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DIC Asset AG on course for further growth, EUR 70 million raised through straight bond

 ​DGAP-News DIC Assets​

DIC Asset AG / Key word(s): Quarter Results

12.05.2011 / 07:30

DIC Asset AG on course for further growth, EUR 70 million raised through straight bond

Letting result in Q1 2011: 48,300 sqm (+55 per cent)

With EUR 2.8 million profit for the period at previous year’s level

FFO remain strong, at EUR 10.0 million (Q1 2010: EUR 10.9 million)

Straight bond and capital increase raised approx. EUR 122 million additional funds

Special fund: fund volume to double within the next 18 months

Key results at a glance:

DIC Asset AG (German Securities ID 509840 / ISIN DE0005098404) today presented its interim report for the first three months of the 2011 financial year. The quarterly results were characterised by two key factors: firstly, DIC Asset AG maintained very stable results from a smaller portfolio, which had diminished in size due to asset sales (including transfer to the new investment fund). At EUR 2.8 million, profit for the period was unchanged year-on-year, and FFO of EUR 10.0 million were only marginally below the figure posted for the previous year’s quarter (Q1 2010: EUR 10.9 million). Secondly, the Company successfully concluded rental agreements (new lettings and renewals) for commercial property with an aggregate rental space of 48,300 sqm – a year-on-year increase of 55 per cent, which bodes well for the rentals business during 2011.

Detailed review of results for the quarter:

DIC Asset AG’s gross rental income for the first three months of 2011 amounted to EUR 27.6 million (Q1 2010: EUR 31.7 million). The 13 per cent decline was largely attributable to the reduced portfolio size following disposals, and placement of the debut investment fund. The expiry of individual rental contracts was an additional contributing factor, which the Company was subsequently able to recoup to some extent. At EUR 25.3 million, net rental income was EUR 3.7 million lower than in the previous year (Q1 2010: EUR 29.0 million).

In a recovering rental market, DIC Asset AG showed a strong performance in terms of new rentals in early 2011, increasing total letting volume by 55 per cent. New rental contracts or renewals were concluded with an aggregate floor space of 48,300 sqm (Q1 2010: 31,200 qm). Renewals accounted for 24,200 sqm (+97 per cent). New rentals of 24,100 sqm (up 28 per cent year-on-year) were also up strongly. Total letting volume was equivalent to annualised rental income of EUR 4.4 million (Q1 2010: EUR 3.3 million). The occupancy rate of 86 per cent remained stable, compared with the previous quarter (Q4 2010) and with Q1 2010.

Net interest expense of EUR 14.2 million was down by 20 per cent (Q1 2010: EUR 17.8 million), with the average interest rate at 4.35 per cent (31 March 2010: 4.55 per cent). Reflecting the growth levels targeted by the Company, staff expenses increased by EUR 0.1 million, to EUR 2.3 million, in line with the budget, whilst administrative expenses rose to EUR 2.2 million (up EUR 0.2 million).

Operating profit before depreciation and amortisation (EBDA) of EUR 9.7 million was slightly lower than the EUR 10.5 million figure posted for the first three months of the previous year – this was also in line with projections. Profit for the period of EUR 2.8 million (Q1 2010: EUR 2.8 million) was in line with the previous year’s figure; it is equivalent to earnings per share of EUR 0.07 (Q1 2010: EUR 0.08).

First-quarter FFO (funds from operations, defined as earnings before interest and taxes, and excluding profits from disposals and development projects) of EUR 10.0 million was slightly lower year-on-year (Q1 2010: EUR 10.9 million). Lower rental income was offset, in particular, by the significant decline in financing costs and a higher management fee income. FFO per share amounted to EUR 0.25 (Q1 2010: EUR 0.33).

Cash flow from operating activities (after interest and taxes paid) rose by a notable EUR 7.6 million year-on-year, to EUR 9.4 million; largely reflecting the lower interest payments. Cash and cash equivalents as at 31 March 2011 increased by EUR 17.7 million year-on-year, to EUR 95.3 million.

The volume of real estate assets under management amounted to about EUR 3.2 billion as at 31 March 2011 (31 Dec 2010: about EUR 3.1 billion), with acquisitions in March accounting for an increase of some EUR 100 million. With an average term of around four years, the majority of the Company’s EUR 1.37 billion debt is long-term. Only approx. 8 per cent of overall financial debt will fall due within the next 12 months. The Company financed the acquisition of real estate assets – completed in March – largely from its own funds: a part of the financing volume will be refinanced by the end of the year by drawing on a loan facility with a maximum term of ten years. The equity ratio increased significantly to 31.3 per cent at the end of the quarter (Q1 2010: 25.4 per cent).

DIC Asset AG successfully entered the fund management business during the first quarter of 2011, with the full placement of around EUR 120 million in equity of the ‘DIC Office Balance I‘ real estate special fund. Moreover, investors have already committed to invest in further growth of the fund. The Company plans to double the fund volume within the next 18 months.

DIC Asset AG raised some additional EUR 70 million through the placement of a five-year straight bond, which was offered for subscription from 5 May to 11 May 2011, with a volume between EUR 60 million and EUR 100 million. The unsecured bond has an adequate 5.875 per cent coupon, which is an attractive cost of funding for the Company. The bond issue will be included in the OTC trading of Deutsche Börse AG (Segment Entry Standard for bonds), with exchange trading set to start on 16 May 2011. Following up on this successful debut issue, DIC Asset AG will take further planning steps to establish the Company as a bond issuer as required. Alongside the successful capital increase in March 2011, through which the Company raised approximately EUR 52 million in fresh funds, DIC Asset AG has thus added a second pillar to the financing mix supporting the planned growth. This will significantly enhance the Company’s flexibility regarding the acquisition of further properties or real estate portfolios.

Outlook for 2011: DIC Asset AG affirms its most recent FFO forecast of EUR 40 to 42 million for the full year 2011.

Ulrich Höller, Chairman of the Management Board of DIC Asset AG, said: ‘The good and respectable rental performance and quarterly results are clear indicators for the growth potential of our business model. Thanks to the successful capital increase and the placement of our corporate bond issue, we are well-positioned for the challenges ahead.’

For more information on DIC Asset AG, please visit the Company’s website, where the three-month report for 2011 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 3.2 billion, comprising around 290 properties. The portfolio is divided into three segments: the ‘Core plus’ portfolio includes the proprietary portfolio held on a long-term basis and offering stable, attractive rental yields. The ‘Value-added’ portfolio contains real estate with promising performance potential over the medium term. The ‘Co-investments’ segment portfolio comprises minority stakes in supplementary real estate sectors, including opportunistic investments, project development as well as the Funds business area, where we invest in first-class core real estate. 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.

Key financial indicators

Operating performance indicators
(EUR mn)
Q1 2011 Q1 2010  
Rental income 27.6 31.7 -13%
Income from property management 1.0 0.6 +67%
Revenues from disposal of properties 0.0 1.5 -100%
Total revenues 32.7 38.4 -15%
Funds from Operations (FFO) 10.0 10.9 -8%
EBDA 9.7 10.5 -8%
Profit for the period 2.8 2.8 0%
Cash flow from operating activities 9.4 7.6 +24%
Balance sheet data
(EUR mn)
31.03.2011 31.12.2010  
Equity ratio (%) 31.3 28.6 +2.7
Investment property 1,822.4 1,718.2 +6%
Debt 1,449.0 1,462.9 -1%
Total assets 2,109.4 2,050.0 +3%
Financial indicators
(EUR per share)
Q1 2011 Q1 2010  
FFO 0.25 0.33 -24%
EBDA 0.24 0.32 -25%
Basic/diluted earnings 0.07 0.08 -13%

End of Corporate News

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