DIC Asset AG has presented its interim report for the first half of the 2009 financial year. The company posted respectable results of €6.1 million in what continued to be a difficult market environment.
Second-quarter profits of 3.5 million showed an increase over the first-quarter result of 2.6 million. Key drivers were the strong performance in real estate operations, and stable rental income of 67.3 million (H1 2008: 67.7 million). The year-on-year decline in net profit was primarily due to lower income this year from opportunistic co-investments, which dominated the results for the first half of 2008 (11.8 million).
At 85.3 million, total revenues for the first half of 2009 showed a 6% year-on-year increase (H1 2008: 80.6 million), primarily driven by sales proceeds, which rose to 6.9 million (H1 2008: 2.0 million). The majority of sales involved small to medium-sized properties, all of which were sold above book value or appraised market value. Stable rental income of 67.3 million provided the cornerstone of revenues: in a market that continued to decline, total new rentals of 128,400 m² during the first half of 2009 were up 9% year-on-year. Two-thirds of rental volume concerned follow-up leases. Annualised like-for-like rental income showed a slight increase (+0.03%).
Total expenses of 44.2 million were higher than in the same period of the previous year (H1 2008: 36.0 million), primarily due to the disposal of assets following a sale. In addition, asset and property management resources were strengthened, to safeguard DIC's rental success despite market tensions through intensive tenant coverage. As a result, staff and administrative expenses rose to 9.0 million (H1 2008: 7.7 million), in line with the budget.
DIC Asset AG's total assets amounted to 2.2 billion as at June 30, 2009. Long-term assets remained stable, at 2.1 billion. Long-term fixed interest rate agreements or hedges are in place for close to 90% of financial debt of 1.6 billion, with 54% having a maturity of over five years. Only approx. 44 million (or just 3% of overall financial debt) will fall due within the next 12 months. DIC Asset AG reduced interest expenses by approx. 2.7 million (based on comparable financing volumes) during the first six months of 2009, thanks to the optimization of portfolio finance: accordingly, the net financial result showed a marked 1.8 million improvement, to -35.3 million. The average interest rate decreased to 4.72% for the first half of 2009, down 25 basis points compared to December 31, 2008, and down 53 basis points from the level as at June 30, 2008 (5.25%).
FFO (funds from operations, comprising earnings before interest and taxes, profits from disposals and development projects) amounted to 21.7 million. In the previous year FFO reached 23.1 million and thus was 1.4 million higher. FFO per share of 0.71 was virtually unchanged year-on-year (H1 2008: 0.74). Second-quarter FFO of 11.5 million was 13% higher than in the first quarter of 2009, reflecting a 3% increase in rental income and a reduction in interest expenses. Cash flow from continuing operations (after interest and taxes paid) rose from 18.6 million to 18.8 million.
Operating profit before depreciation and amortisation (EBDA) declined to 21.1 million (H1 2008: 25.9 million), equivalent to operating profit per share of 0.69 (H1 2008: 0.83). Reflecting the development of consolidated net income, earnings per share declined to 0.20 (H1 2008: 0.37). Second-quarter EBDA and consolidated net income clearly exceeded the first-quarter results, by 13% and 35%, respectively.
DIC Group has acquired at par the 50% stake previously held by Morgan Stanley Real Estate Funds (MSREF) in the MainTor project, a key real estate development in the centre of Frankfurt/Main. DIC Group now holds 100% of the project interest, of which 40% (up from 20%) is held by DIC Asset AG as a minority shareholding. This change of ownership on project level offers DIC the opportunity to realize the project and relate