Instone Real Estate Group Se · XETR:INS
Instone Real Estate — Investor Presentation (November 2023)
64 slides from Instone Real Estate's investor presentation, November 2023
Slide 1: Instone Real Estate Group SE
Instone Real Estate Group SE Investor presentation November 2023 Developing real estate with passion
Slide 2: Disclaimer
Disclaimer BY VIEWING THIS PRESENTATION, YOU AGREE TO BE BOUND BY THE FOLLOWING TERMS AND CONDITIONS REGARDING THE INFORMATION DISCLOSED IN THIS PRESENTATION. THIS PRESENTATION HAS BEEN PREPARED BY INSTONE REAL ESTATE GROUP SE (THE "COMPANY", TOGETHER WITH ITS SUBSIDIARIES, "INSTONE"). For the purpo
Slide 3: Agenda
01 Key Investment Highlights 06 ESG Strategy 02 Q3 2023 Highlights 07 Appendix Q3 2023 Financial Performance & 03 Outlook 04 Market Environment 05 nyoo: Growth Perspective
Slide 4: Key Investment Highlights
INSTONE REAL ESTATE Key Investment Highlights
Slide 5: Investment Highlights
Investment Highlights 1. Leading German residential developer as key beneficiary of structural housing shortage • Leading trading developer on basis of nationwide platform: attractive land bank with focus on the Top 8 cities and surrounding areas • Strong in-house expertise and coverage of entire va
Slide 6: Proven track record of >30 years
Proven track record of >30 years First mover in building up a nationwide residential developer >1 million sqm platform in Germany Successfully developed and Focus on developing modern, urban, marketed since 1991 8 branches + HQ multi-family, residential buildings Established operating platform with
Slide 7: Covering the Entire Value Chain with Deeply Rooted Construction Expertise
Covering the Entire Value Chain with Deeply Rooted Construction Expertise Planning Acquisition application Sales Construction Completion Internal/external Internal/external External Fully in-house experts sales teams contractors €€€€€ No speculative High building density 30% pre-sale hurdle Strong c
Slide 8: Selected projects: Leipzig, Berlin, Dusseldorf, Essen, Schorndorf
Leipzig | Parkstadt Berlin | Friedenauer Höhe Dusseldorf | Wohnen im Hochfeld 8 | November 2023 | Investor presentation Essen | Literaturquartier Schorndorf | S´Lederer
Slide 9: Q3 2023 Highlights
INSTONE REAL ESTATE Q3 2023 Highlights
Slide 10: Highlights
Highlights Continued modest improvement in B2C business, sales starts add positive momentum ✓ Sales: Private customer demand shows modest improvement, institutional buyers in ‘wait and see’ mode, ✓ Private investors: encouraging initial results from new sales starts in Q4 Operational ✓ Positive impa
Slide 11: Sales ratio: Continued moderate improvement from depressed levels
Sales ratio: Continued moderate improvement from depressed levels Sales ratio1 In % Influenced Long term Instone sales ratio Sales ratio by bloc sale 4.5 4.2 4.2 4.0 3.8 3.7 Pull- forward 3.5 3.5 3.6 3.6 3… 3.5 3.5 effects in Leipzig 3.4 3.5 3… 3.2 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.2 project due to 3.1
Slide 12: New build prices with only moderate decline; CPI stabilisation
New build prices with only moderate decline; CPI stabilisation House price inflation1 Construction price inflation2 In % In % 9.1 y-o-y q-o-q y-o-y q-o-q 8.7 7.4 7.5 7.5 7.6 7.3 7.2 6.7 17.6 20.0 6.4 16.516.9 14.4 14.3 15.1 4.8 12.6 15.0 3.2 8.8 10.0 6.4 6.4 2.8 0.1 0.7 2.3 2.3 4.1 3.8 3.4 1.6 1.6 1
Slide 13: Price development: yield expansion partly compensated by accelerating rent growth
Price development: yield expansion partly compensated by further accelerating rent growth House price sensitivity: price impact in different scenarios1 New-build rent development2 - accelerating positive momentum y-o-y Rent Yield / Rent Multiple In % 4.2% 4.0% 3.8% 3.7% 3.6% 3.4% 3.3% 3.2% 3.1% 6.2%
Slide 14: Under construction projects de-risked as 90% sold
Under construction projects de-risked as 90% sold Project portfolio as of 30/09/2023 by development (GDV) Pre sale: €3.8bn Under construction: €3.1bn t/o sold €2.8bn ✓ Projects with GDV of €3.1bn are “under Total GDV construction” of which 90% (€2.8bn) already sold €7.0bn ✓ Of the €2.8bn sold volume
Slide 15: Q3 2023 Financial Performance & Outlook
Q3 2023 Financial Performance & Outlook
Slide 16: Adjusted Results of Operations
Adjusted Results of Operations High profitability maintained – Well on track to reach FY earnings targets €m Q3 2023 Q3 2022 Change 9M 2023 9M 2022 Change Revenues 153.8 173.9 -11.6% 433.3 441.9 -1.9% ✓ Majority of revenues is based on pre-sold units Project cost -115.3 -129.0 -10.6% -322.6 -328.2 -
Slide 17: Bulk of 2023 adjusted revenues target already logged in
Bulk of 2023 adjusted revenues target already logged in Concluded sales contracts – expected development in 2023 Adj. revenues – expected development in 2023 In €m In €m >150 600-700 Retail sales Institutional sales Expected sales 20 154 18 156 53 123 Q1 23 Q2 23 Q3 23 Q4 23e FY 23e Q1 23 Q2 23 Q3 2
Slide 18: Rock solid balance sheet maintained
Rock solid balance sheet maintained €m 30/09/2023 30/06/2023 31/12/2022 Corporate debt 165.6 Project debt1 283.9 ✓ Further improved balance sheet ratios in Q3 Financial debt1 449.5 535.6 520.6 Cash and cash equivalents and term deposits1 -177.0 ✓ Very moderate LTC Net financial debt1 272.5 322.0 265
Slide 19: Strong Q3-cash flow further strengthens financial profile
Strong Q3-cash flow further strengthens financial profile t/o t/o Cash Flow (€m) Q3 2023 Q3 2022 9M 2023 9M 2022 Liquidity (€m) Total drawn available EBITDA adj. 23.7 26.3 69.5 64.6 Corporate debt Other non-cash items 3.1 -3.6 -3.7 -12.7 Promissory notes 165.5 165.5 - Taxes paid -23.7 -2.0 -27.0 -2.
Slide 20: Financing: No major maturities until H2-2025
Financing: No major maturities until H2-2025 Maturity profile (corporate debt) as of 30/09/2023 Secured/unsecured as of 30/09/2023 In €m Project debt, secured Corporate debt 100.0 29.5% 50.0 Total: €561.1m 15.51 0.0 0.0 70.5% 2023 2024 2025 2026 2027 Weighted average corporate debt maturity 2.4 year
Slide 21: Outlook 2023: on track for full year targets
Outlook 2023: on track for full year targets €m Forecast 2023 Revenues (adjusted) 600-700 Gross profit margin (adjusted) ~25% EAT (adjusted) 40-50 Volume of concluded sales contracts >150 21 | November 2023 | Investor presentation
Slide 22: Market environment
INSTONE REAL ESTATE Market environment
Slide 23: Structural supply shortage in German resi continues to worsen
Structural supply shortage in German resi continues to worsen Supply Demand Expected decline in new supply (completions)1 Order cancellations in building construction2 German mortgage lending picks up again In k units Share of affected companies in % Volume, new business, by month, in €m 07/23: Fore
Slide 24: New-builds gain relative attractiveness as investment product
New-builds gain relative attractiveness as investment product Offer prices for multi-family homes: discounts per energy efficiency category1 Discounts vs. reference category in % New build properties continue to outperform H1-2021 H1-2022 H1-2022 (markets with supply surplus) ✓ Opportunity for index
Slide 25: Sustained positive outlook for rents will partly compensate increased rental yield requirements
Sustained positive outlook for rents will partly compensate increased rental yield requirements House price sensitivity: price impact in different scenarios1 New builds historically traded at negative yield spreads to Bunds Rent Yield / Rent Multiple Spread Gross rent yield 10y Bund 4.2% 4.0% 3.8% 3
Slide 26: Upcoming market consolidation offers vast opportunities
Upcoming market consolidation offers vast opportunities INS well positioned to weather more difficult market environment ✓ Industry leading gross margins (c.25% in 2023e) a key strength and competitive advantage ✓ Comparatively low production costs vs. peers due to strong inhouse construction expert
Slide 27: nyoo: Growth Perspective
INSTONE REAL ESTATE nyoo: Growth Perspective
Slide 28: Mid to long-term opportunity: nyoo
Mid to long-term opportunity: nyoo Mid-market segment and most underserved residential market in Germany Instone's approach Adding a new pillar to the existing Instone platform based on standardisation, digital processes and significant scale potential with game changing implications for production
Slide 29: First projects confirm INS's competitive edge
First projects confirm INS’s competitive edge Projects running according to plan and within budget DUS 19, Düsseldorf (Unterbach) DUI 76, Duisburg (Buchholz) MG 400, Mönchengladbach (Lürrip)1 DUI 06, Duisburg (Wedau) • 100% sold to LEG • 100% sold to Danish Pension fund Joint project with INS Develo
Slide 30: Demanding challenges for cost-effective housing solutions
Demanding challenges for cost-effective housing solutions Cost efficiency requirements Key challenges Highly fragmented market General building law and social Simplification of Product housing pre-requisites are regulated on state level Standardisation of Planning Additional municipal statutes exist
Slide 31: Unrivalled c.2,800€/m² total production costs achievable
Unrivalled c.2,800€/m² total production costs achievable Around 25% cost saving potential ▪ Reduction of total production cost including planning, marketing, sales € Around 25% etc. from ~ 3,700€/m² to c. cost saving 2,80€/m² potential Ancillary costs Cost savings by standardisation Selling expenses
Slide 32: Considerable savings in project duration resulting in superior project IRR
Considerable savings in project duration resulting in superior project IRR Up to 30 % time saving Time savings potential ▪ ~ 6m of planning and approval process ▪ Up to 12m of construction process “MODULAR” Additional potential Land acquisition........................................................
Slide 33: Highly attractive project economics
Highly attractive project economics Project related economics • Standardised planning and simplified execution provides for Project Size ▪ €30-50m attractive economics in smaller size projects • Projects gross margins expected to be lower compared to target Target gross margin ▪ ~20% margins for INS
Slide 34: Innovative modular and highly standardised planning concept
Innovative modular and highly standardised planning concept 5-ROOM 108 SQM ▪ Modular housing groundplan kit ▪ Gapless BIM-based planning process 4-ROOM 89 SQM ▪ Fully integrated technical planning ▪ Realtime mass and cost calculation 3-ROOM 78 SQM ▪ Standardised tender documents ▪ Digital interface
Slide 35: The modular planning process is the foundation of our new product
The modular planning process is the foundation of our new product Illustrative simulation of modular planning approach applied to Project Rottenburg PLANNING PHASES LPH1 LPH2 LPH3 LPH4 LPH5 basic evaluation sketches groundplans application details INDIVIDUAL LEVEL OF DETAIL PLANNING PROCESS 1 3 5 7
Slide 36: More easily scalable construction and potential for industrialized production processes
More easily scalable construction and potential for industrialized production processes Instone Instone nyoo ▪ Lean construction process core → increase of efficiency incl. underground excl. underground product parking parking ▪ Lower cost risks due to standardisation 6 ▪ Standardised product leads
Slide 37: Comparison of products
Comparison of products Traditional Instone Product Instone nyoo ▪ Lower to mid-price segment ▪ Mid to high price segment ▪ Positioning between social housing and Price ▪ No luxury ▪ Selling price €5.000/sqm – 9,000/sqm Instone core product ▪ Selling price up €4,000/sqm – 5,000/sqm ▪ Highly customise
Slide 38: ESG Strategy
INSTONE REAL ESTATE ESG Strategy
Slide 39: 2022 ESG achievements and disclosures
2022 ESG achievements and disclosures • EU Taxonomy related disclosure • 96.5% of Instone 2022 revenues are eligible for EU taxonomy assessment • 86.7% of Instone 2022 revenues are EU taxonomy aligned • 94.2% of individual buildings contributing to Instone 2022 revenues are taxonomy aligned • Scope
Slide 40: Major ESG-KPIs – achievements and targets
Major ESG-KPIs – achievements and targets Major KPIs 2021 2022 Targets Taxonomy-compliant revenues (in %) n/a 86.7 Predominantly taxonomy-compliant Share of projects/objects with energy requirements at least NZEB - ~82.5% ~97.4% 100% of project/object portfolio in 2030 10%1 GHG emissions / scope 1 a
Slide 41: 87% of revenues are compliant with EU Taxonomy
87% of revenues are compliant with EU Taxonomy Proportion Climate Climate Absolute revenue of total change change • Instone reports according to Art. 8 of the Taxonomy revenues mitigation adaptation Ordinance on non-financial reporting according to the A. Taxonomy-eligible activities NFRD/HGB for th
Slide 42: Clear pathway to reduce GHG emissions scope 1 to 3
Clear pathway to reduce GHG emissions scope 1 to 3 Projected versus actual climate targets Scope 3 emissions target curve based on SBTi4 CO2e in t €m kgCO2e/m2 Total Gesamt Upstream Vorgelagert Downstream Nachgelagert To 2030: at least -42% in line with the 3,000 SBTI -1.5°C scenario: 2,500 1.5°C pa
Slide 43: ESG: Top rating underscores commitment to industry leadership
ESG: Top rating underscores commitment to industry leadership ✓ INS among the top 3% of the 288 global real estate development companies ✓ Top 5% across all sectors 43 | November 2023 | Investor presentation
Slide 44: Our contribution to our main fields of action, measures and the UN SDGs
Our contribution to our main fields of action, measures and the UN SDGs Affected UN Key action areas Measures SDGs • E1 Consumption of natural resources/recycling • E2 Biodiversity • E3 CO2 emissions from building operations • E4 CO2 emissions from building manufacture • E6 Choice of building materi
Slide 45: Westville, Frankfurt am Main
Westville, Frankfurt am Main Realizing an innovative energy concept ▪ Former industrial site turned into an attractive living quarter for more than 3,000 people ▪ ~1,300 apartments, thereof 380 subsidized ▪ Three childcare facilities ▪ Large green areas incl. six playgrounds ▪ Specially designed hea
Slide 46: Augusta und Luca, Augsburg
Augusta und Luca, Augsburg Creating living quarters on former station area ▪ Brownfield redevelopment incl. deconstruction and recycling ▪ Mix of 429 apartments (1 to 3 room apartments) plus 5 local squares, 4 playgrounds ▪ Green Building Certificate (DGNB) ▪ Energy standard KfW 55 NH ▪ Rooftop Gard
Slide 47: Neckar.Au, Rottenburg
Neckar.Au, Rottenburg Social Impact for the society and the newly developed quarter ▪ Reduction of sealing by converting a former commercial area into a residential area ▪ Five construction sites with around 480 apartments ▪ Extensive (roof) greening to improve the quality of stay ▪ Around 11,300 sq
Slide 48: Appendix
INSTONE REAL ESTATE Appendix
Slide 49: Project portfolio key figures
Project portfolio key figures €m Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 Volume of sales contracts 20.2 18.4 52.7 42.0 104.6 58.0 87.6 761.7 170.7 Project Portfolio 7,015.5 7,182.6 7,600.4 7,668.8 7,827.4 7,727.4 7,567.7 7,500.0 7,154.9 thereof already sold 2,822.7 2,
Slide 50: Diversified project portfolio across most attractive German regions
Diversified project portfolio across most attractive German regions Project portfolio as of 30/09/2023 by region (GDV) In % Berlin Munich Hamburg 2.1 4.1 4.6 Frankfurt ✓ 48 projects / 14,269 units Leipzig 4.7 34.1 ✓ 88% in metropolitan regions Stuttgart 7.8 ✓ ~79 average sqm / unit Total: €7.0bn ✓ ~
Slide 51: Significant pipeline allows opportunistic investment strategy
Significant pipeline allows opportunistic investment strategy Project portfolio development (GDV) In €m 2 12/2022 Completed Updated 09/2023 projects project assessment 1 1 incl. deconsolidation of one project as “at-equity” as well as changed sales strategy to land sale 51 | November 2023 | Investor
Slide 52: Expected future cash flows suggest significant upside
Expected future cash flows suggest significant upside1 Fundamental Instone value rests on three distinct pillars (As of 30 September 2023; in EUR million) Pre-sold projects - c.€3.1bn currently under construction De-risked free cash flow from projects under construction1 c.500m - t/o c.€2.8bn pre-so
Slide 53: Substantial cash return to shareholders
Substantial cash return to shareholders Share Buyback SBB I SBB II Total No. of shares1 2,349,416 1,349,417 3,698,833 ✓ Share buy back completed; used full existing authorisation Percentage of share capital (%) 5.00 2.87 7.87 Volume (€ million) 25.4 11.4 36.9 ✓ Two consecutive programmes: 18 March 2
Slide 54: Status of building rights
Status of building rights Project portfolio as of 30/09/2023 by building right status (GDV) 63.2% ~85% Building permit granted Master plan granted ~3% Building permit application filed ~12% Building permit application in preparation Master plan in progress 13.9% 13.9% Master plan in preparation 22.9
Slide 55: Project portfolio as of 30/09/2023
Project portfolio as of 30/09/2023 (projects > €30m sales volume, representing total: ~ €7.0bn) Sales volume Land plot Building right Sales Construction Project Location (expected) acquired obtained started started Hamburg SE - Kösliner Weg Norderstedt-Garstedt 106 Mio. € H - Sportplatz Bult Hannove
Slide 56: Project portfolio as of 30/09/2023
Project portfolio as of 30/09/2023 (projects > €30m sales volume, representing total: ~ €7.0bn) Sales volume Land plot Building right Sales Construction Project Location (expected) acquired obtained started started Rhine-Main Update CO WI - Delkenheim Wiesbaden 114 Mio. € F - Schönhof-Viertel Frankf
Slide 57: Project portfolio as of 30/09/2023
Project portfolio as of 30/09/2023 (projects > €30m sales volume, representing total: ~ €7.0bn) Sales volume Land plot Building right Sales Construction Project Location (expected) acquired obtained started started Baden-Wurttemberg S - City-Prag Stuttgart 135 Mio. € WN - Schorndorf Schorndorf N/A T
Slide 58: Opportunity Growth Act Introduction (Wachstumschancen Gesetz)
Opportunity Growth Act Introduction (“Wachstumschancen Gesetz“) Key Positives from Increased Depreciation Expected ▪ Positive impact for buy-to-let investors expected ▪ Increase of depreciation on newly built residential properties from (currently) 3% linear to 6% degressive p.a. ▪ The higher deprec
Slide 59: No major impact from other new subsidy schemes expected
No major impact from other new subsidy schemes expected The German government plans to invest >1bn p.a. to support owner-occupiers (help-to- buy) and new build of rental apartments • Name: “Wohneigentum für Familien” = homes for families • Name: “Klimafreundlicher Neubau” = climate friendly new-buil
Slide 60: Approvals/Acquisition Strategy
Approvals/Acquisition Strategy Projects without need Projects with for zoning processes zoning processes No requirement due to Masterplan in place Brownfield projects §34 BauGB (building code) ▪ Generally less ▪ Within built-up districts ▪ Close cooperation with attractive for INS due municipalities
Slide 61: Instone share
Instone share Basic data Shareholder structure (December 2023) • ISIN: DE000A2NBX80 • Ticker symbol: INS Others: 46.06% • No of shares: 46,988,336 Activum: 25.95% • Market cap 1: €274.9m • Average daily trading volume: €0.4m DAMAC Properties : 10.04% • Market segment: Prime Standard, Frankfurt Range
Slide 62: Financial calendar
Financial calendar 2024 January 11 Barclays European Real Estate Conference, London January 15 ODDO BHF Forum, Virtual January 16 UniCredit Kepler Cheuvreux German Corporate Conference, Frankfurt March 19 Annual Report 2023 March 20 EMEA Real Estate CEO Conference, London May 08 Quarterly Statement
Slide 63: The Instone Management Board
The Instone Management Board Kruno Crepulja David Dreyfus Andreas Gräf CEO CFO COO ✓ CEO since 2008 (of Instone’s ✓ CFO, effective September 1, 2023 ✓ COO since 2008 (of Instone’s predecessor formart) predecessor formart) ✓ >28 years of experience in corporate ✓ Comprehensive experience as an financ
Slide 64: Investor Relations Contact
Investor Relations Contact Burkhard Sawazki Head of Business Development & Communication T +49 201 45355-137 M +49 173 2606034 burkhard.sawazki@instone.de Tania Hanson Roadshows & Investor Events T +49 201 45355-311 M +49 152 53033602 tania.hanson@instone.de Instone Real Estate Group SE Grugaplatz 2
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