Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — Investor Presentation (November 2014)

49 slides from Deutsche Wohnen's investor presentation, November 2014

  1. Slide 1: Company presentation November 2014

    Deutsche Wohnen AG » Company presentation November 2014 1

  2. Slide 2: Agenda

    » Agenda 1 General overview 2 Highlights 9M-2014 3 Portfolio & investment strategy 4 Integration & restructuring power 5 Market fundamentals 6 Appendix 2

  3. Slide 3: General overview

    ‘ ) a Deutsche Wohnen » General overview deutsche-wohnen.com

  4. Slide 4: Deutsche Wohnen business model "Made in Germany"

    » Deutsche Wohnen business model “Made in Germany” Strong cash flow for Capex, shareholder return and NAV growth Nursing & Privatisation & Assisted Residential letting business institutional Living sales >EUR 600m gross rents from Backed by high-quality portfolio1) Additional cash demographic and NA

  5. Slide 5: Deutsche Wohnen at a glance

    » Deutsche Wohnen at a glance 150,000 Units, predominantly in German metropolitan areas 2,000 Privatisations per year 2,200 Nursing places / apartments 2,400 Employees EUR 9 bn Assets under management EUR 5 bn Market capitalisation 5

  6. Slide 6: A unique business model

    » A unique business model 1 Accretive add-ons to business model by nursing and privatisation business 2 Focused on most dynamic growth regions in Germany 3 Portfolio with highest quality 4 Strongest like for like rental growth and highest NAV upside potential 5 Most efficient NOI margin 6 Cost leade

  7. Slide 7: Highlights 9M-2014

    ‘ ) a Deutsche Wohnen » Highlights 9M-2014 deutsche-wohnen.com

  8. Slide 8: Highlights 9M-2014

    » Highlights 9M-2014 Financials Operational development EUR 9M-2014 Change EUR 9M-2014 Change FFO I (before minorities) 172.8m (+100.2%) NOI letting 354.5m (+87.6%) FFO I (after minorities)1) 166.3m (+92.7%) L-f-l rental growth 2.8% (+0.5pp) (entire portfolio) FFO I /share2) 0.58 (+9.4%) Rent increa

  9. Slide 9: Portfolio & investment strategy

    » Portfolio & investment strategy 9

  10. Slide 10: New scoring model to characterize and rate housing market

    » New scoring model to characterize and rate housing market in Core+, Core and Non-Core Main criteria of the portfolio scoring model Historic real estate specific data • Change in households (2008-2014) • Change in-place rent (2008-2014) Core+ • Population growth (2008-2014) „growth“ Prognostic real

  11. Slide 11: Update of regional clustering based on scoring model

    » Update of regional clustering based on scoring model Regional Cluster Residential % of In-place Rent Vacancy Multiple Multiple 1) 2) units total rent Potential 30/09/2014 in-place market units 30/09/2014 rent rent # EUR/sqm in % in % Total 146,822 100.0 5.65 19.2 2.4 14.1 12.8 Re-classification of

  12. Slide 12: Microanalysis shows opportunities in Core+

    » Microanalysis shows opportunities in Core+  Attractive and dynamic micro locations with promising fundamental outlook  Shortage of supply Operate  High rent potential and dynamic development of market rents  Key driver: In-place rents with high upside to market rents Value potential due to re-

  13. Slide 13: Portfolio split and strategic focus for investment decisions

    » Portfolio split and strategic focus for investment decisions Strategy Cluster Residential % of total In-place Rent Vacancy Multiple Multiple 1) 2) units units rent Potential 30/09/2014 in-place market 30/09/2014 rent rent EUR/sqm in % in % Total Results 146,822 100.0 5.65 19.2 2.4 14.1 12.8 Only i

  14. Slide 14: Investment target of EUR 280m within 4 years in Core+

    » Investment target of EUR 280m within 4 years in Core+ Develop cluster approach  c. 17,000 units identified (almost entirely in Core+) mainly in dynamic micro loations  Earnings and value accretion: • Focus on portfolios with the highest rent potential (c. 27%) • NAV-growth due to overproportiona

  15. Slide 15: Operate: small single-investments targeted

    » Operate: small single-investments targeted Operate cluster approach  Focus on re-letting  80% of re-lettings in 2014 took place in Core+  Re-letting spendings lead to double digit returns  70% of re-lettings EUR <3,000 investment per unit (ROI >65%)  Re-lettings with EUR >10,000 investment pe

  16. Slide 16: Focused and sustainable investments into the portfolio

    » Focused and sustainable investments into the portfolio 1) 9M-2014 9M-2013 EUR m EUR m Maintenance 61.4 38.9 Thereof repairs & 45.0 25.0 maintenance Thereof re-letting 16.5 13.9 9M-2014: total spendings for re-letting of EUR 33.3m to Modernization 36.4 14.3 realize annual rental uplifts of EUR >5m

  17. Slide 17: Integration & restructuring power

    » Integration & restructuring power 17

  18. Slide 18: GSW integration almost completed – track record expanded

    » GSW integration almost completed – track record expanded Achievements  Successful implementation of domination agreement  Joined investment strategy  To date more than EUR 20m p.a. synergy realization achieved  Negotiation with workers council and execution of „social plan“  Consolidation of

  19. Slide 19: Long term integration track record

    » Long term integration track record DW before GSW DW incl. GSW 2013 2011 2012 2013 Outlook pro forma No. of units (avg.) 48,699 57,914 86,999 149,979 146,000 Gross rental income1) 196.4 240.0 353.5 589.7 620.0 Corporate expenses (32.9) (40.4) (48.1) (102.2) (75.0) Cost per unit (676) (698) (553) (6

  20. Slide 20: Group restructuring & refinancing created significant shareholder value

    » Group restructuring & refinancing created significant shareholder value EUR 5m of EUR 35m of additional EUR39 m EUR ~80m p.a. synergies with synergies additional effect FFO II FFO I impact (restructuring sales from financing (before tax) force)  Over-achievement of originally targeted synergies o

  21. Slide 21: Sustainable financing

    » Sustainable financing Pre — refinancing Post — refinancing Maturity profile as of 30/09/2014 in nominal value (EUR m) Maturity profile as of 30/09/2014 in nominal value, pro forma for refinancing (EUR m) 400 400 250 250 769 797 870 710 728 797 710 695 703 501 439 446 501 355 430 160 23 23 74 72 49

  22. Slide 22: Financing strategy of the future – what comes next

    » Financing strategy of the future – what comes next… Optimized debt book to balance stability and profitability:  Resilience optimized (avg. debt maturity of ~9 years after refinancing)  Strong position for external growth in times of „market crises“  Above avg. ISCR of >3x provides the group wi

  23. Slide 23: Rating from Moody's underlines quality of Deutsche Wohnen

    » Rating from Moody’s underlines quality of Deutsche Wohnen Overview of Issuer Credit Ratings in the European real estate sector A A2 A- A3 1 2 BBB+ Baa1 BBB Baa2 BBB- Baa3 BB+ Ba1 BB Ba2 S&P Moody's Fitch Negative Outlook Stable Outlook Positive Outlook  Moody’s assigned a first time long-term iss

  24. Slide 24: Cash flow creation and dividend coverage

    » Cash flow creation and dividend coverage EURm 2011 2012 2013 2014e FFO I1) 47.5 68.2 114.5 212.2 FFO disposals 10.6 19.9 23.0 50.0 2014 refinancing and FFO II 58.1 88.1 137.5 262.2 further synergies will + ∆ CF disposals2) 54.0 51.2 49.9 85.0 improve cash flow by - Regular amortization -30.2 -36.0

  25. Slide 25: Market fundamentals

    » Market fundamentals deutsche-wohnen.com ‘ ) a Deutsche Wohnen 25

  26. Slide 26: Resilient and growing residential real estate market in Germany

    » Resilient and growing residential real estate market in Germany Germany among the most stable markets in terms of Disposable income in Germanys has outgrown house price increases house prices multiple times Nominal house prices (1990 = 100) House price index (1975=100) 600 600 500 500 400 400 300

  27. Slide 27: Key residential market determinants for Germany

    » Key residential market determinants for Germany — macro-setting for further rental growth Residential market is driven by a trend towards … a rising demand smaller households sizes … in per capita residential space… Private households by household size in Germany (2012 and 2030) 58 55,0 45 41 43 5

  28. Slide 28: Berlin and Frankfurt (Rhine-Main) as attractive growth markets

    » Berlin and Frankfurt (Rhine-Main) areas as some of the most attractive growth markets in Germany Economic development translating into above average rental growth in the Berlin and Frankfurt markets in recent years  Berlin and Frankfurt listed under Europe's top 10 locations in Rents for flats, r

  29. Slide 29: Berlin as the most dynamic growth market in Germany

    » Berlin as the most dynamic growth market in Germany A further increase of Berlin's Berlin with constantly improving economic indicators population is anticipated (m) 4,0 6 20 Unemployment rate (%) GDP growth (%) 4 18 3,8 2 16 3,6 0 14 3,4 (2) 12 3,2 (4) 10 2011 2000 2001 2002 2003 2004 2005 2006 2

  30. Slide 30: Berlin's key facts

    » Berlin's key facts (1) Population (2) Residential units Number of residential units Population Berlin (2012)(1) ca. 1.9m (12/2013)(1) ca. 3.45m Number of residential units for letting (2012)(6) ca. 1.6m Population Capital Region Berlin-Brandenburg Completed apartments 2013 (12/2013)(1) ca. 4.5m (2

  31. Slide 31: Appendix

    » Appendix deutsche-wohnen.com ‘ ) a Deutsche Wohnen 31

  32. Slide 32: Strong earnings and cash contributions from letting

    » Strong earnings and cash contributions from letting in EUR m 9M-2014 9M-2013 In-place rent: 9M-14: EUR 5.65 / sqm Current gross rental income 469.3 259.5 Non-recoverable expenses (9.9) (5.7) Earnings Maintenance1) from letting: Rental loss (5.8) (2.6) 9M-14: EUR 8.83 /sqm + EUR 178m Maintenance (6

  33. Slide 33: Overview of portfolio as at 30 September 2014

    » Overview of portfolio as at 30 September 2014 30/09/2014 Residential Area 1) In-place New letting Vacancy Fair Share in FV 5) Multiple Yield Multiple Yield 2) 3) 4) units rent rent Value terms of in-place market (FV) FV rent rent # K sqm EUR/sqm EUR/sqm % EUR m % EUR/sqm % % Strategic core and gro

  34. Slide 34: Pro forma like for like overview of portfolio

    » Pro forma like for like overview of portfolio as at 30 September 2014 In-place rent (like-for-like) and vacancy (like-for-like)2) Like-for-like Residential units In-place In-place in % Vacancy Vacancy 1) 1) 30/09/2014 rent rent 30/09/2014 30/09/2013 # 30/09/2014 30/09/2013 EUR/sqm EUR/sqm y-o-y in

  35. Slide 35: Dynamic rent potential in Core+ regions

    » Dynamic rent potential in Core+ regions (letting portfolio) New-letting rent in New-letting 1) 3) In-place rent in EUR/sqm Rent potential EUR/sqm2) contracts4) Core+ 5.76 23.5% 7.11 6,172 Greater 5.64 21.5% 6.85 5,267 Berlin Rhine- 7.15 25.2% 8.95 757 Main Rhineland 6.62 22.0% 8.07 148  Current t

  36. Slide 36: NAV contribution by strong disposal business

    » NAV contribution by strong disposal business Closed in EUR m 9M-2014 9M-2013  Free cash flow from sales activities of EUR 101.4m (1,583 Sales proceeds 205.7 101.0 closed privatization units and Cost of sales (9.1) (6.5) 1,869 closed units institutional sales) Net sales proceeds 196.6 94.5 Carryin

  37. Slide 37: Signed units for privatization business & non-core disposals

    » Signed units for privatization business & non-core disposals Signed with Units Transaction Fair value Gross Margin expected closing volume 1) in 2014 # EUR m EUR m EUR m %2) Privatization 2,037 162.3 112.7 49.6 44% Institutional sales 2,052 86.1 77.4 8.7 11%  Ongoing and successful focus on dispo

  38. Slide 38: Nursing and Assisted Living − increasing FFO contribution

    » Nursing and Assisted Living − increasing FFO contribution in EUR m 9M-2014 9M-2013 30/09/2014 Facilities Places Income Greater Berlin 12 1,442 Nursing 41.5 38.3 Saxony 7 475 Living 4.5 1.5 Others 2 257 Other 4.8 3.1 In total 21 2,174 Total income 50.8 42.9 Costs Average Occupancy Nursing and corpo

  39. Slide 39: Successful restructuring of financing

    » Successful restructuring of financing… Pre-refinancing Pro forma (30/09/2014) post-refinancing LTV (%) 54.7 ~ 55.8  Interest Rate (%) ~3.2 ~ 2.5  Mandatory redemption p.a. (%) ~ 1.6 ~ 1.1  Weighted maturity ~ 7.5 years ~ 8.9 years Interest rate fixed/ hedged (%) ~ 92 ~ 86 Unencumbered assets (%

  40. Slide 40: Benchmark EBITDA margin among the Peer Group

    » Benchmark EBITDA margin among the Peer Group in EUR m 9M-2014 9M-2013 EBITDA margins 9M-2014 9M-2013 Earnings from Residential Property Management 385.9 208.2 adj. EBITDA / gross rents 77.6% 75.8% Earnings from Disposals 38.8 17.9 adj. EBITDA excl. disposals / 69.4% 68.9% gross rents Earnings from

  41. Slide 41: Adjusted EBT increased by ~110% (y-o-y)

    » Adjusted EBT increased by ~ 110% (y-o-y) in EUR m 9M-2014 9M-2013 in EUR m 9M-2014 9M-2013 EBITDA (adjusted) 364.3 196.8 Interest expenses (138.9) (84.9) Non-cash interest expenses (12.3) (8.6) Depreciation (4.5) (4.0) 2) 2) (151.2) (93.5) Financial result (net) (150.5) (92.9) Interest income 0.7

  42. Slide 42: Recurring FFO per share performance +9.4% (y-o-y)

    » Recurring FFO per share performance +9.4% (y-o-y) in EUR m 9M-2014 9M-2013 FFO development in EUR m Profit 144.9 66.5 67.0 104.2 205.1 Earnings from Disposals (38.8) (17.9) Depreciation 4.5 4.0 Valuation SWAP and convertible bond 22.0 (0.2) 38.8 One-off costs for transactions and financing 5.1 3.4

  43. Slide 43: Balance sheet

    » Balance sheet Assets Equity and Liabilities in EUR m 30/09/2014 31/12/2013 in EUR m 30/09/2014 31/12/2013 Investment properties 8,882.5 8,937.1 Total equity 4,094.2 3,944.3 Other non-current assets 554.4 552.2 Financial liabilities 4,881.9 5,154.6 Derivatives 0.1 2.7 Convertibles 654.6 250.2 Defer

  44. Slide 44: EPRA NAV per share up by 2.5%

    » EPRA NAV per share up by 2.5% in EUR m 30/09/2014 31/12/2013 in EUR m 30/09/2014 31/12/2013 Equity (before non-controlling EPRA NAV per share in EUR 3,858.7 3,777.8 14.34 13.99 interests) (undiluted) Fair value adjustment of Adjusted NAV per share in 4.0 (2.2) 12.64 12.27 convertible bonds EUR (un

  45. Slide 45: Strong like-for-like development

    » Strong like-for-like development 1) Total Portfolio Letting Portfolio Core+ regions In-place rent (EUR/sqm) In-place rent (EUR/sqm)  Comprises ~ 84,700 units under management since Dec 2008  Comprises ~ 72,000 units under management since Dec 2008 Letting Portfolio Core regions Letting Portfolio

  46. Slide 46: Portfolio structure – characteristics meeting strong demand

    » Portfolio structure – characteristics meeting strong demand In-place rent1) ( €5.53/sqm/month) Year of construction 25.4% 31.7% 29.5% 19.6% 15.4% 19.5% 11.9% 15.3% 6.9% 7.2% 3.1% 3.8% 1.5% 2.2% 3.1% 3.4% 0.6% <=3.50 > = 8.01 3.51 - 4.00 4.01 - 4.50 4.51 - 5.00 5.01 - 5.50 5.51 - 6.00 6.01 - 6.50

  47. Slide 47: Management board and areas of responsibilities

    » Management board and areas of responsibilities Michael Zahn Andreas Segal Lars Wittan Chief Executive Officer Chief Financial Officer Chief Investment Officer (CEO) (CFO) (CIO) Areas of responsibility: Areas of responsibility: Areas of responsibility:  Strategy  Equity Financing  Accounting/Tax

  48. Slide 48: 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

  49. Slide 49: Deutsche Wohnen AG contact details

    Deutsche Wohnen AG Registered Office Berlin Office Pfaffenwiese 300 Mecklenburgische Straße 57 65929 Frankfurt/ Main 14197 Berlin Phone: +49 30 897 86 5413 Fax: +49 30 897 86 5409 © 2014 Deutsche Wohnen AG 49

Deutsche Wohnen — Investor Presentation (November 2014) on 6ix