DIC Asset Starts into the Year with Great Quarterly Result and Places its Fifth Institutional Real Estate Fund

Press Release

DIC Asset Starts into the Year with Great Quarterly Result and Places its Fifth Institutional Real Estate Fund

– Successful launch of the DIC Office Balance IV as successor product of the fully placed DIC Office Balance III

– Property disposals worth EUR 157 million – already achieved three-quarter mark of the year-end target

– Rental income shows 0.9 percent like-for-like growth

– FFO of EUR 15.8 million (Q1 2016: EUR 14.5 million)

– Forecast for 2017 upheld

Frankfurt am Main, 05 May 2017. DIC Asset AG (German securities code number WKN A1X3XX / ISIN DE000A1X3XX4) presented its quarter-end figures for Q1 2017 today. The company started into the financial year with solid figures, and just started placing its fifth institutional real estate fund, DIC Office Balance IV, having fully placed its DIC Office Balance III. With the disposal of a real estate portfolio in German A- and B-class cities in a volume of EUR 143 million, among other disposals, the company has already passed the three-quarter mark en-route to its set sales target for 2017. The FFO increased to EUR 15.8 million year on year (Q1 2016: EUR 14.5 million) and thus reflect the reduced interest expenses above all, which were brought down by the refinancing arranged in late 2016. The assets under management showed a modest increase compared to the year-end total of 2016 at EUR 3.6 billion (31 December 2016: EUR 3.5 billion). The profit for the period added up to EUR 7.6 million (Q1 2016: EUR 11.8 million), which is essentially explained by a drop in sales profits over prior-year quarter, and was thus right on target. The Management Board reaffirmed the targets set for 2017.

“These latest funds from operations show that we are right on track, and as a result of the portfolio sale at the beginning of the year, we have far advanced toward our sales target for 2017. As far as our business lines go, we continued to optimise the performance of our Commercial Portfolio through active asset management, on the one hand, and expanded our fund business by launching the DIC Office Balance IV after fully placing the DIC Office Balance III, on the other hand,” said Aydin Karaduman, CEO of DIC Asset AG.
 

Operating Performance Indicators on Target
The letting performance during the first quarter of 2017 added up to 40,000 square metres, which puts this indicator in the expected band. The figure includes new rentals of about 16,000 square metres and renewed rentals of about 24,000 square metres. More than 31,000 square metres of the total letting performance represent Commercial Portfolio lettings. This is an increase by almost 45 percent over prior-year quarter, due to the successful active asset management of the proprietary portfolio. The vacancy rate declined to 12.4 percent year on year (Q1 2016: 13.1 percent). The gross rental income from the proprietary portfolio and “Warehousing” added up to EUR 30.5 million (Q1 2016: EUR 27.6 million), implying a one-year increase by around 11 percent. The annualised rental income during the first three months of 2017 from properties that are still held in the portfolio from a year ago (like-for-like approach) also registered an increase by 0.9 percent. Asset sales from the Commercial Portfolio that were transacted at the beginning of this year brought the volume of property disposals already up to EUR 157 million as of today, three quarters of the way toward the set year-end target of EUR 200 million. Transfer of ownership, rights and duties is expected by the end of the second quarter of 2017.
 

Fund Business off to a Successful Start
With a purchase of an office property in Frankfurt am Main for the DIC Office Balance III in the first quarter (bringing the number of fund assets up to eleven) the fund portfolio has achieved its target volume of EUR 327 million. With this transaction the fund is fully placed just one year after it started operating. As successor product in the Office Balance series, the company also placed its fifth institutional real estate fund during the first quarter. For the new investment fund with a target volume of EUR 300 to 350 million, equity commitments by several investors have been secured. Around one third of the target volume is already secured by a start-up portfolio. Overall, the assets under management of the investment fund division added up to a total of EUR 1.3 billion. The FFO contribution from the fund business (representing management fees and investment income) equalled EUR 3.9 million.
 

Financial Indicators Further Improved
The successful refinancing of the Commercial Portfolio in the amount of circa EUR 960 million at the end of 2016 has already had an impact on the quarter-end figures of the financial year to date. The average interest rate of the bank liabilities equalled 1.7 percent as at balance sheet date of 31 March 2017, and is therefore well below the average rate of 3.4 percent registered at the end of 2016. The financial debt at the end of the first quarter of 2017 was more or less on a level with the total of circa EUR 1.57 billion it showed at year-end 2016. The net interest result improved by roughly 32 percent to EUR -7.9 million (Q1 2016: EUR -11.6 million) in the wake of the refinancing arranged before the end of the year. The loan-to-value ratio, when adjusted for warehousing effects, equalled 59.8 percent and remained consistently below 60 percent.
 

For more details on DIC Asset AG, please visit the company’s homepage at www.dic-asset.de.

About DIC Asset AG:
Established in 2002, DIC Asset AG, with registered offices in Frankfurt am Main, is a real estate company with investment focus on commercial real estate in Germany, pursuing a return-oriented investment policy. The Company’s investment strategy is geared to the continued development of a high-quality, highly profitable, and regionally diversified portfolio. The company has around 200 real estate assets under management with an aggregate market value of EUR 3.6 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-Investments” segment (EUR 1.6 billion) comprises fund investments (pro-rata share of EUR 1.3 billion), joint-venture investments, and interests in development projects. 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.

Key Performance Indicators