DEMIRE: Successful first half-year 2018

DGAP-News: DEMIRE Deutsche Mittelstand Real Estate AG / Key word(s): Half Year Results

16.08.2018 / 07:15
The issuer is solely responsible for the content of this announcement.

DEMIRE: Successful first half-year 2018
  • Rental income of EUR 36.6 million in 1H 2018 (1H 2017: EUR 37.2 million) following the sale of non-strategic real estate and reduction of vacant space
  • EPRA vacancy rate declines 160 basis points to 7.8 %
  • Valuation result increases to EUR 70.1 million in the first half of 2018; portfolio's rental yield at 6.6 %
  • Net loan-to-value ratio (net LTV) declines by 760 basis points to 52.5 %
  • EPRA NAV per share (diluted) increases significantly by 75 cents to EUR 5.69
  • FFO I (after taxes, before minorities) rises to EUR 11.4 million (1H 2017: EUR 4.9 million)
  • Executive Board confirms forecast for the 2018 financial year
Langen, 16 August 2018 - DEMIRE Deutsche Mittelstand Real Estate AG (ISIN: DE000A0XFSF0) continued its positive performance in the second quarter of 2018. The DEMIRE Group's real estate portfolio consisted of 87 commercial properties as of the 30 June 2018 reporting date (31 December 2017: 86 properties) with a total lettable floor space of roughly 1 million square metres and a market value totalling roughly EUR 1,105 million (31 December 2017: EUR 1,034 million). The annualised contractual rent rose to EUR 72.5 million during the reporting period from EUR 72.1 million as of 31 December 2017. Taking into account real estate already sold, the EPRA vacancy rate of the portfolio was reduced by a further 160 basis points to 7.8 % (31 December 2017: 9.4 %) as a result of the solid letting performance in the first half-year.

In the first half of 2018, the DEMIRE Group's rental income amounted to EUR 36.6 million (1H 2017: EUR 37.2 million), which declined slightly by 1.8 % year-on-year following the sale of non-strategic real estate in the preceding 12 months. A majority of this decline was offset by the successful reduction of vacant space. Profit / loss from the rental of real estate was up 2.7 % year-on-year and amounted to EUR 28.1 million in the reporting period (1H 2017: EUR 27.3 million).

High valuation result leads to considerable increase in EBIT
Earnings before interest and taxes (EBIT) came to EUR 84.4 million in the first half-year of 2018 (1H 2017: EUR 24.1 million). The valuation result rose sharply to EUR 70.1 million (1H 2017: EUR 6.8 million) due to a strong operating letting performance and the continued positive environment in the rental markets. Due to these factors, among others, profit / loss before taxes (EBT) grew approximately to EUR 62.4 million (1H 2017: EUR 10.8 million). Taking into account a 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, net profit / loss for the period in the first half of 2018 was EUR 44.7 million compared to EUR 5.6 million in the same period last year.
Net loan-to-value ratio falls by 760 basis points
As of 30 June 2018, the DEMIRE Group's total assets amounted to around EUR 1.24 billion. The equity ratio rose to 32.5 % compared to a level of 27.8 % as of the end of the 2017 financial year. Basic EPRA NAV per share declined slightly during the first half of 2018 to EUR 5.75 per share (31 December 2017: EUR 5.96 per share) due to a higher share capital resulting from the placement of a 10 % capital increase in February and conversions of convertible bonds. Diluted EPRA NAV per share rose strongly to EUR 5.69 (31 December 2017: EUR 4.94). The net loan-to-value ratio improved sharply by 760 basis points to 52.5 % compared to the end of 2017 (31 December 2017: 60.1 %). A positive impact as of the balance sheet date resulted primarily from the conversion of convertible bonds in the amount of roughly EUR 10.3 million in June 2018 by DEMIRE's major shareholders, the positive result from the valuation of the real estate portfolio in the first half of 2018 and the high level of cash and cash equivalents, among others, from the proceeds of the 10 % capital increase in April 2018.

The financial result in the first half-year amounted to EUR -22.0 million (1H 2017: EUR -13.3 million) due to lower interest expenses, which were partially offset by higher minority interests at Fair Value REIT. The average interest rate on financial debt was unchanged at 3.0 % p.a. versus the end of 2017.

Sharp increase in FFO I to EUR 11.4 million
FFO I (after taxes, before minorities) totalled EUR 11.4 million as of the 30 June 2018 reporting date (1H 2017: EUR 4.9 million) due to lower interest expenses and a lower tax burden resulting from the optimised Group structure. After minorities and taxes, FFO I amounted to EUR 9.1 million (1H 2017: EUR 0.9 million). In the first half of the year, funds from operations were still affected by relatively low capital expenditures compared to the total planned investment expenditures for the 2018 financial year. 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 11.4 million (1H 2017: EUR 4.5 million) and EUR 9.1 million (1H 2017: EUR 0.5 million) after taxes and after minorities.

CEO/CFO Ralf Kind in his comments on the quarterly results said: "The good results in the first half of 2018 confirm the positive effects of our DEMIRE 2.0 strategy. Among others, as of the balance sheet date, we were considerably closer to reaching a key objective, which is to reduce the net loan-to-value ratio to around 50 %. Our particular focus in the second half of 2018 and beyond will be on implementing the planned growth of our real estate portfolio. To achieve this, we are working hard to expand our acquisition pipeline and our real estate network in a competitive investment market. Further reducing our net LTV and optimising our Group structure are also important building blocks and goals in growing DEMIRE into a leading listed commercial real estate platform in Germany."

Full-year 2018 outlook confirmed
In light of the positive development during the first half-year, the Executive Board confirms the forecasts for the 2018 financial year of FFO I (after taxes, before minorities) in a range of EUR 16 million to EUR 18 million based on the current real estate portfolio. DEMIRE also expects to generate rental income of EUR 71 million to EUR 73 million in the 2018 financial year.

The strategy "DEMIRE 2.0" signifies the Company's next growth phase. With the implementation of an integrated action plan - which, among others, targets a reduction in financing costs, cost optimisation and streamlining the Group's structure - is a key cornerstone of the plan to further expand the current portfolio to a volume of EUR 2 billion. The business model's focus remains on acquiring commercial property in German secondary locations. The cost base will continue to be optimised under this programme through permanent improvements in efficiency and economies of scale in real estate management resulting from the Company's growth. By further optimising the financing mix and, specifically, through continuously examining potential refinancing options in the debt and equity markets, average interest costs should fall over the medium term, and the loan-to-value ratio is expected to drop to around 50 % over the medium term. In addition to increasing its market capitalisation, DEMIRE also aims to position its risk profile in the area of "investment grade" in order to secure long-term and sustainable financing on favourable terms for future growth.
The half year result 2018 is available on the Company's website under Investor Relations at:
Invitation to the conference call on 16 August 2018
DEMIRE will announce its half year 2018 results on Thursday, 16 August 2018. On the same day at 10.00 AM (CET) / 09.00 AM (UK), we cordially invite you to participate in a conference call hosted by Ralf Kind (CEO/CFO). 

Please call one of the dial-in numbers below approximately ten minutes prior to the start of the call.
Dial-in #:    
+49 (0)69 2222 2018     (from Germany)
+44 (0)330 336 9411     (from UK)
+1 929 477 0402           (from USA)
+33 (0)1 76 77 22 57     (from France)
+41 (0)44 580 1022       (from Switzerland)
The operator will ask you for a confirmation number, which is:
Confirmation no.: 1180727#

Please note that the accompanying presentation can be followed live via webcast under the following link
In addition, the presentation is also available for download on our homepage on Thursday, 16 August 2018, using the following link:
There will be a replay available after the call (please follow the link above).          

Selected consolidated key performance indicators for DEMIRE Deutsche Mittelstand Real Estate AG
Consolidated income statement (EUR m)    
Rental income 36,6 37,2
Net letting income 28,1 27,3
Fair value adjustments in investment properties 70,1 6,8
General administrative and other operating expenses 13,9 11,9
EBIT 84,4 24,1
Net finance cost -22,0 -13,3
Earnings after taxes 44,7 5,6
- of which attributable to shareholders of the parent company 39,5 3,8
FFO I (after taxes, before non-controlling interests) 11,4 4,9
FFO II (after taxes, before non-controlling interests) 11,4 4,5
Basic/diluted earnings per share (EUR) 0,66/0,65 0,07/0,07

Consolidated statement of financial position (EUR m)


Total assets 1.238 1.147  
Investment property 1.092 1.022  
Cash funds 93,8 74,0  
Property held for sale 12,7 12,3  
Equity (including non-controlling interests) 402,8 319,1  
Equity ratio (% of total assets) 32,5 27,8  
Basic/diluted EPRA NAV 420,4/420,6 323,6/335,6  
EPRA NAV per share (EUR, basic/diluted) 5,75/5,69 5,96/4,94  
Net financial liabilities 579,8 621,0  
Net Loan-to-Value ratio in % 52,5  60,1  

Portfolio key performance indicators


Properties (number) 87 86  
Market value (EUR m) 1.104,7 1.034,1  
Annualised contractual rent (EUR m) 72,5 72,1  
Rental yield (in %) 6,6 7,0  
EPRA vacancy rate (in %)* 7,8 9,4  
WALT (in years) 4,7 4,9  
* non including properties held for sale

Press Contact                                                       
RUECKERCONSULT GmbH                                  
Nikolaus von Raggamby                                         
Phone: +49 30 28 44 987 40                                                              

Investor Relations 

DEMIRE Deutsche Mittelstand Real Estate AG
Peer Schlinkmann
Phone: +49 6103 372 49 44

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 half-year 2018.
The portfolio focus on office, retail and logistics assets results in exactly 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 pursue an active property management approach out of the conviction that it is the best way to achieve economies of scale and portfolio optimisations.

16.08.2018 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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