LEG Immobilien SE · XETR:LEG
LEG Immobilien — FY2019 Earnings Presentation
37 slides from LEG Immobilien's earnings presentation, Mar 9, 2020
Slide 1: 2019 Results
LEG Immobilien AG 2019 Results 9 March 2020 1 I March 2020
Slide 2: Disclaimer
Disclaimer While the company has taken all reasonable care to ensure that the facts stated in this presentation are accurate and that the opinions contained in it are fair and reasonable, this presentation is selective in nature and is intended to provide an introduction to, and an overview of the C
Slide 3: Agenda
Agenda I. HIGHLIGHTS 2019 & YTD 2020 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. OUTLOOK V. APPENDIX 3 I March 2020
Slide 4: Highlights 2019 & first achievements 2020
Highlights 2019 & first achievements 2020 Growing along our defensive profile Guidance 2020 confirmed Strong Performing ESG Financials Operations Achievements FFO I +7.1% Net cold rent +4.6% CO2 emission –5,400t from our EBITDA-Margin 72.8% L-f-l rental growth +2.9% 2019 modernisation effo
Slide 5: Delivering attractive pay-outs
Highlights 2019 – Further growing our platform Delivering attractive pay-outs No. of units FFO I €m Dividend €m ~138,900 +7% +11% ~1,200 341.3 248 ~3,700 318.6 223 134,031 133,969 141.2 92 94,311 2013 2014 2015 2016 2017 2018 2019 2020 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018
Slide 6: Remaining focussed on NRW/Germany and affordable living
Highlights 2019 – Selective growth Remaining focussed on NRW/Germany and affordable living Regional split Deal funnel 2019 Target markets Rationale Share NRW (units) Focus on NRW Market insight/ ~100,000 offered as no.1 Cost advantages first level c.45% NRW ~67,000 analysis Additionally B-/ Leveragi
Slide 7: Agenda
Agenda I. HIGHLIGHTS 2019 & YTD 2020 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. OUTLOOK V. APPENDIX 7 I March 2020
Slide 8: Positive rent development across all submarkets
Portfolio and Operating Performance – Overview Positive rent development across all submarkets Strong results on the basis of tailor-made management strategies Bielefeld North Rhine-Westphalia Lippe Munster Gütersloh (~129,600 units / ~97%) Recklinghausen Hamm Paderborn GelsenkirchenDortmund Soest O
Slide 9: Sound underlying rent dynamics
Portfolio and Operating Performance – Rent Development Sound underlying rent dynamics L-f-l residential rent Rent growth drivers (€/sqm/month) % +2.9% +3.0% +2.9% 5.66 5.82 0.7 0.9 2018 2019 Re-letting 0.8 Modernisation L-f-l free financed rent 0.8 (€/sqm/month) Mietspiegel adjustments +3.6% 5.99 6.
Slide 10: Lifting potential for growth and energy efficiency
Portfolio and Operating Performance – Capex & Maintenance Lifting potential for growth and energy efficiency Lifting potential for growth and energy efficiency while maintaining high capital efficiency €m +16.9% €295.3m (€33.9/sqm) €252.7m (€29.4/sqm) Investments increased c.17% year-over-year in
Slide 11: Leveraging LEG's strong customer base with additional services
Portfolio and Operating Performance – Innovation & Value-Added Services Leveraging LEG‘s strong customer base with additional services Strong FFO contribution – Services €m 23 Partner Partner Partner 16 15 Cooperation Cooperation Joint venture (51%) 9 Multimedia: TV, Electricity, heating, Small repa
Slide 12: Agenda
Agenda I. HIGHLIGHTS 2019 & YTD 2020 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. OUTLOOK V. APPENDIX 12 I March 2020
Slide 13: Margin expansion story is set to continue
Financial Highlights 2019 Margin expansion story is set to continue Net Cold Rent Adj. Net Rental and Lease Income Margin €m €m +4.6% Adj. Net Rental and Lease Income +5.2% % 586.1 76.8 77.3 Driver 560.2 430.5 453.3 Ongoing efficiency gains 2018 2019 2018 2019 2018 2019 Adj. EBITDA % 72.3 72.8 Benef
Slide 14: EPRA Net Asset Value: Increase of +€11.99 per share
Financial Performance EPRA Net Asset Value Increase of +€11.99 per share €/ps 1.85 -3.53 13.38 -0.07 -0.26 -0.35 0.44 0.52 €105.39/ps €93.40/ps +12.8% 2018 Valuation Retained Dividend Adoption Pensions Increase ESP Goodwill Net effect 2019 uplift earnings of IFRS 16 stake resulting from of executed
Slide 15: Valuation uplift driven by letting performance and yield compression
Financial Performance – Portfolio Valuation 2019 Valuation uplift driven by letting performance and yield compression Breakdown revaluation gains €m Value drivers Valuation uplift by markets Allocation capital growth 96 202 9.4% 9.1% 8.3% 422 6.1% €1,125m1 607 923 Total High Stable Higher growth yie
Slide 16: Portfolio valuation: €1,353/sqm @5.1% gross yield
Financial Performance – Portfolio (as of 31 December 2019) Portfolio valuation: With €1,353/sqm @5.1% gross yield still at attractive levels in absolute and relative terms GAV In-Place GAV Residential Residential GAV/ Gross Rent Market Commercial/ Total GAV Market segment Units Assets (€m) sqm (€) y
Slide 17: Further improved financing structure: Lower for longer
Financial Performance Further improved financing structure: Lower for longer Maturity profile Average debt maturity (years) €m 2019 8.1 2020 100 -0.3% 2018 7.6 2021 0 2022 0 Average interest costs 2023 331 1.9% 2019 1.43% 2024 891 1.6% 2018 1.58% 2025 980 1.3% 2026 526 1.5% 2027 919 1.3% Loan-to-val
Slide 18: Agenda
Agenda I. HIGHLIGHTS 2019 & YTD 2020 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. OUTLOOK V. APPENDIX 18 I March 2020
Slide 19: Guidance 2020 confirmed
Outlook Guidance 2020 confirmed Strong Performing ESG Financials Operations Topics FFO I €370m – 380m L-f-l rental growth c.2.8% Energy efficient modernization EBITDA-Margin ~74% (incl. 20bps from refinancing) of c.3% of the portfolio p.a. LTV 43% max L-f-l vacancy slightly New foundat
Slide 20: Agenda
Agenda I. HIGHLIGHTS 2019 & YTD 2020 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. OUTLOOK V. APPENDIX 20 I March 2020
Slide 21: NAV and dividend development
Appendix – Generating Attractive Shareholder Returns NAV and dividend development NAV per share Dividend per share €, excl. goodwill € 105.39 93.40 3.53 3.601 83.81 3.04 67.15 2.76 58.92 52.69 2.26 49.36 1.96 1.73 +13.5% +13.0% 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 1
Slide 22: Acquisitions: Leading Management Skills Paying Off
Appendix – Scalability of platform + cost discipline support value accretive growth Acquisitions: Leading Management Skills Paying Off Strong volume growth at decreasing overhead cost… # of units 36.7 33.1 32.1 33.3 34.0 33.2 Recurr. Admin costs (€m) 133,969 134,031 128,488 130,085 106,961 108,916 2
Slide 23: EPRA-Net Asset Value and Pro-forma-NAV
Appendix – 2019 EPRA-Net Asset Value and Pro-forma-NAV €m 2019 2018 €923.4m Portfolio revaluation Equity (excl. minority interests) 5,909.9 4,757.6 -€223.1m Dividends €596.8m Equity increase Effect of exercising options, convertibles and other rights 26.1 553.9 -€144.8m Others NAV 5,936.0 5,
Slide 24: FFO Calculation
Appendix – 2019 FFO Calculation €m 2019 2018 Net cold rent 586.1 560.2 +€25.9m/+4.6% Profit from operating expenses -2.8 -4.5 Maintenance (externally-procured services) -61.0 -51.8 Growth in staff costs mainly Staff costs -68.2 -60.3 due to additional FTE’s Allowances on rent receivables -7.9 -8
Slide 25: FFO Bridge 2019: Increase of +€22.7m (+7.1%)
Appendix – FFO FFO Bridge 2019 Increase of +€22.7m (+7.1%) €m 9.6 -5.1 4.5 -4.8 0.8 -1.6 3.0 -0.1 -1.4 341.3 18.6 318.6 +7.1% FFO I Organic Net rental Sales Lower I-f-I Higher I-f-I Lower Higher net Lower net Minorities Other FFO I 2018 rental growth effect operating maintenance recurring cash inter
Slide 26: Strong balance sheet
Appendix – 2019 – Balance Sheet Strong balance sheet €m 2019 2018 Investment property 12,031.1 10,709.0 Revaluation €923.4 m Acquisitions €360.7m Other non-current assets 322.7 175.9 Capex €201.5m Non-current assets 12,353.8 10,884.9 Cash flow from operating Receivables and other assets 89.6
Slide 27: Strong credit profile in more volatile financing environment
Appendix – 2019 – LTV Strong credit profile in more volatile financing environment €m 2019 2018 Financial liabilities 5,053.9 4,598.1 Strong balance sheet with LTV of 37.7% significantly below maximum target (43%) Excluding lease liabilities (IFRS 16) 31.8 - leaves headroom for growth investments
Slide 28: Income Statement
Appendix – 2019 Income Statement €m 2019 2018 Higher rental income (+€25.9m YOY/+4.6%) Net rental and lease income 435.0 418.6 Higher personnel expenses (€7.9m) and one-time costs Net income from the disposal of investment property -1.3 -0.9 (+€2.5m) Net income from the valuation of investment p
Slide 29: Cash Effective Interest Expense
Appendix – 2019 Cash Effective Interest Expense €m 2019 2018 Refinancing effect from early conversion of convertible Reported interest expense -153.1 -109.3 bond (€17.7m) Interest expense related to loan amortisation 34.9 14.0 Prepayment penalties of €27.6m due to early Prepayment penalties / br
Slide 30: Broadbased valuation uplifts continue across market segments
Appendix – Financial Performance – Portfolio Valuation 2019 Broadbased valuation uplifts continue across market segments Valuation uplift by markets (l-f-l), including commercial and other assets Valuation uplift FY-19 Valuation uplift H2-19 Gross yield FY-19 High-Growth Markets 9.4% (7.5% in FY-18,
Slide 31: EPRA Net Initial Yield
Appendix – 2019 EPRA Net Initial Yield €m 2019 2018 Investment properties 12,031.9 10,702.2 Assets held for sale 25.2 20.3 Market value of residential property portfolio (net) 12,057.1 10,722.5 Estimated incidental costs 1,184.7 1,056.9 Market value of residential property portfolio (gross) 13,241.7
Slide 32: Accelerating external growth
Appendix – 2019 acquisitions Accelerating external growth Acquisitions Residential units Purchase price Rent multiple Price / sqm FFO p.a. signed in 2019 5,700 approx. €500m 21.7x €1,433 c. €13m (FY 2020) Top 5 locations Units Federal state Market segment Bremen 1,160 Bremen stable Greater Aachen
Slide 33: Refinancing of subsidised loans lifting value
Appendix – Rent revisionary potential Refinancing of subsidised loans lifting value Rent Potential Subsidised Units Number of Units Coming Off Restriction and Rent Upside # Units c. 17,000 Until 2028, c. 24,000 units will come c. 9,000 2.272 off rent restriction 1.667 1.620 Units show significan
Slide 34: LEG Additional Creditor Information
Appendix LEG Additional Creditor Information Unsecured financing covenants Financing mix Covenant Threshold 31.12.2019 Variable interest Fixed interest Consolidated Adjusted EBITDA / 7.7% 80.8% Net Cash Interest >1.8x 5.4x Unencumbered Assets / Swaps Unsecured Financial Indebtedness >125% 180% 11.5%
Slide 35: LEG Share Information
Appendix LEG Share Information Basic data Well-balanced shareholder structure1 Prime Standard, Frankfurt Stock Exchange Other free float MFS Total no. of shares: 69,009,836 75.8% 10.5% Ticker symbol: LEG BlackRock ISIN: DE000LEG1110 7.5% Indices: MDAX, FTSE EPRA/NAREIT, GPR 250, BNP Pariba
Slide 36: Financial Calendar 2020
Appendix Financial Calendar 2020 Marc h 2020 Report/Event 9th Annual Report 2019 May 2020 11th Quarterly Statement Q1 as of 31 March 2020 20th Annual General Meeting, Düsseldorf A ugust 2020 7th Quarterly Report Q2 as of 30 June 2020 Novem ber 2020 12th Quarterly Statement Q3 as of 30 September 2020
Slide 37: Investor Relations
Contact Investor Relations Frank Kopfinger, CFA Head of Investor Relations & Strategy Tel: +49 (0) 211 4568-550 frank.kopfinger@leg.ag Karin Widenmann Senior Manager Investor Relations Tel: +49 (0) 211 4568-458 karin.widenmann@leg.ag LEG Immobilien AG Phone: +49 (0) 211 4568-400 Hans-Boeckler-Str. 3