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

Press Release

DIC Asset AG’s operating profit increases by 15 per cent in the first half of 2016

Frankfurt, 03.08.2016

• FFO up 15 per cent, to EUR 27.7 million (H1 2015: EUR 24.0 million)
• Consolidated profit for the period rises to EUR 20.2 million (H1 2015: EUR 5.0 million)
• Acquisitions worth nearly EUR 300 million already transacted for funds business in 2016
• Significant scaling back of joint ventures
• Full-year guidance for 2016 increased

DIC Asset AG (German Securities ID A1X3XX / ISIN DE000A1X3XX4) today presented its financial report for the first half of 2016. DIC Asset AG’s consolidated profit for the period amounted to EUR 20.2 million in the first half of 2016 (H1 2015: EUR 5.0 million). The significant year-on-year increase was largely due to successful sales and improvement in the net interest result. At EUR 27.7 million, FFO (funds from operations) for the first six months of 2016 was 15 per cent higher than in the same period of the previous year (H1 2015: EUR 24.0 million). This is a result, in particular, of the significantly increased FFO contribution from the funds (+EUR 11.6 million) and an improvement in the net interest result. The figure is equivalent to an FFO per share of EUR 0.40 (H1 2015: EUR 0.35). EBIT increased to EUR 49.1 million (+32 per cent compared to EUR 37.3 million for the first half of 2015).

Aydin Karaduman, CEO of DIC Asset AG, said: “Results for the first half of 2016 show that we are on the right track with the successful expansion of our funds business and the ongoing establishment of our real estate management platform, which is being appreciated by investors in the German real estate market.”

Growth in fees from real estate management for funds
Real estate management fees rose by more than 100 per cent during the first six months of the year, to EUR 15.0 million (H1 2015: EUR 3.0 million), with the most significant contributions emanating from fund real estate management fees. These increased by around EUR 11.8 million, to reach EUR 14.1 million (H1 2015: EUR 2.3 million).

The funds business continued to prosper during the first six months of 2016. As previously reported, real estate investments for DIC Asset AG’s funds business amounted to nearly EUR 300 million in the first half of 2016, clearly more than half of the planned acquisitions for 2016 (new target volume: c. EUR 500 million). Moreover, DIC Asset AG is implementing the projected strategic development of its funds business as planned. In preparation for a planned retail fund, DIC Asset AG already successfully notarised the acquisition of three retail properties – with a total volume of EUR 220 million – in July 2016. For the existing funds, DIC Asset AG purchased real estate properties with a volume of EUR 77 million in the current financial year.

Sales activities to optimise the portfolio – significant scaling back of joint ventures
In the year to date, sales volumes totalled EUR 106.2 million, as part of optimising the Commercial Portfolio and the continued scaling back of existing joint ventures. Of the total figure, EUR 73.2 million was attributable to sales from the joint venture portfolio. Further sales of investments held in joint ventures are planned for the remainder of the year. Within the framework of its future strategic orientation and for the purpose of simplifying its business model, DIC Asset AG plans to divest its joint venture investments between now and year-end 2017.

Aydin Karaduman: “With the optimisation of our real estate portfolio and the rapid expansion of our funds business, we are developing DIC Asset AG into an investment house for indirect real estate investments of institutional investors, with its own vertically integrated management platform. Simultaneously we are implementing the related reduction of our joint-venture investments, as announced – swiftly and successfully.”

Gross rental income during the first half of 2016 was EUR 54.6 million (H1 2015: EUR 70.4 million). The 22 per cent year-on-year decline in rental income was attributable to the scheduled sales from the Commercial portfolio in the 2015 financial year. Letting performance during the first half of 2016 comprised contracts generating annualised rental income of some EUR 15.3 million (H1 2015: EUR 6.3 million), including EUR 4.9 million in new rentals and EUR 10.4 million in renewed rental agreements.

Financial result significantly improved
Total financial liabilities declined to approximately EUR 1.3 billion as at 30 June 2016, a reduction of approximately EUR 277 million compared to year-end 2015 (31 Dec 2015: EUR 1.57 billion). The average interest rate on all bank loans declined to 3.4 per cent as at 30 June 2016, and as such presents a 10 basis point decrease compared to the previous year (30 June 2015: 3.5 per cent). The average maturity of financial debt was 3.6 years as at the end of the first half of 2016 (H1 2015: 4.7 years); as expected, it was reduced further compared to the year-end 2015 (4.3 years). With 57.2 per cent, the net debt ratio (loan-to-value ratio) declined significantly (by 540 basis points) compared to the 2015 year-end (31 Dec 2015: 62.6 per cent).

As at 30 June 2016, the net interest result improved to EUR -23.2 million, largely driven by continuous optimisation of the company’s financing structure (H1 2015: EUR -31.9 million). Interest expenses were reduced to EUR 28.0 million (H1 2015: EUR 36.9 million). Interest income remained stable year-on-year, at EUR 4.8 million (H1 2015: EUR 5.0 million).

Full-year guidance for 2016 increased
In view of the positive developments during the first half of the year, DIC Asset AG's Management Board maintains its FFO full-year guidance for 2016 of EUR 43 million to EUR 45 million. Due to successful acquisitions for the expanding funds business, the Company increased the acquisition target from between EUR 400 million to EUR 450 million up to EUR 500 million. Rental income is expected to increase to between EUR 105 million and EUR 107 million due to lower disposals from the Commercial Portfolio in the first half of 2016 and better than expected letting volume. DIC Asset is planning total sales volume of EUR 80 million to EUR 100 million, for the continued optimisation of the Commercial Portfolio.

Key figures >>

Half-year report Q2 2016 >>

About DIC Asset AG:
Established in 2002, DIC Asset AG, with registered offices in Frankfurt/Main, is a real estate company with an 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 210 properties with an aggregate market value of EUR 3.2 billion. The real estate portfolio is structured in two segments: the Commercial Portfolio (EUR 1.7 billion) comprises existing properties with long-term rental contracts generating attractive rental yields. The Co-Investments segment (EUR 1.5 billion) comprises fund investments (accounting for a share of EUR 1.2 billion), 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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