Letter to the shareholders: Successful 2019 fiscal year creates basis for strong growth in 2020 - significant increase in FFO to EUR 104 to 106 million planned
- All forecast targets for 2019 achieved or exceeded:
- FFO of EUR 95.0 million achieved, year-on-year increase by around 40%
- Transaction reaches new record level of EUR 2.2 billion
- Gross rental income from Commercial Portfolio: c. EUR 102 million
- Real estate platform grows to EUR 7.6 billion
- Like-for-like valuation effect of around 7%, corresponds to EUR 1.72 per share
- Adjusted NAV reaches 22.26 Euro per share
- Loan-to-value (LtV) declines by 530 basis points to 47.8%
- Dividend proposal for fiscal year 2019: EUR 0.66 per share
- Forecast 2020: substantial growth in FFO to a range of EUR 104 million to EUR 106 million
The year 2019 was a decidedly successful year for DIC Asset AG. We were able to achieve or exceed all milestones we had set out, and made decisive strategic preparations for our company's future development. Our stock achieved a share price performance of around 75% year on year, which means that the market capitalisation is now well over EUR 1 billion. Reasons for the robust performance include, above all, the successful and significant growth in our third-party business (Institutional Business), including the acquisition of GEG German Estate Group (GEG) in June 2019, the further optimisation of our proprietary portfolio (Commercial Portfolio) and not at least the increased transparent and expanded communication of the key performance indicators and contributors to operating income of our diversified and fast-growing business model. As far as operating activities go, our company now rests on two earnings streams of equal standing, one being our proprietary portfolio (Commercial Portfolio), the other being our third-party asset and property management (Institutional Business).
Our exceptional performance in the fiscal year 2019 as a whole pushed the Funds from Operations (FFO) up by 40% to c. EUR 95 million, which represents a strong result that lives up to the latest forecast.
These were the operating highlights of the 2019 financial year:
- We have achieved a new transaction record and net growth in both business segments. With a transaction volume of EUR 2.2 billion, we substantially exceeded the prior-year figure of EUR 1.2 billion. Acquisitions account for c. EUR 1.9 billion (forecast: c. EUR 1.3 billion) thereof. The sales volume equalled EUR 286 million (forecast: EUR 200-230 million).
- Our real estate platform grew considerably as it went up to c. EUR 7.6 billion worth of assets under management (AuM). This means we are progressing very well toward our short- to medium-term goal of EUR 10 billion. By the end of the year, the Commercial Portfolio (EUR 1.9 billion in AuM) held 93 properties while the Institutional Business (EUR 5.7 billion in AuM) had a portfolio of 87 properties.
- The EPRA vacancy rate in the Commercial Portfolio was further reduced by another 70 basis points, down to 6.5%. The WALT rose from 5.8 to 6.0 years.
- At year-end, independent external appraisers determined a like-for-like valuation effect equal to around 7% or EUR 124.1 million for the Commercial Portfolio, which translates into a value of EUR 1.72 per share. This result documents the sound operating performance of our real estate teams, and it is reflected in the enhanced portfolio quality of our proprietary real estate portfolio.
Provisional Financials Confirm the Strong Result of Fiscal Year 2019
Based on provisional and yet to be audited figures for the 2019 financial year, we recognized gross rental income in an amount of c. EUR 102 million, thereby exceeding the latest forecast as well as the prior-year level (2018: c. EUR 100 million). Mainly acquisition-driven, the real estate management fees soared to c. EUR 63 million (2018: c. EUR 34 million). The EBIT clearly exceeded the prior-year level at c. EUR 130 million (2018: c. EUR 93 million). Analogously, the profit for the period went up to c. EUR 81 million (2018: c. EUR 48 million). The investment properties reached in value a total of c. EUR 1.6 billion (31/12/2018: c. EUR 1.5 billion) as a result of net acquisitions. Portfolio growth and the strong result combined bring the total assets up to c. EUR 2.7 billion (31/12/2018: c. EUR 2.5 billion). The shareholders' equity rose to c. EUR 1.0 billion (31/12/2018: c. EUR 0.9 billion) while the financial debt remained flat at c. EUR 1.5 billion (31/12/2018: c. EUR 1.5 billion). The loan-to-value (LtV) fell significantly by 530 basis points to 47.8% as of the balance sheet date, mainly due to valuation effects (31.12.2018: 53.1%). The EPRA Net Asset Value increased by 12% to EUR 17.23 per share mainly due to valuation effects and growth of the investment properties, among other reasons. The adjusted net asset value including the value of the Institutional Business (adjusted NAV) was EUR 22.26 per share at year-end 2019.
Dividend Proposal for 2019 - High Dividend Yield of 4.2%
For the 2019 financial year, the Management Board will therefore propose a dividend of EUR 0.66 per share at the annual general meeting on 17 March 2020, with shareholders having the choice, as last year, to opt for a scrip dividend. The dividend yield relative to the year-end 2019 share price thus equals around 4.2%.
Forecast for the 2020 Financial Year - Plans Calling for Further Growth in FFO
The reassuring performance during the past financial year and the enhanced visibility of our company on the real estate and capital markets also encourages us to keep pursuing our contemplated activities as we strive for continued success. We are engaged in a continuous wealth-building effort on behalf of our stakeholders, and intend to keep pursuing our dynamic growth trajectory in the coming years. In the fiscal year 2020, we intend to keep strengthening both operating segments and to keep stepping up the pace of our company's growth. The main driver in our plans for 2020 is the contemplated acquisition volume of c. EUR 1.6 billion to EUR 1.9 billion, of which c. EUR 500 million to EUR 600 million are earmarked for the Commercial Portfolio, and c. EUR 1.1 billion to EUR 1.3 billion for the Institutional Business. This will help us accomplish both an increase in gross rental income and further growth in real estate management fees year over year. On top of that, we plan a sales volume across all segments of c. EUR 400 million, which will break down into c. EUR 100 million in sales from the Commercial Portfolio and c. EUR 300 million in sales from the Institutional Business portfolio. For the first time, we will consolidate GEG German Estate Group AG, a company acquired in June 2019, for a full year in the financial statements of DIC Asset.
Accordingly, we anticipate a further significant rise in FFO up to somewhere between EUR 104 million and EUR 106 million during the fiscal year 2020.
We will publish our full-length 2019 annual report, which will include a detailed outlook for the ongoing 2020 financial year, on 05 February 2020. We look forward to accomplishing our next operating objectives, and would like to take this opportunity to thank you for the trust you have shown in DIC Asset. Your faith in us and our staff will motivate us every day to keep pushing forward.
With kind regards,
Sonja Wärntges and Johannes von Mutius
(Members of the Management Board of DIC Asset AG)
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 six 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.
IR Contact DIC Asset AG:
Head of Investor Relations & Corporate Communications
Neue Mainzer Strasse 20
D-60311 Frankfurt am Main
Phone +49 69 9454858-1492
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