Deutsche Wohnen AG.» Company presentation. May PDF

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Deutsche Wohnen AG» Company presentation May » Key investment highlights of Deutsche Wohnen 1 Diversified business model with focus on metropolitan growth regions 2 Best in class portfolio quality

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Deutsche Wohnen AG» Company presentation May 2» Key investment highlights of Deutsche Wohnen 1 Diversified business model with focus on metropolitan growth regions 2 Best in class portfolio quality with highest rental growth of Peer Group 3 Leadership in cost efficiency due to asset concentration 4 Proven track record at the capital markets 5 With ~EUR 4bn free float market cap most liquid stock in german real estate 6 We are well positioned to achieve further internal and external growth » Deutsche Wohnen business model Made in Germany Strong CF for Shareholder Return Dividends + NAV growth Nursing & assisted living Backed by demographic trends Residential letting business EUR 600m gross rents from high-quality portfolio 1) EUR 8bn portfolio value Privatization & institutional sales Additional cash and NAV contribution Sustainable Financing (LTV, Maturities, Sources) 1) current gross rental income 3 » Deutsche Wohnen portfolio focussed and concentrated Cologne Bonn Dusseldorf Koblenz Wiesbaden Mainz Hanover Frankfurt/Main Mannheim Kaiserslautern Braunschweig Magdeburg Berlin Potsdam Halle Leipzig Dresden Erfurt Portfolio development underlines shift to growth regions with significant upside potential Total residential holdings: ~150,000 units Thereof ~80% in dynamic Core + -regions (~119,000 units) Thereof ~72% in Greater Berlin (~108,000 units) Largest private landlord of Berlin Successful disposal of Non-core assets 31/03/2014 Residential units # Share in terms of units % Area 1) K sqm In-place rent 2) EUR/sqm Vacancy % Fair Value 3) EUR m Fair Value 4) EUR/sqm Total 148, % 9, , Strategic core and growth regions 145,979 98% 8, , Core + -Regionen Core-Regionen Core + 118,690 80% 7, , Core 27,289 18% 1, , Non-core 2,818 2% ) Only residential area 2) Contractually owed rents from rented apartments divided by rented area 3) Fair Value including residential, commercial and parking spaces 4) Fair Value divided by residential and commercial area 4 = = 2000 = = 8.01» Portfolio structure characteristics meeting strong demand In-place rent 1) ( 5.53 /sqm/month) Year of construction 25.4% 19.6% 15.4% 11.9% 6.9% 7.2% 1.5% 3.1% 3.8% 2.2% 3.1% 3.4% 29.5% 31.7% 19.5% 15.3% 0.6% Apartment size (Ø 60.8 sqm) Rent Rental restrictions restrictions = 75 sqm 19.2% 40 sqm 10.1% Rent-restricted 5.45/sqm 65 to 75 sqm 17.8% 55 to 65 sqm 24.1% 40 to 55 sqm 28.8% Unrestricted 5.57/sqm 82.1% 17.9% Note: Figures as of 31-Dec-2013 / Based on residential units 1) excl. vacant apartments 5 » Strong like-for-like development 1) Total Portfolio Letting Portfolio Core + regions In-place rent (EUR/sqm) In-place rent (EUR/sqm) Comprises ~ 84,700 units under management since Dec 2008 Comprises ~ 72,000 units under management since Dec 2008 Letting Portfolio Core regions In-place rent (EUR/sqm) Letting Portfolio Greater Berlin In-place rent (EUR/sqm) Comprises ~ 7,800 units under management since Dec 2008 Comprises ~ 64,800 units under management since Dec ) Pro forma incl. GSW portfolio Note: Above time series analysis are based on a like-for-like comparison, i.e. only comprises units under management since December 2007 without taking into account any acquisitions/disposals in the period under review. 6 » Dynamic rent potential in Core + regions (letting portfolio) 1) 3) New-letting rent in In-place rent in EUR/sqm Rent potential EUR/sqm 2) New-letting contracts 4) Core % ,340 Greater Berlin % ,979 Rhine- Main % Rhineland % Current tenant turnover: 7% annualised in Core + Regions Note: incl. acquisition 1) Contractually owed rent from rented apartments divided by rented area 2) Contractually owed rents for newly concluded contracts for units not subject to rent control effective in 2014 respectively 3) Rent potential = New-letting rent compared to in-place rent 7 4) Unrestricted units as at 31/03/2014 » Berlin residential real estate market offering attractive fundamentals Demographics Number of inhabitants increases consistently (mainly because of net migration gain) Until 10/2013 ca. +39,500 inhabitants (+1.2% leading to a total population of ~3.4 m) Top ranking for greatest average rise in employment figures nationwide in 2012 and 2013 up to ~1.8 m employees Household income raised by 3.1% in 2012 Supply and Demand Ca. 2.03m households with 54.3% single-person households (+1.3%pts. since 2007) and Ø 1.73 persons per household Lack of new built residential units in multi-family homes Approx. 6,600 apartments completed in 2013, equalling only +0.3% of ca. 1.9 m existing apartments Building permissions are accelerating ( 10k in 2013; 4k in Q1-2014) but still behind demand for new residential units which is projected to grow further Berlins average market rent EUR / sqm 1) Munich Frankfurt Stuttgart Hamburg Cologne Berlin Berlin Average market rent still offers headroom to grow Source: Amt für Statistik Berlin-Brandenburg 1) F+B Index Q Report 8 » Berlin's key facts (1) Population (2) Residential units Population Berlin (10/2013) (1) ca. 3.4m Population Capital Region Berlin-Brandenburg (10/2013) (1) ca. 4.5m Number of residential units (2012) (1) ca. 1.9m Number of residential units for letting (2012) (6) ca. 1.6m Completed apartments 2013 (2012) (1) 6,641 (5,417) (3) Vacancy and rents (4) Economic data Average vacancy rate (2012) (5) 2.3% Average unemployment rate % (2012) (2) (12.3%) Mean monthly net cold rent according to rent table 2013 (2011) (4) 5.54/sqm ( 5.21/sqm) Purchasing power/ household per month 2013 (2012) (3) 2,851 ( 2,696) Monthly median new letting rent analysed by CBRE 2013 (2012) (3) 8.02/sqm/month ( 7.50/sqm/month) Housing cost ratio/ household per 26.6% month 2013 (2012) (3) (27.4%) Source: (1) Statistical Office Berlin-Brandenburg (2) Federal Employment Agency; (3): CBRE /GSW Housing Market Report 2013; (4) Senatsverwaltung für Stadtentwicklung (5) Verband Berlin-Brandenburgischer Wohnungsunternehmen e.v., (BBU), (6) own calculatíon based on 15% home ownership rate for Berlin 9 » Core + and Core regions showing positive fundamentals 1) Rhine-Main region incl. Frankfurt/ Main Rhineland region incl. Dusseldorf Hanover / Brunswick / Magdeburg Economic location Demographic situation One of the most important regions in Germany with 5.6 m inhabitants and EUR 200 bn GDP Internationally outstanding position as financial markets centre, trade fair location, trading centre and central transport hub Above avg. purchasing power per inhabitant of ca. EUR 24k 2) With 685,000 inhabitants largest city in Hesse and 5th largest within Germany Population increase of 6.6% and +8% no. of households ( ) 54.1% single-person households New construction projects (2012: 2,144 res. units) unable to meet growing demand for living space Residential rents for medium to good quality standard: EUR 7.00/sqm EUR 16.50/ sqm Focus on Dusseldorf: Top location for consultancy firms in Germany with 1,760 consultancy firms based here Most important trade centre with 3,800 retailers, 2,000 wholesalers and export trading companies Above avg. purchasing power per inhabitant of ca. EUR 25k 1) Ca. 598,000 inhabitants Sustained population growth evident since 2000 is set to continue Expected Increase of inhabitants up to ca. 600,600 by 2025 resulting in greater demand for living space Dynamic development of rental prices: avg. at EUR 9.25/sqm (H1-2013; +3.6% on y-o-y basis) Favourable location in the centre of Germany offering logistical advantages Automobile industry, machinery & plant engineering are traditionally strong sectors in the region Approx. 1 m inhabitants in total (sum of all 3 cities) Hanover and Brunswick above average purchasing power of 22.3k 1) and 22.9k 1) population growth combined with low vacancy rates and low levels of new construction lead to increasing demand Magdeburg Stable demographic structure (inhabitants/ households) foreseen for the next years Core + regions Core regions 1) excl. Berlin 2) national average: ca. 21k 10 » LTV at 56.5%; low average interest rate ~ 3.36% Debt structure Financial liabilities in EUR m Mark-to-market 5,288.5 LTV (%) 56.5% Nominal value 5,379.0 LTV (%) 57.5% Avg. interest rate incl. Convertible bond: ~3.36% Debt service Avg. mandatory redemptions p.a.: ~1.6% Avg. weighted maturity: ~7.9 years Interest rate fixed or hedged: ~91% Long-term maturities profile EUR m nominal values ) = Significant potential from due refinancing available in order to enhance FFO profile through a decrease of existing interest rate levels 1) Convertible Bond 11 » Strong position in the capital markets Most investable German listed real estate company Free float market cap 1) increased by ~ 78% from EUR 2.3bn (April 2013) to EUR 4.2bn (April 2014) Largest free float of all residential peers Ø daily trading volume 2) increased by 55% to ca. 583`sh Impressive track record of placements 3 structured equity transactions in 2013 EUR 195m ABB for acquisitions (fully invested) MDAX Ranking Apr Market cap 14 6 Apr Turnover EPRA Weighting Apr Apr Germany 21.9% 31.2% Europe 2.0% 3.4% 14.6m shares January 2013 Value accretive as placed above NAV Discount below 3% of share price Weight (%) Global 0.3% 0.5% Outperforming EPRA Germany by 6% in Successful use of shares as acquisition currency to accelerate growth and drive consolidation Blackstone portfolio: 8.2m shares GSW transaction: 117.3m shares Flexible use of equity instruments to create shareholder value Deutsche Wohnen EPRA Germany 1) According to Deutsche Börse definition 2) Only regarding ISIN DE000A0HN5C6 by April 2014 on y-o-y basis 12 » Strong earnings and cash contributions from letting Earnings from letting: + EUR 60.8m Cash flow % in EUR m Q Q Current gross rental income Non-recoverable expenses (3.2) (1.3) Rental loss (2.5) (1.1) Maintenance (17.2) (8.4) Others (2.4) (1.6) Earnings from Residential Property Management Personnel, general and administrative expenses (10.6) (6.8) Net Operating Income (NOI) NOI margin 77.1% 77.0% NOI in EUR / sqm / month in EUR m Q Q Net operating income (NOI) Cash interest expenses (46.0) (26.6) Cash flow from portfolio after cash interest expenses Interest cover ratio In-place rent: Q1-14: EUR 5.58 / sqm Maintenance 1) Q1-14: EUR 7.38 /sqm (Q1-13: EUR 6.48 /sqm) additional EUR 7.9m for modernisation (EUR 3.39 /sqm in Q1-14) NOI increased by EUR 57.0m (89%) due to higher current gross rental income of EUR 73.7m (full effect of 2013 acquisitions including GSW) w/o EUR 1.1m for nursing and assisted living NOI-margin Constant on y-o-y basis despite higher maintenance expenses NOI in EUR / sqm / month + 5.1% due to changes in portfolio structure resulting from GSW acquisition among others 1) extrapolated 12 months 13 » NAV contribution by strong disposal business Closed in EUR m Q Q Sales proceeds Cost of sales (3.0) (2.0) Net sales proceeds Free cash flow from sales activities of ca. EUR 45m (520 closed privatisation units and 982 closed units institutional sales) Carrying amounts of assets sold (67.6) (24.6) Earnings from Disposals Privatisation (closed) (gross margin & sales price / sqm) 35% 1,039 42% 1,173 52% 1,260 Berlin: Papageienviertel Berlin: Steglitz 31/03/ /03/ /03/2014 EUR/sqm Margin Hanover: Bemerode/Kronsberg Berlin: Hufeisensiedlung 14 » Nursing and Assisted Living increasing FFO contribution in EUR m Q Q Income Nursing Living Other Total income Costs 31/03/2014 Facilities Places Greater Berlin 12 1,442 Saxony Others In total 21 2,174 Average Occupancy Nursing and corporate expenses (4.4) (3.4) Staff expenses (8.2) (6.8) Total costs (12.6) (10.2) Earnings from Nursing and Assisted Living Cash interest expenses (1.1) (0.8) FFO contribution /03/ /03/ of 21 facilities are owned by Deutsche Wohnen with Fair Value of the properties of EUR 144.9m Slight decrease in average occupancy to 96.0% mainly due to last years` acquisitions with upside potential 15 » Adjusted EBITDA increased by ~ EUR 61m / + 93% (y-o-y) in EUR m Q Q Earnings from Residential Property Management Earnings from Disposals Earnings from Nursing and Assisted Living Segment contribution margin Corporate expenses (22.8) (11.8) Other operating expenses/income (4.4) (2.0) Cost Ratio 1) 14.5% in Q1 vs. 17.3% FY 2013 (pro-forma incl. GSW) EBITDA Restructuring & Reorganisation expenses One-off costs for integration of GSW EBITDA (adjusted) Adj. EBITDA Increased by ~EUR 61m mainly attributable to an increase of earnings from letting ~EUR 61m and from disposals ~EUR10 m 1) Corporate expenses (EUR 22.8m) divided by current gross rental income (EUR 157m) 16 » Adjusted EBT increased by ~ 113% (y-o-y) in EUR m Q Q EBITDA (adjusted) Depreciation (1.6) (1.3) 2) 3) Financial result (net) (52.0) (30.1) EBT (adjusted) Restructuring & Reorganization (2.2) 0.0 Valuation SWAP and Convertible Bond (16.7) (0.2) EBT Current taxes (3.3) (2.6) Deferred taxes (5.4) (5.3) Profit Earnings per share 1) in EUR m Q Q Interest expenses (47.1) (27.4) Non-cash interest expenses (5.2) (2.9) (52.3) (30.3) Interest income Financial result (net) (52.0) (30.1) Non-cash interest expenses (in EUR m) Q Q Low interest bearing liablities (4.3) (1.8) Liabilities from EK 02 taxes (0.4) (0.5) Employee benefit liability (0.5) (0.5) DB (0.1) Total (5.2) (2.9) 1) Based on weighted average shares outstanding (Q1-14: 286.2m; Q1-13: 158.1m) 2) Adjusted for Valuation of SWAP and Convertible Bond (EUR 16.7m) 3) Adjusted for Valuation SWAP (EUR -0.2m) 17 » Recurring FFO per share performance +5 % (y-o-y) in EUR m Q Q Profit Earnings from Disposals (15.8) (5.5) Depreciation Valuation SWAP and Convertible Bond Non-cash financial expenses Deferred taxes FFO development in EUR m Tax benefit from capital increase FFO attributable to non-controlling interest (1.7) 0.0 Restructuring & Reorganization expenses FFO (w/o disposals) % % 59.1 Earnings from Disposals ) 5.5 FFO (incl. disposals) FFO (w/o disposals) per share 1) FFO (incl. disposals) per share 1) Q Q Q Earnings from disposals FFO (w/o disposals) Accretive FFO (w/o disposals) per share development: +5% (y-o-y) 1) Based on weighted average shares outstanding (Q1-14: 286.2m; Q1-13: 158.1m) 2) Adjusted for minority contribution 18 » Balance sheet Assets in EUR m 31/03/ /12/2013 Investment properties 8, ,937.1 Other non-current assets Derivatives Deferred tax assets Non current assets 9, ,772.5 Land and buildings held for sale Trade receivables Other current assets Cash and cash equivalents Current assets Total assets 10, ,173.1 in EUR m 31/03/ /12/2013 Total equity 3, ,944.3 Financial liabilities 5, ,154.6 Convertible Tax liabilities Deferred tax liabilities Derivatives Other liabilities Total equity and liabilities Equity ratio Equity & Liabilities 10, ,173.1 Stable at 39% on y-o-y basis Equity in EUR m 31/03/ Profit Cash flow hedge Pensions » EPRA NAV per share up by 1.6% in EUR m 31/03/ /12/2013 in EUR m 31/03/ /12/2013 Equity (before non-controlling interests) Fair value adjustment of convertible bond Fair values of derivative financial instruments 3, , (2.2) EPRA NAV per share in EUR (undiluted) Adjusted NAV per share in EUR (undiluted) Shares outstanding in m Deferred taxes (net) EPRA NAV (undiluted) 4, ,004.7 Goodwill (491.6) (491.6) Adjusted NAV (undiluted) 3, ,513.1 EPRA NAV per share Adjusted NAV Increased by 1.6% to EUR as at 31 March 2014 Reflects (i.e. deducts) the goodwill from GSW transaction 20 » Guidance 2014 (unchanged) 1 FFO (w/o disposals): min. EUR 210m FFO expected EUR 203m considering 8% minority share = EUR 0.71 per share (+9.2% growth) 2 Dividend policy: 60% of FFO (w/o disposals) = EUR 0.42 per share (+23.5% growth) 3 Synergies: EUR 15m to be generated in 2014, thereof EUR 10m effective / to realise in Mid term target: overall cost ratio of 12% from 2016 onwards 5 LTV: ~ 55% 6 Opportunistic portfolio strategy: accretive acquisitions and disposals will continue 21 » Appendix 22 » Overview of portfolio as at 31 March /03/2014 Residential units # Share in terms of units % Area 1) K sqm In-place rent 2) EUR/sqm Vacancy % Fair Value 3) EUR m Share in terms of Fair Value % Fair Value 4) EUR/sqm Multiple in-place rent Yield % Multiple market rent Total 148, % 9, , % Yield % Strategic core and growth regions 145,979 98% 8, , % Letting portfolio 139,012 93% 8, Privatisation 6,967 5% Core + 118,690 80% 7, , % Letting portfolio 113,825 76% 6, Privatisation 4,865 3% Core 27,289 18% 1, , % Letting portfolio 25,187 17% 1, Privatisation 2,102 1% Non-core 2,818 2% % Disposal 584 0% Other 2,234 2% Dynamic Core + regions comprise 80% of total units and 83% of total fair value Attractive spread between multiples of in-place rent and market rent offering further potential for NAV-growth Very successful ongoing disposal of non-core portfolio 1) Only residential area 2) Contractually owed rents from rented apartments divided by rented area 3) Fair Value including residential, commercial and parking spaces 4) Fair Value divided by residential and commercial area 23 » Details on regions of portfolio as at 31 March /03/2014 Residential Share in terms Commercial Parking units of units Area In-place rent 1) Vacancy units spaces # in % k sqm EUR/sqm in % # # Total 148, % 9, % 2,098 31,408 Strategic core and growth regions 145,979 98% 8, % 2,063 30,447 Letting portfolio 139,012 93% 8, % 1,953 27,873 Privatisation 6,967 5% ,7% 110 2,574 Core + 118,690 80% 7, % 1,845 20,504 Letting portfolio 113,825 76% 6, % 1,737 18,502 Privatisation 4,865 3% % 108 2,002 Greater Berlin 107,853 72% 6, % 1,631 14,851 Letting portfolio 104,066 70% 6, % 1,587 14,122 Privatisation 3,787 3% % Rhine-Main 9,018 6% % 168 4,892 Letting portfolio 8,090 5% % 121 4,014 Privatisation 928 1% % Rhineland 1,819 1% % Letting portfolio 1,669 1% % Privatisation 150 0% % Core 27,289 18% 1, % 218 9,943 Letting portfolio 25,187 17% 1, % 216 9,371 Privatisation 2,102 1% % Hanover/Brunswick/Magdeburg 11,039 7% % 111 2,776 Letting portfolio 10,210 7% % 110 2,499 Privatisation 829 1% % Rhine Valley South 4,853 3% % 41 3,341 Letting portfolio 4,650 3% % 41 3,186 Privatisation 203 0% % Rhine Valley North 2,949 2% % 3 2,116 Letting portfolio 2,845 2% % 3 2,007 Privatisation 104 0% % Central Germany 5,720 4% % 55 1,152 Letting portfolio 5,720 4% % 55 1,152 Privatisation 0 0% % 0 0 Others 2,728 2% % Letting portfolio 1,762 1% % Privatisation 966 1% % 1 31 Non-Core 2,818 2% % Disposals 584 0% % Other 2,234 2% % ) Contractually owed rents from rented apartments divided by rented area 24 » The Berlin-Portfolio at a glance Reinickendorf # 11, % Mitte # 3, % Spandau # 15, % Pankow # 8, % Friedrichshain-Kreuzberg # 7, % Lichtenberg # 7, % Marzahn-Hellersdorf # 8, % Charlottenburg-Wilmersdorf # 7, % Treptow-Köpenick # 4, % Steglitz-Zehlendorf # 11, % 3,000 5,000 8,000 10,000 Tempelhof-Schöneberg # 6, % Neukölln # 10, % # units in-place rent (EUR/m²) vacancy City of Berlin # 103, % Greater Berlin # 107, % Note: Figures as of 31-March-2014 / Based on residential units 25 » Hidden Champions backbone of German economy Number of Hidden Champions Germany Hidden Champion = USA Japan Austria No. 1 on continent and/or Top 3 worldwide in their sector 2. Revenues 5 bn Euro 3. Mainly family-owned, max 5,000 employees Switzerland 110 Main Reasons: Italy Historical, scattered regionalism France China leads to intensive competition 2. Strong manufacturing basis 3. Power of innovation UK Rest of World Unit labour costs 5. Made in Germany 6. Dual apprenticeship 7. Political stability Source: Simon, Herrmann: Hidden Champions (2012); p. 56, 63; Processing CBRE 26 » Management board and areas of responsibilities Michael Zahn Chief Executive Officer (CEO) Andreas Segal Chief Financial Officer (CFO) Lars Wittan Chief Investment Officer (CIO) Areas of responsibility: Strategy Property Management Nursing and Assisted Living HR Communication Areas of responsibility: Equity Financing Debt Financing Treasury Investor Relations Legal/Compliance Areas of responsibility: Accounting/Tax/Controlling Asset Manageme
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