DEMIRE meets expectations with H1 2023 results

DEMIRE meets expectations with H1 2023 results

• Rental income of EUR 40.8 million (+ 3.4% y-o-y)
• Funds from Operations I (after tax, before minority interests) of EUR 19.3 million (- 7.4% y-o-y)
• Portfolio value decline of 5.9% compared to the end of 2022 resulting from revaluation of real estate holdings to reflect current market conditions
• Net LTV down to 52.9% as real estate portfolio devaluation more than offset by property sales and bond buybacks
• Liquidity more than doubled to EUR 123 million
• 2023 guidance confirmed: full-year rental income expected to be between EUR 74.5 und EUR 76.5 million, Funds from Operations I (after tax, before minority interests) between EUR 33.0 and EUR 35.0 million

Langen, Germany, 4 September 2023. DEMIRE Deutsche Mittelstand Real Estate AG (ISIN: DE000A0XFSF0) has announced financial results for the first half of 2023 in line with management expectations.

Rental income continues to rise, pre-tax FFO I slightly higher

During the first half, rental income rose by 3.4% to EUR 40.8 million (H1 2022: EUR 39.5 million), primarily due to rent indexation. Over the same period, earnings before interest and taxes (EBIT) fell to negative EUR 65.0 million (H1 2022: EUR 26.4 million), with the drop largely the result of revaluations of investment properties to reflect current market conditions (loss of EUR 59.7 million) as well as of properties held for sale (loss of EUR 9.4 million).

Although Funds from Operations I (FFO I) before taxes increased slightly, higher current tax expense led to FFO I after taxes and before minority interests of EUR 19.3 million, which was 7.4% lower than in the comparable prior-year period (H1 2022: EUR 20.8 million).

Decrease in portfolio value due to value correction and sales

The market value of DEMIRE’s portfolio fell compared to the end of 2022 to approx. EUR 1.18 billion (31/12/2022: EUR 1.33 billion). The drop in portfolio value was partly attributable to the sale of properties in Ulm and Apolda (near Jena) but also to the revaluation of the portfolio to reflect current market conditions, resulting in a value correction of 5.9% compared to the end of 2022. During the reporting period, undiluted net asset value (NAV) per share thus decreased by EUR 0.56 to EUR 4.43 (31/12/2022: EUR 4.99).

Leasing performance (new and extended leases signed) dropped to 18,200 m² (H1 2022: 144,900 m²), primarily because space available to rent was much less following the strong leasing performance of the previous year and because fewer leases have expiries during 2023. The vacancy rate calculated on an EPRA basis, and excluding properties classified as development projects, rose slightly to 9.6% (31/12/2022: 9.5%). The portfolio’s weighted average remaining lease term (WALT) remained almost unchanged at 4.6 years (31/12/2022: 4.8 years).

“We are seeing strong buyer interest in the renewed sale of our LogPark logistics property in Leipzig,” explains Ralf Bongers, Chief Investment Officer of DEMIRE. “We are currently in a structured sales process which we hope to successfully complete this year.”

Increase in liquidity, decrease in net LTV

“During the first half of the year, we were able to achieve a significant boost to our liquidity position along with a reduction in our debt ratio,” says Tim Brückner, Chief Financial Officer of DEMIRE. “Further positive effects can be expected from extensive targeted sales, such that our net LTV will drop significantly.” For the first half of the year, DEMIRE’s nominal borrowing cost remained low at an average annual rate of 1.74%. The net loan-to-value (LTV) ratio ended the period at 52.9%, which was slightly lower than the 2022 year-end ratio (54.0%). As of the period close, cash and cash equivalents rose significantly to EUR 123.4 million (31/12/2022: EUR 57.4 million).

Guidance for 2023 confirmed

“DEMIRE made good progress in generating additional liquidity in the first half of 2023,” says Prof. Dr. Alexander Goepfert, Chief Executive Officer of DEMIRE. “Given the weak market environment we are in, our year-to-date operating metrics are solid and in line with our expectations from the beginning of the year. For the second half of the year, we likewise expect key financial results in line with our original plan.”

The Executive Board thus confirms the guidance for fiscal year 2023, with full-year rental income expected to be between EUR 74.5 and 76.5 million (2022: EUR 81.1 million) and FFO I (after taxes, before minorities) between EUR 33.0 and 35.0 million (2022: EUR 41.8 million).

End of press release

Invitation to Conference Call on 4^th of September 2023

The Executive Board of DEMIRE is pleased to invite all interested parties to participate in a conference call on 4th of September 2023, starting at 3:00 p.m. (CEST) during which the financial results for the first half of 2023 will be presented.

Please use the following registration link:

https://webcast.meetyoo.de/reg/mX0pcB22jiyU

The presentation of the financial results will also be webcasted live via the following link: https://www.webcast-eqs.com/demire-2023-h1/no-audio

To listen to the audio, please use the registration link provided above. The financial results presentation will be available for download at https://www.demire.ag/en/publications/

About DEMIRE Deutsche Mittelstand Real Estate AG

DEMIRE Deutsche Mittelstand Real Estate AG acquires and holds commercial real estate in mid-sized cities and up-and-coming locations bordering metropolitan areas across Germany. The Company's particular strength lies in realising the potential of the properties at these locations while focusing on a range of properties that appeals to both regional and international tenants. As of 30 June 2023, DEMIRE's portfolio comprises 60 assets with a lettable space of approx. 861k m². Including the proportionately acquired Cielo property in Frankfurt/Main, the market value amounts to approximately EUR 1.4 billion.

The portfolio's focus is on office properties with a blend of retail, hotel and logistics properties resulting in a return / risk structure that is appropriate for the commercial real estate segment. The Company places importance on long-term contracts with solvent tenants and the realisation of the properties' potential. DEMIRE anticipates continued stable and sustainable rental income along with solid value appreciation.

DEMIRE aims to expand its portfolio significantly in the medium term. The company focuses on assets contributing strongly to the FFO and properties with the potential for additional value creation. Properties that are not in line with this strategy will be sold. DEMIRE is being further developed operationally and procedurally with numerous measures. The company plans to enhance its operating performance through cost discipline as well as an active asset and portfolio management approach.

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

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