DIC Asset AG sees further FFO growth in 2015

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

2015-03-18 / 08:01

Frankfurt, 18 March 2015

DIC Asset AG sees further FFO growth in 2015

FFO up 4 per cent, to EUR 47.9 million (2013: EUR 45.9 million)

Gross rental income up by a strong 18 per cent, to EUR 147.5 million

NAV per share stable, at EUR 12.61 (2013: EUR 12.58)

Very stable dividend: unchanged proposal of EUR 0.35 per share

Forecast for 2015: FFO to grow to between EUR 48 million and EUR 50 million (by up to 4 per cent)

Johannes von Mutius brings further key strengths to the Management Board, joins as CIO

DIC Asset AG (German Securities ID A1X3XX / ISIN DE000A1X3XX4) today presented its report for the 2014 financial year. The Company increased its operating results on the back of markedly higher rental income and achieved its operative targets. FFO (funds from operations) rose by EUR 2.0 million, or 4%, to EUR 47.9 million (2013: EUR 45.9 million), equating to a 32% increase since year-end 2010. The Management Board will propose to pay an unchanged dividend of EUR 0.35 per share. Based on the 2014 year-end closing price, this translates into an attractive dividend yield of 4.7 per cent.

Ulrich Höller, Chief Executive Officer of DIC Asset AG: “We had a successful 2014 financial year. Combined with a stronger focus on managing directly-held existing properties over the past twelve months, we have made important strategic decisions for the Company and its shareholders.”

Continued growth in operating results and FFO

Reflecting portfolio growth at the end of 2013, gross rental income rose to EUR 147.5 million, up 18 per cent (2013: EUR 125.2 million). Profits on property disposals came close to the strong previous year’s level at EUR 6.8 million (2013: EUR 7.6 million). Mainly as a result of the planned reduction following the portfolio acquisition in 2013, fees from real estate management decreased by EUR 1.3 million year-on-year, to EUR 5.2 million. At the same time, income from real estate management related to the funds business showed a strong increase from EUR 3.4 million to EUR 4.0 million. Total income for the 2014 financial year posted an 18 per cent increase on the previous year, reaching EUR 277.6 million (2013: EUR 236.1 million). Consolidated profit for the period of EUR 14.0 million (2013: EUR 16.0 million) was in line with expectations and reflected non-recurring effects related to the placement of corporate bonds.

FFO was within the target corridor between EUR 47 million and EUR 49 million, at EUR 47.9 million, benefiting from the strong rise in rental income and stable income from the funds business. FFO per share was EUR 0.70 (2013: EUR 0.94). Based on the comparable number of shares outstanding in 2014, FFO per share 2013 would have been EUR 0.67, implying a 4% rise in 2014.

After extensive disposals, investments and the change in value (-0.2 per cent), the pro-rata market value of the portfolio declined by 5.6 per cent, to EUR 2,396.9 million (2013: EUR 2,538.3 million). The net asset value (NAV) per share remained stable as at year-end at EUR 864.8 million (2013: EUR 862.4 million). NAV per share, based on the higher number of shares, was EUR 12.61 (2013: EUR 12.58).

Successful real estate management lays solid groundwork

DIC Asset AG continued to improve its letting performance in 2014, generating annualised rental income of EUR 33.2 million through its rental agreements (2013: EUR 19.3 million). This corresponds to an aggregate letting performance of approximately 242,000m², of which 114,000m² was in new rentals. The strong letting performance resulted in the vacancy rate developing as expected. After a reduction by 3 percentage points over the previous four years, the vacancy rate has now stabilised at 10.9 per cent (2013: 10.7 per cent). The sales volume at year-end exceeded the EUR 150 million target, reaching EUR 162 million (2013: EUR 99 million). The selling prices achieved an average mark-up of around six per cent over the most recent market value determined. The volume of acquisitions amounted to approximately EUR 180 million (2013: EUR 600 million). As expected, acquisitions were centred around the growing funds business, with seven properties and EUR 135 million (2013: EUR 119 million).

Attractive additional income

Share of profit of associates (co-investments in funds business, project developments and other joint ventures) increased strongly on the previous year, by EUR 5.0 million, to reach EUR 6.6 million. In particular, realised gains on project developments posted major contributions, totalling EUR 3.9 million in 2014. Funds business, as another attractive source of income, grew strongly and developed successfully. With an aggregate investment volume of EUR 650 million, DIC Asset AG generated EUR 1.6 million in income from fund investments. Recurring fees from real estate management services for the funds business posted a marked increase, up by approximately 18 per cent, to EUR 4.0 million (2013: EUR 3.4 million).

Financing structure: favourable environment used for further optimisation
After repayments, refinancings and an increase in corporate bond financing, DIC Asset reduced its financial liabilities slightly, to EUR 1.67 billion as at 31 December 2014 (31 Dec 2013: EUR 1.72 billion). The average interest rate for all bank loans declined significantly, to 3.9 per cent, as at 31 December 2014 (31 Dec 2013: 4.1 per cent). The average maturity of DIC Asset AG’s financial debt declined to 4.0 years, as expected, from 4.5 years at the end of 2013, reflecting the lower volume of financings and refinancing operations. The net debt equity ratio stood at 33.4 per cent as at 31 December 2014, representing a slight increase on the previous year (31 Dec 2013: 32.6 per cent). Accordingly, the loan-to-value ratio based on the portfolio market value decreased by one percentage point, to 65.9 per cent (31 Dec 2013: 66.9 per cent).

Forecast for 2015: Further FFO growth ahead

DIC Asset AG will continue to deliver on its Strategy during the current financial year. This means that the Company will optimise its portfolio, expand the funds business and increase the volume of disposal to reduce the debt ratio, strengthen the net debt equity ratio and generate further results growth. DIC Asset AG expects the vacancy rate to have fallen to 10.5% by the end of 2015, and guides for rental income of between EUR 134 million and EUR 136 million. Regarding the volume of disposals, the Company sets a target range of between EUR 150 million and EUR 170 million. As further investments are crucial to further growth in the funds business, DIC Asset AG plans to spend between EUR 130 million and EUR 150 million on acquisitions. On this basis, the Company projects FFO for 2015 between EUR 48 million and EUR 50 million, up by as much as 4 per cent compared to 2014.

Changes within the Management Board

Johannes von Mutius has been appointed to the newly created role of Chief Investment Officer (CIO), and will join the Management Board on 1 April 2015. 45-year old Mr von Mutius holds a degree in business administration and has more than 10 years of experience as a member of the Management Board at Deutsche Immobilien Chancen AG & Co. KGaA, where he was responsible for Investment & Sales. As a renowned real estate expert, he brings around 20 years’ industry experience – in various executive positions – to the table. As a Member of the Management Board at DIC Asset AG, his responsibilities will include strengthening sales activities as an important contribution to further deleveraging. In addition he takes over the control of DIC Onsite’s Asset and Property Management activities from the 40-year old Rainer Pillmayer (member of the Management Board). Pillmayer will continue to focus on the further growth of the fund business and also assume responsibility for the acquisitions. His appointment to the Management Board of DIC Asset AG means that Mr von Mutius will leave Deutsche Immobilien Chancen AG & Co. KGaA.

For more information on DIC Asset AG, please visit the Company’s website www.dic-asset.de, where the annual report 2014 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 230 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 2.2 billion) comprises existing properties with long-term rental contracts generating attractive rental yields. The Co-Investments segment (pro-rata share of EUR 0.2 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.

Media contacts:
Thomas Pfaff Kommunikation
Höchlstrasse 2
81675 Munich, Germany
Phone: +49 89 992496-50
Fax: +49 89 992496-52
Mobile: +49 172 8312923

Investor Relations
Peer Schlinkmann
Neue Mainzer Strasse 20 – MainTor
60311 Frankfurt/Main, Germany
Phone: +49 69 274033-1221
Fax: +49-69-274033-9399

Key financial indicators

Financial indicators (EUR mn) 2014 2013  
Total income 277.6 236.1 +18%
Gross rental income 147.5 125.2 +18%
Fees from real estate management 5.2 6.5 -20%
Property disposal proceeds 90.5 81.1 +12%
Profits on property disposals 6.8 7.6 -11%
Funds from Operations (FFO) 47.9 45.9 +4%
Financial indicators per share (EUR) 2014 2013  
EPRA earnings* 0.69 0.93 -26%
FFO* 0.70 0.94 -26%
Net asset value (NAV) 12.61 12.58  


* Reduction due to changed average number of shares – comparable prior-year figures: FFO 0.67, EPRA earnings 0.66

Statement of financial position – key items (EUR mn) 31 Dec 2014   31 Dec 2013
Net debt equity ratio (%) 33.4   32.6
Loan-to-value ratio (LTV) 65.9   66.9
Investment property 2,143.9   2,256.4
Equity 774.8   793.1
Financial debt 1,667.9   1,723.9
Total assets 2,537.0   2,596.0
Cash and cash equivalents 97.4   56.4

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