DEMIRE with a successful start into the year 2020: Rental income and FFO grow significantly in the first quarter

- Rental income rises to EUR 22.0 million

- FFO I (after taxes, before minorities) improves by 7.7 percent to EUR 9.6 million

- Letting performance reaches approx. 47,200 m² and underscores operating strength*

- EPRA vacancy rate improves to 8.9 percent

- Effects of the COVID-19 pandemic moderate thus far

Langen, 19 May 2020. DEMIRE Deutsche Mittelstand Real Estate AG (ISIN: DE000A0XFSF0) recorded a successful first quarter of 2020. Key operating and portfolio-related figures improved once again. Business activities were only slightly affected by the COVID-19 pandemic in the reporting period. For the months of April and May, a total of just 2.6 percent of annual contractual rents are outstanding.

FFO and EPRA NAV increase

Funds from Operations I (FFO I: before minorities, after taxes) increased year-on-year by 7.7 percent to EUR 9.6 million in the reporting period (Q1 2019: EUR 8.9 million). In the same period, DEMIRE recorded an increase in rental income to EUR 22.0 million (Q1 2019: EUR 18.2 million). Earnings before interest and taxes (EBIT) amounted to around EUR 12.9 million, and profit / loss before taxes (EBT) rose by 12.0 percent to EUR 8.0 million.

The value of DEMIRE's portfolio continued to increase compared with the end of 2019, rising from EUR 1.51 billion to over EUR 1.55 billion. The purchase of one property and the sale of four smaller properties during the first quarter of 2020 further enhanced the portfolio from a strategic perspective and brought the number of properties to a total of 87. The average value per property increased from EUR 16.5 million at the end of 2019 to EUR 17.6 million as at the reporting date. Diluted EPRA NAV increased from EUR 6.32 to EUR 6.38 per share.

In terms of letting performance, DEMIRE was able to continue building on the very solid performance of the prior year. The Company succeeded in letting* of around 47,200 m², of which roughly 80 percent represented new lettings and around 20 percent follow-on lettings. As a result, the EPRA vacancy rate improved to 8.9 percent, corresponding to a reduction in the vacancy rate of 0.6 percentage points compared to the end of 2019. The WALT remained constant in the reporting period at 4.8 years.

Financing costs continue to fall

DEMIRE also made further progress in terms of financing costs. At 1.80 percent, the average nominal interest rate on borrowings as of the reporting date is 4 basis points below the 2019 year-end figure. During the same period, the net loan-to-value ratio (net LTV) fell 1.3 percentage points to 45.4 percent. "The sustained reduction in financing costs is primarily a result of the refinancing activities carried out in 2019," explains Tim Brückner, CFO of DEMIRE AG. Financial expenses declined from a level of EUR 5.9 million in the first quarter of 2019 to EUR 4.7 million in the reporting period, in part, due to the issue of the 2019 / 2024 corporate bond.

COVID-19 effects moderate so far; new outlook for 2020 not yet possible

The effects of the COVID-19 pandemic have hit large parts of the German economy starting in mid-March 2020. Since rent payments are usually made at the beginning of a month, the pandemic had little impact on DEMIRE's quarterly figures. The effect on the second quarter has also been moderate so far. Outstanding rent payments amounted to EUR 1.1 million for April and EUR 1.2 million for May, corresponding to a total of EUR 2.3 million or around 2.6 percent of the current annualised contractual rents of EUR 89.9 million. As the effects of the pandemic cannot yet be assessed with any certainty, DEMIRE refrains from issuing an updated guidance for the remainder of the 2020 financial year.

Ingo Hartlief, CEO of DEMIRE: "Our REALize Potential strategy and its multitude of efficiency improvements are increasingly impacting both our operative performance with 47.200 m² in letting performance, as well as in a futher increasing FFO. We see ourselves in a position to continue to optimise our portfolio despite the challenging market environment".
 

The DEMIRE quarterly report is available on the Company's website for downloading at: https://www.demire.ag/en/investor-relations/reports-results

Invitation to the Conference Call on 19 May 2020
The Management Board of DEMIRE invites all interested parties to attend the presentation of the Q1 2020 interim results during a conference call on 19 May 2020 at 10:00 CET.

To dial in, please use the following phone numbers:
Germany: +49 69 2222 13426
United Kingdom: +44 330 336 9104
United States: +1 929 477 0338

PIN: 408692

The presentation of the quarterly financial report will also streamed as a live webcast. Please use the link https://webcasts.eqs.com/demire20200519/no-audio

For the audio broadcast, please use the dial-in numbers listed above. A presentation will be available on https://www.demire.ag/en/investor-relations/reports-results

Selected Key Performance Indicators of DEMIRE Group

	01/01/2020- 31/03/2020	01/01/2019- 31/03/2019
Consolidated income statement (in EURm)
Rental income	22.0	18.2
Net income from the rental of real estate	17.3	17.1
General administrative overhead and other operating expenses	-3.1	-3.4
EBIT	12.9	13.6
Financial results	-4.9	-6.5
Profit/loss for the period after tax	6.8	6.6
- thereof attributable to shareholders of the parent company	6.2	5.8
FFO I (after tax, before minority interests)	9.6	8.9
FFO II (after tax, before minority interests)	7.8	8.9
Basic/diluted earnings per share (in EUR)	0.06/0.06	0.05/0.05
Consolidated accounts (in EURm)	31.03.2020	31.12.2019
Total assets	1,689.1	1,677.4
Investment properties	1,510.2	1,493.9
Cash and cash equivalents	85.5	102.1
Properties held for sale	38.1	16.3
Shareholders' equity (incl. non-controlling shareholders)	667.1	660.8
Equity ratio (in % of total assets)	39.5	39.4
Undiluted/diluted EPRA-NAV	690.2/690.7	684.1/684.6
EPRA-NAV per share (EUR, basic/diluted)	6.40/6.38	6.35/6.32
Net financial liabilities	703.5	704.8
Net debt-to-equity ratio (net LTV), in %	45.4	46.7
Portfolio key ratios	31.03.2020	31.12.2019
Properties (number)	87	90
Market value (in EURm)	1,531.2	1,488.4
Annualised gross rental income (in EURm)	89.9	90.0
Rental yield (in %)	5.9	6.0
EPRA vacancy rate (in %) **	8.9	9.4
WALT (in years)	4.8	4.8

 

* Includes a contract signed after the reference date, whose term started on 1 April 2020
** Excluding assets held for sale

 

About DEMIRE Deutsche Mittelstand Real Estate AG

DEMIRE - REALize Potential

DEMIRE Deutsche Mittelstand Real Estate AG acquires and holds commercial real estate in mid-sized cities and up-and-coming locations bordering metropolitan areas across German. The Company's particular strength lies in realising the potential of the properties at these locations while focusing on a range of properties that appeals to both regional and international tenants. DEMIRE's portfolio contains lettable space totalling more than 1.1 million square metres and has a market value in excess of EUR 1.5 billion.

The portfolio's focus on office properties with a blend of retail, hotel and logistics properties results in a return / risk structure that is appropriate for the commercial real estate segment. The Company places importance on long-term contracts with solvent tenants and the realisation of the properties' potential. DEMIRE anticipates continued stable and sustainable rental income along with solid value appreciation and expects the portfolio to grow significantly in the medium term. As it expands its portfolio, DEMIRE is concentrating on FFO-strong assets with potential and, at the same time, disposing of properties that are not in line with its strategy. DEMIRE is taking several steps to further the development of its operations and processes. Next to cost consciousness, the operating performance is set to improve through an active asset and portfolio management approach.

DEMIRE Deutsche Mittelstand Real Estate AG shares are listed in the Regulated Market (Prime Standard segment) of the Frankfurt Stock Exchange.

Contact:
Michael Tegeder
Head of Investor Relations & Corporate Finance
DEMIRE Deutsche Mittelstand Real Estate AG
T: +49 6103 372 4944
Email: tegeder@demire.ag