DIC Asset AG: Strong Third Quarter with 30-Percent Growth in FFO

Press Release

DIC Asset AG: Strong Third Quarter with 30-Percent Growth in FFO

– Significant FFO increase by 30 percent to EUR 48.1 million

– Consolidated income increases to EUR 33.4 million

– EUR 85.7 million gross rental income; like-for-like growth 1.1 percent

– Revenues from fund management grow to EUR 13.0 million

– Special dividend planned for 2017

Frankfurt/Main, 03 November 2017. This Friday, DIC Asset AG (WKN A1X3XX / ISIN DE000A1X3XX4) presented its figures for the third quarter of 2017. Following in the wake of an already excellent mid-year result, the company’s very robust performance during the third quarter resumed seamlessly from that of the first six months of 2017, returning rather positive results across all operating segments. The FFO equalled EUR 48.1 million, which implies a year-on-year increase by 30 percent (9M 2016: EUR 36.9 million). At the same time, the profit for the period surged by 48 percent to EUR 33.4 million year on year (9M 2016: EUR 22.5 million). Assets under management added up to a total of EUR 3.3 billion by the end of Q3. In addition to the excellent performance of the operating segments, the positive effects of the equity interest acquired in the company WCM contributed to the result.

“With a noticeably increased FFO and a rise in consolidated income, we look back on an excellent performance during the ongoing financial year. Both the placement of our sixth institutional fund and the robust results in the Commercial Portfolio demonstrate that the two operating segments of our hybrid business model are equally successful. In addition, we recognised a significant positive effect on earnings through our strategic equity investment in WCM and the takeover bid by TLG that allowed us to acquire a share below NAV in an interesting listed commercial property AG and its portfolio. The planned special dividend is intended to let our shareholders directly participate in this success,” said Sonja Wärntges, CEO of DIC Asset AG.
 

Outperformance of Commercial Portfolio
A strong letting performance during the third quarter lowered the vacancy rate of the “Commercial Portfolio” segment to 12.1 percent. This implies a quarter-over-quarter reduction by 80 basis points. Overall, around 91,700 square metres were let. New rentals accounted for around 37,100 square metres thereof, and renewals for around 54,600 square metres. The gross rental income rose to 85.7 million euros, which implies an increase by 5 percent year on year (9M 2016: EUR 81.4 million). Moreover, the like-for-like rental income developed extremely positively as they grew by 1.1 percent. At 6.3 percent, the gross rental yield maintained the same high level it had shown at mid-year. “The successful lettings in our operating business and the steady reduction of vacancies demonstrate the high quality and market proximity of our asset and property management platform. To be successful in the letting business, you need to have a presence on the ground, and maintain close ties with tenants and tenant leads,” said Wärntges.

Steady Growth in the Fund Business
As expected, the “Funds” operating segment developed good during the third quarter. The launch of the Retail Balance I marked the second investment fund that DIC placed on the market this year, and brought the total number of institutional real estate funds it launched up to six. The fund’s target investment volume is approximately EUR 250 million. At this time, the fund is endowed with a high-end start-up portfolio in a total volume of EUR 190 million that includes three local convenience centres. The company’s next fund products are already in planning. By the end of the third quarter, the assets under management in the Funds segment added up to EUR 1.5 billion, which brought them to the same level as the Commercial Portfolio. Fees from real estate management in the fund business experienced a significant increase that is explained by the new fund launched in the third quarter, totalling EUR 13.0 million (mid-year 2017: EUR 6.9 million).

Segment “Other Investments” generates increasing Income
Income from the “Other Investments” segment increases from EUR 2.1 million in 9M 2016 to EUR 7.5 million in 9M 2017, mainly due to equity returns from the equity investment in WCM. This investment was changed into a 6 percent stake at TLG at the beginning of October 2017 in the course of the takeover of WCM by TLG. In the meantime DIC expanded the TLG investment and holds currently 14.52 percent of the voting rights as a strategic investment. Joint ventures and project developments were further reduced as planned.

Positive Development for Financial and Earnings Position
As in prior periods, the key financial and income figures for the third quarter reflect the positive development of the company. The average interest rate for bank debt remained unchanged at 1.7 percent as of 30 September. At EUR 1.37 billion, the financial debt remained below the year-end figure of 2016 (EUR 1.57 billion), as it had at mid-year. Compared to the prior-year figure (EUR -34.0 million), the net interest result for the nine-month period 2017 improved as well, totalling EUR -26.2 million. The loan-to-value equalled 59.7 percent and remained consistently below 60 percent.

Operating Targets Reaffirmed
As it presented the nine months’ revenue, the Management Board reaffirmed the forecast of the operating targets for the financial year 2017, with planned FFO of EUR 59 to 61 million and a gross rental income of EUR 106 to 108 million. The sales volume of EUR 250 million can also be confirmed, due to the current market environment the acquisition volume will amount to more than EUR 200 million by the end of the year.
On top of that, the Management Board is planning to distribute, in addition to the dividend from operating activities that is targeted for 2017, a one-off special dividend in the amount of at least 20 Cents per share in order to let the shareholders of DIC Asset AG participate in the one-off income derived from having exchanged the WCM shares for TLG shares.

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 around 180 assets with a combined market value of c. EUR 3.3 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 1.5 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 1.5 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 0.3 billion in assets under management) are joint venture investments, equity investments in property developments, strategic financial investments, and the management of properties in which the company holds no equity stakes.

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 Performance Indicators