DIC Asset AG Achieves 2015 Targets as Planned – Real Estate Platform to be Prominently Repositioned in the Third-Party Business

Letter to the Shareholders

DIC Asset AG Achieves 2015 Targets as Planned – Real Estate Platform to be Prominently Repositioned in the Third-Party Business

Frankfurt, 01 February 2016

– Annual targets achieved in 2015:

o FFO in 2015 close to EUR 49 million

o LTV target of less than 60 percent reached well ahead of time

– First strategic agenda-setting for 2016:

o AUM volume in the third-party business to be further expanded

o DIC Asset acquires stake in the company WCM Beteiligungs- und Grundbesitz-AG

Dear Shareholders,

At this time, it is our pleasure to brief you on the successful 2015 financial year of DIC Asset AG (German securities code number WKN 509840/ ISIN DE0005098404) and simultaneously to give you a first qualified outlook on the ongoing financial year of 2016.

Our key message is decidedly good news: DIC Asset AG achieved every one of its planned targets in the 2015 financial year just concluded, in some cases actually exceeding the set targets!

Two ratios take centre stage: one being the FFO result in 2015, which added up to c. EUR 49 million as planned, despite extensive sales.

At the same time, the latest fund transaction in December 2015 helped us implement our target of reducing the debt-to-equity ratio (LTV) to less than 60 percent within the framework of our “Strategy 2016” as early as the start of 2016, that is, nearly a year ahead of schedule.

You will find the most significant preliminary figures for the 2015 financial year listed in the following overview:

– The letting performance totalled 203,000 sqm (2014: 242,000 sqm), which breaks down into 136,000 sqm in renewals and 67,000 sqm in new lettings. Compared to Q3 2015, the vacancy rate was thereby reduced by a substantial 0.5 percentage points, down to 11.3 percent.

– Gross rental income came to c. EUR 136 million by the end of the financial year (2014: EUR 147.5 million). The anticipated year-on-year decline is the result of effective sales from the commercial portfolio during the 2015 financial year.

– We achieved a year-end sales total of c. EUR 220 million, thereby exceeding the latest forecast (no less than EUR 180 million) by more than 20 percent. The commercial portfolio accounted for a total of EUR 210 million thereof as a result of 20 portfolio assets sold. Another three assets with a combined volume of EUR 10 million represented co-investments. The selling prices exceeded the most recently appraised fair market values by an average of five percent.

– Meanwhile, we kept the fund business on its brisk growth trajectory. By realising an acquisition volume of EUR 160 million, we topped our original acquisitions target of EUR 130 million for existing investment funds by more than 20 percent. In addition, proprietary real estate in a volume of c. EUR 270 million was placed in the new institutional real estate fund “DIC Office Balance III.” This caused the assets under management to cross the threshold of one billion for the first time, bringing them up to a total of c. EUR 1.1 billion (year-end 2014: EUR 650 million).

– The average interest for the entire financial debt in the form of bank loans was lowered from 3.9 percent by the end of the prior-year period (31/12/2014) down to 3.5 percent by 31/12/2015.

– Overall, we achieved c. EUR 49 million in FFO (fund from operations before depreciation and tax, and before net income from sales and development projects), up from EUR 47.9 million in 2014. The FFO result therefore lies within the bracket of EUR 48 million to EUR 50 million that had been forecast at the start of 2015. Key factors that contributed to the sound FFO result, which was achieved despite the drop in rental income due to the property sales, included the growing fund business with its FFO contribution of c. EUR 8 million (an increase by roughly 40 percent), and an improved net interest result.

Our successful performance has created an excellent basis, and positioned our company quite well for the coming challenges on Germany’s commercial real estate market.

At the outset of 2016, we set an initial agenda with a view to the strategic perspective of DIC Asset AG. Its idea is to ensure the sustained growth and diversification of our future income basis by leveraging the combined know-how and long-term experience of our property experts who operate from six locations across Germany. The following decisions have been prioritised:

– We will continue to optimise our directly held commercial portfolio through an active asset management and through selective sales that take advantage of the currently favourable market environment.

– We intend to expand our established and successfully positioned end-to-end service spectrum in the fund business and will keep extending it massively into the third-party business involving associated companies. Especially in the fund business, we will seek a substantial growth in assets under management in 2016 and in the years to come. This will help us earn significant contributions to operating income and thereby boost the future business performance of DIC Asset AG. The active management of larger and more significant real estate holdings will considerably and sustainably enhance both the profitability and the efficiency of our business model.

– DIC Asset AG recently reported that it crossed the 20 percent ownership threshold with its equity investment in WCM Beteiligungs- und Grundbesitz-AG, a company based in Berlin and Frankfurt. This means that DIC Asset AG has become one of the company’s significant shareholders. WCM invests in Germany’s commercial real estate market, concentrating on the “Big Seven” cities and other economically strong regions in Germany, and currently has a portfolio volume of c. EUR 500 million. Through its equity interest, DIC Asset will participate in the future growth of the company and in its attractive commercial real estate portfolio. One of our objectives in taking this approach is to expand DIC Asset’s footprint in Germany’s commercial real estate sector, and to pursue this goal in a sustainable way.

Dear Madam, Dear Sir,

We would like to thank you for the loyalty you have placed in our company over the past few years, and specifically during the past 2015 financial year. We will do everything we can to keep earning your trust in our strategic decisions for the future of DIC Asset AG, and to reassure your faith in the productivity of our company.

On 01 March 2016, we will publish the full-length annual report for 2015 with a detailed outlook for the company’s prospective performance in the ongoing year.

Kind regards,

The Management Board

P.S.: For more details on DIC Asset AG, please visit us on the Internet at www.dic-asset.de.
 

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Investor Relations

Peer Schlinkmann
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D-60311 Frankfurt am Main
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Fax +49-69-9454858-9399
P.Schlinkmann@dic-asset.de