DIC Asset AG integrates joint venture portfolio and announces combined capital increase
DIC Asset AG / Key word(s): Capital Increase
Frankfurt/Main, 13 November 2013
DIC Asset AG integrates joint venture portfolio and announces combined capital increase
- Further step on roadmap: simplified corporate structure, extended debt maturities and improved portfolio quality
- Acquisition of an already managed portfolio with a market value of around EUR 481 million
- Combined capital increase of 50 per cent of share capital against contributions in kind and against cash, long-term refinancing of portfolio in place
- Portfolio and earnings growth as basis for significant debt reduction and deleveraging by 2016
The acquisition of the UNITE portfolio will allow DIC Asset AG as part of the strategic roadmap to further optimise and diversify its real estate holdings. Going forward, it will enable the Company to markedly reduce its leverage level especially through property disposals without falling short of a minimum portfolio size that is viable from a capital and real estate market perspective. The Company plans to gradually reduce its leverage to a loan-to value (LTV) ratio of below 60 per cent by 2016. Factors that will contribute to this reduction over the next three years include, in particular, real estate disposals projected to amount to a total of approximately EUR 450 million from DIC Asset AG's entire portfolio, recurring income from the Company's existing portfolio and from further growth in its fund business, results from realised development projects and repayment of existing shareholder loans to a large extent.
With this, DIC Asset AG is continuing its strategy of focusing on direct investments in its Commercial Portfolio whilst reducing its joint venture exposure - following up on the acquisition of MSREF's stake in three joint venture portfolios in the end of 2011. The Company had held a 20 per cent stake in the UNITE portfolio since 2007, as part of its joint venture investments. At present, the UNITE portfolio volume would contribute additional annualised funds from operations (FFO) of around EUR 7 million. Using the issue proceeds from the rights issue against cash contributions, a long-term financing has been arranged and secured until 2019 and 2020 with a syndicate of German banks. The average maturity of DIC Asset AG's financial liabilities will be extended to 4.6 years upon completion of the transaction.
Ulrich Höller, CEO of DIC Asset AG, commented: 'Key factors in the decision to go ahead with this transaction were the further simplification of our group structure, as well as the high quality of the portfolio - which we are familiar with, having managed the properties for many years. On this basis, we will continue to consistently pursue our strategy of optimising the portfolio and reducing financial debt.'
The UNITE portfolio, which is broadly diversified in terms of regions and tenants, generates annual rental income of around EUR 28 million. In terms of its structure and key performance figures, the portfolio is largely in line with DIC Asset AG's existing portfolio with lettings on a long-term basis (weighted average lease term of 5 years) and an occupancy rate of around 88 per cent. The portfolio is characterised by a high proportion of office properties (accounting for 73 per cent of rental income). 56 per cent of market value comes from the leading German metropolitan office locations, properties in the Hamburg real estate market alone accounting for a third. Moreover, at 37 per cent, the public sector accounts for an above-average portion of rental income.
DIC Asset AG already acquired a 20 per cent stake in the portfolio in 2007, as a joint venture partner together with Deutsche Immobilien Chancen AG & Co. KGaA (30 per cent) and DIC Capital Partners (Germany) GmbH KG & Co. KGaA (50 per cent). Since then, the portfolio has been managed by the Company's internal asset and property manager DIC Onsite GmbH. The three parties have agreed upon an implied equity purchase price of EUR 46 million. This represents a discount of 30 per cent on the pro-rata net asset value (NAV) of the portfolio, which translates into an initial yield of 6.1 per cent based on gross rental income.
Capital increase and rights issue
The portfolio will be acquired via a capital increase against contribution in kind of approximately 6.2 million DIC Asset AG shares. This will be accompanied by a rights issue of approximately 16.7 million shares against cash contributions, in both cases partially exercising the authorised capital of EUR 22,859,000. The selling parties will receive shares in DIC Asset AG as consideration for their respective stake in the UNITE portfolio via a holding Company. They support the transaction by having agreed to hold these shares for a minimum lock-up period of twelve months and by remaining invested in the portfolio with 6 per cent in a tax-efficient structure. The 4-for-11 rights issue will have a subscription price of EUR 6.00 per share.
Deutsche Immobilien Chancen Group as largest shareholder of DIC Asset will continue to hold a minimum stake of at least around 33 per cent in DIC Asset AG following the transaction, and has declared to DIC Asset AG that it intends to continue holding this strategic investment in the long term. Deutsche Immobilien Chancen Group will participate in the rights issue by way of an 'opération blanche' (cash neutral disposal of the number of subscription rights required to exercise the remaining number of subscription rights based on the disposal proceeds).
The proceeds of the rights issue against cash contributions will largely be used to optimise the financial structure of the UNITE portfolio, but also for general corporate purposes.
The new shares from the capital increase against contribution in kind and the rights issue will carry full dividend rights for the financial year 2013. DIC Asset AG plans to have the new shares admitted to trading in the regulated market (Prime Standard) of the Frankfurt Stock Exchange as its existing shares.
Bankhaus Lampe and Commerzbank will act as Joint Global Coordinators for the transaction, as well as as Joint Bookrunners for the rights issue. The Joint Bookrunners agreed to underwrite the new shares at the subscription price of EUR 6.00, to offer them to the Company's shareholders for subscription and to place any new shares not subscribed for.
The acquisition of the UNITE portfolio will significantly enlarge DIC Asset AG's existing Commercial Portfolio, through the addition of 54 properties generating a significant FFO contribution and will also sharpen DIC Asset AG's profile as a direct commercial real estate investor.
Moreover, the acquisition will further significantly enhance the diversification of rental income, and of the portfolio's regional structure. At the same time, DIC Asset AG is seizing the opportunity to further simplify its corporate structure following the complete takeover of former three joint venture portfolios with MSREF in the end of 2011.
Projected timeline for the rights issue:
- Subscription period: 14-27 November 2013
- Subscription rights trading: 14-25 November 2013
- Inclusion of new shares from the capital increase against contribution in kind and the rights issue into the existing listing of DIC Asset AG at the Frankfurt Stock Exchange: 29 November 2013
For more information on DIC Asset AG, please visit www.dic-asset.de.
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 as of 30 September 2013 amounted to around EUR 3.2 billion, comprising around 250 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 1.8 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.
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|Company:||DIC Asset AG|
|Eschersheimer Landstr. 223|
|Phone:||+49 69 9454858-86|
|Fax:||+49 69 9454858-99|
|ISIN:||DE000A1X3XX4, DE000A1KQ1N3, DE000A1TNJ22|
|WKN:||A1X3XX, A1KQ1N, A1TNJ2|
|Listed:||Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart|
|End of News||DGAP News-Service|