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

Press Release

Branicks Group AG: Review of the 3rd Quarter and Outlook

Frankfurt, 08.11.2023

Review of the 3rd Quarter and Outlook

• Full-year forecast reaffirmed – FFO between EUR 50 and 55 million
• Over 340,000 sqm in take-up from lettings
• Bond repaid on schedule at maturity
• Consistent implementation of “Performance 2024” action plan continues
• Statement by Sonja Wärntges, CEO of Branicks Group AG

“The third quarter has shown: With our “Performance 2024” action plan, we are facing up to the global challenges of our industry. With success. We have been reducing our debt, lowering costs, and completing large-scale lettings for attractive and sustainable units in our office and logistics properties. Encouraged by these achievements, we confirm the forecast for our full-year target.”

Branicks Group AG (“BRNK”), ISIN: DE000A1X3XX4, one of Germany’s leading listed property companies, published its financials for the first nine months (“9M”) of the year today.

Branicks earned EUR 33.1 million in funds from operations (FFO) after non-controlling interests (previous year: EUR 76.1 million) by the end of the nine-month period, and reaffirmed its projected full-year target of FFO (after non-controlling interests, before taxes) in a range of EUR 50 to 55 million.

Noticeable Progress with the “Performance 2024” Action Plan

In the implementation of its “Performance 2024” action plan, Branicks already has demonstrable achievements to report. These concern both the financing issues and the operating activities as well as the company’s ambitions to improve its cost effectiveness. In conjunction with the effort to reduce the company’s debt, the disposals that were notarised during the previous quarter had a positive effect on the LTV ratio, which equalled 56.9% by the end of September, and therefore improved slightly quarter on quarter (Q2: 57.6%). In addition, the 2018/2023 corporate bond was repaid on schedule in early October.

The lettings business grew by 6.8% like-for-like while the Institutional Business continued to show a robust performance along the expected lines, bringing assets under management up to EUR 9.9 billion. Given the current situation on the markets, it will take some time yet before the transaction business starts to deliver earnings, but productive talks concerning further disposals are already underway, with letter of intents signed in some cases. At the same time, Branicks is making swift progress toward its target to reduce the operating costs by 5-10%, starting in 2024.

Milestones of the First Nine Months of 2023:

As at balance sheet date of 30 September 2023, the company’s assets under management equalled approximately EUR 13.9 billion. The balance sheet portfolio with its focus on logistics and office real estate (Commercial Portfolio) currently has a market value of c. EUR 4.0 billion and is optimally diversified by region and tenant industry. The gross rental yield equalled 4.8% as at balance sheet date, while the EPRA vacancy rate was 5.0% and the average remaining lease term (WALT) was 5.0 years.

Compared to the prior-year period, both the gross and the net rental income are influenced by the VIB transaction and consolidation during the second quarter of 2022 but also by the persistently high net take-up. The gross rental income increased significantly over prior-year period as it rose to EUR 142.9 million (previous year: EUR 124.9 million). Another factor that contributed to the increase is the high net take-up and the associated like-for-like rental income growth by 3.5% in the Commercial Portfolio. The net rental income went up to EUR 125.8 million (previous year: EUR 108.8 million).

Real estate management fees are defined by the slowed transaction activity in the course of the year and by a decrease in development fees: In total, the company earned EUR 33.3 million in real estate management fees. The sum breaks down into EUR 0.2 million (previous year: EUR 30.0 million) in transaction and performance fees, and EUR 33.1 million (previous year: EUR 26.9 million) in asset management, property management and development fees.

The share of the profit or loss of associates declined as expected, reflecting a transaction-related drop in profits from associates over prior-year period down to EUR 4.5 million (previous year: EUR 18.0 million). The prior-year result had been defined by the disposal of a joint-venture participation.

At EUR 50.9 million, the operating costs decreased year over year, which is mainly explained by the one-off transaction costs caused by the integration of VIB the year before and by the drop in transaction activities in the Institutional Business division when compared to the previous year (EUR 61.9 million).

The net interest income dropped to EUR -68.8 million (previous year: EUR -41.6 million), primarily due to the first-time recognition of the VIB debt, due to the funding activities during the previous year and due to the VIB bridge loan.

As of 30 September 2023, the NAV amounted to EUR 17.64 per share (31 December 2022: EUR 18.29). The adjusted NAV, supplemented by the economic value-added of the Institutional Business, equalled EUR 21.17 per share (31 December 2022: EUR 21.84).

The debt-to-equity ratio (loan-to-value, LTV) declined slightly since year-end 2022, down to 56.9% (31 December 2022: 57.8%). Analogously, the adjusted LTV, which takes the value of the Institutional Business into account, were reduced to 53.6% (31 December 2022: 54.7%).

Invitation to a Conference Call on 08 November 2023

The Management Board of Branicks Group AG invites you to attend the presentation of the financial statement for the first nine months of 2023 at 10:00 CET.

To attend the conference call, please register at:

https://webcast.meetyoo.de/reg/9Is3eyf9hzmY

The webcast (incl. replay) is available under the link below:

https://www.webcast-eqs.com/branicks-2023-q3/no-audio

For more details on Branicks Group AG, visit the company’s homepage at www.branicks.com/en.

About Branicks Group AG

Branicks Group AG (formerly DIC Asset AG) is Germany’s leading listed specialist for office and logistics real estate with 25 years of experience on the real estate market and with access to a broad-based network of investors. Our business is based on a regional and inter-regional real estate platform with nine offices on the ground in all major German markets (with VIB Vermögen AG included). We currently manage a total of 358 assets with a combined market value of EUR 14.2 billion on site, always close to our properties and their occupiers.

The Commercial Portfolio segment comprises real estate held for our own account. Here, we generate steady cash flows from stable rent revenues on long-term leases while also optimising the value of our portfolio assets through active management, and realising gains from sales.

In the Institutional Business segment, we earn recurrent fees from real estate services we provide to national and international institutional investors by structuring and managing investment products that return attractive dividend yields.

For more details, go to branicks.com.

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