Branicks Group confirms outlook for 2024 after good start to the year

Frankfurt am Main, May 16, 2024

Press release of the Branicks Group AG

Branicks Group confirms outlook for 2024 after good start to the year

• Operating business on track
• Rental growth like for like at 4.6%
• Funds from operations after minority interests of EUR 9.0 million
• Reorganization of financial structures successfully continued
• Development of the additional Renewables asset class
• Annual forecast for 2024 confirmed

“With another strong letting performance and reduced operating costs, we are on track with our operating business in the first quarter. Following the systematic reorganization of our financial structures, we have set the course to be at the forefront when the industry recovers. We are concentrating on further developing the quality and sustainability of our portfolio within our asset focus areas of office and logistics and on building up the new asset class of renewables,” said Sonja Wärntges, CEO of Branicks Group AG.

Frankfurt, May 16, 2024 - Branicks Group AG (Branicks), ISIN: DE000A1X3XX4, one of Germany's leading listed real estate companies, today published its results for the first three months of the 2024 financial year.

In a persistently difficult overall market, the operating business developed according to plan. At +4.6%, like-for-like growth in the letting business was once again noticeable compared to the same quarter of the previous year. The institutional business continues to be a stabilizing factor. The company's total portfolio amounted to EUR 13.1 billion in assets under management as at the balance sheet date of March 31, 2024. Branicks is successfully implementing the action areas of the Plan 2024 action plan.

At the end of the first three months, Branicks generated FFO (funds from operations) after minority interests of EUR 9.0 million (previous year: EUR 12.9 million) and confirmed its full-year targets for 2024.

Successful reorganization of financial structures

Branicks successfully continued the reorganization of its financial structures in the first few months of the 2024 financial year, thus putting its financing on a reliable footing for the coming years. Branicks had already halved the bridge financing for the acquisition of VIB Vermögen AG in the 2023 financial year and repaid the 2018/2023 corporate bond as planned. In March 2024, Branicks Group AG reached agreements with its creditors on the repayment of a further partial amount of EUR 40 million of the VIB bridge financing and a restructuring plan based on a corporate plan reviewed by independent experts on a new timing for the repayment of promissory note loans originally maturing in 2024 and the remaining VIB. This paved the way for a sustainable, financially stable future for the company.

Milestones in the first three months of the 2024 financial year

• As at the reporting date of March 31, 2024, assets under management amounted to around EUR 13.1 billion (31.12.2023: EUR 13.2 billion). The gross rental yield was 4.8% as at the reporting date, the EPRA vacancy rate was 5.3% (previous year: 4.7) and the weighted average lease term (WALT) was 6.0 years (previous year: 6.4).

• Gross rental income fell year-on-year to EUR 44.4 million (previous year: EUR 50.4 million) due to sales. The good letting performance and the associated like-for-like rental growth of 2.3% in the Commercial Portfolio had an offsetting effect. Net rental income decreased to EUR 38.5 million (previous year: EUR 44.0 million).

• Income from property management is impacted by the continued sluggish transaction market. In total, real estate management income of EUR 9.7 million (previous year: EUR 10.5 million) was generated from asset, property management and development fees.

• The result from associates increased year-on-year to EUR 1.6 million (previous year: EUR 0.9 million) due to the newly launched VIB Retail Balance I.

• Operating costs were significantly reduced by EUR 1.1 million to EUR 15.6 million (previous year: EUR 16.7 million).

• Net interest income amounted to EUR -24.0 million (previous year: EUR -26.0 million).

• As at March 31, 2024, NAV increased slightly to EUR 15.69 per share (December 31, 2023: EUR 15.54). Adjusted NAV, which includes the value contribution of the Institutional Business, also increased to EUR 17.79 per share (December 31, 2023: EUR 17.63).

• The loan-to-value (LTV) ratio fell slightly compared to the end of 2023 to 59.4% (December 31, 2023: 60.1%). Correspondingly, the adjusted LTV, which includes the value of the institutional business, also fell to 56.9% (December 31, 2023: 57.6%).

• Forecast for 2024 confirmed
  Branicks Group AG is planning transactions with a total volume of between EUR 0.8 billion and EUR 1.2 billion across all segments for 2024. Purchases totaling around EUR 0.15 billion to EUR 0.3 billion are planned exclusively for the Institutional Business segment, both for existing mandates and as part of new mandates and investment vehicles. Branicks anticipates sales across all segments with a volume of around EUR 650 to 900 million. Of this, around EUR 500 to 600 million will be attributable to the Commercial Portfolio and around EUR 150 to 300 million to the Institutional Business. Based on the current own portfolio, the planned letting performance and further on-balance sheet sales in the current financial year, Branicks expects gross rental income from the Commercial Portfolio to increase to between EUR 160 million and EUR 175 million. Furthermore, we expect total income from property management of EUR 40 to 50 million in the 2024 financial year. In 2024, Branicks will focus in particular on further portfolio and cash flow optimization, so that total FFO (after minorities, before taxes) is expected to be in the range of EUR 40 to 55 million. The business forecast is based on the key assumptions explained on page 89 of the Branicks Group AG annual report 2023.

• Expansion of the business model to include the renewables asset class
  In view of the ongoing changes on the real estate markets, the Branicks Group is tapping into additional potential for returns and value appreciation by expanding its business model to include the renewable energy asset class, as communicated after the end of the first quarter on April 30, 2024. On the one hand, this includes the further expansion of the green building quota as the equivalent of ecological assets. In addition, a partnership with Encavis Asset Management AG has been launched in the Institutional Business segment to develop the additional Renewables asset class. The aim is to develop and offer investment vehicles in the field of solar and wind power plants in Germany and other European countries. A first fund with a target volume of EUR 300 million is being set up for this purpose and will be launched on the market shortly.

Focus on return to positive net cash flow and significant debt reduction
For the current financial year and subsequent years, the Branicks Group will consistently drive forward its transformation into a profitable, ESG-focused and value-creating asset manager. In its corporate planning for the three-year period 2024-2026, which has been reviewed by independent experts, Branicks assumes that the transaction market will begin to recover in the second half of 2024 and plans to return to a net profit and positive net cash flow by the end of 2026, with income from ESG expertise exceeding the earnings contribution from traditional real estate management. The strategic focus is on a significant reduction in debt, which is to be financed primarily through sales from the real estate portfolio. The aim is to reduce the LTV ratio to below 50% in the course of 2025.

Invitation to the conference call on May 16, 2024 

The Board of Directors of Branicks Group AG invites you to the presentation of the results for the first three months of 2024 at 10:00 a.m. CET.

To participate in the conference call, please register at:

https://webcast.meetyoo.de/reg/6H5Yxi9tqdLl

The webcast (incl. replay) can be accessed via the following link:

https://presenter.webcast-eqs.com/webcast/branicks-2024-q1

About Branicks Group AG:
Branicks Group AG (formerly DIC Asset AG) is a leading German listed specialist for office and logistics real estate as well as newly renewable assets with over 25 years of experience in the real estate market and access to a broad investor network. Our basis is the national and regional real estate platform with nine offices in the ground in all major German markets (including VIB Vermögen AG). As of March 31, 2024, we managed properties with a market value of EUR 13.1 billion in the Commercial Portfolio and Institutional Business segments.

The Commercial Portfolio segment comprises real estate held for our own account. Here, we generate cash flows from stable rent revenues on long-term leases while also optimizing the value of our portfolio assets through active management and realizing gains from sales.

In the Institutional Business segment, we earn recurrent fees from real estate services we provide to national and international institutional investors by structuring and managing investment products that return attractive dividend yields.

The shares of Branicks Group AG are listed in the Prime Standard of the German Stock Exchange (WKN: A1X3XX / ISIN: DE000A1X3XX4).

The company is fully committed to sustainability and occupies top positions in ESG-relevant ratings such as Morningstar Sustainalytics and S&P Global CSA. The Branicks Group is also a signatory to the UN Global Compact and the UN PRI network. Properties in the Branicks portfolio have been awarded renowned ESG certificates such as DGNB, LEED or BREEAM.

For more details, go to www.branicks.com

PR Contact Branicks Group AG:

Stephan Heimbach

Neue Mainzer Strasse 32-36

D-60311 Frankfurt am Main

Phone +49 69 9454858-1569

pr@branicks.com

IR Contact Branicks Group AG:

Jasmin Dentz

Neue Mainzer Strasse 32-36

D-60311 Frankfurt am Main

Phone +49 69 9454858-1492

ir@branicks.com

The Branicks Group AG at a glance

¹ Figures per share adjusted in accordance with IFRS (number of shares as at 31.03.2024: 83,565,510 thousand /31.03.2023: 83,152,566 thousand)
² Adjusted for warehousing

³ Figures per share adjusted in accordance with IFRS (number of shares as at 31.03.2024: 83,565,510 thousand /31.12.2023: 83,565,510 thousand)

⁴ inkl. full value of the Institutional Business

⁵ Only calculated for the Commercial Portfolio excluding repositioning and warehousing