DEMIRE Deutsche Mittelstand Real Estate AG: Strong performance in the first nine months of 2019 and a solid basis for future growth: ‘REALize Potential’ strategy continues to show success

DGAP-News: DEMIRE Deutsche Mittelstand Real Estate AG / Key word(s): Quarterly / Interim Statement/Quarter Results
14.11.2019 / 07:10
The issuer is solely responsible for the content of this announcement.

 

DEMIRE: Strong performance in the first nine months of 2019 and a solid basis for future growth: 'REALize Potential' strategy continues to show success

- Rental income increases by 8.9 % to EUR 60.1 million (9M 2018: EUR 55.1 million)

- FFO I (after taxes, before minority interests) rises significantly by 33.4 % to EUR 24.5 million (9M 2018: EUR 18.3 million)

- Letting performance, at 134,770 m², is already 63 % higher than in full-year 2018

- Successful bond issue to reduce financing costs and significantly increase FFO going forward

- CEO Ingo Hartlief: "Successful performance in the first nine months of 2019 constitutes a strong basis for DEMIRE's future growth"

Langen, 14 November 2019 - DEMIRE Deutsche Mittelstand Real Estate AG (ISIN: DE000A0XFSF0) continued its positive development in the first nine months of 2019 by consistently implementing its 'REALize Potential' strategy. All key ratios improved significantly, while the foundation was laid for future growth.

Rental income of the DEMIRE Group increased to EUR 60.1 million in the first nine months of 2019 (9M 2018: EUR 55.1 million). This rise is attributable to the letting performance and rent increases within the portfolio, as well as to a broader earnings base following the acquisition of an office and a department store portfolio. Profit / loss from the rental of real estate increased disproportionately in the reporting period by 14.7 % to EUR 48.9 million (9M 2018: EUR 42.6 million) and underscores DEMIRE's operational progress. Profit / loss before taxes amounted to EUR 45.7 million after a total of EUR 66.3 million in the same period of the previous year. Adjusted for fair value adjustments (2019: EUR 29.6 million; 2018: EUR 70.1 million), profit / loss for the period amounted to EUR 7.9 million, following EUR -22.0 million in the same period of the previous year.

As at 30 September 2019, letting performance of 134,770 m² was already more than 63 % higher than in full-year 2018 (82,559 m²). This improvement resulted in a renewed positive trend in the development of the EPRA vacancy rate following the acquisition of a value-adding office portfolio in May 2019. The vacancy rate fell to 10.9 % as at 30 September 2019, after reaching 11.1 % as at 30 June 2019. WALT also improved in the third quarter from 4.5 to 4.7 years. A variety of further contracts commencing after the reporting date will reinforce this trend and pave the way for a further decline in the vacancy rate by the end of 2019.

In addition, sales contracts with a volume of EUR 32.2 million were signed during the reporting period for five properties that had either exhausted their potential or were not of a sufficient size. A valuation gain of approximately EUR 8 million was achieved as a result of these sales, corresponding to an average premium of more than 30 % compared to the valuation in June 2019.

Significant rise in FFO I

Funds from operations (FFO I, after taxes, before minorities) increased sharply year-on-year by 33.4 % to EUR 24.5 million after EUR 18.3 million in the same period of the prior year. This rise is primarily an effect of the consistent implementation of the "REALize Potential" strategy and the resulting operational improvements in all areas, together with the rapid integration of the two purchased portfolios.

Balance sheet ratios improved and financing costs optimised

The balance sheet ratios as at 30 September 2019 continue to demonstrate a solid financing structure while, at the same time, reflecting the transfer of ownership of the acquired portfolios. The total assets of the DEMIRE Group increased to around EUR 1,526 million as at the reporting date, and the equity ratio amounted to 40.5 %. The EPRA NAV (undiluted) increased to EUR 5.89 per share as of the reporting date (December 31, 2018: EUR 5.52 per share). The net loan-to-value ratio moved from the end of 2018 (38.7 %) towards the company's target of 50 % and stood at 48.5 % on the reporting date.

After the reporting date, the 2017/2022 bond was redeemed with the issue proceeds of the new 2019/2024 bond. DEMIRE AG benefited from the Company's positive development and the favourable capital market environment, resulting in a positive one percentage point decline in the nominal interest rate and an increase in volume of more than EUR 230 million. The repayment of the 2017/2022 bond and other higher-interest liabilities will significantly reduce financing costs and lead to a direct increase in FFO. These positive refinancing effects were not yet apparent in the reporting period but will become visible starting with the fourth quarter of 2019.

Ingo Hartlief, CEO of DEMIRE AG, in his comments says: "The positive development of DEMIRE in the first three quarters of 2019 is the result of the consistent implementation of our 'REALize Potential' strategy. In addition to our strong operating results reflected in all of our key figures, we are above all laying the foundation for a successful future. Despite the two acquisitions this year, our sale of five properties significantly above their book value, whose potential was either exhausted or they were too small in size, and our successful refinancing activities have enabled us to maintain our financial latitude and the pipeline to actively shape our growth. We are very optimistic that in both the short and medium terms, DEMIRE will continue to deliver strong performance."

Executive Board confirms higher forecasts for rental income and FFO I

Following DEMIRE's very positive development in the first nine months of the year, the Management is confirming its full-year 2019 forecast, which was raised in August. Rental income is expected to range from EUR 80.5 to 82.5 million, and FFO I (after taxes and before minority interests) is anticipated between EUR 30 to 32 million.

The 2019 Interim Report is available on the Company's website at https://www.demire.ag/investor-relations/reports-and-results/.

 

Invitation to the conference call on 14 November 2019

On behalf of the DEMIRE Executive Board, we cordially invite all interested parties to join a conference call presenting our results for the first nine months of 2019 on 14 November 2019 at 10.00 AM (CET).

Please call one of the dial-in numbers below:

Germany: +49 69 2222 2018
UK: +44 330 336 9411
USA: +1 929 477 0324
France: +33 1 7677 2257
Switzerland: +41 44 580 1022

PIN: 4635146

The accompanying presentation of our results can be followed live via webcast under the following link https://webcasts.eqs.com/demire20191114/no-audio

To listen to the presentation, please use one of the dial-in numbers above. The presentation of our results will also be available to download from our website at www.demire.ag/investor-relations.

 

Selected Group key performance indicators for DEMIRE Deutsche Mittelstand Real Estate AG

 

  01/01/2019-
30/09/2019
01/01/2018-
30/09/2018
Consolidated statement of income (in EUR millions)    
Rental income 60.1 55.1
Profit / loss from the rental of real estate 48.9 42.6
Fair value adjustments to investment properties 29.1 70.1
General and administrative expenses and other operating expenses 9.2 17.9
EBIT 76.3 95.6
Financial result -30.6 -29.3
Net profit / loss for the period 37.5 48.1
- thereof, attributable to parent company shareholders 34.2 42.3
FFO I (after taxes, before minorities) 24.5 18.3
FFO II (after taxes, before minorities) 29.6 18.3
Basic/diluted earnings per share (EUR) 0.32/0.32 0.66/0.65
Consolidated balance sheet (in EUR millions) 30/09/2019 31/12/2018
Total assets 1,526 1,379
Investment properties 1,377 1,140
Cash and cash equivalents 65.6 190.4
Properties held for sale 17.0 12.3
Equity (incl. non-controlling interests) 618.1 582.3
Equity ratio (in % of total assets) 40.5 42.2
Basic/diluted EPRA NAV 634.7/635.2 595.2/595.7
EPRA NAV per share (EUR, basic/diluted) 5.89/5.87 5.52/5.50
Net financial liabilities 676.8 446.1
Net loan-to-value ratio (Net LTV) in % 48.5 38.7
Key portfolio indicators 30/09/2019 31/12/2018
Properties (number) 91 84
Gross asset value (in EUR millions) 1,394.3 1,152.1
Annualised contractual rent (in EUR millions) 85.4 73.2
Rental yield (in %) 6.2 6.5
EPRA vacancy rate (in %) * 10.9 7.5
WALT (in years) 4.7 4.5
 

* Excluding properties held for sale

 

Press & Investor Relations

DEMIRE Deutsche Mittelstand Real Estate AG
Michael Tegeder
Head of Investor Relations & Corporate Finance
Phone: +49 6103 372 49 44
Email: tegeder@demire.ag

About DEMIRE Deutsche Mittelstand Real Estate AG

DEMIRE - REALize Potential

DEMIRE Deutsche Mittelstand Real Estate AG has commercial real estate holdings in mid-sized cities and up-and-coming locations bordering German metropolitan areas. The Company's specific forte is its focus on these second-tier cities - its claim being "First in Secondary Locations" - and on a range of assets that appeals to both internationally active and regionally rooted tenants. DEMIRE holds a portfolio with a combined lettable area of around 1.1 million m² and a market value of more than EUR 1.4 billion.

The portfolio focus on office, retail and logistics assets results in exactly the kind of risk/return structure that DEMIRE considers appropriate for the business line of commercial real estate. The Company puts a premium on long-term contracts with solvent tenants in anticipation of stable and sustainable rental revenues. DEMIRE has set itself the goal to keep optimising its corporate structure. To this end, it pursues an active property management approach, convinced that it is the best way to achieve economies of scale and portfolio optimisations.

DEMIRE Deutsche Mittelstand Real Estate AG shares (ISIN: DE000A0XFSF0) are listed in the Prime Standard segment of the Frankfurt Stock Exchange.



14.11.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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