Deutsche Wohnen Se · XETR:DWNI
Deutsche Wohnen — FY2020 Earnings Presentation
71 slides from Deutsche Wohnen's earnings presentation, Mar 25, 2021
Slide 1: Deutsche Wohnen SE Full Year Results 2020
Deutsche Wohnen SE Full Year Results 2020 Conference Call 25 March 2021 deutsche-wohnen.com FY 2020 Results
Slide 2: Agenda
Agenda 01 Highlights and Strategy Update 02 Market and Portfolio 03 Financials and Outlook 04 Appendix deutsche-wohnen.com FY 2020 Results 2
Slide 3: Highlights and Strategy Update
Highlights and Strategy Update deutsche-wohnen.com Berlin, Hufeisensiedlung, UNESCO World Heritage FY 2020 Results
Slide 4: Highlights
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Highlights ▪ Operating business proves resilient during pandemic; full year guidance achieved with all segments contributing according to plan ▪ Adj. EBITDA growth to above EUR 1bn driven by successful disposal
Slide 5: Key strategic challenges for the German residential real estate industry for the next decades
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Key strategic challenges for the German residential real estate industry for the next decades ▪ Reduce energy consumption of Reduction of 30% of Germany’s CO2 existing building stock 1 environmental impact emis
Slide 6: Mission climate neutrality
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Mission climate neutrality The two key fields of action 2040 Climate neutrality Deutsche Wohnen 1. Reducing energy Impact on the consumption goal of climate neutrality 2. Increasing renewable energies & on-site
Slide 7: CO2 target path until 2040
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix CO2 target path until 2040 80 1. Focus on energetic refurbishments ▪ Economically sensible investments in energy-efficient 70 building refurbishment will reduce the CO2 intensity to 22 kg CO2 e/sqm by 2040 60 C
Slide 8: EUR 1.5 bn investments in energetic refurbishment of existing buildings until 2040
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix EUR 1.5 bn investments in energetic refurbishment of existing buildings until 2040 Investment Criteria Portfolio Action Increasing share of energetic Tenant affordability ▪ Basement ceiling insulation investmen
Slide 9: EUR 0.5 bn investments to expand heat and power generation with low CO2 footprint
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix EUR 0.5 bn investments to expand heat and power generation with low CO2 footprint 2020 2040 District Heating Energy mix ▪ Portfolio streamlining for oil-fired Energy mix Oil heating systems almost completed ▪ D
Slide 10: Extensive project pipeline focused on sustainable new construction
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Extensive project pipeline focused on sustainable new construction ▪ Creating a center-of-competence for new construction in Germany while focusing on sustainable building ▪ Ensuring sustainable approach throug
Slide 11: Strategic platform for residential project development
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Strategic platform for residential project development Structure Breakdown by project stage (in % TIC) Breakdown by location (in % TIC) 40% (platform level) 13% Other3 8% Stuttgart 31% Berlin TIC ~18k EUR 6.9bn
Slide 12: Investment case built on quality locations
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Investment case built on quality locations Focus on “top 8” cities in line with Deutsche Wohnen’s enhanced investment strategy Overview of locations and macro data Hamburg City level Relative Key Frankfurt Dres
Slide 13: Breakdown of Deutsche Wohnen's development exposure
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Breakdown of Deutsche Wohnen’s development exposure Total economic share of c. 80% – substantially de-risked in view of zoning, exit and funding status Illustrative structure and exposure breakdown Comments 40%
Slide 14: Significant value creation potential of pipeline
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Significant value creation potential of pipeline Market prices for newly Total development pipeline constructed apartments Upside NCR NCR TIC Yield-on-TIC FV Yield (per month) (per month) Berlin EUR 4,300/sqm E
Slide 15: Selection of projects from QUARTERBACK pipeline
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Selection of various projects from QUARTERBACK pipeline with sustainable neighbourhood concepts and ambitious architecture Bahnhofstraße, Böblingen Juri-Gagarin-Ring, Erfurt Krystallpalast Areal, Leipzig Kochw
Slide 16: Market and Portfolio
Market and Portfolio deutsche-wohnen.com Berlin, Headquarter, Mecklenburgische Straße FY 2020 Results
Slide 17: Portfolio focused on Germany's top 8 cities
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Portfolio focused on Germany’s top 8 cities Strategic cluster Residential units % of total In-place rent Fair value Multiple Multiple Vacancy (#) (measured by (EUR/sqm/month) (EUR/sqm) in-place rent re-letting
Slide 18: Total value uplift of EUR 1.7bn
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Total value uplift of EUR 1.7bn German residential transaction market (EUR bn) Components of DW valuation uplift (EUR bn) EUR 9bn of volume in top 8 7% like-for-like uplift excl. EUR bn German cities, Berlin mo
Slide 19: Berlin residential market update
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Berlin residential market update Development in rental offers and asking rents in Berlin Development of transaction market for multi-family and condo # of rental offers Asking rents in EUR/sqm Multi-family aski
Slide 20: Total like-for-like development 1.3% on a cash flow basis
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Total like-for-like development 1.3% on a cash flow basis Like-for-like Residential In-place rent In-place rent Change Vacancy Vacancy Change 31/12/2020 units 31/12/2020 31/12/2019 (y-o-y) 31/12/2020 31/12/2019
Slide 21: Ongoing investments into the portfolio
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Ongoing investments into the portfolio FY-2020 FY-2019 Refurbishment & Maintenance (EUR per sqm) EUR/ EUR/ EUR m EUR m sqm1 sqm1 30.91 35.53 25.76 Maintenance (expensed 105.0 10.39 102.4 9.92 10.14 9.92 10.39 t
Slide 22: Financials and Outlook
Financials and Outlook deutsche-wohnen.com Potsdam, Eisenbahnersiedlung Babelsberg FY 2020 Results
Slide 23: Stable letting business
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Stable letting business in EUR m FY 2020 FY 2019 Development of NOI margin Income from rents (rental income) 837.6 837.3 80.7% Income relating to utility/ancillary costs 365.4 359.4 79.6% Income from rental bus
Slide 24: Disposal business delivering double digit gross margins
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Disposal business delivering double digit gross margins 3 Disposals Privatization Institutional sales Total with closing in FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 No. of units 233 314 8,623 6,867 8,856
Slide 25: Nursing business proves resilient
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Nursing business proves resilient Operations (in EUR m) FY-2020 FY-2019 in EUR m FY-2020 FY-2019 Total income 238.1 225.2 Nursing & Assisted Living 208.8 207.2 Total expenses (218.1) (206.7) Other 29.3 18.0 EBI
Slide 26: Adjusted EBITDA growth driven by successful disposal business
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Adjusted EBITDA growth driven by successful disposal business in EUR m FY-2020 FY-2019 Development of cost ratio1 Earnings from Residential Property Management 720.4 729.8 11.4% Earnings from Disposals 20.4 3 1
Slide 27: FFO I per share flat at EUR 1.56, dividend to increase by 14% yoy
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix FFO I per share flat at EUR 1.56, dividend to increase by 14% yoy in EUR m FY-2020 FY-2019 FFO I margin development4 EBITDA (adjusted) 1,010.1 901.2 64.1% 62.9% Earnings from Disposals (incl. valuation gains) (
Slide 28: EPRA NAV replaced by EPRA NTA starting from FY 2020
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix EPRA NAV replaced by EPRA NTA starting from FY 2020 in EUR m 31-Dec-2020 31-Dec-2020 EPRA NAV and NTA per share (diluted) in EUR EPRA NAV EPRA NTA Equity (before non-controlling interests) 13,391.7 13,391.7 +12
Slide 29: Diversified and robust capital structure
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Diversified and robust capital structure ▪ A– (negative outlook)/ ▪ Share buyback terminated in September 2020. Utilization of 79.5% with total Rating volume of c. EUR 597m repurchased corresponding to c. 16.07
Slide 30: Strong generation of total shareholder return
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Strong generation of total shareholder return Development of dividend in EUR per share Development of EPRA NAV in EUR per share CAGR 2016–2020: +9% CAGR 2016–2020: +15% Yoy growth +8% +9% +3% +14% Yoy growth +2
Slide 31: Guidance 2021
Highlights and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix Guidance 2021 Reported FY-2020 New Guidance 2021 ▪ Stable at 2020 level (accounting for EUR 34m loss in rental FFO I (EUR m) ▪ EUR 544m income due to disposals and net of acqusitiions) ▪ Stable at 2020 level (a
Slide 32: Appendix
Appendix deutsche-wohnen.com Dresden FY 2020 Results
Slide 33: Portfolio
Portfolio deutsche-wohnen.com Berlin, Weiße Stadt, UNESCO World Heritage FY 2020 Results
Slide 34: Deutsche Wohnen, the only residential company with majority of assets in top 8 cities
Highlights | Market and Portfolio | Financials and Outlook | Appendix Deutsche Wohnen, the only residential company with majority of assets in top 8 cities Top 8 cities in Germany (in m inhabitants)1 Peer Analysis2 % of portfolio in top 8 cities (by units) Deutsche Wohnen Berlin 3.7 Hamburg 1.8 21%
Slide 35: Recent residential portfolio disposals
Highlights | Market and Portfolio | Financials and Outlook | Appendix Recent residential portfolio disposals Signed in 2019 Signed in 2020 Region Kiel, Lübeck, Chemnitz Berlin Across Germany (34 locations) No. of units 6,350 2,175 6,380 residential, 38 commercial Signing Aug 19 Dec 19 Jun 20 Disposa
Slide 36: Continued attractive market fundamentals
Highlights | Market and Portfolio | Financials and Outlook | Appendix Continued attractive market fundamentals Risk premium Supply/demand imbalance remains Affordability2 in % Applicants per advertized apartment 5 30% 4 Ø 3.3 27% 27% 3 150 137 24% 2.9 22% 2 100 1 63 53 0 40 50 32 26 25 -1 -0.5 -2 0
Slide 37: Update on Berlin residential market
Highlights | Market and Portfolio | Financials and Outlook | Appendix Update on Berlin residential market Development of asking rents Development of asking prices Development of asking prices (EUR/sqm) for multi-family-homes (EUR/sqm) for condominiums (EUR/sqm) 12% 13% 11% 6% 5% 6% 9% 5% 1% –3% 17%
Slide 38: Current level of rents and prices in top German cities
Highlights | Market and Portfolio | Financials and Outlook | Appendix Current level of rents and prices in top German cities Asking prices multifamily housing (in EUR/sqm)1 Development of rents (EUR/sqm/month)1 DW Berlin DW Berlin (book value) 2.847 (in-place rent) 6.53 +15% +61% Berlin Berlin 3.267
Slide 39: Like-for-like development by regions
Highlights | Market and Portfolio | Financials and Outlook | Appendix Like-for-like development by regions 1 1 Like-for-like Residential In-place rent In-place rent Change Vacancy Vacancy Change 31/12/2020 units 31/12/2020 31/12/2019 (y-o-y) 31/12/2020 31/12/2019 (y-o-y) (#) (EUR/sqm) (EUR/sqm) (in
Slide 40: Fair Values across regions
Highlights | Market and Portfolio | Financials and Outlook | Appendix Fair Values across regions Regions Residential units FV FV Multiple Multiple Multiple (#) 31/12/2020 31/12/2020 in-place rent re-letting rent spread (EUR m) (EUR/sqm) 31/12/2020 31/12/2020 Core+ 144,812 25,114 2,774 34.0 29.21 4.8
Slide 41: Deutsche Wohnen's residential portfolio is best-in-class
Highlights | Market and Portfolio | Financials and Outlook | Appendix Deutsche Wohnen's residential portfolio is best-in-class Siemensstadt, Berlin Hellersdorf, Berlin Carl-Legien-Siedlung, Berlin Südwestkorso, Berlin Oranienkiez, Berlin Hufeisensiedlung, Berlin Dresden Otto-Suhr-Siedlung, Berlin de
Slide 42: The Berlin portfolio at a glance
Highlights | Market and Portfolio | Financials and Outlook | Appendix The Berlin portfolio at a glance Reinickendorf Pankow Berlin # 9,758 | 0.7% # 10,140 | 1.9% # 110,414 | 1.3% EUR 6.52 | EUR 2,732 EUR 6.91 | EUR 3,518 EUR 6.52 | EUR 2,869 Greater Berlin Spandau Lichtenberg # 114,191 | 1.3% # 13,0
Slide 43: Portfolio structure – characteristics meeting strong demand
Highlights | Market and Portfolio | Financials and Outlook | Appendix Portfolio structure – characteristics meeting strong demand Apartment size (Ø 60 sqm) Year of construction Rental restrictions In-place rent (expiring over time) 29.8% 29.2% 35.8% 11% 7% 18% 23.4% 23.6% 18.3% 17% 30% 13.1% 8.6% 5.
Slide 44: Ownership structure of residential real estate in Germany and Berlin
Highlights | Market and Portfolio | Financials and Outlook | Appendix Ownership structure of residential real estate in Germany and Berlin # of appartments: 21.2m 66% 34% Germany Private individuals and community Professional landlords of apartment owners ▪ Ownership structure of residential real es
Slide 45: Development of land prices and building permits in Berlin
Highlights | Market and Portfolio | Financials and Outlook | Appendix Development of land prices and building permits in Berlin Prices for undeveloped land in Berlin (in EUR/sqm) Building permits are decreasing in Berlin 3.410 24.218 2.934 22.524 2.055 –7% 1.197 20.459 1,032 824 873 –9% 622 613 450
Slide 46: ESG
ESG deutsche-wohnen.com Quartiere Berlin Waldsiedlung FY 2020 Results
Slide 47: Ideally positioned to benefit from megatrends and committed to ESG
Highlights | Market and Portfolio | Financials and Outlook | Appendix Deutsche Wohnen – ideally positioned to benefit from the existing megatrends and committed to ESG concerns Persistent low Urbanization Aging society interest rate period Continued growth of cities anticipated; Further increase in
Slide 48: Balancing climate costs through CO2 pricing
Highlights | Market and Portfolio | Financials and Outlook | Appendix Balancing climate costs through CO2 pricing Current legal situation Our proposal for a socially acceptable solution State Our proposal State "Concept for socially Subsidy BEG responsible climate protection in the property sector"
Slide 49: Generation of green energy in the neighborhood
Highlights | Market and Portfolio | Financials and Outlook | Appendix Generation of green energy in the neighborhood Deutsche Wohnen has founded SYNVIA energy for the expansion of PV and the marketing of decentrally generated energy as tenant electricity PV efficiency program ▪ Green already started
Slide 50: Optimization potential for climate protection through building automation
Highlights | Market and Portfolio | Financials and Outlook | Appendix Optimization potential for climate protection through building automation Potential benefits: Actions Deutsche Wohnen: Results: Optimization and remote monitoring ▪ Development and roll-out of a ▪ Transparency regarding condition
Slide 51: Improvement of energy efficiency of our properties
Highlights | Market and Portfolio | Financials and Outlook | Appendix Improvement of energy efficiency of our properties Energy efficiency classes Energy efficiency 2015–2020 in % of our portfolio in kWh/sqm per year Ø 125.1 kWh/sqm 139.1 30.2% 27.6% 135.1 24.1% 23.5% 133.4 22.8% 132.3 20.8% 128.9 1
Slide 52: Deutsche Wohnen – a socially reliable landlord
Highlights | Market and Portfolio | Financials and Outlook | Appendix Deutsche Wohnen – a socially reliable landlord who goes beyond legal requirements Key Achievements Details on “Our promise to tenants” ▪ Implementation of EUR 30m Corona relief fund for our tenants and business ▪ Our promise #1 pa
Slide 53: Responsible corporate management
Highlights | Market and Portfolio | Financials and Outlook | Appendix Responsible corporate management Corporate Governance Strategically manage sustainability activities Independent Supervisory board: ▪ Concept for incorporating the recommendations of TCFD into ▪ 1/3 are female Group reporting ▪ Re
Slide 54: Our contribution to the UN SDGs
Highlights | Market and Portfolio | Financials and Outlook | Appendix Our contribution to the UN SDGs ▪ The health and well-being of our customers, employees and business ▪ Climate neutrality until 2040 with clear targets and goals partners is central to Deutsche Wohnen ▪ Substantial investments int
Slide 55: CSR Ratings continuously improved
Highlights | Market and Portfolio | Financials and Outlook | Appendix CSR Ratings continuously improved ESG Risk Rating 12.1 Low Risk Negl Low Med High Severe 0-10 10-20 20-30 30-40 40+ In 2021, Deutsche Wohnen SE received a rating of AA (on a TOP Global Universe Gold Award 2020 Rating: C 2020 scale
Slide 56: Financials
Financials deutsche-wohnen.com Quartiere Berlin Hellersdorfer Promenade FY 2020 Results
Slide 57: Overview of new EPRA NAV metrics as of 31/12/2020
Highlights | Market and Portfolio | Financials and Outlook | Appendix Overview of new EPRA NAV metrics as of 31/12/2020 1 1 in EUR m NRV NTA NDV NAV NNNAV EPRA Net Reinstatement Value (NRV) Equity (before non-controlling interests) 13,391.7 13,391.7 13,391.7 13,391.7 13,391.7 The EPRA Net Reinstatem
Slide 58: Bridge from adjusted EBITDA to profit
Highlights | Market and Portfolio | Financials and Outlook | Appendix Bridge from adjusted EBITDA to profit in EUR m FY-2020 FY-2019 in EUR m FY-2020 FY-2019 EBITDA (adjusted) 1,010.1 901.2 Interest expenses (145.8) (135.5) Depreciation (40.0) (40.9) In % of gross rents ~17% ~16% At equity valuation
Slide 59: Summary balance sheet
Highlights | Market and Portfolio | Financials and Outlook | Appendix Summary balance sheet Assets Equity and Liabilities in EUR m 31/12/2020 31/12/2019 in EUR m 31/12/2020 31/12/2019 Investment properties 28,069.5 25,433.3 Total equity 13,832.8 13,107.3 Other non-current assets 979.7 442.2 Financia
Slide 60: Nursing and Assisted Living
Nursing and Assisted Living deutsche-wohnen.com Quartiere Berlin Wohnstadt Carl Legien FY 2020 Results
Slide 61: Nursing portfolio – regional distribution
Highlights | Market and Portfolio | Financials and Outlook | Appendix Nursing portfolio – regional distribution Region Facilities # Units1 # Occupancy rate Managed by owner Geographical allocation of the nursing and assisted living portfolio Greater Hamburg 17 3,330 82.9% Greater Berlin 12 1,430 96.
Slide 62: Demographic trends in Germany underpin rising demand
Highlights | Market and Portfolio | Financials and Outlook | Appendix Demographic trends in Germany underpin rising demand Increasing share of age groups 65+ and 80+ Ageing population leads to increasing demand for nursing homes 7% Age groups: 80+ ▪ Nursing care market driven by (irreversible) demog
Slide 63: Overview of elderly care market in Germany
Highlights | Market and Portfolio | Financials and Outlook | Appendix Overview of elderly care market in Germany Description Payment regulation ▪ Covers all levels of inpatient care ▪ Reimbursement level depending on extend of care required (5 degrees available) ▪ Focus on higher care degrees EBITDA
Slide 64: Overview of regulatory environment for nursing homes (1/2)
Highlights | Market and Portfolio | Financials and Outlook | Appendix Overview of regulatory environment for nursing homes (1/2) ▪ No formal permission (except for building laws) required to set up new nursing homes New homes ▪ Operators entitled to enter into new supply contract with Long-term care
Slide 65: Overview of regulatory environment for nursing homes (2/2)
Highlights | Market and Portfolio | Financials and Outlook | Appendix Overview of regulatory environment for nursing homes (2/2) Standard daily cost breakdown of nursing homes 14% Investment costs ▪ Germany is one of few countries which requires all citizens to have 22% Accomodation 64% Nursing eith
Slide 66: Why we target to increase our investment in nursing market
Highlights | Market and Portfolio | Financials and Outlook | Appendix Why we target to increase our investment in nursing market Increasing demand for nursing Well funded long-term care insurance Strong Robust cash demographic flows trends Fragmented market with need for consolidation Attractive c.
Slide 67: Nursing & Assisted Living – Strategy update
Highlights | Market and Portfolio | Financials and Outlook | Appendix Nursing & Assisted Living – Strategy update Deutsche Wohnen is targeting an EBITDA contribution of 15% in the medium-term ▪ Segment contribution to group EBITDA at c. 12% Further investments envisaged ▪ Redensification and new con
Slide 68: Best in class Nursing and Assisted Living portfolio
Highlights | Market and Portfolio | Financials and Outlook | Appendix Best in class Nursing and Assisted Living portfolio Uferpalais, Berlin Im Schlossgarten, Brandenburg Wolkenstein, Saxony Wilsdruff, Saxony Bonn, North Rhine-Westphalia Am Schwarzen Berg, Lower Saxony Holstenhof, Hamburg Am Albertp
Slide 69: Highly fragmented market structure for nursing home operators
Highlights | Market and Portfolio | Financials and Outlook | Appendix Highly fragmented market structure for nursing home operators Nursing home operators split by type (# of beds) 5% Public operators ▪ Nursing home operator market is very fragmented − Top ten private operators only c. 13% market sh
Slide 70: Disclaimer
Highlight and Strategy Update | Market and Portfolio | Financials and Outlook | Appendix 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 an
Slide 71: Deutsche Wohnen SE
Deutsche Wohnen SE Mecklenburgische Straße 57 14197 Berlin Phone +49 30 89786-5413 Fax +49 30 89786-5419 © 2021 Deutsche Wohnen Gruppe