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

Press Release

DIC Asset AG remains profitable during the first half of 2009

Frankfurt, 19.08.2009

• 6-month profit of EUR 6.1 million, with Q2 results exceeding Q1
• Rental income stable, at EUR 67.3 million
• Total revenues rise to EUR 85.3 million
• DIC Group assumes full control of MainTor project

DIC Asset AG (German Securities ID 509840 / ISIN DE0005098404) today presented its interim report for the first half of the 2009 financial year. The Company posted respectable results of EUR 6.1 million in what continued to be a difficult market environment. Second-quarter profits of EUR 3.5 million showed an increase over the first-quarter result of EUR 2.6 million. Key drivers were the strong performance in real estate operations, and stable rental income of EUR 67.3 million (H1 2008: EUR 67.7 million). The year-on-year decline in net profit was primarily due to lower income this year from opportunistic co-investments, which dominated the results for the first half of 2008 (EUR 11.8 million).

At EUR 85.3 million, total revenues for the first half of 2009 showed a six per cent year-on-year increase (H1 2008: EUR 80.6 million), primarily driven by sales proceeds, which rose to EUR 6.9 million (H1 2008: EUR 2.0 million). The majority of sales involved small to medium-sized properties, all of which were sold above book value or appraised market value. Stable rental income of EUR 67.3 million provided the cornerstone of revenues: in a market that continued to decline, total new rentals of 128,400 m² during the first half of 2009 were up nine per cent year-on-year. Two-thirds of rental volume concerned follow-up leases. Annualised like-for-like rental income showed a slight increase (+0.03 per cent).

Total expenses of EUR 44.2 million were higher than in the same period of the previous year (H1 2008: EUR 36.0 million), primarily due to the disposal of assets following a sale. In addition, asset and property management resources were strengthened, to safeguard DIC’s rental success – despite market tensions – through intensive tenant coverage. As a result, staff and administrative expenses rose to EUR 9.0 million (H1 2008: EUR 7.7 million), in line with the budget.

DIC Asset AG’s total assets amounted to EUR 2.2 billion as at 30 June 2009. Long-term assets remained stable, at EUR 2.1 billion. Long-term fixed interest rate agreements or hedges are in place for close to 90 per cent of financial debt of EUR 1.6 billion, with 54 per cent having a maturity of over five years. Only approx. EUR 44 million (or just three per cent of overall financial debt) will fall due within the next 12 months. DIC Asset AG reduced interest expenses by approx. EUR 2.7 million (based on comparable financing volumes) during the first six months of 2009, thanks to the optimisation of portfolio finance: Accordingly, the net financial result showed a marked EUR 1.8 million improvement, to EUR -35.3 million. The average interest rate decreased to 4.72 per cent for the first half of 2009, down 25 basis points compared to 31 December 2008, and down 53 basis points from the level as at 30 Jun 2008 (5.25 per cent).

FFO (funds from operations, comprising earnings before interest and taxes, profits from disposals and development projects) amounted to EUR 21.7 million. In the previous year FFO reached EUR 23.1 million and thus was EUR 1.4 million higher. FFO per share of EUR 0.71 was virtually unchanged year-on-year (H1 2008: EUR 0.74). Second-quarter FFO of EUR 11.5 million was 13 per cent higher than in the first quarter of 2009, reflecting a 3 per cent increase in rental income and a reduction in interest expenses. Cash flow from continuing operations (after interest and taxes paid) rose from EUR 18.6 million to EUR 18.8 million.

Operating profit before depreciation and amortisation (EBDA) declined to EUR 21.1 million (H1 2008: EUR 25.9 million), equivalent to operating profit per share of EUR 0.69 (H1 2008: EUR 0.83). Reflecting the development of consolidated net income, earnings per share declined to EUR 0.20 (H1 2008: EUR 0.37). Second-quarter EBDA and consolidated net income clearly exceeded the first-quarter results, by 13 per cent and 35 per cent, respectively.

DIC Group has acquired at par the 50 per cent stake previously held by Morgan Stanley Real Estate Funds (MSREF) in the “MainTor” project, a key real estate development in the centre of Frankfurt/Main. DIC Group now holds 100 per cent of the project interest, of which 40 per cent (up from 20 per cent) is held by DIC Asset AG as a minority shareholding. This change of ownership on project level offers DIC the opportunity to realize the project and related further steps more flexibly. DIC Group is prepared to continue the project on its own but still remains open to interested investors looking to participate. At present, the MainTor project has entered the final stage of realigning the zoning map.

Given that the market environment remains difficult, DIC Asset AG will continue to focus on its profitable rental business during the second half of 2009, as well as on the selective marketing of small- to medium-sized properties. Thanks to the investments made during the first half of the year, to preserve and enhance portfolio value and to strengthen asset and property management activities, and against the background of its stable rental performance, DIC is able to afford to postpone larger-sized transactions until the market situation has improved. Considering the successful performance shown so far, the Company continues to anticipate full-year FFO in the range of EUR 34 million to EUR 36 million.

Ulrich Höller, Chairman of the Management Board of DIC Asset AG, explained that DIC Asset AG had ”prepared for the difficult times at an early stage. That is why DIC remains competitive throughout the serious economic crisis. With our top-quality portfolio and a financing structure that continues to be stable, we have a solid basis for our business performance to remain positive during the second half of 2009.”

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 2 million m² of floor space, spread over 331 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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