DGAP-News: DIC Asset AG / Key word(s): Miscellaneous
Business Update against the Background of the COVID-19 Pandemic
Dear Shareholders and Business Partners,
Maintaining a continuous, open and transparent line of communication with you has always been a primary concern for us. This is true especially in these times of general uncertainty caused by the global coronavirus crisis. Since we had to cancel the annual general meeting originally scheduled for 17 March 2020, at which we had planned to report to you on the very good performance in 2019 and the great start into the current year, we chose to turn to you today with this letter. The situation is without precedent in every respect.
Our utmost priority at this time is our duty of care with respect to the health of our employees and our responsibility to our tenants and institutional investors, to which we live up by providing reliable front-line service in our business locations within the framework of our resources and requirements, and by delivering our operative local services even at a time when public life has switched into crisis mode. Thanks to the firm sense of commitment and the circumspection shown by our staff, and owing to our seven local branch offices nation-wide, we have been successful so far. We are extremely grateful to everyone involved for everything they do.
That said, the current crisis clearly represents an exogenous event. Conversely, this means: Nothing has changed about the solidity of our company, the robustness of our business model, our operational strength and our strong cash position.
The structure of our real estate portfolio across both business divisions – Commercial Portfolio and Institutional Business – is balanced. In both segments, we benefit from the high degree of diversification across types of use, tenants and locations. Our 20 top properties, which generate about 60% of our entire rental income, are almost fully occupied, showing an EPRA vacancy rate of just 1.4%, and have a remaining average lease term of around 7.5 years. The Commercial Portfolio generates around 66% of its annualised rental income from office space, with public sector tenants such as the City of Hamburg, the State of Hesse or the City of Duisburg accounting for almost 30% thereof.
Around 20% of our rental income comes from retail premises, with grocery stores like REWE, Aldi, Edeka, real, Netto, tegut and drugstores like Rossmann and dm Drogeriemarkt making up roughly one third. As part of the critical infrastructure, these are unaffected by the current lockdown. In the Institutional Business portfolio under our management, around 86% of the rental income is generated by office space, around 14% by other commercial premises, including around 8% by retail space. In a separate effort, we are analysing the extensive aid programs offered by federal, state and municipal governments to alert affected tenants to available liquidity assistance if needed, while temporarily offering one-off solutions ourselves whenever the situation calls for them.
From the current point of view, we consider ourselves to be well-positioned to cope with the ongoing crisis. Our company is characterized by ample capital resources and sound financial strength. Considering that we have c. EUR 350 million in our bank accounts, additional free credit lines and no major maturities, our cash position is very comfortable.
Nonetheless, we are, like you, concerned about the current situation on the stock markets, the decline in the price of our stock and the high volatility in trading. None of us are able to predict the duration and ramifications of the coronavirus crisis. But then again, the very robust starting position we built up last year gives us an excellent foundation. As a matter of course, we are maintaining our professional risk management efforts and remain capable of making adjustments and taking additional precautionary measures at any time.
We will stay in touch with you in a continuous dialogue.
The Management Board
About DIC Asset AG:
With more than 20 years of experience on the German real estate market, the company maintains a regional footprint on all major German markets through seven branch offices, and has 180 assets with a combined market value of c. EUR 7.6 billion under management (as of 31/12/2019).
Taking an active asset management approach, DIC Asset AG employs its proprietary, integrated real estate management platform to raise capital appreciation potential company-wide and to boost its revenues.
In its Commercial Portfolio division (EUR 1.9 billion in assets under management (as of 31/12/2019)), DIC Asset AG 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.
In its Institutional Business division (EUR 5.7 billion in assets under management (as of 31/12/2019)), which operates under the name GEG German Estate Group, DIC Asset AG generates income from structuring and managing investment vehicles with attractive dividend yields for national and international institutional investors.
DIC Asset AG has been SDAX-listed since June 2006.
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