Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — Q1 2015 Earnings Presentation

38 slides from Deutsche Wohnen's earnings presentation, May 20, 2015

  1. Slide 1: Deutsche Wohnen AG Q1 2015 results

    Deutsche Wohnen AG » Q1 2015 results Conference Call, 20 May 2015 1

  2. Slide 2: Agenda

    » Agenda 1 Highlights Q1 2015 2 Portfolio 3 Financials 4 Financing 5 Guidance & Outlook 6 Q&A 7 Appendix 2

  3. Slide 3: Highlights Q1 2015

    » Highlights Q1 2015 Financials Operational development In EUR Q1 2015 yoy In EUR Q1 2015 yoy FFO I (after minorities)1) 71.3m (+21%) NOI letting 122.0m (+0.7%) FFO I/share2) 0.24 (+14%) L-f-l rental growth 2.5% (-0.9pp) (entire letting portfolio) FFO II (incl. disposals) 80.6m (+8%) Rent increase p

  4. Slide 4: Portfolio

    ‘ ) a Deutsche Wohnen » Portfolio deutsche-wohnen.com

  5. Slide 5: Ongoing Portfolio optimization

    » Ongoing Portfolio optimization OPERATE  Macro / Micro view  Condition / Investment needs BUY  Potential (rent, vacancy, price) DISPOSE  Structure / construction age  Operational costs  Focus on metropolitan  Competitive environment  Opportunistic areas in particular  Yield requirements 

  6. Slide 6: Realized Berlin transactions

    » Realized Berlin transactions Block sales1 Acquisitions1 Residential units 6,240 Residential units ~7,500 Sales volume (EUR m) 411 Purchase volume (EUR m) ~570 Price per sqm (EUR m) 956 Price per sqm (EUR m) ~1,200 Vacancy 4.0% Vacancy 1.7% Multiple (in place rent) 15.0x Multiple (in place rent) 20

  7. Slide 7: Sales and Acquisitions

    » Sales and Acquisitions Sales Units EUR m EUR/sqm Margin Privatization1) 1,141 109 1,426 41% Core+ Institutional sales1) 6,427 426 953 9% Including 5,750 units of residential block Core 198 13 947 21% sale in Berlin, signed in 2014 with closing at beginning of Q2 2015 None-core 419 22 781 29%  Pri

  8. Slide 8: Berlin Mietspiegel

    » Berlin “Mietspiegel” Development of Berlin „Mietspiegel“ Development of inflation1) and Berlin Mietspiegel Rent (EUR/sqm/month) (in % two-year period) +8 Cent +33 Cent +38 Cent +30 Cent 10 Ø +23 Cent 7.9 8 6.3 6 5.8 3.7 5.4 4 2.9 3.7 2.3 2 1.7 1.0 0 2007 2009 2011 2013 2015 #REF! Inflation #REF! M

  9. Slide 9: Financials

    . ) Deutsche Wohnen » Financials deutsche-wohnen.com

  10. Slide 10: Strong earnings and cash contributions from letting

    » Strong earnings and cash contributions from letting in EUR m Q1 2015 Q1 2014 In-place rent: Q1 15: Current gross rental income 158.9 157.0 EUR 5.73/sqm/month Non-recoverable expenses (3.6) (3.2) Earnings Maintenance1) Rental loss (1.8) (2.5) from letting: Q1 15: EUR 8.25/sqm + EUR 0.8m Maintenance

  11. Slide 11: Benchmark EBITDA margin among the peer group

    » Benchmark EBITDA margin among the peer group in EUR m Q1 2015 Q1 2014 EBITDA margins Q1 2015 Q1 2014 Earnings from Residential Property Management 132.5 131.7 adj. EBITDA/gross rents 77.2% 80.7% adj. EBITDA excl. Earnings from Disposals 9.3 15.8 71.3% 70.6% disposals/gross rents Earnings from Nurs

  12. Slide 12: Efficiency leadership

    » Efficiency leadership DW before DW incl. GSW GSW 2013 2013 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 pro forma No. of units 90,270 150,219 147,105 148,797 148,035 146,822 147,105 146,850 Gross rental 353.5 589.7 626.3 157.0 156.4 155.9 157.0 158.9 income1) (EUR m) Corporate (48.1) (102.2) (90.5

  13. Slide 13: IFRS result

    » IFRS result in EUR m Q1 2015 Q1 2014 in EUR m Q1 2015 Q1 2014 EBITDA (adjusted) 122.6 126.7 Interest expenses (35.2) (47.1) Depreciation (1.3) (1.6) Non-cash interest expenses 5.0 (5.2) At equity valuation (0.4) 0.0 (30.2) (52.3) Financial result (net) (30.0) (52.0) Interest income 0.2 0.3 EBT (ad

  14. Slide 14: FFO I per share performance +14.3% (yoy)

    » FFO I per share performance +14.3% (yoy) in EUR m Q1 2015 Q1 2014 FFO II2) development in EUR m Profit (44.2) 45.5 36.4 74.9 80.6 Earnings from Disposals (9.3) (15.8) Depreciation 1.3 1.6 Valuation SWAP and convertible bonds 109.9 16.7 9.3 15.8 One-off costs for transactions and financing 9.0 0.0

  15. Slide 15: EPRA NAV

    » EPRA NAV in EUR m 31/03/2015 31/12/2014 in EUR m 31/03/2015 31/12/2014 Equity EPRA NAV (undiluted) 5,296.1 5,326.0 4,655.3 4,692.9 (before non-controlling interests) Fair values of derivative Goodwill GSW (535.1) (535.1) 144.3 144.9 financial instruments Adjusted NAV (undiluted) 4,761.0 4,790.9 De

  16. Slide 16: Financing

    » Financing deutsche-wohnen.com . ) Deutsche Wohnen

  17. Slide 17: Optimization of capital structure

    » Optimization of capital structure LTV reduction Diversification of financing structure  LTV reduction intended  Placement of corporate bond intended  New LTV target of 40-45%  Targeted debt structure:  How to achieve the LTV target: • New acquisitions mainly financed by equity 70-80% Bank deb

  18. Slide 18: Financing structure of European real estate peers

    » Financing structure of European real estate peers Debt composition in listed European real estate sector Pro-forma refinancing 100% 13% 9% 14% 10% 13% 10% 22% 17% 23% 30% 80% 10% 49% 21% 21% 38% 70% 50% 73% 60% 40% 75% 92% 90% 40% 77% 76% 65% 70% 62% 51% 49% 20% 38% 39% 30% 27% 16% 8% 0% Bank debt

  19. Slide 19: Overview of intended refinancing

    » Overview of intended refinancing Total volume and sources Terms and conditions  Refinancing/repayment of outstanding bank debt EUR m of EUR ~1.5 bn in total 1.500 c. 350  Mainly existing debt maturing in 2018/19 to 2021 1.200 Existing cash  Loans scheduled for refinancing with average 900 c. 50

  20. Slide 20: Improvement of Rating intended

    » Improvement of Rating intended After execution of the intended measurements, financial parameters should develop as follows: Ratios 2014 2015 pro forma 2016e EBITDA interest cover ratio1) 2.2x >3.0x ~4.0x Fixed charge coverage2) 2.4x ~3.5x ~4.0x Debt/(debt + equity) 51.9% 40-45% ~40% Debt/total as

  21. Slide 21: Guidance & Outlook

    » Guidance & Outlook deutsche-wohnen.com ‘ ) a Deutsche Wohnen 21

  22. Slide 22: Guidance 2015 – upside from acquisitions and financing

    » Guidance 2015 – upside from acquisitions and financing 1 FFO I target: EUR >250m base case (after minorities) Add-ons Impact 2015 Full year impact Signed acquisitions1) ~10m ~20m Refinancing potential2) 10-15m ~30m Potential future acquisitions 2 LTV target range 40-45% in 2015/16 1) 2015 impact d

  23. Slide 23: Q&A

    »Q&A deutsche-wohnen.com vr) a Deutsche Wohnen 23

  24. Slide 24: Appendix

    » Appendix deutsche-wohnen.com ‘ ) a Deutsche Wohnen 24

  25. Slide 25: Strong disposal business

    » Strong disposal business Closed in EUR m Q1 2015 Q1 2014  Free cash flow from sales activities of EUR 22.8m Sales proceeds 49.7 86.4 (453 closed privatization units Cost of sales (3.5) (3.0) and 108 closed units institutional sales) Net sales proceeds 46.2 83.4 Carrying amounts of assets sold (36

  26. Slide 26: Nursing and Assisted Living

    » Nursing and Assisted Living in EUR m Q1 2015 Q1 2014 31/03/2015 Facilities Places Income Greater Berlin 12 1,442 Nursing 12.9 13.7 Saxony 7 475 Others 2 257 Living 1.5 1.5 In total 20 2,048 Other 1.9 1.6 Total income 16.3 16.8 Costs Average occupancy Nursing and corporate expenses (4.3) (4.4) Staf

  27. Slide 27: Cash flow creation

    » Cash flow creation EUR m Q1 2015 Q1 2014 FFO I1) 71.3 59.1 FFO disposals 9.3 15.8 FFO II 80.6 74.9 + ∆ CF disposals2) 13.4 29.4 - Regular amortization -15.9 -21.3 - Capex -15.7 -7.9 Corporate Free Cash Flow 62.4 75.1 Per share 0.21 0.26 1) After minorities (guaranteed dividend x number of outstand

  28. Slide 28: Overview of portfolio as at 31 March 2015

    » Overview of portfolio as at 31 March 2015 1) 31/03/2015 Residential Area In-place New letting Vacancy Fair Share in FV 5) Multiple Yield Multiple Yield 2) 3) 4) units K sqm rent rent % Value terms of EUR/sqm in-place % market % # EUR/sqm/ EUR/sqm/ (FV) FV rent rent month month EUR m % Strategic co

  29. Slide 29: Portfolio split and strategic focus for investment decisions

    » Portfolio split and strategic focus for investment decisions 1) Strategy cluster Residential Area % of total In-place Rent Vacancy Multiple Multiple 2) 3) units K sqm units rent Potential 31/03/2015 in-place market 31/03/2015 in % in % rent rent EUR/sqm/month Total 146,850 8,932 100 5.73 21.2 2.3

  30. Slide 30: Like-for-like overview of portfolio as at 31 March 2015

    » Like-for-like overview of portfolio as at 31 March 2015 In-place rent (like-for-like) and vacancy (like-for-like) letting portfolio1) Like-for-like Residential units In-place In-place in % Vacancy Vacancy in % 2) 2) 31/03/2015 # rent rent yoy 31/03/2015 31/03/2014 yoy 31/03/2015 31/03/2014 in % in

  31. Slide 31: Dynamic rent potential in Core+ regions

    » Dynamic rent potential in Core+ regions (letting portfolio) New-letting rent in New-letting In-place rent in EUR/sqm 1) Rent potential 3) EUR/sqm/month2) contracts4) 31.03.2015 5.83 24.3% 7.25 2,639 Core+ 7.11 2,330 31.03.2014 5.69 25.0% Greater 31.03.2015 5.75 23.1% 7.07 2,124 Berlin 31.03.2014 5

  32. Slide 32: Focused and sustainable investments into the portfolio

    » Focused and sustainable investments into the portfolio EUR m Q1 2015 Q1 2014 15.06 10.76 Maintenance 19.0 17.2 6.81 7.25 3.39 Modernization 15.7 7.9 0.77 Total 34.7 25.1 7.38 8.25 6.48 Total EUR/sqm1) 15.06 10.76 Q1 2013 Q1 2014 Q1 2015 Modernization in EUR/sqm Capitalization rate 45.2% 31.5% Main

  33. Slide 33: Balance sheet

    » Balance sheet Assets Equity and Liabilities in EUR m 31/03/2015 31/12/2014 in EUR m 31/03/2015 31/12/2014 Investment properties 9,757.1 9,611.0 Total equity 4,846.0 4,876.1 Other non-current assets 599.1 600.6 Financial liabilities 4,669.6 4,779.0 Derivatives 0.0 0.0 Convertibles 861.1 748.7 Defer

  34. Slide 34: The drivers of rental growth

    » The drivers of rental growth FY 2013: split of 3.1% rental growth1) FY 2014: split of 2.5% rental growth1) 0.1% 0.1% 0.4% 1.0% 0.5% new lettings new lettings 1.2% rent table rent table rent restricted rent restricted modernization modernization 0.7% 1.6%  After adjusting “Berlin Mietspiegel effec

  35. Slide 35: Strong like-for-like development

    » Strong like-for-like development Letting Strategic Core and growth regions Letting Portfolio Greater Berlin In-place rent (EUR/sqm/month) In-place rent (EUR/sqm/month) +3.5% +2.4% +2.5% +3.2% +2.2% +3.8% +2.1% +3.3% +2.3% +3.1% +3.4% +2.2% 5.39 5.50 5.69 5.83 5.27 5.39 5.60 5.74 4.96 5.12 5.22 4.8

  36. Slide 36: The Berlin-Portfolio at a glance as at March 2015

    » The Berlin-Portfolio at a glance as at 31 March 2015 Pankow Reinickendorf # 8,766  6.06  1.0% # 11,631  5.52  2.1% Friedrichshain-Kreuzberg Mitte # 7,782  5.67  1.5% # 3,605  5.78  1.8% Lichtenberg # 7,606  5.79  1.2% Spandau # 15,144  5.40  2.7% Marzahn-Hellersdorf # 8,605  5.06  2.

  37. Slide 37: 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

  38. Slide 38: 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 5409 © 2015 Deutsche Wohnen AG 38

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