DIC Asset AG increases FFO to a record level of EUR 68 million in 2018; dividend raised to 48 Cents (previous year: 44 Cents)

Press Release

DIC Asset AG increases FFO to a record level of EUR 68 million in 2018; dividend raised to 48 Cents (previous year: 44 Cents)

• FFO grow significantly by 13 % to EUR 68 million
• Profit for the period maintains high level at EUR 47.6 million
• Dividend proposal of EUR 0.48
• Commercial Portfolio: EPRA vacancy rate down by 24 % to 7.2 %;  like-for-like rental income +2.7 %; c. EUR 160 million in value growth not including transactions (+10.4 %)
• Income from fund business increased by 73 %, up to EUR 37.3 million
• Forecast for 2019: rise of FFO to EUR 70-72 million

Frankfurt am Main, 08 February 2019. This Friday, DIC Asset AG, one of Germany’s leading listed property companies, published its figures for the 2018 financial year, looking back on a decidedly successful year in business.

Funds from Operations (FFO) grew by a significant 13 % to EUR 68.0 million (previous year: EUR 60.2 million) and thereby attained a new record level. This is attributable specifically to the outstanding performance of the funds trading platform and the resulting noticeably higher transaction-related income from management fees. The profit for the period is at EUR 47.6 million and rose by 6 % – without the one-off effect in 2017 of the share swap in which the company traded its WCM Beteiligungs- und Grundbesitz AG stock in for shares in TLG Immobilien AG. The assets under management (AuM) totalled EUR 5.6 billion as of 31 December 2018 (previous year: EUR 4.4 billion).

In response to the successful financial year, the Management Board of DIC Asset AG will propose an increased dividend of EUR 0.48 per share for 2018-with the option to choose a scrip dividend instead-to the annual general meeting on 22 March 2019. The dividend yield relative to the year-end 2018 share price thus equals 5.3 %.

“Just like the year before, we reliably matched or indeed exceeded the forecast in 2018 and once again demonstrated the profitability and dynamic of our hybrid business model. We made good progress toward our strategic goals to keep enhancing the quality and balance of our portfolio and to generate growth. We were able to showcase our real estate competence across segments, especially through the like-for-like increase in the rental income of our Commercial Portfolio by 2.7 % as well as through the drastically reduced vacancy rate and extended average lease terms. The brisk growth in the fair market value of our real estate created sustainable values that are reflected not least in the improved loan-to-value ratio. For the first time ever, our net asset value has topped EUR 1 billion and thereby set a new high-water mark. In our investment fund division, we expanded our trading platform by launching two new special funds and by completing advantageous exits, boosting income by 73 %. Meanwhile, we kept moving forward with our strategic reorganisation by further expanding the third-party business in our Other Investments segment, finalising the wind-down of our joint ventures, and selling our equity interest in TLG as planned. With EUR 5.6 billion in assets under management, we considerably widened the foundation for stable and sustainable cash flows once again,” said Sonja Wärntges, CEO, as she commented the financial year concluded.

Commercial Portfolio with strong Reduction in Vacancy Rate and Increase in Market Value
The company continued to increase its portfolio quality during the 2018 financial year: With 101 properties (previous year: 113 properties), the value of the assets under management increased to c. EUR 1.7 billion (previous year: EUR 1.6 billion) in value. The gross rental income of EUR 100.2 million fell short of the prior-year total (EUR 109.7 million) as planned. The properties held in the Commercial Portfolio benefited from a like-for-like valuation effect that amounted to EUR 159.4 million or 10.4 %. The EPRA vacancy rate dropped by 24 % down to 7.2 % as of 31 December 2018. The weighted average lease term (WALT) improved noticeably from 5.1 years to 5.8 years. Rental income was increased by 2.7 % like for like, meaning without transactions taken into account.

Seventh and Eighth Special Fund Launched, Highly Profitable Exits
The strategy of establishing the fund business as trading platform on the market was advanced with great success during the 2018 financial year. The net increase in assets under management when taking the intense buying and selling activities into account amounts to EUR 1.8 billion (previous year: EUR 1.5 billion). New vehicles set up in 2018 include the two special funds “DIC Office Balance V” (target return: 4.0-4.5 %) and “DIC Metropolregion Rhein-Main” (target return: 3.5-4.5 %). Real estate management fees increased by EUR 12.7 million to EUR 31.6 million in the 2018 financial year, primarily because of the high transaction proceeds of EUR 20.2 million (previous year: EUR 9.4 million). With the investment income in the amount of EUR 5.7 million (previous year: EUR 2.6 million) taken into account, income from fund business soared by 73 % to EUR 37.3 million (previous year: EUR 21.5 million).

Growing Third-Party Business in the Other Investments Segment
Assets under management in the Other Investments segment grew to EUR 2.1 billion (previous year: EUR 1.3 billion), thereof EUR 1.7 billion originating in third-party business (previous year: EUR 0.8 billion). Real estate management fees rose to EUR 2.0 million, up from EUR 1.9 million the previous year. Investment income added up to a total of EUR 10.1 million and essentially consists of the dividends paid by the TLG equity interest (previous year: EUR 26.4 million). The objective to sell any remaining joint venture properties in their entirety was accomplished during the 2018 financial year. The planned sales of the TLG stake of 14 % during the first half of 2019 will release additional funds toward the future growth of the company.

Funding Structure further Optimised, Loan-to-Value Brought down to 53.1 %
As a result of the issuance activity during the 2018 financial year, the net interest income dropped to EUR -36.8 million (previous year: EUR -35.1 million). Repaying the 13/18 bond and issuing the new 18/23 bond helped to stabilise the average debt maturity at 3.9 years (previous year: 4.6 years). The average interest rate for all bank debt remained at 1.8 % (previous year: 1.8 %). The EPRA net asset value rose by 21 % to EUR 1,085.8 million (previous year: EUR 900.0 million) as a result of high valuation effects for the real estate assets. In the same context, the loan-to-value (LtV) was reduced to 53.1 % (previous year: 57.0 %). The balance sheet equity ratio improved to 36.0 % (previous year: 35.4 %), which is primarily attributable to the high consolidated income and the high level of acceptance for the scrip dividend.

Outlook for 2019
In the 2019 financial year, DIC Asset AG plans to achieve a stable gross rental income of EUR 98-100 million. A volume of c. EUR 500 million for acquisitions and a range of EUR 200-230 million for sales from all segments is expected. FFO is expected to further increase to EUR 70-72 million.

For more details on DIC Asset AG, visit the company’s homepage at www.dic-asset.de.

About DIC Asset AG:
DIC Asset AG is one of Germany’s leading listed property companies, and specialises in commercial real estate. With around 20 years of experience on the German real estate market, the company maintains a regional footprint on all major German markets through six branch offices, and has 178 assets with a combined market value of c. EUR 5.6 billion under management. DIC uses a hybrid business model to manage its business divisions Commercial Portfolio, Funds and Other Investments. Taking an active asset management approach, DIC employs its proprietary, integrated real estate management platform to raise capital appreciation potential in its business divisions and to boost its revenues.

In its Commercial Portfolio division (EUR 1.7 billion in assets under management), DIC acts as proprietor and property asset holder, and thus generates revenues both from the management of the assets and through the value optimisation of its own real estate portfolio. The Funds division (EUR 1.8 billion in assets under management) generates its revenues by acting as issuer and manager of special real estate funds for institutional investors. Gathered in the business unit Other Investments (EUR 2.1 billion in assets under management) are strategic financial investments, the management of properties in which the company holds no equity stakes, equity investments in property developments and joint venture investments. 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. (as of: 31/12/2018)

DIC Asset AG at a Glance

* not including third-party business, warehoused assets and properties to be repositioned
** Commercial Portfolio without warehoused assets and properties to be repositioned

*** adjusted for warehousing