DGAP-News: DEMIRE Deutsche Mittelstand Real Estate AG / Key word(s): Quarterly / Interim Statement
DEMIRE Deutsche Mittelstand Real Estate AG: DEMIRE off to a Good Start to the Year: FFO Rises by 74 %, Forecast confirmed
15.05.2019 / 07:00
The issuer is solely responsible for the content of this announcement.
DEMIRE off to a Good Start to the Year: FFO Rises by 74 %, Forecast confirmed
- FFO I (after tax, before minority interests) up 74 % to EUR 8.9m (Q1 2018: EUR 5.2m)
- EBT without valuation effect at EUR 7.1m, up from EUR -1.6m (EUR 30.5m including valuation effect) in Q1 2018
- Vacancy rises as expected by 80 basis points to 8.3 % since year-end 2018
- Rental income stable at EUR 18.2m despite sales (Q1 2018: EUR 18.3m)
- Net debt-to-equity ratio stable at 38.6 % (31 December 2018: 38.7 %)
- Management Board confirmed forecast for 2019: EUR 77m-79m in rental income revenues and EUR 27m-29m in FFO I
Langen, 15 May 2019 - DEMIRE Deutsche Mittelstand Real Estate AG (ISIN: DE000A0XFSF0) was off to a good start to the year 2019. As of the reporting date of 31 March 2019, the DEMIRE Group's portfolio comprised an unchanged total of 84 commercial properties (31 December 2018: 84 properties; 31 March 2018: 86 properties) with a total lettable building area of about 926,000 square metres whose market value added up to c. EUR 1,141 million (31 December 2018: EUR 1,140 million).
The rental income of the DEMIRE Group totalled EUR 18.2 million by the end of the first quarter of 2019 (Q1 2018: EUR 18.3 million). The modest set-back is explained by the sale of two non-strategic properties in the course of 2018, although the drop in rent revenues was largely offset by the successful lease management of the proprietary portfolio.
Annualised base rents on a like-for-like basis increased by 1.5 %, up to EUR 73.3 million. Income from the rental of real estate rose to EUR 17.1 million during the reporting period and thereby exceeded the corresponding prior-year period by around 30 % (Q1 2018: EUR 13.2 million) as a result of operational improvements and deferral effects in utility and service charge management.
As expected, the EPRA vacancy rate rose to 8.3 % as of 31 March 2019 (31 December 2018: 7.5 %) after certain leases expired on 31 December 2018. Despite a brisk letting performance during the second quarter of 2019, the vacancy rate is expected to perk up again by 30 June 2019 due to the previously announced acquisition of an office portfolio that includes a value-added property effective as of 1 May 2019.
FFO I Nearly Doubled
The Funds from Operations (FFO I, after tax, before minority interests) performed strongly over prior-year period and increased by 74 % to EUR 8.9 million. The underlying reasons for this are improvements across all divisions, including higher income from property lettings, reduced interest expenses, a lower current administrative overhead and a lower tax burden over prior-year period, which had ended with EUR 5.2 million in FFO.
Steadily Improving Balance Sheet Ratios
The total assets of the DEMIRE AG Group grew slightly to c. EUR 1,381 million as of 31 March 2019. The equity ratio improved by small margin since the end of the previous financial year, rising to 42.6 %. The undiluted EPRA NAV increased to EUR 5.58 per share as of the balance sheet date, implying a growth by 1.1 % since year-end 2018 (31 December 2018: EUR 5.52 per share). The (diluted) EPRA NAV amounted to EUR 5.56 per share as of the balance sheet date and thus rose by EUR 0.06 per share since year-end 2018 (31 December 2018: EUR 5.50 per share). The Net Debt-to-Equity ratio (net loan-to-value) remained stable compared to year-end 2018 (38.7 %) and stood at 38.6 % as of 31 March 2019. By 30 June 2019, the balance sheet ratios are expected to reflect the closing of the announced acquisition of a portfolio consisting of four office buildings as of 1 May 2019.
Earnings before Taxes without Valuation Effects Clearly Positive
At EUR 7.1 million, the Earnings before Taxes (EBT) was well below the prior-year figure of EUR 30.5 million. Since the changes in valuation parameters were negligible, the fair market values of the properties were not adjusted as of the reporting date. When ignoring this effect, which contributed EUR 32.1 million to earnings last year, the comparable prior-year result of EUR -1.6 million was significantly exceeded. With the lower tax expense compared to the prior-year period taken into account, which is due not least to a decrease in deferred taxes, net income for the first three months of the 2019 financial year amounted to EUR 6.6 million, compared to EUR 20.8 million during the prior-year period.
Ingo Hartlief, CEO of DEMIRE AG, commented: "Our financial year obviously started on the right foot. Our team identified and implemented fresh performance potential, thereby boosting the Funds from Operations. Owing to our successful lease management, we not only compensated for the slight increase in vacancies after the regular expiration of lease agreements, but actually managed to boost the income from the rental of real estate. The successful performance of the first quarter and the recently closed acquisition of an office portfolio helped us create a sound basis for further growth during the 2019 financial year."
Management Board Confirms Forecast for 2019
Given the robust business performance during the first three months of 2019 and considering the already completed acquisition, the Management Board confirms its forecast for the 2019 financial year. Specifically, DEMIRE expects to see rental income between EUR 77 and 79 million by the end of the 2019 financial year on the basis of its current portfolio, including the recent acquisition. At the same time, the Management Board anticipates between EUR 27 and 29 million in FFO I (after taxes and before minorities) for the 2019 fiscal year.
The quarterly report for Q1 2019 is available for download in the Investor Relations section of the company's home page:
Invitation to a Conference Call on 15 May 2019
The Management Board of DEMIRE invites all interested parties to attend the presentation of the quarterly financial report for Q1 2019 during a conference call on 15 May 2019 at 10:00 CET.
To dial in, please use the following phone numbers:
Germany: +49 (0)69 2222 25574
United Kingdom: +44 (0)330 336 9125
United States: +1 929 477 0324
France: +33 (0)1 70 72 25 50
Switzerland: +41 (0)44 580 7206
The presentation of the quarterly financial report will also streamed as a live webcast. Please use the link https://webcasts.eqs.com/demire20190515/no-audio
For the audio broadcast, please use the dial-in numbers listed above. Shortly before the start of the conference call, the presentation will be available on our homepage www.demire.ag/investor-relations for downloading.
Selected Key Performance Indicators of DEMIRE Group
||01/01/2019 - 31/03/2019
|Consolidated income statement
|Net income from the rental of real estate
|Fair-value adjustments on
|General administrative overhead and other operating expenses
|Profit/loss for the period after tax
|- thereof attributable to shareholders of the parent company
|FFO I (after tax, before minority interests)
|FFO II (after tax, before minority interests)
|Basic/diluted earnings per share (in EUR)
|Consolidated accounts (in EURm)
|Cash and cash equivalents
|Properties held for sale
|Shareholders' equity (incl. non-controlling shareholders)
|Equity ratio (in % of total assets)
|EPRA-NAV per share (EUR, basic/diluted)
|Net financial liabilities
|Net debt-to-equity ratio (net LTV), in %
|Portfolio key ratios
|Market value (in EURm)
|Annualised base rents (in EURm)
|Rental yield (in %)
|EPRA vacancy rate (in %) *
|WALT (in years)
* Excluding assets held for sale
Nikolaus von Raggamby
Phone: +49 30 28 44 987 40
DEMIRE Deutsche Mittelstand Real Estate AG
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 2018 both by buying single properties and by acquiring equity interests, DEMIRE holds a portfolio with a combined lettable area of around 1 million sqm and a fair market value of more than EUR 1.1 billion today.
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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