset AG significantly reduced its financial liabilities (after repayments, refinancings, and an increase in corporate bond financing), to EUR 1.57 billion as at 31 December 2015 (31 Dec 2014: EUR 1.67 billion). The average interest rate on all bank loans declined once again, to 3.4 per cent as at 31 December 2015 (31 Dec 2014: 3.9 per cent), whilst the average maturity of DIC Asset AG’s financial debt rose again, to 4.3 years (2014: 4.0 years). The equity ratio (as reported on the statement of financial position) stood at 32.3 per cent as at 31 December 2015 (31 Dec 2014: 30.5 per cent). The net debt ratio based on the portfolio market value (loan-to-value ratio – “LTV”) declined by 3.3 percentage points, to 62.6 per cent (31 Dec 2014: 65.9 per cent). Through the "DIC Office Balance III" fund transaction, DIC Asset AG achieved its target to reduce LTV to below 60 per cent already at the start of the year 2016.

The net interest result improved markedly by 14 per cent, to EUR -59.8 million (2014: EUR -69.6 million). Net financing expenses decreased significantly, reflecting extensive refinancings (at improved terms). Interest expenses thus declined by EUR 10.1 million, to EUR 70.3 million. Consequently, the interest cover ratio (ICR), defined as the ratio of net rental income to interest payments, rose significantly, to 171 per cent (31 Dec 2014: 164 per cent).

Forecast for 2016
In the current financial year, DIC Asset AG will focus on actively managing its Commercial Portfolio, as well as on strengthening the position of its real estate management platform in the German commercial real estate market. DIC Asset AG plans to strengthen its revenue base for the future, through further portfolio optimisation as well as successfully growing its management activities for funds and related third parties; the objective is to continue generating sustainable earnings contributions going forward. To achieve further growth in the funds business, DIC Asset AG plans to spend between EUR 400 million and EUR 450 million on acquisitions. The volume of disposals, in order to further optimise the Company's portfolio, is expected to range between EUR 80 million and EUR 100 million in 2016. Given the volume of planned disposals (and those already executed), DIC Asset AG anticipates rental income of around EUR 100 million for 2016, with FFO between EUR 43 million and EUR 45 million (approximately EUR 0.63–0.66 per share).

Key figures >>

Annual Report 2015 >>

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.
The Company's investment strategy is geared to the continued development of a high-quality, highly profitable and regionally diversified portfolio. Real estate assets under management comprise 215 properties with a market value of EUR 3.2 billion and a pro-rata value of approximately EUR 2.2 billion. The real estate portfolio is structured in two segments: the Commercial Portfolio (EUR 2.0 billion) comprises existing properties with long-term rental contracts generating attractive rental yields. The Co-Investments segment (pro-rata share of EUR 0.2 billion) comprises fund investments, joint-venture investments, and interests in development projects. In-house real estate management teams provide a direct service to tenants, working out of six different locations in each of the portfolio focus regions. This market presence and expertise creates the basis for preserving and enhancing earnings and real estate values. 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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