DGAP-News: Deutsche Industrie REIT-AG - Successful business performance despite corona crisis

Deutsche Industrie REIT-AG - Successful business performance despite corona crisis

- Important lease extended ahead of schedule and rent significantly increased
- Two further properties purchased
- Promissory note loan of EUR 10 million raised
- So far little impact due to the corona pandemic
- Confirmation of the previous FFO forecast

Rostock, 16 April 2020 - Deutsche Industrie REIT-AG (ISIN DE000A2G9LL1) this week successfully concluded negotiations on the early extension of a lease agreement running until the end of 2024. The multi-site lease will be extended for another five years (plus an option for five more years). The annual net cold rent will increase from EUR 1.45 million p.a. to EUR 2.38 million p.a. from 2025 onwards. i.e. by 64% p.a.

Two further properties in Saxony-Anhalt were already acquired before Easter for a total of EUR 6.1 million.

Firstly, in Oebisfelde the production site of a plastics processing company with around 12,515 sqm of usable floor space in the immediate vicinity of Wolfsburg was purchased. The annual net cold rent is kEUR 240 with a WALT of 3.1 years. The purchase price amounts to EUR 2.5 million, resulting in a gross initial yield of approx. 9.6%.

On the other hand, a logistics property located in Stegelitz in the municipality of Möckern with direct access to the A2 motorway and the state capital Magdeburg was acquired. The so-called cross-dock facility enables users to achieve a high turnover rate, has a usable floor space of around 12,200 sqm. and has been rented for many years by a large German logistics company. The annual net rent is kEUR 407 and the WALT is 1.7 years. With a purchase price of EUR 3.6 million, this results in a gross initial yield of approx. 11.3%.

For further refinancing, DIR has taken out an unsecured loan of EUR 10 million, thereby further strengthening its liquidity. The loan has a term of five years with an interest rate to be determined every six months, initially 2.25% p.a. In addition, DIR is negotiating with various cooperative banks and savings banks for further refinancing, in some cases with imminent maturity.

The Management Board assesses the effects of the Corona crisis on the business model as follows:

DIR's business model is sustainable, long-term and risk-averse from the outset. The endeavour to only have properties with a high cash yield in the portfolio now protects the company from effects being too harsh, as the gross initial yield is around 10%. Moreover, the portfolio is now well diversified both regionally (Germany-wide) and sectorally (over 50 sectors).

There are currently no significant actual bad debts and only a few requests for temporary rent reductions.

About half of the space in the portfolio is used for logistics and warehousing and it can be observed that the demand for these services is currently even stronger than before.

Deutsche Industrie REIT-AG has a broadly diversified debt capital portfolio (secured corporate bond, convertible bonds, mortgage-backed bank loans, unsecured promissory note loans), a remaining term of more than 8 years and an interest coverage ratio (ICR) of 3.8x (EBITDA/net interest). The financing network consists primarily of savings banks and cooperative banks and thus continues to be valid and involves very reliable partners for the liquidity strategy.

The equity ratio is currently excellent (equity ratio as of 31/12/2019 = 67%)

Despite the yet unforeseeable economic consequences of the Corona crisis, we believe Deutsche Industrie REIT-AG is well equipped and look to the future with confidence.

Based on current knowledge, there is no need to adjust the existing forecasts. The Management Board continues to expect an FFO of EUR 23 m to EUR 25 m for the 2019/2020 financial year. The FFO run rate (annualised FFO without accrual effects) is expected to be EUR 27 m to EUR 29 m at the end of the 2019/2020 financial year.

Detailed information about Deutsche Industrie REIT-AG can be found at
https://deutsche-industrie-reit.de/

About Deutsche Industrie REIT-AG

Deutsche Industrie REIT-AG makes sustainable investments in light industrial real estate in Germany. Light Industrial comprises not only the activities of storage and distribution of trade goods, but also their administration and production. The asset class consists mainly of medium-sized to large industrial and commercial park sites. The sites are usually more complex than pure logistics properties and have a high local relevance.

The share is listed on the regulated market of Berlin Stock Exchange and in the Prime Standard of the Frankfurt Stock Exchange. Since the beginning of 2018, the Company has had the status of a REIT ("real estate investment trust") and the associated income tax exemption.