The DIC Group is one of the leading investors in the German market for commercial real estate

Press Release

DIC Asset AG enjoys a successful start to 2016

Frankfurt, 12.05.2016

• Operating profit (FFO) up 20 per cent, to EUR 14.5 million (Q1 2015: EUR 12.1 million)
• "Strategy 2016" successfully concluded: LTV at 58.8 per cent
• EUR 11.8 million consolidated profit for the period markedly higher year-on-year (Q1 2015: EUR 1.3 million)
• Fees from real estate management rise to EUR 7.4 million
• Stake in WCM Beteiligungs- und Grundbesitz-AG raised to 24.9 per cent
• Annual targets for 2016 affirmed

DIC Asset AG (German Securities ID A1X3XX / ISIN DE000A1X3XX4) today presented its interim report for the first three months of the 2016 financial year. Supported by strong operating performance, the Company has developed on schedule and affirms its full-year targets, including a projected 2016 FFO of between EUR 43 million and EUR 45 million. The Company also successfully concluded its "Strategy 2016" at the end of the first quarter, reaching a loan-to-value ratio of 58.8 per cent. As announced, the Company will focus its future strategy and business model on growing its funds business and its real estate management platform for the German commercial real estate market. In addition, it will focus on managing the assets in its directly-held Commercial Portfolio. In particular, the planned growth in assets under management in the funds and third party businesses are set to boost fees from real estate management. Besides rental income from the directly-held Commercial Portfolio, these fees are to form a further material source of income for DIC Asset AG.

Aydin Karaduman, CEO of DIC Asset AG, said: "Results for the first quarter of 2016 finally affirm the successful conclusion of our 'Strategy 2016'. Leveraging a lower debt ratio, we will now focus on further expansion of our successful funds business, and on further establishing our real estate management platform with investors active in the German real estate market."

Summary details on results for the first quarter:
Due to sales of properties in 2015, gross rental income of EUR 27.6 million was slightly lower year-on-year (Q1 2015: EUR 35.1 million). Reflecting the successful placement of the DIC Office Balance III fund, fees from real estate management showed a significant increase over the previous year, to EUR 7.4 million (Q1 2015: EUR 1.4 million). Funds from operations (FFO) of EUR 14.5 million for the first three months thus exceeded the previous year's figure by around 20 per cent (Q1 2015: EUR 12.1 million). Thanks to considerably higher profits on property disposals (EUR 9.9 million; Q1 2015: EUR 0.3 million), first-quarter consolidated profit for the period totalled EUR 11.8 million (Q1 2015: EUR 1.3 million).

Operating business on schedule
DIC Asset AG's letting performance during the first quarter of 2016 comprised contracts generating aggregate annualised rental income of some EUR 5.2 million (Q1 2015: EUR 2.0 million), including EUR 1.2 million in new rentals and EUR 4.0 million in renewed rental agreements. The vacancy rate increased to 13.1 per cent, in line with planning. This was mainly due to the launch of the new DIC Office Balance III fund and the associated transfer of properties from the Commercial Portfolio. Sales of five properties valued at EUR 24.5 million were agreed year-to-date, to further optimise the Commercial Portfolio and reduce existing joint-venture investments, as planned.

Fast-growing income from the funds business
Properties worth a total of EUR 270 million were transferred (including transfer of title), largely from the Company's own portfolio, to the DIC Office Balance III fund at the beginning of the year. To expand the Company's funds business, deeds have been signed for acquisitions of two properties located in Essen, worth EUR 35 million, for existing funds, with negotiations for further acquisitions with a volume of around EUR 100 million at an advanced stage. Moreover, DIC Asset AG plans to launch additional funds during the current financial year, with a focus on the office and retail real estate asset classes. Assets under management in the funds business currently amount to approx. EUR 1.1 billion. Overall, the Company plans to spend between EUR 400 million and EUR 450 million on acquisitions in its funds business during 2016. The continued increase in assets under management in the funds businesses expected to result in a growing contribution to FFO (which comprises income from investments and from management fees), mainly due to consistent growth in fees from real estate management. At the end of the first quarter 2016, this contribution showed a marked increase, to EUR 7.6 million (Q1 2015: EUR 1.7 million), reflecting the DIC Office Balance III transaction.

"Strategy 2016" successfully concluded: LTV markedly reduced
Total financial liabilities declined to EUR 1.3 billion as at 31 March 2016 (31 Dec 2015: EUR 1.6 billion). The average interest rate on all bank loans declined to 3.4 per cent as at 31 March 2016, compared to 3.9 per cent a year earlier. The average maturity of DIC Asset AG's financial debt was 3.9 years as at 31 March 2016 (31/03/2015: 3.8 years). The net interest result improved to EUR –11.6 million (Q1 2015: EUR –15.6 million), largely driven by the further optimisation of the Company’s financing structure, as well as repayments of liabilities following the disposals in 2015. The net debt ratio, based on the portfolio market value (loan-to-value ratio), declined by approximately 3.8 percentage points compared to the year-end 2015, to 58.8 per cent (31 Dec 2015: 62.6 per cent). DIC Asset AG thus successfully implemented its “Strategy 2016”, with the primary objective of lowering its net debt ratio/LTV to below 60 per cent achieved at the end of the first quarter of 2016.

Stake in WCM increased
Having announced in early February that its stakeholding in WCM Beteiligungs- und Grundbesitz-AG ("WCM"), a real estate company domiciled in Berlin and Frankfurt, reached the 20 per cent threshold, DIC Asset AG further increased its stake in WCM during the first quarter. At the end of the first quarter, the Company's stake in WCM reached 24.9 per cent. During the 2015 financial year, WCM recorded dynamic portfolio growth as well as fast-growing results. Through its shareholding, DIC Asset AG will participate in WCM's future growth, as well as in an attractive commercial real estate portfolio in Germany.

Guidance affirmed for the full year 2016
The Management Board maintains its FFO guidance, according to which the Company projects FFO for 2016 of between EUR 43 million and EUR 45 million. Rental income is expected in the region of EUR 100 million. Until the end of the year, the Company targets disposals in a range of between approximately EUR 80 million and EUR 100 million, to optimise the portfolio. To expedite further growth in its funds business, the Company plans to spend between EUR 400 million and EUR 450 million on acquisitions.

Key figures >>

Interim Report Q1 2016 >>

About DIC Asset AG:
Established in 2002, DIC Asset AG, with registered offices in Frankfurt/Main, is a real estate company with an investment focus on commercial real estate in Germany, pursuing a return-oriented investment policy. The Company's investment strategy is geared to the continued development of a high-quality, highly profitable and regionally diversified portfolio. Real estate assets under management comprise 216 properties with an aggregate market value of EUR 3.2 billion. 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 (EUR 1.4 billion) comprises fund investments (accounting for a share of EUR 1.1 billion), joint-venture investments, and interests in development projects. In-house real estate management teams provide a direct service to tenants, working out of six different locations in each of the portfolio focus regions. This market presence and expertise creates the basis for preserving and enhancing earnings and real estate values. DIC Asset AG has been included in the SDAX® 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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