Deutsche Industrie REIT-AG
Annual Report 2019/ 2020
1 October 2019 to 30 September 2020
Key figures
01/10/2019- | 01/10/2018- | % | ||
30/09/2020 | 30/09/2019 | Difference | ||
Income statement (TEUR) | ||||
Gross Rental income | 40,781 | 25,481 | 15,300 | 60.0 |
Net rental income | 31,286 | 20,950 | 10,335 | 49.3 |
Result from the revaluation of investment | 36,982 | 37,552 | -570 | -1.5 |
properties | ||||
Finance result | -11,468 | -7,558 | -3,910 | 51.7 |
Net income | 50,821 | 48,672 | 2,149 | 4.4 |
FFO | 24,646 | 12,888 | 11,758 | 91.2 |
FFO per share (€) | 0.84 | 0.60 | 0.25 | 41.1 |
Recurring costs ratio | 6.9 % | 7.7 % | -0.8 % | -10.8 |
30/09/2020 | 30/09/2019 | Difference | % | |
Balance sheet (TEUR) | ||||
Investment properties | 585,820 | 392,849 | 192,971 | 49.1 |
Total assets | 715,849 | 438,989 | 276,860 | 63.1 |
Equity | 377,200 | 181,463 | 195,737 | >100 |
Total debt | 309,638 | 250,749 | 58,889 | 23.5 |
(net) Loan-to-Value (LTV) | 37.1 % | 57.8 % | -20.7 % | -35.8 |
EPRA NAV | 376,709 | 181,671 | 195,037 | >100 |
EPRA NAV per share undiluted (€) | 11.74 | 7.74 | 4.01 | 51.8 |
REIT metrics | ||||
REIT equity ratio | 64.4 % | 46.2 % | 18.2 % | 39.4 |
Share information | ||||
Shares issued | 32,079,505 | 23,451,945 | 8,627,560 | 36.8 |
Average number of shares 01/10 - 30/09 | 29,297,634 | 21,619,034 | 7,678,599 | 35.5 |
Market cap in € million | 574.2 | 403.4 | 170.8 | 42.4 |
Share price XETRA (€) | 17.90 | 17.20 | 0.70 | 4.1 |
Real estate portfolio | ||||
# Properties | 69 | 49 | 20 | 40.8 |
Commercial rental space in m² | 1,229,072 | 918,916 | 310,156 | 33.8 |
Annualised In place rent in € million | 44.5 | 33.1 | 11.4 | 34.4 |
Occupancy commercial | 85.1 % | 88.9 % | -3.8 % | -4.2 |
WALT in years | 5.0 | 4.9 | 0.1 | 2.0 |
IPR commercial in €/m² | 3.47 | 3.34 | 0.13 | 3.9 |
Market value in € million | 565.0 | 391.8 | 173.2 | 44.2 |
Rental yield | 7.9 % | 8.5 % | -0.6 % | -7.3 |
Content
Letter to our shareholders | 2 |
The share | 4 |
Corporate Governance Report | 8 |
Report of the Supervisory Board | 20 |
Composition of the Management Board | |
and Supervisory Board | 25 |
Deutsche Industrie as a REIT | 26 |
The Acquisition Pipeline | 28 |
The Real Estate Portfolio | 34 |
Key figures according to EPRA | 52 |
Table of contents | 54 |
Financial Statement | 88 |
Balance sheet | 90 |
Statement of comprehensive income | 91 |
Cash flow statement | 93 |
Statement of changes in equity | 95 |
Notes | 96 |
Audit Opinion of the independent | |
individual financial statements | 152 |
Statement by the Executive Board regarding | |
compliance with the requirements of the REITG | 156 |
Financial Calendar | 158 |
PICTURE:
Westhausen, Dr.-Rudolf-Schieber-Str.
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Deutsche Industrie REIT-AG Annual report 2019/2020
Letter to our shareholders
Dear Shareholders, Ladies and Gentlemen,
A difficult year for all of us is coming to an end. During the preparation of this Annual Report, the second wave of the Corona pandemic has again dominated everyday life in Germany. The economic consequences of this crisis will continue to affect us in the coming months. However, our business model has proven to be extremely robust and there have been no major negative effects for us so far. The past financial year 2019/2020 was again successful for Deutsche Industrie REIT-AG. We were able to grow further this year and improve almost all key figures.
The property portfolio increased again in size and value
As of 30 September 2020, the portfolio consists of
69 properties and is balanced at almost 568 € million. This is an increase of nearly 50 %. In addition, there are already eight further properties with an investment volume of approximately 53 € million. Con sidering all objects purchased so far, the pro forma portfolio consists of 77 properties with annualised total rent of around 49 € million and a portfolio value of around 618 € million.
Our acquisition pipeline continues to be very well filled and offers us good opportunities for further significant growth in terms of quantity and quality in the current financial year.
Capital increases and financing to strengthen liquidity
Following the capital increase in November 2019, in which we raised almost EUR 93 million, we carried out a further capital measure in June 2020. This took place mainly in view of the Corona crisis and took advantage of the optimal time window on the capital market. On the one hand, this was intended to buffer
possible risks of rent losses and rent deferrals, and on the other hand, we wanted to be able to act quickly in the event of further purchase opportunities.
In addition, external financing with a volume of around 73 million was raised with very attractive conditions.
Due to the higher value of the investment properties, the high liquidity reserves and somewhat more restrained borrowing, our debt-equity ratio (LTV) is currently only 37.1 %, which is well below our target level of 50 %. We see potential to take out more loans in the coming months.
Good annual results
Net rental income rose by almost 50 % from almost 21 € million in the previous year to just over 31 € million in the 2019/2020 financial year. FFO (Funds From Operations) increased by 91 % from just under 13 € million to nearly 25 € million. Despite the sharp increase in the number of shares due to the two capital increases, FFO per share rose by 41 % from 0.60 € to 0.84 €.
Equity more than doubled and the undiluted EPRA NAV per share rose by 52 % from 7.74 € to 11.74 €. The G-REIT equity ratio now stands at 64 %, which is significantly above the required 45 % for the second time in a row.
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Deutsche Industrie REIT-AG Letter to our shareholders
Dividend payment | With best regards, |
After we paid a dividend of 0.09 € per share for the | |
first time last year, this year shareholders were pleased | |
to receive a dividend payment of 0.16 € per share. | |
We intend to continue this positive development | Rolf Elgeti |
and plan to propose the distribution of a dividend | Chief Executive Officer |
of EUR 0.24 for the 2019/2020 financial year at the | |
next Annual General Meeting. | |
Outlook 2020/2021 | Sonja Petersen |
We want to continue the development of the past | Chief Investment Officer |
years with steady and sustainable growth in | |
2020/2021. In addition to manageable risks, the | |
effects of the corona crisis offer additional oppor | |
tunities that we can exploit. For example, we have | |
actively promoted the issue of sale-and-lease-back | René Bergmann |
and positioned ourselves as a contact for German | Chief Financial Officer |
SMEs. We are confident that we will be able to invest | |
a volume of between 100 € million and 200 € million | |
again this year. For the 2020/2021 financial year, we | |
expect to be able to achieve FFO of 32 € million to | Potsdam in December 2020 |
34 € million. | |
We would like to take this opportunity to thank our | |
shareholders, our tenants, our employees, and service | |
providers for their great support. |
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Deutsche Industrie REIT-AG Annual report 2019/2020
The share
The Stock Market in view of the Corona Pandemic
In 2019, the stock market experienced a massive rally. Initial success with the negotiations between the USA and China surrounding the trade dispute boosted the markets. In 2019, the stock exchanges also benefited from the central banks furthering their expansive monetary policy in view of weakening economic. The DAX closed the 2019 trading year with a plus of 25.5 %. Even both the MDAX and the SDAX rose by 31 %. At the beginning of the year 2020, the global economy was in a strong position. Following the worldwide outbreak the Corona Pandemic in Febru- ary and the widespread national lockdowns put in place to contain the pandemic, the stock markets plummeted by over 30 %. The global economy came under massive pressure and the economy slumped
sharply. After the fall in economic output in the
first half of 2020 a slight initial recovery of economic activity was recorded. In April 2020 there was an easing of the restrictions and in many countries some sense of normality was restored. There is still however a risk of setbacks as the results of the pandemic continue to progress. In the summer quarter, despite a gradual recover, the economy was still far from the pre-crisis level. A main reason for this, is that the pandemic has still not been effectively contained
in many countries. After the massive economic downturn in March and April a V-shaped recovery took place in May on the stock markets. Nine months into 2020, the DAX stood at 12,760.70 points, exceeding the level of the previous year despite Corona (September 30, 2019: 12,428.10 points).
- Deutsche Industrie REIT-AG - Share price development (XETRA)
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23 | |||||||||||
22.00 | 22 | ||||||||||
21 | |||||||||||
20 | |||||||||||
19 | |||||||||||
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17 | |||||||||||
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14 | |||||||||||
Oct. 19 | Nov. 19 | Dec. 19 | Jan. 20 | Feb. 20 | Mar. 20 | Apr. 20 | May 20 | Jun. 20 | Jul. 20 | Aug. 20 | Sep. 20 |
DIR share performs well in the crisis
At the beginning of the 2019/2020 financial year, the share price (opening price on October 1, 2019) stood at EUR 17.20. Prior to the effects of the Corona crisis and the resulting distortions in the stock markets, the price was always stable above EUR 20.00. The lowest value of the fiscal year was recorded on 06.04.2020 at EUR 14.80, the highest share price reached EUR 23.60 on May 5, 2020. After the distortions on the stock markets at the peak of the Corona crisis in March and April the DIR share recovered faster and more strongly than other German real estate stocks and in May to June was traded at between EUR 19.00 and EUR 22.00.
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Deutsche Industrie REIT-AG The share
Capital increases
Within the 2019/2020 financial year, two capital increases resulted in a significant increase in both the capital stock and the number of shares. The first cash capital increase took place in November 2019 (+5,711,242 shares) followed by a second increase in June 2020 of 10 % without subscription rights of the share capital (+2,916,318 shares), which increased the number of shares to the current value of 32,079,505.
Shareholder structure
The shareholder structure is characterised by insti tutional national and international investors with a predominantly long-term investment strategy.
The free float (as defined by Deutsche Börse AG in compliance with the attribution regulations pursuant to the German Securities Trading Act (WpHG))amounted to 42.5 % at the reporting date on September 30, 2020.
- Shareholder structure
7.8 % | Obotritia Capital KGaA |
7.0 % | Obotritia Alpha Invest GmbH |
4.7 % | Obotritia Beta Invest GmbH |
4.4 % | Babelsberger Beteiligungs GmbH |
3.6 % | Försterweg Beteiligungs GmbH |
2.2 % | Obotritia Delta Invest GmbH |
29.7 % | Total Obotritia-Group |
9.8 % | VBL |
5.2 % | Aurelius Growth Investments S.a.r.l. |
0.2 % | Lotus AG |
0.9 % | Olive Tree Invest GmbH |
6.3 % | attributable to Dirk Markus |
6.2 % | Parson GmbH |
5.0 % | Massachusetts Financial Services |
4.7 % | Gert Purkert |
3.7 % | Rocket Internet SE |
0.5 % | Rolf Elgeti |
34.1 % | Remaining free float |
The percentages are based on voting rights notifications in accordance with Sections 33 et seq. WpHG of the named shareholders, or notifications of managers transactions pursuant to Art. 19 MAR as well as individual voluntary disclosures by some shareholders. The voting rights in each case relate to the number of total voting rights at the time of the notification. In addition, there is the possibility that the share of voting rights has changed since then without any obligation to notify within the respective thresholds.
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Deutsche Industrie REIT-AG Annual report 2019/2020
Analyst Coverage
In February 2020, Berenberg Bank launched the coverage on which the DIR shares are valued by three separate analysts:
Date | Institute | Report | Analyst | Recommendation | Target Price |
23/11/2020 | Baader Bank | Update | Andre Remke | "Buy" | 24.00 EUR |
08/09/2020 | Berenberg Bank | Update | Kai Klose | "Buy" | 23.00 EUR |
13/08/2020 | ODDO BHF | Update | Manuel Martin | "Buy" | 24.50 EUR |
- The DIR share at a glance:
As of | 30/09/2020 |
WKN | A2G9LL |
ISIN | DE000A2G9LL1 |
Ticker Symbol | JB7 |
Listing date | 07 December 2017 |
Number of shares | 32,079,505 |
Nominal capital in EUR | EUR 32,079,505.00 |
Stock exchanges | XETRA, Frankfurt and Berlin |
Market segment | Regulated market |
Transparency level | Prime Standard |
Investor Relations
To ensure a transparent and continuous dialogue with existing and potential investors the DIR continued to intensify their investor relation activities in 2019/2020. In doing so, the company managed to sustain more individual discussions and a greater representation at various conferences.
Furthermore, in the 2019/2020 financial year, the DIR often present in major investor media reports and was thus able to improve its perception of the company on the capital markets. On the Investor Relations pages of the website, interested parties can find information on capital market law mandatory notices, such as ad-hoc announcements, as well as financial reports and investor presentations available for download.
PICTURE:
Bad Oeynhausen, Unterer Sundern
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Deutsche Industrie REIT-AG Annual report 2019/2020
Declaration on corporate governance and Corporate Governance Report
In the following, the Supervisory Board and the Management Board of Deutsche Industrie REIT-AG (DIR or the "Company") report on the corporate governance of the company and on the management of the company in accordance with Section 289f of the German Commercial Code (HGB).
The current Declaration of Conformity of the Supervisory Board and the Management Board of Deutsche Industrie REIT-AG dated 23 October 2020 is reproduced first. This is followed by a description of the working methods of the Supervisory Board and Management Board and their composition. In addi- tion, the corporate governance of the company is presented, and the diversity concept is discussed.
1. Declaration of Compliance of Deutsche Industrie REIT-AG with the German Corporate Governance Code (DCGK)
The Management Board and Supervisory Board of Deutsche Industrie REIT-AG welcome and support the German Corporate Governance Code (GCGC) and the objectives it pursues.
They hereby declare in accordance with section 161
- of the German Stock Corporation Act (Aktienge- setz) that Deutsche Industrie REIT-AG has complied with the recommendations of the Government Com- mission on the German Corporate Governance Code as amended on 7 February 2017 and published by the Federal Ministry of Justice in the official section of the Federal Gazette (Bundesanzeiger) in the version of the Code dated 7 February 2017, published in the Federal Gazette on 24 April 2017, with the following excep- tions, since the submission of the last declaration of compliance on 25 October 2019:
Section 4.1.3 DCGK - Compliance Management System: The company has not employed more than six employees since the last declaration of compliance was issued. The Management Board therefore saw no need to draw up and disclose systems of measures in a formalised form for compliance management or a so-called "whistleblowing". In view of the size of the company, the cost of setting up, implementing, and maintaining formalised systems of measures was and is disproportionate to the potential benefits.
Section 4.1.5 DCGK - Consideration of women in filling management positions:
The Management Board did not follow the recommendation that diversity should be taken into account when filling management positions in the company, and in particular that women should be given appropriate consideration. The company had and currently has only employees without management functions. Apart from the Management Board, there were no management positions to be filled in the company, which is why the company could not follow this recommendation for formal reasons. For this reason, the company had set 0 % as the target figure for the participation of women in management positions for the period until 30 September 2020 and 0 % as the target figure for the period until 30 Sep- tember 2025. At Deutsche Industrie REIT-AG, how ever, the decisive criterion for filling management positions is qualification and suitability, irrespective of gender.
Section 4.2.1 Sentence 2 GCGC - Rules of
Procedure for the Management Board:
There were no rules of procedure for the Management Board in the past year. The company believed this instrument would not contribute to the effectiveness of the Management Board in view of its small size.
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Deutsche Industrie REIT-AGCorporate Governance Report
Section 5.1.2 (1) Sentences 2 and 3; (2) Sentence 3 GCGC - Consideration of diversity, setting targets for the proportion of women on the Management Board and setting an age limit:
The Supervisory Board did not follow the recommendation to take diversity into account when appointing members of the Management Board. The company believed professional qualifications and knowledge of the company were decisive as prerequisites for appointment. However, the company has set a target of one-third for the period until 30 September 2020 for the participation of women on the Management Board, which is currently being met. By 30 September 2025, the company has set one third as the target figure for the participation of women on the Managing Board. For the reasons outlined above, an age limit for members of the Board of Management had not previously been set. By resolution of 10 Septem- ber 2020, the Supervisory Board has now decided on an age limit for the Board of Management.
Section 5.3 DCGK - Formation of committees:
In view of its small number of members, the Supervisory Board had previously refrained from forming committees. In view of the continued low level of complexity and the transparent business model of Deutsche Industrie REIT-AG, it did not consider it necessary to form committees and devoted its entire attention to the issues at hand.
of the company were decisive as prerequisites for appointment, so that the aforementioned requirements were not conducive to achieving the objec- tives. For this reason, the company has set 0 % for the period up to 30 September 2020 and 20 % for the period up to 30 September 2025 as the target figure for the participation of women on the Supervisory Board. For these reasons, the company has not yet set an age limit or a standard limit for membership of the Supervisory Board. By resolution dated 10 Sep- tember 2020, the Supervisory Board has now set an age limit of 80 years. As the GCGC in the version dated 16 December 2019, does not recommend a rule limit to be set for the length of service on the Supervisory Board, the company will not comment on this point in future.
The Management Board and the Supervisory Board of Deutsche Industrie REIT-AG further hereby declare in accordance with section 161 (1) of the German Stock Corporation Act (Aktiengesetz) that Deutsche Industrie REIT-AG has complied since the announcement with the recommendations of the Government Commission on the German Corporate Governance Code in the version dated 16 December 2019, published in the official section of the Federal Gazette on
20 March 2020, with the following exceptions and will comply with the recommendations in the future with the following exceptions:
Section 5.4.1 (2), (3), (4) DCGK - Specification of objectives for the composition of the Supervisory Board, particularly with regard to diversity, and development of a competence profile as well as an age limit to be specified and a rule limit for membership of the Supervisory Board:
The Supervisory Board has not set any concrete objectives for its composition or developed a competence profile for the entire body. Nor have rules on diversity been laid down in the objectives for the composition of the supervisory board. The company believed professional qualifications and knowledge
Recommendation A.1 GCGC - Respect for diversity when filling management positions:
The Management Board does not currently follow the recommendation to take diversity into account when filling management positions in the company. The company currently only has employees without management functions. Apart from the Management Board, there are no management positions to be filled in the company, which is why the company cannot currently follow this recommendation for formal reasons.
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Deutsche Industrie REIT-AG Annual report 2019/2020
Recommendation A.2 DCGK - Compliance Management System:
The company currently employs only six staff. The Management Board therefore sees no need to develop and disclose systems of measures in a formalised form for compliance management or a so-called "whistle- blowing". In view of the size of the company, the cost of setting up, implementing, and maintaining formal- ised systems of measures has never been and is not in any reasonable proportion to the potential benefits.
achieving the objectives. For this reason, the company had set 0 % as the target figure for the participation of women on the Supervisory Board for the period up to 30 September 2020, and has dispensed with setting an age limit for members of the Supervisory Board. By resolution of 10 September 2020, the Supervisory Board has now set a target of 20 % for female participation in the Supervisory Board and an age limit of 80 years for the period up until
30 September 2025.
Recommendation B.1 GCGC - Observance of diversity in the composition of the Management Board:
The Supervisory Board does not currently follow the recommendation to observe diversity when appointing Management Board members in the company.
The company is of the opinion that professional qualifications and knowledge of the company are decisive as prerequisites for appointment, so that the above-mentioned requirements are not conducive to achieving the objective.
Recommendation B.2 DCGK - Long-term Succession planning by the Supervisory Board and Management Board:
In view of the current age of the members of the Management Board (37 to 50 years), the company does not consider long-term succession planning to be necessary at present.
Recommendations C.1 and C.2 GCGC - Specification of objectives for the composition of the Supervisory Board, in particular consideration of diversity and the development of a competence profile, and specification of an age limit for members of the Supervisory Board:
The Supervisory Board has not set any concrete objectives for its composition or developed a competence profile for the entire body and does not intend to set such objectives or develop a competence profile in the future. Nor have any rules on diversity in the objectives for the composition of the Supervisory Board been set or are to be set in the future. The company is of the opinion that the professional qualifications and knowledge of the company are sufficient as prerequisites for the appointment of members to the Supervisory Board, such that the aforementioned objectives are not conducive to
Recommendation C.5 DCGK - Supervisory Board mandates in non-group listed companies:
While the company assumes that Recommendation C.5 of the GCGC contains guidelines for the members of the company's Supervisory Board (and not for its Management Board), in view of the ambiguous wording, it is pointed out that Management Board member Rolf Elgeti holds more than two Supervisory Board mandates in non-group listed companies or in comparable supervisory bodies (also as Chairman of the Supervisory Board).
Recommendation on section D.II.2 GCGC - Supervisory Board committees:
In view of its small number of members, the Supervisory Board has so far refrained from forming committees and therefore does not follow recommendations D.2, D.3, D.4 and D.5 GCGC. In view of the continued low level of complexity and the transparent business model of Deutsche Industrie REIT-AG, it is not considered necessary to form committees in the future either and continues to devote its full attention to the issues at hand.
Recommendation D.13 GCGC - self-assessment of the Supervisory Board:
In view of the low complexity of the company and its business model, it was assumed that the legally required interval of Supervisory Board meetings and the regular meetings held without the Management Board, were adequate for the effective performance of its duties. To this extent, a formalised self-assessment system was dispensed with. By resolution dated
10 September 2020, the Supervisory Board has now introduced a formalised self-assessment system and will follow the recommendation in future.
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Deutsche Industrie REIT-AGCorporate Governance Report
Recommendations on Section G.I. of the GCGC - Remuneration of the Management Board:
Section G.I. of the GCGC contains new recommen dations on the remuneration of the Management Board, which the current remuneration model of Deutsche Industrie REIT-AG does not fully comply with, as it has become outdated and dates back to the time before the announcement of the Government Commission on the German Corporate Governance Code in the version dated 16 December 2019. This includes the recommendations on the determination of the remuneration system (G.1), on the determination of the amount of the variable remuneration components (G.6, G.7, G.8, G.10 and G.11) and on benefits upon termination of contract (G.12, G.13 and G.14). The Supervisory Board and Management Board intend to make the recommendations the focus of the review of the 2020/2021 compensation system.
Recommendation G.3 GCGC - customary level of specific total remuneration:
The Supervisory Board is currently not carrying out a peer group comparison to assess the customary level of Management Board remuneration, as there is currently not a sufficient representation and therefore a lack of suitable comparable companies/ REITs in Germany. Nevertheless, the Supervisory Board checks that the remuneration of the Board of Management is appropriate and customary by comparing it with national and international listed real estate companies in the broader sense.
Rostock, 23 October 2020
For the Supervisory Board
Recommendation G.4 GCGC - Assessment of the customary level of Management Board remuneration within the company:
At present, the Supervisory Board does not determine the customary level of Management Board remune ration by establishing a relationship with senior management and the workforce, since firstly, due to the small size and low complexity of the company, there is currently no senior management level and secondly, the number of employees is too small to be able to make meaningful deductions.
Recommendation G.16 GCGC - crediting of remuneration when members of the Supervisory Board take on non-group supervisory board mandates:
The Supervisory Board does not follow the recommendation that, when members of the Management Board take on non-group supervisory board man- dates, it should decide whether and to what extent remuneration from the respective supervisory board mandate should be credited. Based on past experience with the members of the Management Board and their dealings with non-group Supervisory Board mandates, it is not expected that non-group Supervisory Board mandates will have a negative impact on the future activities of the members of the Management Board for the company. Given the Supervisory Board's ability to exercise control, which also exists independent of the recommendation, a decision on the crediting of remuneration from non-group Supervisory Board mandates is not necessary.
For the Management Board
Hans-Ulrich Sutter | Rolf Elgeti |
Chairman of the Supervisory Board | Chairman of the Management Board |
PICTURE:
Remscheid, Rosentalstraße
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Deutsche Industrie REIT-AGCorporate Governance Report
The current declarations of compliance are published on our website https://www.deutsche-industrie-reit.de/, in the "Investor Relations" section under the menu items "Corporate Governance" and "Declara- tion of Compliance".
2. Functioning of the Management Board and Supervisory Board
Management structure with three bodies
The Management Board and Supervisory Board work closely together for the benefit of the company to ensure responsible management and control of the company through good corporate governance.
An essential element of corporate governance is the separation of corporate management and corporate control. This is achieved through a clear division of tasks and responsibilities between the Management Board and the Supervisory Board. In addition, the Annual General Meeting is the third body. Through it, shareholders participate in fundamental decisions of the company.
The Management Board
The Management Board manages the company on its own responsibility and represents it in transactions with third parties. In doing so, it is bound to the interests of the company with the aim of creating sustainable value. It develops the company's strategic orientation, agrees it with the Supervisory Board and ensures its implementation. The Management Board also ensures that appropriate risk management and controlling systems are in place within the company.
The members of the Management Board are responsible for individual areas of responsibility, irrespective of their joint responsibility for the company. They work together as colleagues and keep each other informed of important events and measures in their areas of responsibility. The Management Board has not yet adopted rules of procedure.
The Management Board of Deutsche Industrie REIT-AG is appointed by the Supervisory Board in
accordance with Article 6 No. 2 of the Articles of Association. The Supervisory Board also determines the total number of members on the Management Board and whether there should be a Chairman or Spokesman. The members of the Management Board are appointed for a maximum of five years. Reappointments are permitted.
The Supervisory Board does not currently follow recommendation B.1 of the German Corporate Governance Code (DCGK) to take diversity into account when appointing members of the Management Board. The company is of the opinion that professional qualifications and knowledge of the company are sufficient as prerequisites for appoint- ment, with the result that the above-mentioned requirements are not conducive to achieving the objectives.
However, the Supervisory Board set a target
of one third for the proportion of women on the Management Board for the period up to 30 Septem ber 2020 and maintains this target, by resolution of 10 September 2020, for the period up to 30 Septem- ber 2025. This target figure has been achieved in the past and is currently being achieved. No further rules on diversity in the targets for the composition of the Management Board have been defined to date.
The Management Board of Deutsche Industrie REIT-AG consists of three persons: Mr Rolf Elgeti (CEO), Ms Sonja Petersen (née Paffendorf) (CIO) and Mr René Bergmann (CFO). The Management Board contract of Mrs. Sonja Petersen (née Paffendorf) was extended for a further three years until 17 Octo- ber 2023.
The CEO, Mr Rolf Elgeti, is responsible for Human Resources, Public Relations and Strategy. The CIO, Mrs. Sonja Petersen (née Paffendorf), is responsible for investment and asset management. The CFO, Mr René Bergmann, is responsible for the areas of accounting/controlling, financing and investor relations. All three Management Boards also manage and control external service providers for their respective areas.
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Deutsche Industrie REIT-AG Annual report 2019/2020
The CVs of the members of the Management Board can be found at https://deutsche-industrie-reit.de/en/company/ceo/
The Supervisory Board and Management Board agree on annual targets, the achievement of which is regularly reviewed.
The Management Board is responsible for training and refresher courses.
In section B.2, the DCGK recommends that long-term succession planning should be carried out by the Supervisory Board. The DIR does not comply with this recommendation, as the company does not currently consider long-term succession planning to be necessary in view of the current age of the members of the Management Board (37 to 50 years).
The company had previously believed the professional qualifications and knowledge of the company were decisive as prerequisites for appointments, so that no age limit had been set for members of the Board of Management. In a resolution dated 10 September 2020, the Supervisory Board has now decided to set an age limit of 80 years for members of the Management Board.
A D&O insurance policy has been taken out for the members of the Management Board, considering Section 93 (2) of the German Stock Corporation Act (AktG).
The remuneration of the CEO, Rolf Elgeti, is currently paid in the form of fixed remuneration via a pay-as-you-go agreement with Obotritia Capital KGaA. The remuneration system for the Management Board members Sonja Petersen and René Bergmann is based on short and long-term remuneration incentives. Detailed information on the remuneration of the Management Board is provided in the remuneration report in the management report 2019/2020.
Section G.I. of the GCGC contains new recommendations on the remuneration of the Management Board, which the current remuneration model of Deutsche Industrie REIT-AG does not fully comply with, as it
was agreed on prior to the announcement of the Government Commission on the German Corporate Governance Code in the version dated 16 December 2019. This applies to the recommendations on the determination of the remuneration system (G.1), the determination of the amount of the variable remuneration components (G.6, G.7, G.8, G.10 and G.11) and benefits upon termination of the contract (G.12 and G.13). Before the next annual shareholders' meeting, the supervisory board will pass a resolution in accordance with § 87a (1) of the German Stock Corporation Act (AktG) on the future remuneration system for the Management Board and submit it to the shareholders' meeting for approval in accordance with § 120a (1) of the German Stock Corporation Act (AktG).
Consideration of women when filling management positions
The Management Board does not currently follow recommendation A.1 of the German Corporate Governance Code (DCGK) to pay attention to diversity when filling management positions in the company. The company currently only has employees without management functions. Apart from the Management Board, there are no management positions to be filled in the company, which is why the company cannot currently follow this recommendation for formal reasons. Even if the company was and is of the opinion that Section 76 (4) AktG has no practical scope in this particular case due to the lack of management positions to be filled, the company had, purely as a precautionary measure for the period up to 30 September 2020 and currently maintains, by resolution of 10 September 2020 for the period up to 30 September 2025, 0 % as the target for the participation of women in management positions. At Deutsche Industrie REIT-AG, however, the decisive criterion for filling management positions is qualification and suitability, irrespective of gender.
The Supervisory Board
The central tasks of the Supervisory Board are to advise and monitor the Management Board. The five-member Supervisory Board of Deutsche Industrie REIT-AG works based on rules of procedure which it has given itself. Overall, the members of the Supervi-
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Deutsche Industrie REIT-AGCorporate Governance Report
sory Board have the knowledge, skills and professional experience required to properly perform their duties.
Proposals for resolutions and information on the subjects to be discussed are made available to the members of the Supervisory Board in good time before the respective meeting. By order of the Chairman of the Supervisory Board, resolutions may be passed outside meetings in individual cases. This option is occasionally used in urgent cases. In the event of a tied vote on resolutions, the Chairman of the Supervisory Board has the casting vote.
All members of the Supervisory Board are elected by the shareholders at the Annual General Meeting. There are currently no employee representatives on the Supervisory Board of Deutsche Industrie REIT-AG. In the opinion of the shareholder representatives on the Supervisory Board, all shareholder representatives are to be considered independent.
The Supervisory Board does not intend to set specific targets for its composition or to draw up a competence profile for the entire body. Nor is it intended to lay down rules on diversity in the objectives for the composition of the supervisory board. The company is of the opinion that professional qualifications and knowledge of the company are decisive as prerequisites for appointment, so that the aforementioned requirements are not conducive to achieving company objectives. For this reason, the company set 0 % as the target for the participation of women on the Supervisory Board for the period up to 30 September 2020. This target figure was achieved during the relevant period; since 6 March 2020, the actual level of female participation has been 40 %. By resolution of 10 September 2020, the Supervisory Board has now set 20% as the target figure for female participation on the Supervisory Board for the period until 30 Septem- ber 2025. This target figure is currently also being met.
The Supervisory Board of Deutsche Industrie REIT-AG currently consists of five persons: Mr Hans-Ulrich Sutter, Dr Dirk Markus, Mr Achim Betz, Ms Cathy Bell-Walker and Ms Antje Lubitz.
Hans-Ulrich Sutter is Chairman of the Supervisory Board, Dr Dirk Markus is the first vice Chairman and Achim Betz is the second vice Chairman. The term of office of all members of the Supervisory Board expires at the end of the Annual General Meeting that resolves on the discharge of the members of the Supervisory Board for the financial year ending on 30 September 2024.
The CV's of the members of the Supervisory Board are published at https://www.deutsche-industrie-reit.de/ en/ in the section "Company" under the menu item "Supervisory Board".
In view of its small number of members, the Supervisory Board has so far refrained from forming committees and therefore does not follow recommendations D.2, D.3, D.4 and D.5 DCKG. In view of the continuing low level of complexity and the transparent business model of Deutsche Industrie REIT-AG, it does not consider it necessary to form committees in the future either and continues to devote its full attention to the issues at hand.
In the past, no age limit was set. The company was of the opinion that the specification of an age limit was not appropriate, as the knowledge and experience of older persons should also be available to the company over a longer period of time in the context of Management Board and Supervisory Board activities. In addition, professional qualifications and knowledge of the company should be decisive as prerequisites for filling the position. By resolution of
10 September 2020, the Supervisory Board has now set an age limit of 80 years for the Supervisory Board.
The Chairman of the Supervisory Board explains the activities of the Supervisory Board in his annual report and verbally at the Annual General Meeting.
The Supervisory Board regularly assesses the effi ciency of its own performance of its duties during meetings held in person and by telephone. By resolution dated 10 September 2020, the Supervisory Board has now introduced a formalised self-assessment system, which will be applied in the current
16
Deutsche Industrie REIT-AG Annual report 2019/2020
financial year. It will report on the manner and results in the next declaration on corporate govern- ance.
A D&O insurance policy was taken out for the members of the DIR Supervisory Board in January 2018.
In accordance with the Articles of Association, the members of the Supervisory Board receive a fixed remuneration and reimbursement of cash expenses. Detailed information on the remuneration of the Supervisory Board is provided in the remuneration report in the management report 2019/2020.
The members of the Supervisory Board ensure that they have sufficient time to perform their duties. They are responsible for providing the necessary basic and advanced training. The company provides appropriate support to the members of the Super visory Board during their inauguration and training and further training. All members of the supervisory board are given access to specialist literature and are reimbursed for the costs of attending seminars and webinars in which topics relevant to the work of the supervisory board are covered.
Further details of the work of the Supervisory Board can be found in the Report of the Supervisory Board, which is part of the Annual Report 2019/2020.
Cooperation between Management Board and Supervisory Board
The Supervisory Board appoints the members of the Management Board, determines their respective total remuneration and monitors their management of the company. It also advises the Management Board on the management of the company. The Supervisory Board approves the annual financial statements. Major decisions made by the Management Board require the approval of the Supervisory Board.
The Management Board ensures regular, timely and comprehensive reporting to the Supervisory Board. In addition, the Chairman of the Supervisory Board is kept regularly and continuously informed about business developments. Intensive and continuous communication between the Management Board and the Supervisory Board is the basis for efficient corporate management.
The Management Board of Deutsche Industrie REIT-AG regularly attends the meetings of the Supervisory Board. It reports in writing and orally on the individual agenda items and draft resolutions and answers the questions of the Supervisory Board members. If necessary, the Supervisory Board also meets without the Management Board.
Conflicts of interest
Conflicts of interest of members of the Management Board and Supervisory Board must be disclosed to the Supervisory Board without delay. No conflicts of interest arose in the 2019/2020 financial year.
3. Essential corporate governance practices
Basic principles of compliance
Deutsche Industrie REIT-AG is committed to responsible management of the company with a focus on sustainable value creation. This includes cooperation in a spirit of trust between the Management Board and the Supervisory Board as well as between employees and a high level of transparency in reporting and corporate communications.
The main basis of Deutsche Industrie REIT-AG's business is to create, maintain and strengthen the trust of tenants, business partners, shareholders and other capital market participants and employees. Thus, compliance at DIR means not only adherence to legal principles and the Articles of Association, but also adherence to internal instructions and voluntary commitments to implement the values, principles, and rules of responsible corporate governance in daily operations.
Compliance management System
Currently, the DIR has only five employees (exclud- ing the Management Board). The Management Board therefore saw and still sees no need to draw up and disclose systems of measures in a formalised form for compliance management and a so-called "whistle blowing". In view of the size of the company, the cost of setting up, implementing, and maintaining formal- ised systems of measures has never been and is not in any reasonable proportion to the potential benefits.
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Deutsche Industrie REIT-AGCorporate Governance Report
Organisation and Controlling
Deutsche Industrie REIT-AG has its registered office in Germany and is therefore subject to the provisions of German stock corporation and capital market law and the provisions of the Articles of Association.
Deutsche Industrie REIT-AG manages the company primarily based on the following key figures: EBIT, FFO, LTV, EPRA NAV and cash flow. Sustainable economic, social, and ecological aspects are consid- ered.
Shareholders and Annual General Meeting
The shareholders of Deutsche Industrie REIT-AG exercise their rights before or during the Annual General Meetings to the extent permitted by law and the Articles of Association and exercise their voting rights. Each share grants one vote.
The Annual General Meeting is chaired by the Chairman of the Supervisory Board. Every shareholder is entitled to participate in the annual sharehold- ers' meeting, to speak on the respective items on the agenda and to request information on company matters, insofar as this is necessary for the proper assessment of an item on the agenda. The sharehold- ers' meeting decides on all tasks assigned to it by law.
Deutsche Industrie REIT-AG publishes the agenda of the annual general meeting and the reports and documents required for the annual general meeting on its website at: https://www.deutsche-Industrie.de/en/ in the section "Investor Relations" under the menu item "Annual General Meeting".
PICTURE:
Wedemark, Industriestraße
18
Deutsche Industrie REIT-AG Annual report 2019/2020
To make it easier for its shareholders to exercise their rights personally and to be represented by a proxy, the DIR appoints a representative to exercise voting rights in accordance with instructions. This representative can also be contacted during the Annual General Meeting.
The general meeting of shareholders takes place within the first eight months of each financial year.
The Annual General Meeting of Deutsche Industrie REIT-AG, which passed resolutions on the financial year ended 30 September 2019, was held in Berlin on 6 March 2020. The Annual General Meeting resolved to expand the Supervisory Board to five members and re-elected the previous Supervisory Board members Hans-Ulrich Sutter, Dr Dirk Markus and Achim Betz and elected Cathy Bell-Walker and Antje Lubitz as new members of the Supervisory Board.
It was also resolved to pay a dividend of EUR 0.16 per share for the 2018/2019 financial year.
Furthermore, the Management Board and Supervisory Board were approved for their term of office in the 2018/19 financial year. DOMUS AG Wirtschaftsprü- fungsgesellschaft/Steuerberatungsgesellschaft, Berlin, was elected as auditor for the 2019/20 financial year. In addition, various minor amendments to the Articles of Association were approved. New Author- ised Capital 2020 was created, and a resolution was passed on the creation of an authorisation to issue warrant-linked and/or convertible bonds with the option of excluding subscription rights.
Around 58 percent of the share capital was represented (share capital of the company at the time the Annual General Meeting was convened: EUR 29,163,187).
All the items on the agenda were approved by a large majority.
Stock option plans
Deutsche Industrie REIT-AG currently has no stock option programs or similar incentive systems.
Transparent reporting
Via its website, Deutsche Industrie REIT-AG ensures that shareholders and the interested public receive uniform, comprehensive, timely and simultaneous information on the economic situation and new facts. This information is available on the website at https://www.deutsche-Industrie-reit.de/en in the "Investor Relations" section.
Reporting on the financial performance and financial position is currently carried out in annual reports, quarterly announcements as well as in the half-yearly financial reports, which are available for download on the company's website. Significant current information is published via Corporate News and ad hoc announcements and is also made available on the company's website. In addition, transactions
by management personnel and related parties are publicly disclosed as "Directors' Dealings" in accordance with Article 19 MAR (Market Abuse Regulation) and are also available on the company's website.
In accordance with Art. 18 MAR, prescribed insider lists are maintained, and the persons included in insider lists have been and are being informed of the resulting legal obligations and sanctions.
Significant events and publication dates are maintained and published in the financial calendar, which can be viewed at any time on the company's website.
Accounting and Auditing
The annual financial statements of Deutsche Industrie REIT-AG are prepared in accordance with IFRS as applicable in the European Union. After preparation by the Management Board, the annual financial statements are examined and approved by the auditor and the Supervisory Board. The company aims to publish the annual financial statements within 90 days of the end of the financial year in accordance with the German Corporate Governance Code and to publish the mandatory financial information during the year (quarterly reports and the half-yearly financial report) within 45 days.
The annual general meeting of shareholders which passed a resolution on the financial year ended
30 September 2019, appointed DOMUS AG Wirtschaftsprüfungsgesellschaft Steuerberatungs- gesellschaft as auditor for the 2019/2020 financial year. DOMUS AG's audits comply with German auditing regulations as well as the principles of proper auditing laid down by the Institut der Wirtschaftsprüfer (Institute of Auditors) and the International Standards on Auditing. The chairman
Rostock, December 2020
For the Supervisory Board
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Deutsche Industrie REIT-AGCorporate Governance Report
of the supervisory board shall be informed immediately by the auditor of any reasons for exclusion or exemption and any inaccuracies in the declaration of compliance which arise during the audit. The auditor reports without delay to the Chairman of the Supervisory Board on all issues and incidents of importance to the duties of the Supervisory Board that arise during the audit and is obliged to inform the Supervisory Board immediately of any grounds for exclusion or impartiality that may arise.
Opportunity and risk management
A key element of corporate management is risk management to counter the risks to which Deutsche Industrie REIT-AG is exposed adequately and system- atically. A comprehensive process has been introduced to enable management to identify, assess and control risks and opportunities in good time. To this extent, unfavourable developments and events become transparent at an early stage and can be analysed and dealt with in a targeted manner. Further information on risk management is contained in the opportunities and risks report in the management report 2019/2020.
For the Management Board
Hans-Ulrich Sutter | Rolf Elgeti |
Chairman of the Supervisory | Chairman of the Management Board |
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Deutsche Industrie REIT-AG Annual report 2019/2020
Report of the Supervisory Board
Dear Shareholders,
In the 2019/2020 financial year, the Supervisory Board of Deutsche Industrie REIT-AG duly performed the duties incumbent on it under the law, the Articles of Association and the Rules of Procedure.
Cooperation between Supervisory Board and Management Board
The Supervisory Board continuously monitored and advised the Management Board in the management of the company. The Supervisory Board was directly involved in all decisions of fundamental importance to the company. The Board of Management fulfilled its duties to provide information and informed the Supervisory Board regularly, promptly and compre- hensively, both in writing and verbally, about corporate planning, the course of business, strategic developments, the current situation of the company and the current occupancy rates.
The members of the Supervisory Board always had ample opportunity to critically examine the Management Board's proposed resolutions and to make their own suggestions. In particular, the members of the supervisory board discussed in detail and checked the
plausibility of all business transactions of significance to the company on the basis of written and verbal reports from the management board. On several occasions the Supervisory Board dealt in detail with the risk exposure, liquidity planning and equity of the company. At the meeting for the balance sheet approval the Board of Management also reported to the Supervisory Board on the profitability of the company, and in particular on the return on equity. The Supervisory Board gave its approval for individual business transactions as required by law, the articles of association or the rules of procedure for the Board of Management.
The Company provides appropriate support to the members of the Supervisory Board during their inauguration and for training and further education meas- ures. All members of the Supervisory Board are given access to specialist literature and are reimbursed for the costs of attending seminars and webinars which include topics relevant to the work of the Supervisory Board.
Attendance of the Supervisory Board meetings
A total of nine meetings of the Supervisory Board were held in the period under review, of which two were face-to-face meetings, two were internet con ferences and five were telephone conferences. In addition, resolutions were passed by written proce- dure. Resolution proposals submitted by the Board of Management were approved following examination of extensive documentation and intensive discussions with the Board of Management. No committee meetings of the Supervisory Board took place in the period under review. If deemed necessary, the Supervisory Board may meet without the Management Board.
No member of the Supervisory Board attended fewer than half of the meetings. There were no conflicts of interest amongst the members of the Management Board or the Supervisory Board. Any conflicts must be disclosed to the Supervisory Board without delay.
21
Deutsche Industrie REIT-AG Report of the Supervisory Board
- The following overview shows the attendance of the members of the Supervisory Board at meetings in the 2019/2020 financial year:
Meeting | Hans-Ulrich | Dr. Dirk | Achim | Cathy | Antje | |
Sutter | Markus | Betz | Bell-Walker | Lubitz | ||
Chairman | First Deputy | Second Deputy | Member of | Member of | ||
of the Super | Chairman of the | Chairman of the | the Supervisory | the Supervisory | ||
Date | Species | visory Board | Supervisory Board | Supervisory Board | Board | Board |
since 06.03.2020 | since 06.03.2020 |
30/10/2019 | Conference Call | x | x | x | ||
07/11/2019 | Conference Call | x | x | x | ||
14/11/2019 | Conference Call | x | x | x | ||
17/12/2019 | Face-to-face meeting, | x | x | x | ||
Potsdam | ||||||
06/03/2020 | Face-to-face meeting, | x | x | x | x (by telephone) | x |
Berlin | ||||||
20/05/2020 | Internet Conference | x | x | x | x | x |
16/06/2020 | Conference Call | x | x | x | x | |
17/06/2020 | Conference Call | x | x | x | x | |
10/09/2020 | Internet Conference | x | x | x | x | x |
Key issues discussed by the Supervisory Board
The Supervisory Board's discussions at the individual meetings focused on the following key issues:
On 30 October 2019, the Supervisory Board approved the resolution put forward by the Board of Management on the same date to implement a capital increase with subscription rights against cash contri- butions. The subscription price was resolved on 7 November 2019 and the volume of this capital increase on 14 November 2020.
Meeting on 17 December 2019
- The auditor's report on the inspection of the annual financial statements for the 2018/2019 financial year and the audit of the dependency report
- Resolution on the approval of the audited finan- cial statements for the 2018/2019 financial year, the proposal for the distribution of profits and the audited dependency report
- Resolution on the Report of the Supervisory Board for the 2018/2019 financial year
- Resolution on the variable remuneration for the members of the Board of Management Sonja Petersen and René Bergmann for the financial year 2018/2019 and the setting of targets for the variable remuneration for the financial year 2019/2020.
- Discussions on the agenda for the Annual General Meeting on 6 March 2020
- Management Board report business developments, the portfolio and successful acquisitions, the financing and the acquisition pipeline
- Resolution to offer Mrs. Sonja Petersen a contract extension and appointment to the Management Board for a further three years.
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Deutsche Industrie REIT-AG Annual report 2019/2020
In accordance with the articles of association, the term of office of the previous members of the Supervisory Board ended at the end of the last Annual General Meeting. In accordance with the resolution of the Annual General Meeting on 6 March 2020, the Supervisory Board was expanded from three to five members. The previous members of the Supervisory Board, Mr. Hans-Ulrich Sutter, Dr. Dirk Markus and Mr. Achim Betz were re-elected to the Supervisory Board. Newly elected members are Ms Cathy Bell- Walker and Ms Antje Lubitz. The Supervisory Board was constituted on 6 March 2020, immediately after the Annual General Meeting. At the meeting,
Mr Hans-Ulrich Sutter was re-elected unanimously as Chairman. Dr. Dirk Markus was unanimously elected as first vice Chairman. Achim Betz was unanimously elected as second vice Chairman.
Meeting on 20 May 2020
- Report of the Management Board for the first half of 2019/2020
- Report of the Management Board on the effects of the Corona crisis
- Presentation of completed and planned acquisitions
- Information on the financial situation of the company
- Consultation on the Declaration of Compliance 2020 with the German Corporate Governance Codex and other corporate governance issues
On 16 June 2020, the Supervisory Board approved the resolution of the Board of Management to implement a capital increase with exclusion of subscription rights. On 17 June 2020, the Supervisory Board approved the volume and the Board of Management's pricing proposal for this capital increase.
Meeting on 10 September 2020
- Report by the Management Board on business developments, acquisitions and financing, and expectations regarding the development of the results for the financial year
- Resolution on targetting 20 % female represen tation on the Supervisory Board
- Resolution on setting a target of a one-third proportion of women on the Management Board
- Resolution on the setting of a standard age limit of 80 years for members of the Supervisory Board and Management Board
- Resolution on the adjustment of the rules of procedure of the Supervisory Board. The rules of procedure have since been published on the websitehttps://www.deutsche-industrie-reit.de/ in the Investor Relations/Corporate Governance section.
- Presentation of the 2020 draft statement in compliance with the German Corporate Govern- ance Codex and agreement to adopt it by circular resolution in October 2020
In addition, individual transactions requiring approval were approved by the Supervisory Board by circular resolution.
Corporate governance
The Management Board also reports on corporate governance at Deutsche Industrie REIT-AG on behalf of the Supervisory Board in the corporate governance declaration. This report is published on the compa- ny's website at https://www.deutsche-industrie-reit.de/ in the Investor Relations/Corporate Governance section and in the 2019/2020 Annual Report. The Management Board and the Supervisory Board
repeatedly discussed the recommendations and proposals from the German Corporate Governance Code and issued a declaration of compliance in accordance with section 161 of the German Stock Corporation Act (AktG) on 23 October 2020.
Annual audit
The annual financial statements for Deutsche Industrie REIT-AG as of 30 September 2020 prepared by the Management Board, together with the management report of the company, were audited by the auditor appointed at the Annual General Meeting on 6 March 2020 and reviewed by the Supervisory Board, DOMUS AG Wirtschaftsprüfungsgesellschaft/Steuer- beratungsgesellschaft, Berlin, and issued with an unqualified audit certificate.
23
Deutsche Industrie REIT-AG Report of the Supervisory Board
The annual financial statements for Deutsche Industrie REIT-AG and the management report of the company as well as the auditor's reports were made available to all members of the Supervisory Board in good time. The auditor attended the Supervisory Board meeting on the 16 December 2020 for the approval of the financial statements and reported on the key findings of their audit at this meeting. This included his comments on the internal control system and risk management in relation to the accounting process. He was also available to the members of the Supervisory Board for additional questions and information. After a detailed discussion, the Supervisory Board approved the results of the audit of the annual financial statements and the management report of the company.
PICTURE:
Hannover, Wiesenauer Straße
24
Deutsche Industrie REIT-AG Annual report 2019/2020
The Supervisory Board carefully examined the annual financial statements and the management report
of the company, the proposal for the appropriation of net profit and the audit reports of the auditor. No objections were raised. The Supervisory Board thereupon approved the annual financial statements prepared by the Board of Management for the year ended 30 September 2020. The annual financial statements were thereby finalised.
Assessment of the report of the Management Board on relations with affiliated companies (dependency report)
The Board of Management has prepared a report on relations with affiliated companies for the period of control in accordance with Article 312 of the German Stock Corporation Act and submitted it to the Supervisory Board. The report of the Board of Management on relations with affiliated companies was the subject of the audit by the auditors. The auditor issued the following opinion on the results of his audit:
"Based on our audit and assessment in accordance with professional standards, we confirm that
- the factual information in the report is correct
-
consideration paid by the company
for the legal transactions listed in the report was not inappropriately high."
The audit report was also submitted to the Supervisory Board. The Supervisory Board examined both the dependency report of the Board of Management and the audit report of the auditors, and the auditors participated in the Supervisory Board's negotiations on the dependency report and reported on the main findings of their audit. Following the final results of the review by the Supervisory Board, the Supervisory Board concurs with the dependency report of the Management Board and the audit report of the auditors and raises no objections to the final statement by the Management Board contained in the dependency report.
Personnel changes on the Management Board and Supervisory Boardt
There were no personnel changes in the Management Board in the period under review. The management contract of Ms. Sonja Petersen (née Paffendorf) was extended for a further three years until 17 Octo- ber 2023.
At the Annual General Meeting on 6 March 2020, the Supervisory Board was expanded to five members. Ms Cathy Bell-Walker and Ms Antje Lubitz were newly voted onto the Supervisory Board. Furthermore, the decision was made to allow the election of several vice chairman to the Supervisory Board.
At the constituent meeting of the Supervisory Board held after the Annual General Meeting, Mr Hans- Ulrich Sutter was confirmed as Chairman of the Supervisory Board. Dr. Dirk Markus was elected as first vice chairman and Achim Betz as second vice chairman. The term of office of all members of the Supervisory Board expires with the conclusion of the Annual General Meeting that resolves on the discharge of the members of the Supervisory Board for the financial year ending on 30 September 2024.
The Supervisory Board would like to thank the Board of Management and the employees for their commitment and hard work in the 2019/2020 financial year.
Rostock, December 2020
For the Supervisory Board
Hans-Ulrich Sutter
Chairman of the Supervisory Board
25
Deutsche Industrie REIT-AG Composition of the Management Board and Supervisory Board
Composition of the Management Board and Supervisory Board
Management Board
Sonja Petersen
CIO
Ms. Petersen is responsible for the areas of acquisition and sales as well as asset and property management
Rolf Elgeti
CEO
Mr. Elgeti is responsible for Human Resources, Public Relations and Strategy
René Bergmann
CFO
Mr. Bergmann is responsible for Corporate Finance, Accounting/ Controlling and Investor Relations
Supervisory Board
Hans-Ulrich Sutter | Dr. Dirk Markus | Achim Betz |
Chairman of the | First Deputy Chairman of | Second Deputy Chairman of |
Supervisory Board | the Supervisory Board | the Supervisory Board |
Business diploma, Düsseldorf | MBA | Business diploma |
CEO, Aurelius Group, London | Public accountant, Auditor, | |
Tax advisor, Nürtingen |
Cathy Bell-Walker | Antje Lubitz |
Solicitor | Real Estate Economist |
Partner, Allen & Overy LLP, | Managing Director |
London | 3PM Services GmbH, Berlin |
The CVs of the members of the Management Board and Supervisory Board are published under https://deutsche-industrie-reit.de/en/company/in the menu items "Management Board" respectively "Supervisory Board".
26
Deutsche Industrie REIT-AG Annual report 2019/2020
Deutsche Industrie as REIT
REIT is the abbreviation for "Real Estate Investment Trust". These are listed real estate corporations whose business purpose is long-term asset management and the sustainable achievement of rental income. As a result of their stock market listing, REITs have direct access to the capital markets and, therefore, so to speak, everlasting equity capital compared to real estate funds. In addition, real estate stocks represent a fungible investment vehicle for investors, enabling indirect real estate investments in various asset classes. Another key feature is the tax transparency of the REIT company, as no income tax is levied at company level and taxation at the investor level takes place downstream of the dividend distribution. In
this respect, a REIT investment is equated to a direct investment in real estate for tax purposes.
A REIT thus enables a broad spectrum of investors to participate indirectly in real estate via shares. In particular, retail investors can thus participate in various real estate classes for which a direct investment in a property would not be considered due to the volume, lump risk and management require- ments.
For decades, REITs have been characterised by high stability, profitability, dividend strength, and sustained appreciation, and have long been established
PICTURE:
Barleben, Im Hasenwinkel
in developed investment markets such as the US, Canada, UK, France, Belgium, Singapore, Hong Kong and Japan.
Essential prerequisites for becoming a REIT in Germany derive from the REIT Law of 2007 and include the following criteria:
- Minimum equity of the corporation of EUR 15 million,
- Listing in the regulated market of a German stock exchange
- At least 15 % free float in the shareholders,
27
Deutsche Industrie REIT-AG Deutsche Industrie as REIT
- Limitation of the direct participation of a single shareholder to 10 % of the share capital
- Minimum equity ratio of 45 %,
- Real estate assets of at least 75 % of total assets,
- Rental income of at least 75 % of total revenues,
- Minimum dividend distribution of 90 % of the annual financial result according to commercial law.
In this respect, the founding of a REIT already requires a certain minimum size and stability of the company. The German REIT criteria guarantee shareholders high quality right from the start.
Furthermore, the listing in the "Regulated Market" on a German stock exchange ensures the highest level of transparency. For example, there are regular disclosure requirements such as quarterly reporting in German and English and mandatory participation in analyst and investor events.
Finally, the tax exemption of a REIT stock company enables very streamlined and cost-effective management structures, as, e. g., no separate tax department or managing complex tax structures are required.
In this respect, DIR is an interesting, low-risk and attractive option on the capital market for investing in German Light Industrial properties.
28
Deutsche Industrie REIT-AG Annual report 2019/2020
The Acquisition Pipeline
It is the aim of the company to generate steady, sustainable and profit-oriented growth. This can be achieved with a balanced and regionally diversified real estate portfolio and with a focus on the German market.
DIR has a strong network and some longstanding relationships with potential sellers of Light Industrial real estate. As a result, the company receives a large number of attractive property offers. Mostly these assets are not sold through public auctions, but are only offered to a small audience or even exclusively.
For this reason, the acquisition process and the associated data management play a central role in the valuation of the properties as well as the basic market assessment. For this purpose, the acquisition team has developed and implemented its own efficient data collection for processing the offers. This extensive data allows the company to carry out systematic evaluations of the Light Industrial Real Estate market in Germany.
Structure of offers/Evaluation
In the FY 2019/2020, the Company received
525 property offers with a total purchase price volume of approximately 3,278 € million. To ensure the validity of the evaluation, duplicates and incomplete offers were adjusted for the overall result. Offers are only considered if they provide, the basic infor-
mation purchase price, rent and total floor space. The three classifications for the usage of the properties are: industrial park, logistics and production- & logistics, which are defined by the DIR as general categories.
Type | Offers | Percentage | Asking Price vol. in m€ | Area in m² |
Industrial Park | 60 | 15.7 % | 356.3 | 725,954 |
Logistics | 82 | 24.1 % | 545.5 | 834,541 |
Production & logistics | 197 | 60.2 % | 1,362.5 | 2,536,450 |
Total | 339 | 100.0 % | 2,264.3 | 4,096,945 |
The analysis shows an excess of offers of production | DIR was also able to make balanced investments in |
& logistics real estate (> 60 %), subject to the signifi- | industrial parks and logistics properties during the |
cant market share of German corporate real estate. | period under review. |
Despite the excess in offers for assets in production, |
29
Deutsche Industrie REIT-AG The Acquisition Pipeline
• Comparison of offers and DIR portfolio
15.7 %
27.4 % | ||||
Market | 41.1 % | DIR | ||
24.1 % | ||||
60.2 % | ||||
31.5 % | ||||
Industrial Park | Industrial Park | |||
Logistics | Logistics | |||
Production & logistics | Production & logistics | |||
Based on the adjusted data, statements on average | ||||
purchase prices and initial yields can be made which | ||||
help the company to evaluate its own purchase | ||||
criteria and acquisitions in the market context. | ||||
Type | Asking Price per m² | Yield | Multiple | |
Industrial Park | 491 | 7.1 % | 14.1 | |
Logistics | 654 | 6.6 % | 15.1 | |
Production & logistics | 537 | 7.1 % | 14.0 | |
Total | 553 | 7.0 % | 14.3 | |
The average price per square meter for Light Industrial properties is around 553 €/m², with an average initial yield of 7.0 %. DIR was able to buy at an average purchase price of 318 €/m² during the
financial year, around 42 % below market levels. The average initial yield of 10.7 % was around 35 % above the market yield.
• Asking price per m² | • Yield | ||
600 | 12 % | ||
500 | 553 | 10 % | |
400 | 8 % | ||
300 | 318 | 6 % | |
200 | 4 % | ||
100 | 2 % | ||
0 | Market | DIR | 0 % |
10.7 %
7.0 %
MarketDIR
30
Deutsche Industrie REIT-AG Annual report 2019/2020
Regional Allocation
Overall, the regional distribution of the data evaluation is comparable with that of the DIR portfolio. The company invests in Light Industrial real estate throughout Germany, with a propensity towards investments in the West and Southwest (North Rhine-Westphalia,Baden-Württemberg and Bavaria),
due to the strong local industrial sector. This obser vation can also be seen in the data analysis, in which the top 4 (North Rhine-Westphalia,Baden-Württem- berg, Lower Saxony, Bavaria), account for 68.7 % of the total volume, representing a significant share of offers.
Federal State | Offers | Percentage | Asking Price vol. in m€ | Multiple | Yield |
North Rhine-Westphalia | 91 | 23.9 % | 540.1 | 13.7 | 7.3 % |
Baden-Württemberg | 44 | 15.9 % | 359.2 | 13.5 | 7.4 % |
Lower Saxony | 43 | 15.6 % | 353.2 | 14.4 | 6.9 % |
Bavaria | 30 | 13.4 % | 303.9 | 13.8 | 7.2 % |
Hesse | 19 | 6.8 % | 153.5 | 15.5 | 6.5 % |
Saxony | 29 | 6.3 % | 141.9 | 15.5 | 6.5 % |
Rhineland-Palatinate | 16 | 3.5 % | 78.6 | 13.7 | 7.3 % |
Brandenburg | 15 | 3.0 % | 67.0 | 17.1 | 5.8 % |
Schleswig-Holstein | 9 | 2.5 % | 56.3 | 14.3 | 7.0 % |
Thuringia | 12 | 2.2 % | 50.1 | 12.7 | 7.9 % |
Saxony-Anhalt | 15 | 1.5 % | 33.3 | 12.1 | 8.3 % |
Mecklenburg-Western Pomerania | 2 | 0.4 % | 9.0 | 12.1 | 8.3 % |
Saarland | 1 | 0.1 % | 1.4 | 11.5 | 8.7 % |
Berlin | 5 | 2.9 % | 65.0 | 22.0 | 4.5 % |
Bremen | 6 | 1.4 % | 22.2 | 22.2 | 4.5 % |
Hamburg | 2 | 0.8 % | 18.7 | 19.0 | 5.3 % |
Total | 339 | 100.0 % | 2,264.3 | 14.3 | 7.0 % |
31
Deutsche Industrie REIT-AG The Acquisition Pipeline
7.0 %
5.3 %
4.5 %
6.9 %
8.3 %
4.5 %
7.9 %5.8 %
7.3 %
6.5 %
8.3 %
6.5 %
7.3 %
8.7 %
7.2 %
7.4 %
Among the most expensive regions are the city states of Berlin, Hamburg and Bremen, which have an average initial yield of less than five percent. This can be explained by the scarcity of offers in compari-
son to other regions and countries, while also maintaining similar rent levels to the rest of the properties in this asset class.
32
Deutsche Industrie REIT-AG Annual report 2019/2020
Acquisition Process
The acquisition process of the company is characterized by an opportunistic approach. Each offer goes through a structured analysis process in which opportunities and risks are weighed up and swift decisions on the attractiveness of the offer are made. Overall, DIR rejected 73 % of the total volume of offers because they did not meet the yield require- ments. The main reasons for this were excessively high purchase prices, major maintenance requirements and unsustainable rental conditions.
A total of 92 properties with a volume of 662 € million were shortlisted in the financial year. These properties had an average initial yield - based on the expected purchase price - of around 8.3 %. DIR's purchase price offers were around 24 % below the expected price, which led to the purchase of the
17 properties acquired in the fiscal year. The properties purchased have an average initial yield of 10.2 %.
The acquisition pipeline is still strong and the company expects to purchase further attractive assets and to therefore continue its portfolio growth in the future.
Total
total = 339 offers - 2,264 m€
minus rejected offers -73 %
closer selection = 92 offers - 662 m€
~8.3 % Initial yield/~462 €/m²
Offers made = 59 offers / 348 m€
Acquired = 17 Assets / 90 m€
PICTURE:
Düren, Kreuzauer Straße
34
Deutsche Industrie REIT-AG Annual report 2019/2020
The Real Estate Portfolio
Portfolio overview
Pro forma | ||||
30/09/2018 | 30/09/2019 | 30/09/2020 | 07/12/2020 | |
Properties | 22 | 49 | 69 | 77 |
Commercial units | 900 | 1,205 | 1,528 | 1,758 |
Total rental space in m² | 508,443 | 1,105,419 | 1,561,024 | 1,720,881 |
Commercial rental space in m² | 470,776 | 918,916 | 1,229,072 | 1,383,875 |
Annualised In place rent in € million | 16.1 | 33.1 | 44.5 | 49.8 |
Vacancy commercial | 84.9 % | 88.9 % | 85.1 % | 86.2 % |
Ocupancy commercial | 3.9 | 4.9 | 5.0 | 5.4 |
IPR commercial in €/m² | 3.23 | 3.34 | 3.47 | 3.41 |
Market value in € million | 167.0 | 391.8 | 565.0 | 617.5 |
Rental yield | 9.6 % | 8.5 % | 7.9 % | 8.1 % |
Our investment strategy
Deutsche Industrie REIT-AG invests sustainably in Light Industrial real estate across Germany. Light industry includes storage, distribution of goods as well as management and production. This asset class consists mostly of medium to large industrial and commercial estates. These properties are usually more sophisticated than pure logistics real estate and have a high local relevance.
The objective of the company is to generate constant, sustainable and profit-oriented revenue growth by means of further acquisitions, ongoing investments in the real estate portfolio and strategic asset and portfolio management. In strategic terms, the company invests in good micro-locations which are infrastructurally well-connected and have a high local relevancy. By undertaking these investments the company aims to occupy a niche which is situated below the investment criteria of institutional inves-
tors and above the investments undertaken by private investors.
As a result of the network of the corporate management and the completed transactions, Deutsche Industrie has close and in some cases long-standing relationships with potential sellers of Light Industrial properties. In most cases, these properties are not sold through public auctions, but are only offered to a small audience or even exclusively.
So far, properties have been acquired all over Germa- ny and it is intended to continue acquiring properties throughout Germany. There is no focus on specific regions. It is the companys belief that having an wide range of requirements has the advantage that lucrative properties can be acquired outside the usual Light Industrial locations.
35
Deutsche Industrie REIT-AG The Real Estate Portfolio
Growth and operational performance
In the 2019/2020 financial year, the transfer of ownership for 20 acquired commercial properties took place. The property portfolio, reported as of
30 September 2020, therefore comprises 69 properties with a total area of 1.2 million m². The weighted average lease term (WALT) is 5.0 years, with an annualised in place rent of € 44.5 million. The portfolio is balanced at € 585.8 million (Including IFRS-effect of € 20.8 milllion out of leaseholds).
In addition, purchase agreements were notarised for eight further properties with an investment volume of € 52.6 million for which the transfer of ownership took place or will take place after 30 September 2020.
Taking into account all properties acquired and sold to date, the total portfolio of Deutsche Industrie pro forma consists of 77 properties with an annualised total rent of around € 49.8 million and a portfolio value of approx. € 617.5 million.
90 % | 700 | |||||||
properties | Properties | €million | ||||||
80 % | GAV | 617.5 | ||||||
of | Annualised in place | 77 | 600 | |||||
No. | 565.0 | |||||||
70 % | ||||||||
69 | ||||||||
500 | ||||||||
60 % | ||||||||
50 % | 391.8 | 400 | ||||||
49 | 49.8 | |||||||
40 % | 44.5 | |||||||
300 | ||||||||
30 % | 33.1 | |||||||
200 | ||||||||
20 % | 22 | 167.0 | ||||||
10 % | 16.1 | 100 | ||||||
0 % | 0 | |||||||
30/09/18 | 30/09/19 | 30/09/20 | Proforma |
In addition to the growth in size, the key operating figures also developed well. In a comparison of the total portfolio as of the respective reporting date,
rents per m² of commercial space and the weighted average lease term increased as well as the occupancy rate improved significantly.
36
Deutsche Industrie REIT-AG Annual report 2019/2020
€/m² | 6.0 | 90 | in % | ||||
5.5 | 5.4 | 89 | Occupancy | ||||
5.0 | 88 | ||||||
4.9 | 5.0 | ||||||
4.5 | 4,4 | 87 | |||||
4.0 | 86 | ||||||
3.9 | |||||||
3.5 | 85 | ||||||
3.0 | 84 | ||||||
2.5 | 83 | ||||||
30/09/18 | 30/09/19 | 30/09/20 | Proforma |
WALT in years | IPR commercial | Occupancy commercial |
Regional allocation
The real estate portfolio is spread all over Germany with a focus on the more industrial south and west and due to proximity to the ports in the north of the country.
In the economically strong state of Baden-Wurttem- berg, we were able to grow significantly through the
acquisition of three additional properties. After North Rhine-Westphalia and Bavaria, the most important federal states for the company, Lower Saxony and Baden-Württemberg now follow in terms of rental income. In total, the portfolio is now spread across 69 locations in twelve federal states.
Federal State | Properties | Commercial space | Annualised rent | % of rent | |
North Rhine-Westphalia | 23 | 318,443 m² | 10.8 | Mio. € | 24.2 % |
Bavaria | 6 | 125,109 m² | 7.7 | Mio. € | 17.3 % |
Lower Saxony | 8 | 265,255 m² | 7.5 | Mio. € | 16.8 % |
Baden-Wurttemberg | 7 | 170,390 m² | 7.2 | Mio. € | 16.2 % |
Mecklenburg Western Pomerania | 7 | 119,742 m² | 3.3 | Mio. € | 7.4 % |
Brandenburg | 5 | 46,443 m² | 2.2 | Mio. € | 5.0 % |
Thuringia | 4 | 56,779 m² | 1.7 | Mio. € | 3.8 % |
Saxony-Anhalt | 5 | 43,611 m² | 1.5 | Mio. € | 3.5 % |
Rhineland Palatinate | 1 | 20,905 m² | 1.0 | Mio. € | 2.3 % |
Saarland | 1 | 44,084 m² | 0.9 | Mio. € | 2.1 % |
Bremen | 1 | 9,496 m² | 0.4 | Mio. € | 0.9 % |
Berlin | 1 | 8,816 m² | 0.2 | Mio. € | 0.5 % |
Total | 69 | 1,229,072 m² | 44.5 Mio. € | 100.0 % | |
28
24 | |||
24 | |||
2424 | 2424 | ||
24 | 24 | ||
24 | 2424 | 28 | |
24 | 28 | ||
24 24 | |||
24 | |||
24 |
28
28
24
24
37
Deutsche Industrie REIT-AG The Real Estate Portfolio
28
Balanced portfolio as of 30/09/2020 Properties with transfer after 30/09/2020
38
Deutsche Industrie REIT-AG Annual report 2019/2020
Types of use
Deutsche Industrie distinguishes between three types of property when it comes to the use of the respective objects:
Logistics: These are building complexes that have been designed for the distribution of goods and merchandise, with the appropriate technical equip- ment, high load capacities and, in most cases, access suitable for trucks at any time (24/7). These properties are typically used by single tenants or dominant main tenants, who generally operate nationwide.
Industrial parks: These usually consist of several different buildings, with various uses ranging from
storage to workshops, laboratories, offices and event areas. The tenant structure is small and fluctuations occur more regularly, the tenants also tend to be more locally active. This enables higher rents, but can also lead to longer marketing periods and higher vacancy rates.
Production and logistics: These properties are normally geared to a main production user and, in addition to the actual production areas, also consist of downstream warehouse/logistics, administrative and social areas. These properties, are also often let to a larger tenant with a typically longer lease term alongside additional smaller secondary users.
Type
Industrial park
Logistics
Production & logistics
Total
Properties | Total |
rental space |
- 378,703 m²
- 409,322 m²
33 772,998 m²
69 1,561,024 m²
Commercial | IPRp. m² | Occupancy | WALT | Annualised | % of rent | GAV | Yield |
rental space | commercial | rent | |||||
353,513 m² | 4.78 € | 72.4 % | 3.6 | 15.2 m€ | 34.2 % | 161.0 m€ | 9.4 % |
384,213 m² | 3.42 € | 84.3 % | 4.9 | 13.4 m€ | 30.1 % | 201.6 m€ | 6.6 % |
491,346 m² | 2.79 € | 94.9 % | 6.2 | 15.9 m€ | 35.7 % | 202.4 m€ | 7.8 % |
1,229,072 m² | 3.47 € | 85.1 % | 5.0 | 44.5 m€ | 100.0 % | 565.0 m€ | 7.9 % |
- Within the properties, the individual tenancy units consist of the following main types of use:
1 % | ||
11 % | ||
16 % | Types of use | 40 % |
by commercial | ||
space | ||
33 % |
493,721 m² | Logistics | larger areas, corresponding technical |
equipment | ||
404,693 m² | Production | small to medium-sized areas, more |
simple equipment | ||
190,620 m² | Office | mostly as simple administration or |
training rooms incl. corresponding | ||
social rooms | ||
131,946 m² | Storage | halls, workshops |
8,092 m² | Other commercial | e. g. open spaces, parking, antennas, |
space | etc. | |
1,229,072 m² | total |
Tenant structure
Weighted by the rental percentage of tenants in a property, the DIR classifies the rental structure of the tenant population per property location. The three specifications used are: Single tenant, dominating major tenant and a multiple tenant structure. The rental structure within the company's portfolio is diversified across all three types of tenants and is broken down as follows in proportion to the rent:
39
Deutsche Industrie REIT-AG The Real Estate Portfolio
34.5 % | |
Rebt by letting | 43.5 % |
structure | |
22.0 % | |
multi tenant | |
dominating major tenant | |
Single tenant |
Letting structure | Number of | Annualised rent | % of rent | IPR p. m² | Occupancy | WALT | |
properties | commercial | ||||||
multi tenant | 22 | 19.4 m€ | 43.5 % | 4.61 | € | 74.4 % | 3.8 |
dominating major tenant | 18 | 9.8 m€ | 22.0 % | 2.75 | € | 86.3 % | 4.5 |
single tenant | 29 | 15.3 m€ | 34.5 % | 3.06 | € | 95.3 % | 6.5 |
Total | 69 | 44.5 m€ | 100.0 % | 3.47 | € | 85.1 % | 5.0 |
Cyclicality
The tenants in the DIR portfolio are assigned to cyclicality types according to their economic sector or business segment. The company distinguishes between four different classifications, whose percentage of the total rent in the portfolio is as follows:
The company receives more than 40.0 % of its regular rental income from tenants in sectors that are hardly or only slightly exposed to economic fluctuations.
One example is Aenova/ Haupt Pharma from the pharmaceutical industry with a current portfolio rental percentage of 6.3 %. The heterogeneous orientation cyclical and non-cyclical tenants enables the company to operate a risk-minimising operative rental management and to ensure a stable rental return independent of expected economic fluctua- tions.
1.1 % | |
4.7 % | |
37.6 % | Cyclical by |
rent share | |
56.6 % |
cyclical
non-cyclical
public sector
private/ non commercial
40
Deutsche Industrie REIT-AG Annual report 2019/2020
Tenant mix
The 484 tenants belong to some 54 different sectors and are widely diversified in terms of their economic sector, geographical orientation, lease terms and usage profile. When purchasing new properties and negotiating new and follow-up leases, it is important to maintain and expand this diversity in order to avoid cluster risks and maintain a more crisis-proof tenant portfolio.
The ten largest tenants represent less than 34 % of the rent, the other tenants representing more than 66 % are rather small and widely spread. This has the advantage of highly solvent tenants from economically strong sectors on the one hand while on the other hand leaving the potential for rent increases in the more fluctuating part of the portfolio.
Tenant | Sector | % of rent |
Aenova / Haupt Pharma | Pharmaceutical Industry | 6.3 % |
Versandhaus Walz GmbH, Baby Walz | Online/Mail order seller | 5.8 % |
Lufthansa Group | Aerospace company | 3.8 % |
Gabo Stahl GmbH | Metalworking | 3.5 % |
DST Defence Service Tracks GmbH | Defence industry | 3.4 % |
Bundesanstalt für Immobilienaufgaben | German Armed Forces / public sector | 2.8 % |
Sihl GmbH | Printable materials | 2.7 % |
CompAir / Gardner Denver | Compressed air systems | 2.3 % |
Veenendaal Schaumstoffwerk GmbH | Foam products | 2.0 % |
Zwilling J.A. Henckels AG | Metalworking | 2.0 % |
Top Ten Tenants | 34.5 % | |
Top Twenty Tenants | 484 Mieter insgesamt | 49.3 % |
The weighted average lease term is 5.0 years and is divided between contracts with remaining terms of two to four years - typically many tenants in business parks - and longer terms of more than five years, mostly in production and logistics with a lower number of tenants.
41
Deutsche Industrie REIT-AG The Real Estate Portfolio
12.7 m€
5.9 m€ | |||||||||||||||||||
5.5 m€ | |||||||||||||||||||
4.9 m€ | |||||||||||||||||||
4.6 m€ | |||||||||||||||||||
4.1 m€ | |||||||||||||||||||
3.4 m€ | |||||||||||||||||||
3.3 m€ | |||||||||||||||||||
up to1 year | up to 2 years | up to 3 years | up to 4 years | up to 5 years | 5 to 10 years | > 10 years | no fixed |
expiration |
Property valuation
As of 30 June 2020, the annual property valuation of the portfolio was carried out by an external appraiser.
The result was a significant revaluation of € 37.0 million. Therefore, the value of the balanced portfolio now amounts to € 585.8 million (including € 20.8 million IFRS adjustments for leasehold rights).
The reasons for the increase are mainly higher market prices, especially in logistics, as well as higher market rents and operational enhancements (vacancy reduction, rent increases and contract extensions) in the portfolio.
- The valuation results as of 30/09/2020 for the various types of use are as follows:
Type | Fair Value | Fair Value per m² | Valuation change | Valuation change to | Yield |
in m€ | commercial space | purchase price | |||
Industrial park | 161.0 | 455.5 | 8.2 % | 28.3 % | 9.4 % |
Logistics | 201.6 | 524.6 | 12.7 % | 36.9 % | 6.6 % |
Production & logistics | 202.4 | 411.9 | 9.6 % | 21.6 % | 7.8 % |
Total | 565.0 | 459.7 | 10.3 % | 28.6 % | 7.9 % |
The property valuation for this financial year was again carried out by the CBRE GmbH Berlin.
42
Deutsche Industrie REIT-AG Annual report 2019/2020
CapEx / maintenance
The planning and implementation of any CapEx measures, such as maintenance and upgrades, is carried out using a bottom-up approach. This enables the company to allocate financial resources directly and in a targeted and demand-oriented manner. The portfolio-wide management and monitoring of all CapEx measures is the responsibility of the commissioned asset management in consultation with the company. The planning and monitoring of the necessary measures implemented in this way enables targeted portfolio maintenance and safeguarding of the desired total return.
In line with the investment strategy, all purchase decisions are also examined for possible CapEx requirements prior to a purchase. Once these measures are determined, they are incorporated into the expected return of the acquisition decision and the negotiations with the seller party.
PICTURE:
Wesel, Schepersweg
43
Deutsche Industrie REIT-AG The Real Estate Portfolio
44
Deutsche Industrie REIT-AG Annual report 2019/2020
The portfolio - property by property
Properties | Type | No. of | Total rental | Commercial rental | |
commercial units | space in m² | space in m² | |||
1 | Neubrandenburg, Augustastraße 30 | Production & logistics | 26 | 56,513 | 36,243 |
2 | Güstrow, Glasewitzer Chaussee 31 | Production & logistics | 1 | 15,274 | 6,130 |
3 | Bad Salzdetfurth, Teccenter 1 | Industrial park | 136 | 52,857 | 48,606 |
4 | Löhne, Dieselstraße 7-9 | Logistics | 3 | 46,967 | 46,967 |
5 | Schortens TCN, Olympiastraße 1 | Industrial park | 174 | 98,066 | 95,955 |
6 | Rostock, Handelsstraße 3 | Logistics | 111 | 39,023 | 38,459 |
7 | Bornheim, Ottostraße 91 | Logistics | 3 | 9,057 | 9,057 |
8 | Drei Gleichen, Dr. Bube Str. 6 | Logistics | 1 | 24,004 | 24,004 |
9 | Wuppertal, Am Brögel 1A - 23 | Industrial park | 65 | 10,109 | 9,251 |
10 | Remscheid, Kippdorfstraße 6 - 24 | Industrial park | 191 | 27,021 | 26,594 |
11 | Neustadt-Glewe, Brauereistraße 30 - 35 | Production & logistics | 5 | 11,081 | 10,932 |
12 | Dortmund, Hannöversche Straße 22 | Industrial park | 40 | 24,776 | 20,777 |
13 | Bochum, Kantstraße 10, 18-20 | Industrial park | 10 | 3,272 | 3,272 |
14 | Witten, Rüsbergstr. 70 | Industrial park | 35 | 11,304 | 7,887 |
15 | Ronnenberg, Berliner Str. 1-3 | Production & logistics | 5 | 31,099 | 30,099 |
16 | Elchingen, Dieselstraße 10 | Production & logistics | 1 | 7,690 | 3,258 |
17 | Lichtenfels, Bamberger Str. 58-60 | Production & logistics | 1 | 28,404 | 16,356 |
18 | Meschede, Am Steinbach 8 | Industrial park | 4 | 6,563 | 6,563 |
19 | Hattingen, Hufeisenstraße 6-8 | Industrial park | 5 | 2,580 | 2,580 |
20 | Meerbusch, Fritz-Wendt-Str. 5 | Logistics | 4 | 13,380 | 13,380 |
21 | Wildau, Chaussestraße 3 | Logistics | 89 | 16,808 | 14,307 |
22 | Fehrbellin, An der Plantage 15 | Logistics | 1 | 2,700 | 1,400 |
23 | Schleiz, Industriestraße 11 | Production & logistics | 1 | 5,929 | 5,929 |
24 | Bremen, Am Heidbergstift 6 | Production & logistics | 14 | 9,903 | 9,496 |
25 | Schortens II, Roffhausener Landstraße | Logistics | 29 | 29,909 | 29,909 |
18c | |||||
45
Deutsche Industrie REIT-AG The Real Estate Portfolio
Annualised In place | Ocupancy | WALT in years | IPR commercial | Current market | Yield | Quarter of |
rent in m€ | commercial | in €/m² | value m€ | transfer | ||
0.7 | 98.0 % | 6.7 | 1.57 | 6.3 | 10.7 % | Q1-2015 |
0.1 | 100.0 % | 10.5 | 1.22 | 0.8 | 11.4 % | Q1-2016 |
1.7 | 74.9 % | 1.4 | 3.76 | 14.8 | 11.5 % | Q1-2017 |
1.6 | 100.0 % | 5.8 | 2.76 | 21.7 | 7.2 % | Q2-2017 |
3.6 | 61.0 % | 3.4 | 5.04 | 43.3 | 8.4 % | Q1-2017/2018 |
1.1 | 96.6 % | 5.7 | 2.43 | 15.2 | 7.3 % | Q1-2017/2018 |
0.3 | 100.0 % | 3.3 | 3.02 | 6.1 | 5.5 % | Q1-2017/2018 |
0.6 | 100.0 % | 2.7 | 2.08 | 7.2 | 8.3 % | Q2-2017/2018 |
0.4 | 76.7 % | 1.6 | 4.56 | 6.2 | 6.7 % | Q3-2017/2018 |
0.9 | 82.9 % | 0.5 | 3.59 | 10.7 | 8.9 % | Q3-2017/2018 |
0.3 | 100.0 % | 3.4 | 1.99 | 2.4 | 10.9 % | Q2-2017/2018 |
0.8 | 84.7 % | 3.4 | 3.50 | 9.0 | 8.6 % | Q3-2017/2018 |
0.2 | 100.0 % | 6.4 | 5.04 | 2.9 | 7.2 % | Q3-2017/2018 |
0.4 | 91.1 % | 3.2 | 3.65 | 4.0 | 9.3 % | Q3-2017/2018 |
0.8 | 89.7 % | 1.4 | 2.50 | 10.1 | 8.2 % | Q4-2017/2018 |
0.2 | 100.0 % | 8.3 | 4.29 | 3.1 | 5.4 % | Q3-2017/2018 |
0.9 | 100.0 % | 8.3 | 4.57 | 10.4 | 8.6 % | Q3-2017/2018 |
0.2 | 100.0 % | 0.5 | 2.46 | 2.3 | 8.6 % | Q3-2017/2018 |
0.1 | 100.0 % | 2.0 | 3.85 | 1.6 | 7.5 % | Q4-2017/2018 |
0.2 | 19.8 % | 3.3 | 7.61 | 9.5 | 2.5 % | Q4-2017/2018 |
1.0 | 96.2 % | 0.9 | 6.24 | 14.5 | 7.1 % | Q4-2017/2018 |
0.1 | 100.0 % | 1.1 | 4.29 | 1.1 | 7.8 % | Q2-2018/2019 |
0.2 | 100.0 % | 4.9 | 3.20 | 2.9 | 8.0 % | Q1-2018/2019 |
0.4 | 100.0 % | 3.3 | 3.68 | 5.3 | 7.9 % | Q1-2018/2019 |
0.2 | 29.3 % | 0.3 | 1.44 | 2.3 | 6.6 % | Q1-2018/2019 |
46
Deutsche Industrie REIT-AG Annual report 2019/2020
Properties | Type | No. of | Total rental | Commercial rental | |
commercial units | space in m² | space in m² | |||
26 | Wismar, Am Westhafen 1-3c | Production & logistics | 15 | 11,873 | 5,812 |
27 | Simmern, Argenthaler Str. 11 | Production & logistics | 6 | 127,517 | 20,905 |
28 | Schwerin, Werkstraße 710 - 714, 717 - 721 | Industrial park | 16 | 19,451 | 19,451 |
29 | Berlin, Gradestraße, Britzer Damm | Production & logistics | 7 | 10,034 | 8,816 |
30 | Münster, Schleebrüggenkamp 15 | Production & logistics | 1 | 2,889 | 2,889 |
31 | Regensburg, Donaustaufer Straße 378 | Production & logistics | 19 | 19,699 | 19,699 |
32 | Wolfsratshausen, Pfaffenriederstraße 5 | Production & logistics | 4 | 30,267 | 30,267 |
u. 7 | |||||
33 | Dinslaken, Thyssenstraße 93 | Production & logistics | 38 | 4,768 | 3,259 |
34 | Solingen, Nümmener Feld 10 | Logistics | 23 | 25,847 | 24,852 |
35 | Bad Waldsee, Steinstraße 28 | Logistics | 3 | 46,350 | 46,350 |
36 | Zella-Mehlis, Am Köhlersgehäu 6 | Production & logistics | 9 | 30,901 | 19,391 |
37 | Schortens III, Roffhausener Landstraße 18c | Production & logistics | 11 | 3,719 | 3,612 |
38 | Duisburg, Eisenbahnstraße | Production & logistics | 8 | 16,221 | 16,221 |
39 | Halberstadt, Am Sülzegraben 17 | Production & logistics | 2 | 1,500 | 1,500 |
40 | Remscheid, Rosentalstraße 22 | Production & logistics | 1 | 16,245 | 16,245 |
41 | Remscheid, Víeringhausen 118 | Production & logistics | 1 | 35,490 | 11,933 |
42 | Freisen, Industriegelände | Production & logistics | 1 | 44,084 | 44,084 |
43 | Essingen, Streichhoffeld 1 u. 3 | Logistics | 16 | 32,809 | 32,809 |
44 | Aalen, Ulmer Straße 82-84 | Production & logistics | 8 | 9,711 | 9,711 |
45 | Rosengarten, Neue Str. 1 | Production & logistics | 32 | 20,368 | 20,368 |
46 | Dortmund, Westfaliastraße 187 | Logistics | 3 | 3,508 | 3,508 |
47 | Barleben, Im Hasenwinkel 5 | Production & logistics | 2 | 35,411 | 10,400 |
48 | Eschenbach, Gossenstraße 51 | Production & logistics | 3 | 6,834 | 6,510 |
49 | Bad Oeynhausen, Unterer Sundern 11 | Logistics | 9 | 12,773 | 12,773 |
49 | Properties with transfer before 01/10/2019 | 1,193 | 1,152,557 | 908,775 | |
47
Deutsche Industrie REIT-AG The Real Estate Portfolio
Annualised In place | Ocupancy | WALT in years | IPR commercial | Current market | Yield | Quarter of |
rent in m€ | commercial | in €/m² | value m€ | transfer | ||
0.3 | 95.9 % | 2.7 | 2.84 | 3.9 | 8.1 % | Q1-2018/2019 |
1.0 | 100.0 % | 6.8 | 4.16 | 14.0 | 7.5 % | Q1-2018/2019 |
0.7 | 100.0 % | 4.0 | 2.84 | 7.2 | 9.3 % | Q2-2018/2019 |
0.2 | 89.7 % | 2.3 | 2.39 | 5.5 | 4.2 % | Q2-2018/2019 |
0.1 | 100.0 % | 3.3 | 3.81 | 1.9 | 7.1 % | Q2-2018/2019 |
0.7 | 100.0 % | 3.3 | 2.75 | 8.2 | 8.1 % | Q2-2018/2019 |
1.8 | 100.0 % | 3.3 | 4.93 | 24.4 | 7.3 % | Q2-2018/2019 |
0.1 | 67.7 % | 1.6 | 3.54 | 1.5 | 6.8 % | Q2-2018/2019 |
1.0 | 96.2 % | 2.7 | 3.65 | 16.5 | 6.3 % | Q1-2018/2019 |
2.6 | 100.0 % | 8.3 | 4.60 | 33.5 | 7.6 % | Q2-2018/2019 |
0.6 | 98.4 % | 6.7 | 2.61 | 7.6 | 8.1 % | Q3-2018/2019 |
0.0 | 40.5 % | 1.8 | 1.68 | 0.3 | 10.1 % | Q2-2018/2019 |
0.5 | 100.0 % | 8.3 | 2.57 | 7.4 | 6.8 % | Q2-2018/2019 |
0.0 | 100.0 % | 7.3 | 2.33 | 0.4 | 9.9 % | Q3-2018/2019 |
0.3 | 100.0 % | 4.3 | 1.63 | 5.4 | 5.9 % | Q4-2018/2019 |
0.2 | 100.0 % | 4.3 | 1.64 | 4.2 | 5.5 % | Q4-2018/2019 |
0.9 | 100.0 % | 4.3 | 1.79 | 13.2 | 7.2 % | Q4-2018/2019 |
1.6 | 100.0 % | 5.3 | 3.92 | 20.8 | 7.5 % | Q3-2018/2019 |
1.1 | 100.0 % | 7.9 | 9.41 | 9.4 | 11.7 % | Q3-2018/2019 |
0.4 | 100.0 % | 0.0 | 1.73 | 4.5 | 9.4 % | Q3-2018/2019 |
0.2 | 100.0 % | 1.3 | 5.71 | 3.1 | 7.8 % | Q4-2018/2019 |
0.5 | 100.0 % | 8.8 | 4.13 | 6.5 | 7.9 % | Q4-2018/2019 |
0.3 | 100.0 % | 8.3 | 3.42 | 3.6 | 7.3 % | Q4-2018/2019 |
0.4 | 100.0 % | 3.8 | 2.55 | 4.0 | 9.9 % | Q4-2018/2019 |
32.8 | 88.6 % | 4.6 | 3.34 | 420.7 | 7.8 % | |
48
Deutsche Industrie REIT-AG Annual report 2019/2020
Properties | Type | No. of | Total rental | Commercial rental | |
commercial units | space in m² | space in m² | |||
50 | Schwerin, Grevesmühlener Str. 18a | Logistics | 2 | 7,715 | 2,715 |
51 | Düren, Kreuzauer Str. 33 | Production & logistics | 2 | 77,111 | 40,850 |
52 | Linthe, Kampaweg 1 | Logistics | 46 | 10,165 | 9,541 |
53 | Altlandsberg, Seeberger Str. 10 | Logistics | 2 | 11,534 | 8,053 |
(Hönower Chaussee 1) | |||||
54 | Westhausen, Dr.-Rudolf-Schieber-Str. 11, | Industrial park | 63 | 16,295 | 15,880 |
13, 15 | |||||
55 | Hannover, Wiesenauer Straße 11, 13 | Industrial park | 18 | 27,572 | 24,396 |
56 | Bocholt, Hindenburgstr. 19, Kaiser- | Logistics | 4 | 12,900 | 12,692 |
Wilhelm-Str. 39, 41, 42 | |||||
57 | Unna, Heinrich-Hertz-Str. 14, 18 | Industrial park | 18 | 6,869 | 6,693 |
58 | Löbichau, Leedenstraße 3 | Logistics | 1 | 17,891 | 7,455 |
59 | Wesel, Schepersweg 41-61 | Industrial park | 18 | 22,273 | 16,590 |
60 | Kloster Lehnin, Damsdorfer Hauptstraße | Logistics | 3 | 13,142 | 13,142 |
36B | |||||
61 | Dinslaken, Lanterstr. 34 | Production & logistics | 1 | 22,243 | 3,610 |
62 | Wedemark, Industriestraße 44 | Logistics | 15 | 20,637 | 20,637 |
63 | Oberding, Lohstraße 22-28a | Industrial park | 118 | 49,695 | 49,019 |
64 | Mönchweiler, Am Fohrenwald 1 | Production & logistics | 10 | 29,093 | 29,093 |
65 | Osterwieck Lüttgenröder Str. 4 | Production & logistics | 1 | 6,993 | 6,993 |
66 | Hude, Heinrich-Dreyer-Str. 1 | Production & logistics | 6 | 15,441 | 12,041 |
67 | Oebisfelde, Lunapark 2 | Production & logistics | 4 | 12,515 | 12,515 |
68 | Stegelitz, Dammfeld 6 | Logistics | 2 | 12,203 | 12,203 |
69 | Lauda-Königshofen, Bahnhofstraße | Production & logistics | 1 | 16,179 | 16,179 |
70 u. 100 | |||||
20 | Properties with transfer 01/10/2019 until | 335 | 408,467 | 320,297 | |
30/09/2020 | |||||
69 | Portfolio as of 30/09/2020 | 1,528 | 1,561,024 | 1,229,072 | |
49
Deutsche Industrie REIT-AG The Real Estate Portfolio
Annualised In place | Ocupancy | WALT in years | IPR commercial | Current market | Yield | Quarter of |
rent in m€ | commercial | in €/m² | value m€ | transfer | ||
0.2 | 100.0 % | 3.3 | 4.77 | 2.0 | 7.9 % | Q1-2019/2020 |
1.2 | 100.0 % | 14.0 | 2.33 | 12.1 | 9.9 % | Q1-2019/2020 |
0.1 | 47.7 % | 0.3 | 2.00 | 3.2 | 4.2 % | Q1-2019/2020 |
0.5 | 100.0 % | 3.2 | 5.12 | 8.0 | 6.2 % | Q1-2019/2020 |
0.7 | 71.9 % | 1.8 | 5.20 | 9.5 | 7.7 % | Q1-2019/2020 |
0.8 | 72.9 % | 2.0 | 3.61 | 12.4 | 6.8 % | Q1-2019/2020 |
0.6 | 100.0 % | 8.6 | 3.95 | 9.0 | 6.7 % | Q1-2019/2020 |
0.6 | 99.8 % | 2.3 | 7.10 | 6.6 | 9.1 % | Q2-2019/2020 |
0.2 | 100.0 % | 3.8 | 2.68 | 2.9 | 8.2 % | Q2-2019/2020 |
0.1 | 5.2 % | 5.3 | 3.90 | 7.1 | 1.0 % | Q1-2019/2020 |
0.5 | 100.0 % | 0.0 | 2.88 | 3.3 | 13.7 % | Q2-2019/2020 |
0.2 | 100.0 % | 4.1 | 3.66 | 2.0 | 8.4 % | Q1-2019/2020 |
0.0 | 0.0 % | 0.0 | 0.00 | 13.3 | 0.0 % | Q2-2019/2020 |
3.9 | 78.2 % | 6.5 | 8.35 | 23.5 | 16.7 % | Q3-2019/2020 |
0.4 | 45.5 % | 4.0 | 2.73 | 11.4 | 3.8 % | Q3-2019/2020 |
0.3 | 100.0 % | 9.8 | 4.00 | 3.1 | 11.0 % | Q4-2019/2020 |
0.3 | 94.4 % | 4.8 | 2.06 | 3.7 | 7.6 % | Q4-2019/2020 |
0.2 | 100.0 % | 2.9 | 1.60 | 2.6 | 9.3 % | Q4-2019/2020 |
0.4 | 100.0 % | 1.3 | 2.78 | 4.3 | 9.4 % | Q4-2019/2020 |
0.4 | 100.0 % | 9.8 | 2.01 | 4.3 | 9.0 % | Q4-2019/2020 |
11.7 | 75.1 % | 6.1 | 3.94 | 144.3 | 8.1 % | |
44.5 | 85.1 % | 5.0 | 3.47 | 565.0 | 7.9 % | |
50
Deutsche Industrie REIT-AG Annual report 2019/2020
Properties | Type | No. of | Total rental | Commercial rental | |
commercial units | space in m² | space in m² | |||
70 | Euskirchen, Adolf-Halstrick-Str. 6 | Production & logistics | 57 | 41,987 | 39,445 |
71 | Oschersleben, Anderslebener Straße 159 | Logistics | 3 | 15,000 | 15,000 |
72 | Grünsfeld, Industriestraße 2 u. 6 | Production & logistics | 2 | 3,244 | 3,244 |
73 | Bielefeld, Gustav-Winkler-Str. 17 | Logistics | 4 | 12,655 | 12,655 |
74 | Metzingen, James-Watt-Str. 9 | Logistics | 34 | 16,676 | 16,352 |
75 | Sembach, Junkersstr. 10 | Industrial park | 15 | 12,263 | 10,963 |
76 | Gevelsberg, Mühlenstr. 5, 29-31 | Industrial park | 111 | 25,627 | 24,739 |
77 | Gevelsberg, Kölner Straße 64 | Production & logistics | 4 | 32,406 | 32,406 |
8 | Properties with transfer after 30/09/2020 | 230 | 159,857 | 154,803 | |
69 | Portfolio as of 30/09/2020 | 1,528 | 1,561,024 | 1,229,072 | |
77 | Proforma Portfolio | 1,758 | 1,720,881 | 1,383,875 | |
PICTURE:
Löbichau, Leedenstraße
51
Deutsche Industrie REIT-AG The Real Estate Portfolio
Annualised In place | Ocupancy | WALT in years | IPR commercial | Current market | Yield | Quarter of |
rent in m€ | commercial | in €/m² | value m€ | transfer | ||
1.2 | 100.0 % | 10.0 | 2.38 | 10.5 | 11.5 % | Q1-2020/2021 |
0.4 | 100.0 % | 1.3 | 2.10 | 3.0 | 12.6 % | Q1-2020/2021 |
0.2 | 100.0 % | 0.0 | 4.78 | 1.2 | 16.2 % | Q1-2020/2021 |
0.4 | 89.1 % | 4.3 | 2.66 | 3.6 | 10.0 % | Q1-2020/2021 |
0.5 | 93.5 % | 8.3 | 2.66 | 5.5 | 9.4 % | n.n. |
0.4 | 95.6 % | 12.8 | 3.39 | 4.8 | 9.1 % | n.n. |
0.7 | 79.4 % | 4.5 | 2.79 | 7.0 | 10.3 % | n.n. |
1.5 | 100.0 % | 10.3 | 3.92 | 17.0 | 9.0 % | n.n. |
5.3 | 94.8 % | 8.6 | 2.92 | 52.6 | 10.1 % | |
44.5 | 85.1 % | 5.0 | 3.47 | 565.0 | 7.9 % | |
49.8 | 86.2 % | 5.4 | 3.41 | 617.5 | 8.1 % | |
52
Deutsche Industrie REIT-AG Annual report 2019/2020
Key figures according to EPRA
The European Public Real Estate Association EPRA
EPRA is a non-profit organisation based in Brussels that represents the interests of the European real estate industry and has developed standardised ratios that ensure a high level of comparability between real estate companies. Since June 2018, DIR has been a full member of EPRA and publishes the EPRA key figures according to Best Practice Recommendations (BPR) for the first time since the 2017/2018 financial year.
For the 2018/2019 financial year, DIR received the EPRA BPR Bronze Award for the first time for the EPRA reporting in its annual report.
For the financial year 2019/2020 the EPRA KPIs of DIR are as follows:
EPRA Earnings
The EPRA Earnings represent the result from the ongoing property management. Valuation effects and proceeds from disposals are not considered.
TEUR | 2019/2020 | 2018/2019 |
Period result | 50,820.5 | 48,671.9 |
- Valuation Result | -36,981.7 | -37,552.1 |
- Sale result | 0.0 | -57.0 |
EPRA Earnings | 13,838.9 | 11,062.8 |
EPRA Earnings per share, EUR | 0.47 | 0.51 |
TEUR | 2019/2020 | 2018/2019 |
Market value of investment properties | 585,918.7 | 392,849.0 |
+ Transaction costs | 37,805.0 | 28,169.8 |
Gross market value of investment | 623,624.7 | 421,018.8 |
properties | ||
Annualised rental income | 44,476.5 | 33,141.0 |
- Non-recoverable management | -8,895.3 | -6,628.2 |
costs | ||
Annualised net rental income | 35,581.2 | 26,512.8 |
+ Rent-free periods | 0.0 | 0.0 |
Annualised "Topped-up" net | 35,581.2 | 26,512.8 |
rental income |
EPRA net initial yield (EPRA NIY) and
EPRA "Topped-up" NIY
The EPRA initial net return is the annualised annual rent less non-recoverable management costs in
relation to the current portfolio value and, thus, represents the current portfolio return.
EPRA "Topped-up" NIY includes temporarily existing tenant incentives e.g. rent-free periods. Currently there are no material rent-free incentives at DIR.
EPRA initial net yield | 5.7 % | 6.3 % |
EPRA "Topped-up" NIY | 5,7 % | 6.3 % |
EPRA cost ratio
The EPRA cost ratios relate the current property- specific management expenses as well as the
administrativeand management expenses to the
rental income and, therefore, show the cost burden of the management platform in relation to the rentalincome.
TEUR | 2019/2020 | 2018/2019 |
Expenses from property management | -9,495.7 | -4,530.8 |
+ Personnel expenses | -854.2 | -808.3 |
+ Other recurring operating expenses | -1,958.4 | -1,161.7 |
- Other income | 175.6 | 373.7 |
EPRA costs A incl. direct vacancy costs | -12,132.6 | -6,127.0 |
- direct vacancy costs | -1,273.4 | -454.1 |
EPRA costs B excl. direct vacancy costs | -13,406.0 | -6,581.1 |
Rental income | 40,781.3 | 25,481.2 |
EPRA cost ratio A | 29.8 % | 24.0 % |
EPRA cost ratio B | 32.9 % | 25.8 % |
EPRA vacancy rate
In contrast to pure vacancy, the EPRA vacancy rate reflects the economic vacancy based on the market rent of the vacant space in relation to the total rent of the portfolio at the balance sheet date. The estimated underlying market rents result from the real estate appraisals of the external and independent appraiser CBRE GmbH, Berlin. The increase of EPRA vacancy rate mainly results from a higher portion of vacant space in the portfolio which can be let at (higher) market rents.
TEUR | 30/09/2020 | 30/09/2019 |
Estimated Rental Value of vacant | 5,927.5 | 2,329.8 |
space | ||
Estimated rental value of the whole | 45,645.6 | 34,346.1 |
portfolio | ||
EPRA vacancy rate | 13.0 % | 6.8 % |
53
Deutsche Industrie REIT-AG Key figures according to EPRA
Like-for-Like portfolio
From a like-for-like perspective which means without the inclusion of acquisitions or disposals within the last financial year, the key figures of the property portfolio developed as follows:
TEUR | 30/09/2020 | 30/09/2019 | Diffe- |
rence | |||
Net rent / m2/ per month | 3.34 | 3.34 | -0.1 % |
Vacancy (%) | 11.4 % | 11.1 | 2.2 % |
WALT (years) | 4.6 | 4.9 | - 7.0 % |
EPRA NAV / EPRA NNNAV
The EPRA NAV represents the long-term value of the Company as at the balance sheet date. In this respect, short-term valuation effects of financial instruments from hedging relationships or deferred tax effects are not taken into account and eliminated from equity.
The EPRA NAV per share (undiluted) as of 30 September 2020 is as follows:
TEUR | 30/09/2020 | 30/09/2019 |
Equity | 377,200.0 | 181,463.2 |
NAV | 377,200.0 | 181,463.2 |
Fair value of financial derivatives | -491.4 | 0.0 |
EPRA NAV | 376,708.6 | 181,463.2 |
No. of shares | 32,079,505 | 23,451,945 |
EPRA NAV per share | 11.74 | 7.74 |
The so-called EPRA NNNAV, on the other hand,
depicts the short-term intrinsic value of the Company by disclosing hidden reserves and burdens and
includes the shortterm valuation effects such as from interest hedges and deferred taxes.
The EPRA NNNAV is intended to represent the current net asset value of a real estate company, taking into account current market values for assets and liabilities.
54
Deutsche Industrie REIT-AG Annual report 2019/2020
The EPRA NNNAV per share on 30 September 2020 is as follows:
TEUR | 30/09/2020 | 30/09/2019 |
EPRA NAV | 376,708.6 | 181,463.2 |
Fair value of financial instruments | 491.4 | 0.0 |
Deferred tax | 0.0 | 0.0 |
EPRA NNNAV | 377,200.0 | 181,463.2 |
EPRA NNNAV per share, EUR | 11.76 | 7.74 |
New EPRA-NAV reporting standard
EPRA-NRV
The EPRA-Net Reinstatement Value (EPRA NRV) is part of the new EPRA reporting standard for the EPRA NAV. It aims to clarify the long-term net asset value of the portfolio. The EPRA-NRV is calculated by adjusting assets and liabilities for which no sustained increase in value is expected under normal circumstan- ces, such as deferred taxes on valuation gains or the market-related change in financial derivatives. Again,
costs which would be necessary to rebuild the company on the basis of its current financing and capital structure, such as acquisition costs or real estate transfer tax, are included in the key figure.
EPRA-NTA
EPRA Net Tangible Asset (EPRA-NTA) is based on the assumption that a company buys and sells properties, which is why deferred tax liabilities can be realised.
EPRA-NDV
It is in the interest of a company's shareholders to consider all liabilities in their entirety and the resulting company value in the event that company assets are sold and/or existing liabilities are not held until their maturity. The EPRA net disposal value (EP- RA-NDV) is a key figure that provides information about the full amount of taxes, financial instruments and certain adjustments that are calculated on the basis of their liability, including the tax risk not shown in the balance sheet, after deduction of all resulting taxes. The EPRA-NDV should not be considered as a kind of "liquidation NAV", as the underlying fair values in many cases do not represent liquidation values as such.
TEUR | 2019/2020 | 2018/2019 | |||||||
EPRA-NAV | EPRA- NRV | EPRA-NTA | EPRA-NDV | EPRA-NAV | EPRA- NRV | EPRA-NTA | EPRA-NDV | ||
IFRS Equity attributable to | 377,200.0 | 377,200.0 | 377,200.0 | 377,200.0 | 181,463.2 | 181,463.2 | 181,463.2 | 181,463.2 | |
shareholders | |||||||||
Number of shares outstanding | 32,079,505 | 32,079,505 | 32,079,505 | 32,079,505 | 23,451,945 | 23,451,945 | 23,451,945 | 23,451,945 | |
Undiluted NAV per share | 11.76 € | 11.76 € | 11.76 € | 11.76 € | 7.74 € | 7.74 € | 7.74 € | 7.74 € | |
minus fair value of financial | -491.4 | 0.0 | |||||||
derivatives | |||||||||
undiluted EPRA-NAV | 376,708.6 | 181,463.2 | |||||||
undiluted EPRA NAV per | 11.74 € | 7.74 € | |||||||
share | |||||||||
Include / Exclude | |||||||||
I) Hybrid instruments | 8,736.0 | 8,736.0 | 8,736.0 | 8,736.0 | 1040.0 | 1040.0 | 1040.0 | 1040.0 | |
Interest expense for | 832 | 208 | |||||||
convertible bond | |||||||||
Valuation result for | 7,904 | 832 | |||||||
convertible bond | |||||||||
55
Deutsche Industrie REIT-AG Key figures according to EPRA
TEUR | 2019/2020 | 2018/2019 | ||||||
EPRA-NAV | EPRA- NRV | EPRA-NTA | EPRA-NDV | EPRA-NAV | EPRA- NRV | EPRA-NTA | EPRA-NDV | |
Diluted NAV | 385,936.0 | 385,936.0 | 385,936.0 | 385,936.0 | 182,503.2 | 182,503.2 | 182,503.2 | 182,503.2 |
Include: | ||||||||
II. a) Revaluation of IP (if IAS | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||
40 cost option is used) | ||||||||
II. b) Revaluation of IPUC (if IAS | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||
40 cost option is used) | ||||||||
II. c) Revaluation of other | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||
non-current investments | ||||||||
III.) Revaluation of tenant | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||
leases held as finance leases | ||||||||
IV.) Revaluation of trading | 0.0 | 0.0 | 0.0 | 57.0 | 57.0 | 57.0 | ||
properties | ||||||||
Diluted NAV at Fair Value | 385,936.0 | 385,936.0 | 385,936.0 | 385,936.0 | 182,503.2 | 182,560.2 | 182,560.2 | 182,560.2 |
Exclude: | ||||||||
V) Deferred tax in relation to | 0.0 | 0.0 | 0.0 | 0.0 | ||||
fair value gains of IP | ||||||||
VI) Fair value of financial | -491.4 | -491.4 | 0.0 | 0.0 | ||||
instruments | ||||||||
VII) Goodwill as a result of | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||
deferred tax | ||||||||
VIII. a) Goodwill as per the IFRS | 0.0 | 0.0 | 0.0 | 0.0 | ||||
balance sheet | ||||||||
VIII. b) Intangibles as per the | -3.4 | -1.8 | ||||||
IFRS balance sheet | ||||||||
Include:
IX) Fair value of fixed interest rate debt
- Revaluation of intangibles to fair value
XI) Real estate transfer tax
0.0 | 0.0 | ||
0.0 | 0.0 | ||
0.0 | 0.0 | 0.0 | 0.0 |
NAV | 385,936.0 | 385,444.6 | 385,441.2 | 385,936.0 | 182,503.2 | 182,560.2 | 182,558.5 | 182,560.2 |
potential convertible shares | 2,266,165.0 | 2,266,165.0 | 2,266,165.0 | 2,266,165.0 | 2,248,648.0 | 2,248,648.0 | 2,248,648.0 | 2,248,648.0 |
Fully diluted number of | 34,345,670.0 | 34,345,670.0 | 34,345,670.0 | 34,345,670.0 | 25,700,593.0 | 25,700,593.0 | 25,700,593.0 | 25,700,593.0 |
shares | ||||||||
NAV per share | 11.24 € | 11.22 € | 11.22 € | 11.24 € | 7.10 € | 7.10 € | 7.10 € | 7.10 € |
Management Report
1. | Fundamentals of the | 3. | Opportunities and Risk Report | ||
Deutsche Industrie REIT-AG | 58 | and Forecast Report | 70 | ||
1.1 | Business model and strategy | 58 | 3.1 | Opportunities and Risk Report | 70 |
1.2 | Structure and controlling system | 59 | 3.2 | Forecast report | 79 |
1.3 | Research and Development | 59 | |||
4. | Remuneration report | 80 | |||
2. | Economic report | 60 | 5. | Dependency report | |
2.1 | Macroeconomic development | 60 | and overall assessment | 83 | |
2.2 | Development of the German Light | 6. | Information relevant for takeovers | 84 | |
Industrial real estate market | 61 | 7. | Statement on Corporate Governance | 86 | |
2.3 | Business performance | 62 | |||
2.4 | Financial position, liquidity and | PICTURE: | |||
financial performance | 65 | Schwerin, Grevesmühlener Str. | |||
58
Deutsche Industrie REIT-AG Annual report 2019/2020
1. Fundamentals of the Deutsche Industrie REIT-AG
1.1 Business model and strategy
Deutsche Industrie REIT-AG ("Deutsche Industrie", "DIR" or the "Company") was founded as Jägersteig Beteiligungs GmbH in November 2014. In October 2017, it was renamed Deutsche Industrie Grundbesitz AG. At the beginning of 2018, the status of a REIT ("Real Estate Investment Trust") was obtained with the associated income tax exemption. Since then the company has been called Deutsche Industrie REIT-AG.
The share has been listed on the regulated market of the Berlin Stock Exchange since 7 December 2017. Since 19 December 2018, the share has also been listed in the sub-segment of the regulated market with additional post-admission obligations (Prime Standard) on the Frankfurt Stock Exchange and thus also in
XETRA.
The company's business activities focus on the acquisition, leasing, management, and sale of Light Industrial real estate in Germany. "Light Industrial" is a generic term for many different types of industrial operations and includes not only the activities of storage and distribution of commercial goods but also their administration and production. Light Industrial real estate" is therefore typically commercial yards, logistics real estate (warehouses, transhipment halls, distribution halls and special warehouses) or industrial real estate, which is used by commercial users in most cases for storage, packaging or as smaller production facilities.
The company's goal is to generate steady, sustainable, and profit-oriented earnings growth through further acquisitions, ongoing investments in the property portfolio and strategic asset and property manage- ment. The company intends to invest throughout Germany with a focus on good micro-locations. In addition, the Company intends to take advantage of the favourable financing terms currently available on the market to finance further property acquisitions.
The Company intends to achieve its strategic goals with the following measures:
- Acquisition of further Light Industrial real estate with potential for value enhancement.
- Exploitation of available upside potential through rent increases, new lettings, and revitalisation of properties.
- Active, strategic portfolio management to expand and improve the real estate portfolio and the ongoing review of existing properties regarding their added value within the overall portfolio.
- Benefit from the advantages of the status as a REIT-AG.
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Deutsche Industrie REIT-AG Fundamentals of the Deutsche Industrie REIT-AG
1.2 Structure and controlling system
Under company law, DIR consists of a corporation that holds and accounts for all real estate. This and the REIT status enable the company to have particularly lean administrative structures. In addition, the existing network, the management's many years of experience and the lean structures help to achieve a high purchasing speed, which is advantageous in transaction processes.
The largest shareholder of DIR is currently Obotritia Capital KGaA ("Obotritia") with its personally liable partner Rolf Elgeti, which together with its subsidiaries held around 29.7% of the shares on 30 September 2020. DIR uses Obotritia's business premises and IT infrastructure and, to some extent, its staff, which is passed on to the company on a pro rata basis via a levy. DIR is obliged to prepare a dependency report for the period as a subsidiary of Obotritia KGaA in accordance with Section 312 of the German Stock Corporation Act (AktG).
The DIR is managed based on financial indicators such as initial yield (annualised net cold rent divided by purchase price), FFO (Funds From Operations), aFFO (adjusted Funds From Operations), LTV (Loan To Value) and EPRA NAV (EPRA Net Asset Value). The
key performance indicator is the FFO. The calculations for LTV, EPRA-NAV, FFO and aFFO can be found in the tables contained in "2.4 Financial position, liquidity, and financial performance" for the respective key figures.
Non-financial control parameters of DIR are the annualised net cold rent, the occupancy rate, and the Weighted Average Lease Term (WALT) at individual property level and at the overall portfolio level. Due to the acquisition of properties with higher vacancy rates and short remaining lease terms in line with the business model, these non-financial indicators are subject to significant fluctuations.
DIR also has planning instruments such as corporate planning and rolling liquidity planning, which are used to control operational business development.
1.3 Research and development
As part of its business purpose, DIR does not carry out research and development activities and is not dependent on licences and patents.
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2. Economic report
2.1 Macroeconomic development
Due to the weakness in industry and global trade, the global economic upturn slowed down towards the end of 2019.1 Global economic activity came to an abrupt, albeit temporary, halt as a result of the COVID-19 pandemic and also resulting in lockdowns in many parts of the world. According to an economic forecast published in September 2020 by the Kiel Institute for the World Economy (IfW), economic performance in the first half of 2020 fell by almost 10 % overall as a result of this exogenous shock: After an initial decline of 3 % in the first quarter of 2020, global production plunged by a further 7 % in the second quarter of 2020. After the lifting of the strict lockdowns in May 2020, a phase of recovery set in again by late summer 2020, leading to high global economic growth rate expectations for the third quarter of 2020.2
The COVID-19 pandemic also affected the German economy. The German economy had been just about to get back on track following the downturn in the previous year.3 According to the Federal Statistical Office (Destatis), gross domestic product (GDP) in the second quarter of 2020 was down 9.7 % on the first quarter of 2020 (adjusted for price, seasonal and calendar effects). The slump in the German economy was therefore much sharper than during the financial market and economic crisis of 2008/2009 (-4.7 %
in the first quarter of 2009) and thus the sharpest decline since quarterly GDP calculations for Germany began in 1970. In the first quarter of 2020 the
German economy had already contracted by -2.0 %. Economic output had remained unchanged in the fourth quarter of 2019 and in the third quarter of 2019, GDP had still risen by 0.3 %.4
According to the Bundesbank, following the collapse in economic output in the first half of 2020 almost everywhere in the world, economic activity began to recover in the beginning of the second half of the year. Since an easing of the containment measures had been implemented at the end of April 2020, a certain normalisation had occurred in many coun- tries. Nevertheless, there would still be a great danger of setbacks in the further course of the pandemic. The economic consequences of the corona pandemic and the extensive measures to contain it had also dominated events on the international financial markets in spring and summer 2020.5
According to lfW, gross domestic product can be expected to decline by 5.5 % in the current year and rise by 4.8 % in the coming year.6
The interest rate level in the eurozone remains at a historic low. On 16 March 2016, the European Central Bank (ECB) cut the key interest rate by 5 basis points, bringing the main refinancing rate to 0.00 %.7 This means that real estate companies such as Deutsche Industrie REIT-AG, which finance their portfolios to a large extent by borrowing, continue to enjoy fundamentally favourable conditions for financing their investments.
- Kiel Economic Report No. 61 (2019/Q4) of 11 December 2019: World Economy. Winter 2019, page 2.
- Kiel Economic Report No. 69 (2020/Q3) of 16 September 2020: World Economy. Autumn 2020, page 3.
- Kiel Economic Report No. 65 (2020/Q1) of 11 March 2020: German Economy. Spring 2020, page 3.
- Press Release Destatis of 25 August 2020.
- Deutsche Bundesbank: Monthly Report. August 2020, pages 7-8, 10.
- Kiel Economic Report. No. 71 (2020/Q3) of 16 September 2020: German Economy in Autumn 2020, page 3.
- www.finanzen.net/leitzins/, last reviewed on 19. Oktober 2020.
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2.2 Development of the German Light Industrial real estate market
The company specializes in the acquisition, rental, management and sale of Light Industrial real estate, which can be divided primarily into commercial yards, logistics real estate (warehouses, handling halls, distribution halls and special warehouses) and industrial real estate, which is used by commercial users in most cases for storage, packaging or as smaller production facilities. The market of Light Industrial real estate in Germany, thus defined by the company, is dominated by the submarket of logistics real estate, which is therefore also of major importance to the company's business activities. Therefore, the market for logistics real estate will be described in the following.
The last survey on the turnover of the European logistics market for 2018 was estimated at 1,120 € billion (approx. +6.7 % compared to the previous year), forecasts predict a slight increase to 1,150 € billion (approx. +2.7 % compared to 2018).8 With a reported volume of around 279 € billion or 24.8 percent, Germany will probably again account for one of the largest shares in 2019.9 For the year 2018, the total volume of logistics services in Germany was distributed relatively evenly, with around 51 % of the total volume being provided by external logistics service providers. The remaining volume of approx. 49 % was provided internally by logistics services from industry, trade, etc.10 Apart from the geographically advantageous location in the centre of Europe
with an extensive freeway and rail network and a continuing leading international position despite the current pandemic, the development of the logistics market as a whole continues to be favoured by the continuing German export surplus.11
In 2019, the share of employees in the manufacturing sector of the industrial sectors excluding construction was around 8.36 million.12 Incoming orders in the industrial sector excluding construction fell by around 5.8 % compared with the previous year, while price-adjusted gross domestic product also declined slightly by around 0.6 % in the same period compared with the previous year's higher growth rate of around 1.3 %.13
Domestic consumer spending, which has a direct and indirect impact on logistics and production revenues, rose to around 1,755.65 € billion in 2019, an increase of around 2.9 % year-on-year.14 Financial assets of private households increased by approx. 7.7 % and the debt ratio by approx. 4.6 % in the same period.15 The dispatch of goods and parcels by courier, express and parcel services (CEP) have recorded a steep increase in consignment volumes and revenues in recent years. Despite the slight economic downturn and declining deliveries in the B2B business, a consignment volume increase of about 3.8 % and a revenue increase of about 4.4 % is reported for 2019 due to the continued steady growth of the B2C market.16 In line with previous years, online trade sales repeatedly exceeded the previous year's result and grew by approx. 11.6 % to around 72.6 € billion
- "Market volume of the logistics markets in Europe in the years 2008 to 2018", available on 27 November 2020 available at https://de.statista.com/statistik/daten/ studie/204132/umfrage/volumen-des-logistikmarktes-in-europa published by Statista GmbH
- "Logistics Revenues and Employment ", available on 28 October 2020, available at https://www.bvl.de/service/zahlen-daten-fakten/umsatz-und-beschaeftigung, published by the Federal Association for Logistics (BVL) e.V.
- "Logistics 2020 - Structure and Value Shifts as a Challenge" available October 2020, published by Prof. Do. Christian Kille and Markus Meißner, p.16
- "German Exports in 2019: +0,8 % for the year 2018", available on 27 October 2020, available at https://www.destatis.de/DE/Presse/Pressemitteilungen/2020/02/ PD20_039_51.html#:~:text=Allerdings%20verlor%20das%20Wachstum%20im,104%2C1%20Milliarden%20Euro%20importiert, published by Statista GmbH
- "Number of People Employed in the Economic Sector in Germany in the Year 2019", available on 27 October 2020, available at https://de.statista.com/statistik/ daten/studie/1248/umfrage/anzahl-der-erwerbstaetigen-in-deutschland-nach-wirtschaftsbereichen/, published by Statista GmbH
- "Deutsche Bundesbank - The German Economy at a glance ", available on 27 October 2020, available at https://www.bundesbank.de/resource/ blob/810556/6cd4b11347fbcb91f13707d10db97ba6/mL/000-tabelle-deutsche-wirtschaft-data.pdf, published by Deutsche Bundesbank
- " Private Consumer Spending and Available Income, supplement to subject-matter series 18 - 2. quarter 2020" published on 10 October 2020 by the Statistical Bundesamt, p. 7
- "Deutsche Bundesbank - The German Economy at a Glance", available on 27 October 2020, available at https://www.bundesbank.de/resource/ blob/810556/6cd4b11347fbcb91f13707d10db97ba6/mL/000-tabelle-deutsche-wirtschaft-data.pdf, published by Deutsche Bundesbank
- "KEP Study 2019" published in June 2020 by the Federal Association of Parcel and Express Logistics, p.19
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Deutsche Industrie REIT-AG Annual report 2019/2020
in 2019. A further increase in sales of approx. 9.2 % was already recorded for the first half of 2020.1718 In line with this sales trend, the B2C CEP market also experienced a further increase in the first half of 2020, with a growth forecast of 3.5 % to 7.0 % for 2020.19 In order to cope with the rise in private consumption and the subsequent increase in deliveries of goods as well as the emerging rethinking of the entire supply chain, additional logistics space is likely to be increasingly required nationwide in the coming years.
In 2019, the German market for warehouse and logistics space achieved a turnover of approx. 6.9 million square meters, a drop of only approx. 7 % on the previous all-time record year 2018.20 By contrast, the overall result for the first three quarters of 2020 was
5.02 million square meters, only 5.0 % down from the previous year. For 2020, the sub-market for warehouse and logistics space is expected to achieve a result of at least 6.0 million square meters and thus once again an end-of-year result above the ten-year average.21
However, one of the most important trends for the company in the future continues to be the steady demand on the investment market for German commercial real estate, which reached a historic high of around 70.8 € billion last year.22 Despite the effects of the corona pandemic, the investment volume in the current year 2020 only declined moderately.23 In the first three quarters of 2020, a new all-time high was recorded in the submarket segment of industrial and logistics real estate with a transaction volume of approx. 5.0 € billion.24 From the company's point of view, the existing demand will continue and possibly increase further due to the continuation of the
historically low interest rate level, the high demand for commercial real estate by international investors and the continued stable economic situation in Germany.
The market share of industrial and logistics real estate sales in the first three quarters of 2020 was also slightly higher than in the previous year, at approx. 12 % of the total commercial real estate investment market.25 The currently still high price level coupled with the economic impact of the pandemic could ultimately lead to a situation in which in 2020 real estate owners will have to increasingly consider selling their properties.
2.3 Business performance
Development of the real estate portfolio
The real estate portfolio continued to grow in the 2019/2020 financial year due to acquisitions. On
1 October 2019, the portfolio comprised 49 properties with a rentable commercial area of approx. 0.91 million m² and an annualised net cold rent of 33.1 € million. There was a transfer of ownership of 20 acquired properties. The property portfolio as of
30 September 2020 thus comprises 69 properties with a rentable commercial area of approx. 1.2 million m² and annualised net cold rent of 44.5 € million.
For the period under review the occupancy rate is 85.1 % (30 September 2019: 88.9 %) and the WALT of the portfolio is 5.0 years (30 September 2019:
4.9 years).
17 "https://www.bevh.org/presse/pressemitteilungen/details/vielbesteller-treiben-e-commerce-umsatz-in-2019-auf-neuen-hoechststand.html#:~:text=Im%20 vierten%20Quartal%202019%20hat,erreichte%20mit%2022%2C3%20Mrd.>. (10/27/20)
18 "E-Commerce growth of 9.2% in the first half of 2020 - Permanently more E-Commerce for "Daily Needs"" available on 27 October 2020, available athttps:// www.bevh.org/presse/pressemitteilungen/details/e-commerce-plus-von-92-prozent-im-1-halbjahr-2020-dauerhaft-mehr-e-commerce-beim-taeglichen-beda.html, published by the Federal Association for E-Commerce and Mail Order Sales in Germany
- "KEP Study 2020" published in June 2020 by the Federal Association of Parcel and Express Logistics, p.23
- "Property Report 2020 - Logistics Market in Germany" available on 27 October 2020, available at https://www.realestate.bnpparibas.de/marktberichte/ logistikmarkt/deutschland-property-report, published by BNP Paribus Real Estate Holding GmbH
- BNP Paribas Real Estate Holding GmbH. "At a Glance Q3 2020 - Logistics Market in Germany" available on 27 October 2020, available at https://www.realestate. bnpparibas.de/marktberichte/logistikmarkt/deutschland-at-a-glance, published by BNP Paribus Real Estate Holding GmbH
- "German Investment Market" published in January 2020 by Savills Property Consulting GmbH, p.1
- "Investment Q1 3 | 2020 | Germany" published in 2020 by Colliers German International GmbH, p.1
- "Logistics Investment Q3 | 2020 | Deutschland" published 2020 by Colliers German International GmbH, p.1
- "Investment Q1-3 | 2020 | Deutschland", published in 2020 by Colliers International Deutschland GmbH, p.1
Increase in value of the real estate portfolio
The annual property valuation of the portfolio was carried out by an external expert on 30 June 2020.
Taking incidental acquisition costs and subsequent construction costs (capex) into account, the valuation result was 37.0 € million.
Accordingly, the portfolio shown in the balance sheet now has a value of 585.8 € million (including IFRS adjustments for ground leases in the amount of
20.8 € million, of which 19.4 € million is attributable to Oberding). The value enhancement is mainly due to further increases in market prices, particularly in the logistics sector, as well as stable and further increasing market rents and operational impro- vements in the portfolio.
The property valuation was again carried out by CBRE GmbH, Berlin, this financial year.
Successful capital increases
In November 2019, the company implemented a capital increase. A total of approx. 5.7 million shares were placed at a price of 16.25 € per share, generating gross proceeds of approx. 92.8 € million. In addition to existing shareholders, half of the new shareholders participated in this capital measure. After deducting
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the costs of raising equity capital of 1.3 € million, net proceeds of 91.5 € million remained.
In June 2020, the company successfully carried out a capital increase from the authorised capital 2020/I. A total of approx. 2.9 million new bearer shares were placed in a private placement by way of an accelerated book building procedure at a price of 20.00 € per new share. The company's share capital thus increased from 29,163,187.00 € to 32,079,505.00 €. The statutory subscription rights of the company's shareholders were excluded.
The company received gross issue proceeds of 58.3 € million from the capital increase. Until these funds were used to finance acquisitions, liquid funds were invested as part of short-term financial planning.
Financing activities
In the past financial year 2019/2020, Deutsche Industrie concluded a total of eleven loan agreements with various savings banks and cooperative banks in the amount of 63.2 € million, which were also paid out in this financial year. The loans were secured, as is customary in the market, by first-ranking land charges and the assignment of rent and lease payment claims.
Initial | Loan | Contractual | Contractual | ||
Lender | nominal | fixed interest | Refinanced properties | ||
interest rate | term (years) | ||||
(TEUR) | rate (years) | ||||
Kreissparkasse Ostalb | 1.47 %* | 9,000 | 6 | 6 | Essingen |
Kreissparkasse Ostalb | 1.75 %* | 4,000 | 9 | 9 | Aalen |
Kreissparkasse Ostalb | 1.75 %* | 4,500 | 9 | 9 | Westhausen |
Sparkasse UnnaKamen | 1.55 % | 3,900 | 17.5 | 10 | Dortmund und Unna |
Sparkasse Düren | 1.45 % | 8,000 | 17.5 | 10 | Düren |
Berliner Sparkasse | 1.46 % | 4,000 | 10 | 10 | Altlandsberg |
Berliner Volksbank | 1.10 % | 4,100 | 18 | 10 | Bocholt |
Berliner Volksbank | 1.10 % | 6,400 | 18 | 10 | Hannover |
Kreissparkasse St. Wendel | 1.50 % | 9,240 | 14.8 | 10 | Remscheid und Freisen |
Sparkasse Hildesheim Goslar Peine | 0.97 %* | 8,670 | 10 | 10 | Barleben, Osterwieck Oebisfelde, Stegelitz |
Landessparkasse zu Oldenburg | 1.20 % | 1,410 | 10 | 10 | Hude |
Total | 1.27 % | 63,220 | 12.7 | 9 |
*synthetic fixed interest rate (SWAP)
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Deutsche Industrie REIT-AG Annual report 2019/2020
In addition, two loans with a volume of TEUR 4,400 were paid out in the 2019/2020 financial year, which were already concluded in the 2018/2019 financial year but are to be balanced in 2019/2020.
In addition, DIR has taken out an unsecured borro- wer's note loan in the amount of TEUR 10,000.0. The loan has a term of five years with an interest rate to be determined biannually, initially 2.25 % p. a.
Annual General Meeting
The company's Annual General Meeting was held in Berlin on 6 March 2020.
By resolution of the Annual General Meeting, the Supervisory Board was expanded from three to five members. Ms. Cathy Bell-Walker and Ms. Antje Lubitz became new members and the previous members Hans-Ulrich Sutter, Dr Dirk Markus and Achim Betz were re-elected to the Board. In addition, the Articles of Association were amended so that several Vice Chairmen of the Supervisory Board can also be appointed.
At the constituent meeting of the Supervisory Board, which took place after the Annual General Meeting, Mr. Hans-Ulrich Sutter was re-elected Chairman of the Supervisory Board. Dr Dirk Markus was elected First Vice Chairman and Achim Betz Second Vice Chairman.
The Annual General Meeting approved the payment of a dividend of 0.16 € per share for the 2018/2019 financial year, which was paid out to shareholders on 11 March.
Furthermore, the actions of the Management Board and Supervisory Board were approved for their term
of office in the 2018/19 financial year. DOMUS AG Wirtschaftsprüfungsgesellschaft/Steuerberatungsge- sellschaft, Berlin, were again elected as auditors for the 2019/20 financial year. Furthermore, various minor amendments to the Articles of Association were approved.
In addition, new Authorised Capital 2020/I was created amounting to 14,581,593.00 € in total, which can be utilised until 5 March 2025, and a resolution was passed to renew the authorisation to issue option and/or convertible bonds with a total nominal value of up to 150,000,000.00 € and to increase Contingent Capital I up to 14,581,593.00 € with the option to exclude subscription rights.
More than 58% of the share capital was represented (share capital of the company at the time of the convening of the Annual General Meeting: 29,163,187.00 €). All items on the agenda were passed with the required majority.
Influence of the Corona pandemic on business performance
The impact of the corona pandemic on DIR's bus iness has so far been minimal. There have only been deferrals of EUR 1.8 million in rents, of which EUR 0.65 million had already been paid by 30 Sep- tember 2020. Part of the deferrals, which have not yet been settled, was considered in the annual result under administrative expenses in the form of individual impairments.
No significant impact on the letting situation, the acquisition pipeline or other areas of property management is currently discernible.
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2.4 Financial position, liquidity, and financial performance
Financial position
Total assets increased by TEUR 276,859.6 to TEUR 715,848.7 (previous year: TEUR 438,989.1). This resulted from growth through acquisitions, the revaluation of the property portfolio and the two capital increases. Investment property was carried at TEUR 585,819.7 as of 30 September 2020 (30 Septem- ber 2019: TEUR 392,849.0). Other financial assets were carried at TEUR 22,949.2 (30 September 2019: TEUR 0.0). This relates to the share of financial assets with maturities of more than one year. There were also other non-current assets in the amount of TEUR 7,474.1 (previous year: TEUR 38,886.2), which
represent advance payments for the acquisition of investment property.
Current assets increased to TEUR 98,073.5 (previous year: TEUR 5,765.2). This is primarily due to the higher level of other current assets amounting to TEUR 94,618.3 (30 September 2019: 2,883.7) because of financial investments with a term of up to one year.
The company's equity increased by TEUR 195,736.8 to TEUR 377,200.0 (30 September 2019: TEUR 181,463.2), which is due to the two capital increases amounting to TEUR 149,090.9 and the positive annual result of TEUR 50,820.5 (30 September 2019: TEUR 48,671.9), taking into account the dividend payment of TEUR -4,666.1 (30 September 2019: TEUR -2,025.0).
- The EPRA NAV per share on 30 September 2020 is as follows:
30/09/2020 | 30/09/2019 | |
Equity (TEUR) | 377,200.0 | 181,463.2 |
NAV | 377,200.0 | 181,463.2 |
Fair Value of financial derivates | -491.4 | 0.0 |
EPRA NAV | 376,708.6 | 181,463.2 |
Number of shares at the balance sheet date | 32,079,505 | 23,451,945 |
EPRA NAV (€ per share) undiluted | 11.74 | 7.74 |
A dilution from the convertible bond was not to be considered here, as no convertible bonds have been converted to date.
Non-current liabilities increased by TEUR 94,788.2 to TEUR 322,932.8 (previous year: TEUR 228,144.6). This was due to the increase in liabilities to banks to TEUR 134,664.2 (previous year: TEUR 67,526.5)
because of new bank loans. Liabilities from convertible bonds increased to TEUR 49,088.0 (previous year: TEUR 41,184.0), which is solely due to the valuation on the reporting date. Other non-current liabilities increased by TEUR 19,585.3 due to the increase in liabilities from ground rents resulting from the acquisition of the property in Oberding.
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Current liabilities fell by TEUR 13,665.4 to TEUR 15,715.9 (previous year: TEUR 29,381.3). While current liabilities to banks (interest) increased due to
the higher loan portfolio and other current liabilities, liabilities to other lenders amounted to TEUR 0.0 as of 30 September 2020 (previous year: TEUR 20,177.7).
- The development of financial liabilities and the Net Loan-to-value ratio (net LTV) is as follows:
TEUR | 30/09/2020 | 30/09/2019 |
Non-current financial liabilities | ||
Liabilities to banks | 134,664.2 | 67,526.5 |
Liabilities from corporate bonds | 118,065.2 | 117,904.0 |
Liabilities from convertible bonds | 49,088.0 | 41,184.0 |
Other non-current liabilities | 21,112.4 | 1,527.1 |
Current financial liabilities | ||
Liabilities to banks | 7,820.7 | 3,956.9 |
Liabilities to other creditors | 0.0 | 20,177.7 |
Other non-current financial assets | -22,949.2 | 0.0 |
Current financial assets | ||
Cash and cash equivalents | -35.1 | -2,065.6 |
Trust accounts | 212.5 | -459.0 |
Short-term loans | -87,928.5 | 0.0 |
Net debt | 220,050.2 | 249,751.6 |
Investment properties | 585,819.7 | 392,849.0 |
Advance payments on investment property | 7,474.1 | 38,886.2 |
Non-current assets held for sale | 0.0 | 435.0 |
Total Investment properties | 593,293.8 | 432,170.2 |
Net LTV | 37.1 % | 57.8 % |
In the LTV calculation, leasehold rights were included in the items investment property in the amount of TEUR 20,832.7 (previous year: TEUR 1,472.0) and other non-current liabilities in the amount of TEUR 21,050.1 (previous year: TEUR 1,516.7). Without this consideration, the LTV would have been 34.8 % (previous year: 57.6 %).
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Liquidity
• The cash flow statement is as follows:
TEUR | 2019/2020 | 2018/2019 |
Cash flow from operating activities | 17,661.9 | 17,133.0 |
Cash flow from investing activities | -225,398.3 | -198,002.9 |
Cash flow from financing activities | 205,705.9 | 182,818.4 |
Change in cash and cash equivalents | -2,030.5 | 1,948.5 |
Cash and cash equivalents at the beginning of the period | 2,065.6 | 117.1 |
Cash and cash equivalents at the end of the period | 35.1 | 2,065.6 |
Cash flow from operating activities increased to TEUR 17,661.9 (previous year: TEUR 17,133.0). Overall, cash flow from operating activities would have been expected to increase in line with higher rental income. However, this was offset in the current year by a cash deposit of TEUR 8,354.0 for contractually owed bank guarantees from the ground lease contracts in Oberding.
The cash flow from investment activities in the year under review was TEUR -225,398.3 (previous year: TEUR -198,002.9) and includes mainly payments for
properties purchased and payments for short-term financial investments.
The various financing measures carried out had an overall impact on cash flow from financing activities in the amount of TEUR 205,705.9 (previous year: TEUR 182,818.4). These were the cash inflows from the two capital increases and several loans taken out. These were offset by payments for debt service and dividends.
The company was always able to meet its payment obligations.
Financial performance
- The financial performance of Deutsche Industrie developed as follows in the financial year under review:
TEUR | 2019/2020 | 2018/2019 |
Net rental income | 31,285.7 | 20,950.4 |
Net proceeds from the sale of investment properties | 0.0 | 57.0 |
Other income | 175.6 | 373.7 |
Result from the revaluation of investment properties | 36,981.7 | 37,552.1 |
Administrative expenses | -6,154.3 | -2,725.3 |
EBIT | 62,288.7 | 56,207.9 |
Finance result | -11,468.0 | -7,558.1 |
EBT | 50,820.7 | 48,649.8 |
Other tax | -0.2 | 22.1 |
Net income | 50,820.5 | 48,671.9 |
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Rental income increased primarily due to growth from acquired properties. Accordingly, management expenses also rose. Net rental income rose to approximately TEUR 31,285.7 (previous year:
TEUR 20,950.4).
Other operating income of TEUR 175.6 (previous year: TEUR 373.7) is primarily due to insurance refunds.
The net income for the period was significantly influenced by the regular valuation of the property portfolio and the resulting positive valuation result of TEUR 36,981.7 (previous year: TEUR 37,552.1). The
revaluation resulted from the increase in market values in the Logistics division, which was caused by the increased international demand for this segment. However, operating improvements (new lettings, reduction of vacancies and rent adjustments) and higher market rents also contributed to the value development.
The higher administrative expenses TEUR -6,154.3 (previous year: TEUR -2,725.3) are primarily the result of increased depreciation and impairment losses on rent receivables due to the larger portfolio as well as general bad debt allowances on creditshelf loans.
- The cost ratio for general administrative expenses is as follows:
TEUR | 2019/2020 | 2018/2019 |
Personnel expenses | -854.2 | -808.3 |
Other administrative expenses | -2,578.2 | -1,592.9 |
One-off effects | 619.9 | 431.2 |
Adjusted administrative expenses | -2,812.5 | -1,970.0 |
Gross Rental income | 40,781.3 | 25,481.2 |
Recurring costs ratio | 6.9 % | 7.7 % |
The financial result of TEUR -11,468.0 (previous year: TEUR -7,558.1) resulted from the increase in financial liabilities (loans), which correspond to the larger property portfolio, as well as significantly higher interest income and a valuation effect from the fair value measurement of the convertible bond and higher ground rents.
There are no income taxes due to the tax exemption for REIT companies.
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- The net income for the year amounts to TEUR 50,820.5 (previous year TEUR 48,671.9), from which FFO (funds from operations) and aFFO (adjusted funds from operations) are derived as follows:
TEUR | 2019/2020 | 2018/2019 |
Net income | 50,820.5 | 48,671.9 |
Adjustment amortisation and depreciation | 157.8 | 115.5 |
Adjustment revaluation of investment properties | -36,981.7 | -37,552.1 |
Adjustment sales result of investment properties | 0.0 | -57.0 |
Adjustment revaluation result financial liabilities | 7,904.0 | 832.0 |
Adjustment for special effects / non-cash expenses + income | 2,125.0 | 446.1 |
Adjustment for one-off expenses/income | 619.9 | 431.2 |
FFO | 24,645.5 | 12,887.6 |
- Capex | -4,943.6 | -3,273.4 |
aFFO | 19,701.9 | 9,614.2 |
Non-cash expenses and income primarily include valuation adjustments from convertible bond interest and interest on the property bond. Non-recurring expenses/income primarily include expenses for land charges and expenses relating to other periods.
The investment costs (capex) comprise value-enhancing construction measures in several properties, of which TEUR 1,204.5 in the Dortmund Hannöversche Str. property (construction of a new warehouse) and TEUR 880.6 in the TCN Schortens property, including the construction of new company flats.
Overall statement by the Management Board on the economic situation and business performance
Following an already very successful financial year 2018/2019, the 2019/2020 financial year was also positive, despite the effects of the corona crisis. Once again, the real estate portfolio was significantly
expanded through further acquisitions, which also led to a corresponding increase in rental income. In addition, the valuation gain from the property valuation again demonstrated the great potential for value enhancement of the portfolio. In terms of financing, loans were taken out at more favourable conditions and two capital measures were success fully implemented.
An FFO of TEUR 24,645.5 was generated during the 2019/2020 financial year, in-keeping with the projection of TEUR 23,000.0 to TEUR 25,000.0.
The effects of the acquisitions will be reflected throughout the year from the new 2019/2020 financial year onwards. The management of DIR therefore believes that the company is ideally positioned for further successful and profitable development.
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3. Opportunities and Risk Report and Forecast Report
3.1 Opportunities and Risk Report
Risk management system of DIR
Risk management is designed to identify the value creation potential of the company's business activities and to enable them to be exploited in a manner that results in a sustainable increase in the value of the company. An integral part of this system is a structu- red, early examination of potentially unfavourable developments and events (risks), which enables the Management Board to take countermeasures in good time before significant damage occurs.
The DIR risk management system comprises the regular systematic identification, analysis, evaluation, monitoring and control of significant risks by the com- pany's Board of Management. In view of the clearly defined corporate structures and business processes, the degree of formalisation of the risk management system is low, but effective and appropriate. The close involvement of the Board of Management in major business operations and projects ensures ongoing monitoring of risks as they arise.
The risk management system used includes the following essential elements:
- a controlling and reporting system that can identify undesirable business developments at an early stage and communicate them to corporate governance
- the documentation of relevant risks for regular or event-related information of corporate governance
- a periodic, regular evaluation of the identified risks and the decision on possible countermeasu- res or the deliberate acceptance of manageable risks by the Management Board
- an internal control system (ICS), with elements such as the dual control principle and segregation of functions, designed to ensure accurate and complete financial reporting, ensuring a secure invoice receipt and disbursement process.
In detail, the essential elements of the risk management system are reflected in the following risk management process:
- Defining the requirements: The Management Board defines the methodological and substantive requirements for the risk management system, whereby the expectations of the company are determined, and the risk awareness is strengthened.
- Risk identification and analysis: All business risks are fully captured, analysed for their causes and effects, assessed, and divided into five risk catego- ries. In addition, possible countermeasures are identified.
- a regular or event-related risk inventory
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c. | Reporting: The Management Board is informed | ment, the identified, analysed and assessed risks |
regularly and at an early stage about all existing | are actively responded to during this stage. | |
risks and possible countermeasures. As part of the | ||
reporting cycles, reporting is done on an ad hoc, | e. Risk controlling: Risk controlling is the methodi- | |
weekly, monthly, or quarterly basis, depending on | cal and content-related planning, monitoring and | |
the circumstances and the risk assessment. | control of the risk management system by a | |
qualified risk manager. Risk controlling encompas- | ||
d. | Risk management: Based on the decisions on | ses all phases of the risk management process and |
control measures taken by the Board of Manage- | must be regularly adjusted by the Management | |
Board in terms of methodology and content. |
- The risks are assessed based on defined thresholds regarding the amount of damage and the probability of occurrence: EUR million
Extent of damage
High | > 8.0 | Medium | Medium-high | High | |
Medium | 4.0 up to 8.0 | Medium-low | Medium | Medium-high | |
Low | < 4.0 | Low | Medium-low | Medium | |
< 10 % | 10 % up to 50 % | > 50 % | ||
Low | Medium | High | ||
Probability of occurrence | ||||
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DIR is exposed to the following risk categories or individual risks which, individually or collectively, may have a negative impact on the net assets, financial position and results of operations and the further economic development of the company:
price levels and adversely affect the creditworthi- ness of potential tenants and purchasers of real estate. This can have different regional effects, so that DIR can be affected here. Furthermore, the national economic situation may also depend considerably on international developments.
General, strategic, and market-specific risks
a. Political, legal, and social risks | The global economy, and with it the German |
Since the business activities of DIR are regulated | economy, has entered into recession, intensified |
by legal frameworks for real estate, this could be | by the SARS-CoV-2 pandemic. German economic |
affected by changes in national and/or European | output in 2020 will be significantly lower on |
law standards as well as by a changed interpretati- | average than in previous years. Both the Federal |
on or application of existing legal norms. These | Ministry of Economics and Energy and the ifo- |
include, inter alia, tenancy law, public constructi- | Institute expect the recovery to continue soon. |
on law and tax law. Furthermore, political changes | |
can also lead to changes in the legal framework | Management keeps itself constantly informed |
and thus have an indirect impact on DIR. | about the current macroeconomic situation and |
has the necessary expertise to identify changes | |
Politically, Germany has dealt comparatively well | in the macroeconomic environment, take any |
with the onset of recession. Measures such as | necessary measures and thus safeguard the |
the short-time working allowance and the rent | company's earnings position. |
moratorium, which were quickly adopted and | |
implemented, show the efficiency with which the | c. Industry risks in the Light Industrial sector |
German government, unlike many other Europe- | The real estate sector is characterised by intense |
an countries, actively steered against a severe | competition between the numerous providers. In |
economic downturn. Even if this is associated | this respect, there is a risk that competition will |
with short-term losses, it has been positively | lead to increased price pressure and lower mar- |
received by investors. | gins. This can also have a negative impact in |
various DIR locations if rental contracts are not | |
Although the German real estate submarkets are | renewed or rents are reduced. |
not as liquid as in other European countries, they | |
are recovering unmistakably quickly from the | Despite the state of emergency in 2020 in many |
critical economic effects, as was evident shortly | areas of public life and in the economy, the |
after the lifting of the lockdown and shutdown. | current recession has not yet left a profound mark |
This means that the German Federal Republic | on the Light Industrial market. However, based on |
remains one of the most attractive investment | the current statistical data on the market for |
locations for global investors and capital due to | corporate real estate, the Management Board |
its resilience and market stability. | assumes that a not insignificant proportion of |
market activity was due to previously planned or | |
b. Economic risks | already initiated planning. This means that the |
So far, DIR has achieved its sales exclusively in | effects of the SARS-CoV-2 pandemic and the |
Germany. A deterioration in national economic | measures taken during it, may be reflected in the |
conditions, coupled with an increase in the number | statistical market data or the Light Industrial |
of unemployed, may negatively impact rent and | sector in the future due to a time lag. |
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Due to Germany's geographically advantageous location and the expected increase in turnover in the logistics sector, the risk of significantly falling rents and the failure to extend rental agreements is considered manageable.
-
Changes in the financing environment/capital market
Of importance for the national demand for real estate is the development of interest rate levels in Germany. An increase in interest rates would make real estate investments more difficult due to growing interest charges. In addition, in this case, the borrowing costs of the loans taken out by the real estate companies would increase the cost of earnings.
The Board of Management considers the risk of interest rate increases to be low at present and for the new financial year. The main reason for this is the further intensification of monetary and fiscal policy by the ECB and the states in the wake of the SARS-CoV- 2 pandemic.
Company specific risks
-
Risks due to the use of IT
DIR uses all current and modern IT applications and is supported here by an external systems provider. In this context, there is a fundamental risk of total outages both at DIR and the service provider, which could lead to significant dis- ruptions in the business. Furthermore, there is a risk of attacks on the systems of DIR and thus access of unauthorised persons to the data of DIR.
In order to counteract this, the service provider regularly carries out all necessary operational, administration and maintenance work, and assumes the contractual liability for this. All employees are also required to behave properly in the use of IT. The company has a clearly demarca- ted IT infrastructure from that of other affiliated companies. The DIR has IT roles and IT access and authorisation concepts.
Furthermore, with the decree on the mandatory application of the new General Data Protection Regulation (GDPR), companies were given the responsibility to protect user data. In concomitant with this, DIR must protect stored data against misuse or, in the case of misuse, to send an immediate notification to the persons concerned. In the case of infringements, fines may amount to up to 4 % of the annual turnover. DIR has installed an external professional data protection officer in good time for this purpose, who monitors these processes and is available for clarifying any areas of uncertainty. In addition, the data protection officer or data protection service provider implements and adheres to all measures necessary to comply with the DSGVO. The company does not believe that it is exposed to significantly higher IT risks than other companies in the industry.
-
Human Resources risks
Due to DIR's lean personnel and administrative structure, there is a risk that qualified and high-performing employees and knowledge carriers leave the company and cannot be replaced within a reasonable time.
The company is pushing ahead with the esta blishment and expansion of management and personnel capacities with expertise to further mini- mise the personnel risk. In the past fiscal year 2019/2020, DIR hired two new employees, thereby expanding its capacities. The structure of the orga- nisation and staffing levels will continue to be adapted to the growth of the company. - Financing risks
As part of its business, DIR is exposed to finan- cing, liquidity, and interest rate risks.
Financing risks exist in so far as borrowing can either not take place or can only be carried out under unfavourable terms as a result of changes in company or market-related developments, which could have a negative impact on further acquisiti-
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on financing and the earnings situation of DIR. Should this result in problems in servicing current loans, lenders could force-sell real estate collateral, and such distress sales could result in significant financial penalties for DIR.
To counter this risk, DIR works together with various credit institutions and closely monitors developments on the financing market. In doing so, it also makes use of short-term financing options to secure attractive long-term financing options through upcoming or planned lease extensions.
There are also various risks regarding corporate liquidity. These can arise on the one hand because of possible rent losses. In addition, negative liquidity effects may arise in individual cases if leases cannot be extended and vacancy rates arise as a result. In addition, a breach of agreed ratios in loan agreements (covenants) may lead to a special termination of the lending bank and cause an unscheduled outflow of liquidity from the loan repayment.
To avoid rent losses, the creditworthiness of the potential tenant is regularly checked in conjunction with the conclusion of rental agreements. Furthermore, liquidity risks are counteracted by extensive liquidity planning instruments, which reflect current business transactions with the planning data both in the short and in the medium term. There is regular liquidity reporting and a liquidity forecast to the Management Board. In addition, as part of a bank reporting, a likely covenant breach is recognised as early as possible and prevented by suitable measures.
Interest risks exist regarding the liabilities due for rollover or refinancing as well as planned loans for the financing of real estate portfolios. To hedge against adverse effects of changes in interest rates, DIR uses fixed interest rates for financing depending on the market situation and the assessment of market prospects. The direct impact of changes
in the general interest rate level on the company's performance in terms of changes in cash flows is relatively small compared to the potential indirect effects of changes in the general interest rate level on real estate demand. DIR's management follows developments on the capital markets and financing conditions are constantly monitored. Where necessary, measures are taken to optimise risk.
In addition, default risks also exist with regard to the interest-bearing cash and cash equivalents invested as part of the short-term liquidity management if the borrowers do not pay the principal for economic reasons. DIR counteracts this risk by only making investments with the best possible credit rating and by continuing to monitor existing investments on an ongoing basis to counteract any risks that may arise.
-
Legal and litigation risks
Through its business activities, DIR is exposed to the risk of legal disputes and (potential) warranty claims and claims for damages without being able to assert claims against third parties.
There are currently no other legal risks, from legal disputes, which could have a significant impact on the economic position of the company. - Tax risks
To maintain the REIT status, DIR must comply with the provisions of the REIT Act. Thus, the investment object, the investment volume as well as the business activity are restricted or influenced by the following regulations: - Exclusion of the acquisition of domestic existing residential real estate
- Exclusion of the acquisition of shares in real estate corporations
- Exclusion of real estate trading
- Limitation of reserve formation
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Deutsche Industrie REIT-AG Opportunities and Risk Report and Forecast Report
- Only minimal liquidity formation due to the minimum distribution of 90 % of the annual net income according to commercial law
- Limitation of ancillary activities close to the property for third parties
- Minimum equity of 45 % of immovable property
If the statutory requirements are not met, DIR risks losing the tax exemption. This can lead to certain after-taxation obligations.
Due to the restrictions of the REIT Act, certain chances or opportunities in the real estate and financing market cannot be exercised or only to a limited extent in individual cases.
Furthermore, the company may be threatened with (criminal) payments for non-compliance with the provisions of the REIT Act. In addition, the company is threatened with compensation claims by shareholders in the event of a loss of the REIT status due to at least a 15 % free float and/or a maximum participation rate of 10 %. shareholders who own less than 3 % of the voting rights are eligible. The lack of practice in the application of the REIT Act by the competent supervisory and tax authorities could, in disputed individual cases, lead to a disadvantageous interpretation of the application of the law or force the company to adapt to the new legal situation.
Most of the REIT criteria under tax law can be achieved without difficulty due to the DIR business model. Compliance is ensured on an ongoing basis through permanent monitoring of the criteria and a stringent financing policy. The growth of DIR means that equity capital increases are carried out with less risk and less borrowing is required. Moreover, an infringement must have been committed in three consecutive financial years to lose the tax exemption. This legal requirement gives the company sufficient reaction time or room for reaction to take necessary counter- measures.
-
Pandemic risks
The outbreak and spread of a pandemic can lead to restrictions on the company's business activities.
The coronavirus (COVID-19 (Coronavirus SARS- CoV-2)), which first broke out in China at the end of 2019, developed into a global pandemic over the course of 2020. By the time of the risk report (Q4 2020), Germany had already gone through a nationwide lockdown and shutdown and has been in a partial lockdown again since November 2020. Furthermore, it cannot be ruled out that government measures to combat the pandemic may be extended or tightened.
Individual deferral agreements have been conclu- ded with tenants whose business activities have been or are still being closed or partially restricted due to government regulations during the pande- mic or due to the SARS-CoV-2 pandemic. These deferral agreements/receivables are monitored on an ongoing basis through active asset manage- ment and receivables controlling.
Property-specific risks
-
Investment risk of the individual property The economic success and further growth of the company is decisively dependent on the selection and acquisition of suitable real estate. This involves the risk of incorrectly assessing or not recognising the structural, legal, economic, and other burdens on the objects to be purchased. In addition, the assumptions made in relation to the earnings potential of the real estate may subse- quently prove to be partially or fully inaccurate. In particular, misconceptions about the attractive- ness of the property location and other factors which may influence the tenants or buyer's perspective could mean that the management of the property in question does not lead to the expected results.
These property-specific risks are counteracted by an in-depth review of the properties concerned. In the context of the object assessment, among other things, the anticipated redevelopment, main- tenance, and modernisation needs are deter-
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mined, and the earnings value and the basic debt servicing capacity are examined according to bank-conforming standards. The rental income risk, the rental situation and the need for refurbis- hment, maintenance, and modernisation of the properties in the portfolio are assessed in regular fixed meetings and as part of internal reporting.
-
Inventory and valuation risks
The company holds real estate holdings to achieve the most stable cash flows possible from the management of these holdings over a longer period. While the real estate is in the company's portfolio, it may manifest a variety of inventory and valuation risks that could cause the company to lose value. For example, the social structures of a location may deteriorate after the acquisition of real estate by DIR and, as a result, adversely affect letting activities and the achievable rental income.
In addition, the property portfolio held by the company may experience excessive wear and tear requiring maintenance and revitalisation measu- res earlier or to a greater extent than originally planned. In addition, it may also turn out that the structures have an initially unexpected recovery requirement, which leads to additional costs for the company, without initially receiving corres- ponding additional income.
In connection with these risks, but also due to other factors such as unexpected competitors in the immediate vicinity of the site, vacancies may increase and result in lower rental income com- bined with higher leasing expenses. In addition to adverse effects on the company's ongoing operating income and expenses, these risks may adversely affect the valuation of the property held by DIR and therefore the company's results.
The further growth of the real estate portfolio and the resulting better location and tenant diversifi- cation will reduce these individual risks from the overall portfolio perspective. The real estate inven- tory and valuation risks for the respective loca- tions are counteracted with the measures descri- bed under a).
In addition, as with all assets, there is the fundamental risk of destruction of individual objects due to force majeure or natural hazards. These risks are countered by adequate insurance cover with well-known and high-performance insurance companies. The insurance values of DIR's portfolio properties are valued annually, and the insurance policies and scope of insurance are adjusted, as necessary.
-
Letting risk
There is a risk that changes in supply and demand on the letting market and deterioration in the competitiveness of individual properties in their respective local market conditions could have
a direct negative impact on the rental income generated by DIR and the development of vacan- cies in the Company's real estate portfolio. In addition, this can incur additional costs that cannot be allocated to the tenants.
These risks are countered by active asset and
property management, which firstly includes a permanent analysis of the letting market and tenant needs. Furthermore, this includes professional letting management as well as ongoing maintenance, refurbishment, and modernisation measures, which ensure the attractiveness and thus the competitiveness of the locations. The letting risk and the letting situation in the portfolio are discussed in regular asset management and capex jours fixes. If maintenance, refurbishment, or modernisation measures are necessary for the prevailing letting situation, these are carried out professionally in accordance with the principle of cost/earnings ratio.
-
Construction risk
If structural measures are required on the proper- ties, there is a risk that the construction costs considerably exceed the target values. This risk is countered by a detailed planning of the construc- tion costs and their tight monitoring.
Uncertainties may also contribute to the construc- tion risks regarding whether, when and under which conditions and/or secondary conditions
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Deutsche Industrie REIT-AG Opportunities and Risk Report and Forecast Report
the building permits for the projects are granted. For example, the company sometimes relies on the discretion of individual authorities, and even disputes with residents and tenants can significantly delay or adversely affect the granting of permits. Any of these circumstances can lead to planned building work not being able to be carried out at the assumed costs, not within the planned timeframe, or not at all. These risk factors are already being thoroughly examined in advance of individual construction measures.
Building projects or project developments are not crucial to the economic success of DIR, so the risk is limited. There are currently no properties under project development. The focus of DIR's core business is not on project development of real estate. Should project developments or construction projects be necessary during a property life cycle, the company will take appropriate measures.
-
Environmental risk
If contaminated sites and other building, soil and environmental damage are identified, the compa- ny could be obliged to take extensive and costly measures to eliminate them. As part of the purchase audit, the company carries out a syste- matic review of environmental aspects. To hedge against the risk, guarantees are obtained from the sellers and due diligence checks are carried out during the purchase process. In the process, environmental law risks, the existing environmen- tal quality, environmental law issues and contami- nated sites are analysed and evaluated. Where they exist, these are evaluated in the context of the company's existing purchase criteria or guidelines. The company also takes possible environmental risks such as contaminated sites into account with a sufficiently high safety discount when determining the purchase price.
Internal controlling and risk management system regarding the accounting process
The accounting-related internal control system at DIR was implemented with the aim of ensuring adequate assurance with respect to full and accurate annual financial statements by establishing appropriate
control mechanisms within the internal and external accounting and reporting process.
At least once a quarter and in regular jours fixes, the company receives object and portfolio information from its commissioned service providers according to its specifications, in which it is informed about important, contract-relevant activities and, if applica- ble, deviations from the planning. The evaluations are analysed and checked for plausibility and examined for identifiable risks. Recognised risks are assessed and included in the regular or ad hoc risk reporting to the Supervisory Board.
The accounting-related risk management system of DIR aims to reduce the risk of fundamental errors or inappropriate presentation of the net assets, financial position, and results of operations. For this purpose, the underlying data is regularly reflected on analytically based on expected values. The service provider commissioned for significant parts of the accounting process of the company is kept informed closely and continuously about the current business develop- ment. The services include the fulfilment of the accounting obligations in accordance with the German Commercial Code as well as the assumption of payment transactions, the preparation of profit and loss accounts, account analyses, monthly sales tax pre-notifications as well as business analyses and the quarterly preparation of interim financial statements according to HGB and IFRS, as well as object and portfolio information. The accounting process is monitored by both service providers and the company through an effective internal control system that ensures the regularity of accounting and compliance with legal requirements. In particular, the clear allocation of responsibility and control in compliance with the dual control principle and the principle of separation of duties, appropriate access regulations in the financial statement relevant EDP systems and consideration of recognised and assessed risks must be mentioned. For the determination of market values of real estate, the company invites external experts. DIR was convinced of the technical, qualita- tive, and capacity-based suitability of the service providers and employees involved in the accounting process and the appraisal reports. In view of the still
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small size of the company, DIR has so far refrained from establishing an internal audit.
In our estimation, there are currently no concrete risks jeopardising the existence of the company.
Other influences
In addition to the risks mentioned, there are general influences that are unpredictable and thus hardly controllable. These include, for example, political changes, social influences, and risk factors such as natural disasters or terrorist attacks. Such influences could have negative effects on the economic situation and indirectly affect the further economic development of DIR.
Assessment of the overall risk
The Board of Management considers the overall risk situation to be manageable and has not changed in leaps and bounds compared to previous years. With regard to the individual risks mentioned above, we currently assess competition risk and financing risks from rising interest rates as well as risks from asset management as medium risks, although no significant new events and associated increases in risk occurred in the reporting year.
Chances of future development
DIR will further increase its cash flow from rentals through the acquisition of further high-yielding properties in the year under review. Furthermore, the reduced financing costs due to the refinancing of borrowed capital will contribute to increasing profitability and funds from operations (FFO).
Furthermore, the Management Board expects that DIR will increasingly be perceived as a reliable and long-term oriented real estate partner, which will result in better opportunities for extending lease agreements as well as acquisition opportunities for further properties. As a result of the increasing presence at capital market conferences and in investor media, the Management Board expects to see broader demand for DIR shares in the future and thus continued good access to sources of debt and equity.
PICTURE:
Eschenbach, Gossenstraße
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3.2 Forecast report
The following statements on the future business development of DIR are based on the estimates of the Management Board. The assumptions made are currently regarded as realistic based on the information available. In principle, however, forward-looking statements involve a risk that developments will not actually occur either in their tendency or in their extent.
Forecast for the 2020/2021 financial year
In the 2020/2021 financial year, DIR will continue to concentrate on efficient portfolio management and above all on the further acquisition of Light Industrial properties in accordance with the investment criteria. Acquisitions will be financed to a moderate extent by existing equity, borrowings in line with market conditions and, if necessary, by capital measures.
The development of the FFO as a key performance indicator for the company depends to a large extent
on the size of the acquisitions and the associated increase in rental income. Based on planned acquisitions the company expects the FFO to increase to
32.0 € million to 34.0 € million for the coming financial year.
Due to the continued dynamic development of the company, planned for the 2020/2021 financial year and the continuing good growth prospects, there will continue to be a need for additional liquidity. For the coming financial year, the company assumes that there will be further inflows of sufficient liquidity due to the very good access to the banking, investor, and capital markets.
If the changed conditions resulting from the Corona pandemic continue to apply, management expects effects in the real estate business in terms of revenues, agreed rental contracts and net income, which cannot be reliably quantified at present.
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4. Remuneration report
Compensation system for the Supervisory Board
The members of the Supervisory Board receive a fixed cash remuneration of TEUR 5.0 for each full financial year of their membership of the Supervisory Board plus the premiums for an appropriate directors' and officers' liability insurance policy (D&O insurance). The Chairman of the Supervisory Board receives double this basic remuneration, vice chairmen receive one and a half times this basic remuneration.
No committees were formed, and no attendance fees are paid. No variable remuneration based on the success of the company or other criteria is granted.
The remuneration of the Supervisory Board for the financial year amounted to TEUR 28.8 (previous year: TEUR 22.5) plus expenses and VAT and is distributed as follows:
Supervisory Board member | 2019/2020 (TEUR) | 2018/2019 (TEUR) |
Dr Maximilian Murawo | 0.0 | 4.7 |
Chairman (until 22/03/2019) | ||
Hans-Ulrich Sutter | 10.0 | 5.3 |
Chairman (from 22/03/2019) | ||
Dr. Dirk Markus | 7.5 | 7.5 |
First Vice Chairman | ||
Achim Betz | 6.3 | 5.0 |
Second Vice Chairman (from 06/03/2020) | ||
Cathy Bell-Walker (from 06/03/2020) | 2.5 | 0.0 |
Antje Lubitz (from 06/03/2020) | 2.5 | 0.0 |
Total | 28.8 | 22.5 |
Remuneration system for the Management Board
Basic remuneration system
The members of the Management Board of DIR receive non-performance-related basic remuneration in cash and performance-related variable remuneration in cash, which is based on short-term(Short-Term Incentive, STI) and long-term(Long-Term Incentive, LTI) targets.
The Chairman of the Management Board, Rolf Elgeti, is excluded from this remuneration system and receives a flat-rate annual remuneration of TEUR
71.3. The remuneration is paid by cost allocation by the shareholder Obotritia Capital KGaA, as there is no employment contract between the company and the Chairman of the Management Board.
The non-performance-related basic remuneration consists of the fixed annual salary, which is paid in twelve monthly installments. Some members of the Management Board use a company car, which is taxed as a non-cash benefit. No benefits other than other remuneration are granted. The contracts of the members of the Board of Management do not provide for any pension entitlements.
For variable compensation, a compensation system was introduced in fiscal year 2017/2018 that is geared to operating targets and is fundamentally based on a fixed calculation scheme that includes short-term and long-term components.
In the event of any other premature termination of the employment contract, the Executive Board contract of Ms Petersen contains a provision that payments may not exceed the value of two years' compensation (severance payment cap). In the event of a change of control, i. e. if one or more shareholders acting together acquire at least 30 % of the voting rights in the DIR, she has the right to terminate her contract of employment with two months' notice (special right of termination). If this special right of termination is exercised, the company will pay a gross severance payment due at the time of departure in the amount of the outstanding remuneration under the employment contract, but not exceeding 150 % of the severance payment cap. This provision does not apply to the other two members of the Management Board.
Variable remuneration for the 2019/2020 financial year
The criteria for achieving the objectives were taken as a basis:
- Share price performance (weighting 30 %) 20 % year-on-year growth (after elimination of the dividend paid in the financial year) based on the respective volume-weighted average price in September
- FFO per share (weighting 40 %) Growth of 20 % compared to the same period last year
-
Development of EPRA NAV per share (weighting 30 %)
Growth of 25 % (after elimination of the dividend paid in the financial year) compared to the respective reporting date of 30 September
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The degree to which the objectives are achieved is redefined each year.
The variable remuneration for the 2019/2020 financial year is based on 100% target achievement:
- For Sonja Petersen: TEUR 150.0
- For René Bergmann: TEUR 125.0
The variable remuneration starts from a target achievement of at least 30 % (including = EUR 0). In the event of overachievement, there is a cap of 150 % for each individual target. To this extent, the total variable remuneration component in 2019/2020 can amount to a maximum of TEUR 225.0 for Ms Peter- sen and a maximum of TEUR 187.5 for Mr Bergmann.
Half of the variable remuneration will be paid in cash after the determination of the financial statements audited by the auditor (in December of the year). The other half will be paid out after two further financial years, provided that the target of 30 % is achieved in each of the financial years.
The figures are calculated based on VWAP (Septem- ber) or the balance sheet date of 30 September (NAV) or the comparable period of the previous year (FFO) and are based on the IFRS financial statements.
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Remuneration of the Management Board in financial year 2019/2020
The remuneration of the Management Board, which was earned in the past financial year (benefits granted), amounts to TEUR 670.0 (previous year:
TEUR 693.7). The amounts received by the Management Board in the past fiscal year amount to TEUR 518.3 (previous year: TEUR 501.6).
TEUR | Rolf Elgeti | Sonja Petersen | René Bergmann | |||||||
CEO | CIO | CFO | ||||||||
2018/2019 | 2019/2020 | 2018/2019 | 2019/2020 | 2019/2020 | 2019/2020 | 2018/2019 | 2019/2020 | 2019/2020 | 2019/2020 | |
(Current) | (Current) | (Current) | (Current) | (Min.) | (Max.) | (Current) | (Current) | (Min.) | (Max.) | |
Granted Remuneration | ||||||||||
Fixed remuneration | 71.3 | 71.3 | 120.0 | 120.0 | 120.0 | 120.0 | 120.0 | 120.0 | 120.0 | 120.0 |
Fringe benefits | 0.0 | 0.0 | 14.2 | 12.4 | 12.4 | 12.4 | 7.3 | 7.1 | 7.1 | 7.1 |
Total | 71.3 | 71.3 | 134.2 | 134.4 | 134.4 | 134.4 | 127.3 | 127.1 | 127.1 | 127.1 |
STI | 0.0 | 0.0 | 112.5 | 92.5 | 0.0 | 112.5 | 75.0 | 77.1 | 0.0 | 93.7 |
LTI | 0.0 | 0.0 | 112.5 | 92.5 | 0.0 | 112.5 | 60.9 | 77.1 | 0.0 | 93.8 |
Total | 0.0 | 0.0 | 225.0 | 185.0 | 0.0 | 225.0 | 135.9 | 154.2 | 0.0 | 187.5 |
Total remuneration | 71.3 | 71.3 | 359.2 | 317.4 | 132.4 | 357.4 | 263.2 | 281.3 | 127.1 | 314.6 |
Related Remuneration | ||||||||||
Fixed remuneration | 71.3 | 71.3 | 120.0 | 120.0 | 120.0 | 120.0 | ||||
Fringe benefits | 0.0 | 0.0 | 14.2 | 12.4 | 7.3 | 7.1 | ||||
Total | 71.3 | 71.3 | 134.2 | 132.4 | 127.3 | 127.1 | ||||
STI | 0.0 | 0.0 | 112.5 | 112.5 | 56.3 | 75.0 | ||||
LTI | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
Total | 0.0 | 0.0 | 112.5 | 112.5 | 56.3 | 75.0 | ||||
Total remuneration | 71.3 | 71.3 | 246.7 | 244.9 | 183.6 | 202.1 | ||||
In addition to the above-mentioned variable remune- | Mr Rolf Elgeti TEUR 0.0 |
ration, provisions of TEUR 351.8 were formed for | Mrs Sonja Petersen TEUR 220.0 |
possible bonuses with a long-term incentive effect, | Mr René Bergmann TEUR 131.8 |
which are distributed among the members of the | |
Board of Management as follows |
83
Deutsche Industrie REIT-AG Dependency report and overall assessment
5. Dependency report and overall assessment
In the 2019/2020 financial year, DIR was a company dependent on Obotritia Capital KGaA. In accordance with the statutory provisions, the Management Board of DIR, for the period during which DIR was a company dependent on Obotritia Capital KGaA, prepared a report on relationships with affiliated companies (dependency report) for the past financial year and made a final declaration in it:
"We hereby declare in accordance with Article 312 (3) of the German Stock Corporation Act (AktG) that our company received appropriate consideration for each legal transaction listed in the above report on relations with affiliated companies according to the circumstances known to us at the time when the legal transactions were carried out. No measures were taken or omitted at the instigation of or in the interests of Obotritia Capital KGaA or its affiliated companies."
PICTURE:
Kloster Lehnin, Damsdorfer Hauptstraße
84
Deutsche Industrie REIT-AG Annual report 2019/2020
6. Information relevant for takeovers
pursuant to § 289a Abs. 1 HGB
Composition of share capital, voting rights and special rights
As of 30 September 2020, the company's share capital is divided into 32,079,505 no-par-value bearer shares. As of the balance sheet date, the company holds no treasury shares. All shares carry the same rights and obligations. Each share represents one vote at the Annual General Meeting. The shares may be freely transferred in accordance with the legal provisions applicable to bearer shares. No shares were issued with special rights conferring powers of control. Where employees hold shares in the company, they exercise their control rights directly.
Shareholdings of 10 % or more of the voting rights
No shareholder may directly hold 10 % or more of the shares or voting rights in accordance with Article 11 (4) REITG (maximum participation limit). If
the maximum participation limit is exceeded, the shareholder concerned must prove the reduction in his direct participation in an appropriate form within two months of being requested to do so by the Management Board. According to the Articles of Association, a continued violation of the maximum participation limit can lead to a transfer of shares more than the maximum participation limit without compensation or to a compulsory withdrawal of
these shares without compensation. At the balance sheet date, no shareholder held 10 % or more of the voting rights.
Authorisation of the Management Board to acquire treasury shares and issue new shares:
Authorised capital
On 6 March 2020, the Annual General Meeting
of Deutsche Industrie REIT-AG resolved to authorise the Management Board of the company to increase the share capital of the company, with the approval of the Supervisory Board, on one or more occasions until 5 March 2025 by up to a total of
EUR 14,581,593.00 (Authorised Capital 2020/I) by issuing new no-par value bearer shares against cash or non-cash contributions.
The new shares must be offered to shareholders for subscription. However, the Board of Management was authorized, with the consent of the Supervisory Board, to exclude the subscription rights of shareholders in certain cases.
The Board of Management is authorised, with the consent of the Supervisory Board, to determine the further details of the capital increases and the conditions of the share issue, in particular the issue price.
Conditional capital
By resolution of the Annual General Meeting on 6 March 2020, the Board of Management was authorised, with the consent of the Supervisory Board, to issue bearer bonds with option or con vertible bonds (collectively "bonds") with a total nominal amount of up to EUR 150,000,000.00 with or without a limited term to maturity on one or more occasions up to 5 March 2025. It was also authorised to grant or impose option rights/obligations on holders and creditors (collectively "owners") of option bonds and conversion rights/obligations on owners of convertible bonds, for bearer shares of the company with a pro rata amount of the share capital of EUR 1.00 each, in accordance with the more detailed provisions of the bond terms and conditions. Further details can be found in the publication in the Federal Gazette.
The share capital is conditionally increased by up to EUR 14,581,593.00 by issuing up to 14,581,593 new no-par value bearer shares with entitlement to dividends from the beginning of the financial year in which they are issued (Conditional Capital I). The
85
Deutsche Industrie REIT-AG Information relevant for takeovers
conditional capital increase will only be implemented to the extent that the option or conversion rights are exercised.
The Board of Management was authorised to determine the further details of the implementation of the conditional capital increase.
Changes to the Articles of Association
Amendments to the Articles of Association require the majority of 75 % of the voting rights represented at the Annual General Meeting as prescribed by the German Stock Corporation Act.
Appointment and dismissal of members of the Management Board
The Supervisory Board determines the number and appoints the full and deputy members of the Management Board, concludes the employment contracts and revokes appointments.
86
Deutsche Industrie REIT-AG Annual report 2019/2020
7. Statement on Corporate Governance
pursuant to § 289f HGB.
On 4 December 2020, the Management Board of Deutsche Industrie REIT-AG issued a corporate governance statement in accordance with Section 289f of the German Commercial Code (HGB) and made it available on the website https://deutsche-industrie-reit.de/en in the Investor Relations section under Corporate Governance.
Rostock, 7 December 2020
Deutsche Industrie REIT-AG
Rolf Elgeti | Sonja Petersen | René Bergmann |
Chief Executive Officer | Chief Investment Officer | Chief Financial Officer |
PICTURE:
Oberding, Lohstraße
Financial Statement
Balance sheet | 90 |
Statement of comprehensive income | 91 |
Cash flow statement | 93 |
Statement of changes in equity | 95 |
PICTURE:
Bocholt, Hindenburgstr. Kaiser-Wilhelm-Str.
90
Deutsche Industrie REIT-AG Annual report 2019/2020
Balance sheet
as of 30 September 2020
TEUR | Notes | 30/09/2020 | 30/09/2019 |
Assets | |||
Non-current assets | 617,775.2 | 432,788.9 | |
Investment properties | (2.1) | 585,819.7 | 392,849.0 |
Intangible assets | (2.2) | 3.4 | 1.8 |
Property, plant and equipment | (2.3) | 1,037.4 | 1,051.9 |
Other financial assets | (2.5) | 22,949.2 | 0.0 |
Derivative financial instruments | (2.6) | 491.4 | 0.0 |
Other non-current assets | (2.7) | 7,474.1 | 38,886.2 |
Current assets | 98,073.5 | 5,765.2 | |
Trade and other receivables | (2.4) | 3,420.1 | 815.9 |
Other current assets | (2.7) | 94,618.3 | 2,883.7 |
Cash and cash equivalents | (2.8) | 35.1 | 2,065.6 |
Non-current assets held for sale | 0.0 | 435.0 | |
TOTAL ASSETS | 715,848.7 | 438,989.1 | |
Equity and liabilities | |||
Equity | 377,200.0 | 181,463.2 | |
Issued share capital | (2.9) | 32,079.5 | 23,451.9 |
Capital reserve | (2.9) | 229,993.6 | 89,530.2 |
Other reserves | (2.9) | 50.0 | 50.0 |
OCI (Other Comprehensive Income) | (2.9) | 491.4 | 0.0 |
Retained earnings | (2.9) | 114,585.5 | 68,431.1 |
Non-current liabilities | 322,932.8 | 228,144.6 | |
Liabilities to banks | (2.10) | 134,664.2 | 67,526.5 |
Liabilities from corporate bonds | (2.11) | 118,065.2 | 117,904.0 |
Liabilities from convertible bonds | (2.12) | 49,088.0 | 41,184.0 |
Other non-current provisions | (2.14) | 3.0 | 3.0 |
Other non-current liabilities | (2.15) | 21,112.4 | 1,527.1 |
Current liabilities | 15,715.9 | 29,381.3 | |
Liabilities to banks | (2.10) | 7,820.7 | 3,956.9 |
Liabilities to other creditors | (2.13) | 0.0 | 20,177.7 |
Other current provisions | (2.14) | 1,542.8 | 994.0 |
Trade payables | (2.16) | 2,043.6 | 2,692.0 |
Other current liabilities | (2.15) | 4,308.8 | 1,560.7 |
TOTAL EQUITY AND LIABILITIES | 715,848.7 | 438,989.1 | |
91
Deutsche Industrie REIT-AG Financial Statement
Statement of comprehensive
income for the financial year from 1 October 2019 - 30 September 2020
TEUR | Notes | 2019/2020 | 2018/2019 |
Total revenues | 48,390.5 | 30,366.7 | |
Gross Rental income | (3.1) | 40,781.3 | 25,481.2 |
Income from operating and ancillary costs | (3.1) | 7,174.2 | 4,258.5 |
Operating expenses | (3.1) | -16,669.8 | -8,789.3 |
Net rental income | 31,285.7 | 20,950.4 | |
Proceeds from salel of investment properties | (3.2) | 435.0 | 627.0 |
Expenses on sale of investment properties | (3.2) | -435.0 | -627.0 |
Value change of the sold properties | 0.0 | 57.0 | |
Net proceeds from the sale of investment properties | (3.2) | 0.0 | 57.0 |
Other income | (3.3) | 175.6 | 373.7 |
Result from the revaluation of investment properties | (3.4) | 36,981.7 | 37,552.1 |
Subtotal | 68,443.0 | 58,933.2 | |
Personnel expenses | (3.5) | -854.2 | -808.3 |
Amortisation of intangible assets, depreciation of property, | (2.2, 2.3) | -157.8 | -115.5 |
plant and equipment | |||
Impairment loss of inventories and receivables | (3.6) | -2,564.1 | -208.6 |
Other administrative expenses | (3.7) | -2,578.2 | -1,592.9 |
Administrative expenses | -6,154.3 | -2,725.3 | |
EBIT | 62,288.7 | 56,207.9 | |
Valuation result of financial liabilities | (3.8) | -7,904.0 | -832.0 |
Interest income | (3.8) | 5,473.2 | 98.6 |
Interest expense | (3.8) | -8,147.2 | -6,824.7 |
Ground rents (Finance lease) | (3.8) | -890.0 | 0.0 |
Finance result | -11,468.0 | -7,558.1 | |
EBT | 50,820.7 | 48,649.8 | |
Other tax | (3.9) | -0.2 | 22.1 |
Net income | 50,820.5 | 48,671.9 | |
92
Deutsche Industrie REIT-AG Annual report 2019/2020
Net income for the year as per income statement | 50,820.5 | 48,671.9 | |
Items not reclassified to profit/loss | 0.0 | 0.0 | |
Items reclassified to profit/loss | 491.4 | 0.0 | |
Impairment of acquired loans | 1,733.8 | 0.0 | |
Change in fair value of acquired loans | -1,733.8 | 0.0 | |
Cash flow hedge reserve | 491.4 | 0.0 | |
Total other comprehensive income | 491.4 | 0,0 | |
Total comprehensive income | 51,311.9 | 48,671.9 | |
Earnings per share (in €) | |||
Undiluted result per share | 1.73 | 2.25 | |
Diluted result per share e | 1.73 | 2.08 | |
93
Deutsche Industrie REIT-AG Financial Statement
Cash flow statement
TEUR | Notes | 2019/2020 | 2018/2019 | |
Net income | 50,820.5 | 48,671.9 | ||
+/- | Interest expense/interest income | (3.8) | 3,563.9 | 6,726.1 |
+/- | Depreciation. amortisation and write-down/ reversals of intangible assets, tangible | (2.2, | 157.8 | 115.5 |
assets and financial assets | 2.3) | |||
+ | Impairments on inventories and receivables | (3.6) | 2,564.1 | 208.7 |
-/+ | Gains / Losses from the revaluation of investment properties | (3.4) | -36,981.7 | -37,552.1 |
-/+ | Profit/loss from the valuation of financial liabilities | (3.8) | 7,904.0 | 832.0 |
-/+ | Gains / Losses on disposal of investment properties | (3.2) | 0.0 | -57.0 |
+/- | Increase / decrease in provisions | (2.14) | 548.8 | -693.9 |
- | Income taxes paid | (2.18) | 0.0 | -2,583.2 |
-/+ | Increase/decrease in inventories, trade receivables and other assets not attributable | (2.7) | -13,009.1 | -290.6 |
to investing or financing activities | ||||
+/- | Increase/decrease in trade payables and other liabilities not attributable to investing | (2.15, | 2,093.6 | 1,755.6 |
or financing activities | 2.16) | |||
Cash flow from operating activities | -17,661.9 | 17,133.0 | ||
+ | Proceeds from disposals of investment properties (less disposal costs) | (3.2) | 435.0 | 627.0 |
- | Cash payments related to property investments | (2.1) | -104,973.7 | -215,529.4 |
- | Cash payments related to other investments in intangible and tangible assets | (2.2, | -132.0 | -251.8 |
2.3) | ||||
+ | Cash Inflow due to financial investments in the context of short-term financial | (2.7) | 17,652.2 | 16,612.4 |
management | ||||
- | Cash Outflow due to financial investments in the context of short-term | (2.7) | -140,306.4 | 0.0 |
financial management | ||||
+ | Received interests | (3.8) | 1,926.6 | 538.9 |
Cashflow from investment activities | -225,398.3 | -198,002.9 | ||
94
Deutsche Industrie REIT-AG Annual report 2019/2020
+ Cash proceeds from the issue of shares | (2.9) | 8,627.6 | 5,451.9 | |
+ Cash proceeds from capital increases | (2.9) | 142,506.5 | 59,042.0 | |
- Costs related to capital increases | -2,043.1 | -1,488.6 | ||
+ Cash inflow from issuing corporate bonds | (2.11) | 0.0 | 28,100.0 | |
- Costs related to issuing corporate bonds | (2.11) | 0.0 | -101.1 | |
+ Cash inflow from issuing convertible bonds | (2.12) | 0.0 | 40,352.0 | |
- Costs related to issuing convertible bonds | (2.12) | 0.0 | -161.3 | |
+ Cash inflow from loans | (2.10) | 77,620.0 | 61,875.0 | |
- Costs related to the issuance of loans | -214.4 | -42.5 | ||
- | Amortisation of loans | (2.10) | -6,448.3 | -2,268.0 |
- | Interests paid | (3.8) | -8,762.8 | -5,916.1 |
- paid interests to landowner ground rent | (3.8) | -913.5 | 0.0 | |
- Paid dividends to shareholders | -4,666.1 | -2,025.0 | ||
Cash flow from financing activities | 205,705.9 | 182,818.4 | ||
Change in cash and cash equivalents | -2,030.5 | 1,948.5 | ||
Cash and cash equivalents at the beginning of the period | (2.8) | 2,065.6 | 117.1 | |
Cash and cash equivalents at the end of the period | (2.8) | 35.1 | 2,065.6 | |
95
Deutsche Industrie REIT-AG Financial Statement
Statement of changes in equity
TEUR | Issued share capital | Capital reserve | Other | OCI | Retained | Total equity |
reserves | earnings | |||||
As at 01/10/2018 | 18,000.0 | 31,976.8 | 50.0 | 0.0 | 21,784.2 | 71,811.0 |
Period result | 0.0 | 0.0 | 0.0 | 0.0 | 48,671.9 | 48,671.9 |
Total comprehensive income | 0.0 | 0.0 | 0.0 | 0.0 | 48,671.9 | 48,671.9 |
Cash capital increase/ - reduction | 5,451.9 | 59,042.0 | 0.0 | 0.0 | 0.0 | 64,493.9 |
cost of capital measures | 0.0 | -1,488.6 | 0.0 | 0.0 | 0.0 | -1,488.6 |
Dividend distribution | 0.0 | 0.0 | 0.0 | 0.0 | -2,025.0 | -2,025.0 |
As at 30/09/2019 | 23,451.9 | 89,530.2 | 50.0 | 0.0 | 68,431.1 | 181,463.2 |
As at 01/10/2019 | 23,451.9 | 89,530.2 | 50.0 | 0.0 | 68,431.1 | 181,463.2 |
Period result | 0.0 | 0.0 | 0.0 | 0.0 | 50,820.5 | 50,820. |
Other comprehensive income | 0,0 | 0,0 | 0,0 | 491.4 | 0,0 | 491.4 |
Total comprehensive income | 0.0 | 0.0 | 0.0 | 491.4 | 50,820.5 | 51,311.9 |
Cash capital increase/ - reduction | 8,627.6 | 142,506.5 | 0.0 | 0.0 | 0.0 | 151,134.1 |
Addition / Withdrawal from reserves | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
cost of capital measures | 0.0 | -2,043.1 | 0.0 | 0.0 | 0.0 | -2,043.1 |
Dividend distribution | 0.0 | 0.0 | 0.0 | 0.0 | -4,666.1 | -4,666.1 |
As at 30/09/2020 | 32,079.5 | 229,993.6 | 50.0 | 491.4 | 114,585.5 | 377,200.0 |
Notes
Deutsche Industrie REIT-AG, Rostock
Notes for the financial year from 01/10/2019-30/09/2020
1. | General information | 98 |
1.1. | Deutsche Industrie REIT-AG | 98 |
1.3. | Key discretionary decisions and estimates | 99 |
1.4. | Application of IFRS in financial year 2019/2020 | 100 |
1.5. | Individual accounting and valuation principles | 102 |
2. Notes to the balance sheet | 112 | |
2.1. | Investment property | 112 |
2.2. | Intangible assets | 115 |
2.3. | Property, plant, and equipment | 115 |
2.4. | Trade receivables | 116 |
2.5. | Other non-current financial assets | 117 |
2.6. | Non-current derivative financial instruments | 118 |
2.7. | Other non-current and current assets | 118 |
2.8. | Liquid funds | 118 |
2.9. | Equity | 119 |
2.10. | Liabilities to banks | 120 |
2.11. | Liabilities from corporate bonds | 120 |
2.12. | Liabilities from convertible bonds | 121 |
2.13. | Liabilities to other lenders | 122 |
2.14. | Other provisions | 122 |
2.15. | Other non-current and current liabilities | 122 |
2.16. | Trade payables | 123 |
2.17. | Leasing | 123 |
2.18. | Taxes and deferred taxes | 125 |
3. Notes to the statement of comprehensive
income | 126 | |
3.1. | Net rental income | 126 |
3.2. | Net proceeds from the sale of investment | |
properties | 126 | |
3.3. Other Company income | 127 | |
3.5. | Personnel expenses | 127 |
3.6. | Impairment loss of inventories and receivables | 127 |
3.7. | Other administrative expenses | 128 |
3.8. | Finance result | 129 |
3.9. | Other taxes | 129 |
3.10. | Earnings per share | 130 |
4. | Notes to the cash flow statement | 132 |
5. | Disclosures on financial | |
instruments and fair value | 134 | |
5.1. | Financial risk management | 134 |
5.2. | Net results from financial instruments | 139 |
5.3. | Offsetting financial assets and liabilities | 139 |
5.4. | Capital management | 140 |
5.5. | Valuation categories of financial instruments | |
according to IFRS 9 | 142 | |
5.6. | Fair value of assets and liabilities | 144 |
6. | Other information | 145 |
6.1. | Contingent liabilities and other financial | |
obligations | 145 | |
6.2. | Obligations under leases | 145 |
6.3. | Transactions with related companies and persons | 146 |
6.4. | Supervisory Board and Management | 148 |
6.5. | Consolidated Financial Statements | 149 |
6.6. | Fee of the auditor | 150 |
6.7. Significant events after the balance sheet date | 150 |
6.8. Corporate Government Codex (Declarati- on on the German Corporate Governance
Code pursuant to Art. 161 AktG) | 151 |
Assurance of legal representatives | 151 |
Audit Opinion of the independent | |
individual financial statements | 152 |
Statement by the Executive Board | |
regarding compliance with the requirements | |
of the REITG | 156 |
PICTURE:
Altlandsberg, Seeberger Straße
98
Deutsche Industrie REIT-AG Annual report 2019/2020
1. General information
1.1. Deutsche Industrie REIT-AG
Deutsche Industrie REIT-AG (hereinafter referred to as "DIR", "Company" or " Corporation"; until 17 Octo- ber 2017 trading as Jägersteig Beteiligungs GmbH) is a real estate company focusing on Light Industrial real estate in Germany with its registered office in Ros- tock. According to the Articles of Association, the object of the Company is the management of its own assets through the acquisition, management and sale of properties and equity interests; transactions requiring approval are excluded. Furthermore, the Company is entitled to take all measures that are directly or indirectly suitable for serving this corporate purpose. The focus is on activities that are geared to the long-term and sustainable increase in value of the real estate portfolio. The Company is authorised to establish, acquire, lease, or invest in similar or similar companies. It may also establish branch offices in Germany and abroad. The DIR is registered in the Commercial Register of the Rostock Local Court under HRB 13964. The registered office is August- Bebel-Str. 68 in 14482 Potsdam.
The DIR share (ISIN DE000A2G9LL1) has been listed on the Berlin Stock Exchange since 7 December 2017. Since 1 January 2018, the company has had the status of a REIT (Real Estate Investment Trust) and is therefore exempt from income tax at company level. Since 19 December 2018, the shares have also been listed in the sub-segment of the regulated market with additional post-admission obligations (Prime Standard) on the Frankfurt Stock Exchange and therefore also in XETRA.
The separate financial statements of DIR as of
30 September 2020 were prepared on 7 December
2020. The Supervisory Board is expected to approve
these separate financial statements at its meeting on 16 December 2020. The IFRS individual financial statements were prepared voluntarily due to the stock exchange listing.
1.2. Basics of the preparation of the individual financial statements
The individual financial statements as of 30 Septem- ber 2020 were prepared in accordance with the International Financial Reporting Standards (IFRS) as applicable in the EU at the reporting date. In addition, the provisions of Section 315e (1) of the German Commercial Code (HGB) were applied analogously.
All relevant standards and interpretations whose application was mandatory for the financial year were observed.
The reporting period covers the period from 1 October 2019 to 30 September 2020, with the balance sheet as of 30 September 2019 and the statement of comprehensive income for the period from 1 October 2018 to 30 September 2019 serving as comparative figures.
The individual financial statements comprise the balance sheet, statement of comprehensive income, statement of changes in equity, cash flow statement and the notes to the financial statements and are presented in euros (EUR). All amounts are generally shown in thousands of euros (TEUR) (exceptions are indicated), which may result in rounding differences.
The company is currently a one-segment company. Sales are generated exclusively with customers based in Germany in the commercial real estate segment.
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Deutsche Industrie REIT AG published this content on 18 December 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 December 2020 16:22:04 UTC