International News

Deutsche Konsum REIT reports profitable growth for the first half of 2021/2022 financial year

Rolf Elgeti, CEO of Deutsche Konsum REIT-AG.

Deutsche Konsum REIT-AG has published its half-year results for its 2021/2022 financial year, achieving an increase of 10% in its rental income from €33 million to €36.2 million when compared to the previous financial year. Net income rose from €22.5 million to €24.7 million.

Funds from operations (FFO) increased by 4% to €21.1 million (or €0.60 per share). In contrast, funds from operations, after the deduction of capitalised modernisation measures, rose considerably by 37% to €14.7 million due to a lower investment rate in revitalisation measures.

Currently, more than 80% of DKR’s rental income is inflation-hedged, as a large part of the leases contain corresponding indexation clauses. Due to the current spikes in inflation, this has led to rent increases of around 1% of the annualised rent of the entire portfolio during the first half of the 2021/2022 financial year. The company expects further strong rental increases in the coming quarters if this high inflation level persists.

DKR’s real estate portfolio recognised on the 31st of March 2022 comprises of 174 retail assets with a balance sheet value of approximately €1,027.5 million (31st September 2021: €1, 014.2 million) and a rental area of around 1,045,000 square metres, including the sold properties whose transfers of benefits and encumbrances occurred in May 2022 or are expected in the coming months.

The average acquisition yield of the overall portfolio is approximately 10.3%.

DKR recently acquired a grocery store in Lohra/Marburg (Hesse) and a local retail centre in Lübtheen (Mecklenburg-Western Pomerania) with anchor tenants Lidl and EDEKA by notarial deeds in April 2022. The total purchase price of €5 million and annualised rental income of TEUR 454.0 results in an acquisition yield of 9.2%.

Since the start of the new financial year, the company has acquired 15 local retail assets for an investment value of approximately €49 million and an annual rent of €4.2 million, which corresponds to a purchase factor of 11.8 times the annual rent. These new acquisitions have fully compensated for the rent reductions of the properties sold in the past six months. The sales proceeds of around €75 million have been offset by new investments of €49 million to date. The resulting free liquidity will be invested in further acquisitions.

The Altenburg/Nobitz acquisition was transferred to DKR during the first half of the current financial year, and the transfer of benefits and encumbrances of a total of eight further properties took place after the balance sheet date in April and May 2022. The remaining six properties’ transfer will take place in the coming weeks and months.

Considering all notarised acquisitions and sales, the pro forma portfolio comprises of a total of 178 properties with a total lettable area of approximately 1,040,000 square metres and a balance sheet value of €1,003 million. The portfolio currently generates an annual rent of €71.1 million.

EPRA NTA per share increased to €10.14 as at 31 March 2022 (30 September 2021: €10.10 per share) due to the positive half-year result (and after the dividend payment of €0.40 per share on the 15th of March 2022).

DKR’s net loan-to-value (LTV) amounts to 53.9% as of the balance sheet date, temporarily above the target figure of around 50%.

For the current financial year, DKR’s Board confirms an FFO of between €40 million and €44 million based on current conditions.

DKR’s share price has increased by 18% over the past six months.