Grand City Properties SA · XETR:GYC
Grand City Properties SA — Investor Presentation (June 2017)
41 slides from Grand City Properties SA's investor presentation, June 2017
Slide 1: Company Presentation June 2017
Cologne Berlin Leipzig COMPANY PRESENTATION JUNE 2017 Munich Berlin
Slide 2: Company Overview
COMPANY OVERVIEW GCP is a specialist in residential real estate, value-add opportunities in densely populated areas in Germany Key facts – August 2017 Run Rate1) Net Rental Adjusted EBITDA FFO I FFO I per share Dividend Income Per share €338m €253m €177m €1.15 65% of FFO I (Yield 6.3%*) €0.75 (4.1%
Slide 3: Portfolio Overview: Regional Distribution
PORTFOLIO OVERVIEW Regional Distribution Bremen Regional distribution March 2017 (by value) ► GDP growth1 : 2.7% ► Migration balance2: 0.4% ► Population density3: 1,695 per km2 Berlin ►GDP growth1: 3.0% ►Migration balance2: 1.2% ►Population density3: 3,891 per km2 NRW Dresden/Leipzig/Halle ►GDP shar
Slide 4: Portfolio Overview (Mar 2017)
PORTFOLIO OVERVIEW (MAR 2017) Largest European metropolitan area Quality Berlin locations* Well distributed within NRW* Quality East Portfolio Dresden/Leipzig/Halle* • 50% of property locations in the inner-city • 13% are well located in strong and growing areas outside the inner circle, such as Wes
Slide 5: Portfolio Overview: Well Distributed Portfolio
PORTFOLIO OVERVIEW WELL DISTRIBUTED PORTFOLIO Quality real estate portfolio Value Area EPRA vacancy Annualized net In-place rent Number of Value per sqm Rental yield (in €M) (in k sqm) rent per sqm (in €) units (in €) (in €M) NRW 1.613 1.861 8,3% 108 5,1 28.029 866 6,7% Berlin 834 470 5,3% 38 6,9 6.
Slide 6: Portfolio – Potential to Come
PORTFOLIO – POTENTIAL TO COME Current Annualized Rental Income vs. Market Potential Residential in-place rent compared to market rent prices including vacancy reduction Large upside potential for rent increase to market levels with very limited downside risk In-place rent like-for-like growth of 2.1
Slide 7: Key Financials (1)
KEY FINANCIALS (1) Net Rent (in € millions) Adj. EBITDA (in € millions) Cologne Berlin Neu-Isenburg Berlin 7
Slide 8: Key Financials (2)
KEY FINANCIALS (2) FFO I (in € millions) FFO I per share (in €) AFFO & FFO II (in € millions) Nuremberg Berlin 8
Slide 9: Key Financials (3)
KEY FINANCIALS (3) Portfolio size (in ’000 units) Total equity (in € millions) *including June 2017 capital increase of €198 million Net Profit* (in € millions) Net Profit YOY development Nuremberg * Net profit figures are not annualized **Adjusted for one time costs 9
Slide 10: Key Financials (4)
KEY FINANCIALS (4) EPRA NAV (in € millions) Munich EPRA NAV per share EPRA NAV incl. perpetual notes per share NAV EPRA NAV EPRA NAV EPRA NNNAV Number of shares including perpetual notes (in 000’) Mar 31st 2017 Pro forma (in 000’)* €3,034,213 €2,828,097 €3,497,097 €2,726,392 164,789 Mar 31st 2017 Pr
Slide 11: Debt Schedule
DEBT SCHEDULE Berlin Leipzig Investment grade rating by S&P of BBB+ (A-2 Short Term) and from Moody’s of Baa2 with a positive outlook. The ratings are supported by a strong financial profile which validates the success of the business model GCP’s long maturity schedule enables the Company to fully f
Slide 12: Debt Structure and Cover Ratios
DEBT STRUCTURE AND COVER RATIOS Interest Coverage Ratio* & Debt Service Coverage Ratio* * 1-3/2017 Unencumbered Assets* *) Adjusted EBITDA / interest **) Adjusted EBITDA / (interest + loan amortization),DSCR aka fixed charge coverage ratio *Calculated as the ratio of the unencumbered assets to the t
Slide 13: Financing Sources
FINANCING SOURCES GCP has over 40 non-recourse separate bank loans from over 20 banks Munich Cologne Revolving Credit Facilities GCP signed strong corporate credit lines with international banking leaders exceeding €200 million All credit facilities do not have a Material Adverse Change (MAC) clause
Slide 14: GCP Financial Policy
GCP FINANCIAL POLICY GCP financial policy Strive to achieve A- global rating in the long term LTV limit at 45% Debt-to-cap ratio at 45% (or lower) on a sustainable basis Maintaining conservative financial ratios Cologne Unencumbered assets above 50% of total assets Long debt maturity profile Good mi
Slide 15: Peers Analysis (Largest 4) March 2017
PEERS ANALYSIS (LARGEST 4) MARCH 2017 Peer companies Lower Upper Range Range Business Amount of Units 84k 130k 360k In-place rent (€ per m2) 5.4 5.4 6.2 EPRA Vacancy rate 7.7% 3.5% 1.9% Book Value per sqm 939 940 1,600 NRI Multiple 15.7x 15.0x 21.7x Rating BBB+ , Baa2 positive BBB+ / Baa1 A- / A3 GC
Slide 16: S&P Anchor Rating Matrix
S&P ANCHOR RATING MATRIX Credit Rating development 1 2 3 4 5 6 Min- Modest Aggre- High imal Intermediate Significant ssive Lever- aged 1 aaa/ bbb- Excellent aa a+/a a- bbb aa+ /bb+ GCP will continue strengthening its position within the business profile (Vonovia- BBB+)* Business risk profile 2 aa/ S
Slide 17: Analyst Coverage
ANALYST COVERAGE GCP‘s operations are researched by leading real estate market analysts, who conduct independent equity research and target price recommendations Analyst Research Target Price Index inclusions: SDAX major FTSE EPRA/NAREIT indices FTSE EPRA/NAREIT Global FTSE EPRA/NAREIT Devel
Slide 18: Outperforming
OUTPERFORMING Share Price Since First Equity Placement (19.7.2012) Share price/conversion price throughout the Company’s issuances Frankfurt Stock Exchange Placement (Prime Standard) First equity issuance 19.07.2012 (€2.75 per share) Number of shares (basic) 164,788,883 Number of shares 182,988,285
Slide 19: Outperforming
OUTPERFORMING Straight Bond Series D Spread over mid-€-swap, remaining 4.5 years Straight Bond Series E Spread over mid-€-swap, remaining 8 years 3.75% Perpetual notes Spread over mid-€-swap 19
Slide 20: ESG Measures
ESG Measures Environmental Social Corporate Governance • GCP implements environment- • Tenant satisfaction is a top • Experienced and diverse friendly measures throughout priority and an essential part of management board its portfolio, with the goal of GCP’s business strategy • Four committees cons
Slide 21: Management
MANAGEMENT CEO Christian Mr. Windfuhr is Grand City Properties’ CEO. Before joining Grand City Mr. Windfuhr served as CEO of Maritim Hotels, with 40 hotels in Windfuhr Germany. Prior to this he served as CEO of Mövenpick. He achieved the financial turnaround of Mövenpick, drove international expansi
Slide 22: Summary
SUMMARY Experienced management team with unique knowledge of the market Proven expertise with established Investing in track record Berlin value-add assets with Top geographical distribution in downside Germany protection In-house IT/software to support a strong team High EBITDA & FFO margins and op
Slide 23: Appendix
Nuremberg Duisburg Gelsenkirchen APPENDIX Berlin Hannover Dresden 23
Slide 24: Germany: Robust Macro Economic Base
GERMANY ROBUST MACRO ECONOMIC BASE Low debt level and budget surplus positions Germany well above the average EU Increasing economic status with increasing wages and lower unemployment, resulting in higher than average purchasing power and disposable income Debt/GDP 2016 Unemployment rate 2016 Gross
Slide 25: Germany: Increasing Residential Demand
GERMANY INCREASING RESIDENTIAL DEMAND Increasing population from strong migration balance, increasing urbanization levels along small/single person household sizes in cities is fueling the strong demand German Population 2012-2016 Migration Balance 2012-2015 (in millions) Urbanization level 2009-201
Slide 26: Germany: Low Residential Supply, Significantly Below Demand Levels
GERMANY LOW RESIDENTIAL SUPPLY, SIGNIFICANTLY BELOW DEMAND LEVELS The supply of housing vs demand went into deficit in 2015, reflecting the significant supply shortage Construction over the last 15 years has been exceptionally low and completions even lower Apartments number surplus (deficit) in Ger
Slide 27: Berlin Market Overview
BERLIN MARKET OVERVIEW Key drivers: Capital city, positive net migration balance, public administration and start-up hub Strong population growth attributable to migration – 40k-50k net migration growth p.a. Highest population density at 4,000 residents per km² and the second most populous EU inner
Slide 28: North Rhine-Westphalia Market Overview
NORTH RHINE-WESTPHALIA MARKET OVERVIEW Key drivers: Economic growth and urbanization Highest populated federal state in Germany with increased population growth in 2015 Strongest economic region in Germany, generating 21% of the country’s GDP in 2015 Home to 30 of 80 largest German cities High popul
Slide 29: Dresden/Leipzig/Halle Market Overview
DRESDEN/LEIPZIG/HALLE MARKET OVERVIEW Key drivers: IT and Key Technology sectors Strong population growth figures from high birth rates Software and IT sector experiences most growth across industry and services sectors Strong share of SMEs, 63% employment share compared to German average of 43% Maj
Slide 30: Proven Ability to Access Capital Markets
PROVEN ABILITY TO ACCESS CAPITAL MARKETS EQUITY AND BOND BOOKRUNNERS Jun-17 Equity capital increase of €198 million at €18 per share Sep-16 Issuance of €200 million perpetual notes, bearing a coupon of 2.75% p.a. Feb-16 Issuance of Series F, 2022 convertible bonds of € 450m, coupon of 0.25% p.a Jan-
Slide 31: GCP Covenant Package
GCP COVENANT PACKAGE The straight bonds (Series D, Series E) and the convertible bond (Series F) are unsecured and have the below covenant package Overview of Covenant Package Covenant Type GCP (BBB+ from S&P, Baa2/positive from Moody’s) 1 Limitation on Debt Total Debt / Assets <=60%(1) 2 Limitati
Slide 32: Moody's Rating Peer Comparison
MOODY’S RATING PEER COMPARISON Rating Sub- Broad Rating Rating Sub-Factor Factor Factor Weight Measure Score Measure Score Measure Score Measure Score (LTM Q3 16) (12-18 Month (LTM Q3 16) (LTM Q3 Forward View) 16) Liquidity Coverage 8.00% A A A A A A Ba Ba Liquidity and Debt Maturities ratio 6.25% A
Slide 33: According to the Frankfurter Allgemeine Zeitung…
ACCORDING TO THE FRANKFURTER ALLGEMEINE ZEITUNG… GRAND CITY PROPERTIES IS THE MOST SUCCESSFUL IPO IN GERMANY SINCE 2007 AMONG 106 IPOS Source: Frankfurter Allgemeine Zeitung February 9, 2017 33 Nr. 34, page 23
Slide 34: Business Model and Acquisition Criteria
BUSINESS MODEL AND ACQUISITION CRITERIA Deal-sourcing network Due Diligence & negotiation of best possible deal terms Acquisition established for over 13 years Take-over Repositioning + Capex Long term Increase Rent & occupancy Hold (90%) Decrease operating costs & non- Yield & value increas
Slide 35: Asset Management, Sales & Marketing, Operations
Bremen Düsseldorf Asset Management Operations / Acquisitions & Sales & Marketing Construction Maintenance Due Diligence Customer Relation Management (CRM) through Proprietary and Centralized IT system Continuous monitoring of portfolio operations, costs and staff performance Systematic tenant lead f
Slide 36: Rent Increase
RENT INCREASE Automated rent increase calculation Market limitation Legal limitation Jennifer Weniger Rental team Dresden Gelsenkirchen Essen Leipzig 36
Slide 37: ESG Measures: Environmental and Sustainability
ESG Measures: Environmental and sustainability RENEWABLE ENERGY • Two thirds of properties have been switched to electricity from 100% renewable sources in the past two years, with the goal of gradually switching when the opportunity arises • All of GCP’s offices are supplied with energy from 100% r
Slide 38: ESG Measures: Social Responsibility
ESG Measures: Social Responsibility Neighborhood and community initiatives • The creation and maintenance of a comfortable community feeling is of high priority to Grand City, and this is the target of our various initiatives • GCP organizes over 150 family-friendly tenant events such as Easter, sum
Slide 39: ESG Measures: Tenant Satisfaction
ESG Measures: Tenant Satisfaction Best-in-class tenant service through professional and 24/7 availability A dedicated and professional service team is available 24/7 for existing and prospective tenants, reachable through toll-free numbers, e-mail, and the recently launched GCP mobile app GCP‘s Serv
Slide 40: ESG Measures: Tenant Satisfaction with IT Support
ESG Measures: Tenant satisfaction with IT support Advanced IT/software systems to monitor the complete portfolio and to identify fluctuations of tenants, with immediate control over newly acquired assets Operational excellence with tenant management software - top service to ensure tenant satisfacti
Slide 41: Contact / Disclaimer
CONTACT Katrin Petersen Head of Communications E-mail: katrin.Petersen@grandcity.lu www.grandcityproperties.com Halle 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 accor
Grand City Properties — Investor Presentation (June 2017) on 6ix