Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — FY2016 Earnings Presentation

40 slides from Deutsche Wohnen's earnings presentation, Mar 21, 2017

  1. Slide 1: Full year results 2016

    Deutsche Wohnen AG » Full year results 2016 Conference Call, 21 March 2017 1

  2. Slide 2: Table of content

    » Table of content 1 Highlights 2016 & Strategic Priorities 2 Portfolio 3 Financials & Outlook 4 Appendix 2

  3. Slide 3: Highlights 2016 & Strategic Priorities

    » Highlights 2016 & Strategic Priorities 3

  4. Slide 4: Highlights FY-2016

    » Highlights FY-2016 Financials Portfolio & valuation in EUR m FY-2016 FY-2015 Portfolio KPIs FY-2016 FY-2015 EPRA NAV 10,017 7,766 Number of residential units 157,976 146,128 in EUR/ share1) 29.68 23.02 In-place rent in EUR/ sqm 6.10 5.89 FFO I 384 304 Like for like rental growth 2.9% 3.5% in EUR/

  5. Slide 5: Strong generation of total shareholder return

    » Strong generation of total shareholder return Development of dividend in EUR per share Development of EPRA NAV (undiluted) in EUR per share CAGR 2012-2016: +37% CAGR 2012-2016: +24% +37% +29% +23% 0.74 +29% 29.68 +29% +23% +62% 0.54 +16% 23.02 0.44 17.87 0.34 14.51 12.48 0.21 2012 2013 2014 2015 2

  6. Slide 6: Key strategic priorities to accelerate rental and value growth

    » Key strategic priorities to accelerate rental and value growth 1 Capex programme increased to EUR 1bn for 30,000 units by 2021 Investments Doubling of reversionary potential post capex to 50% existing stock Significant fair value uplift margin post capitalized investments expected 2 2,200 units fo

  7. Slide 7: Portfolio

    » Portfolio deutsche-wohnen.com .

  8. Slide 8: Portfolio update 31/12/2016 – attractive reversionary potential

    » Portfolio update 31/12/2016 – attractive reversionary potential Strategic cluster Residential % of total In-place rent1) Re-letting rent Rent potential2) Vacancy units measured by fair value EUR/sqm/month EUR/sqm/month in % in % Strategic core and growth 154,144 98.8 6.12 7.48 22.1 1.7 regions Cor

  9. Slide 9: Strong like-for-like development in particular in Berlin

    » Strong like-for-like development in particular in Berlin Like-for-like Residential In-place rent1) In-place rent1) Lfl rental growth Lfl Vacancy2) Lfl Vacancy2) 31/12/2016 units 2016 2015 2016 2015 EUR/sqm/month EUR/sqm/month In % In % In % Strategic core and growth regions Core+ 123,353 6.17 5.98

  10. Slide 10: Strong dynamics in Core+ leading to EUR 2.7bn value uplift

    » Strong dynamics in Core+ leading to EUR 2.7bn value uplift Summary Key figures 2014 2015 2016 Revaluation of EUR ~2.7 bn or EUR 298 per sqm, Total fair value 9.8bn 11.7bn 15.5bn leading to a multiple expansion by 3.4x to 21.5x (EUR) Yield compression is underpinned by portfolio Area (in m sqm) 9.2

  11. Slide 11: Significant capital growth driven by yield compression in Berlin

    » Significant capital growth driven by yield compression in Berlin FV FV FV FV YoY Multiple in- Multiple Multiple Regions (2015) (2016) (2015) (2016) change place rent in-place rent market rent EUR m EUR m EUR/sqm EUR/sqm in % (2015) (2016) (2016) Strategic Core and growth 11,591 15,280 1,296 1,603

  12. Slide 12: Focused and increasing investments into the portfolio

    » Focused and increasing investments into the portfolio FY-2016 FY-2015 EUR m EUR/ sqm EUR m EUR/ sqm Maintenance stable at EUR 9-10 per Maintenance sqm 94.5 9.63 86.1 9.45 (expensed through p&l) Modernization (capitalized on balance 150.0 15.29 96.0 10.53 sheet) Total maintenance and capex will inc

  13. Slide 13: Example Siemensstadt (growth cluster)

    » Example Siemensstadt (growth cluster) District Charlottenburg-Wilmersdorf Residential units 3,565 Rent before mod. (in-place) EUR 5.70 per sqm # of modernized units 360 Reversionary potential c. 60% Project period 2015/2016 13

  14. Slide 14: Example Spanische Allee (hot spot cluster)

    » Example Spanische Allee (hot spot cluster) District Steglitz-Zehlendorf Residential units 177 Rent before mod. (in-place) EUR 5.15 per sqm # of modernized units 177 Reversionary potential c. 80% Project period 2015/2016 14

  15. Slide 15: Valuation in perspective of rent potential and affordability

    » Valuation in perspective of rent potential and affordability Affordability of average Deutsche Wohnen flat in Berlin Housing cost ratios across major European cities4) DW in-place Market rent 37% Rent (EUR/sqm) 6.10 9.001) 33% 32% DW 30% 29% 27% 25% Average ancillary cost (EUR/sqm) 2.50 22% 17-23%

  16. Slide 16: Replacement costs continue to increase

    » Replacement costs continue to increase Examples for development of Berlin land values in Construction costs are steadily increasing1) EUR/ sqm over the last 12 months2) 115 114.7 2,000 110 100% 105 1,000 +3.8% +2.5% 100 Central location (Kreuzberg) +2.3% 95 90 85 89.8 + Average location (Treptow)

  17. Slide 17: Acquisition of high quality portfolio in Berlin

    » Acquisition of high quality portfolio in Berlin consisting of c. 3,900 residential units with focus on central locations Majority of portfolio in central Berlin KPIs Units 4,166 Thereof residential units 3,893 Area (incl. commercial units) 274,000 sqm Acquisition price EUR 655m Implied acquisition

  18. Slide 18: Financials & guidance

    » Financials & guidance deutsche-wohnen.com . ) a Deutsche Wohnen

  19. Slide 19: Significant increase of adjusted NAV per share by 39%

    » Significant increase of adjusted NAV per share by 39% in EUR m 31/12/2016 31/12/2015 EPRA NAV per share (undiluted) in EUR Equity (before non-controlling interests) 7,965.6 6,582.7 29.68 + 29% Fair values of derivative financial 23.02 47.0 44.8 instruments Deferred taxes (net) 2,004.4 1,138.1 EPRA

  20. Slide 20: Significant creation of shareholder value from the GSW acquisition

    » Significant creation of shareholder value from the GSW acquisition GSW equity development (EUR bn) Significant margin improvement of GSW + EUR 1.8bn +12pp EBITDA margin uplift 3.4 74% +23pp FFO I margin uplift 62% 55% 1.6 32% EBITDA margin FFO I margin 2013 (at acquisition) 2016 2013 (at acquisiti

  21. Slide 21: Strong earnings and cash contributions from letting

    » Strong earnings and cash contributions from letting in EUR m FY-2016 FY-2015 Significant reduction of operational cost items (in % of rental income) Rental income 704.5 634.0 Non-rec. exp.& rent loss Maintenance Other Personnel Non-recoverable expenses (9.8) (12.7) 25.1% -2.5pp Rental loss 22.6% (

  22. Slide 22: Growing prices as demonstrated by disposal business

    » Growing prices as demonstrated by disposal business Disposals Privatization Institutional sales Total with closing in 2016 2015 2016 2015 2016 2015 No. of units 1,235 1,908 3,073 7,497 4,308 9,405 Proceeds (EUR m) 146 187 208 487 354 674 Price in EUR per sqm 1,564 1,394 961 952 n/a n/a Earnings (E

  23. Slide 23: High profitability from nursing operations and assets

    » High profitability from nursing “operations” and “assets” Operations (in EUR m) FY-2016 FY-2015 in EUR m FY-2016 FY-2015 Total income 70.1 67.1 Nursing 55.7 53.3 Total expenses (63.3) (61.9) Living 6.5 6.1 EBITDA operations 6.8 5.3 Other 7.9 7.7 EBITDA margin 9.7% 7.9% in EUR m FY-2016 FY-2015 1)

  24. Slide 24: Significant step up in EBITDA margin

    » Significant step up in EBITDA margin in EUR m FY-2016 FY-2015 Development of cost ratio 11.8% Earnings from Residential Property Management 586.4 519.2 10.5% Earnings from Disposals 54.3 68.9 Earnings from Nursing and Assisted Living 16.8 15.6 Segment contribution margin 657.5 603.7 FY-2015 FY-201

  25. Slide 25: Bridge from adjusted EBITDA to profit

    » Bridge from adjusted EBITDA to profit in EUR m FY-2016 FY-2015 in EUR m FY-2016 FY-2015 EBITDA (adjusted) 581.7 523.9 Interest expenses (106.2) (127.0) Depreciation (6.4) (5.7) In % of rents ~15% ~20% At equity valuation 2.0 1.8 Non-cash interest expenses (18.7) (9.5) Interest income 1.3 0.9 Finan

  26. Slide 26: Operational improvements and acquisitions drive FFO growth

    » Operational improvements and acquisitions drive FFO growth in EUR m FY-2016 FY-2015 FFO per share development in EUR EBITDA (adjusted) 581.7 523.9 FFO II 1.16 1.30 Earnings from Disposals (54.3) (68.9) 0.16 0.21 + 20% Long-term remuneration component 2.2 1.0 (share-based) At equity valuation 2.0 1

  27. Slide 27: Capital structure pro forma recent capital market transactions

    » Capital structure pro forma recent capital market transactions Rating A- / A3; stable outlook ICR ~ 5.5x Low leverage, long maturities and strong rating Ø maturity ~ 8.5 years Flexible financing approach to optimize financing costs No significant maturities until and including 2019 % secured bank

  28. Slide 28: Continuous and pro-active management of capital structure

    » Continuous and pro-active management of capital structure Development of average interest rate (2013-2016) Development of LTV (2013-2016) 3.3% 57.4% 51.0% 2.5% 38.0% 37.7% 1.8% 1.6% 2013 2014 2015 2016 2013 2014 2015 2016 Cash interest cost reduced by EUR 92m to EUR 98m Significant de-risking of c

  29. Slide 29: Guidance

    » Guidance 2016 2017e Main drivers FFO I (EUR m) 384 ~425 Operational performance and recent acquisitions Based on 65% pay-out ratio from FFO I and current Dividend per share (EUR) 0.74 ~0.78 shares outstanding 35-40% LTV 37.7% Aim to keep current rating (target range) Like-for-like rental growth 2.

  30. Slide 30: Q&A

    »QE&A deutsche-wohnen.com . 30

  31. Slide 31: Appendix

    » Appendix deutsche-wohnen.com .

  32. Slide 32: Strong like-for-like development in particular in Berlin

    » Strong like-for-like development in particular in Berlin 1) 1) In-place rent In-place rent Like-for-like Residential units Lfl rental growth Lfl Vacancy Lfl Vacancy 2016 2015 31/12/2016 number In % 2016 2015 EUR/sqm/month EUR/sqm/month in % in % Core+ 123,353 6.17 5.98 3.2 1.4 1.4 Greater Berlin 1

  33. Slide 33: Portfolio valuation changes by cluster

    » Portfolio valuation changes by cluster FV FV Multiple in-place FV FV Multiple Multiple market Regions (31/12/2015) (31/12/2015) rent (31/12/2016) (31/12/2016) in-place rent rent EUR m EUR/sqm (31/12/2015) EUR m EUR/sqm (31/12/2016) (31/12/2016) Strategic Core and growth 11,591 1,296 18.2 15,280 1,

  34. Slide 34: Nursing homes - portfolio overview

    » Nursing homes - portfolio overview Nursing business: Assets and operating business # of places Managed by owner Assisted Fair Value Facilities Nursing Total Occupancy Region living (31/12/2016) # # # rate # EUR m Greater Berlin 12 1,072 370 1,442 98.2% Hamburg1) 3 334 158 492 89.0% Saxony 7 436 39

  35. Slide 35: Summary balance sheet

    » Summary balance sheet Assets Equity and Liabilities in EUR m 31/12/2016 31/12/2015 in EUR m 31/12/2016 31/12/2015 Investment properties 16,005.1 11,859.1 Total equity 8,234.0 6,798.1 Other non-current assets 108.6 614.3 Financial liabilities 4,600.0 3,780.4 Deferred tax assets 0.7 2.0 Convertibles

  36. Slide 36: Successful completion of EUR 1.3bn multi-tranche capital markets transactions

    » Successful completion of EUR 1.3bn multi-tranche capital markets transactions Aggregate principal amount of EUR 800 million, issued at par and maturing in July 2024 Issued at a coupon of 0.325% and a conversion premium of 53% Issuance of new Dividend protection above a EUR 0.54 dividend per share

  37. Slide 37: Portfolio structure – characteristics meeting strong demand

    » Portfolio structure – characteristics meeting strong demand Apartment size on av. 60 sqm Year of construction 31.8% >= 75 sqm, < 40 sqm, 29.5% 18% 11% 18.5% 40 to < 55 16.2% 65 to < 75 sqm, 18% sqm, 30% 3.7% 0,4% 55 to < 65 sqm, 23% <= 1918 1919 - 1950 - 1970 - 1980 - >= 2000 1949 1969 1979 1999 R

  38. Slide 38: The Berlin portfolio at a glance

    » THE BERLIN-PORTFOLIO AT A GLANCE Reinickendorf Pankow # 9,334 • 6,07 • 1.6% # 9,199 • 6.52 • 1.6% Mitte Friedrichshain-Kreuzberg # 3,323 • 6.18 • 1.0% # 7,766 • 5.99 • 2.9% Lichtenberg # 8,717 • 6.08 • 1.2% Spandau # 13,683 • 5.92 • 1.5% Marzahn-Hellersdorf # 14,872 • 5.47 • 0.8% Charlottenburg-Wi

  39. Slide 39: 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

  40. Slide 40: Deutsche Wohnen AG Pfaffenwiese 300 65929 Frankfurt/ Main

    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 5419 © 2017 Deutsche Wohnen AG

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