DIC Asset AG: promising start in 2013

DIC Asset AG / Key word(s): Quarter Results

14.05.2013 / 07:31

DIC Asset AG: promising start in 2013

FFO up 6 per cent, to EUR 11.2 million (Q1 2012: EUR 10.6 million)

Higher transaction volume and sales profit

Equity base strengthened further

Forecast for 2013 FFO affirmed, at EUR 45 million to EUR 47 million

DIC Asset AG (German Securities ID 509840 / ISIN DE0005098404) today presented its interim report for the first three months of the 2013 financial year. The Company had a successful start to the new year, posting gratifying earnings growth.

Key results at a glance:

FFO rose by 6 per cent to EUR 11.2 million (Q1 2012: EUR 10.6 million). DIC Asset AG significantly increased consolidated profit for the period to EUR 3.7 million (Q1 2012: EUR 2.6 million). The good results were predominantly attributable to a marked increase in sales activities at the end of 2012, the results of which were effective during the first quarter of 2013, as planned. Furthermore, rental income remained stable, at EUR 30.3 million (after increased disposals during 2012), and was thus in line with the high levels posted for the previous year (Q1 2012: EUR 31.1 million). Total revenues amounted to EUR 74.1 million (Q1 2012: EUR 39.4 million). The net debt equity ratio rose by approximately one percentage point, to 32 per cent, following the realisation of refinancing operations and disposals. Moreover, average interest costs decreased to 3.95 per cent (Q1 2012: 4.20 per cent). Overall, DIC Asset AG thus maintained the positive performance achieved over recent quarters, generating FFO of EUR 0.25 per share (Q1 2012: EUR 0.23).

Detailed review of results for the quarter:

Due to the high level of disposals at the end of the previous year, gross rental income decreased to EUR 30.3 million, as planned (Q1 2012: EUR 31.1 million). Accordingly, net rental income was EUR 1.5 million lower than the previous year’s Q1 figure of EUR 26.6 million. Fees from real estate management grew by EUR 0.4 million, to EUR 1.6 million (Q1 2012: EUR 1.2 million). Higher income from asset management and property management fees – reflecting the successful expansion of the Company’s fund business – more than offset lost management fees following the planned disposal of co-investment properties. Total income for the first quarter increased markedly, up 88 per cent to EUR 74.1 million (Q1 2012: EUR 39.4 million); this was primarily attributable to high sales proceeds of around EUR 37 million.

Due to the significant reduction in vacancies already achieved and a lower volume of expiring rental agreements, DIC Asset AG’s first-quarter letting volume decreased year-on-year, as expected, to around 31,000 sqm (Q1 2012: 51,900 sqm). New rentals accounted for 12,100 sqm, with the remainder of 18,700 sqm being in renewals. The total letting volume was equivalent to annualised rental income of EUR 3.0 million (Q1 2012: EUR 5.6 million). On a like-for-like basis, rental income was down 0.9 per cent. This reflects expired rental agreements, which typically occur more frequently at the beginning of each year. The vacancy rate declined by 0.7 percentage points year-on-year, to 11.6 per cent (31 March 2012: 12.3 per cent); the Company plans to further reduce the vacancy rate to approximately 10 per cent by the year-end. DIC Asset AG already reduced potential expiries of rental agreements from 4.3 per cent of annual rental income (year-end 2012), to now 2.7 per cent (or EUR 3.5 million).

With two additional sales agreed upon in April, the year-to-date sales volume in 2013 already exceeds EUR 26 million. All three disposals involved co-investment properties, which were sold with an average mark-up of around 5 per cent over the most recent market value determined.

The net interest result improved to EUR -12.8 million (Q1 2012: EUR
-14.5 million). The interest expense of EUR -15.2 million was EUR 1.7 million lower year-on-year, mainly due to lower interest costs achieved in the course of refinancings, and also reflecting the lower interest rate levels. Interest income was stable at EUR 2.3 million (Q1 2012: EUR 2.4 million).

The average maturity of reduced financial liabilities of EUR 1.47 billion (31 March 2012: EUR 1.53 billion), stood at 3.3 years at the end of the first quarter (Q1 2012: 3.2 years). In the first quarter, DIC Asset AG repaid EUR 32.8 million in financial debt, through sales, refinancing and scheduled redemptions. The majority of refinancings due for the existing portfolio (EUR 95 million of EUR 140 million) have already been executed. The average interest rate on financial debt stood at 3.95 per cent as at 31 March 2013 – down 25 basis points year-on-year (Q1 2012: 4.20 per cent). The interest cover ratio, defined as the ratio of net rental income to interest payments, thus rose to 176 per cent (Q1 2012: 166 per cent).

Reflecting the expansion in the Company’s fund business and the integration of DIC Onsite’s enhanced portfolio management functions, personnel expenses increased by EUR 0.1 million to EUR 3.1 million, in line with planning, administrative expenses of EUR 2.5 million were also up slightly year-on-year (Q1 2012: EUR 2.2 million).

At EUR 11.2 million, FFO (funds from operations, defined as earnings before interest and taxes, and excluding profits from disposals and development projects) for the first quarter of 2013 was up year-on-year (Q1 2012: EUR 10.6 million), despite lower rental income – thanks to the marked reduction in financing costs and higher fees from real estate management. FFO per share increased to EUR 0.25 (Q1 2012: EUR 0.23).

At EUR 3.7 million, consolidated profit for the period rose by a marked EUR 1.1 million compared to the previous year’s Q1 figure of EUR 2.6 million. DIC Asset AG thus more than offset the lower earnings base (following disposals) and the reduced profit contributions from co-investments, through financing cost savings and sales profits of EUR 1.7 million.

Cash flow from operating activities rose to EUR 12.2 million (Q1 2012: EUR 10.2 million). Cash and cash equivalents increased significantly, to EUR 77.9 million as at 31 March 2013 (31 Dec 2012: EUR 56.7 million); the rise was predominantly due to the disposals recognised.

Real estate assets under management currently stand at around EUR 3.4 billion, whilst DIC Asset AG’s total assets of EUR 2.2 billion were in line with the level at year-end 2012 (31 Dec 2012: EUR 2.2 billion). The net debt equity ratio (based on net liabilities, and adjusted for effects of derivatives) rose to 32.0 per cent as at 31 March 2013 (31 Dec 2012: 31.2 per cent).

At the beginning of 2013, DIC Asset AG launched its second real estate special fund ‘DIC HighStreet Balance’, with a planned investment volume of up to EUR 250 million. The retail real estate fund invests in first-class retail properties in prime inner-city locations and pedestrian areas of prosperous regional centres and conurbations within Germany. An additional attractive retail property involving an investment of some EUR 22 million was purchased during the first quarter: the property, which is located in a top retail area in Passau, Bavaria, has around 8,000 sqm of floor space which is almost fully let on long-term contracts to tenants of high credit standing.

DIC Asset AG holds significant co-investment in both special funds, with a 20 per cent stake; on top of investment income, this generates regular and stable income from real estate management fees. The resulting profit contributions keep growing; they amounted to EUR 0.9 million during the first quarter of 2013 (Q1 2012: EUR 0.7 million).

Development of the MainTor quarter in Frankfurt, in which DIC Asset AG holds a 40 per cent stake, is progressing ahead of schedule, thanks to continued significant marketing success: 75 per cent of the flats in the first two sections ‘Riva’ and ‘Puro’ being sold, DIC Asset AG now started marketing for the remaining third complex ‘Lido’. By now, well over 50 per cent of the approximately 90 flats of the ‘MainTor Palazzi’ development, with aggregate residential floor space of some 10,000 sqm, have been sold within just a few months. At the turn of the year, two large-scale lettings, with aggregate floor space of 17,000 sqm have laid one key foundation for the profitable realisation of construction phases ‘Porta’ and ‘Panorama’.

Outlook for 2013: despite the unstable economic environment, robust domestic development in Germany offers a stable business environment for DIC Asset AG. DIC Asset AG therefore 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 in 2012; the Company also projects a significant reduction in the vacancy rate, to around 10 per cent (2012: 10.9 per cent).

Ulrich Höller, Chairman of the Management Board of DIC Asset AG, commented on the results: ‘We have started the year with a solid increase in earnings, thanks to which we are firmly on track to achieving our full-year targets.’

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 3.4 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 1.9 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.

Key financial indicators

Operating performance indicators
(EUR mn)
Q1 2013 Q1 2012  
Gross rental income 30.3 31.1 -3 %
Fees from real estate management 1.6 1.2 +33 %
Property disposal proceeds 37.0 2.8 >100 %
Profits on property disposals 1.7 0.5 >100 %
Total revenues 74.1 39.4 +88 %
Funds from Operations (FFO) 11.2 10.6 +6 %
FFO per share (EUR) 0.25 0.23 +9 %
EPRA result 10.4 10.0 +4 %
Consolidated profit for the period 3.7 2.6 +42 %
Cash flow from operating activities 12.2 10.2 +20 %


Statement of financial position
key items (EUR mn)
31/03/2013 31/12/2012
Net debt equity ratio 32.0 % 31.2 %
Investment property 1,842.8 1,847.4
Equity 626.3 614.3
Financial debt 1,470.9 1,462.6
Total assets 2,196.3 2,210.2
Cash and cash equivalents 77.9 56.7

Immo von Homeyer
Head of Investor Relations & Corporate Communications
Tel +49 (0) 69 27 40 33 86
Fax +49 (0) 69 27 40 33 69

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210868  14.05.2013