Adler Group Sa · XETR:ADJ
Adler Group Sa — ADO Properties — Merger or Acquisition (June 2020)
32 slides from Adler Group Sa's merger presentation, Jun 29, 2020
Slide 1: Acquisition of growth pipeline in Germany's urban centres
w Acquisition of growth pipeline i n G e r m a n y ’s u r b a n c e n t r e s Acquisition of Consus Real Estate June 29, 2020 0
Slide 2: Disclaimer
Disclaimer THIS PRESENTATION OR ANY PART THEREOF IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN. YOU ARE REMINDED THAT THE FOLLOWING INFORMATION HAS BEEN DELIVERED TO YOU ON THE BASIS THAT YOU ARE A PERSON INTO WHOSE POSSESSION SUCH INFORMATION MAY B
Slide 3: Transaction summary: Exercise of call option to acquire control in Consus
Transaction summary: Exercise of call option to acquire control in Consus In December 2019, ADO launched an all share voluntary exchange offer for ADLER and acquired a strategic minority stake in Consus; following successful public offer, ADO owns ~95%1 of ADLER ~95%1 ADO ADLER The combined Gr
Slide 4: Through the acquisition of Consus, ADO consolidates its position as a leading German residential player
Through the acquisition of Consus, ADO consolidates it’s position as a leading German residential player Fourth largest European residential player with significant footprint in Top 7 German cities, providing €11.7bn1 GAV and ~€3bn2 a strong platform for growth market cap Integrated German residen
Slide 5: The company's long term vision: what the new Group would look like if execution were completed
The company’s long term vision: what would the new Group look like today if execution was already fully completed (at today’s valuation) KPIs (fully completed, at today's valuation) Combined portfolio post run-rate build-to-hold portfolio €8.6bn1 existing investment 1 GAV (€bn) ~14 properties and ru
Slide 6: Leading residential real estate company in Europe with enhanced liquidity
Leading residential real estate company in Europe with enhanced liquidity Listed European residential real estate companies by GAV (€bn) Combined market cap and free float1 market cap (€bn) Market cap Free float market cap 415 161 136 76 72 35 85 9 3 13 78% 15% 73% 2.8 52.7 €450m rights issue 0.45 2
Slide 7: Combination to deliver increased scale and profitability through attractive development pipeline
Combination to deliver increased scale and profitability through attractive development pipeline in Top 7 German cities Landbank to yield growth opportunities over 6-8 years (€m, unless stated otherwise) Last reported “Run – Rate” (Pro forma combined 2019A) Build-to-Hold portfolio NRI1 358 ~160-180
Slide 8: Following the sale of non-strategic projects, Consus has streamlined its portfolio
Following the sale of non-strategic projects, Consus has streamlined its portfolio in Top 7 German cities Sale of 17 Sale of 8 As of projects on projects on Q1-2020 May 08, 2020 Pro-Forma May 20, 2020 Pro-Forma On May 8, 2020, Consus sold 17 development Number of projects with a GAV of 65 17 48 8
Slide 9: Consus FFO II contribution strengthens cash flow of combined group
Consus FFO II contribution strengthens cash flow of combined group Illustrative FFO 2020E (€m) 1 Pro-Forma FFO I guidance for ADO + ADLER assuming full consolidation 2 Estimated from Consus disclosure of forward sales, condominums sales Before run-rate operating and and upfront sales, adjusted for
Slide 10: Illustrative NAV of combined group upon completion of development program
Illustrative NAV of combined group upon completion of development program to capture significant organic growth (at today’s valuation) Illustrative NAV of the combined group (€bn) €bn Per Share12 Pre-announcement equity value Consus9 0.8 6.2 Purchase Consideration10 1.1 6.8 1 Pro forma ADO and ADLE
Slide 11: Q1-20 Pro Forma GAV, Net Debt and LTV for the combined group
Q1-20 Pro Forma GAV, Net Debt and LTV for the combined group Pro Forma Q1-20 GAV for the combined group (€bn) Pro Forma Q1-20 Net Debt for the combined group (€bn) Latest appraised valuation for Consus asset base Expected to further decrease over 2.8 medium term through disposal of assets held for s
Slide 12: Consus portfolio to support conversion from build-to-sell to build-to-hold
Consus portfolio to support conversion from “build-to-sell” to “build-to-hold” under ADO’s management Basis of segmentation Segmentation of Consus’ portfolio City & micro location A Landbank for potential Build-to-Hold % residential Core landbank in attractive Top 7 cities to deliver quality
Slide 13: €1bn strategic land bank with €4.7-5.3bn GDV added to €8.6bn strategic ADO assets
€1bn strategic land bank with €4.7-5.3bn GDV in core key cities added to €8.6bn strategic ADO assets Combined total portfolios Development, 4 Non-strategic, 4 Non-strategic, 4% 9% 17% Development, 7% By Forward and condo Landbank, Residential, type 91% sales, 49% 8% Forward and condo sales, 12% Resi
Slide 14: Attractive landbank located in Top 7 German cities
Attractive landbank located in Top 7 German cities providing significant potential for organic growth Projects under Build-to-Hold portfolio Portfolio overview GAV GDV Area Yield on cost # Project Name City (€m) (€bn) (k sqm) (%) 1 Benrather Gärten Düsseldorf 106 1.1-1.3 216 5.3% Hamburg VAI Campus
Slide 15: Value uplift potential in Consus' build-to-hold portfolio drives future NAV growth
Value uplift potential in Consus’ build-to-hold portfolio drives future NAV growth Illustrative cost and profitability composition ~20-30% Development margin ~€1.0-1.6bn target value uplift Cost of €2.5–€3.0bn ~50-60% construction construction cost (spent over 6–8 years) ~20% Land value ~€1bn Landba
Slide 16: Embedded value uplift in build-to-hold portfolio to be unlocked
Embedded value uplift in build-to-hold portfolio to be unlocked with selected project developments Consus Build-to-Hold portfolio | Estimated value (€/sqm) Comments 1 Based on current value, Consus’ 11 projects with a total floor ~1.0 ~2.8 ~3.7 ~1.0-1.6 ~4.7-5.3 area of ~0.8m in its build-to-hold
Slide 17: Significant synergies targeted through the combination
Significant synergies targeted through the combination 2020 2021 Mezzanine debt >10% - €0.3bn €45m - €47m €45m - €47m Financing Senior/Junior debt >7-10% - €0.2bn €5m - 7m €5m - 7m synergies Bond - €0.45bn - €28m - €32m Total financing synergies €50m - €54m €77m - €86m 12-24 months ■ Reduction in ma
Slide 18: Streamlined financing structure and financial policy to maintain investment grade-like credit profile
Streamlined financing structure and financial policy to maintain investment grade-like credit profile Combined debt KPIs post Consus1 Combined sources of funding1 2.3% Net Net LTV LTV Incl. Incl. Convertible Convertible ~54% ~€840m4 of liquidity available in the 11.5% combined entity 5.9% Net Net LT
Slide 19: Strong corporate governance and management
Strong corporate governance and management The combined company to be renamed ADLER Group, operational headquarters to 1 remain in Berlin 2 Company with Luxembourg corporate governance and listing in Germany 1 Tier Board structure with 10 directors 3 Majority of independent directors (includ
Slide 20: An experienced management with operational expertise
An experienced management with operational expertise Maximilian Rienecker Thierry Beaudemoulin (Co-CEO & Director) (Co-CEO & Director) Corporate Strategy Asset Management M&A Transaction/ Acquisition Financing Property Management/ Letting Accounting, Treasury Technical Management T
Slide 21: Transaction timetable and next steps
Transaction timetable and next steps Date Key achievements and activities 15 December 2019 Announcement of exchange offer for ADLER and acquisition of 22% of Consus 7 February 2020 Publication of offer document and start of offer period 6 March 2020 End of initial acceptance period | 82.82% of
Slide 22: Appendix
Appendix 1. Portfolio update 2. Real Estate market 3. Others
Slide 23: Forward sale pipeline, self-funding with minimized development risks
Forward sale pipeline, self-funding with minimized development risks Illustrative forward sales business model based on development stage Description (cash flow profile) Pre-deal Consus business model was focused on forward sales, where prior to construction start, Development / Acquisition Constr
Slide 24: Selected forward sales in 2019
Selected forward sales in 2019 Consus continues to execute on forward sales pipeline Sales Development / Acquisition Construction Delivery City/Project KPIs Pictures Status Forward sale GDV € 67m A well-known institutional purchaser acquired the ‘Ostforum’ project in Leipzig Leipzig, Completion 20
Slide 25: Appendix
Appendix 1. Portfolio update 2. Real Estate market 3. Others
Slide 26: Exposure to Germany's favourable macro economic conditions in highly attractive locations
Exposure to Germany’s favourable macro economic conditions in highly attractive locations Attractive housing sector fundamentals in the strongest European economy Largest housing market in Europe Rent affordability remains healthy Forecast of total population per country in 2020 (m) Gross annual sal
Slide 27: Exposure to Germany's favourable macro economic conditions (cont'd)
Exposure to Germany’s favourable macro economic conditions in highly attractive locations (cont’d) Strong and consistent rental price growth in German Supply and demand of apartments across Germany’s Top 7 residential German cities p.a. up to 2020 Demand Supply Undersupply in % of demand 140 Rental-
Slide 28: Build-to-hold strategy to deliver residential supply of 10,000+ units in Top 7 German cities
Build-to-hold strategy to deliver residential supply of 10,000+ units in Top 7 German cities Demand of 3.2m units with c. € 1 trillion GDV1 until 2030 Expected population growth from 2012 until 2030 across Top 7 German Demand of 3.2m new apartments until 2030 cities Total demand (000s) Berlin 8.0% D
Slide 29: Appendix
Appendix 1. Portfolio update 2. Real Estate market 3. Others
Slide 30: Transaction recap and next steps: Highlights since the announced combination of ADO and ADLER
Transaction recap and next steps: Highlights since the announced combination of ADO and ADLER Exercise of call Combination of Offer for ADLER Integration Financing option and next ADO & ADLER completed started steps Business €3.5bn of ADLER Closing on 9 April Appointment of On May 8 and Ma
Slide 31: Board of Directors consisting of a majority of independent directors
Board of Directors consisting of a majority of independent directors including the chairman who has a casting vote Dr. Peter Maser Tomas de Vargas Machuca1 Chairman Deputy Chairman German, born in 1961 British, born in 1974 CEO of BCP Partner Deloitte Arzu Akkemik Maximilian Rienecker Thierry Beaude
Slide 32: Actions taken in response to Covid-19 reflect limited impact on overall operational performance
Actions taken in response to Covid-19 reflect limited impact on overall operational performance German authorities have eased the rules for short time work: employees will receive 60% to 67% of their net income for non worked hours Actions by the Requirements for obtaining a housing allowance ar