Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — German Corporate Conference 2015

46 slides from Deutsche Wohnen's conference presentation, January 2015

  1. Slide 1: Deutsche Wohnen AG Company presentation

    Deutsche Wohnen AG » Company presentation German Corporate Conference 2015 January 2015 1

  2. Slide 2: Agenda

    » Agenda 1 General business model 2 Market overview 3 Portfolio- and investment strategy 4 Capital markets 5 Financing strategy and credit rating 6 FFO and cashflow 7 Appendix 2

  3. Slide 3: General business model

    » General business model deutsche-wohnen.com Deutsche Wohnen -

  4. Slide 4: Deutsche Wohnen business model "Made in Germany"

    » Deutsche Wohnen business model “Made in Germany” Strong cash flow for Capex, shareholder return and NAV growth Nursing & Privatisation & Assisted Residential letting business institutional Living sales >EUR 600m gross rents from Backed by high-quality portfolio1) Additional cash demographic and NA

  5. Slide 5: A unique business model

    » A unique business model 1 Accretive add-ons to business model by nursing and privatisation business 2 Focused on most dynamic growth regions in Germany 3 Portfolio with highest quality 4 Strongest like for like rental growth and highest NAV upside potential 5 Most efficient NOI margin 6 Cost leade

  6. Slide 6: Future growth drivers

    » Future growth drivers  Rent table (new Berlin rent table mid-2015)  Capex L-f-l rental  New lettings growth by:  Vacancy reduction  Restricted rent increases linked to CPI Additional  EUR 39m lower financing costs after refinancing FFO growth  Synergies by GSW integration  Portfolio value

  7. Slide 7: Market overview

    » Market overview deutsche-wohnen.com

  8. Slide 8: German residential market and real estate market cap

    » German residential market and real estate market cap Total residential units 41.3 m Institutional landlords Small private landlords Owner occupiers 8.4 m 15.4 m 17.5 m Cooperatives Public housing comps Other Listed housing comps 2.2 m 2.7 m 2.7 m 0.8 m Sources: Zensus, Deutsche Wohnen EPRA Germany

  9. Slide 9: Market trends remain positive

    » Market trends remain positive  Positive fundamentals for metropolitan regions fully intact (urbanization, immigration, rising number of households, almost no new construction in the lower segment)  Berlin and Rhine-Main (portfolio share ~80%) under Europe's top 10 locations in terms of attractiv

  10. Slide 10: Berlin as one of the most dynamic growth markets in Germany

    » Berlin as one of the most dynamic growth market in Germany  Berlin: population growth of 4.3% from 2010-2013 mainly driven by migration  New Berlin rent table mid-2015 should confirm the above average rent growth (on av. +2.7% p.a since 2008)  Increasing gap between rent table rent (2013: EUR 5

  11. Slide 11: Portfolio & investment strategy

    » Portfolio & investment strategy 11

  12. Slide 12: Scoring model to characterize and rate housing market in Core+, Core

    » Scoring model to characterize and rate housing market in Core+, Core and Non-Core Main criteria of the portfolio scoring model Historic real estate specific data • Change in households (2008-2014) • Change in-place rent (2008-2014) Core+ • Population growth (2008-2014) „growth“ Prognostic real est

  13. Slide 13: Regional clustering based on scoring model

    » Regional clustering based on scoring model Regional Cluster Residential % of In-place Rent Vacancy Multiple Multiple 1) 2) units total rent Potential 30/09/2014 in-place market units 30/09/2014 rent rent # EUR/sqm in % in % Total 146,822 100.0 5.65 19.2 2.4 14.1 12.8 Re-classification of 9,700 Cor

  14. Slide 14: Microanalysis shows opportunities in Core+

    » Microanalysis shows opportunities in Core+  Attractive and dynamic micro locations with promising fundamental outlook  Shortage of supply Operate  High rent potential and dynamic development of market rents  Key driver: In-place rents with high upside to market rents Value potential due to re-

  15. Slide 15: Investment target of EUR 280m within 4 years in Core+

    » Investment target of EUR 280m within 4 years in Core+ Develop cluster approach  c. 17,000 units identified (almost entirely in Core+) mainly in dynamic micro loations  Earnings and value accretion: • Focus on portfolios with the highest rent potential (c. 27%) • NAV-growth due to overproportiona

  16. Slide 16: Operate: small single-investments targeted

    » Operate: small single-investments targeted Operate cluster approach  Focus on re-letting  80% of re-lettings in 2014 took place in Core+  Re-letting spendings lead to double digit returns  70% of re-lettings EUR <3,000 investment per unit (ROI >65%)  Re-lettings with EUR >10,000 investment pe

  17. Slide 17: Focused and sustainable investments into the portfolio

    » Focused and sustainable investments into the portfolio 1) 9M-2014 9M-2013 EUR m EUR m Maintenance 61.4 38.9 Thereof repairs & maintenance 45.0 25.0 Thereof re-letting 16.5 13.9 9M-2014: total spendings for re-letting of EUR 33.3m to Modernization 36.4 14.3 realize annual rental uplifts of EUR >5m

  18. Slide 18: Financing strategy and credit rating

    » Financing strategy and credit rating 18

  19. Slide 19: Sustainable financing

    » Sustainable financing Key figures financing Maturity profile pro forma post refinancing (EUR m)  Total nominal debt volume EUR 5.6bn  Average weighted maturity ~9 years 400  Average cost of debt c. 2.5% 250  Interest rate hedged are ~85% 870 797  2015 onwards: ISCR >3 710 695 703  Unencumber

  20. Slide 20: Credit Rating underlines quality of Deutsche Wohnen

    » Credit Rating underlines quality of Deutsche Wohnen Overview of Issuer Credit Ratings in the European real estate sector Sources: S&P, Fitch, Moody's, UBS Credit Research  Moody’s and S&P assigned a long-term issuer rating of Baa1 and BBB+ with stable outlook  Structual subordination of low port

  21. Slide 21: Financing strategy of the future – what comes next

    » Financing strategy of the future – what comes next… Optimized debt book to balance stability and profitability:  Resilience optimized (avg. debt maturity of ~9 years after refinancing)  Strong position for external growth in times of „market crises“  Above avg. ISCR of >3x provides the group wi

  22. Slide 22: Capital markets

    » Capital markets deutsche-wohnen.com 22

  23. Slide 23: Stock performance and shareholder structure

    » Stock performance and shareholder structure Shareholder structure 1) Outperformance of indices in 2014 MDAX EPRA Europe EPRA Germany 150 Deutsche Wohnen Sun Life Financial Inc./ MFS; 11.05% 140 Norges Bank; 6.97% 130 BlackRock, Inc.; 7.13% 120 APG Asset Management Others; N.V.; 3.01% 68.84% 110 10

  24. Slide 24: FFO and cashflow

    » FFO and cashflow deutsche-wohnen.com ry Deutsche Wohnen 24

  25. Slide 25: Recurring FFO and guidance

    » Recurring FFO and guidance in EUR m 9M-2014 9M-2013 Profit 144.9 66.5 Earnings from Disposals (38.8) (17.9) Depreciation 4.5 4.0 Valuation SWAP and convertible bond 22.0 (0.2) One-off costs for transactions and financing 5.1 3.4 Non-cash financial expenses 12.3 8.6 Deferred taxes 9.7 20.9 Tax bene

  26. Slide 26: Cash flow creation and dividend coverage

    » Cash flow creation and dividend coverage EURm 2011 2012 2013 2014e FFO I1) 47.5 68.2 114.5 212.2 FFO disposals 10.6 19.9 23.0 50.0 2014 refinancing and FFO II 58.1 88.1 137.5 262.2 further synergies will + ∆ CF disposals2) 54.0 51.2 49.9 85.0 improve cash flow by - Regular amortization -30.2 -36.0

  27. Slide 27: Group restructuring & refinancing created significant shareholder value

    » Group restructuring & refinancing created significant shareholder value EUR 5m of EUR 35m of additional EUR39 m EUR ~80m p.a. synergies with synergies additional effect FFO II FFO I impact (restructuring sales from financing (before tax) force)  Over-achievement of originally targeted synergies o

  28. Slide 28: Appendix

    » Appendix deutsche-wohnen.com . 28

  29. Slide 29: Strong earnings and cash contributions from letting

    » Strong earnings and cash contributions from letting in EUR m 9M-2014 9M-2013 In-place rent: 9M-14: EUR 5.65 / sqm Current gross rental income 469.3 259.5 Non-recoverable expenses (9.9) (5.7) Earnings Maintenance1) from letting: Rental loss (5.8) (2.6) 9M-14: EUR 8.83 /sqm + EUR 178m Maintenance (6

  30. Slide 30: Overview of portfolio as at 30 September 2014

    » Overview of portfolio as at 30 September 2014 30/09/2014 Residential Area 1) In-place New letting Vacancy Fair Share in FV 5) Multiple Yield Multiple Yield 2) 3) 4) units rent rent Value terms of in-place market (FV) FV rent rent # K sqm EUR/sqm EUR/sqm % EUR m % EUR/sqm % % Strategic core and gro

  31. Slide 31: Pro forma like for like overview of portfolio

    » Pro forma like for like overview of portfolio as at 30 September 2014 In-place rent (like-for-like) and vacancy (like-for-like)2) Like-for-like Residential units In-place In-place in % Vacancy Vacancy 1) 1) 30/09/2014 rent rent 30/09/2014 30/09/2013 # 30/09/2014 30/09/2013 EUR/sqm EUR/sqm y-o-y in

  32. Slide 32: Dynamic rent potential in Core+ regions

    » Dynamic rent potential in Core+ regions (letting portfolio) New-letting rent in New-letting 1) 3) In-place rent in EUR/sqm Rent potential EUR/sqm2) contracts4) Core+ 5.76 23.5% 7.11 6,172 Greater 5.64 21.5% 6.85 5,267 Berlin Rhine- 7.15 25.2% 8.95 757 Main Rhineland 6.62 22.0% 8.07 148  Current t

  33. Slide 33: NAV contribution by strong disposal business

    » NAV contribution by strong disposal business Closed in EUR m 9M-2014 9M-2013  Free cash flow from sales activities of EUR 101.4m (1,583 Sales proceeds 205.7 101.0 closed privatization units and Cost of sales (9.1) (6.5) 1,869 closed units institutional sales) Net sales proceeds 196.6 94.5 Carryin

  34. Slide 34: Signed units for privatization business & non-core disposals

    » Signed units for privatization business & non-core disposals Signed with Units Transaction Fair value Gross Margin expected closing volume 1) in 2014 # EUR m EUR m EUR m %2) Privatization 2,037 162.3 112.7 49.6 44% Institutional sales 2,052 86.1 77.4 8.7 11%  Ongoing and successful focus on dispo

  35. Slide 35: Nursing and Assisted Living − increasing FFO contribution

    » Nursing and Assisted Living − increasing FFO contribution in EUR m 9M-2014 9M-2013 30/09/2014 Facilities Places Income Greater Berlin 12 1,442 Nursing 41.5 38.3 Saxony 7 475 Living 4.5 1.5 Others 2 257 Other 4.8 3.1 In total 21 2,174 Total income 50.8 42.9 Costs Average Occupancy Nursing and corpo

  36. Slide 36: Successful restructuring of financing

    » Successful restructuring of financing… Pre-refinancing Pro forma (30/09/2014) post-refinancing LTV (%) 54.7 ~ 55.8  Interest Rate (%) ~3.2 ~ 2.5  Mandatory redemption p.a. (%) ~ 1.6 ~ 1.1  Weighted maturity ~ 7.5 years ~ 8.9 years Interest rate fixed/ hedged (%) ~ 92 ~ 86 Unencumbered assets (%

  37. Slide 37: Benchmark EBITDA margin among the Peer Group

    » Benchmark EBITDA margin among the Peer Group in EUR m 9M-2014 9M-2013 EBITDA margins 9M-2014 9M-2013 Earnings from Residential Property Management 385.9 208.2 adj. EBITDA / gross rents 77.6% 75.8% Earnings from Disposals 38.8 17.9 adj. EBITDA excl. disposals / 69.4% 68.9% gross rents Earnings from

  38. Slide 38: Adjusted EBT increased by ~110% (y-o-y)

    » Adjusted EBT increased by ~ 110% (y-o-y) in EUR m 9M-2014 9M-2013 in EUR m 9M-2014 9M-2013 EBITDA (adjusted) 364.3 196.8 Interest expenses (138.9) (84.9) Non-cash interest expenses (12.3) (8.6) Depreciation (4.5) (4.0) 2) 2) (151.2) (93.5) Financial result (net) (150.5) (92.9) Interest income 0.7

  39. Slide 39: Recurring FFO per share performance +9.4% (y-o-y)

    » Recurring FFO per share performance +9.4% (y-o-y) in EUR m 9M-2014 9M-2013 FFO development in EUR m Profit 144.9 66.5 67.0 104.2 205.1 Earnings from Disposals (38.8) (17.9) Depreciation 4.5 4.0 Valuation SWAP and convertible bond 22.0 (0.2) 38.8 One-off costs for transactions and financing 5.1 3.4

  40. Slide 40: Balance sheet

    » Balance sheet Assets Equity and Liabilities in EUR m 30/09/2014 31/12/2013 in EUR m 30/09/2014 31/12/2013 Investment properties 8,882.5 8,937.1 Total equity 4,094.2 3,944.3 Other non-current assets 554.4 552.2 Financial liabilities 4,881.9 5,154.6 Derivatives 0.1 2.7 Convertibles 654.6 250.2 Defer

  41. Slide 41: EPRA NAV per share up by 2.5%

    » EPRA NAV per share up by 2.5% in EUR m 30/09/2014 31/12/2013 in EUR m 30/09/2014 31/12/2013 Equity (before non-controlling EPRA NAV per share in EUR 3,858.7 3,777.8 14.34 13.99 interests) (undiluted) Fair value adjustment of Adjusted NAV per share in 4.0 (2.2) 12.64 12.27 convertible bonds EUR (un

  42. Slide 42: Strong like-for-like development

    » 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 Letting Portfolio

  43. Slide 43: Portfolio structure – characteristics meeting strong demand

    » Portfolio structure – characteristics meeting strong demand In-place rent1) ( €5.53/sqm/month) Year of construction 25.4% 31.7% 29.5% 19.6% 15.4% 19.5% 11.9% 15.3% 6.9% 7.2% 3.1% 3.8% 1.5% 2.2% 3.1% 3.4% 0.6% <=3.50 3.51 - 4.00 4.01 - 4.50 4.51 - 5.00 5.01 - 5.50 5.51 - 6.00 6.01 - 6.50 6.51 - 7.

  44. Slide 44: Management board and areas of responsibilities

    » Management board and areas of responsibilities Michael Zahn Andreas Segal Lars Wittan Chief Executive Officer Chief Financial Officer Chief Investment Officer (CEO) (CFO) (CIO) Areas of responsibility: Areas of responsibility: Areas of responsibility:  Strategy  Equity Financing  Accounting/Tax

  45. Slide 45: Disclaimer

    » 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, the development or the

  46. Slide 46: Deutsche Wohnen AG contact details

    Deutsche Wohnen AG Registered Office Berlin Office Pfaffenwiese 300 Mecklenburgische Straße 57 65929 Frankfurt/ Main 14197 Berlin Phone: +49 30 897 86 5413 Fax: +49 30 897 86 5409 © 2014 Deutsche Wohnen AG 46

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