Frankfurt/Main, 23 February 2017. This Thursday, DIC Asset AG (WKN A1X3XX / ISIN DE000A1X3XX4) published its 2016 Annual Report, looking back on a decidedly prosperous financial year. The company achieved or indeed exceeded the targets projected at the start of 2016, which had actually been raised for certain sub-segments as the year progressed. In addition, the company laid an important foundation for positive future performance of cash flow and FFO by refinancing its Commercial Portfolio in late 2016.
At EUR 47 million (2015: EUR 49 million), the FFO was at the upper end of the company's target range, which had been raised to EUR 46 million to EUR 47 million as late as September. The FFO per share equals EUR 0.69 (previous year: EUR 0.72). Assets under management rose to EUR 3.5 billion (31 December 2015: EUR 3.2 billion). The profit for the period is impacted by the refinancing arrangement and the associated one-off expenses in a non-recurrent amount of EUR -56.3 million not recognised in the FFO. The adjusted profit for the period totalled EUR 26.9 million, which implies a year-on-year increase by EUR 6.2 million, and which is primarily explained by the elevated net income and the increased income from management fees. DIC Asset AG, upholding the continuity of its dividends, will propose to the shareholders at the annual general meeting that a dividend of EUR 0.40 per share be distributed, implying a 3 cent increase year on year (2015: EUR 0.37). Relative to the year-end share price of 2016, this translates into an attractive dividend yield of 4.4 percent. The net asset value (NAV) equalled EUR 880.0 million by the end of the year (31 December 2015: EUR 884.1 million euros). This implies a NAV per share of EUR 12.83, up from EUR 12.89 the previous year.
Surge in operative performance
The company used its high-powered asset management and investment platform to keep raising its operating income, and concluded 2016 in far better shape than anticipated at the start of the year. The letting performance increased by nearly 45 percent to a total of around 293,500 square metres let (2015: 202,800 square metres). Out of this total, renewed rentals accounted for 186,400 square metres, new rentals for 107,100 square metres. The vacancy rate stood at 11.3 percent by the end of the year, matching the prior-year level. All things considered, the gross rental income from the Commercial Portfolio and warehoused assets* added up to c. EUR 111.2 million, and reached the upper limit of the target benchmark of EUR 109 to 111 million. The volume of property disposals from the Commercial Portfolio approximated EUR 108 million, thereby exceeding the target of EUR 80 to 100 million that had been projected at the start of the year. This sum is complemented by c. EUR 93 million in disposals from Co-investments as the company rolled back its equity investments in joint ventures as planned. On average, the selling prices of the assets were roughly 11 percent above the most recently appraised market values.
Brisk growth momentum in the fund business
The acquisition volume was expanded as planned through acquisitions totalling EUR 520 million (2015: EUR 160 million), a sum that tops even the revised mid-year forecast. The acquisitions transacted were earmarked for the growing fund business, which raised its contribution to the operating income once again in 2016. The fees from real estate management nearly tripled, growing from EUR 7.3 million in 2015 to EUR 21.5 million by 31 December 2016. The surge is mainly attributable to the expansion of the fund business as planned and to the third-party business and the management services performed in this context. All things considered, the fund business generated FFO contributions from fund management fees and investment income in the amount of EUR 21.2 million (2015: EUR 8.3 million).
Financial performance and earnings position significantly strengthened
Having successfully refinanced the Commercial Portfolio in the amount of EUR 960 million and on much more favourable terms helped the company to strengthen its FFO and cash flow considerably by cutting the interest expense by up to EUR 20 million annually. Accordingly, DIC Asset AG expects to see a substantial increase in FFO. At the same time, the average interest rate for bank debt of every type will drop from 3.4 percent to 1.7 percent in 2017, thus securing a best-in-class financing rate level for DIC. The average maturity of the financial debt was already raised from 4.3 years to 5.9 years by the end of 2016 as a result of having refinanced the Commercial Portfolio. On the whole, the financial liabilities totalled EUR 1.6 billion by 31 December 2016, and thus maintained a stable level year on year (31 December 2015: EUR 1.6 billion). Adjusted for the one-off expense of the refinancing arrangement, the net interest result improved by 22 percent year on year to EUR -46.7 million (2015: EUR -59.8 million). The company's equity ratio dropped to 31.6 percent toward year-end (31 December 2015: 32.3 percent). The loan-to-value ratio, relative to the portfolio market value and adjusted for warehousing effects, was brought down to 59.9 percent (31 December 2015: 62.6 percent).
“During the financial year just concluded, we were able to seamlessly tie into to the success of prior years, and are near the upper limits of the target corridor we defined for 2016. We continued to consolidate our position in Germany's commercial real estate market, and will resume the effort in 2017 through active asset management of our portfolio and by expanding our fund business. The premature refinancing has created an excellent basis for the financial years to come, and has freed up additional funds to fuel our continued growth,” said Aydin Karaduman, CEO of DIC Asset AG.
Forecast for 2017
The outstanding operative achievements of 2016 mirror the successful redevelopment of the company's real estate management and its growth in the fund business. Going forward, DIC plans to diversify its sources of income by optimising its real estate inventory and expanding its fund segment, while also raising value-added potential and generating stable cash flows. The company is thus aiming for an acquisition volume of c. EUR 500 million euros for both business divisions in 2017, but with particular focus on the fund business. At the same time, the company projects a volume of disposals amounting to c. EUR 200 million in order to further optimise the Commercial Portfolio, and to exploit the current market environment to transact sales. With the disposals of 2016 and planned transactions duly taken into account, the company expects to collect a gross rental income in the amount of EUR 98 to 103 million in 2017. The refinancing arranged by the end of the 2016 business year will have a positive impact both on the cash flow and on the FFO as early as the current financial year. Accordingly, DIC expects to see a considerably improved operating income and a FFO increase by up to 28 percent to a projected total of EUR 57 to 60 million in 2017 (FFO per share between EUR 0.83 and EUR 0.88).
DIC Asset AG
Head of Corporate Communications
Neue Mainzer Strasse 20 – MainTor
60311 Frankfurt/Main, Germany
Phone: +49 69 9454858-1435
Fax +49 69 9454858-9199
DIC Asset AG
Head of Investor Relations
Neue Mainzer Strasse 20 – MainTor
60311 Frankfurt/Main, Germany
Phone: +49 69 9454858-1221
Fax +49 69 9454858-9399
About DIC Asset AG:
Established in 2002, DIC Asset AG, with registered offices in Frankfurt am Main, is a real estate company with 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. The company has around 200 real estate assets under management with an aggregate market value of EUR 3.5 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 (EUR 1.5 billion) comprises fund investments (pro-rata 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 kind of market presence and expertise creates the basis for preserving and enhancing our 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.
*Warehoused assets: These are attractive properties bought and earmarked for the start-up portfolios of new institutional funds.
Deutsche Immobilien Chancen AG & Co. KGaA
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