DIC Asset AG: outstanding performance in 2020 despite COVID-19

Press Release

DIC Asset AG: outstanding performance in 2020 despite COVID-19

• All targets achieved or even exceeded
• Dividend increase: EUR 0.70 per share (dividend yield of 5.2%)
• Funds from operations (FFO) of EUR 96.5 million exceed prior-year result and forecast
• Like-for-like value of the Commercial portfolio increased by around 3.4%
• Outlook 2021: continued growth and FFO increase by over 10% to between EUR 106 and 110 million
• Medium-term goal: increasing assets under management by 50% to EUR 15 billion

Frankfurt am Main, 10 February 2021. DIC Asset AG (ISIN: DE000A1X3XX4), one of Germany’s leading listed property companies, published its consolidated financial statements for 2020 today. Despite the pandemic, the company fully achieved or indeed exceeded its set targets during the year concluded. The business model of DIC Asset AG demonstrated its stability and potential for significant growth even in times of crisis.

The company managed to expand its real estate platform significantly, and set yet another record with a total transaction volume of EUR 2.5 billion. At the turn of the year, the company moreover acquired the logistics specialist RLI Investors, whose competencies will help the company to deepen its commitment in the logistics real estate sector in future. In the medium term, DIC Asset AG plans to expand its assets under management to approximately EUR 15 billion, and has thus set itself another clear growth target.

Sonja Wärntges, CEO of DIC Asset AG, commented: “Our numbers for the year 2020 illustrate our ability to perform dynamically, and successfully, even in times of crisis. Our unique business model has proven its worth especially during exceptional times. Over all, we provide a platform for complementary segments. The combination of a real estate portfolio, on the one hand, and services for institutional clients, on the other hand, is highly profitable and robust within a crisis. It will keep ensuring that our business remains stable and profitable in future, too.”

With this in mind, the company will therefore propose to its shareholders at the upcoming annual general meeting to raise the dividend to EUR 0.70 per share. As in the past years, shareholders can elect to receive a cash or a scrip dividend. The dividend yield based on the year-end 2020 share price is approximately 5.2%.

Key indicators and results of the 2020 financial year

Assets under management increased by 26% to EUR 9.6 billion as of the balance sheet date; when including the RLI Investors transaction, which became effective beginning 2021, they already exceed EUR 10 billion. The funds from operations (FFO) have set another record at EUR 96.5 million and are above the prior-year level (2019: EUR 95.0 million). The significant increase in income from real estate management fees and the optimisation of the financial structure contributed to the increase. FFO does not include profits from sales. FFO II, by adding the disposal result, equalled EUR 128.5 million (2019: EUR 135.5 million). The profit for the period amounted to EUR 73.1 million as of the balance sheet date (2019: EUR 80.7 million). The decline compared to the prior-year result is mainly attributable to the fact that the profit from sales was EUR 8.5 million lower due to a reduced volume of property sales.

Another transaction record set at EUR 2.5 billion

The transaction volume generated during the financial year concluded at approximately EUR 2.5 billion, setting another record. The transaction targets, which had been adjusted in April due to the ongoing pandemic, were clearly exceeded (2019: EUR 2.2 billion). With c. EUR 1.8 billion in notarised acquisitions across both segments, the company easily topped its most recent forecasts, which is mainly caused by large-scale acquisitions. Almost 90% (EUR 1.6 billion) of the acquired assets are earmarked for the Institutional Business, whereas EUR 0.2 billion were spent on acquisitions for the Commercial Portfolio. Notarised sales added up to a total of EUR 612 million: Sales worth c. EUR 242 served the purposes of portfolio optimisation and revenue realisation from the Commercial Portfolio, while assets worth c. EUR 370 million were sold for our active fund management mandates.

Strong letting performance despite challenging COVID-19 environment

Delivering a strong letting performance, our property management teams signed lease agreements of about 269,900 sqm, which exceeds last year’s total by +28%. The focus was primarily on renewals, a trend that kept gathering momentum under the impact of the COVID-19 pandemic as the year progressed, reflecting a growing need for stability and a waning desire to relocate on the tenant side. On a square-metre basis, renewals accounted for the vast majority of lease signings with 71% (192,600 sqm) and new lettings for 29% (77,300 sqm). The letting performance equalled EUR 33.2 million as of 31 December 2020 (31 December 2019: EUR 32.7 million). The average square-metre rent of the leases signed went up significantly by around 7 %, rising from EUR 12.97 to EUR 13.86.

Commercial Portfolio: Stability and value creation

The key portfolio metrics of the Commercial Portfolio continued to improve with lettings and portfolio optimisation through profitable acquisitions and sales. The gross rental income amounted to EUR 100.7 million (2019: EUR 101.9 million), thereby reaching the stable level of the previous year. The net rental income came to EUR 82.2 million, falling short of the prior-year level (2019: EUR 87.9 million) mainly due to valuation allowances for rent receivables that were EUR 3.2 million higher than the previous year for pandemic-related reasons. The average lease term improved from 6.0 years to 6.5 years, which was accomplished primarily through long-term lease signings. The EPRA vacancy rate was reduced by 110 basis points year on year, from 6.5% down to 5.4%. As a result, the third-party valuation of the Commercial Portfolio returned a like-for-like valuation effect of around 3.4% or EUR 65.9 million by year-end.

Institutional Business: growth continued even in 2020

The concluded financial year once again highlighted our long-term track record and the profound trust among our institutional investors in our real estate platform, which has been growing rapidly for years. By the end of the year, a number of transactions had increased the company’s assets under management by 33%, up to 7.6 billion euros. The income from property management generated by current management and transaction activities increased by 27% year on year, up to EUR 79.7 million (2019: EUR 62.9 million). In the Institutional Business unit, the share of the profit or loss of associates from co-investments equalled EUR 11.4 million (2019: EUR 5.4 million, not including the TLG dividend).

Financial and capital structures strengthened further
The average level of interest rates across all financial liabilities remained unchanged at 2.0% as of 31 December 2020. The interest coverage ratio (ICR, meaning the ratio of EBITDA to net interest expense) rose by another 48 basis points over prior year, up to 557%, because of the significant increase in EBITDA and the improved net interest expense (2019: 509 %). The average maturity of debt remained generally stable at 3.6 years (31 December 2019: 3.9 years).

The EPRA net asset value (EPRA NAV) equalled EUR 1,409.9 million (31 December 2019: EUR 1,244.2 million) or EUR 17.49 per share (31 December 2019: EUR 17.23) as of the balance sheet date. The increase per share is primarily the result of the earnings growth and another robust like-for-like valuation effect equal to +3.4%. The value of the real estate management services provided by the Institutional Business unit is not fully reflected in the EPRA-NAV via the goodwill reported in the balance sheet. Including this externally audited value, the total value for the adjusted NAV amounted to EUR 1,776.5 million (31 December 2019: EUR 1,607.2 million) or EUR 22.04 per share (31 December 2019: EUR 22.26 per share). The balance sheet equity ratio continued to increase year on year, rising by 4.2 percentage points from 36.5% to 40.7%. Especially the increased market values of our real estate in the Commercial Portfolio (+3.4% adjusted for acquisitions and disposals) and our optimised funding structure helped us lower the loan-to-value ratio (LtV), adjusted for warehousing, by 330 basis points down to 44.5 % (2019: 47.8%).

Outlook for 2021
DIC Asset’s plans for the 2021 financial year call for substantial growth in either business segment. On the acquisition side, DIC Asset AG anticipates a volume of EUR 1.2 to 1.8 billion, of which EUR 200 to 300 million are earmarked for the Commercial Portfolio, and EUR 1.0 to 1.5 billion for the Institutional Business. On the disposal side, we are calculating with a sales volume of EUR 300 to 400 million, thereof assets worth c. EUR 100 million from the Commercial Portfolio and c. EUR 200 to 300 million worth of assets from the Institutional Business portfolio. The gross rental income is expected to reach EUR 98 to 102 million by year-end. In the Institutional Business, it is planned to bring the income from property management up to between EUR 94 and 104 million. The company expects to see a brisk year-on-year increase in funds from operations (FFO), up to a range between EUR 106 million and EUR 110 million.

The full-length 2020 Annual Report of DIC Asset AG was published on 10 February 2021 and is available on the company’s homepage under the link below: https://www.dic-asset.de/en/ir/publications/

Invitation to attend investor call / webcast on 10 February 2021
The Management Board of DIC Asset AG invites you to attend the presentation of the financial statement for the 2020 financial year at 10.00 CET.

Please use the numbers below to dial in: Dial-in numbers:
Germany: +49 (0)89 2030 35526
United Kingdom: +44 (0)330 336 9411
United States: +1 929-477-0324
France: +33 (0)1 76 77 22 57
Switzerland (Zurich): +41 (0)44 580 1022

The confirmation code is: 8535708#

The webcast (incl. replay) is available under the link below:
https://www.webcast-eqs.com/dic20210210/no-audio

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 Germany’s leading listed specialist for commercial real estate with more than 20 years of experience on the real estate market and access to a broad-based network of investors. Our business is based on a regional and inter-regional real estate platform with eight offices on the ground in all major German markets. We manage 225 assets with a combined market value of c. EUR 10.3 billion on site, always close to our properties and their occupiers.

The Commercial Portfolio segment (EUR 2.0 billion in assets under management) represents the proprietary real estate portfolio of DIC Asset AG. Here, we generate constant cash flows from stable rent revenues on long-term leases while also optimising the value of our portfolio assets through active management and realising gains from sales.

In the Institutional Business segment (EUR 8.3 billion in assets under management), we earn recurrent fees from real estate services we provide to national and international institutional investors by structuring and managing investment vehicles that return attractive dividend yields.

DIC Asset AG has been SDAX-listed since June 2006.

IR Contact DIC Asset AG:
Peer Schlinkmann
Head of Investor Relations & Corporate Communications
Neue Mainzer Strasse 20
D-60311 Frankfurt am Main
Phone +49 69 9454858-1492
ir@dic-asset.de

DIC Asset AG at a glance

*All per-share figures adjusted in accordance with IFRS (Total no. of shares in 2020: 79,421k; 2019: 71,713k)
** Not including warehoused assets
*** Commercial Portfolio, not including assets to be repositioned