DEMIRE Doubles FFO I during its 2018 Financial Year
- FFO I forecast achieved at EUR 23.4 million (2017: EUR 11.7 million)
- Net loan-to-value ratio drops to 38.7 % (31/12/2017: 60.1 %)
- Diluted EPRA-NAV per share rises by EUR 0.56 to EUR 5.50 (31/12/2017: EUR 4.94)
- EPRA vacancy rate declines by 190 bp to 7.5 % (31/12/2017: 9.4 %)
- Forecast for 2019: FFO I of c. EUR 27-29 million, rental income EUR 77-79 million
Langen, 20 March 2019 - The listed German property company DEMIRE Deutsche Mittelstand Real Estate AG (ISIN: DE000A0XFSF0) achieved a successful performance and significant improvements in terms of key operating and portfolio ratios during the 2018 financial year. This is the gist of the annual report that the company published for the year 2018 today.
The funds from operations (FFO I, before minority interests, after tax) added up to c. EUR 23.4 million during the year under review, and therefore doubled year on year (EUR 11.7 million). The underlying reasons include in particular the considerably improved net interest result, lower maintenance costs and the increased income from rental of property. With a view to the company's positive performance, the company's management board had already raised the FFO I year-end forecast for 2018 from EUR 16 million to EUR 18 million to somewhere between EUR 23 million and EUR 24 million in November 2018. The earnings before interest and tax (EBIT) increased by EUR 42.5 million to EUR 127.1 million (2017: EUR 84.6 million).
Ingo Hartlief FRICS, CEO of DEMIRE AG, commented: "DEMIRE has set itself the goal of becoming one of the leading property asset holders on Germany's commercial real estate market. With the successful operating performance during the past financial year and the significant boost to the company's equity base by our major shareholders in 2018, we have taken another big step toward achieving this goal. At the same time, we created a solid foundation for the ongoing 2019 financial year and our continued growth."
Stable Rental Income - Net Loan-to-Value Drastically Reduced
The rental income of the DEMIRE Group in an amount of EUR 73.7 million (2017: EUR 73.7 million) was within the range predicted in the November 2018 forecast of c. EUR 73 million to EUR 74 million and remained stable over prior-year period due to a successful letting performance and despite the disposals of non-strategic properties. The profit for the period after tax clearly exceeded the prior-year figure at EUR 69.1 million (2017: EUR 19.4 million) and is essentially explained by the lower finance expenses as a result of the refinancing activities in 2017 while it is also explained by valuation effects for the proprietary portfolio during the 2018 financial year.
Year on year, the net loan-to-value ratio declined from 60.1 % to 38.7 % by 31 December 2018. This drastic reduction was primarily accomplished through the appreciation of portfolio properties and the year-on-year increase in cash and cash equivalents, which is particularly due to the inflow of shareholder capital within the framework of a cash capital increase that generated gross proceeds of c. EUR 150 million in November 2018.
By 31 December 2018, the shareholders' equity of DEMIRE amounted to EUR 582.3 million (31 December 2017: EUR 325.5 million). The brisk increase year on year is the result of a 10 % capital increase in April 2018, the continued expansion of the shareholdings of the two major shareholders, Apollo Global Management and Wecken Group-not least through a takeover bid in April 2018-as well as the premature conversion of a large proportion of the outstanding 2013/2018 convertible bonds in June 2018 and the cash capital increase by c. EUR 150 million in November 2018. The basic EPRA-NAV per share equalled EUR 5.52 as of the balance sheet date (31 December 2017: EUR 5.96) while the diluted EPRA-NAV per share was EUR 5.50 (31 December 2017: EUR 4.94).
Substantially Lower Finance Expenditures due to Comprehensive Refinancing Arrangements
Comprehensive refinancing measures undertaken in the 2017 financial year caused the finance expenditures to drop to nearly half their previous level during the year under review. The average nominal interest rate for financial liabilities remained at 3.0 % p.a. By the balance sheet date of 31 December 2018, the share of non-collateralised assets in the overall portfolio of the DEMIRE Group stood at 46.6 % and was thus 160 basis points higher than the year before.
EPRA Vacancy Rate further Reduced
The market value of the proprietary portfolio equalled EUR 1,130.4 million as of 31 December 2018 (31 December 2017: EUR 1,034.1 million). The weighted remaining lease term (WALT) approximated 4.5 years (31 December 2017: 4.9 years). The property portfolio achieved a net increase in value of EUR 93.1 million during the 2018 financial year (2017: EUR 48.6 million). This resulted in a gross rental return of 6.5 % for the proprietary portfolio as of the balance sheet date. Owing to the robust letting performance, the EPRA vacancy rate of the proprietary portfolio declined by a total of 190 basis points in the course of the year and ended the financial year at 7.5 % (31 December 2017: 9.4 %). The annualised rental income of the proprietary portfolio, adjusted by acquisitions and disposals (like-for-like approach), rose by EUR 2.1 million or 2.9 % during the 2018 financial year.
Executive Board's Forecast for 2019
In the 2019 financial year, DEMIRE plans to generate rental income of around EUR 77 million to EUR 79 million from the real estate it held in its portfolio as of 31 December 2018, that is, not including properties already sold but taking into account acquisitions already notarised. On the basis of the anticipated rental income and the positive effects from the further implementation of the strategy already taken into account in the 2019 financial year, DEMIRE expects to see a further increase in the FFO result for 2019 (FFO I, before minority interests, after tax) to a bracket of EUR 27 million to EUR 29 million.
To download the 2018 Annual Report, use the following link to the homepage of DEMIRE: https://www.demire.ag/en/investor-relations/reports-results/2018
Save the Date: In late March 2019, DEMIRE will present its third and latest survey of the office markets in Germany's secondary cities. For more details, please contact Jan Schweiger (e-mail: firstname.lastname@example.org).
Invitation to the Conference Call on 20 March 2019
DEMIRE's Executive Board members, Ingo Hartlief (CEO) and Tim Brückner (CFO), invite anyone interested to join them for a conference call at 10:00 am (CEST) for a presentation of the 2018 financial year.
Please use the following dial-in numbers:
Germany: +49 (0)69 2222 25574
UK: +44 (0)330 336 9125
USA: +1 929-477-0324
France: +33 (0)1 70 72 25 50
Switzerland: +41 (0)44 580 7206
The earnings presentation will also be broadcast live via webcast. Please use the link https://webcasts.eqs.com/demire20190320/no-audio. To hear the presentation, please use the dial-in numbers above. The presentation will also be made available on our website at https://www.demire.ag/en/investor-relations/reports-results/2018 shortly before the call.
Selected Key Performance Indicators of the Group DEMIRE Deutsche Mittelstand Real Estate AG
|Consolidated income statement (in EURm)
|Profit/loss from the rental of real estate
|Gain or loss on fair value adjustments of investment properties
|General administrative overhead and other operating expenses
|Net profit/loss for the period
|- thereof attributable to parent company shareholders
|FFO I (before minority interests, after tax)
|FFO II (before minority interests, after tax)
|Basic/diluted earnings per share (in EUR)
* Adjustment of prior-year figures due to change in classification
|0.85 / 0.85
||0.25 / 0.22
|Consolidated balance sheet (in EUR millions)
|Cash and cash equivalents
|Real estate held for sale
|Equity ratio (in % of total assets)
|EPRA-NAV per share (EUR, basic/diluted)
||5.52 / 5.50
||5.96 / 4.94
|Net financial liabilities
|Net Loan-to-value (net LTV) in %
|Portfolio key ratios
||01/01/2018 - 31/12/2018
||01/01/2017 - 31/12/2017
|Market value (in EURm)
|Gross rental income p.a. (in EUR millions)
|GRI yield (in %)
|EPRA vacancy rate (in %) *
|WALT (in years)
* Properties held exclusively for sale
The Management Board
DEMIRE Deutsche Mittelstand Real Estate AG
Phone: +49 (0) 6103 - 372 49 - 0
Fax: +49 (0) 6103 - 372 49 - 11
Nikolaus von Raggamby
Tel.: +49 30 28 44 987 40
DEMIRE Deutsche Mittelstand Real Estate AG
Tel.: +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. By the end of the 2018 financial year, DEMIRE held a portfolio with a combined lettable area of around 926,000 sqm and a fair market value of more than EUR 1.1 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 rent 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.
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