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Deutsche Wohnen AG
Investor Presentation
December 2010
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Agenda
Introduction to Deutsche Wohnen
Portfolio Overview and Operations
Financial Highlights
Guidance and Strategic Objectives
Appendix
1
2
3
4
5
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Introduction to Deutsche Wohnen1
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A Major German Residential Platform
Deutsche Wohnen Business Overview
Deutsche Wohnen Corporate Structure
A focused residential property company listed in the German Prime Standard
Focus on Berlin and Rhine-Main areas
Market capitalisation of approx. EUR 725 million
Second-largest listed German residential real estate company, part of SDAX index
Management of residential property portfolio comprising 47,209 units (September 2010) and selective value-enhancingdisposal activities
Note
1. Closing price of EUR 8.86 as at 24 November 20102. Management of rents and receivables, projects, large scale maintenance and facility management
Non-Core BusinessResidential Properties
Portfolio Management
Nursing andAssisted Living
Asset and Property Management
Central ServiceCenter Berlin
CentralFunctions (2)
RegionalService Points
Single UnitPrivatization
Acquisitions
Sales and Acquisition
InstitutionalBlock Sales
Deutsche Wohnen
Accounting/Tax Legal Personnel Communication IR
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Portfolio Overview and Operations2
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Portfolio Overview
Portfolio as of 30 September 2010
3.9%NA5.52NA1792,622DB14
10.5%NA4.97NA5017,829Disposals
2.7%6.425.43100%2,21236,758Core portfolio
6.4%6.056.080%12174Others
4.0%NA5.36NA2,89247,209Total portfolio
5.5%5.684.853%63958Brandenburg
2.4%5.084.847%1672,637Rhine Valley North
5.1%5.434.8612%2584,310Rhine Valley South
6.5%7.265.8410%2243,746Rhine-Main
1.8%8.366.8810%2173,656Frankfurt/Main
1.6%6.115.3258%1,27121,277Berlin
Vacancy
in %
Market rent2)
(/sqm)
In-placerent1)
(/sqm)
% of coreportfolio
by area
Area
(k sqm)
Number of
units
Note
1. Contractually agreed rent of let apartments divided by the area let.2. Average rent for contracts signed in the last twelve months for units not subject to rent control.
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Details of the Core Portfolio
Split by Year of Construction
Split by Number of Floors
50.0%43.3%
11.3%
4.0%
19.3% 20.9%
5.8%
25.1%
15.1%
5.1%
0%
10%
20%
30%
40%
50%
60%
1980
Berlin Frankfurt
%
8.0%0.0%
76.3%
7.9% 7.8%12.7%
3.2%
84.1%
0%
20%
40%
60%
80%
100%
=9
Berlin Frankfurt
%
Berlin
58%
Other3%
Rheintal19%
Frankfurt/Rhine-Main20%
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Increased fundamentals generate accelerating rent potential
5.31
0.950.99
5.17
5.43
0.77
4.50
5.00
5.50
6.00
6.50
7.00
30 Sep 08 30 Sep 09 30. Sep 10
in/sqm
Inplace rent Rent potential (Market rent ./. In-place rent)
5.175.94
6.26
5.31
6.42
5.43
4.50
5.00
5.50
6.00
6.50
7.00
In-place rent Market rent
in/sqm
30 Sep 08 30 Sep 09 30 Sep 10
9
2.7%2.3%
5.4%2.6%
5.0 % 8.1 %
> 2,763 new contracts were concluded in the core portfolio (non-subsidised) in 9m/2010
> Average market rent for non-subsidised apartments at EUR 6.42/sqm as of 30 September 2010
Rent potential of 18%
> Average in-place rent was increased by 5.0% (or CAGR: 2.5% p.a.) since Sep 2008
> Average market rent was increased by 8.1% (or CAGR:4.0 % p.a.) since Sep 2008
Core portfolio Core portfolio
In-place rent: Contractually owed rent from the rented apartments divided by the rented area
Market rent: Average rent for contracts signed in the last twelve months for units not subject to rent control
17.9%14.9% 18.2%
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No Structural Vacancy in the Core Portfolio
Vacancy Rate (Core Portfolio)in %
Already rented360
Due to fluctuations423
Due to investments390
Number of Units
4.5%
3.3%
2.7%
0%
1%
2%
3%
4%
5%
30 Sep 2008 30 Sep 2009 30 Sep 2010
-18%
-43%
Due to fluctuations: Vacancy due to terminationnotice
Potential for rent increases for new lettings
Only 100 residential units (0.3% of core portfolio)
have remained vacant for longer than 12 months Due to investments: Vacancy due to comprehen-
sive modernization works for residential estates
Rent potential post-modernization for theseproperties amounts to 35% on average
Vacancy reduction by 43% since 30September 2008
Vacancy Structure (Core Portfolio)as of 30 September 2010
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Progress in Portfolio Cleaning
Sales Volume
in EUR million
61.0 57.6
58.7
28.1
85.7
119.7
020
40
60
80
100
120
140
160
180
31 Dec 2008 31 Dec 2009
Privatisation Institutional sale
49.4 56.1
22.9
102.3
158.4
72.3
020
40
60
80
100
120
140
160
180
30 Sep 2009 30 Sep 2010
Stable transaction volume in the residential privatization business with gross margins above 30%
Significant stimulation of the transaction market in 2010 Institutional sales in 9m 2010 have already been more than tripled compared to full-year 2009
40% of disposal portfolio already sold
Improvement of operative metrics and administrative efficiency
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Consistent Disposal of Assets above Book Value
Disposal Success
Single unit privatisation with different characteristicscompared to block sales
Significantly higher disposal margins on book
values (e.g. privatisation: 34%; bloc-sales: 6%*)and higher rental multiplier
Higher transaction costs
Higher cash margin
Both disposal portfolios contribute positive cashafter repayment of property level loans
Mid term goal to selectively increase turnover of theportfolio
Disposal units generally characterized by lower
overall quality, higher vacancy rate as well aslimited fit compared to units in core portfolio
Disposals do not dilute the quality of theremaining portfolio
Block Sales Volume and Multiples1)
302
1,225
898
2,633
12,5x
11,8x11,4x
12,8x
0
500
1.000
1.500
2.000
2.500
3.000
2007 2008 2009 9m/2010
10x
11x
12x
13x
14x
Units Multiple
# of Units x
Single Unit Volume and Multiples1)
657675
573528
17,8x
18,6x
19,1x18,5x
0
100
200
300
400
500
600
700
800
2007 2008 2009 9m/2010
16x
17x
18x
19x
20x
Units Multiple
# of Units x
1) Multiple on potential gross rental income2) including notarised
2)
2)
1) Multiple on current gross rental income2) including notarised
*) margins for 9m/2010; based on notarised volume
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Financial Highlights3
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P&L Key Items (1)
EUR million 9m 2008 9m 2009 9m 2010
Current Gross Rental Income 145.7 144.4 143.1
Maintenance (24.8) (21.1) (21.8)
Earnings from ResidentialProperty Management 113.3 114.3 113.4
Earnings from Disposals 7.3 6.7 8.8
Corporate Expenses (28.6) (24.9) (22.5)
EBITDA 99.41)
102.51)
104.6
Fair value adjustments investment
properties 0.4 0.0 0.0
Net Interest Expenses2) (95.7) (85.1) (75.3)
Profit/loss continued operations (13.2) (2.5) 10.1
FFO 19.6 27.4 37.7
Key P&L Items Reflect Improved Operations
0.24
0.34
0.46
0.00
0.10
0.20
0.30
0.40
0.50
9m 2008 9m 2009 9m 2010
and even more so in FFO/ Share 3)
FFO / Share (EUR)
+35%
a
c
b
99.4 102.5104.6
73.1%71.0%68.2%
0
20
40
60
80
100
9m 2008 9m 2009 9m 2010
20%
30%
40%
50%60%
70%
80%
Efficiency Improvements Reflected in EBITDA (1)
EBITDA (EUR million) EBITDA Margin on Rental Income %
c Increase in FFO mainly due to decrease of interest expense
a 2009 rental income level kept almost stable despite disposals
b Corporate restructuring resulting in overhead cost savings
Notes:
1. Adjusted for restructuring- and reorganisation costs2. Adjusted for result of fair value adjustment to derivative financial instruments3. 2008 and 2009 figures based on new number of shares
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Stable asset values and increasing operating performance
Increasing In-place Rental Yield (Core Portfolio)Comments
Currently fair market valuation compared tocompetitors
Rent multiplier in the core portfolio of 14.5x based onin-place rent, down from 14.9x in 2008
Significant value creation through rent increases andvacancy reduction in 2009 and 9m/2010
Increased in-place rental yields from 6.7% to 6.9%
in core portfolio
Assuming constant 2008 rental yields would resultin a positive revaluation of the portfolio of ca.EUR 100 million
Since a smaller portfolio generates almost the same
amount of rental earnings, the operating performancein fact improved
The net operating income (NOI) per sqm rose fromEUR 3.31/sqm to 3.79/sqm
945943929
6.9%6.8%6.7%
800
850
900
950
1,000
1,050
2008 2009 30 Sep 2010
5.4%
5.6%
5.8%
6.0%
6.2%
6.4%
6.6%
6.8%
7.0%
Fair Value/ sqm In-place Rental Yield
EUR/ sqm %
Increasing NOI per month and per sqm1)
3.31
3.57
3.79
3.00
3.203.40
3.60
3.80
4.00
Monthly avg. 2008 Monthly avg. 2009 Monthly avg.9m/2010
EU
R/sqm
+15 %
Notes:
1. Net operating income of the period divided by months of the period and area at the end of the periodAllocation of personnel and G&A-expenses as part of corporate expenses to residential property management segment In 2008 approximated based on 2009allocation
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Early refinancing of large loans for 2012 finalised
Financial Profile Successfully De-Risked
EUR 490 million repayed since Jan 2008
Repayments resulted in a decrease of the LTV ratio to 58.8% in 9m 2010
Successful early refinancing of 100% of large value loans originally due in 2012 already in 9m/2010 finalised; in this context wemanaged to secure further loan funds of EUR 95 million for investments
Significant improvement of refinancing ability
Banks willing to finance up to 10x
Deutsche Wohnen remains below the low end of its stated target corridor of 60% - 65% LTV
Reduction of Net Debt, LTV in Target Corridor
1,657
1,772
2,073
2,156
58.8%
65.4%
70.6%
61.5%
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2007 2008 2009 30 Sep 10
50%
55%
60%
65%
70%
75%
80%
Net Debt (EUR million) LTV (%) (2)
NNAV and NNAV per Share (1)
884.4 870.3 866.2
1,218.9
14.89
10.5810.6310.81
500
700
900
1,100
1,300
2007 2008 2009 30 Sep 10
0
5
10
15
20
Total NNAV NNAV/ Share
Notes
1. Historical numbers prior to the capital raise are adjusted for the net proceeds from the capital increase of EUR 237.78 million and 26.4 million more shares2. LTV: Loan to value ratio; defined as net financial liabilities divided by the sum of investment properties, non-current assets held for sale and land and buildings
held for sale
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Attractive Long Term Financing Secured (1)
Sustainable Debt Financing
~95% of interest rate exposure hedged
Hedging provides for stable interest cost andsustainable financial results
Average interest rate of 4.4%
Average mandatory redemption p.a.: ~2.0% (excl. salesrelease payments)
~88% of bank debt matures after 2015, remainder in2011-2013 only represent several small loans
Debt Structure as at 30 September 2010
Financial liabilities in EUR million Total
Mark-to-market
LTV (%) (2)
Nominal value
LTV (%) (2)
1,722
58.8
1,833
62.7
Long Term Maturities as at 30 September 2010
1721.71,511.8
144.724.935.64.70.0
0
5001,000
1,500
2,000
2,500
Total 2010 2011 2012 2013 2014 2015
Notes
1. Excludes liabilities from convertible bonds2. LTV: Loan to value ratio, defined as net financial liabilities divide d by the sum of investment properties, non-current assets held for sale and land and
buildings held for sale
Current Covenant Structure
69% of loan portfolio bears financial covenants(EUR 1.2 billion)
Credit volume of approx. EUR 900 million has been
renegotiated in 2009 Covenants were adjusted and standardized
Leverage as rental multiplier: 11.0 14.3 in loanagreement, 7.4 11.4 in business plan
Debt service coverage ratio: 1.03 1.10 in loanagreement, 1.30 2.00 in business plan
Debt maturities
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Guidance and Strategic Objectives4
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Strategic and Growth Objectives
The business model of Deutsche Wohnen proved viable and strong during the financial crisis. In the context
of our corporate strategy, we focus on long-term earnings potential and solid f inancing structures that reduce our
exposure to the volatility of the market
It is our aim to permanently establish the company as the Germanmarket leader in the listed residential space
by focusing on:
Sustainable topline and earnings growth
Sustainability of dividends
Listing in the MDAX and increased liquidity of the Deutsche Wohnen share
Three general routes to growth:
Growth via Acquisitions
Selective acquisitions allow forrealisation of economies of scaleand offer potential assetmanagement upside
Focus on attractive relative pricing DW can lever significant experience
through integration of GEHAG
Internal Optimization
Increase of rents per sqm, reductionof vacancies or costs
Internal optimisation processlargely completed
Additional upside resulting frompotential platform growth
Value Crystallization from CorePortfolio
Selective disposal of optimisedassets from core portfolio in order tocrystallise existing value withoutaffecting quality of residual portfolio
No effect on business modelfundamentals, as DeutscheWohnen will remain a portfoliocompany
1 2 3
Organic Acquisitive
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2010 Financial Guidance (1)
Note
1. Not included: contributions to operating income from valuation, bloc sales and / or acquisitions
Rental income
Continued monetisation of rent potential in the core portfolio; further decrease ofinvestment-related vacancies upon conclusion of the investments
Enlargement of portfolio in the favoured regions through acquisitions (EUR 10 50 million)
Deutsche Wohnen is open to consider large strategic acquisitions, as long as they areaccretive
Proceeds from sales
Target volume of sales of privatisation units up from 500 to 550 with gross margins 35%;taking advantage of market opportunities by selective sales from the core portfolio
Institutional disposal of units located in structurally weak regions to strengthen the overallportfolio mix
FFO Increased forecast for entire 2010 to EUR 0.54 per share, i.e. 25% increase compared toactual FFO in 2009 (EUR 0.43 per share)
Dividend Policy Management announced to initiate dividend payments from 2010 onwards
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Appendix5
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Current shareholder structure*)
Oaktree Capital Group
Holdings GP, LLC 1);11.35%
Asset Value Investors
Ltd.2)
; 9.99%
rzteversorgung
Westfalen-Lippe6);3.33%
Sun Life Financial
Inc.5); 5.03%
Cohen & Steers, Inc.4);5.24%
First Eagle OverseasFund; 5.24%
Other; 48.46%
Ruffer LLP3); 5.61%
Zurich DeutscherHeroldLebensversicherungAG; 5.75%
* according to latest WpHG notification** without Oaktree Capital Group Holdings GP. LLC and
Zurich Deutscher Herold Lebensversicherung AG
1) Attributed voting rights acc. to Art. 22, Sec. 1, Sent. 1, No. 1 and No. 6 in connection with Sent. 2WpHG
2) Attributed voting rights acc. to Art. 22, Sec. 1, Sent. 1, No.6 WpHG3) Attributed voting rights acc. to Art. 22, Sect. 1, Sent. 1, No. 6 WpHG4) Attributed voting rights acc. to Art. 22, Sec. 1, Sent. 1, No. 6 WpHG in connection with Art. 22,
Sec. 1, Sent. 2 WpHG5) Attributed voting rights acc. to Art. 22, Sec. 1, Sent. 1, No. 6 in connection with Art. 22, Sec. 1,
Sent. 2 WpHG6) Feri Finance AG resp. MLP AG attributed voting rights acc. to Art. 22, Sec. 1, Sent. 1, No. 1
WpHG
Shareholders
> 10% Oaktree Capital Group Holdings GP, LLC1) 11.35%
> 5% Asset Value Investors Ltd.2)
9.99%Zurich Deutscher Herold Lebensversicherung AG 5.75%Ruffer LLP3) 5.61%First Eagle Overseas Fund 5.24%Cohen & Steers Inc.4) 5.24%Sun Life Financial Inc.5) 5.03%
> 3% rzteversorgung Westfalen-Lippe6) 3.33%.8 institutional shareholders in total 51.54%___________________________________________________________________________
Freefloat acc. to Deutsche Brse 82.90%**
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Disclaimer
This presentation contains forward-looking statements including assumptions, opinions and views of Deutsche Wohnen or
quoted from third party sources. Various known and unknown risks, uncertainties and other factors could cause actual results,financial positions, development or performance of the company to differ materially from the estimations expressed or implied
herein. The company does not guarantee that the assumptions underlying such forward-looking statements are free from
errors nor do they accept any responsibility for the future accuracy of the opinions expressed in this presentation or the actual
occurrence of the forecasted developments. No representation or warranty (expressed or implied) is made as to, and no
reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no
liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and accordingly, none of the
company or any of its parent or subsidiary undertakings or any of such persons officers, directors or employees accepts any
liability whatsoever arising directly or indirectly from the use of this document. Deutsche Wohnen does not undertake any
obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the
date of this presentation.
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Deutsche Wohnen AG
Head Office
Pfaffenwiese 30065929 Frankfurt am Main
Berlin Office
Mecklenburgische Strae 5714197 BerlinTelefon: 030 897 86 501
Telefax: 030 897 86 519
2010 Deutsche Wohnen AG
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