DEMIRE records solid third quarter: Executive Board confirms increased forecast

• FFO I (after taxes, before minorities) nearly doubles to EUR 18.3 million (9M 2017: EUR 9.2 million)
• Successful reduction in EPRA vacancy rate of 170 basis points to 7.7 % compared to the end of 2017
• EBT increases almost six-fold to EUR 66.3 million
• Net loan-to-value ratio declines to 52.6 %
• Executive Board confirms recent increase in 2018 outlook for rental income of approx. EUR 74 million and FFO I of EUR 23- 24 million

Langen, 15 November 2018 - DEMIRE Deutsche Mittelstand Real Estate AG (ISIN: DE000A0XFSF0 recorded positive business development in the first nine months of the 2018 financial year. As of the 30 September 2018 reporting date, the DEMIRE Group's real estate portfolio comprised a total of 85 commercial properties (31 December 2017: 86 properties) with total lettable floor space of around 956,700 m² and a total market value of EUR 1,105 million (31 December 2017: EUR 1,034 million). In early November, we acquired a portfolio of four office properties for an investment of around EUR 167 million. The transfer of ownership, benefits and obligations to the DEMIRE portfolio is expected to take place in the first quarter of 2019.

In the first nine months of the 2018 financial year, the DEMIRE Group generated rental income of EUR 55.1 million (9M 2017: EUR 55.9 million). The decline of 1.3 % resulted from the sale of non-strategic real estate, whereby the accompanying decline in rental income was largely offset by a successful reduction in vacant space in the real estate portfolio. Profit / loss from the rental of real estate in the reporting period amounted to EUR 42.6 million (9M 2017: EUR 42.0 million) and was 1.5 % higher year-on-year.

Annualised contractual rent increased from EUR 72.1 million as of 31 December 2017 to EUR 72.9 million as of 30 September 2018 due to successful letting performance and a related reduction in vacancies. On a like-for-like basis, annualised contractual rent has risen 2.5 % since the 31 December 2017 balance sheet date. The EPRA vacancy rate declined versus the end of 2017 (31 December 2017: 9.4 %) by another 170 basis points to 7.7 % as of 30 September 2018, including real estate already sold, as a result of active real estate management. The letting performance in the first nine months of the 2018 financial year reached around 49,200 m², of which roughly 24,400 m² were new lettings.

CEO/CFO Ralf Kind in his comments on the business performance in the first nine months of 2018 said: "We are very pleased with the success of our business in the first nine months of the current financial year, which confirms the progress we are making in implementing our DEMIRE 2.0 strategy. After greatly optimising our financing structure and successfully executing another capital increase in the current quarter, we were able to acquire a portfolio of four office properties valued at EUR 167 million, marking the first step in achieving our medium-term target of growing our real estate portfolio to around EUR 2 billion.
 
 
FFO I nearly doubles
Funds from operations (FFO I, after taxes, before minorities) nearly doubled compared to the prior-year period. FFO I reached EUR 18.3 million in the first nine months of 2018 (9M 2017: EUR 9.2 million) due to higher profit / loss from the rental of real estate, lower interest expenses, lower recurring general and administrative expenses and a reduced tax burden versus the same period in the prior year. FFO I after minorities and taxes amounted to EUR 15.4 million (9M 2017: EUR 4.6 million). Taking into account the profit / loss from the sale of real estate, funds from operations (FFO II) after taxes and before minorities amounted to EUR 18.3 million (9M 2017: EUR 8.7 million) and EUR 15.4 million (9M 2017: EUR 4.1 million) after taxes and after minorities.
 
Significant reduction in net loan-to-value ratio (net LTV)
As of 30 September 2018, the DEMIRE Group's total assets increased to a total of around EUR 1.23 billion. The equity ratio rose from 27.8 % as of the end of the 2017 financial year to around 32.9 % as a result of the positive net profit for the period, a higher level of subscribed capital stemming from the 10 % capital increase in April 2018 and the conversion of convertible bonds. Basic EPRA NAV as of the reporting date amounted to EUR 5.80 per share and declined slightly compared to the end of 2017 (31 December 2017: EUR 5.96 per share) due to the higher number of shares outstanding. Diluted EPRA NAV as of the reporting date amounted to EUR 5.75 per share and has risen by EUR 0.81 per share since the end of 2017 (31 December 2017: EUR 4.94 per share). The net loan-to-value ratio (net LTV) fell sharply by 750 basis points to 52.6 % as of 30 September 2018 compared to the end of 2017 (60.1 %). A positive impact as of the reporting date resulted above all from the conversion of convertible bonds in the amount of approximately EUR 10.4 million, mainly from DEMIRE's major shareholders in June 2018, the positive result from the valuation of the real estate portfolio in the first nine months of 2018 and the high level of cash and cash equivalents that included, among others, the proceeds from the 10 % capital increase in April 2018.
 
Profit / loss before taxes sees almost a six-fold increase
Profit / loss before taxes (EBT) experienced an almost six-fold increase to EUR 66.3 million (9M 2017: EUR 11.6 million) due to significantly higher fair value adjustments. Taking into account the higher tax expense compared to the same period of the previous year, which was mainly due to higher deferred taxes from positive real estate valuation effects, the net profit / loss for the period in the first nine months of the 2018 financial year was EUR 48.1 million compared to EUR 8.6 million in the same period of the prior year.
 
Executive Board confirms increased 2018 forecast
Based on the positive business performance during the first nine months, the Executive Board confirms the recent increase in the 2018 outlook. Based on the current real estate portfolio and better-than-planned operating performance, the Company now expects rental income of around EUR 74 million in the 2018 financial year (previously: EUR 71 to 73 million). FFO I (after taxes and before minority interests) in the 2018 financial year is expected to range between EUR 23 to 24 million (previously: EUR 16 to 18 million).

The interim statement for the first nine months of 2018 is available for download on the Company's website at www.demire.ag/en/investor-relations in the Investor Relations section at https://www.demire.ag/en/investor-relations/reports-results/2018


Invitation to the conference call on 15 November 2018
On behalf of the DEMIRE Executive Board member Ralf Kind, we cordially invite all interested parties to join a conference call presenting our results for the first nine months of 2018 at 11.00 AM (CET).

Please call one of the dial-in numbers below:
Germany:       +49 (0)69 2222 25574 
UK:                 +44 (0)330 336 9128    
USA:               +1 929 477 0448          
France:           +33 (0)1 76 77 22 88    
Switzerland:   +41 (0)44 580 7206

PIN: 7450400#

The accompanying presentation of our results can be followed live via webcast under the following link https://webcasts.eqs.com/demire20181115/no-audio. To listen to the presentation, please use one of the dial-in numbers above. The presentation will also be available to download shortly before the start of the conference call from our website at www.demire.ag/investor-relations.

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

	01/01/2018-30/09/2018		01/01/2017- 30/09/2017
Consolidated statement of income (in EUR millions)
Rental income	55.1		55.9
Profit / loss from the rental of real estate	42.6		42.0
Fair value adjustments in investment properties	70.1		26.3
General and administrative expenses and other operating expenses	17.9		16.4
EBIT	95.6		53.7
Financial result	-29.3		-42.1
Net profit / loss for the period	48.1		8.6
- thereof, attributable to parent company shareholders	42.3		4.9
FFO I (after taxes, before minorities)	18.3		9.2
FFO II (after taxes, before minorities)	18.3		8.7
Basic/diluted earnings per share (EUR)	0.66/0.65		0.09/0.08
Consolidated balance sheet (in EUR millions)		30/09/2018	31/12/2017
Total assets		1,232	1,147
Investment properties		1,092	1,022
Cash and cash equivalents		88.5	74.0
Properties held for sale		12.9	12.3
Equity (incl. non-controlling interests)		404.9	319.1
Equity ratio (in % of total assets)		32.9	27.8
Basic/diluted EPRA NAV		424.2/424.4	323.6/335.6
EPRA NAV per share (EUR, basic/diluted)		5.80/5.75	5.96/4.94
Net financial debt		581.9	621.0
Net loan-to-value ratio (Net LTV) in %		52.6	60.1
Key portfolio indicators		30/09/2018	31/12/2017
Properties (number)		85	86
Gross asset value (in EUR millions)		1,105.2	1,034.1
Annualised contractual rent (in EUR millions)		72.9	72.1
Rental yield (in %)		6.6	7.0
EPRA vacancy rate (in %) *		7.7	9.4
WALT (in years)		4.6	4.9

* Excluding properties held for sale

 
 
Press Contact                                                      
 
RUECKERCONSULT GmbH                                
Nikolaus von Raggamby                                        
Phone: +49 30 28 44 987 40                                
Email: demire@rueckerconsult.de                    
 

Investor Relations 

DEMIRE Deutsche Mittelstand Real Estate AG
Peer Schlinkmann
Phone: +49 6103 372 49 44
Email: schlinkmann@demire.ag



About DEMIRE Deutsche Mittelstand Real Estate AG
 
DEMIRE - First in Secondary Locations
 
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. Having expanded rapidly between 2013 and 2016 both by buying single properties and by acquiring equity interests, DEMIRE held a portfolio with a combined lettable area of around 1 million sqm and a fair market value of more than EUR 1.1 billion by the end of the first nine months of 2018.
 
The portfolio focus on office, retail and logistics assets results in precisely the kind of risk/reward 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 rent revenues. DEMIRE has set itself the goal to keep optimising its corporate structure. To this end, it pursues an active property management approach out of the conviction 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.