DEMIRE DEUTSCHE MITTELSTAND REAL ESTATE AG Market Update Presentation
April 2024
Disclaimer
This document is for informational purposes only. This document is not intended to form the basis of any investment decision and should not be considered as a recommendation by DEMIRE Deutsche Mittelstand Real Estate AG (the "Company") or any other person in relation to the Company. This document does not constitute an offer to sell, a solicitation of an offer of the sale or purchase of securities or an invitation to purchase or tender for the Company. Securities of the Company shall not be offered or sold, in any jurisdiction in which such an offer, solicitation or sale would be unlawful.
Certain information in this document is based on management estimates. Such estimates have been made in good faith and represent the current beliefs of management. Management believes that such estimates are founded on reasonable grounds. However, by their nature, estimates may not be correct or complete. Accordingly, no representation or warranty (express or implied) is given that such estimates are correct or complete.
This document includes 'forward-looking statements'. Forward-looking statements are all statements which do not describe facts of the past but contain the words "believe", "estimate", "expect", "anticipate", "assume", "plan", "intend", "could", and words of similar meaning. These forward-looking statements are subject to inherent risks and uncertainties since they relate to future events and are based on current assumptions and estimates of the Company, which might not occur at all or occur not as assumed. They therefore do not constitute a guarantee for the occurrence of future results or performances of the Company. The actual financial position and the actual results of the Company as well as the overall economic development and the regulatory environment may differ materially from the expectations which are assumed explicitly or implicitly in the forward-looking statements and do not comply to them. Therefore, investors are warned to base their investment decisions with respect to the Company on the forward-looking statements mentioned in this document.
2
Introductory remarks
- As previously reported in an ad-hoc announcement published on 26 March 2024, DEMIRE Deutsche Mittelstand Real Estate AG ("Company") and a group of bondholders ("Ad hoc Group") of its unsecured corporate bond (ISIN: DE000A2YPAK1) with a maturity date of 15 October 2024 and a nominal amount currently still outstanding of EUR 499 million ("Bond") have been negotiating an agreement to extend and restructure the Bond on adjusted terms reasonable for the current market environment ("Lock-up Agreement")
- Constructive negotiations between the Company, its shareholders and certain Ad hoc Group members as well as additional holders of the Bond are continuing
- Whether the Lock-up Agreement will be concluded, and the exact terms of the Lock-up Agreement are currently still open
3
Preliminary FY 2023 figures1 (1/3)
Shortened P&L / FFO-bridgeFY 2023: Slightly lower rental result driven by asset disposals
FY 2023 | FY 2022 | Change | |||
(€ m) | (€ m) | (%) | |||
Rental income | 1 | 78.5 | 81.1 | (3.2) | »1 |
Income from utility and service charges | 2a | 23.0 | 28.1 | (18.0) | »2 |
Operating expenses to generate rental income | 2b | (42.0) | (46.8) | (10.3) | |
Profit / loss from the rental of real estate | 59.5 | 62.3 | (4.5) | ||
Profit / loss from fair value adjustments in properties | 3 | (176.8) | (98.9) | 78.8 | |
Profit / loss from sale of real estate & RE companies | 4 | (14.3) | (8.2) | 75.6 | |
Other operating income / expenses (net) | 5 | (25.8) | (16.0) | 61.2 | »3 |
General and administrative expenses | (11.6) | (10.7) | 8.8 | ||
Impairment of receivables | 6 | (18.9) | (1.5) | >100 | »4 |
Earnings before interest and taxes (EBIT) | (187.9) | (72.9) | >100 | »5 | |
Financial income | 7a | 22.5 | 18.1 | 24.3 | |
Finance expenses | 7b | (17.1) | (19.3) | (11.1) | »6 |
Profit / loss before taxes and minorities | (182.5) | (74.1) | >100 | ||
± Profit / loss from the sale of real estate | 14.3 | 8.2 | 75.6 | ||
± Profit / loss from fair value adjustments | 176.8 | 98.9 | 78.8 | »7 | |
± Other adjustments | 6 7a | 32.9 | 11.6 | >100 | |
FFO I (pre minorities, pre tax) | 41.5 | 44.6 | (7.0) | ||
Current income taxes | (4.7) | (2.8) | 66.1 | ||
FFO I (pre minorities, post tax) | 36.7 | 41.8 | (12.0) |
1) Not yet fully audited, preliminary figures subject to change
Slightly lower rental income mainly driven by sale of Ulm
Decrease due to the disposal of properties sold in the reporting period as well as lower energy costs y-o-y, partly due to the introduction of the German government's energy price brake. In addition, FY 2022 included a one-off effect of € 2.5m from the conclusion of a rental agreement in Essen
FY 2023 revaluation result (13.2% y- o-y on a l-f-l basis)
Primarily due to disposal of asset in Ulm
Includes €24.1m provision for expected penalty payment in connection with Cielo
In FY 2023, primarily related to c.€ 18m partial impairment of loan to RFR 5 Immobilien GmbH (in connection with Cielo JV) as interest payments are delayed
Mainly driven by bond buy-back below par in April 2023, results in lower interest expenses due to lower outstanding bond volume
4
Preliminary FY 2023 figures1 (2/3)
Shortened balance sheet FY 2023: Cash increased mainly after sale of Ulm property
FY 2023 | FY 2022 | Change | ||
(€ m) | (€ m) | (%) | ||
Investment properties | 1 | 947.3 | 1,231.1 | (23.1) |
Non-current assets held for sale | 2 | 149.1 | 121.0 | 23.2 |
Lendings and financial assets | 3 | 70.5 | 87.5 | (19.4) |
Other non-current assets | 8.8 | 7.2 | 21.1 | |
Total non-current assets | 1,175.7 | 1,446.8 | (18.7) | |
Other current assets | 4 | 31.9 | 32.6 | (2.3) |
Cash and cash equivalents2 | 5 | 120.0 | 57.4 | >100 |
Total current assets | 151.9 | 90.0 | 68.7 | |
Total assets | 1,327.5 | 1,536.9 | (13.6) | |
Subscribed capital | 105.5 | 105.5 | (0.0) | |
Reserves | 6 | 198.1 | 344.7 | (42.5) |
Equity attributable to parent company shareholders | 303.6 | 450.2 | (32.6) | |
Non-controlling interests | 29.7 | 36.5 | (18.6) | |
Total equity | 333.3 | 486.7 | (31.5) | |
Long-term financial and lease liabilities | 7 | 145.9 | 839.6 | (82.6) |
Other non-current liabilities | 134.0 | 156.4 | (14.3) | |
Total non-current liabilities | 280.0 | 996.0 | (71.9) | |
Short-term financial and lease liabilities | 7 | 671.0 | 16.0 | >100 |
Other current liabilities | 43.2 | 38.1 | 13.5 | |
Total current liabilities | 714.3 | 54.1 | >100 | |
Total liabilities | 994.2 | 1,050.2 | (5.3) | |
Total equity and liabilities | 1,327.5 | 1,536.9 | (13.6) |
1) Not yet fully audited, preliminary figures subject to change
2) C.€ 23m at FVR level for FY 2023
»1
»
2
»
3
»4
»5
»6
»7
Reduction mainly driven by disposal of asset in Ulm and FY 2023 year-end revaluation
Various properties reclassified to held for sale category (LogPark as largest asset)
C.€ 18m partial impairment in FY 2023 of loan to RFR 5 Immobilien GmbH (in connection with Cielo JV) as interest payments are delayed
Includes c.€ 9.5m restricted cash that has been reclassified to financial
assets as of FY 2023
Cash inflow from disposals, mainly from divestment of asset in Ulm
Primarily due to revaluation result for the period which reduces reserves
Reclassification of bond to short-term financial liabilities
5
Preliminary FY 2023 figures1 (3/3)
Shortened cash flow FY 2023: Cash increased mainly after sale of Ulm property
FY 2023 | FY 2022 | Change | |||
(€ m) | (€ m) | (%) | |||
EBT | (177.5) | (73.3) | >100 | »1 No dividend paid on DEMIRE level in | |
FY 2023 vs. € 32.7m in FY 2022; | |||||
Financial result | (5.4) | 0.6 | >100 | includes reversal of provision and | |
Profit / loss from fair value adjustments in properties | 176.8 | 98.9 | 79.0 | impairment in connection with Cielo in | |
FY 2023 | |||||
Profit / loss from sale of real estate & RE companies | 14.3 | 8.2 | 75.6 | »2 Cash inflow from disposals, mainly | |
Interest proceeds | 2.2 | 3.8 | (72.4) | from divestment of asset in Ulm | |
Income taxes paid | 4.2 | (2.6) | >100 | »3 New mortgage loans / top-up for | |
Other adjustments (incl. D&A) | 1 | 22.6 | (23.0) | >100 | existing loans e.g. for the properties in |
Bad Vilbel and Meckenheim | |||||
Cash flow from operating activities | 37.3 | 12.6 | >100 | »4 Bond buy-back below par in April | |
2023, results in lower interest | |||||
Payments for investments in investment properties | - | - | (59.8) | expenses due to lower outstanding | |
bond volume | |||||
Proceeds from the sale of real estate | 2 | 78.3 | 4.5 | >100 | |
Other adjustments | (12.8) | (30.8) | >100 | ||
Cash flow from investing activities | 65.4 | (26.3) | >100 | ||
Proceeds from the issuance of financial liabilities | 3 | 23.3 | - | n.m. | |
Interest paid on financial liabilities | 4a | (14.8) | (17.0) | (13.3) | |
Payments for the redemption of financial liabilities | 4b | (48.4) | (51.4) | (6.3) | |
Other adjustments | (0.2) | (0.1) | >100 | ||
Cash flow from financing activities | (40.1) | (68.5) | (40.1) | ||
Net change in cash / CE | 62.6 | (82.2) | >100 | ||
Cash / CE at the start of the period | 57.4 | 139.6 | (58.9) | ||
Cash / CE at the end of the period 1 | 120.0 | 57.4 | >100 | ||
6 |
1) Does not include € 9.5m restricted cash as of Dec-23 held under financial assets; c.€ 23m at FVR level for FY 2023
Medium to long-term outlook
General remarks and asset disposal program
General remarks
- Any financial information not specifically identified as actual financial information is not a guidance or forecast by DEMIRE
- Business plan has been sensitised together with an expert consulting firm - figures are shown on a preliminary basis
- Figures shown do not incorporate any amendment or repayment of the SUNs but assume a prolongation at current nominal volume and in-place terms and conditions for illustrative purposes only
Asset disposal program
351
332
(80)
252
34 2026
104 2025
115 2024
GAV (Dec-23) Gross proceeds Secured debt | Net proceeds |
- 18 assets planned to be sold (incl. LogPark)
-
Including LogPark, assets with a fair value of c.€ 350m as of Dec- 23 planned to be sold generating cumulative net proceeds of c.€
250m taking into account corresponding secured debt - Asset by asset sales price assumptions, on average 5% discount to Dec-23 fair values
7
Medium to long-term outlook
Key P&L / FFO figures FY 2024−2027E
Rental income | 1 | |
67 | 64 | |
55 | 58 | |
Profit/loss from the rental of real estate 2
50 | 49 |
40 | 44 |
»1
»2
»3
Decreasing rental income mainly due to planned sale of 18 assets, slightly offset by increasing rents from vacancy reduction and completion of expansion project in Essen
Almost constant margin for rental operations
Decline in FFO driven by rental result
FY 2024 | FY 2025 | FY 2026 | FY 2027 | FY 2024 | FY 2025 | FY 2026 | FY 2027 |
FFO (pre minorities, post tax) | 3 |
- Additionally, in-place secured financings maturing in business plan period prolonged at slightly higher interest cost to reflect current financing market sentiment
- Decline in FFO mitigated in this scenario due to interest income received on cash balance
2522
1415
FY 2024 | FY 2025 | FY 2026 | FY 2027 |
8
1) As per definition in bond documentation
Medium to long-term outlook
Key balance sheet figures FY 2024−2027E
Investment properties1 | 1 | ||
923 | 849 | 858 | 879 |
FY 2024 | FY 2025 | FY 2026 | FY 2027 |
Cash and cash equivalents2 | 2 | ||||
279 | 282 | ||||
232 | |||||
193 | |||||
€ 10m min. | |||||
operating | |||||
liquidity | FY 2024 | FY 2025 | FY 2026 | FY 2027 | |
»1 Assets planned to be sold mostly offset by capex spent (primarily on one large development project); business plan does not assume the exercise of the call option for the Cielo land; the business plan assumes a net cash inflow of c.€ 29m in 2026 on the basis of the respective put option in the JV agreement
»2 Increasing cash position from planned disposals
»3 Declining net debt and LTV primarily driven by growing cash balance from disposals
Net financial debt2 | 3 | Total equity | 4 | ||||||
55% | 50% | ||||||||
LTV3 | 50% | 48% | |||||||
555 | |||||||||
469 | 440 | 438 | |||||||
290 | 302 | 304 | 326 | ||||||
FY 2024 | FY 2025 | FY 2026 | FY 2027 | FY 2024 | FY 2025 | FY 2026 | FY 2027 |
»4 No dividend payouts assumed on DEMIRE level
1) Includes assets held for sale | 9 |
- Total cash and cash equivalents amount included in net debt calculation; includes cash at FVR level, restricted cash as of Dec-23 (€ 9.5m) as well as further liquidity becoming restricted due to committed capex
- Net debt including cash and cash equivalents as per definition above divided by total assets excluding goodwill and cash and cash equivalents as per definition above
Medium to long-term outlook
Key cash flow figures FY 2024−2027E
Cash flow from operating activities 1
87
40 | 40 |
(48) | |||
FY 2024 | FY 2025 | FY 2026 | FY 2027 |
Redemption of financial liabilities 3
Capex / TIs | 2 |
82 | |||
56 | 54 | ||
16 | |||
FY 2024 | FY 2025 | FY 2026 | FY 2027 |
Net change in cash1
91
65
»1 Negative operating cash flow in 2024 / comparatively higher operating cash flow in 2025 driven by liquidity becoming restricted for committed capex in 2024 and respective release in 2025
»2 C. 2/3 of capex / TIs relates to the committed expansion projects in Essen and Kassel while the remainder relates to ordinary capex and TI measures; capex facility for expansion projects under negotiation (business plan assumes capex facility of c.€47m to be utilized from 2026 onwards)
»3 Driven by secured debt corresponding to planned asset disposals
45
52
21
8
3
(7)
FY 2024 | FY 2025 | FY 2026 | FY 2027 |
FY 2024 | FY 2025 | FY 2026 | FY 2027 |
10
1) Change in cash excluding restricted cash as of Dec-23 (€ 9.5m) as well as further liquidity becoming restricted due to committed capex
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Disclaimer
DEMIRE Deutsche Mittelstand Real Estate AG published this content on 19 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 April 2024 21:51:22 UTC.
