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DIC Asset AG pursues its strategy in the first half of 2011

 ​DGAP-News DIC Assets​

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

11.08.2011 / 07:36


DIC Asset AG pursues its strategy in the first half of 2011

DIC Asset AG exceeds first-quarter results on nearly all financial indicators

137,800 sqm of new lettings or renewals (+18 per cent)

Profit for the period of EUR 6.2 million matches the previous year’s level (H1 2010: EUR 6.3 million)

FFO remains high, at EUR 20.1 million (H1 2010: EUR 22.0 million)

Key results at a glance:

Today DIC Asset AG (German Securities ID 509840 / ISIN DE0005098404) presented its interim report for the first half of the 2011 financial year. The Company once again generated very stable results, on the basis of a smaller portfolio (as a result of sales, and the contribution of properties to the investment fund in 2010). DIC Asset AG outperformed its results posted for the first quarter of 2011 on almost all operating business indicators, maintaining its momentum seen since the beginning of the year. For instance, profit for the period of EUR 3.4 million for the second quarter exceeded the first-quarter figure of EUR 2.8 million, and FFO of EUR 10.1 million matched the level of the previous quarter (Q1 2011: EUR 10.0 million).

Detailed review of results for the first half year:

DIC Asset AG’s gross rental income for the first half of 2011 amounted to EUR 56.5 million (H1 2010: EUR 64.1 million). The 12 per cent decline was mainly attributable to the reduced portfolio size following disposals, and placement of the debut investment fund. Gross rental income of EUR 28.9 million exceeded the figure for the previous quarter by some 5 per cent (Q1 2011: EUR 27.6 million). This trend was also evident for net rental income, which rose to EUR 26.9 million in the second quarter (Q1 2011: EUR 25.3 million). At EUR 52.2 million, net rental income for the first half of the year was down 11 per cent year-on-year (H1 2010: EUR 58.4 million).

In a recovering letting market, DIC Asset AG increased total letting volume by a clear 18 per cent: New rental contracts or renewals were concluded for portfolio properties with an aggregate floor space of 137,800 sqm (H1 2010: 116,300 sqm). The bulk of this increase was attributable to new lettings: at 63,700 sqm (up 41 per cent), these were clearly higher than in the previous year. Renewals remained strong, rising 4 per cent to 74,100 sqm. Total new lettings were equivalent to annualised rental income of EUR 12.4 million, which was in line with the previous year’s level (H1 2010: EUR 12.6 million). The tenancy rate remained stable, at 86 per cent (unchanged from 31 Dec 2010).

DIC Asset AG has a sound financial position. For the first six months of the year, the Company posted a net interest result of EUR -26.1 million: this was EUR 6.8 million (or 21 per cent) lower than in the previous year. This reduction was due to lower financing volumes (reflecting asset sales), the optimisation of interest expenses for loans and hedging instruments, and in higher cash and cash equivalents – generating interest income – as a result of the two capital measures carried out during the first half of the year. Accordingly, the average interest rate declined to 4.45 per cent (H1 2010: 4.56 per cent). In conjunction with the stable net rental income, this led to a marked increase in the interest cover ratio, to 176 per cent (H1 2010: 162 per cent).

With an average term of around 3.6 years, the majority of the Company’s EUR 1.43 billion financial debt is medium- to long-term. 71 per cent has a remaining term of more than three years (H1 2010: 58 per cent), and only 7 per cent will need to be refinanced over the next 12 months.

Reflecting the growth levels targeted by the Company, personnel expenses rose to EUR 4.9 million (up EUR 0.2 million), a moderate increase in line with the budget, whilst administrative expenses increased by EUR 0.2 million, to EUR 4.2 million. This is contrasted by increased management fee income, which rose by 53 per cent to EUR 2.3 million (H1 2010: EUR 1,5 million).

As expected, operating profit before depreciation and amortisation (EBDA) of EUR 20.3 million was lower than the EUR 21.9 million figure posted for the first six months of the previous year. Profit for the period of EUR 6.2 million (H1 2010: EUR 6.3 million) matched the previous year’s figure; it is equivalent to earnings per share of EUR 0.14 (H1 2010: EUR 0.17).

Six-month FFO (funds from operations, defined as earnings before interest and taxes, and excluding profits from disposals and development projects) of EUR 20.1 million was down by EUR 1.9 million year-on-year. The decrease in rental income, reflecting the smaller portfolio, and the cessation of rental income from the MainTor site (as planned) were largely compensated by the significantly improved net interest result, and by higher real estate management income. FFO per share amounted to EUR 0.47 (H1 2010: EUR 0.60).

Cash flow from operating activities (after interest and taxes paid) rose by 25 per cent, from EUR 15.4 million in the previous year to EUR 19.3 million. This reflected the notable contribution of lower interest payments. Cash and cash equivalents in excess of EUR 139 million as at 30 June 2011 was up by approximately EUR 45 million year-on-year. Loan facilities of some EUR 40 million related to the acquisition of two Kaufhof properties, the leading German retailer, will additionally be available until the end of the year; to date, the Company has predominantly used own funds to finance the transaction.

Real estate assets under management amounted to approx. EUR 3.2 billion as at 30 June 2011 (31 Dec 2010: approx. EUR 3.1 billion). The equity ratio (based on equity reported in the statement of financial position) stood at 30.5 per cent on 30 June 2011 (31 Dec 2010: 28.6 per cent).

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

Ulrich Höller, Chairman of the Management Board of DIC Asset AG, explained that DIC Asset AG ‘implements its strategy step by step. For the second half of the year, we anticipate further improvements to results from our letting performance. Furthermore, we envisage acquisitions of at least EUR 200 million to EUR 300 million for 2011 as a whole. And we will commence with the first construction stage of the MainTor project, which is already sold.’

For more information on DIC Asset AG, please visit the Company’s website www.dic-asset.de, where the half-year 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 280 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 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)
H1 2011 H1 2010   Q2 2011 Q1 2011  
             
Gross rental income 56.5 64.1 -12% 28.9 27.6 +5%
Income from management fees 2.3 1.5 +53% 1.3 1.0 +30%
Profit on property disposals 0.6 0.6 ±0% 0.6 0.0
Total revenues 76.0 93.9 -19% 43.3 32.7 +32%
Funds from Operations (FFO) 20.1 22.0 -9% 10.1 10.0 +1%
EBDA 20.3 21.9 -7% 10.6 9.7 +9%
Profit for the period 6.2 6.3 -2% 3.4 2.8 +21%
Cash flow from operating activities 19.3 15.4 +25% 9.9 9.4 +5%
             
Indicators per share
(EUR)
H1 2011 H1 2010*   Q2 2011 Q1 2011  
             
FFO 0.47 0.60   0.22 0.25  
EBDA 0.47 0.60   0.23 0.24  
Basic/diluted earnings per share 0.14 0.17   0.07 0.07  

* The previous year’s figures were adjusted for the effects of the capital increase (in accordance with IFRS, IAS 33).

Statement of financial position – key items (EUR mn) 30 June 2011 31 Dec 2010

Equity ratio (%)     30.5   28.6  
Investment property     1,810.2   1,718.2  
Equity     657.6   587.1  
Debt     1,425.5   1,376.1  
Total assets     2,155.2   2,050.0  
Cash and cash equivalents     139.2   117.3  

End of Corporate News


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135246  11.08.2011