Six months results of DIC Asset AG: significant increase in FFO

Six months results of DIC Asset AG: significant increase in FFO

• Strong letting performance, vacancy rate significantly down to 11.1 per cent
• Operating results (FFO) rose to EUR 23.1 million, up 6 per cent year-on-year
• Funding mix significantly improved by long-term financing of EUR 320 million
• MainTor: exceptionally high rate of pre-sold condominiums
• DIC Asset AG affirms targets for the 2013 financial year

DIC Asset AG (German Securities ID 509840 / ISIN DE0005098404) today presented its interim report for the first half of the 2013 financial year. The figures show that the Company is well on track for achieving all of its full-year targets.

Strong earnings growth

DIC Asset AG’s gross rental income amounted to EUR 30.7 million in the second quarter (Q1 2013: EUR 30.3 million). Rental income for the first half of 2013 totalled EUR 61.0 million (H1 2012: EUR 62.5 million). The declining vacancy rate drove quarterly rental income growth. Thanks to the higher occupancy rate and new properties acquired, the Company has almost offset the year-on-year decline in rental income following property sales. Total income for the first six months of 2013 was up by 43 per cent year-on-year, to EUR 111.9 million (H1 2012: EUR 78.2 million), mainly due to higher sales proceeds.

At EUR 23.1 million, the FFO (funds from operations, defined as earnings before interest and taxes, and excluding profits from disposals and development projects) for the first six months of 2013 was six per cent higher than in the same period of the previous year (H1 2012: EUR 21.8 million). The increase in FFO was largely attributable to growth in the fund management business and the improved net interest result, whilst rental income was stable; personnel and administrative expenses increased in line with projections. FFO per share increased to EUR 0.50 (H1 2012: EUR 0.48). Moreover, with several very successful property sales and the marked reduction in financing costs, consolidated profit for the period of EUR 6.5 million was up by a clear 25 per cent year-on-year (H1 2012: EUR 5.2 million).

DIC Asset AG affirms forecasts for the full year

DIC Asset AG affirms its FFO forecast of EUR 45 million to EUR 47 million for the 2013 financial year (2012: EUR 44.9 million). Rental income is projected at EUR 121 million to EUR 123 million (2012: EUR 126.5 million), following the higher level of disposals; the Company also projects a significant reduction in the vacancy rate, to around 10 per cent (2012: 10.9 per cent).

Financing mix strengthened significantly

As a major milestone in the process of optimising its financing mix, and as announced last week, DIC Asset AG arranged a long-term refinancing taken out to finance the Company’s biggest existing real estate portfolio, well ahead of maturity of the facility. Reflecting the long-term tenor of the EUR 320 million, seven-year loan, the renewal has significantly extended the future average term of financial debt out to a very stable 4.2 years (30 June 2013: 3.1 years). Including this latest loan agreement, DIC Asset AG has secured the average interest cost on its total financial debt at the prevailing attractive level.

As at 30 June 2013, total financial liabilities declined to EUR 1.46 billion (31 Dec 2012: EUR 1.60 billion; 30 June 2012: EUR 1.52 billion). The average interest rate on financial debt stood at 4.00 per cent as at 30 June 2013 – down 20 basis points year-on-year (30 June 2012: 4.20 per cent).

The net interest result improved by 13 per cent, to EUR -24.8 million (H1 2012: EUR -28.6 million). Interest expenses were EUR 3.5 million lower than for the same period of the previous year; besides the lower aggregate financing volumes and the lower interest rate levels, loan terms for refinancings also contributed to the lower expense figure. Consequently, the interest cover ratio (ICR), defined as the ratio of net rental income to interest payments, rose significantly, to 178 per cent (30 June 2012: 168 per cent).

Cash and cash equivalents totalled about EUR 70 million at the end of the period under review (31 Dec 2012: about EUR 57 million). The net debt equity ratio (based on net liabilities, and adjusted for effects of derivatives) increased considerably to 32.5 per cent as at 30 June 2013 (31 Dec 2012: 31.6 per cent).

Operative business performance: portfolio successfully optimised

Following a first quarter during which rentals were subdued – as expected – DIC Asset AG doubled its letting performance during the second quarter, to around 63,000 sqm, bringing total rentals concluded during the first half of the year to approximately 94,000 sqm. New rentals accounted for 33,000 sqm thereof, with the remaining 61,000 sqm in renewals. The key rental successes during the second quarter were a long-term renewal to eBay in Berlin (around 20,000 sqm) and another large rental agreement with Ruhr University in Bochum (6,700 sqm). As a result of the strong letting performance, the vacancy rate significantly declined to 11.1 per cent (H1 2012: 12.0 per cent; Q1 2013: 11.6 per cent).

With aggregate disposals of EUR 73 million (H1 2012: EUR 12.4 million), as at the half-year point DIC Asset AG has almost achieved its full-year sales target of EUR 80 million. Properties disposed of achieved an average mark-up of around six per cent over the most recent market value determined.

The expansion of DIC Asset AG’s fund management business is making good progress – most recently with the acquisition of three attractive properties, worth more than EUR 70 million in total, for the two special funds, DIC Office Balance I and DIC HighStreet Balance. At EUR 435 million, the aggregate volume of the two funds already exceeds 60 per cent of the target volume (approximately EUR 700 million) planned for the next two years.

Development of the MainTor quarter in Frankfurt, in which DIC Asset AG holds a 40 per cent stake, continues to progress in a positive way: more than 85 per cent of the flats in the ‘MainTor Palazzi’ development have already been sold. Construction of the three project phases ‘MainTor Patio’, ‘MainTor Panorama’ and ‘MainTor Palazzi’ has now started. With its 22,000 sqm of floor space already being fully let, the ‘MainTor Porta’ development is a highly attractive investment in a first-class location, for which investors have expressed serious interest. DIC Asset AG therefore expects to be able to sell the property during the next six to eight months, which would enable the Company to realise profit straight after completion in late summer 2014.

Ulrich Höller, Chairman of the Management Board, said that DIC Asset AG ‘fully achieved its interim targets in the first half of 2013 – some of them ahead of schedule. We are on track to once again generate significant earnings growth.’

For more information on DIC Asset AG, please visit the Company’s website www.dic-asset.de, where the quarterly report 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 3.3 billion, comprising around 260 properties. The Company’s investment strategy is geared to the continued development of a high-quality, highly profitable and regionally diversified portfolio. The real estate portfolio is structured in two segments: the Commercial Portfolio (EUR 1.8 billion) comprises existing properties with long-term rental contracts generating attractive rental yields. The Co-Investments segment (pro-rata share of EUR 0.3 billion) comprises fund investments, joint-venture investments, and interests in development projects. DIC Asset AG provides a direct service to tenants through its own real estate management teams in six branch offices located at the regional hubs within the portfolio. This provides DIC Asset AG with an edge in terms of market presence and expertise, and builds the foundation for maintaining and increasing income – and the value of its real estate assets. 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.

Press contact:

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

Investor Relations & Corporate Communications

Immo von Homeyer
DIC Asset AG
Eschersheimer Landstrasse 22
60320 Frankfurt/Main, Germany
Phone: +49 69 274033-86
Fax +49-69-9454858-99
i.vonhomeyer@dic-asset.de

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