Vonovia SE · XETR:VNA

Vonovia — Deutsche Annington Immobilien — Commerzbank German Residential Forum 2015

45 slides from Vonovia's conference presentation, Mar 27, 2015

  1. Slide 1: Deutsche Annington Immobilien SE – Commerzbank German Residential Forum

    Deutsche Annington Immobilien SE Commerzbank German Residential Forum London, March 27, 2015 Thomas Eisenlohr, Head of IR © Deutsche Annington Immobilien SE Commerzbank German Residential Forum, London / March 27, 2015

  2. Slide 2: Promised and delivered – the 2014 Highlights

    Promised and delivered – the 2014 Highlights  2014: Another strong year with KPIs at top end of guidance or exceeding  Like-for-like rental growth of 2.5%  FFO1 increased 28.2% to € 286.6m  NAV/share plus 6.0% to € 24.22  Proposed dividend up 11.4% to € 0.78/share  Successful execution of main

  3. Slide 3: The positive performance is driven by all strategic pillars

    The positive performance is driven by all strategic pillars Reputation & customer satisfaction 1 Traditional Property All KPIs improved, with striking management  Efficiency improvement gains strategy  Invest 2014 at more than € 29/m² 5 Acquisition 2  Maturity profile further smoothened strategy

  4. Slide 4: Improvement of all KPIs in 2014: FFO 1/share +5.9%, NAV/share +6.0%

    Improvement of all KPIs in 2014 FFO 1/share +5.9%, NAV/share +6.0% FFO 1 (€m) NAV (€m) FFO 1 / share1 (€) FFO 1 / unit2 (€) NAV / share1(€) CAGR: +15.9% CAGR: +25.3% 286.6 286.6 6,578.0 6,578.0 223.5 5,123.4 1.06 24.22 159.0 1.00 22.85 2,671.0 1,541 1,246 2010 2014 2013 2014 31 Dec 2010 31 Dec 2014

  5. Slide 5: Improvement of all KPIs in 2014: Rents up 2.5%, vacancy down to 3.4%

    Improvement of all KPIs in 2014 Rents up 2.5%, vacancy down to 3.4% Residential in-place rent (l-f-l in €/sqm) Vacancy rate Total Portfolio Total Portfolio CAGR: +2.4% -140 bp 5.55 5.55 4.8% 5.41 5.05 3.4% 3.5% 3.4% 31 Dec 2010 31 Dec 2014 31 Dec 2013 31 Dec 2014 31 Dec 2010 31 Dec 2014 31 Dec 2013

  6. Slide 6: FFO is significantly up in all categories

    FFO is significantly up in all categories FFO evolution (€m) 2014 2013 FFO breakdown (€m) ( €m ) 2014 2013 FFO 1 excl. 554.0 470.4 554 maintenance Adjusted EBITDA (-) Interset expense FFO -209.3 -210.7 432 (-) Current income taxes -8.0 -8.5 (=) FFO 2 336.7 251.2 (209) (8) 337 (-) Adjusted EBITDA Sal

  7. Slide 7: Steady NAV growth

    Steady NAV growth NAV-bridge to Dec. 31, 2014 (€m) Comments  Capital increase position is 7.638,0 net of transaction costs 6.578,0 1,557.3  Deferred tax calculation has been adjusted to comply with 4.932,6 88.1 331,8 (168.2) (54.2) EPRA best practise 1.017,7 3.805,5 recommendation – see appendix f

  8. Slide 8: Long-term and well-balanced maturity profile

    Long-term and well-balanced maturity profile Debt maturity profile as of Dec 31, 2014 (€ m) 1.800 2019 and 2021: 1.600 Considered 1.400 `economical maturity´ of the hybrid-bonds 1.200 1.000 800 600 400 200 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 from 2024 Mortgages Structured Loans Bonds Hybr

  9. Slide 9: 2014 results at top end of guidance or exceeding

    2014 results at top end of guidance or exceeding Feb. 2014 Sep. 2014* 2014 Guidance Guidance Results L-f-l rental growth 2.3 – 2.6% 2.3 – 2.6% 2.5% Modernisation program € 150m € 160m € 171.7m Disposals (privatisation) ~1,800 units 2,100-2,200 units 2,238 units Step-up on FMV (privatisation) 20% 30-

  10. Slide 10: Confirmed positive outlook for 2015

    Confirmed positive outlook for 2015 (Deutsche Annington without GAGFAH as of 1.1.2015) Results 2014 Outlook 2015 (DAIG stand alone) l-f-l rental growth 2.5% 2.6 – 2.8% Rental income € 789.3m € 880 – 900m FFO 1 € 286.6m € 340 – 360m NAV/share1) € 24.22 € 24 – 25 Modernisation program € 171.7m > € 200

  11. Slide 11: AFFO: Substantial rise in maintenance guarantees sustainability of rental growth

    Substantial rise in maintenance guarantees the sustainability of our portfolio‘s rental growth capacity €/sqm Maintenance (€/sqm) Capitalised maintenance (€/sqm) Modernisation (€/sqm) 30,00 29,12 25,00 14,47 19,95 20,00 18,43 15,95 6,19 15,00 14,06 5,59 3,95 2,42 Cash Flow 2,89 1,84 1,29 2,02 0,89 F

  12. Slide 12: Successful 2014 cost saving program leads to significant cost per unit improvement

    Successful 2014 cost saving program leads to a significant cost per unit improvement  Increased cost saving program lifts savings up to ~€ 76/unit (9% yoy improvement)  Effect of acquisitions in 2014 minor, as units count pro rata, full effect from 2015 onwards Cost per unit (€) 1.250 1.150 2013 (

  13. Slide 13: Proven track record of the modernisation program

    Proven track record of the modernisation program Promising start into the year 2015 Positive track record 2014 substantially over-delivered & more to come 12K €m ~7.0%  Over-delivered on promise at IPO to # units 12K Unlevered asset yield substantially increase investments to 7.5%* ~€ 150m p.a. 200

  14. Slide 14: Significant fair value step-up on privatisations and non-core disposals

    Significant fair value step-up on privatisations and non-core disposals Privatisation FY 2013 FY 2014  Privatisation volume slightly below previous year, but above plan # units sold 2,576 2,238 Gross proceeds (€m) 223.4 231.2  Fair value step-up increased due to good market environment and sales s

  15. Slide 15: Successful start of the bathroom program

    Successful start of the bathroom program Status update • Since initiation in August 2014, already ~400 projects have been executed • Average investment of € 6.7k • Fixed price agreed with TGS, while TGS suggests execution dates • After start with first roadshow container in August 2014, a second con

  16. Slide 16: Smart-Submetering – the next promising pilot project

    Smart-Submetering – the next promising pilot project Pilot implemented Smart-submetering - What´s it about?  Measuring of consumption of Water and Heat (Sub-Metering)  Consumption of heat and water has to be tracked  ‘Smart’: Utilize intelligent online Metering technology (unit by unit). Currentl

  17. Slide 17: Screening the market for potential acquisitions with a very selective approach

    We are screening the market for potential acquisitions, but with a very selective approach Acquisition Deal Pipeline since IPO If it comes to an acquisition, we are a highly (≥ 2k units) appreciated and reliable partner  We offer transaction security. If we sign, we Number of residential units in `

  18. Slide 18: Every potential acquisition is monitored by a dedicated process

    Every potential acquisition is monitored by a dedicated process, thus keeping us highly disciplined Acquisition Criteria + Strategic fit  Scale benefits, geographical diversification and strengthening footprint in growth regions, increase of asset density, etc. Fulfillment + FFO / share  Accretive

  19. Slide 19: We are well prepared for the GAGFAH integration

    We are well prepared for the GAGFAH integration We are well prepared… …to go the extra mile, fast.  2014 acquisitions of DeWAG and Vitus are fully  Next Steps 2015 integrated and financed – smooth and faster than  Start of integration planned  Assimilation of IT-structure  Segmentation of combi

  20. Slide 20: Summary

    Summary  Promised and delivered: 2014 was an outstanding year for Deutsche Annington  Excellent operational performance continued leading to all major KPIs at or above guidance  Innovative finance structure demonstrated by first hybrid issuance in German residential  We strictly follow our strat

  21. Slide 21: Appendix

    Appendix © Deutsche Annington Immobilien SE Commerzbank German Residential Forum, London / March 27, 2015

  22. Slide 22: Portfolio review leads to a slightly adjusted segmentation

    Portfolio review leads to a slightly adjusted segmention Portfolio segmentation1) Portfolio distribution Rental Only (86%) Operational value generation through I. Operate YE 13:  Rental growth • No need for larger 39%  Vacancy reduction action in the next few  Effective and sustainable years main

  23. Slide 23: FY 2014 key figures

    FY 2014 key figures Key Figures in €m 2014 2013 Change in (%) Residential units k 203,028 175,258 15.8 Rental income 789.3 728.0 8.4 Vacancy rate % 3.4 3.5 -0.1 pp Monthly in-place rent€/sqm (like-for-like) 5.55 5.40 2.5 Adjusted EBITDA Rental 503.9 442.7 13.8 Adj. EBITDA Rental/unit in € 2,709 2,46

  24. Slide 24: Like-for-like rental growth in 2014 accelerated to 2.5%

    Like-for-like rental growth in 2014 accelerated to 2.5% (2013 = 1.9%) Rent increase type L-f-l rental growth 2014 Sitting tenants (non-subsidised) +0.8% Sitting tenants (subsidised) +0.3% New rentals +0.5% Subtotal excl. modernisation +1.6% Sales effect +0.0% Total incl. Sales +1.6% Modernisation +0

  25. Slide 25: FY 2014: Strong growth in adjusted EBITDA rental and sales

    FY 2014: Strong growth in adjusted EBITDA rental and adjusted EBITDA sales Bridge to Adjusted EBITDA Rental segment (€m) 2014 2013 (€m) 2014 2013 Average number of units over the period 186,013 179,354 Profit for the period 409.7 484.2 Rental income 789.3 728.0 Net interest result 274.9 288.3 Mainte

  26. Slide 26: FY 2014: P&L development

    FY 2014: P&L development P&L Comments Change  Increase primarily driven by DeWAG and Vitus (€m) 2014 2013 (€m) % acquisition which accounted for € 65.6m in 2014 Income from property letting 1,138.4 1,048.3 90.1 8.6  Excluding acquisition effects, rental income remains Rental income 789.3 728.0 61.

  27. Slide 27: FY 2014: P&L development (cont'd)

    FY 2014: P&L development (cont’d) P&L Comments Change (€m) 2014 2013 (€m) % Income from property letting 1,138.4 1,048.3 90.1 8.6 Rental income 789.3 728.0 61.3 8.4 Ancillary costs 349.1 320.3 28.8 9.0 Other income from property management 18.2 19.3 -1.1 -5.7 Income from property management 1,156.6

  28. Slide 28: FY 2014: Balance sheet evolution

    FY 2014: Balance sheet evolution Overview Comments ( €m ) Dec. 31, 2014 Dec. 31, 2013 Investment properties 12,687.2 10,266.4  Increase driven by acquisition of DeWAG Other non-current assets 292.8 86.2 (€1,066.3m), Vitus (€ 994.7m) as well as valuation 12,980.0 10,352.6 gains (based on DCF method)

  29. Slide 29: Change in deferred tax recognition according to EPRA

    Change in deferred tax recognition according to EPRA  Referring to the EPRA „Best Practices Recommendations“, equity effects caused by deferred taxes should be excluded in the EPRA NAV calculation if they are not expected to crystallise in normal circumstances. Usually, this should be the case for

  30. Slide 30: Overview of DAIG modernisation and maintenance split

    Overview of DAIG modernisation and maintenance split Maintenance and modernisation (€m) Comments 2014 2013 Maintenance expenses 145.1 136.5  In 2014, we more than doubled our Capitalised maintenance 28.7 21.1 modernisation expenditures for the energetic and vacant flats programs Modernisation work

  31. Slide 31: Rent increase and vacancy reduction in the portfolio is on track

    Rent increase and vacancy reduction in the portfolio is on track DA Residential Portfolio Dec. 31, 2014 Units Area Vacancy In-Place Rent Rent l-f-l* Portfolio Y-o-Y in # % (´000 sqm) % €m €/sqm Y-o-Y in % Segment % Operate 86,325 45 5,418 2.9 -0.1 351.2 5.56 1.8 Upgrade 51,901 25 3,259 2.7 -0.1 211.

  32. Slide 32: Rating and Bonds

    Rating and Bonds  Corporate investment grade rating Rating agency Rating Outlook Outlook Date Standard & Poor’s BBB Watch POS 1 Dec 2014  Bond ratings 3 years 2.125% € 700m 99.793% 2.125% 25 Jul 2016 BBB** Euro Bond 6 years 3.125% € 600m 99.935% 3.125% 25 Jul 2019 BBB** Eurobond 4 years 3.200% 3.2

  33. Slide 33: We are well positioned in a favourable market environment

    We are well positioned in a favourable market environment Low home ownership driving rental demand High average tenancy length in years 85% 77% 14,2 69% 12,0 58% 46% 3,7 1,7 Germany France UK Italy Spain Deutsche German avg. France avg. UK avg. Annington Source: Federal Statistical Office, Euroconst

  34. Slide 34: Deutsche Annington at a glance

    Deutsche Annington at a glance  Top 4 European real estate company1 and the largest German residential firm²  203k (208k incl. Franconia) residential units well spread across Germany  97% (96% incl. Franconia) of portfolio by fair value located in Western Germany and Berlin (and 82% [81% incl. Fr

  35. Slide 35: Options for DAIG: reducing effects of Mietpreisbremse

    We are able to reduce the effects of “Mietpreisbremse” by benefitting from our unique modernisation skills  With our German-wide presence and the approach to offer affordable living, only very few of our assets are located in potential “high demand housing markets”, where “Mietpreisbremse” might be

  36. Slide 36: Our modernisation program is capitalising on mega-trends

    Our modernisation program is capitalising on mega-trends supported by German regulation Upgrade Buildings Optimise Apartments Targeting energy efficiency Capitalising e.g. on development of senior population European CO2 emission targets (vs. 1990 levels) > 60y 40-60y 20-40y 0-20y 100% 100% 80% 90%

  37. Slide 37: Investment Process

    Investment Process Year 1 Year 2 Year 3 Investment Definition & Decision Heat insulation Construction of vintage year 2 Rent increases of vintage year 2 Investment Definition & Decision Heating system Construction of vintage year 2 Rent increases of vintage year 2 Investment Definition & Decision Ap

  38. Slide 38: Imbalanced market structure provides opportunities

    Imbalanced market structure provides opportunities Total Returns 2009-2012 (Market data on top 150 cities in Germany)  Total return is the sum of current return and expected value growth Expected value growth in %  Imbalanced market structure provides opportunities  Growth is most crucial compone

  39. Slide 39: Innovative portfolio management for sustainable profitable growth

    Innovative portfolio management for sustainable profitable growth Deutsche Annington‘s portfolio management approach (Deutsche Annington‘s analyses of Germany)  We developed a framework to evaluate the housing market Expected value growth in %  Growth is derived from basic demographic data and own

  40. Slide 40: Active portfolio management approach pays off

    Active portfolio management approach pays off Expected value growth in % Expected value growth in % Current return in % Current return in % Market Market DA avg Vitus avg Vitus (excl. NRW-Portfolio) avg Vitus NRW-Portfolio DeWAG avg Vitus (excl. NRW-Portfolio) Franconia avg DA/Vitus (excl. NRW-Portf

  41. Slide 41: Efficient process to acquire smaller portfolios fast (tactical acquisitions)

    We implemented an efficient process to acquire smaller portfolios fast and smoothly (tactical acquisitions)  With tactical acquisitions (≤ 500 units), we enlarge our transaction toolkit  Our target is to refill reductions from privatisation sales by tactical acquisitions  Standardised and lean “f

  42. Slide 42: Development of new services and products along social megatrends

    We will focus on the systematical development of new services and products along social megatrends Social trend Today Tomorrow (impulse) (implemented) (in development) Energetic Energetic Senior-friendly living modernisation modernisation • Elderly care • Local supply Demographic • Other services ch

  43. Slide 43: Continuous success of our extended business proves DA's business model

    Continuous success of our extended business proves DA’s business model Steady personnel TGS serves the basis of our investments and offers a growth significant cost advantage Strategic advantages of the TGS +52% -25% joint venture: • Higher quality craftsmen (build-up of know how, efficient & closel

  44. Slide 44: IR Contact & Financial Calendar

    IR Contact & Financial Calendar Contact Financial Calendar 2015 Investor Relations Jan 12-13 Commerzbank German Investment Seminar, New York Jan 14 JP Morgan European Real Estate Conference, London Deutsche Annington Immobilien SE Philippstraße 3 Jan 21 Kepler Cheuvreux German Corporate Conference,

  45. Slide 45: Disclaimer – Confidentiality Declaration

    Disclaimer – Confidentiality Declaration This presentation has been specifically prepared by Deutsche Annington Immobilien SE and/or its affiliates (together, “DA”) for internal use. Consequently, it may not be sufficient or appropriate for the purpose for which a third party might use it. This pres

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