Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — 9M 2020 Earnings Presentation

63 slides from Deutsche Wohnen's earnings presentation, Nov 13, 2020

  1. Slide 1: Deutsche Wohnen SE

    Deutsche Wohnen SE Company presentation, November 2020 based on 9M 2020 results

  2. Slide 2: Agenda

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Agenda 01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix deutsche-wohnen.com 2

  3. Slide 3: Highlights 9M 2020

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Highlights 9M 2020 Resilient operating business despite Covid-19 pandemic ▪ L-f-l rental growth at 0.9% for letting portfolio (2.4% excl. effects of Berlin rent freeze law) ▪ Adj. EBITDA margin (excluding disposals) stable a

  4. Slide 4: Deutsche Wohnen – focus on metropolitan regions and quality

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen – focus on metropolitan regions and quality product Unique market presence in dynamic regions Highlights Geographic distribution of DW portfolio and development pipeline based on latest Fair Values / Gross De

  5. Slide 5: Acquisitions – total volume of almost EUR 500m signed YTD

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Acquisitions – total volume of almost EUR 500m signed YTD Regional split Object of purchase ▪ 2,300 units, thereof 91% residential 35% 22% 20% Acquisition price ▪ EUR 460m / c. EUR 2,700 per sqm 12% 10% ▪ EUR 15m p.a. Net co

  6. Slide 6: Expansion of total development pipeline to EUR >5bn

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Expansion of total development pipeline to EUR >5bn, focussed on dynamic hot spot regions Development projects by region Development projects by stage (in % of GDV)1 Other (in % of GDV)1 10% Planning phase 15% Under construc

  7. Slide 7: Portfolio overview

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Portfolio overview 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 rent3 (in %) 30/09/2020 fair value) (x)

  8. Slide 8: Berlin residential market update

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Berlin residential market update Development in rental offers and asking rents in Berlin Development of transaction market for multifamily and condo # of rental offers Asking rents in EUR/sqm Multifamily asking price in EUR/

  9. Slide 9: Total like-for-like development at 0.9% y-o-y

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Total like-for-like development at 0.9% y-o-y Like-for-like Residential In-place rent In-place rent Change Vacancy Vacancy Change 30/09/2020 units 30/09/2020 30/09/2019 (y-o-y) 30/09/2020 30/09/2019 (y-o-y) (#) (EUR/sqm/mont

  10. Slide 10: Stable letting business

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Stable letting business in EUR m 9M-2020 9M-2019 Refurbishment & Maintenance per sqm 45.45 38.54 32.73 Income from rents (rental income) 634.5 622.5 Income relating to utility/ancillary costs 295.0 286.1 35.53 29.68 23.26 In

  11. Slide 11: Disposal business delivering double digit gross margins

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Disposal business delivering double digit gross margins Disposals Privatization Institutional sales Total with closing in 9M-2020 9M-2019 9M-2020 9M-2019 9M-2020 9M-2019 No. of units 182 250 1,403 479 1,585 729 Proceeds (EUR

  12. Slide 12: EBITDA contribution from Nursing business

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix EBITDA contribution from Nursing business Operations (in EUR m) 9M-2020 9M-2019 Total income 177.0 168.8 in EUR m 9M-2020 9M-2019 Total expenses (162.6) (154.3) Nursing & Assisted Living 156.9 155.2 EBITDA operations 14.4 14

  13. Slide 13: Adjusted EBITDA margin stable at ~80%

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Adjusted EBITDA margin stable at ~80% in EUR m 9M-2020 9M-2019 Development of cost ratio1 Earnings from Residential Property Management 553.9 549.6 10.8% 11.1% 10.4% Earnings from Disposals (1.6) 24.8 Earnings from Nursing a

  14. Slide 14: FFO I per share at EUR 1.21

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix FFO I per share at EUR 1.21 in EUR m 9M-2020 9M-2019 EBITDA (adjusted) 542.9 567.0 FFO I margin development4 Earnings from Disposals 1.6 (24.8) 66.5% 65.1% Corporate Expenses for Disposals 64.2% 2.4 2.4 63.2% 60.8% 61.7% Lon

  15. Slide 15: EPRA NAV per share at EUR 47.89

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix EPRA NAV per share at EUR 47.89 in EUR m 30/09/2020 31/12/2019 Equity (before non-controlling interests) 12,197.0 12,700.4 EPRA NAV per share (undiluted) in EUR Fair values of derivative financial instruments 58.3 50.8 +3% +

  16. Slide 16: Conservative long-term capital structure

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Conservative long-term capital structure A- (negative outlook) / Rating A3 (negative outlook) Ø maturity ~ 6.9 years ▪ The share buyback was terminated in Sept 2020. The programme has been utilized to c. 79.5%. A total volum

  17. Slide 17: Outlook 2020

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Outlook 2020 FY-2019 reported FY 2020 Guidance / comments FFO I1 538.1 ▪ FFO I flat (EUR m) FY 2019 35.4% LTV ▪ Around mid-point of 35-40% target range FY 2019 Like-for-like 3.40% ▪ c. 1% l-f-l rental growth on a cash flow b

  18. Slide 18: Appendix

    Appendix

  19. Slide 19: Portfolio and Development Update

    Portfolio and Development Update

  20. Slide 20: Value generation for all stakeholders

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Value generation for all stakeholders Politics Easing conditions in the housing and care unit Tenants markets Affordable and especially, needs-based housing and the Climate possibility to acquire property Shareholders + Clim

  21. Slide 21: Deutsche Wohnen – key strategic elements

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen – key strategic elements Location Product1 Customer satisfaction ▪ Focus on metropolitan areas ▪ Focus on high quality products in terms of technical ▪ Combination of high service quality, high quality ▪ Targ

  22. Slide 22: Only residential company with majority of assets in top 8 cities

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 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) Berlin 3.7 Deutsche Wohnen Hamburg 1.

  23. Slide 23: Update on Berlin residential market

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Update on Berlin residential market Development of asking rents Development of asking prices for Development of asking prices for (EUR / sqm) multi-family-homes (EUR / sqm) condominiums (EUR / sqm) 6% 9% 5% 1% -2% 17% 15% 13

  24. Slide 24: Deutsche Wohnen – Creating new supply

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen – Creating new supply 1 ▪ “Develop to hold” focus on metropolitan areas and biggest cities in Germany 2 ▪ Focus on high quality and green building certificates (DGNB) to improve CO2 footprint 3 ▪ Benefitting

  25. Slide 25: Isaria – Strong development pipeline across asset classes

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Isaria – Strong development pipeline across asset classes ▪ 13 development projects of ISARIA Regional split of pipeline (by area) Object of purchase AG 4% 9% ▪ c. EUR 600m (enterprise value) Acquisition price Region Munich

  26. Slide 26: QUARTERBACK Immobilien AG – EUR 2bn residential development pipeline

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix QUARTERBACK Immobilien AG – EUR 2bn residential development pipeline ▪ Purchase of 40% shares of QBIAG plus direct investments Regional split of pipeline in several project companies with a total GDV of ~EUR 2bn (by GDV) ▪ F

  27. Slide 27: Current level of rents and prices in TOP German cities

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 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 (in-place rent) 6.90 (book value) 2,598 +20% +48% Berlin Berl

  28. Slide 28: Development concept through participation in QUARTERBACK

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Development concept through participation in QUARTERBACK Deutsche Wohnen SE QUARTERBACK (development platform) ▪ Holds 40% participation in QUARTERBACK ▪ Acquires unbuilt land plots / benefits from financing strength of DW ▪

  29. Slide 29: Berlin rent freeze

    Berlin rent freeze

  30. Slide 30: Key points of Berlin rent regulation in force since 23 February 2020

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Key points of Berlin rent regulation in force since 23rd of February 2020 General ▪ Applies to all residential apartments except for subsidized housing stock and new construction (age cluster after 2014) ▪ Rents are basicall

  31. Slide 31: Deutsche Wohnen Berlin properties clustered by building age

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen Berlin properties clustered by building age Average net cold rent per month Age cluster DW proportion1) Rental ceiling (EUR/sqm/month) based on rental ceiling3) (EUR) < 1918 6% 6.45 387 1919-1949 32% 6.27 376

  32. Slide 32: Size matters – below average apartment size

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Size matters – Deutsche Wohnen’s below average apartment size is a clear affordability advantage Affordability of average Deutsche Wohnen flat in Berlin Housing cost ratio DW In- DW- rent DW re- Market Housing cost ratio1 pl

  33. Slide 33: ESG

    ESG

  34. Slide 34: Positioned to benefit from megatrends and committed to ESG

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen – ideally positioned to benefit from the existing megatrends and committed to ESG concerns Persistent low Urbanization Aging society interest rate period Further increase in demand for care Continued growth o

  35. Slide 35: Improvement of energy efficiency of our properties

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Improvement of energy efficiency of our properties Energy efficiency 2015 – 2019 Achievements in kWh/sqm per year ▪ Energy efficiency improved from 139.1 kWh/sqm p.a. 139.1 (2015) to 128.9 kWh/sqm p.a. (2019) 135.1 ▪ 6,650 u

  36. Slide 36: Energy intensity of our properties better than German average

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Energy intensity of our properties better than German average Energy efficiency classes based on final energy need Results in % of our portfolio ~ 64% above Ø energy efficiency performance Ø 128.9 kWh/sqm ▪ ~ 64% of our unit

  37. Slide 37: A socially reliable landlord who goes beyond legal requirements

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen - a socially reliable landlord who goes beyond legal requirements EUR 30m Corona aid fund for our tenants and partners Our promise to our tenants: In more than 800 cases no rent increases due to rent index ad

  38. Slide 38: Deutsche Wohnen provides affordable housing

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen provides affordable housing Distribution of rent levels Apartment size Affordability of average Deutsche Wohnen flat in Berlin in Berlin in Berlin In-place rent Apartment size DW in-place rent Market rent1 (Ø

  39. Slide 39: Responsible corporate management

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Responsible corporate management Corporate Governance Strategically manage sustainability activities ▪ Supervisory board: ▪ Concept for incorporating the recommendations of → 1/3 are female TCFD into Group reporting → Rejuve

  40. Slide 40: Initiatives to improve CO2 footprint

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Initiatives to improve CO2 footprint ▪ Deutsche Wohnen hosted a Climate Conference in October 2020 ▪ Engagement with politics, science and stakeholders ▪ Combine economic, social and ecologic aspects in the interest of landl

  41. Slide 41: Proposal for socially responsible climate protection

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Our proposal for a socially responsible climate protection in the residential property space ▪ Energy efficient refurbishment need to accelerate, Apportionable refurbishment costs over 15 years refurbishment rate would need

  42. Slide 42: Nursing & Assisted Living

    Nursing & Assisted Living

  43. Slide 43: Nursing portfolio – regional distribution

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Nursing portfolio – regional distribution Region Facilities Beds1 Occupancy rate Geographical allocation of the nursing and assisted living portfolio Managed by owner2 # # Greater Hamburg 17 3,380 87.6% Greater Berlin 12 1,4

  44. Slide 44: Demographic trends in Germany underpin rising demand

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 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 ▪ Nursing care market driven by (irreversible) demographic trends

  45. Slide 45: Overview of elderly care market in Germany

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 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) Nursing homes ▪ Focus on higher

  46. Slide 46: Overview of regulatory environment for nursing homes (1/2)

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 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-ter

  47. Slide 47: Overview of regulatory environment for nursing homes (2/2)

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Overview of regulatory environment for nursing homes (2/2) Standard daily cost breakdown of nursing homes 14% Nursing services costs ▪ Germany is one of few countries which requires all citizens to have 22% Accomodation & ca

  48. Slide 48: Why we target to increase our investment in nursing market

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 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 c. 20 years of experie

  49. Slide 49: Nursing & Assisted Living – Strategy update

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 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. 10% ▪ Further investments envisaged ▪ Redensification a

  50. Slide 50: Best in class Nursing and Assisted Living portfolio

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Best in class Nursing and Assisted Living portfolio Uferpalais, Berlin Im Schlossgarten, Brandenburg Wolkenstein, Saxony Wilsdruff, Saxony Am Schwarzen Berg, Lower Saxony Holstenhof, Hamburg Am Albertpark, Saxony Bonn, North

  51. Slide 51: Highly fragmented market structure for nursing home operators

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Highly fragmented market structure for nursing home operators Nursing home operators split by type (# of beds) 5% ▪ Nursing home operator market is very fragmented Non-profit operators − Top ten private operators only c. 13%

  52. Slide 52: Diverse

    Diverse

  53. Slide 53: Bridge from adjusted EBITDA to profit

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Bridge from adjusted EBITDA to profit in EUR m 9M-2020 9M-2019 EBITDA (adjusted) 542.9 567.0 in EUR m 9M-2020 9M-2019 Depreciation (29.2) (29.9) Interest expenses (106.9) (96.7) At equity valuation 2.1 1.7 In % of gross rent

  54. Slide 54: Ongoing investments into the portfolio

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Ongoing investments into the portfolio 9M-2020 9M-2019 Refurbishment & Maintenance per sqm EUR m EUR / EUR m EUR / Sqm1 sqm1 38.54 45.45 32.73 40.00 Maintenance (expensed 72.6 9.47 69.0 8.86 through p&l) 35.53 29.68 30.00 23

  55. Slide 55: Summary balance sheet

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Summary balance sheet Assets Equity and Liabilities in EUR m 09/30/2020 12/31/2019 in EUR m 09/30/2020 12/31/2019 Investment properties 26,259.9 25,433.3 Total equity 12,604.1 13,107.3 Other non-current assets 899.0 442.2 Fi

  56. Slide 56: Like-for-like development by regions

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Like-for-like development by regions 2 2 Like-for-like Residential In-place rent In-place rent Change Vacancy Vacancy Change 30/09/2020 units 30/09/2020 30/09/2019 (y-o-y) 30/09/2020 30/09/2019 (y-o-y) (#) (EUR/sqm) (EUR/sqm

  57. Slide 57: Fair Values across regions

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Fair Values across regions Regions Residential units FV FV Multiple Multiple Multiple 1 (#) 30/09/2020 30/09/2020 in-place rent re-letting rent spread (EUR m) (EUR/sqm) 30/09/2020 30/09/2020 Core+ 149,456 23,568 2,519 29.9 2

  58. Slide 58: Recent residential portfolio disposals

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 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 D

  59. Slide 59: Acquisition and disposal track record

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Acquisition and disposal track record Main acquisitions Fair Value In-place rent (>1,000 units deal size) in EUR/sqm in EUR/sqm Units Year Deal Location At acquisition 30/06/2020 ∆ At acquisition 30/06/2020 ∆ # Centuria 5,20

  60. Slide 60: Deutsche Wohnen's residential portfolio is best-in-class

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 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, Ber

  61. Slide 61: The Berlin portfolio at a glance

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix The Berlin portfolio at a glance Pankow Reinickendorf # 10,140 | 1.9% # 9,762 | 0.7% EUR 7.51 | EUR 3,275 EUR 6.86 | EUR 2,523 Lichtenberg Mitte # 8,803 | 0.9% # 4,620 | 1.1% EUR 6.77 | EUR 2,641 EUR 7.30 | EUR 2,920 Friedri

  62. Slide 62: 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 p

  63. Slide 63: Deutsche Wohnen SE

    Deutsche Wohnen SE Mecklenburgische Straße 57 14197 Berlin Phone +49 30 89786-5413 Fax +49 30 89786-5419 © 2020 Deutsche Wohnen Gruppe

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