DIC Asset AG continues earnings growth in 2013

Press Release

Frankfurt, 18 March 2014

DIC Asset AG continues earnings growth in 2013

– Profit for the period up 36 per cent, to EUR 16.0 million
(2012: EUR 11.8 million)

– FFO rose to EUR 45.9 million (2012: EUR 44.9 million)

– NAV per share at EUR 12.58

– Stronger financial structure: LTV improved to 66.9 per cent, maturity of financial debt extended to 4.5 years

– Consistent dividend of EUR 0.35 per share (unchanged from 2012)

– Forecast for 2014: FFO growth to continue to EUR 47-49 million

DIC Asset AG (German Securities ID A1X3XX / ISIN DE000A1X3XX4) today presented its financial statements for the 2013 financial year. The Company met its forecasts, with FFO up EUR 1.0 million to EUR 45.9 million and consolidated profit up 36 per cent to EUR 16.0 million. As this marks yet another sound business performance and the outlook for 2014 is positive, shareholders will participate in the Company’s performance with a high, consistent year-on-year dividend of EUR 0.35 per share. Based on the 2013 year-end closing price, this translates into an attractive dividend yield of 5.2 per cent.

FFO growth according to forecast

Gross rental income remained stable at a high level of EUR 125.2 million (2012: EUR 126.5 million). Portfolio acquisitions in November 2013 offset the expected reduction in rental income that followed various property sales during the year. Profits on property disposals doubled to EUR 7.6 million (2012: EUR 3.8 million). Fees from real estate management rose to EUR 6.5 million (2012: EUR 5.7 million) resulting in total income increasing by 3 per cent to EUR 236.1 million as per 31 December 2013 (31 Dec 2012: EUR 229.1 million).

FFO (funds from operations, defined as operative earnings before interest and taxes, and excluding profits from disposals and project developments) was within the target range between EUR 45 million and EUR 47 million; the figure rose by EUR 1.0 million to EUR 45.9 million, thanks to a stable rental income, higher fees from real estate management and lower interest expenses. FFO per share (based on the average number of shares in accordance with IFRS) remained stable year-on-year at EUR 0.94; based on the higher number of shares at year-end, FFO per share was EUR 0.67.

In addition to the higher FFO, higher profits on property disposals contributed to the increase in profit for the period, which was up 36 per cent, to EUR 16.0 million (2012: EUR 11.8 million).

The robust market environment for German commercial real estate and the Company’s successful letting activity contributed to the pro-rata market value of the real estate portfolio of EUR 2,538.3 million after acquisitions, sales, investments and the change in value of the properties (-0.63 per cent) (31 Dec 2012: EUR 2,223.5 million). At the end of 2013, the net asset value (NAV) amounted to EUR 862.4 million, up EUR 177.0 million or 26 per cent from the previous year. NAV per share, based on the current number of shares outstanding (68,577,747), thus decreased as expected to EUR 12.58 (2012: EUR 14.99).

Enhanced financial structure

In 2013, the Company considerably strengthened its financal structure as it rearranged EUR 960 million in long-term bank loans. Accordingly, the maturity structure in the financing portfolio improved significantly to 4.5 years as per 31 December 2013 (31 Dec 2012: 3.2 years). At 4.1 per cent, the average interest rate on financial debt remained at an attractive level (31 Dec 2012: 4.0 per cent). Mainly due to these long-term refinancings, 95 per cent of the Company’s financial debt is now hedged against interest rate fluctuations.

The loan-to-value ratio based on the portfolio’s market value improved to 66.9 per cent (31 Dec 2012: 68.1 per cent), driven by the repayment of loans, refinancings and redemption following sales. The net debt equity ratio (based on net liabilities, and adjusted for effects of the hedging reserve) rose to 32.6 per cent as at 31 December 2013 (31 Dec 2012: 31.6 per cent).

In absolute terms, financial debt increased year-on-year to EUR 1.72 billion (31 Dec 2012: EUR 1.46 billion), mainly due to the acquisition of the joint venture portfolio and the increase of the corporate bonds issue volume.

The net interest result improved markedly by 6 per cent, to EUR -53.0 million (2012: EUR -56.2 million). Interest expenses decreased by EUR 3.3 million to EUR 62.7 million; besides the lower interest rate levels, improved loan terms achieved in the course of refinancings and new financings also contributed to the lower expense figure. Consequently, the interest cover ratio (ICR), defined as the ratio of net rental income to interest payments, rose significantly, to 179 per cent (31 Dec 2012: 172 per cent).

Cash and cash equivalents remained at the previous year’s level, totalling approximately EUR 56 million as at 31 December 2013. Following the pile-up of the outstanding bond in early 2014, the Company’s liquidity base rose to approximately EUR 80 million.

Operative business performance: portfolio optimised

DIC Asset AG’s letting performance remained stable year-on-year with 310 individual rental agreements (2012: 320). Demand for smaller- and medium-sized lettings, as well as retail floor space, was particularly strong. As a result of the lower volume in follow-up rentals and restrained activity from larger tenants, letting performance in square metres was lower year-on-year, at 176,000 sqm (2012: 238,000 sqm). New rentals were equivalent to 69,000 sqm; at 107,000 sqm, follow-up rentals remained at a high level. Excluding the acquired joint venture portfolio, the portfolio’s vacancy rate developed as expected, standing at approximately 10 per cent at year-end; including the portfolio acquisition, the portfolio’s vacancy rate were at 10.7 per cent at year-end (2012: 10.9 per cent).

The volume of disposals clearly exceeded the EUR 80 million target, reaching EUR 99 million (2012: EUR 155 million). DIC Asset AG took advantage of strong demand for real estate as an investment, selling 14 properties at prices that were on average six per cent above the most recent market values.

The funds business, including the two funds “DIC Office Balance I” and “DIC HighStreet Balance”, continued to make solid progress in 2013 with the acquisition of top-quality properties worth around EUR 119 million. The funds business performance fed into investment income and management fees and resulted in this business contributing EUR 6.5 million, and thus significantly more to FFO than in the previous year (2012: approximately EUR 4 million). At EUR 525 million, the aggregate investment volume of the two funds already stands at almost 75 per cent of the target volume (up to EUR 700 million) projected until 2015.

DIC Asset AG’s marketing of the MainTor quarter in Frankfurt/Main continued to make good progress in 2013: 92 per cent of the flats in the “MainTor Palazzi” have already been sold, and the office complex “MainTor Porta” was sold in December 2013 for EUR 155 million. In total, five out of six sub-projects have already been successfully marketed and are now in the process of realisation (equivalent to approximately 60 per cent of the total project volume of EUR 750 million, in which DIC Asset AG holds a 40 per cent stake). Marketing of the last sub-project, the central “WINX” office tower, started in early 2014.

Forecast for 2014: DIC Asset AG expects further earnings growth in 2014, on the back of continuing portfolio optimisations and further growth in the funds business. A higher volume of disposals, to the tune of EUR 150 million, is expected to significantly reduce the Company’s debt ratio. Not least due to lease expiries, DIC Asset AG expects a more challenging letting environment and plans a stable vacancy rate and rental income of between EUR 145 million and EUR 147 million. The Company expects between EUR 150 million and EUR 200 million for fund investments. On this basis, DIC Asset AG forecasts FFO for 2014 between EUR 47 million and EUR 49 million.

Ulrich Höller, Chairman of the Management Board, said: “DIC Asset AG strengthened and streamlined its structure in 2013. Now, the goal for the years to come is clear: to generate strong income on a solid basis, and further earnings growth for our shareholders.”

For more information on DIC Asset AG, please visit the Company’s website www.dic-asset.de, where the annual report is also available.
 

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. Real estate assets under management currently amount to approx. EUR 3.4 billion, comprising around 250 properties. The Company’s investment strategy is geared to the continued development of a high-quality, highly profitable and regionally diversified portfolio. The real estate portfolio is structured in two segments: the Commercial Portfolio, with a market value of EUR 2.2 billion, comprises existing properties with long-term rental contracts generating attractive rental yields. The Co-Investments segment (pro-rata share of EUR 0.3 billion) comprises fund investments, interests in development projects, and joint-venture investments. DIC Asset AG provides a direct service to tenants through its own real estate management teams in six branch offices located at the regional hubs within the portfolio. This provides DIC Asset AG with an edge in terms of market presence and expertise, and builds the foundation for maintaining and increasing income – and the value of its real estate assets. DIC Asset AG has been included in the SDAX^(R) 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.

Media contacts:

Thomas Pfaff Kommunikation
Höchlstrasse 2
81675 Munich, Germany
Phone: +49 89 992496-50
Fax +49 89 992496-52
Mobile: +49 172 8312923
kontakt@pfaff-kommunikation.de
 

Investor Relations & Corporate Communications

Immo von Homeyer
DIC Asset AG
Eschersheimer Landstrasse 223
60320 Frankfurt/Main, Germany
Phone: +49 69 274033-86
Fax +49-69-9454858-99
i.vonhomeyer@dic-asset.de

Key figures

* based on the new average number of shares outstanding,
in accordance with IFRS (48,991,351 shares)