Editorial & Overview New Projects for a Sustainable Future

Dear Reader,

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It is not just since the onset of the COVID-19 pandemic that the real estate industry has been at the centre of much public debate in Germany. Against the background of the worldwide efforts to find a more sustainable way of doing business, our industry is of key importance if the goals of the Paris Climate Accord are to be achieved and global warming is to be checked. Although substantial progress has been made throughout the sector in recent years, e. g. through resource-conserving re-developments of portfolio properties, it is quite obvious that all of the players, rather than maintaining the status quo, will have to keep evolving continuously. We at DIC Asset AG are also committed to a process of continuous development, and include the ESG criteria (“ecological, social, governance”) in our decision-making processes as key components of our activities.

In fact, we started reporting about our ESG activities as early as 2011, meaning that we took account of all environmental, social and corporate governance aspects of our day-to-day work in addition to a purely economic angle. Within the framework of this report, we will provide you with an overview of our value-creation from a holistic stakeholder view and in the usual form, while also reporting about milestones achieved and the main sustainability key figures. This includes consumption data from properties managed by us and extensive human resource statistics. As in previous years, we orient ourselves to the internationally recognised reporting standards for listed property companies that were issued by the Global Reporting Initiative (GRI standards) and by the European Public Real Estate Association (EPRA sBPR).

The non-financial control variables will keep gaining in significance in future, and will need to be anchored yet more firmly in our corporate strategy. We are therefore convinced that a systematic synchronisation of these control variables in our operative activities offer additional potential that could be exploited to benefit all of our stakeholders. ESG is not a cost factor but an investment in the preservation and expansion of future value-added. With this in mind, we would like use this report to brief you on two issues that we see as further milestones in our ESG activities:

Late last year, we launched the “smart metering” project through DIC Onsite, our operating subsidiary. The deployment of intelligent measurement systems enables us to digitally capture and electronically transmit consumption data from the properties under our management. This step toward digitisation not only accelerates the availability of data in real time, but has also helps us through standardisation and through access to digital interfaces to improve our analytic methods to the point where we can exercise forward-looking control and engage energy consumption on the portfolio level as yet another area open to optimisation. For the principles underlying the projects and more details on the subject of “smart metering,” see chapter Ecology.

The second focal issue concerns our ESG activities in the Institutional Business. This unit, which provides real estate services to third parties, has lately become an earnings mainstay on equal footing with our other unit, Commercial Portfolio, as a result of having taken over GEG in June 2019. The acquisition represents a genuine milestone for us, as it enabled us to expand into interesting projects and, most notably, to gain decisive competencies and enormous potential. It also increased our assets under management by another EUR 1.4 billion at once. In addition, the expansion has moved the requirements of another one of our stakeholder groups – meaning our institutional clients in this business unit, which are mainly pension funds, insurance companies, banks or family offices – more into focus. Our investor basis is showing a growing interest in ESG issues on the company level and property level both. Over the past years, the investment market has undergone an intensifying process of differentiation and professionalisation in this context that is driven by the growing demand for actively managed ESG investment products, among other factors. These changed parameters on the global market for asset management also confront us with new reporting challenges, which is why we will not only present the expectations of this stakeholder group in the section starting on Strategy and Materiality, but will also provide an overview of the planned expansion of our reporting activities in the Institutional Business segment.

As you can see: We implemented quite a number of things, and cleared important ESG milestones. With many other things planned, we are therefore committed to new projects working towards a sustainable future. We would be delighted to have you with us on our road ahead, and would like to thank you for the faith vested in us as our tenant, shareholder, employee, client or business partner.

Sonja Wärntges

Chief Executive Officer

Patrick Weiden

Chief Capital Markets Officer

Johannes von Mutius

Chief Investment Officer

Key Figures

Environmental Performance Indicators*
Figure 2019 2018 2017

per sqm

Indirect electricity consumption, in kWh

77.6

72.5

86.6

Indirect heating energy consumption, kWh

90.7

95.6

104.0

Indirect CO₂ emissions, in kg CO₂e

55.9

53.5

62.8

Water consumption, in cbm

0.30

0.32

0.31

per workplace

Indirect electricity consumption, in kWh

1,241

1,159

1,386

Indirect heating energy consumption, kWh

1,450

1,530

1,664

Indirect CO₂ emissions, in kg CO₂e

895

857

1,005

Water consumption, in cbm

4.8

5.2

5.0

* relative to the analysis portfolio for the reporting period 2017–2019

Social Performance Indicators
Figure 2019 2018 2017

Total workforce

247

186

187

Turnover rate

19.8%

16.3%

14.4%

Female share

50%

52%

55%

Male share

50%

48%

45%

Sickness absence rate

3.3%

3.8%

3.1%

Economic Performance Indicators
Figure 2019 2018 2017

Number of properties*

93

101

113

Market value of real estate assets, in EUR million*

1,900.0

1,696.8

1,639.2

Lettable area, in sqm*

842,400

893,500

957,500

EPRA vacancy rate*

6.5%

7.2%

9.5%

Rent per sqm, in EUR*

10.41

9.64

9.32

Gross rental yield*

5.4%

5.9%

6.4%

Annualised rental income, in EUR million*

101.8

97.6

95.5

Funds from operations (FFO), in EUR million*

95.0

68.0

60.2

Profit for the period, in EUR million

80.7

47.6

64.4

Cash flow from operating activities, in EUR million

64.8

61.9

56.5

Net asset value (NAV), in EUR million

1,244.2

1,085.8

900.0

Adjusted net asset value in EUR million**

1,607.2

1,322.8

n.a.

* All figures representing only the proprietary real estate inventory held in the Commercial Portfolio; all figures excluding property developments and warehousing, except for the number of assets, the lettable area and the market value

** Figure calculated for the first time as of year-end 2019, using the key dates 31 December 2019 and 31 December 2018

DIC Asset AG – Snapshot

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DIC Asset AG is one of Germany’s leading listed property companies, specialising in the investment in, and management of, commercial real estate in Germany. 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 seven branch offices, and had 180 assets with a combined market value of c. EUR 7.6 billion under management as of 31 December 2019.

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Our business divides into two profitable segments that generate diversified revenues through our proprietary integrated property management platform and by taking an active asset management approach.

  • The Commercial Portfolio segment (EUR 1.9 billion in assets under management as of 31 December 2019) represents the proprietary real estate portfolio of DIC Asset AG. Here, we are generating constant cash flows from stable rent revenues on long-term leases while also optimising the value of our portfolio assets through active management and earning profits from sales.
  • In the Institutional Business segment (EUR 5.7 billion in assets under management (as of 31 December 2019), which operates under the name GEG German Estate Group, we generate revenues by structuring and managing investment vehicles – pool funds, club deals and individual mandates – on behalf of domestic and foreign institutional investors.

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In-house property management teams provide a direct service to tenants, working out of our branch offices in each of the regions that our portfolio focuses on. Staying in close touch with our tenants and with regional markets gives us a head-start in terms of local footprint and know-how and thus an edge over national and international competitors with no presence on the ground. Our activities seek to secure and increase rent revenues and net income as well as the value of our real estate assets. To this end, we monitor and control the entire value chain – from the acquisition, to the property management, and all the way to the eventual disposal – as well as the use of resources.

DIC Asset AG has been SDAX-listed since June 2006.

Regionally Anchored Asset Management and Investment Platform

246 staff deployed in 7 branches (as of 31/12/2019)

DIC branches

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OUR OVERALL PORTFOLIO*
2019 North region East region Central region West region South region Total

Number of properties

27

17

44

50

42

180

Market value, in EUR million

722.4

908.6

3,419.7

1,441.7

1,137.0

7,629.4

Breakdown by market value

9%

12%

45%

19%

15%

100%

Annualised rent (EUR million)

34.8

32.8

110.2

71.3

53.2

302.3

Average rent, in euros per sqm

11.28

13.39

16.72

11.09

11.20

12.97

Average lease term, in years

8.9

6.0

5.5

5.3

7.0

6.2

Gross rental yield

4.8%

3.6%

4.3%

4.9%

4.7%

4.5%

2018 North region East region Central region West region South region Total

Number of properties

23

18

40

53

44

178

Market value, in EUR million

643.3

477.5

2,299.7

1,255.1

970.1

5,645.7

Breakdown by market value

11%

9%

41%

22%

17%

100%

Annualised rent (EUR million)

32.6

24.3

81.6

73.9

45.3

257.7

Average rent, in EUR per sqm

10.06

9.81

11.74

10.47

10.48

10.56

Average lease term, in years

7.9

4.4

6.0

5.5

3.6

5.5

Gross rental yield

5.1%

6.1%

5.5%

5.5%

5.1%

5.4%

* Not including property developments and warehoused assets except in regard to the number of properties, market value and floor area; including third-party assets, except in regard to average rent, average lease terms and gross rental yield