Adler Group Sa · XETR:ADJ
Adler Group Sa — Q3 2022 Earnings Presentation
46 slides from Adler Group Sa's earnings presentation, Nov 29, 2022
Slide 1: Results presentation
Results presentation 29 November 2022
Slide 2: Content
Content 1 Strategy Update 2 Q3 2022 Overview 3 Portfolio & Operational Performance 4 Financial Performance 5 Guidance 6 Appendix 2 Braunschweiger Strasse, Berlin
Slide 3: Strategy Update
Strategy Update 3
Slide 4: Summary of Bond Amendment and New Funding
Summary of Bond Amendment and New Funding The agreed amendments and new funding provide stability and create a platform to maximise value • Quantum up to €937.5m, depending on date of transaction close • New money facilities mature on 30 June 2025 UNCERTAIN PROPERTY • In light of the VALUES restrict
Slide 5: Bond Amendment and New Funding: Steps to Completion
Bond Amendment and New Funding: Steps to Completion ‘Early-bird’ deadline this Friday for existing bondholders who wish to participate in the new money facilities Nov-22 Dec-22 Q1’23 • Fee of 1% for those existing bondholders who confirm their pro-rata allocation in the • Execution of Lock-Up Agreem
Slide 6: The German Residential Market – A Two Sided Story
The German Residential Market – A Two Sided Story STRONG PERFORMANCE AND UNCERTAIN PROPERTY VALUES OUTLOOK GIVEN TRANSACTION FREEZE Strong performance ◼ Like-for-like rental growth of 2.0%1 as per Q3 20222, well ◼ The German housing market is caught in a perfect storm of below German wage increases
Slide 7: Adler Group aims to dispose parts of its portfolio to decrease its LTV
Adler Group aims to dispose parts of its portfolio to decrease its LTV Bondholder agreement allows for orderly disposals without compromising sale prices due to current unfavourable and volatile market conditions Adler Group continues North Rhine its efforts to dispose Development non-strategic part
Slide 8: Adler Group’s New Strategy Centred Around Five Pillars
Adler Group’s New Strategy Centred Around Five Pillars • Transition to a pure-play Berlin residential real estate company Berlin-anchored PORTFOLIO portfolio with STRATEGY • Orderly disposals of selected portfolios & development projects limited development • Very selective development exposure rema
Slide 9: Q3 2022 Overview
Q3 2022 Overview 9
Slide 10: Key Highlights
Key Highlights Continued strong operational performance, Group stabilisation underway PORTFOLIO FINANCIAL DEVELOPMENT PERFORMANCE PERFORMANCE PROGRESS ◼ 2.0% like-for-like rental growth1 ◼ Lower NRI and FFO 1 on the back of ◼ Ostend Quartier, LEA B and Neues decreased size of the portfolio: Korallus
Slide 11: Portfolio & Operational Performance
Portfolio & Operational Performance 11
Slide 12: Continuous Increase in Portfolio Quality
Continuous Increase in Portfolio Quality Post non-strategic disposals, a high-quality portfolio remains anchored in Berlin Standing assets as per Q3 20221 Fair value (€/sqm) 3,015 2,993 GAV €5.3bn standing assets Berlin 2,065 1,887 LIKE-FOR-LIKE Oberhausen FAIR VALUE Essen Duisburg GROWTH Dortmund P
Slide 13: Strong Operational Performance Evidenced in Low Vacancy
Strong Operational Performance Evidenced in Low Vacancy... Portfolio valuation impacted in Q3 2022 on the back of the surge in interest rates Like-for-like fair value growth (%) Yielding portfolio operational vacancy rate2 (%) 10.10% 3.4% 3.3% LIKE-FOR-LIKE FAIR VALUE 8.70% GROWTH 1.4% YoY (vs Q3 20
Slide 14: Increasing Average Monthly In-Place Rent
...Combined with Increasing Average Monthly In-Place Rent Residential and commercial average rent Like-for-like residential rental growth (%) Like-for-like rental growth breakdown (%) (€/sqm/m) 7.56 3.9% 2.1% 7.45 2.0% 1.9% 6.61 6.30 2.5% 2.2% 2.0% Berlin All other cities Total portfolio Portfolio &
Slide 15: Financial Performance
FIADLER GROUP Financial Performance
Slide 16: GAV Slightly Decreased on the Back of Revaluation and Disposals
GAV Slightly Decreased on the Back of Revaluation and Disposals Further sale of developments decreased the Group’s balance sheet GAV excluding BCP (€bn)1 Comments 1 During the third quarter, a revaluation loss of (€123m) was realised on the yielding asset portfolio (2.3% l-f-l value decrease) on the
Slide 17: Increasing LTV in Q3 on the Back of Revaluation
Increasing LTV in Q3 on the Back of Revaluation LTV evolution1,2,3 (%, incl. convertibles) Comments 59.9% 1 Sale of Ostend Quartier, Westend LEA B and Neues Korallusviertel completed during Q3 2022 1.5% 2 Includes revaluation of the yielding assets portfolio on the back of the 58.0% surge in interes
Slide 18: Debt Maturity Schedule
Debt Maturity Schedule Majority of Q4 maturities repaid; 2023 maturities well covered Overview of debt maturities1 incl. BCP (€m) Comments The majority of Q4 maturities 3% 15% 17% 12% 22% 9% 5% 18% have been repaid, including the €120m convertible bond at Consus level and additional €21m Consus debt
Slide 19: Overview of Debt KPIs as per Q3 2022
Overview of Debt KPIs as per Q3 2022 Debt KPIs for Q3 2022 Sources of funding Bond covenants Unsecured debt 64% Incurrence-based Required Total nominal interest-bearing debt (€m) 6,950 Q3 2022 FY 2021 covenants level 3% LTV Net LTV 59.9%1,2,3 (Financial indebtedness / <60% 55.0%2,3 54.5%2,3 total as
Slide 20: Development of Cash Position
Development of Cash Position €615m cash position per Q3 2022; €179m expected by FY 20241 Cash position, excluding BCP (€m)1 186 84 84 -168 8804 208 204 771 8 71 109 1,0345 97 615 101 1903 972 52 Financial Performance 519 179 132 166 Q2 2022 Yielding Project sales Financing Dev. CAPEX Other Q3 2022 F
Slide 21: Guidance
Guidance 21
Slide 22: Strong Operational Result - New Strategy and Agreement with Bondholders
Strong Operational Result - New Strategy and Agreement with Bondholders Creates a Viable Path Towards Stabilisation of Group Objectives Concluding remarks Bondholder agreement supports the stabilisation of Full-year 2022 guidance the Group and provides up to €937.5m in commitments, allowing for orde
Slide 23: Q&A
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Slide 24: Appendix
Appendix 25-31 Financials 32-35 Debt overview 36 CAPEX and maintenance 37-39 Development projects 40-43 Market update 44 Corporate Governance 45 Corporate Agenda 24 Braunschweiger Strasse, Berlin
Slide 25: Profit and Loss Statement
Profit and Loss Statement P&L statement Comments In € million Q3 2022 Q3 20211 1 Compared to Q3 2021, net rental income in Q3 2022 has decreased to €187m mainly due to Net rental income 187 1 259 the reshaping of the yielding assets following the disposal of the Northern portfolio to LEG, the Easter
Slide 26: EBITDA from Rental Activities and EBITDA Total
EBITDA from Rental Activities and EBITDA Total EBITDA from rental activities EBITDA Total In € million Q3 2022 Q3 2021 In € million Q3 2022 Q3 20211 Net rental income 187 259 Income from rental activities 281 344 Income from facility services and recharged utilities costs 94 85 Income from property
Slide 27: FFO
FFO 1 and FFO 2 FFO 1 calculation FFO 2 calculation In € million, except per share data Q3 2022 Q3 2021 In € million, except per share data Q3 2022 Q3 20211 Net rental income 187 259 EBITDA Total 17 1 182 Income from facility services and recharged utilities costs 94 85 Net cash interest (64) (70) I
Slide 28: Balance Sheet
Balance Sheet Balance sheet Comments In € million Q3 2022 FY 2021 1 Fair value of investment properties has decreased in Q3 2022 due to revaluation of the portfolio and Investment properties including advances 6,645 1 7,116 is impacted by portfolio disposals compared to FY 2021 Goodwill – 91 Other n
Slide 29: EPRA Metrics
EPRA Metrics EPRA metrics calculation In € million, except per share data Q3 20221 FY 20211 EPRA metrics NAV NRV NTA NDV NAV NRV NTA NDV Total equity attributable to owners of the Company 2,234 2,234 2,234 2,234 2,990 2,990 2,990 2,990 Revaluation of inventories (102) (102) (102) (102) 8 8 8 8 Defer
Slide 30: Development of Cash Position
Development of Cash Position €615m cash position per Q3 2022; €179m expected by FY 20241 Cash position Adler Group & Consus (€m)1 535 8804 208 129 621 71 265 8 97 540 109 1903 882 32 137 44 80 452 -124 1946 116 82 109 Q2 2022 Yielding Project Financing Dev. Other Q3 2022 FCF FCF Gross New Loan to IC
Slide 31: Net LTV
Net LTV LTV calculation Comments In € million Q3 20221 FY 20211 1 The selected financial assets have declined to (€368m) and contain purchase price Corporate bonds and other loans and borrowings 6,579 7,440 receivables amongst others. They include 1) netted financial receivables (€263m), 2) trade re
Slide 32: Breakdown of Debt Maturities
Breakdown of Debt Maturities Volume (€m) IFRS (€m) Maturity Nominal interest rate Other comments Premature redemption Rate, at which premature redemption is possible ADLER Real Estate Bonds (unsecured) To be repaid 2017/24 300 295 6 Feb 24 2.10% Anytime Under condition of make whole at maturity with
Slide 33: Debt Maturity per Entity
Debt Maturity per Entity Remaining 2022 maturities solely consist of €45m BCP bank loans; remainder already repaid Overview of debt maturity per entity1 incl. BCP (€m) Breakdown per entity 3% 15% 17% 12% 22% 9% 5% 18% Adler RE (excl. BCP) 1,549 22.2% €400m Adler Group €300m Adler Real bond’s maturit
Slide 34: Covenants Overview: Adler Group
Covenants Overview: Adler Group All Adler Group covenants are incurrence-based covenants 1 LTV: Defined as net debt / total assets (<60%) 2 Secured LTV: Defined as secured debt / total assets (<45%) In € million In € million Q3 2022 Pro forma3 Q3 2022 Pro forma3 Consolidated net financial indebtedne
Slide 35: Covenants Overview: ADLER Real Estate
Covenants Overview: ADLER Real Estate All ADLER RE covenants are incurrence-based covenants except the ICR which is a maintenance-based covenant 1 LTV: Defined as net debt / total assets (<60%) 2 Secured LTV: Defined as secured debt / total assets (<40%) In € million In € million Q3 2022 Pro forma2
Slide 36: CAPEX and Maintenance in Q3 2022
CAPEX and Maintenance in Q3 2022 Total CAPEX and maintenance (€m) Maintenance expense (€/sqm) PROCUREMENT Maintenance CAPEX OPTIMISATION 8.9 8.6 AND INCREASED SCALE 7.2 6.7 6.3 5.2 4.0 165 3.22 149 41 3.21 132 31 120 2016 2017 2018 2019 2020 2021 Q3 Q3 34 2021 2022 23 103 95 CAPEX invested (€/sqm) 1
Slide 37: Build-to-Hold Projects
Build-to-Hold Projects Two projects under construction Total Construc. Land 3 remaining Construc. Building Construc. Land plot Area CAPEX GAV GDV YoC # Project name1,2 Entity City Zoning value construc. period permit started (k sqm) (k sqm) spent (€m) (€m) (%) (€m) CAPEX (€m) (€m) Wasserstadt 1 ADLE
Slide 38: Upfront Sale Projects
Upfront Sale Projects Progress in disposals despite difficult market conditions # Project name1 Entity City Construc. period Zoning Building permit Construc. started Land plot (k sqm) Area (k sqm) 1 Westend Ensemble - Upper West - LEA B Consus Frankfurt 2019 - 2023 ✓ ✓ 14 20 PROJECTS SOLD 2 Neues
Slide 39: Forward Sale and Condominium Projects
Forward Sale and Condominium Projects Majority of projects to be completed and handed over by 2023 Total 2 remaining Construc. Building Construc. Land plot Area GAV GDV # Project name1 Entity City Zoning construc. period permit started (k sqm) (k sqm) (€m) (€m) CAPEX (€m) Forward sale projects Quart
Slide 40: Residential Yields are Expected to Rise on the Back of the Interest Rate Turnaround
Residential Yields are Expected to Rise on the Back of the Interest Rate Turnaround and Have Already Impacted the Public Market… Investor demand for residential assets slowed down Rising interest rates are changing the playing field for investors Transaction volume (> 50 units, €bn) 10 year SWAP1 10
Slide 41: German Housing Market Is still Supported by Strong Fundamentals
…Albeit The German Housing Market Is still Supported by Strong Fundamentals Increasing number of households Increasing inflow of immigrants 1.9m 1.8m 1.9m 42.0m 1.8m 41.9m 41.8m 41.7m 41.5m 41.4m 2018 2019 2020 2021 2022E 2023E 2018 2019 2020 2021 High disposable income of households Low unemploymen
Slide 42: Occupier Demand Remains Resilient in Core Operating Regions
Occupier Demand Remains Resilient in Adler Group’s Core Operating Regions Driven by Significant Housing Shortage Home ownership significantly below European average Significant housing shortage (buildings and % shortage2) Owning Renting at market rate Renting Completions 2016-2020 Needed 2021-2025 %
Slide 43: Overview of Berlin, Adler Group’s Key Region
Overview of Berlin, Adler Group’s Key Region €4.2bn €7.7bn 1 Germany 8.1 • #1 European residential investment market 20.8 • Largest economy in Europe by GDP 7.4 Residential €3.1bn investment • 84 million inhabitants volume1 7.1 (€bn) • The world’s 3rd largest exporter of goods 6.3 Germany Sweden Fra
Slide 44: Adler Group Corporate Governance and Shareholder Composition
Adler Group Corporate Governance and Shareholder Composition Current composition of the Board and Senior Management Shareholder composition1 Prof. Dr. A. Stefan Kirsten Chairman of the Board Chairman of the Nomination & Compensation Committee Vonovia 20.5% Thilo Schmid Thomas Zinnöcker Director Dire
Slide 45: Corporate Agenda
Corporate Agenda Adler Group S.A. financial calendar 2023 Investor relation contacts 25 April 2023 Publication Annual Report 2022, unaudited Gundolf Moritz Head of IR 25 May 2023 Publication Q1 2023 Results g.moritz@adler-group.com 29 August 2023 Publication Q2 2023 Results Julian Mahlert Senior IR
Slide 46: Disclaimer
Disclaimer THIS PRESENTATION AND ITS CONTENTS ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, JAPAN OR ANY JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL. This presentation (“Presenta