Deutsche Konsum REIT-AG prepares for strong growth and repositions itself

PRESS RELEASE

Deutsche Konsum REIT-AG prepares for strong growth and repositions itself

Potsdam, 30 May 2023 – In the context of strategic discussions and considerations, Deutsche Konsum REIT-AG (ISIN DE000A14KRD3) has analysed the further business prospects for DKR and the situation on the real estate market as well as on the capital markets and derived measures from this.

The Company considers the current situation on the real estate market to be exciting and full of opportunities and derives positive growth prospects for itself from this. Due to the sharp rise in borrowing costs in the last three quarters, the Company is feeling the effects of dynamically increasing interest costs for refinancing and new loans. On the other hand, the ECB's interest rate hikes in particular are leading to increasingly declining asking prices on the real estate market, which is reflected in a currently increasingly filling acquisition pipeline with interesting local supply properties that fit exactly into DKR's purchase profile. The Company expects this trend to intensify further, especially towards the end of 2023, and derives strong growth opportunities through a significant purchase volume from this.

After careful consideration, the Management Board has come to the conclusion that in the current situation it is necessary to maintain the highest possible level of liquidity. On the one hand, this allows debt instruments that are expiring in the following year already to be gradually repaid, and on the other hand, growth opportunities that arise can be quickly seized through further acquisitions.

Furthermore, the Company would like to strengthen its independence and push ahead with the separation from the founding shareholder and main shareholder Obotritia Capital KGaA.

The Company has derived the following measures to achieve its goals:

Amendment of the dividend proposal and reduction of the dividend distribution for the financial year 2021/2022 to EUR 0.12 per share
As already announced in advance in an insider information, the Management Board amends its proposal for the appropriation of profits dated 15 December 2022 for the past financial year 2021/2022 by retroactively allocating a reinvestment reserve in the amount of EUR 12,689,275. This is possible according to § 13 (3) REIT Act in the amount of half of the realised capital gains from the property sales of the financial year 2021/2022. The remaining distributable amount shall be distributed as dividend in the amount of EUR 4,218,713 or EUR 0.12 per share (instead of EUR 0.48 per share) and the calculated remaining amount shall be transferred to the profit carried forward. The reinvestment reserve is then to be used to partially finance the latest acquisitions.

In order to take into account possible opportunities and risks, the reduction of the dividend distribution is intended to ensure the highest possible flexibility in the further operational management of the Company.

The Annual General Meeting must vote on the new resolution on the appropriation of profits.

Termination of short-term investments of surplus cash and cash equivalents
In view of the re-availability of interest on credit balances and in order to increase the directly available liquidity, the short-term investments were terminated. Since the beginning of the financial year, no new short-term investments have been made and instead around EUR 40 million has already flowed back directly to DKR. Full repayment of all cash and cash equivalents is expected by September 2023.

Capital recycling for further growth financing
The Company currently has several purchase offers at attractive purchase price factors for individual locations, which are currently being reviewed and negotiated. DKR is considering using attractive sales options, especially in the current situation, in order to invest them in new, higher-yielding local supply properties in the sense of capital recycling.

The Company currently has an attractive acquisition pipeline with local retail properties valued at approx. EUR 84 million at an average acquisition factor of 11 times the annual rent (9% yield), the realisation of which would lead to strong growth in the rental income of the property portfolio.

Changes in the Supervisory Board and Management Board – Rolf Elgeti moves from the Management Board to the Supervisory Board
The Chairman of the Supervisory Board Hans-Ulrich Sutter has informed the Company that he will resign from his mandate as well as from his position as Deputy Chairman of the Audit Committee at the end of the next Annual General Meeting for personal reasons.

At the same time, the Chairman of the Management Board Rolf Elgeti (CEO) has decided to resign his mandate with effect from the end of the next Annual General Meeting. In the future, the operational business activities will be carried out by the Management Board members Alexander Kroth (CIO) and Christian Hellmuth (CFO). Rolf Elgeti intends to stand for the chairmanship of the Supervisory Board at the upcoming Annual General Meeting.

Annual General Meeting 2023 on 13th July 2023
The Company will shortly convene the 2023 Annual General Meeting, which will take place in Berlin on 13 July 2023.

Rolf Elgeti, CEO of Deutsche Konsum REIT-AG:
“We sincerely thank our Supervisory Board Chairman Mr Sutter for his valuable work since the IPO of DKR and wish him all the best personally. We also want to take this as an opportunity to take the Company into a new and exciting phase and to reallocate the tasks ahead. For this reason, I would like to step down from my role as Chairman of the Management Board in the future and continue to be available to the Company as Chairman of the Supervisory Board.“

Alexander Kroth, CIO:
“The acquisition pipeline has filled up strongly again in the past two months with attractive properties that fit our portfolio very well and that were not offered to us at these price levels two years ago. We think that this trend will continue until the end of the year, which will create great growth opportunities for us.“

Christian Hellmuth, CFO:
“The change in the resolution on the appropriation of profits and the resulting lower dividend distribution was not easy for us, but from the Company's point of view it makes a lot of sense in the current environment, because it increases the financial flexibility for upcoming refinancing and establishes additional value creation opportunities through investments in the portfolio and through acquisitions of further retail properties, which is why we are asking the shareholders for their approval at the Annual General Meeting.“
 

About the Company
Deutsche Konsum REIT-AG, Broderstorf, is a listed real estate company focusing on German retail properties for everyday goods in established micro-locations. The focus of the Company's activities is on the acquisition, management and development of local retail properties with the aim of achieving a steady increase in value and the lifting of hidden reserves.

The shares of the Company are listed on the Prime Standard of Deutsche Börse (ISIN: DE000A14KRD3) and on the JSE (JSE Limited) (South Africa) by way of a secondary listing.

Contact
Deutsche Konsum REIT-AG
Stefanie Frey
Investor Relations
E-Mail: sf@deutsche-konsum.de
Phone: +49 (0) 331 74 00 76 – 533