Grand City Properties Sa · XETR:GYC
Grand City Properties Sa — FY2018 Earnings Presentation
37 slides from Grand City Properties Sa's earnings presentation, March 2019
Slide 1: FY 2018 Financial Results Presentation
FY 2018 FINANCIAL RESULTS PRESENTATION MARCH 2019
Slide 2: Table of Contents
Table of Contents 1 Highlights 2 Financial and Portfolio performance 3 ESG 4 Guidance 5 Appendix 2
Slide 3: Highlights
1 HIGHLIGHTS INCREASING ASSET QUALITY LEADING TO SECURE CASH FLOW AND SUSTAINABLE VALUE GROWTH Value/sqm €1,257 Rent/sqm Dec 2018 €6.0 Value/sqm Dec 2018 +3.4% €1,155 Rent/sqm Dec 2017 €5.65 Dec 2017 L-F-L SUPPORTED BY STRATEGIC CAPITAL RECYCLING +3.1% Total net rent +0.3% L-F-L growth L-F-L In-plac
Slide 4: Financial Highlights
1 FINANCIAL HIGHLIGHTS Rental and Robust top line Net rental income Net profit EPS (Basic) growth operating income €364million €583million €2.95 €545million FFO I per share FFO I per share 2018 Dividend1 High long term FFO I after perpetual notes profitability €1.19 €0.77 €198million attribution (FF
Slide 5: Profit & Loss
2 PROFIT & LOSS NET RENTAL INCOME (IN € MILLIONS) Selected Income Statement Data 1-12/2018 1-12/2017 in € ‘000 unless otherwise indicated Revenue 545,227 496,875 CAGR Rental and operating income 544,977 494,889 2015-2018 364 Net rental income 364,365 328,056 +18% 328 Property revaluations and capita
Slide 6: FFO I
2 FFO I FFO I (IN € MILLIONS) 1-12/2018 1-12/2017 in € ‘000 unless otherwise indicated Adjusted EBITDA 275,530 247,980 Finance expenses (45,929) (40,208) CAGR (29,845) (28,040) 2015-2018 Current tax expenses 198 Contribution to minorities (1,902) (1,719) +16% 178 FFO I 197,854 178,013 160 FFO I per
Slide 7: FFO II
2 FFO II FFO II (IN € MILLIONS) 334 Disposals in 2018 of €500 million 4% above net book value €137m profit over total cost 38% margin over total cost 229 204 1-12/2018 1-12/2017 in € ‘000 unless otherwise indicated 171 FFO I 197,854 178,013 Result from disposal of properties 136,602 26,440 FFO
Slide 8: EPRA NAV
2 EPRA NAV Dec 2018 Dec 2017 EPRA NAV (IN € MILLIONS) € ‘000 Per share € ‘000 Per share Equity per the financial statements 4,666,987 3,849,662 EPRA NAV EPRA NAV Incl. perpetual notes Equity attributable to perpetual notes investors (1,030,050) (665,871) CAGR 4,783 Equity excluding perpetual notes 3
Slide 9: Investment Property: Capital Recycling and Acquisition Criteria
2 INVESTMENT PROPERTY CAPITAL RECYCLING ACQUISITION CRITERIA FOLLOWING STRICT ACQUISITION CRITERIA Acquisition in densely populated areas and major cities High cash flow generating assets Selective additions in top tier BERLIN neighborhoods Vacancy reduction potential Growth in high quality location
Slide 10: Investment Property
2 INVESTMENT PROPERTY INVESTMENT PROPERTIES (IN € MILLIONS) AVERAGE VALUATION PARAMETERS 7.244 6.388 2018 2017 Rent Multiple 18.9 18.2 Value per sqm €1,257 €1,155 4.796 Market rental growth p.a. 1.5% 1.5% Management cost per unit €258 €262 3.858 Ongoing maintenance cost per sqm €8.4 €8.3 Average dis
Slide 11: Portfolio Distribution
GB 2 PORTFOLIO DISTRIBUTION DISTRIBUTION BY VALUE DECEMBER 2018 London Hamburg Bremen Berlin NRW Halle Leipzig Dresden Frankfurt Nuremberg/ Mainz Fuerth Kaiserslautern Mannheim Focus on value-add opportunities in densely populated areas in Munich Germany and London 11
Slide 12: Portfolio Overview
2 PORTFOLIO OVERVIEW Diversification among areas of sustainable economic fundamentals and demographic prospects PORTFOLIO OVERVIEW DECEMBER 2018 Value Area EPRA Annualized In-place rent Number of units Value Rental yield (in €M) (in k sqm) Vacancy net rent per sqm per sqm (in €M) (in €) (in €) NRW 1
Slide 13: Best in Class Berlin Portfolio - December 2018
2 BEST IN CLASS BERLIN PORTFOLIO - DECEMBER 2018 Berlin is the single largest city in the portfolio PORTFOLIO OVERVIEW BERLIN QUALITY LOCATIONS IN TOP TIER NEIGHBORHOODS OF BERLIN* 24% of GCP’s Portfolio 2/3 of the Berlin portfolio is 2/3 located in top tier neighborhoods: Charlottenburg, Wilmersdor
Slide 14: Portfolio NRW - December 2018
2 PORTFOLIO NRW – DECEMBER 2018 GCP is well positioned in Germany’s largest metropolitan area… PORTFOLIO DISTRIBUTION 27% POPULATION DENSITY IN NRW of GCP’s Portfolio 4th largest city in Germany Dortmund Duisburg Essen Wuppertal Cologne 14
Slide 15: Portfolio East and North - December 2018
2 PORTFOLIO EAST AND NORTH - DECEMBER 2018 …with further diversification in Germany’s fast growing Eastern and largest Northern cities EAST PORTFOLIO NORTH PORTFOLIO 14% 5% of GCP’s of GCP’s Portfolio Portfolio Leipzig Dresden Halle Hamburg Bremen 15
Slide 16: High Quality, Well Connected London Portfolio - December 2018
HIGH QUALITY, WELL CONNECTED LONDON PORTFOLIO - 2 DECEMBER 2018 Portfolio overview London Well connected London portfolio 9% of GCP’s Portfolio Over 93% of the portfolio is situated within a short walking distance to an underground/overground station London - Southwark London - Fullham Asset locatio
Slide 17: Financial Policy
2 FINANCIAL POLICY GCP financial policy Strive to achieve A- global rating in the long term LTV limit at 45% Debt to debt plus equity ratio at 45% (or lower) on a sustainable basis Maintaining conservative financial ratios with a strong ICR Unencumbered assets above 50% of total assets Long debt mat
Slide 18: Loan-to-Value
2 LOAN-TO-VALUE in € ‘000 unless otherwise indicated Dec 2018 Dec 2017 Investment property 7,298,879 6,425,430 COST OF DEBT Investment property of assets held for sale 132,137 117,246 Equity accounted investees 26,207 37,261 Low spreads (15/3/2019) Total value 7,457,223 6,579,937 1.6% Series D 2021
Slide 19: Capital Structure
2 CAPITAL STRUCTURE INTEREST HEDGING STRUCTURE FINANCING SOURCE MIX 14% 11% 99% Bank Debt Hedged 21% 27% Straight Bond 7% 3% Convertible 58% 59% Equity Dec 2017 Dec 2018 ø Maturity as at ø Maturity as at ø Maturity as at year end 2016 year end 2017 year end 2018 7 years 7.7 years 8.2 years MATURITY
Slide 20: Debt Coverage and Credit Rating
2 DEBT COVERAGE AND CREDIT RATING DEBT AND INTEREST COVER RATIOS – 2018 UNENCUMBERED ASSETS 6,0x €4,8 BN 5,1x €4,1 BN 65% of 64% of value value €2,8 BN €2 BN 56% of value 53% of value ICR* DSCR** *) Adjusted EBITDA / interest **) Adjusted EBITDA / (interest + loan amortization) Dec Dec Dec Dec 2015
Slide 21: Maintenance, Capex and Modernization
2 MAINTENANCE, CAPEX AND MODERNIZATION CAPEX STRATEGY Repositioning capex Modernization Pre-letting modifications Increasing property quality Improving standards of Bring newly built and/or Support value creation apartments re-opening of converted/ Measures include: Increasing energy sav
Slide 22: ESG - Outperformer
3 ESG - OUTPERFORMER Starting from 2018, GCP is publishes its Corporate Responsibility report on an annual basis, demonstrating its commitment to sustainability by presenting to investors, business partners, employees and other stakeholders its activities and achievements and to embed the high ESG c
Slide 23: 2019 Guidance
4 2019 GUIDANCE FY 2018 FY 2019 Actual Guidance FFO I (in € millions) 198 211-213 FFO I per share (in €) 1.19 1.26-1.27 Dividend per share (in €) 0.77* 0.82-0.83 FFO I per share 1.01 1.06-1.07 after perpetual notes attribution (in €) Total net rent like-for-like growth 3.4% >3.5% LTV 34% <45% *2018
Slide 24: Appendix
5 APPENDIX 24
Slide 25: Portfolio Potential
5 PORTFOLIO POTENTIAL RESIDENTIAL IN-PLACE RENT COMPARED TO MARKET RENT CURRENT ANNUALIZED NET RENTAL INCOME VS MARKET POTENTIAL 465 359 85% 15% December 2018 Annualized below market level at market level annualized market potential* * including vacancy reduction 5% of units 10 years subject to rent
Slide 26: Proven Ability to Access Capital Markets
5 PROVEN ABILITY TO ACCESS CAPITAL MARKETS Mar-19 Issuance of Series P, 2029 straight bonds of HKD 290m under EMTN, full currency hedge to Euro, effective coupon of 1.4% p.a.+3 month Euribor Feb-19 Issuance of Series O, 2034 straight bonds of €15m under the EMTN, effective coupon of 1.7% p.a. +3
Slide 27: Analyst Coverage
5 ANALYST COVERAGE ANALYST RESEARCH TARGET PRICE GCP‘s operations are researched by leading real estate market analysts, who Key Index inclusions: conduct independent equity research and target price recommendations MDAX FTSE EPRA/NAREIT Global Developed Europe Developed Eurozone Germany
Slide 28: Share Development and Structure
5 SHARE DEVELOPMENT AND STRUCTURE SHARE PRICE AND TOTAL RETURN SINCE FIRST EQUITY PLACEMENT (19.7.2012) Share Price Since First Equity Placement (19.7.2012) SHARE PRICE/CONVERSION PRICE SHARE OWNERSHIP STRUCTURE THROUGHOUT THE COMPANY’S ISSUANCES Basic amount of shares: 166.7 million/ Fully diluted
Slide 29: Bond Spreads
5 BOND SPREADS STRAIGHT BOND SERIES D SPREAD OVER MID-€-SWAP, REMAINING 2.5 YEARS STRAIGHT BOND SERIES E SPREAD OVER MID-€-SWAP, REMAINING 6 YEARS 3.75% PERPETUAL NOTES SPREAD OVER MID-€-SWAP 29
Slide 30: Management
5 MANAGEMENT CEO Christian Windfuhr Mr. Windfuhr is Grand City Properties’ CEO. Before joining Grand City Mr. Windfuhr served as CEO of Maritim Hotels, with 40 hotels in Germany. Prior to this he served as CEO of Mövenpick. He achieved the financial turnaround of Mövenpick, drove international expan
Slide 31: Management
5 MANAGEMENT Senior Management (continued) Uwe Schillinger Mr. Schillinger is GCP’s Director for Technical Service and responsible for the Facility Management. He has 12 years experience in facility management Head of Facility Management and joined GCP in 2006. Mr. Schillinger is an engineer in elec
Slide 32: Credit Rating Matrix
5 CREDIT RATING MATRIX 1 2 3 4 5 6 Min Modest Aggre- High Moody's 12-18 Month - Intermediate Significant ssive Lever- REITs and Other Commercial Property Forward View As of imal aged Firms Industry Grid [1][2] 09/18/2018 [3] 1 aaa Excellent bbb- / aa a+/a a- bbb /bb+ aa+ Factor 1: Scale (5%) Measure
Slide 33: Maintaining Strong and Diverse Financing Sources
MAINTAINING STRONG AND DIVERSE 5 FINANCING SOURCES GCP HAS MORE THAN 40 NON-RECOURSE SEPARATE BANK LOANS FROM AROUND 15 BANKS AND MAINTAINS STRONG RELATIONS WITH A RANGE OF BANKS AND CREDIT PROVIDERS 33
Slide 34: Portfolio Images
London Mannheim Berlin Dresden Essen Dortmund Leipzig Hamburg Berlin 34
Slide 35: Portfolio Images
Cologne Berlin Halle Frankfurt am Main Leipzig Berlin London Berlin Nuremberg 35
Slide 36: Portfolio Images
Berlin Leipzig Munich Bremen Wuppertal London 36
Slide 37: Contact and Disclaimer
5 CONTACT Katrin Petersen Head of Communications E-mail: katrin.petersen@grandcity.lu www.grandcityproperties.com DISCLAIMER IMPORTANT: This presentation has been provided for information purposes only and is being circulated on a confidential basis. This presentation shall be used only in accordanc