DIC Assets integrates JV portfolio, raises €100m

Listed German commercial real estate investor DIC Asset AG raised about €100m last week when it completed a rights issue and a cash capital increase, which will allow it to take control of a €480m portfolio of 54 German office and retail assets from its own major shareholder.

The company said the issuing of nearly 23m new shares in the new capital raising is primarily for the purpose of optimising the financing structure of the UNITE portfolio, in which itself, DIC Capital Partners (50%) and Deutsche Immobilien Chancen, DIC’s largest shareholder (30%) are the beneficial owners. The complex deal has the effect of increasing DIC Asset’s direct holdings to around €2.3bn, while reducing its joint venture exposure. It should also contribute additional annual FFO of €7m.

The move also precedes a spate of planned property sales of about €450m designed to lower the company’s overall loan-to-value ratio to below 60% by 2016.

DIC Asset has owned 20% of the UNITE portolio since 2007, and has managed the assets for the major shareholders since then through its subsidiary DIC Onsite GmbH, so it knows the portfolio well. The portfolio is diversified in terms of regions and tenants, and generates annual rental income of about €28m. Lettings have a weighted average lease term of 5 years, with an occupancy rate of about 88%. 73% of the rental income comes from office properties, mainly (56%) in Germany’s larger cities, with a third of the assets in Hamburg. 37% of the rental income comes from public sector tenants.

The three parties have agreed that DIC Asset will pay with issuance of 6.2m new shares to both sellers. “They support the transaction by having agreed to hold these shares for a minimum lock-up period of 12 months and by remaining invested in the portfolio with 6% in a tax-efficient structure,” said DIC Asset in a statement. The three have agreed on an implied equity purchase price of €46m, translating into an initial yield of 6.1%.