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

Press Release

DIC Asset AG publishes solid results in a challenging environment

Frankfurt, 10.03.2009

• Consolidated net income of EUR 25.2 million
• Operating profit of EUR 53.2 million
• Dividend of EUR 0.30 per share
• Net asset value of EUR 16.23 per share

DIC Asset AG (German Securities ID 509840 / ISIN DE0005098404) today presented its financial statements for the 2008 financial year. Thanks to its well-balanced business model, the company performed well, posting respectable results in what was obviously a difficult market environment. Consolidated net income of EUR 25.2 million was within its projections. Shareholders will benefit from the company's performance with a dividend of EUR 0.30 per share, which is clearly above the current sector average.

At EUR 208.2 million, total revenues for 2008 were 12 per cent lower year-on-year (2007: EUR 236.2 million), and thus still at a very high level. Rental income was the main contributor to this result, with a notable 44 per cent increase, to EUR 134.5 million (2007: EUR 93.6 million).

This increase was due primarily to growth in the real estate portfolio, to approx. 1.3 million sqm, and rent increases of the existing portfolio. Rental income from the about 340 properties under management is broadly diversified across more than 2,700 tenants. Tenancy agreements with large, international conglomerates account for some 23 per cent of overall rental income, with public-sector companies, federal states and municipalities contributing a further 20 per cent. On a like-for-like basis, rental income generated by DIC Asset AG was up 2.4 per cent in 2008.

The second major earnings component was revenues from the sale of real estate, which totalled EUR 49.9 million. Transaction volumes were down on last year but above 2006's sale volumes, as DIC Asset AG successfully adapted its selling strategy to the changed market environment, focusing on sales of small-to-medium sized properties. The successful sales of such assets still offer an attractive yield, even in the challenging market environment, and thus contributed to the higher sales yield of 20 per cent, compared to 2007 (up six percentage points).

DIC Asset AG further optimised its operating efficiency through cost awareness and by exploiting economies of scale: accordingly, total expenses were down by 28 per cent, to EUR 112.2 million (2007: EUR 156.2 million). The decline was mainly attributable to fewer asset disposals, reflecting the lower volume of sales. At the same time, the 40 per cent increase in staff and administrative expenses, to around EUR 15.4 million, was clearly lower than the strong growth in rental income.

EBITDA (earnings before interest, income taxes, depreciation and amortisation) rose by 24 per cent, to EUR 124.0 million (2007: EUR 99.8 million). Cash flow from operating activities totalled EUR 120.4 million, up 61 per cent year-on-year.

FFO (funds from operations, comprising earnings before interest and taxes, plus profits from disposals and development projects) was up 8 per cent, to EUR 48.0 million (2007: EUR 44.6 million). Operating profit before depreciation and amortisation was down slightly (minus 5 per cent), to EUR 53.2 million, equivalent to operating profit per share of EUR 1.71 (2007: EUR 1.94). Taking into account depreciation, amortisation, and taxes, consolidated net income amounted to EUR 25.2 million, which was in line with DIC Asset AG's projections. The decline, compared to the previous year's figure of EUR 36.1 million, was mainly due to the lower sales volumes. Earnings per share of EUR 0.80 were thus lower than in the previous year (2007: EUR 1.25).

The Management Board and the Supervisory Board will propose to the Annual General Meeting to distribute a dividend of EUR 0.30 per share (2007: EUR 1.65). DIC Asset AG thus maintains its consistent dividend policy, with an adequate proportion of profits distributed and the remaining earnings retained in the business.

DIC Asset AG's total assets stood at EUR 2.21 billion as at 31 December 2008, up 4 per cent year-on-year (31 Dec 2007: EUR 2.12 billion). Long-term assets rose from EUR 1.9 billion to EUR 2.06 billion (up 8 per cent). Shareholders' equity declined by 13 per cent year-on-year, to EUR 534 million (2007: EUR 613 million). Financing resources have been secured on a long-term horizon, at attractive terms, and using a risk-mitigating, diversified funding mix across individual portfolios. Of a total figure of EUR 1.57 billion in financial debt (31 Dec 2007: EUR 1.46 billion), approx. 1 per cent is due in 2009, and a further 3 per cent each in the years 2010 and 2011. Having lowered its average financing costs to a current level of below 5 per cent, DIC Asset AG further enhanced the basis for stable cash flows.

DIC Asset AG's real estate portfolio currently includes around 1.3 million sqm of floor space, following the addition of approx. 100,000 sqm in commercial floor space during 2008. The portfolio's aggregate market value, as determined on an annual basis by neutral experts, was just under EUR 2.2 billion at the end of 2008. The 8.5 per cent decline reflected the changed economic environment. Net asset value (NAV) per share was EUR 16.23 at the year-end 2008 (2007: EUR 23.04). The 30 per cent year-on-year decline was due to the adjusted market valuation of the real estate portfolio, and to the dividend payout in mid-2008.

In 2008 new leases on approx. 196,000 sqm of commercial floor space were concluded, equivalent to annual rental income of around EUR 19.5 million. Current income from managing opportunistic co-investments remained stable, at approx. EUR 3.1 million. With these revenues, the DIC ONSITE (a subsidiary of DIC Asset AG) has provided a significant contribution to DIC Asset AG's results, building the foundations for further quality growth.

For 2009, DIC Asset AG endeavours to increase aggregate new rentals, to ensure a stable utilisation of its real estate portfolio. On this basis - and assuming no further deterioration of market conditions - the company envisages operating profit for 2009 (excluding sales, depreciation/amortisation, and taxes) in a range between EUR 34 million and EUR 36 million.

Ulrich Höller, Chairman of the Management Board, said that DIC Asset AG "generated solid and attractive results. Our business model remains sound, even during times of crisis. DIC Asset AG's stable financing structure and its positive cash flow basis are the main prerequisites to sustain our position during the upcoming challenging years."

About DIC Asset AG
Established in 2002, DIC Asset AG, with registered offices in Frankfurt/Main, is a real estate company with a dedicated investment focus on commercial real estate in Germany, pursuing a return-oriented investment policy. DIC Asset AG's real estate portfolio includes around 1.3 million sqm of floor space, spread over approx. 340 properties. The portfolio is divided into three segments: the Core portfolio includes the proprietary portfolio held on a long-term basis and offering stable, attractive rental yields; the Value-Added portfolio contains real estate with promising performance potential over the medium term; while the Opportunistic Co-Investments portfolio is comprised of real estate investments that have a more pronounced risk/return profile, which are placed with third parties following a repositioning under an individual business plan. Real estate assets under management currently amount to approx. EUR 3.3 billion. DIC Asset AG has been included in the SDAX® segment of the Frankfurt Stock Exchange since June 2006.

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