*** FFO 2012 up 10 per cent, to EUR 44.9 million (2011: EUR 40.8 million)
*** FFO per share at approx. EUR 1
*** Market values of real estate holdings affirmed: NAV per share stable, at EUR 14.99 (2011: EUR 14.85)
*** Stable dividend of EUR 0.35 per share (unchanged from 2011)
*** Forecast for 2013: FFO expected to rise further, to between EUR 45 million and EUR 47 million; the vacancy ratio to be further reduced to around 10 per cent
Frankfurt, 5 March 2013 – DIC Asset AG (German Securities ID 509840 / ISIN DE0005098404) today reported results of the 2012 financial year. Once again, the Company posted markedly higher results, meeting – and in some cases exceeding – its forecasts.
Key results at a glance:
Funds from operations (FFO) was up by a clear 10 per cent year-on-year, to EUR 44.9 million (2011: EUR 40.8 million) DIC Asset AG generated EUR 11.8 million consolidated profit for the period, which exceeded the previous year’s figure of EUR 10.6 million by 11 per cent. These good results were primarily attributable to an 8 per cent increase in rental income (gross rental income 2012 amounted to EUR 126.5 million). This growth was the result of higher rental income generated on the properties acquired over the last two years; it also reflected intensive letting activity, the success of which is also evident in a marked reduction in the vacancy ratio, of below 11 per cent (2012: 10.9 per cent – 2011: 12.4 per cent – 2010: 14.3 per cent). Other factors contributing to the higher results were increased fees from real estate management, higher profits realised on the sale of property, and a stable net interest result.
The robust market environment for German commercial real estate and the Company’s successful letting activity led to a largely stable valuation of the real estate portfolio. The market value of the real estate portfolio is at EUR 2,223.5 million and decreases only marginally by -0.65 per cent through valuation effects against the previous year. At the end of 2012, the net asset value (NAV) amounted to EUR 685.4 million, up EUR 6.6 million or 1 per cent from the previous year. NAV per share thus increased to EUR 14.99 (2011: EUR 14.85).
DIC Asset AG’s progress in marketing its MainTor Quartier project is clearly ahead of expectations. Following successful pre-sales and large-scale pre-letting, four sub-projects with an aggregate volume of around EUR 420 million (equivalent to more than 60 per cent of the total project volume) are now in the process of realisation (as at February 2013).
The expansion of the fund business also made solid progress during 2012. As planned, new properties worth around EUR 100 million were purchased for the two special funds. These properties will make a significant contribution to further earnings growth and broadening of the income base in 2013. We have now placed more than EUR 105 million in equity (including our own co-investment) for the recently-launched “DIC HighStreet Balance Fund”, our second special fund. This allows for the acquisition of top-quality retail properties in excess of EUR 200 million in the next years.
Adding to its portfolio, DIC Asset AG purchased six properties with an aggregate acquisition volume of EUR 135 million during 2012 (2011: approx. EUR 300 million). The pro-rata FFO increase attributable to these purchases amounts to some EUR 3 million, largely offsetting the FFO decline due to real estate divestments. A total of 16 properties with an aggregate volume of EUR 155 million were sold during 2012 (2011: EUR 72 million).
Sales resulted in realised profits of EUR 3.8 million (2011: EUR 1.7 million). After transfer of the properties sold at the end of 2012 from the commercial portfolio, there is a profit from sales of around EUR 1.5 million in the first quarter of 2013.
Given this sound business performance and the positive outlook for 2013, shareholders will participate in the Company’s performance with an unchanged dividend of EUR 0.35 per share. Based on the 2012 year-end closing price, this translates into an attractive dividend yield of 4.8 per cent.
The acquisitions during the financial year under review and the successful letting activity provide the basis for a continued increase in results for 2013 – to be broadened further by purchases in 2013. Accordingly, the Company projects FFO for the full year 2013 to increase by up to 5 per cent, to between EUR 45 million and EUR 47 million.
Detailed review of results for 2012:
At EUR 44.9 million, the FFO (funds from operations, defined as earnings before depreciation, amortisation and taxes, and excluding profits from disposals and development projects) for 2012 was as the upper end of the target range (2011: EUR 40.8 million). FFO per share was EUR 0.98 (2011: EUR 0.92); the earnings per share were EUR 0.26, compared to EUR 0.24 the year before.
Both gross rental income of EUR 126.5 million (up 8 per cent year-on-year) and net rental income of EUR 113.2 (up 6 per cent year-on-year) showed strong increases compared to 2011 – mainly due to acquisitions added to the portfolio, but also reflecting the successful letting activities.
Fees from real estate management were up by EUR 0.4 million, or 8 per cent, to EUR 5.7 million. Growth in the fund business thus more than compensated for the loss of income – as planned – following disposals of co-investment properties, as well as the full acquisition of three joint-venture portfolios in the autumn of 2011. Fees from real estate management alone cover 27 per cent of the Company’s aggregate staff and administrative expenses.
Operating costs largely developed in line with revenues during 2012. At 12.0 per cent (2011: 11.5 per cent), the operating cost ratio (defined as the ratio of staff and administrative expenses, adjusted for fees from real estate management, to gross rental income) remained within the 11-12 per cent target corridor. Staff expenses rose by EUR 1.9 million (+19 per cent) to EUR 12.1 million, predominantly due to the expansion in business activities. Administrative expenses were up slightly, by EUR 0.3 million (+4 per cent) to EUR 8.8 million.
DIC Asset AG continues to have a very sound financial position. The net interest result of EUR -56.2 million almost matches the figure of EUR -56.0 million achieved in the previous year. Interest income rose from EUR 1.9 million to EUR 9.8 million, whilst interest expenses rose from EUR 63.9 million to EUR 66.0 billion. Interest income is generated from the investment of cash on hand, and the strategic investment of funds within the scope of co-investments. The average interest rate paid on financial debt fell by a further 40 basis points to 3.95 per cent as at 31 December 2012, and was thus clearly lower year-on-year (2011: 4.35 per cent). The interest cover ratio (the ratio of net rental income to interest payments) was increased by 5 percentage points from 167 per cent to 172 per cent thanks to the stable financing costs combined with higher rental income.
Following the successful completion of sales and refinancing operations, financial debt of EUR 1.46 billion is roughly EUR 65 million lower than in the previous year; the large majority is in the form of bank borrowings (94 per cent), with the remaining 6 per cent from the proceeds of the corporate bond issue. DIC Asset AG repaid EUR 92 million in financial debt during 2012, through sales, refinancing and scheduled redemptions. Financings of existing properties were newly arranged or prolonged in an aggregate volume of around EUR 210 million. The Company raised approximately EUR 40 million in new bank loans for the acquisitions in the Commercial Portfolio during 2012. Due to newly agreed loans the maturity structure in the financing portfolio improved significantly, to a current level of 3.5 years.
At the end of 2012, DIC Asset AG’s real estate portfolio comprised around 270 properties with an aggregate rental space of 1.9 million sqm. Real estate assets under management currently amount to approximately EUR 3.4 billion (31 December 2011: approximately EUR 3.3 billion). The net debt equity ratio (based on net liabilities, and adjusted for effects of derivatives) of 31.2 per cent was almost unchanged from the previous year (2011: 31.6 per cent).
Cash flow from continuing operations (after interest and taxes paid) amounted to EUR 43.9 million, up EUR 5.5 million (+14 per cent) year-on-year (2011: EUR 38.4 million). Cash and cash equivalents totalled EUR 56.7 million as at 31 December 2012 (2011: EUR 100.3 million). The figure was enhanced up to EUR 80 million (approx.) due to sales already agreed upon at the year-end, and the increase in the bond issuing volume.
With a total letting volume of 238,000 sqm, DIC Asset AG almost matched the previous year’s figure of 247,000 sqm. New rentals of 114,000 sqm (2011: 120,000 sqm) and renewals of rentals of around 124,000 sqm (2011: 127,000 sqm) were also in line with the previous year’s results. This letting activity is based on more than 320 individual rental agreements; it is balanced across all size categories, whereby the focus in 2012 was on mid-sized lettings between 1,000 sqm and 5,000 sqm. Total letting volume was equivalent to annualised rental income of EUR 32.4 million (2011: EUR 27.3 million): the marked increase over the previous year was due in particular to higher rents achieved. The Company significantly reduced its vacancy ratio, by 1.5 percentage points, to 10.9 per cent (2011: 12.4 per cent), clearly exceeding the planned reduction by half a percentage point. This means that the vacancy ratio declined by around 3.5 percentage points over the last two years. Reflecting the successful letting activity, rental income on portfolio properties once again increased. Rental income on the like-for-like portfolio rose by 1.0 per cent (2011: +1.7 per cent), clearly above the growth rate for average office rents in Germany (+0.5 per cent in 2012).
Forecast for 2013: Given the markedly lower vacancy ratio, and a significantly lower volume of potential rental expiries for 2013 (4 per cent), DIC Asset AG plans a letting volume of 200,000 sqm this year. This would bring about a further significant reduction in the vacancy rate, by one percentage point, to around 10 per cent. Activities in 2013 will continue to focus on moderate add-ons to the portfolio. Given DIC Asset AG’s liquidity base at the start of the year, the Company plans investments totalling at least EUR 150 million for the current year, with a focus on acquisitions for the special investment funds. DIC Asset AG anticipates sales of at least EUR 80 million. On this basis, DIC Asset AG projects FFO for 2013 between EUR 45 million and EUR 47 million.
Ulrich Höller, CEO: “DIC Asset AG presented itself to shareholders as a highly profitable enterprise that proved its strong performance throughout 2012. This provides the foundation for the dividend yield to remain strong, and for further earnings growth in the current year.”
For more information on DIC Asset AG, please visit www.dic-asset.de. The full annual report will be available on 14 March 2013.
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 amount to approx. EUR 3.4 billion, comprising around 270 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 1.9 billion) comprises existing properties with long-term rental contracts generating attractive rental yields. The Co-Investments segment (pro-rata 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® 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.
DIC Asset AG
Immo von Homeyer
Eschersheimer Landstrasse 223
+49 69 274033-86
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