Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — Q1 2018 Earnings Presentation

36 slides from Deutsche Wohnen's earnings presentation, May 15, 2018

  1. Slide 1: Deutsche Wohnen SE Q1 2018 results

    Deutsche Wohnen SE » Q1 2018 results Conference Call, 15 May 2018 1

  2. Slide 2: Agenda

    » Agenda 1 Highlights Q1 2018 2 Portfolio 3 Financials 4 Appendix 2

  3. Slide 3: Highlights Q1 2018

    » Highlights Q1 2018 Operating business remains strong  L-f-l rental growth remains high with 4.4% for total letting portfolio – for Berlin even at 5.1%  Rent potential increased further to 37% in Berlin  Attractive NOI margin of 79% Capex programme to accelerate rental and value growth fully on

  4. Slide 4: Portfolio update Q1 2018 – significant reversionary potential

    » Portfolio update Q1 2018 – significant reversionary potential Strategic cluster Residential % of total In-place rent1) Fair Value Multiple Multiple Rent potential2) Vacancy units measured by in-place market Fair Value EUR/sqm/month EUR/sqm rent rent in % in % Core+ 140,557 92.4% 6.57 2,006 25.5 18

  5. Slide 5: Strong like-for-like development in particular in Berlin

    » Strong like-for-like development in particular in Berlin 2) 2) Like-for-like Residential units In-place rent In-place rent Change Vacancy Vacancy Change 31/03/2018 number 31/03/2018 31/03/2017 y-o-y 31/03/2018 31/03/2017 y-o-y EUR/sqm EUR/sqm in % in % Strategic core and growth regions Core+ 131,3

  6. Slide 6: Value enhancing Capex programme is fully on track

    » Value enhancing Capex programme is fully on track Q1-2018 Q1-2017 Modernization & Maintenance per sqm EUR / EUR / 19.46 33.37 24.15 ~45 EUR m EUR m sqm1) sqm1) Maintenance (expensed 22.1 8.82 21.8 8.91 through p&l) ~35 Modernization 22.85 (capitalized on 38.4 15.33 25.8 10.55 10.55 15.33 balance s

  7. Slide 7: Stable margins and increased NOI per sqm

    » Stable margins and increased NOI per sqm in EUR m Q1-2018 Q1-2017 Income split from rental business due to first time application of IFRS 15 - amended figures for Income from rents (rental income) 192.9 180.4 Q1-2017 accordingly Income relating to utility/ ancillary costs 101.8 91.8 Non recoverabl

  8. Slide 8: Attractive margins of disposal business despite significant revaluations

    » Attractive margins of disposal business despite significant revaluations Disposals Privatization Institutional sales Total with closing in Q1-2018 Q1-2017 Q1-2018 Q1-2017 Q1-2018 Q1-2017 No. of units 76 184 273 306 349 490 Proceeds (EUR m) 17.0 23.9 13.9 28.4 30.9 52.3 Book value 11.4 18.3 13.0 22

  9. Slide 9: Target to double EBITDA contribution from Nursing and Assisted Living mid-term

    » Target to double EBITDA contribution from Nursing and Assisted Living mid-term Operations (in EUR m) Q1-2018 Q1-2017 in EUR m Q1-2018 Q1-2017 Total income 23.5 23.0 Nursing & Living 20.5 20.0 Total expenses (22.2) (20.9) Other 3.0 3.0 EBITDA operations 1.3 2.1 in EUR m Q1-2018 Q1-2017 EBITDA margi

  10. Slide 10: EBITDA margin stable above 80%

    » EBITDA margin stable above 80% in EUR m Q1-2018 Q1-2017 Development of cost ratio 10.9% Earnings from Residential Property Management 163.7 154.2 10.6% 10.4% Earnings from Disposals 4.8 8.6 Earnings from Nursing and Assisted Living 11.6 12.5 FY-2017 Q1-2017 Q1-2018 Segment contribution margin 180.

  11. Slide 11: FFO I per share growth of 6% to improve throughout 2018

    » FFO I per share growth of 6% to improve throughout 2018 in EUR m Q1-2018 Q1-2017 FFO I margin development EBITDA (adjusted) 162.0 155.3 69% 67% Earnings from Disposals (4.8) (8.6) 64% 64% 63% Long-term remuneration component 58% 0.0 1.1 (share based) Finance lease broadband cable network 0.1 0.0 A

  12. Slide 12: EPRA NAV per share stable in Q1 2018

    » EPRA NAV per share stable in Q1 2018 in EUR m 31/03/2018 31/12/2017 EPRA NAV per share (undiluted) in EUR 35.74 36.05 Equity (before non-controlling interests) 9,991.5 9,888.2 29.68 1% + 20% Fair values of derivative financial 0.5 2.0 instruments Deferred taxes (net) 2,794.5 2,786.6 EPRA NAV (undi

  13. Slide 13: Conservative long-term capital structure

    » Conservative long-term capital structure Rating A- / A3; stable outlook Ø maturity ~ 7.7 years  Low leverage, long maturities and strong rating  Flexible financing approach to optimize financing costs % secured bank debt 66%  LTV at 34.6% as of Q1 2018 (-1.5pp yoy) % unsecured debt 34%  ICR (a

  14. Slide 14: Guidance unchanged

    » Guidance unchanged FY-2017 FY-2018e Main drivers/ comments FFO I (EUR m) 432.3 ~470 Operational performance Based on 65% pay-out ratio from FFO I and current Dividend per share (EUR) 0.80 ~0.86 shares outstanding 35-40% LTV 34.5% Aim to keep current rating (target range)  ~3% based on in-place re

  15. Slide 15: Appendix

    » Appendix deutsche-wohnen.com ‘ ) a Deutsche Wohnen

  16. Slide 16: Deutsche Wohnen's residential portfolio is best-in-class

    » Deutsche Wohnen's residential portfolio is best-in-class Südwestkorso, Berlin Siemensstadt, Berlin Otto-Suhr-Siedlung, Berlin Oranienkiez, Berlin Hellersdorf, Berlin Carl-Legien-Siedlung, Berlin Hufeisensiedlung, Berlin Dresden 16

  17. Slide 17: More than EUR 8bn value potential for residential portfolio

    » More than EUR 8bn value potential for residential portfolio Multiple Underlying Fair Value Fair Value Description rent (EUR m) (EUR/sqm) (EUR m) Current portfolio 25 x 767 ≙ 18,864 EUR 1,886 • Fair Value of residential portfolio as of 31-Dec-2017 (31-Dec-2017) • Based on difference of achieved re-

  18. Slide 18: Significant scope for rent potential to widen further in Berlin

    » Significant scope for rent potential to widen further in Berlin Replacement costs Affordability  Average replacement costs > EUR 3,500 per sqm, pre-  Average DW apartment size of only 60 sqm offers dominately driven by increase of prices for land plots competitive advantage in terms of affordabi

  19. Slide 19: Re-letting rents continue to outpace in-place rents

    » Re-letting rents continue to outpace in-place rents DW rent development in Berlin DW development of multiples in Berlin EUR / sqm 8.91 30x 27.1 26.9 9.000 8.47 23.7 25x 8.000 7.60 37% rent 7.6x spread 6.92 7.02 potential 18.7 20x 7.000 6.54 16.1 20.2 14.4 18.9 19.3 17% rent 15x 6.000 potential 6.4

  20. Slide 20: Current level of rents and prices offer significant growth potential

    » Current level of rents and prices offer significant growth potential Asking prices multifamily housing (in EUR / sqm)1) Asking rents in German top cities (in EUR / sqm)2) DW Berlin DW Berlin (book value) 2,090 (re-letting rent) 8.46 +16% Dusseldorf +27% Berlin 2,548 9.83 Berlin Dusseldorf 2,647 10

  21. Slide 21: Strong like-for-like development in particular in Berlin

    » Strong like-for-like development in particular in Berlin 2) 2) Like-for-like Residential units In-place rent In-place rent Change Vacancy Vacancy Change 31/03/2018 number 31/03/2018 31/03/2017 y-o-y 31/03/2018 31/03/2017 y-o-y EUR/sqm EUR/sqm in % in % Letting portfolio1) 150,045 6.44 6.17 4.4% 1.

  22. Slide 22: Portfolio structure – characteristics meeting strong demand

    » Portfolio structure – characteristics meeting strong demand Apartment size Ø 60 sqm Year of construction < 40 sqm, 30.8% >= 75 sqm, 11% 29.0% 18% 18.3% 40 to < 55 15.9% 65 to < 75 sqm, 30% sqm, 18% 5.7% 0.4% 55 to < 65 <= 1918 1919 - 1950 - 1970 - 1980 - >= 2000 sqm, 23% 1949 1969 1979 1999 Rental

  23. Slide 23: Berlin – The place to be!

    » Berlin – The place to be! Government High-tech Science • 6,500 technology Seat of parliament, firms Highest density of Innovation Tourism government and • 15,000 IT students researchers and 2nd best professional • Forecast 2020: academics in Germany performing European More than 12.9 million assoc

  24. Slide 24: The Berlin-portfolio at a glance

    » THE BERLIN-PORTFOLIO AT A GLANCE Reinickendorf Pankow # 9,403  6.49  1.4% # 9,778  7.09  2.5% Mitte Friedrichshain-Kreuzberg # 4,559  6.88  2.3% # 8,005  6.22  5.0% Lichtenberg # 8,700  6.47  0.9% Spandau # 13,769  6.37  1.7% Marzahn-Hellersdorf # 14,874  5.81  0.8% Charlottenburg-Wi

  25. Slide 25: Disposals business remains opportunistic

    » Disposals business remains opportunistic • Development xxx of privatization business Development of institutional sales business 20,000 95% 2,400 44% 41% 39% 30% 20% 8% 13% 20% 2,086 92% 2,100 15,000 91% 91% 90% 14,811 1,800 10,000 12,669 90% 1,564 1,394 9,596 1,500 1,181 5,000 1,200 2,099 0 85% 9

  26. Slide 26: Best in class Nursing and Assisted Living portfolio

    » Best in class Nursing and Assisted Living portfolio Uferpalais, Berlin Im Schlossgarten, Brandenburg Wolkenstein, Saxony Wilsdruff, Saxony Quellenhof, Saxony Am Schwarzen Berg, Lower Saxony Garpsen, Lower Saxony Am Auensee, Saxony Oberau, Bavaria Blankenese, Hamburg Zum Husaren, Hamburg Am Lunapar

  27. Slide 27: Nursing and Assisted Living segment

    » Nursing and Assisted Living segment Nursing identified as attractive driver for further external growth Assets including operations  Fragmented market with promising fundamental outlook offers Facilities Beds Occupancy room for consolidation Region Managed by owner1) # # rate  Significant invest

  28. Slide 28: Acquisition track record since 2013

    » Acquisition track record since 2013 Main acquisitions Fair Value In-place rent (>1,000 units deal size) in EUR/sqm in EUR/sqm Year Residential units Deal Location At Acquisition 31/12/2017 ∆ At Acquisition 31/12/2017 ∆ # Centuria 5,200 Berlin 711 1,803 154% 4.65 5.67 22% 2013 Larry 6,500 Berlin 84

  29. Slide 29: Operational and financial improvements drive margins

    » Operational and financial improvements drive margins Adj. EBITDA margin (w/o disposals) FFO I margin 77% Avg. cost of debt 75% 3.2% 2.5% 1.8% 1.6% 1.3% 72% 58% 54% 48% 68% 35% 66% 31% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017  Concentrated portfolio and successful integration of  Early a

  30. Slide 30: Strong generation of total shareholder return

    » Strong generation of total shareholder return Development of dividend in EUR per share Development of EPRA NAV (undiluted) in EUR per share CAGR 2013-2017: +24% +8% CAGR 2013-2017: +25% +20% +37% 0.80 +29% 35.74 +23% 0.74 +29% 29.68 +29% +23% 0.54 23.02 0.44 17.87 0.34 14.51 2013 2014 2015 2016 20

  31. Slide 31: Bridge from adjusted EBITDA to profit

    » Bridge from adjusted EBITDA to profit in EUR m Q1-2018 Q1-2017 in EUR m Q1-2018 Q1-2017 EBITDA (adjusted) 162.0 155.3 Interest expenses (23.6) (24.7) Depreciation (1.9) (1.7) In % of rental income ~12.2% ~13.7% At equity valuation 0.7 0.2 Non-cash interest expenses (3.4) (13.7) (26.2) (38.3) (27.0

  32. Slide 32: Summary balance sheet

    » Summary balance sheet Assets Equity and Liabilities in EUR m 31/03/2018 31/12/2017 in EUR m 31/03/2018 31/12/2017 Investment properties 19,769.2 19,628.4 Total equity 10,316.4 10,211.0 Other non-current assets 175.6 134.4 Financial liabilities 4,739.3 4,751.1 Derivatives 4.1 3.3 Convertibles 1,673

  33. Slide 33: Management board and areas of responsibilities

    » Management board and areas of responsibilities Michael Zahn Lars Wittan Philip Grosse Chief Executive Officer Chief Operating Officer Chief Financial Officer (CEO) (COO) (CFO) More than 20 years in the firm Since 2007 at Deutsche Wohnen, Since 2013 at Deutsche Wohnen, since 2011 member of the sinc

  34. Slide 34: Executive Board compensation system – as of 1 January 2018

    » Executive Board compensation system – as of 1 January 2018  Introduction of Share Ownership Guidelines (SOGs) 1  Conversion of the Stock Option Plan into a Performance Cash Plan 2 Reduction of the plan’s complexity and meeting of investor and proxy advisor expectations 1  Obligation to hold a f

  35. Slide 35: 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

  36. Slide 36: Deutsche Wohnen SE contact details

    Deutsche Wohnen SE Mecklenburgische Straße 57 14197 Berlin Phone: +49 30 897 86 5413 Fax: +49 30 897 86 5419 © 2018 Deutsche Wohnen SE

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