Deutsche Konsum REIT-AG Strategizes for Growth Amidst Real Estate Opportunities

Deutsche Konsum Reit
  • Deutsche Konsum REIT-AG announces strategic measures for strong growth and repositioning
  • Reduction in dividend distribution proposed to maintain liquidity and seize growth opportunities
  • Changes in management and focus on capital recycling to fuel further growth financing

Deutsche Konsum REIT-AG (DKR), a listed real estate company specializing in German retail properties, has announced strategic measures to position itself for strong growth in the dynamic real estate market. The company foresees exciting opportunities and intends to capitalize on the declining asking prices and increasing availability of local supply properties. In addition, DKR aims to enhance its independence by separating from its founding shareholder, Obotritia Capital KGaA. These initiatives were unveiled by the management board of DKR in response to the current market conditions and the need to maintain a high level of liquidity.

To achieve its goals, DKR has outlined several key measures:

Amendment of the dividend proposal and reduction of the dividend distribution In light of the prevailing market conditions and to maintain operational flexibility, DKR has decided to amend its dividend proposal for the financial year 2021/2022. The management board has retroactively allocated a reinvestment reserve of EUR 12,689,275, half of the realized capital gains from property sales during the period. The remaining distributable amount will be distributed as a reduced dividend of EUR 0.12 per share, compared to the previously announced EUR 0.48 per share. The calculated remaining amount will be transferred to the profit carried forward. This reduction in dividend distribution aims to ensure DKR’s ability to seize growth opportunities while considering potential risks.

The new resolution on the appropriation of profits will be voted on at the Annual General Meeting.

Termination of short-term investments of surplus cash and cash equivalents To increase available liquidity and take advantage of interest on credit balances, DKR has decided to terminate its short-term investments. Since the beginning of the financial year, no new short-term investments have been made, and approximately EUR 40 million has already been directly returned to DKR. The company expects full repayment of all cash and cash equivalents by September 2023.

Capital recycling for further growth financing DKR is currently reviewing and negotiating several attractive purchase offers with favorable purchase price factors for individual locations. In the context of capital recycling, the company is considering utilizing attractive sales options to invest in new local supply properties with higher yields. This approach is expected to result in strong growth in the rental income of DKR’s property portfolio. The current acquisition pipeline consists of local retail properties valued at approximately EUR 84 million, with an average acquisition factor of 11 times the annual rent (9% yield).

Changes in the Supervisory Board and Management Board Rolf Elgeti, the Chairman of the Management Board (CEO), has decided to step down from his current role and move to the Supervisory Board, following the end of the next Annual General Meeting. Alexander Kroth, Chief Investment Officer (CIO), and Christian Hellmuth, Chief Financial Officer (CFO), will assume responsibility for the operational business activities. Rolf Elgeti intends to stand for the chairmanship of the Supervisory Board at the upcoming Annual General Meeting.

Annual General Meeting 2023 on 13th July 2023 DKR will convene the 2023 Annual General Meeting in Berlin on 13 July 2023. Shareholders will have the opportunity to vote on the new resolution for the appropriation of profits and other important matters.

Rolf Elgeti, CEO of Deutsche Konsum REIT-AG, expressed gratitude towards the outgoing Supervisory Board Chairman and highlighted the company’s commitment to enter a new and exciting phase. Alexander Kroth, CIO, emphasized the strong acquisition pipeline and the potential for significant growth, while Christian Hellmuth, CFO, explained the rationale behind the dividend reduction to ensure financial flexibility and value creation opportunities.

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