DEMIRE achieves record in FFO I

DEMIRE achieves record in FFO I

• Letting performance with new record of around 290,000 sqm
• FFO I exceeds EUR 40 million for the first time
• Guidance for 2023: Rental income between EUR 71 million and EUR 73 million, FFO I in the range of EUR 30 million and EUR 32 million 

Langen, 16 March 2023. DEMIRE Deutsche Mittelstand Real Estate AG (ISIN: DE000A0XFSF0) has again improved on its 2021 record results for Funds From Operations I (FFO I, after taxes, before minorities) and rental performance in the financial year 2022. Despite a challenging political and economic situation worldwide, which is also increasingly affecting the investment markets for real estate, the German commercial real estate specialist has completed a successful year. Against the backdrop of the current market environment, the company intends to focus on optimising its real estate portfolio in 2023 and thus reduce the net leverage ratio (net LTV).

Rental income and FFO exceed guidance

The successful new leases and index adjustments to existing leases almost compensated for the reduction of the portfolio base by two properties, so that rental income fell only slightly from EUR 82.3 million to EUR 81.1 million compared with 2021. Nevertheless, net rental income surpassed the guidance of EUR 78 million to EUR 80 million, given in early 2022. FFO I amounted to an unprecedented EUR 41.8 million in 2022 (2021: EUR 39.8 million). At the beginning of 2022, the Executive Board forecasted FFO I results between EUR 38.5 million and EUR 40.5 million.

Decline in EBIT due to market-driven property devaluations

Due to portfolio write-downs, earnings before interest and taxes (EBIT) decreased from EUR 101.9 million to EUR -72.9 million in the wake of increased yields in property markets. However, these were partially offset by increased cash flows. The result of the portfolio’s fair value adjustment sums up to EUR -61.2 million (2021: EUR 47.0 million), leading to a write-down of -4.7% on the 2021 portfolio value.

The market value of DEMIRE’s portfolio amounts to EUR 1.33 billion at the end of 2022 (previous year: Euro 1.41 billion). The diluted net asset value (NAV) dropped from EUR 629.5 million to EUR 526.8 million. In accordance, the net asset value per share declined from EUR 5.94 to EUR 4.97.

Highly successful operational performance

DEMIRE achieved a record letting performance in 2022: At around 290,000 m², the company exceeded the previous year's figure of 182,700 m² by far. Major leases include Bredeney office park in Essen, where DEMIRE let 24,000 m² of office space to the State of North Rhine-Westphalia for at least 20 years. DEMIRE is going to redevelop the existing property in Essen for high energy efficiency as part of its ESG strategy. The leasing of 7,200 m² to Premier Inn Hotels in Kassel also constituted one of the major successful rental deals. DEMIRE's active asset management succeeded to reduce the EPRA vacancy rate of its portfolio, excluding properties held for sale and project developments, from 11% to 9.5%. The weighted average lease term (WALT) increased slightly from 4.7 to 4.8 years. Also, DEMIRE recorded a rental growth of 10.2 % in the same space.

CEO Prof. Dr. Alexander Goepfert emphasises: "Our remarkable letting performance and the record FFO I show that DEMIRE understands its business very well. However, we will not rest. Instead, we are looking for new ways to optimise our portfolio through active asset management."

LTV to decrease significantly

Since summer 2022, DEMIRE has been pursuing its plan to reduce its leverage ratio. In particular, envisaged property sales as part of the portfolio streamlining should provide more liquidity. For example, the logistics property LogPark in Leipzig was sold for EUR 121 million last year. DEMIRE intends to use the proceeds to significantly reduce its net debt ratio, which rose to 54% in 2022 (end of 2021: 49.7%). Considering contractually agreed but yet outstanding sales proceeds, the pro forma net LTV is already below 50%. Assets of EUR 1.54 billion were offset by liabilities of around EUR 800 million at the end of 2022.

CFO Tim Brückner comments: "Our target for 2023 is a net LTV of below 45%. We are also focusing on the refinancing which is due at the end of 2024."

The envisaged property sales will contribute to projected rental income in 2023 of between EUR 71.0 million and EUR 73 million. The FFO I (after tax, before minorities) is expected between EUR 30.0 million and EUR 32.0 million.

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Selected Key Performance Indicators of DEMIRE Group

Consolidated income statement
(in EUR million) 01/01/2022-
12/31/2022 01/01/2021-
12/31/2021   Rental income 81,1 82,3   Net income from the rental of real 62,3 67,2   EBIT -72,9 101,9   Financial results -0,4 -21,1   Profit/loss for the period after tax -71,5 61,6   -thereof attributable to shareholders of the parent company -65,7 58,5   FFO I (after tax, before minority interests) 41,8 39,8   FFO II (after tax, before minority interests) 34,7 36,9   Undiluted/diluted earnings per share (in EUR) 0,40/0,39 0,38/0,38    
Consolidated accounts (in EUR million) 12/31/2022 12/31/2021   Total assets 1.536,9 1.705,6 Investment properties 1.231,1 1.433,1 Cash and cash equivalents 57,4 139,6 Properties held for sale 121,0 0,0 Shareholders' equity (incl. non-controlling shareholders) 486,7 592,4 Equity ratio (in % of total assets) 31,7 34,7 Undiluted/diluted NAV 526,3/526,8 629,0/629,5 NAV per share (EUR, basic/diluted) 4,99/4,97 5,96/5,94 Net financial liabilities 798,2 775,4 Net debt-to-equity ratio (net LTV), in % 54,0 49,7  
Portfolio key ratios 12/31/2022 12/31/2021 Properties (number) 62 64 Market value (in EUR million) 1.329,8 1.412,5 Annualised contractual rent (in EUR million) 85,1 78,1 Rental yield (in %) 6,4 5,5 EPRA vacancy rate (in %) * 9,5 11,0 WALT (in years) 4,8 4,7  
* excl. Assets held for sale and developments              

Invitation to Conference Call on 16 March 2023

The Executive Board of DEMIRE is pleased to invite all interested parties to participate in a conference call on Wednesday 16 March 2023, starting at 10:00 a.m. (CET) during which the financial results for 2022 will be presented.

Please use one of the following registration link:

https://webcast.meetyoo.de/reg/2jxNp5Kf6Qen

The presentation of the financial results will also be webcast live via the following link: https://www.webcast-eqs.com/demire-2022-fy/no-audio

To listen to the audio, please use the registration link provided above. The financial results presentation will also be available for download at https://www.demire.ag/en/publications/ 

About DEMIRE Deutsche Mittelstand Real Estate AG

DEMIRE Deutsche Mittelstand Real Estate AG acquires and holds commercial real estate in mid-sized cities and up-and-coming locations bordering metropolitan areas across German. The Company's particular strength lies in realising the potential of the properties at these locations while focusing on a range of properties that appeals to both regional and international tenants. As of 31 December 2022, DEMIRE's portfolio contains 62 assets with lettable space totaling about 0.9 million sqm. Including the proportionately acquired Cielo property in Frankfurt/Main, the market value amounts to approximately EUR 1.6 billion.

The portfolio's focus on office properties with a blend of retail, hotel and logistics properties results in a return / risk structure that is appropriate for the commercial real estate segment. The Company places importance on long-term contracts with solvent tenants and the realisation of the properties' potential. DEMIRE anticipates continued stable and sustainable rental income along with solid value appreciation.

DEMIRE aims to expand its portfolio significantly in the medium term. The company is focusing on assets contributing strongly to the FFO and on properties with the potential for additional value creation. Properties that are not in line with this strategy will be sold.  DEMIRE is being further developed operationally and procedurally with numerous measures. The company plans to enhance its operating performance through cost discipline as well as an active asset and portfolio management approach.

DEMIRE Deutsche Mittelstand Real Estate AG AG (ISIN: DE000A0XFSF0) shares are listed in the Regulated Market (Prime Standard segment) of the Frankfurt Stock Exchange.

Contact:
Julius Stinauer
Head of Investor Relations & Corporate Finance
DEMIRE Deutsche Mittelstand Real Estate AG
Telefon: +49 6103 372 4944
Email: stinauer@demire.ag