Deutsche Konsum REIT: Robust business development despite corona epidemic

Rental payments of around 70% received in April 2020

The business closures ordered by the German government are currently affecting tenants who contribute around 30% of the current rental income of the DKR real estate portfolio. This includes tenants with product ranges not relevant to supply, such as non-food discounter markets, textile retailers, electronics stores, DIY stores in federal states with exit restrictions as well as cinemas, fitness clubs, restaurants and hairdressers. The majority of the tenants affected, which mainly consists of large chain stores, have therefore deferred their rental payments initially for the month of April.

Irrespective of this, DKR is proactively engaged in discussions with affected tenants in order to work out individual solutions that will result in a fair settlement for both our tenants and the Company. This can be achieved, for example, by temporarily deferring rents in combination with lease extensions.

Payment obligations fully secured

DKR’s interest cover is over 8 – to this extent, the remaining rental income fully covers all current payment obligations of DKR to its lenders, bondholders and business partners.

Issue of an unsecured bond and further loan financing / Rating confirmed

On 10 March 2020 DKR issued a new unsecured bond 2020/2025 with a term of five years. The bond volume amounts to EUR 40 million and has a coupon of currently 2.75%. The bond has a redemption option at any time.

In addition, secured bank loans of EUR 28 million were taken out with savings banks and Pfandbrief banks in the second quarter. DKR is currently working on further secured loan financing with a volume of around EUR 70 million, which is expected to be paid out shortly. The agreed fixed interest rates are expected to be between 1.50% and 1.80% and thus below DKR’s current average interest rate on borrowed capital.

The existing scope rating was also confirmed: The issuer rating remains at “BB+ stable” and the rating for secured and unsecured debt capital at “BBB” and “BBB-” (investment grade).

DKR well prepared for further acquisitions in the current environment / No significant impact on forecasts expected

DKR currently has funds of around EUR 60 million available for further acquisitions and is thus able to act quickly to take advantage of opportunities arising in the current environment.

The Management Board does not currently expect any significant negative effects on the forecast results for the current financial year.