Frankfurt's DIC Asset boosts 2017 FFO 28% to €60m, proposes special dividend

Sonja Wärntges © DIC

Frankfurt listed commercial property group DIC Asset reported FFO up in 2017 by 28% to €60.2m or €0.88 per share, with net profit at €64.4m, turning round a loss in 2016 caused by a one-off expense. It intends to raise the dividend for last year and also issue a special dividend.

In a release, the firm said it looks back on another banner year, having easily achieved the targets for key performance indicators. Refinancing of the commercial portfolio completed in late 2016, and investment income from WCM - in which it sold a significant stake last year to Berlin-based TLG Immobilien in return for a senior minority stake - are reflected in a consolidated income that more than doubled at €64.4m from an adjusted €26.9m.

At €60.2 m, FFO topped the prior-year €47.0m by 28%, substantially exceeding the forecast at the start of the year. The internal provision of the management platform for proprietary and for third-party real estate produced solid funds from operations in 2017 as in the previous year.

Lettings rose by about a quarter to €40.2m, while the weighted average lease term increased to 5.2 years. With assets from third-party property management, the firm ran €4.4bn as of 31 December. "With a view to the successful financial year, the management board .. intends to propose a special dividend of €0.20 in addition to another increase in dividend to €0.44 per share for 2017," DIC Asset said. This will raise dividend yield to 6.1% of the share price in December.

At year-end the group held €1.44bn of property on its balance sheet, down slightly from €1.58bn in 2016. The remainder of its assets are held in various fund vehicles with third parties.

Sonja Wärntges, who took over as CEO last year, commented: "2017 was very successful financial year for us. The significant improvement in the net interest result and our successes in portfolio management - including for third parties - have had a very positive effect on FFO and cash-flow while our equity interest in WCM generated one-off income."

"We intend to let our shareholders participate in both developments by raising the dividend and by disbursing a special dividend. For the first time, our shareholders will moreover have the choice of receiving their dividend either as cash payment or in the form of additional DIC share certificates. By offering this option, we not only show that ours has become a consistent dividend stock, but we also give our shareholders the chance to step up their participation in the future appreciation of the company by subscribing additional share certificates."

Looking ahead, DIC Asset said it will enhance and optimise its successful and unique hybrid model in 2018. The company plans to keep diversifying its sources of income and is aiming for an acquisition volume between €450m and €500m across its three business divisions but with a special focus on the fund business. At the same time, DIC projects a volume of disposals amounting to €100m to €120m to further optimise its commercial portfolio.

Taking into account transactions and planned lettings, it expects to generate a gross rental income of €95m to €98m in 2018. Operating expenses should decline slightly as a result of the growing fund business. "Considering that FFO in 2017 was characterised particularly by the effect the refinancing arrangement had on financial results, DIC Asset AG expects to see slightly increased funds from operations in an amount of €62m-€64 m - €0.90-€0.93 per share," the release said.

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