DEMIRE improves key financials and makes successful start to 2017 financial year
- Rental income increases by 4.1 % to EUR 18.5 million in Q1 2017 (Q1 2016: EUR 17.8 million) due to new letting and vacancy reduction
- EPRA vacancy rate reduced by 70 basis points to 10.9 %, allowing for properties already sold
- Loan-to-value ratio (LTV) and interest on financial debt each further reduced by 30 basis points to 62.5 % and 4.1 % p.a.
- EPRA NAV per share slightly increased to EUR 5.56 (basic) and EUR 4.61 (diluted)
Langen, 31. May 2017 – DEMIRE Deutsche Mittelstand Real Estate AG has made a successful start to the 2017 financial year. After the first risks and rewards of properties already sold in 2016 were transferred during the first quarter of 2017, the DEMIRE Group’s current portfolio as of the reporting date on March 31, 2017 comprised a total of 98 commercial properties with lettable floor space totalling nearly 1 million square meters and a value totalling EUR 994.1 million (December 31, 2016: EUR 1,005.6 million). Another 15 properties from the sales notarised in 2016 will be removed from the portfolio soon.
As a result of strategy-compliant portfolio adjustments in the first quarter, the annualised contractual rent decreased from EUR 74.1 million as of December 31, 2016 to EUR 72.1 million. At the end of March, the weighted average lease term (WALT) was unchanged compared to December 31, 2016 at 5.3 years. The EPRA vacancy rate in the current portfolio fell by another 70 basis points to 10.9 % as of the reporting date (December 31, 2016: 11.6 %) considering the properties already sold.
The DEMIRE Group’s rental income totalled EUR 18.5 million in the first quarter of 2017, 4.1 % higher than in the same period of the previous year (Q1 2016: EUR 17.8 million) despite a slight decrease in total lettable space. Earnings from property letting increased by 5.7 % to EUR 13.8 million (Q1 2016: EUR 13.1 million).
Earnings before interest and taxes (EBIT) of EUR 9.2 million were lower than in the same period of the previous year (Q1 2016: EUR 14.0 million), in particular because there were higher positive fair value adjustments in that period. The financial result of the first quarter improved considerably from EUR -9,5 million in the previous year to EUR -5.5 million particularly due to successful refinancing in 2016 and the extensions of the promissory note loan at more favourable interest conditions at the start of 2017. In parallel, the average interest on financial debt p.a. declined by around 30 basis points to 4.1 % as of the end of the reporting period (31 December 2016: 4.4 %). The financial result includes the share of profit or loss attributable to minority interests in the subsidiaries of Fair Value REIT AG of EUR 1.1 million (Q1 2016: EUR 0.6 million).
Taking higher tax expenses compared to the same quarter of the previous year into account, the net profit for the period of the first quarter of 2017 was EUR 0.9 million after EUR 3.5 million in the previous year.
Funds from operations (FFO I) after taxes amounted to around EUR 2.0 million in the first quarter of 2017. The decline compared to the first quarter of the previous year (EUR 3.4 million) was attributable in particular to higher tax expenses.
Total assets of DEMIRE Group as of March 31, 2017 were on a par with the end of 2016 at EUR 1.1 billion. Cash increased from EUR 31.3 million to EUR 43.5 million in the first quarter of 2017. The equity ratio is at around 28.1 %. The basic EPRA NAV per share increased slightly in the first quarter of 2017 to EUR 5.56 (December 31, 2016: EUR 5.54). The loan-to-value ratio (LTV) improved by another 30 basis points compared to the end of 2016 to 62.5 %.
COO Markus Drews commented on the business performance in the first quarter: “We closed the first quarter of 2017 as planned. Although tax expenses are still high, the operating indicators show another improvement of our current portfolio. We continued to increase rental income in the first quarter despite the removal of properties that did not conform to the strategy, further reduced the EPRA vacancy rate, kept the average term of our rental contracts stable and continued to reduce our borrowing costs.”
In light of the development in the opening quarter, the Executive Board continues to expect stable rental income for full year 2017. The strategic review of the company started in the first quarter of 2017 is making good progress. A comprehensive package of measures to optimise costs, to streamline the Group structure and to reduce financing costs is being prepared. Once the analysis stage is complete, the Executive Board will publish a new FFO forecast at the Annual General Meeting on June 29, 2017 at the latest.
The interim report on the first quarter of 2017 can be downloaded from the company’s website at www.demire.ag. It can be found on the Investor Relations pages at the following address: http://www.demire.ag/investor-relations/berichte-und-ergebnisse/2017
The Management Board
Selected consolidated key financials of DEMIRE Deutsche Mittelstand Real Estate AG
|Consolidated income statement (in EUR million)||01/01/2017-31/03/2017||01/01/2016-31/03/2016|
|Income from letting||24.8||23.0|
|Earnings on letting||13.8||13.1|
|Other operating income and other effects||1.8||6.7|
|General administrative and other operating expenses||6.2||5.7|
|Net profit/loss for the period after taxes||0.9||3.5|
|Basic/diluted earnings per share (EUR)||0.00/0.00||0.03/0.03|
|Consolidated Balance Sheet (in EUR million)||31/03/2017||31/12/2016|
|Property held for sale||35.7||24.3|
|Equity ratio (% of total assets)||28.1||28.2|
|EPRA equity (NAV) of DEMIRE shareholders||272.3||271.9|
|EPRA NAV per share (EUR, basic/diluted)||5.56/4.61||5.54/4.60|
|Net financial debt||620.9||631.3|
|Loan-to-value ratio (LTV) in %||62.5||62.8|