Deutsche Konsum REIT-AG closes financial year 2022/2023

Potsdam, 19 December 2023 – Deutsche Konsum REIT-AG (ISIN DE000A14KRD3) publishes the final and audited figures for the past financial year 2022/2023:

• Rental income up 7% to EUR 79.7 million
• Rental income increases slightly by 1.8% to EUR 48.3 million
• FFO decreases to EUR 33.1 million mainly due to interest rate hikes / FFO per share at EUR 0.66 (fully diluted)
• Property portfolio value of EUR 1.0 billion
• EPRA NTA per share decreased to EUR 7.64 due to non-cash value adjustments (previous year EUR 10.98 per share)
• Net LTV at 61.6% (previous year: 49.7%)
• Full-year result EUR -181 million (previous year EUR 60.4 million)

Solid operating management result / FFO significantly below previous year, mainly due to lower interest result

The Company's rental income increased by 7.2% year-on-year in the 2022/2023 financial year, from EUR 74.4 million to EUR 79.7 million. This was mainly due to the expansion of the property portfolio and index-based rent increases. By contrast, the result from property management was burdened by higher running costs and expenses relating to other periods and therefore rose only marginally.

Funds from operations ("FFO"), on the other hand, declined and fell by around 19.4% year-on-year to EUR 33.1 million (previous year: EUR 41.1 million) or EUR 0.66 per share (fully diluted) (previous year: EUR 0.82 per share). FFO is therefore below the guidance (EUR 36 million to EUR 39 million). This was primarily due to significantly higher net interest expenses, which were around EUR 6.3 million higher than in the previous year, as well as higher property management expenses.

Similarly, aFFO (FFO after deduction of capitalised modernisation measures) declined and amounted to around EUR 11.1 million (previous year: EUR 22.5 million) due to several major revitalisation measures (capex) at various properties.

Property portfolio enlarged / portfolio devalued by EUR 114 million

As a result of the transfer of ownership of twelve properties acquired in the previous year less three properties sold in the financial year, the property portfolio grew by a total of nine properties with an area of around 35,000 square metres and generates an annual rent of around EUR 79.2 million (30 September 2022: EUR 73.2 million).

The annual revaluation of the property portfolio as at 30 September 2023, on the other hand, leads to a devaluation of around 9% (like-for-like) and a negative valuation result of around EUR 114 million, which is mainly due to the significant change in the interest rate environment with higher interest rates in many cases. After years of significant revaluations fuelled by the low interest rate policy, the ECB's interest rate turnaround with ten interest rate hikes in a row resulted in a valuation decline for the first time. Accordingly, DKR's real estate portfolio (including properties for sale) is valued at around EUR 995 million as at 30 September 2023 which equals around 12.6x the annual rent (30 September 2022: EUR 1,050 million or 14.2x the annual rent).

The gross acquisition yield of the overall portfolio averaged more than 10% as at 30 September 2023.

Repayment and collateral agreement with Obotritia Capital KGaA concluded on outstanding loan / value adjustment of the loan

On 9 December 2023, DKR reached a notarised agreement with Obotritia Capital KGaA regarding the repayment of the outstanding loan receivable, which amounted to EUR 62.5 million as at the balance sheet date. DKR was also granted a comprehensive collateral package. In return, DKR granted Obotritia a deferral of the loan receivable until 30 June 2025 at the latest. For reasons of prudence, DKR has based the carrying amount of the loan exclusively on very short-term and realisable collaterals and has thus made a value adjustment to the loan of around 70%.

First-time recognition of deferred taxes

Furthermore, the Management Board has decided that, due to the unclear time perspective and the unclear outcome of the legal dispute with the Brandenburg tax authorities with regard to maintaining REIT status, all possible tax risks will be recognised for reasons of prudence. Accordingly, the previously recognised tax receivables are derecognised and deferred taxes are recognised for the first time. This leads to tax expenses totalling around EUR 50.2 million in the annual financial statements, of which around EUR 31.7 million comprises the first-time recognition of (non-cash) deferred taxes. The difference of around EUR 18.5 million comprises the recognition of back tax payments for the period from 2016 onwards, of which a portion had already been settled by DKR as at the balance sheet date and further payments were made by the Company after the balance sheet date.

Total comprehensive income for the period at EUR -181 million / No dividend for the 2022/2023 financial year

For the full year 2022/2023, there is a negative result for the period totalling around EUR -181 million, which is significantly influenced by non-cash expenses such as the property devaluation (EUR -113.5 million), the value adjustment of the loan receivable from Obotritia Capital KGaA (EUR -40.1 million) and the first-time recognition of deferred tax liabilities (EUR -31.7 million).

As previously announced, no dividend proposal can be made due to the negative annual result for the past financial year 2022/2023.

EPRA NTA (fully diluted) at EUR 7.64 per share / Net LTV increases to around 61.6%

After accounting for all of the aforementioned risks, the EPRA NTA (fully diluted) as at 30 September 2023 is around EUR 7.64 per share (30 September 2022: EUR 10.98 per share). This means that the intrinsic value of the share is still significantly higher than the current share price.

The net LTV increased to 61.6% on the balance sheet date, mainly due to the devaluation of the property portfolio and the value adjustment of the loan.

Conference Call

Deutsche Konsum REIT-AG will hold an analysts' conference (webcast and conference call) on the annual results of the 2022/2023 financial year today, 19 December 2023, 10:00 a.m. CET/11:00 SAST. The corresponding results presentation and further information on the webcast and the conference call can be found at https://www.deutsche-konsum.de/en/investor-relations. The Annual Report 2022/2023 is  available for download under https://www.deutsche-konsum.de/en/investor-relations/financial-reports.

About Deutsche Konsum

Deutsche Konsum REIT-AG, Broderstorf, is a listed real estate company with a focus on German retail properties for everyday goods at established micro-locations. The focus of the company's activities is on the acquisition, management and development of local supply properties with the aim of continuous performance and the leveraging of hidden reserves.

The shares of the Company are listed on the Prime Standard of the Deutsche Boerse (ISIN: DE 000A14KRD3) and on the JSE (JSE Limited) (South Africa) by way of a secondary listing.