DIC takes control of €481m German portfolio

German listed property company DIC Asset is to raise its stake in the Unite office-led portfolio from 20% to 94% as part of a strategy to streamline the business and further diversify its portfolio.

Frankfurt-based DIC is to acquire a majority interest in the €481 mln package comprising 54 office and commercial properties from co-owners DIC Capital Partners and Deutsche Immobilien Chancen, its majority shareholder.

The acquisition is in line with DIC's strategy to simplify its corporate structure which has already seen the company take over three former joint venture portfolios with MSREF at the end of 2011.

The German property group will finance the purchase with the issue of 6.2 million shares as part of a planned capital increase. To optimise the portfolio financing, DIC said it will also launch a 16.6 million share rights issue. Using the issue proceeds against cash contributions, the company has arranged long-term financing running to 2019 and 2020 with a syndicate of German banks. As a result, DIC's average debt maturity will be extended to 4.6 years.

'The acquisition of the Unite portfolio will allow DIC Asset to further optimise and diversify its real estate holdings,' the Frankfurt-based group said.

The Unite portfolio is broadly diversified in terms of regions and tenants, and generates annual rental income of around €28 mln. The package, largely consisting of offices, boasts a weighted average lease term of five years and an occupancy rate of around 88%.

DIC acquired an initial 20% stake in the portfolio in 2007, in a joint venture with its largest shareholder, Deutsche Immobilien Chancen, and DIC Capital Partners, which owned 50% of the portfolio.

Ulrich Höller, CEO of DIC Asset noted that key factors in the decision to go ahead with the transaction were the further simplification of the group structure, as well as the high quality of the portfolio. 'We are familiar with the assets, having managed the properties for many years. On this basis, we will continue to consistently pursue our strategy of optimising the portfolio and reducing financial debt,' Höller said.

Bankhaus Lampe and Commerzbank will act as Joint Global Coordinators for the transaction, as well as joint bookrunners for the rights issue.

In a separate statement to announce its third-quarter results, DIC said it is confirming its FFO forecast for the full year of €45-47 mln. Rental income is expected to amount to €121-123 mln, while the vacancy rate is forecast to drop to 10%, from 10.9% previously.

'DIC Asset is well on track for completing yet another successful financial year, with a further increase in earnings,' commented Höller.