DIC Asset AG (DIC), which operates a yielding real estate portfolio alongside mutual funds in Germany, is in a precarious situation. It has €806m of upcoming debt maturities compared to €486.7m of pro forma liquidity. LTV and interest coverage covenants are likely to be challenged later this year amid property devaluation and coupon step-ups on its VIB bridge financing — after its terms were recently renegotiated with bridge lenders. 

Deal flow in German real estate was far from normal in the first half, slowing to a trickle. This has led to DIC revising down FY 23 funds from operations (FFO) guidance, after realising €0m of transaction fees in H1 23 versus €22.1m last year. Furthermore, secured debt capacity has dried up because the company has virtually no unencumbered assets left, increasing its dependency on hefty discounted asset sales (€300m - €600m of disposals are targeted in 2023).

Yesterday's (3 August) one-hour long conference call was loaded with questions on these and the company's future action plan (listen to the playback here). Below we take a closer look at these topics individually.