DIC Asset AG Places Proprietary Real Estate in Investment Fund – Substantially Reducing LTV Ratio

Press Release

Frankfurt, 16 December 2015

DIC Asset AG Places Proprietary Real Estate in Investment Fund – Substantially Reducing LTV Ratio

– Successful placement among German institutional investors; sold 7 percent above fair market value

– Significant improvement of the loan-to-value ratio (LTV) by around 4 percentage points, prematurely reaching the strategic target of lowering LTV to below 60%

– Institutional real estate fund “DIC Office Balance III” designed for a total volume of c. EUR 270 million

– Investment fund division crosses EUR 1 billion (AuM) mark
 

DIC Asset AG, a Frankfurt-based investor specialised in German commercial real estate (German securities ID WKN A1X3XX / ISIN DE000A1X3XX4) is about to launch its fourth institutional real estate fund, “DIC Office Balance III”, with a total volume of approximately EUR 270 million. The properties in the start-up portfolio were taken from DIC Asset AG’s own portfolio. The sales contract for contribution of the initial portfolio was just signed. The selling price exceeds the fair market value as of 31 December 2014 by around 7%. DIC Asset AG will remain committed in the portfolio with a co-investment of around five percent, and will provide its proven investment and real estate management services. In addition to investment income, the company will generate regular and stable revenues from services provided. With the placement of this fourth investment fund, the “assets under management” in the fund division crossed the billion-euro mark (the total AuM being c. EUR 1.1 billion). The transaction will first affect earnings during the first quarter of the 2016 financial year.

Significant Reduction of the Leverage Ratio

By closing this transaction, DIC Asset AG has lowered its loan-to-value ratio (LTV) by around 4 percentage points. When taking into account the transfer of ownership for the already notarised sales transactions of more than EUR 220 million toward year-end (as reported in the nine-month statement), the company will have prematurely achieved the “Strategy 2016” target communicated since year-end 2013, which seeks a reduction of the loan-to-value ratio below 60 percent by the end of 2016. The transaction will reduce the future funds from operations (FFO) by c. EUR 5-6 million during the financial year of 2016.

Ulrich Höller, CEO of DIC Asset AG: “We consistently pursued our ‘Strategy 2016’ over the past few months. With this transaction we are swiftly expanding the highly profitable fund business while already bringing down our leverage ratio as planned. We will keep driving the process forward to bring it down even further.”

Fund Profile “DIC Office Balance III”

The fund invests in office buildings in Germany’s “Top 7” cities and economically strong metro regions in Germany. The fund’s start-up portfolio was chosen from among property holdings owned and managed by DIC Asset AG, re-structured into a sub-portfolio. These altogether nine assets were chosen both from the directly held property portfolio (“Commercial Portfolio”) but also from the joint venture portfolio of DIC Asset AG. The start-up portfolio is widely diversified and includes around 150,000 sqm of commercial floor area, thereof more than 80 percent office space. Its assets are spread across several cities nationwide, including “Top 7” locations like Berlin, Cologne, Frankfurt, Munich, and other economically strong regions. The average property value is c. EUR 30 million. More than 50 tenants generate rental income of c. EUR 17 million p.a. The average remaining term of the leases is around 4.5 years while the portfolio’s vacancy rate currently equals around one percent.

After meeting the standard market requirements, the institutional fund is expected to become operational in January 2016, once the transfer of ownership is completed. IntReal (International Real Estate Kapitalverwaltungsgesellschaft mbH), a fully-owned subsidiary of Warburg-HIH Invest Real Estate GmbH, will serve as AIF management company. The equity investor base is made up of German institutional investors, including superannuation schemes, pension funds and savings banks. Recent fundraising has resulted in additional equity commitments to ensure the future growth of the new fund. Once the fund has been launched, investors will benefit from attractive regular distribution yield of around five percent p.a.

About DIC Asset AG:

Established in 2002, DIC Asset AG, with registered offices in Frankfurt am Main, is a real estate company with a dedicated investment focus on commercial real estate in Germany, pursuing a return-oriented investment policy. The investment strategy of DIC Asset AG aims at the continuous development of a quality-driven, high-yield, and regionally diversified portfolio. The real assets under management amount to c. EUR 3.1 billion, comprising around 215 properties, while the pro-rata interest in the real assets amounts to c. EUR 2.2 billion. The real estate portfolio is structured in two segments: the Commercial Portfolio (EUR 2.0 billion) comprises existing properties with long-term rental contracts generating attractive rental yields. The “Co-Investment” segment (EUR 0.2 billion pro rata) pools fund investments, joint venture investments, and investments in project developments. In-house real estate management teams provide a direct service to tenants, working out of six different locations in each of the portfolio focus regions. This kind of market presence and expertise creates the basis for preserving and enhancing our earnings and real estate values. 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.

For more details on DIC Asset AG, please visit us on the internet at www.dic-asset.de.

Press contact:

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

Investor Relations

Peer Schlinkmann
Neue Mainzer Strasse 20 – MainTor
D-60311 Frankfurt am Main
Tel. +49-69-9454858-1221
Fax +49-69-9454858-9399
P.Schlinkmann@dic-asset.de