Letter to Shareholders: DIC commences share buyback programme
DIC Asset AG / Share Buyback
Release of a Corporate News, transmitted by DGAP - a company of EquityStory AG.
The issuer / publisher is solely responsible for the content of this announcement.
like all of us, you will without doubt currently be keeping a watchful eye on the dramatic extent to which the crisis on the international financial markets is also putting pressure on stock exchanges around the world. Besides securities, real estate shares too are being particularly badly affected by this. The shares of our company are likewise not immune to this trend; this is because analysts and investors have virtually no chance to differentiate clearly between the individual securities given the new developments which are occurring on a daily basis.
Of course, we have no influence over developments on the financial and capital markets. However, the management of our company is actively taking up these challenges and displaying its capacity to act in terms of operations. We would therefore like to inform you in detail of our latest measure, how the company is performing at present and also notify you of the steps we are taking:
• Against the background of the very negative performance of our share price at present, which – as a result of market uncertainty - has moved sharply away from the intrinsic value of the shares and from our NAV which we anticipated, we have agreed with our Supervisory Board to implement a share buyback programme, and published this yesterday evening in the form of an ad hoc disclosure. We will buy back own shares amounting to up to 5 percent of our share capital, via the stock market. This share buyback is limited to 10 February 2009. By taking this measure, we as a company are safeguarding the interests of our shareholders by seeing a good opportunity to increase our equity value per share. However, at the same time we would like to therefore point out that the current share price has moved a long way from the fundamental data and company’s sustained performance over a number of years. Because our business policy has always been conservative and guided by high quality standards, we are consequently able to maintain the necessary freedom to take action and make decisions.
• With our business model focused on the German commercial real estate market, we are active in a market which – in comparison to the international market situation – remains the most robustly positioned.
• Rentals on the German commercial real estate market are currently stable; despite the increase of the last two years, letting figures in the various sub-markets are falling well short of their highest level and are instead on a par with those of the mid-90s. As of 30 September 2008, we were able to let 158,000 sqm in total, and we expect this positive trend to continue for our company and our portfolio as well. Our broadly diversified tenant structure in this context serves as the best possible basis for solid and sustainable cash flows which have always been a permanent feature of our business model.
• In the first three quarters of this year, we expect to generate rental income of around EUR 100 million based on the successful letting activities, equivalent to an increase of 55 percent as compared to the same period last year. This illustrates the fact that, in these challenging markets especially, DIC Asset AG’s active property management and internally-managed business model has proved successful in operating terms.
• Even though the sharp fall in the overall number of real estate transactions is a trend which we too have had to take into account in the last few months, we have nevertheless managed to complete 12 sales to date, raising a total of EUR 55 million in the process. In the last three months in particular, the sale of six smaller to more medium-sized properties showed that a change to the sales strategy coupled with direct market proximity will pay off, even in these difficult markets.
• Because sales volumes per se do not represent a quality criterion, we are focusing exclusively on transactions which – in terms of volume and the financing capacity of the buyers - are adjusted to the current market conditions, and with which adequate profits for our company can be achieved. The aforementioned sales, of which a share of EUR 28 million is accounted for by DIC Asset AG, gave us profits of some EUR 5 million in total in the third quarter, thereby allowing us to exceed our most recent market value assessment. Furthermore, following repayment of the corresponding loans, these sales resulted in a capital inflow of around EUR 8 million for our company.
• In the current financial market turbulence, we would like to emphasise in particular our stable financing with long-term guarantees. In the past, we have always agreed long-term fixed interest periods, and only three percent of our financing volume is due for refinancing within the next two years. In the subsequent third and fourth years too, this figure will only stand at two and nine percent respectively. This highlights our more than solid positioning with our financing structure and shows that during these turbulent times, we are able to focus first and foremost on operating business.
• Finally, our own equity situation is strong and will keep on getting stronger thanks to the sales mentioned above and cash inflows from letting activities.
All of the experts assume that the financial crisis will bring about structural changes worldwide. We are confident that DIC Asset AG is one of the companies that will come through the crisis in a stable condition and will then be able take advantage in the long term of the resultant possibilities in a consolidating market. The developments and results from our operating activities which we have outlined are evidence that we will be able to publish a set of results for the third quarter on 12 November which will correspond positively to the expectations we have set.
In recent days especially, we have received many enquiries from shareholders asking us for our view of the market conditions and the effects on our company. We are pleased that these matters are being discussed and we will continue to discuss them with you in an open and transparent manner over the coming months.
Ulrich Höller Markus Koch Dr. Jürgen Schäfer
(Members of the boards of DIC Asset AG)
10.10.2008 Financial News transmitted by DGAP
Issuer: DIC Asset AG
Eschersheimer Landstr. 223
Phone: +49 69 9454858-0
Fax: +49 69 9454858-99
Listed: Regulierter Markt in Frankfurt (Prime Standard), Hannover, Hamburg; Freiverkehr in Berlin, Düsseldorf, München, Stuttgart
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