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

Press Release

DIC Asset AG Raises FFO Forecast for 2016

Frankfurt, 04.11.2016

• FFO of EUR 36.9 million stable at the previous year’s level (9m 2015: EUR 36.8 million)
• Projected sales target of EUR 80-100 million already reached
• Letting performance significantly improved, to EUR 22.2 million (9m 2015: EUR 13.6 million) / Marked decline in vacancy rate to 11.9 per cent (down 1.3 percentage points)
• Higher FFO forecast for 2016 of EUR 46 million - EUR 47 million
  

DIC Asset AG (German Securities ID A1X3XX / ISIN DE000A1X3XX4) published today its quarterly statement for the first nine months of the 2016 financial year. DIC Asset AG generated FFO (funds from operations) of EUR 36.9 million, almost identical to the previous year’s level of EUR 36.8 million and in line with projections. At the same time, DIC Asset AG’s Management Board confirmed the FFO forecast for 2016, which it had raised from EUR 43-45 million to EUR 46-47 million in September, as well as expected higher rental income of between EUR 109 million and EUR 111 million. The positive development was mainly due to the successful letting performance and a delayed transfer of possession, benefits and associated risks for the planned sales of properties from the Commercial Portfolio. Additional rental income from the properties notarised in July 2016 in conjunction with the warehousing for the planned new retail property fund is expected.

FFO per share for the first nine months amounted to EUR 0.54 (9m 2015: EUR 0.54). Taking into account dividend payments of EUR 0.37 in July, EPRA NAV amounted to EUR 12.83 per share as at 30 September 2016. As such, EPRA NAV per share was slightly below the year-end 2015 level of EUR 12.89 ⁽¹⁾. EBIT during the period under review totalled EUR 62.5 million (9m 2015: EUR 64.7 million).

Aydin Karaduman, CEO of DIC Asset AG: “The positive quarterly figures confirm our growth targets in the funds business, and highlight the fact that we can realise potential in our portfolio by pursuing active asset management. Thus, we expect positive year-end results, and anticipate reaching our recently adjusted targets for 2016.”

At EUR 22.5 million, consolidated profit for the period was higher than the previous year’s level (9m 2015: EUR 16.1 million). This result was driven by the profits on property disposals of EUR 18.9 million (9m 2015: EUR 14.1 million), a EUR 12.3 million improvement in the net interest result, and increased fund business fees. Earnings per share amounted to EUR 0.33 (9m 2015: EUR 0.23).

Successful asset management: significantly improved letting performance and vacancy rate
DIC Asset AG’s letting performance during the first nine months of 2016 comprised contracts generating aggregate annualised rental income of some EUR 22.2 million (9m 2015: EUR 13.6 million), of which EUR 14.6 million came from renewed rental agreements and EUR 7.6 million from new rentals. As at the reporting date, the portfolio vacancy rate declined by 1.3 percentage points quarter-on-quarter to 11.9 per cent, reflecting the positive letting performance. With 0.6 per cent growth, like-for-like rental income also performed well. The successful new rentals contributed significantly to this increase, as did rent increases following contractually-agreed index adjustments in some cases.

During the first nine months of the year, real estate management fees rose to EUR 18.0 million (9m 2015: EUR 4.5 million), largely driven by current fund real estate management fees. These increased by EUR 12.8 million, to reach EUR 16.1 million (9m 2015: EUR 3.3 million).

DIC Asset AG realised year-to-date sales volume of approximately EUR 86 million for the Commercial Portfolio. As a result, DIC Asset AG has already achieved their sales target of EUR 80-100 million planned for the current financial year. Including the reduction in joint venture investments the total transactions amount to around EUR 163 million. The sales achieved an average mark-up of around 11 per cent over the most recently appraised market value.

Positive funds business performance
The funds business prospered during the first nine months of 2016, as projected. To date, acquisitions of around EUR 330 million have been realised this year. In the current financial year, real estate totalling approximately EUR 110 million was acquired for the existing funds, and three retail properties totalling approximately EUR 220 million were purchased for the planned new retail property fund. With further purchases planned between now and year-end, the Company anticipates an aggregate full-year purchase total of around EUR 500 million. In the first nine months, FFO contributions from fund real estate management and income from fund investments increased significantly year-on-year, to EUR 18.0 million (9m 2015: EUR 5.1 million).

Further reduction of financial liabilities
Total financial liabilities declined to approximately EUR 1.36 billion as at 30 September 2016, a reduction of approximately EUR 216 million compared to year-end 2015 (31 Dec 2015: EUR 1.57 billion). Year-on-year, the average interest rate on financial debt in the form of bank loans declined to 3.4 per cent as at 30 September 2016 (30 Sep 2015: 3.5 per cent). The average remaining maturity of DIC Asset AG’s financial debt was reduced to 3.2 years compared to the end of the previous year (31 Dec 2015: 4.3 years). The loan-to-value ratio (LTV) declined significantly compared to the 2015 year-end level, to 58.8 per cent (31 Dec 2015: 62.6 per cent). The net interest result improved by 27 per cent to EUR -34.0 million, largely driven by continuous optimisation of the company’s financing structure (9m 2015: EUR -46.3 million). As a result, interest expenses were reduced to EUR 41.1 million (9m 2015: EUR 54.0 million). Interest income was down year-on-year, to EUR 7.1 million, reflecting repayments of loans to related parties, also in line with projections (9m 2015: EUR 7.7 million).

Nine-month results affirm raised full-year guidance
Performance for the first nine months re-affirms DIC Asset AG’s raised FFO forecast of EUR 46 million - EUR 47 million for the 2016 financial year (previous guidance: EUR 43-45 million). Within this guidance, the Company projects gross rental income of between EUR 109 million and EUR 111 million for the full financial year 2016. To expedite further growth in its funds business, the Company plans to acquire EUR 500 million of assets, of which EUR 330 million has already been realised. The projected sales volume of EUR 80-100 million for the Commercial Portfolio have already been achieved.

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 circa 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.

⁽¹⁾ EPRA NAV per share based on the market value of real estate and investments as at 31 December 2015

Key figures >>

Quarterly statement Q3 2016 >>

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