DIC Asset Aktiengesellschaft · Real estate company

Letter to our Shareholders

The German economy started off benign in 2011 as the upturn continued. The second half of the year was increasingly overshadowed by the worsening international sovereign debt crisis, whose impact was felt first by the financial markets and then, in the fourth quarter, by the economy as a whole. Against this backdrop, it is all the more pleasing that 2011 represented yet another successful 'adfinancial year for DIC Asset AG, and one in which it fully met all of the objectives set at the start of the year. The key developments in 2011 were:  

• We improved the profitability of our portfolio with a very good letting result and reduced the vacancy rate significantly, by nearly 2 percentage points.
  
• We increased income from our property management services by over 50% to more than EUR 5 million, mainly thanks to the new services for our special fund.
  
• We switched to growth mode and took some key steps to strengthen our earnings base with an acquisition volume of some EUR 300 million.
  
• The marketing of two sub-projects for the MainTor district development represents a successful start for DIC to this first-class project development in Frankfurt.
• Our profit for the period stands at EUR 10.6 million. The fall in comparison with the previous year is attributable to three factors in particular, which we had accounted for in our plans for 2011: a smaller portfolio than the previous year, lower income from Co-Investments and reduced sales volume.
  
• At around EUR 41 million, FFO, a key ratio indicating the earnings capacity of our portfolio management, was again at a high level and entirely matched our forecasts. This positive operating result has enabled us to propose that our shareholders be paid a stable, high dividend of EUR 0.35 per share, which can be realised with slightly over half being tax-exempt.
  
  

Following a six-month positive price trend, our share was not spared the impact of the widespread market slump from July 2011 onwards, thus reflecting developments in the real estate segment as a whole. There are many reasons for this: the general reticence among investors towards buying shares for one, but also the critical view taken of real estate shares in general due to their proximity to the crisis-stricken finance and banking sector. This means that, unfortunately, the 2011 financial year does not yet reflect DIC Asset AG's positive business development. Since the end of 2011, however, we have experienced a return to a recovery, which has seen virtually all analysts issue positive recommendations for our share.

DIC Asset AG is a real estate share, which is characterised by the potential for above-average returns. Reliable evidence of this is the fact that we have been able to post a profit quarter by quarter without interruption since we went public. Our portfolio of 280 properties is let long term to tenants with high credit ratings, which generate a sustained and substantial cash flow. We work solely in Germany, one of the world's strongest national economies. And we use our own staff to manage our properties via our branches; this gives us efficiency and proximity to the market. 

These are all concrete advantages that make our share stand out from other real estate shares and which we highlight through clear and comprehensive communications. Since its flotation, DIC Asset AG has steadily continued its positive development: our assets under management alone has grown gradually from some EUR 300 million to EUR 3.3 billion. We are increasingly managing this enlarged portfolio on a regional basis via our branch network and are therefore expanding our reporting structure to include a regional perspective. This is allowing us to offer our shareholders and the capital market greater transparency.

We intend to consistently improve the quality and profitability of our property portfolio in 2012. We shall rely on our tried and tested in-house property management in this regard and plan to further reduce the vacancy rate. We shall also exploit opportunities for attractive acquisitions. With its clear strategic positioning, DIC Asset AG is well placed to confront the competition and we will take the opportunities that present themselves in the interests of our shareholders. We are expecting a marked improvement in the result for 2012 and are planning to increase FFO by some 10%.

We should like to thank all our staff for their commitment in 2011, which has played a crucial role in our company's good result.

Yours sincerely,