DEMIRE increases funds from operations by 15.2 per cent to EUR19.4m
DEMIRE Deutsche Mittelstand Real Estate achieved a high letting performance of 122,000 sq m during the first half of 2021, including concluding a long-term lease with Amazon for a new distribution hub to be constructed with around 26,000 sqm of usable space in Leipzig.
DEMIRE also used the first half of the year to actively drive forward the strategic streamlining of its portfolio and, at the same time. The company also successfully concluded the largest single transaction in its history by acquiring the Cielo office building in Frankfurt am Main immediately after the record date. In the first half of the current financial year, the Covid-19 pandemic had a comparatively minor impact on DEMIRE’s business activities. Thanks to an active dialogue with tenants, rental income of only around EUR2.4 million has been outstanding since the beginning of the year, which corresponds to 3.0 percent of the expected rental income for 2021.
DEMIRE's rental income of EUR42.0 million (H1 2020: EUR43.8 million) reflects, among other things, the successful sales in the course of the strategic portfolio streamlining. The profit from the rental of real estate increases from EUR33.0 million to EUR34.2 million, and earnings before interest and taxes (EBIT) rise by 35.2 percent year-on-year to around EUR29.5 million. Earnings before taxes (EBT) improve by 57.5 percent to around EUR18.8 million.
Funds from Operations I (after taxes, before minorities) rose in the reporting period to EUR19.4 million or by 15.2 percent compared to the same period of the previous year (EUR16.9 million). The basic NAV per share is EUR5.45 after the dividend payment of 62 euro cents, compared to EUR5.91 at the end of 2020.
The number of properties decreases further by five to 70 assets compared to year-end 2020 as part of the active portfolio optimisation. The value of the portfolio, however, remains almost constant at around EUR1.4 billion. DEMIRE reports a high letting performance of around 122,000 sqm for the reporting period, of which 46.3 percent is attributable to new lettings and 53.7 percent to follow-on lettings. The EPRA vacancy rate for the portfolio (excluding assets held for sale) was 10.2 per cent as at the reporting date, down from 6.9 per cent as at 31 December 2020. This development is attributable to two factors: On the one hand, the term of some of the concluded leases will begin after reporting date only a few months after signing and thus after the reporting date. On the other hand, new spillovers were taken into re-letting.The WALT increases slightly to 4.9 years, after 4.8 years at year-end 2020.
The average nominal interest rate on debt improves again by 3 basis points to a nominal 1.68 per cent per annum as at 30 June 2021 compared to thel end of 2020. The net leverage ratio (LTV) increases by 2.7 percentage points to 52.7 per cent, and liquidity remains comfortable at EUR121.1 million as of 30 June 2021.
Due to the ongoing vaccination campaign, the overall robust condition of the real estate market and in the expectation that there will be no further nationwide lockdown in Germany, the Management Board confirms its forecast for the 2021 financial year: rental income is expected to be between EUR80 and EUR82 million and FFO I (after tax, before minorities) between EUR34.5 and EUR36.5 million.
Ingo Hartlief, CEO of DEMIRE, says: "We are focusing on our proven "REALize Potential" strategy and our active asset management with a constructive and proactive tenant dialogue. The high letting performance and the signing of a long-term lease with Amazon emphasises our operational performance in raising the potential of our properties and the quality of our portfolio."