DEMIRE achieves lower 9M 2024 result due to smaller portfolio base

• Rental income falls to EUR 50.6 million due to smaller portfolio base
• FFO I (after taxes, before minorities) decrease to EUR 23.0 million
• Net-LTV falls significantly to 52.3% after property sales, compared to 57.7% at the end of 2023
• Guidance for 2024 confirmed: Rental income between EUR 64.0 million and EUR 66.0 million; FFO I (after taxes, before minority interests) expected to be significantly lower than in the previous year

Langen, 7 November 2024. The results of DEMIRE Deutsche Mittelstand Real Estate AG (ISIN: DE000A0XFSF0) fell in the first nine months of 2024, but remained in line with management's expectations. The main reason for this is the reduced portfolio base.

Changed portfolio leads to reduced rental income and FFO I

Rental income decreased to EUR 50.6 million (9M 2023: EUR 59.9 million). Earnings before interest and taxes (EBIT) improved to EUR -22.9 million in the same period (9M 2023: EUR -57.5 million). The increase is mainly due to lower negative market value adjustments as part of the revaluation of investment properties (EUR -17.9 million) and properties held for sale (EUR -8.7 million).

Funds from operations (FFO I) after taxes and before minority interests fell by 17.5% to EUR 23.0 million (9M 2023: EUR 27.8 million). The decline is also a result of the reduced property volume in the portfolio, which has an impact on FFO I through lower rental income.

Frank Nickel, CEO of DEMIRE: ‘The successful refinancing of our bond tied up considerable resources within our company. The fact that we were still able to achieve such a positive result - despite the sale of the LogPark in Leipzig and the deconsolidation of the LIMES portfolio - is a remarkable achievement.’

Rising letting performance despite smaller portfolio

The market value of the DEMIRE portfolio fell to around EUR 811.6 million compared to the end of 2023 (31 December 2023: EUR 1,075.6 million). The decline in the portfolio value is mainly due to the deconsolidation of the LIMES portfolio and the sale of the LogPark in Leipzig. Ralf Bongers, CIO of DEMIRE, commented: ‘The successful sale of the LogPark despite an extremely challenging market environment is proof of our efficiency. We are currently in advanced sales negotiations for other properties. We are therefore confident that these property sales will reduce the bond volume by EUR 50 million in both 2025 and 2026.’

The negative result for the period caused the net asset value (NAV, undiluted) to fall by EUR 0.26 per share to EUR 2.98 in the reporting period (31/12/2023: EUR 3.24).

Despite the smaller portfolio, letting performance rose to 60,310 m² in the first nine months of 2024 (9M 2023: 27,240 m²). New leases, including in the properties in Leipzig and Bad Vilbel, contributed 31% to the result, while 69% was attributable to lease renewals, including in Bonn and Freiburg. The EPRA vacancy rate (excluding properties classified as project development) rose to 14.7% as at 30 September 2024 (31.12.2023: 13.1%). Since 30 June 2024 (15.5%), there have already been signs of a trend reversal towards lower vacancy rates due to new lettings. The average remaining lease term (WALT) of the entire portfolio fell slightly to 4.4 years (31 December 2023: 4.6 years).

Significant decrease in Net LTV

The average nominal borrowing costs remained at a low level of 1.89% per year in the reporting period. Following the bond extension, these are expected to increase to around 3.5% (excluding shareholder loans). The Net LTV fell to 52.3% due to the property sales and is therefore well below the year-end figure for 2023 (57.7%). Tim Brückner, CFO of DEMIRE, commented: ‘We will continue to consistently pursue the path we have taken to reduce our debt in the coming quarters. We will use surplus liquidity from our property sales for this purpose.’

Guidance for 2024 confirmed

The Executive Board confirms the guidance for the 2024 financial year, with rental income expected to fall to between EUR 64.0 million and EUR 66.0 million (2023: EUR 78.5 million). FFO I (after taxes, before minorities) are also expected to be significantly below the previous year's figure of EUR 36.7 million.

Frank Nickel, CEO of DEMIRE, comments: ‘Following the successful extension of our bond until the end of 2027, which was only possible thanks to the outstanding teamwork of everyone at DEMIRE, we now want to set the tone in the area of asset management. We have laid a good foundation for this with an organisational realignment and increased staffing.’

End of press release

 

Invitation to the conference call on 7 November 2024

The Executive Board of DEMIRE invites all interested parties to a conference call on 7 November 2024 at 10:00 am (CET) to present the results for the first nine months of 2024.

Please use the following registration link:

https://webcast.meetyoo.de/reg/Ff7jDzSSS6pi

The presentation of the results will also be broadcast live via webcast. Please use the link https://www.webcast-eqs.com/demire-2024-q3/no-audio

For audio transmission, please use the dial-in via the registration link above. A presentation of the results will be made available for download on the website https://www.demire.ag/en/publications/

 

Selected Key Performance Indicators of DEMIRE Group

Consolidated income statement (in EUR million)	01/01/2024- 30/09/2024		01/01/2023- 30/09/2023
Rental income	50.6		59.9
Net income from the rental of real estate	34.4		43.4
EBIT	-13.8		-64.6
Financial results	-9,1		7.1
Profit / loss for the period after tax	-21.6		-49.5
-thereof attributable to shareholders of the parent company	-22.4		-47.0
FFO I (after tax. before minority interests)	23.0		27.8
FFO II (after tax. before minority interests)	17.7		10.3
Undiluted / diluted earnings per share (in EUR)	0.22/0.22		0.26/0.26
Consolidated balance sheet (in EUR Mio.)	30/09/2024		31/12/2023
Balance sheet total		1,174.9	1,327.5
Investment properties		755.2	947.3
Cash and cash equivalents		164.5	120.0
Properties held for sale		81.8	149.1
Shareholders‘ equity (incl. non-controlling shareholders)		381.1	405.3
Equity ratio (in % of balance sheet total)		26.2	25.1
Undiluted / diluted NAV		314.5/315.0	341.5/342.0
NAV per share (EUR, basic / diluted)		2.98/2.97	3.24/3.23
Net financial liabilities		528.9	697.0
Net debt-to-equity ratio (net-LTV) in %		52.3	57.7
Portfolio key ratios		30/09/2024	31/12/2023
Properties (number)		54	59
Market value (in EUR million)		811.6	1,075.6
Annualised contractual rent (in EUR million)		57.6	76.7
Rental yield (in %)		7.1	7.1
EPRA vacancy rate (in %)*		14.7	13.1
WALT (in years)		4.4	4.6
* excluding properties classified as developments

 

About DEMIRE Deutsche Mittelstand Real Estate AG

DEMIRE Deutsche Mittelstand Real Estate AG acquires and holds commercial properties in medium-sized cities and up-and-coming peripheral locations in metropolitan areas throughout Germany. The company's particular strength lies in realising real estate potential in these locations and focuses on an offering that is attractive to both international and regional tenants. As of 30 September 2024, DEMIRE had a real estate portfolio of 54 properties with a lettable area of around 0.6 million square metres. Taking into account the proportionately acquired Cielo property in Frankfurt/Main, the market value amounts to around EUR 1.0 billion.

The portfolio's focus on office properties with an admixture of retail, hotel and logistics properties is appropriate for the risk/return structure of the commercial property segment. The Company attaches great importance to long-term contracts with solvent tenants and the realisation of potential and therefore continues to expect stable and sustainable rental income and solid value growth. DEMIRE's portfolio is to be significantly expanded in the medium term. In expanding the portfolio, DEMIRE will focus on FFO-strong assets with potential, while properties that do not conform to the strategy will continue to be sold in a targeted manner. DEMIRE will continue to develop its operations and processes with numerous measures. In addition to cost discipline, operating performance is being improved through an active asset and portfolio management approach.

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

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