DEMIRE hives off 13 properties for €85m, above book value
German listed commercial property landlord DEMIRE has sold a total of 13 properties in seven transactions as part of its strategic portfolio streamlining in a flurry of activity since June.
Specifically, a commercial real estate portfolio comprising eight properties was sold to the Ramfort Group as part of an asset deal, while the other five buildings were sold in individual transactions. At €85.2 million, the sales proceeds were above the assets’ most recent book values. DEMIRE said it would re-invest the funds in further strategic acquisitions and developing its existing holdings.
The assets being sold are smaller, management-intensive units or units that offered DEMIRE limited further value-added possibilities, it said. Collectively they had a vacancy rate of 26% and a Weighted Average Lease Term (WALT) of 3.6 years as of June 30, 2020.
After the sales, which will be completed before the end of the year, DEMIRE’s WALT remains constant at 4.8 years compared with December 31, 2019, while the vacancy rate falls from 9.4% to 7.4%.
The Langen (near Frankfurt)-based company said transactions have no impact on its current forecast for the 2020 financial year. The Management Board continues to expect rental income to be between €85m and and funds from operations (FFO I, after taxes, before minorities) to be between €36 and €38 million, both above the previous year's figures.
At the company’s recent AGM, the board approved its first-ever dividend (€0.54) based on what it views as solid results. CEO Ingo Hartlief said the company’s low-risk strategy enabled it to sustainable support the dividend “even in these difficult times.” The company’s two biggest shareholders are Apollo Global Management (58.61%) and the Wecken group (32.14%), so at the moment there is only a relatively small free float (7.39%).
DEMIRE (Deutsche Mittelstand Real Estate AG) focuses on commercial property in Germany’s secondary cities and up-and-coming suburban locations. At the 30th June, before the latest disposals, it held 84 assets with more than 1 million sqm and a market value of more than €1.5bn. About 68% of DEMIRE’s rental income comes from offices, 23% from retail and 6% from logistics properties.