Grand City Properties SA · XETR:GYC
Grand City Properties SA — Investor Presentation (March 2018)
42 slides from Grand City Properties SA's investor presentation, March 2018
Slide 1: Company Presentation March 2018
Cologne Berlin Leipzig COMPANY PRESENTATION MARCH 2018 Munich Berlin
Slide 2: Company Overview
COMPANY OVERVIEW GCP is a specialist in residential real estate, value-add opportunities in densely populated areas in Germany Key financials – 2017 Net Rental Income Adjusted EBITDA FFO I FFO I per share Dividend per share 65% of FFO I €1.12 €328m €248m €178m €0.73 (Yield 5.8%*) (3.8% dividend yiel
Slide 3: Portfolio Overview: Regional Distribution
PORTFOLIO OVERVIEW Regional Distribution Bremen Regional distribution December 2017 (by value) ► GDP growth1 : 2.7% ► Migration balance2: 0.4% ► Population density3: 1,695 per km2 Berlin ►GDP growth1: 3.0% ►Migration balance2: 1.2% ►Population density3: 3,891 per km2 Dresden/Leipzig/Halle ►GDP growt
Slide 4: Portfolio Overview (December 2017)
PORTFOLIO OVERVIEW* (DECEMBER 2017) Largest European metropolitan area Best in Class Berlin Portfolio Well distributed within NRW 28% 24% of GCP’s of GCP’s Portfolio Portfolio Quality East Portfolio Quality North Portfolio Dresden/Leipzig/Halle Bremen/Hamburg/Hannover 70% of the Berlin portfolio is
Slide 5: Portfolio Overview: Well Distributed Portfolio
PORTFOLIO OVERVIEW WELL DISTRIBUTED PORTFOLIO Quality real estate portfolio Value Area EPRA Annualized net In-place rent Number of units Value per sqm Rental yield (in €M) (in k sqm) vacancy rent per sqm (in €) (in €M) (in €) December 2017 NRW 1,792 1,825 7.7% 111 5.4 27,294 982 6.2% Berlin 1,502 63
Slide 6: Portfolio – Potential to Come
PORTFOLIO – POTENTIAL TO COME Annualized net rental income vs. market potential including Residential in-place rent compared to market rent prices vacancy reduction Large upside potential for rent increase to market levels with very limited downside risk In-place rent like-for-like growth of 2.3%, o
Slide 7: Key Financials (1)
KEY FINANCIALS (1) Net Rent (in € millions) Adj. EBITDA (in € millions) Cologne Berlin Neu-Isenburg Berlin 7
Slide 8: Key Financials (2)
KEY FINANCIALS (2) FFO I (in € millions) FFO I per share (in €) AFFO & FFO II (in € millions) Nuremberg Berlin 8
Slide 9: Key Financials (3)
KEY FINANCIALS (3) Portfolio size (in ’000 units) Total equity (in € millions) Net Profit (in € millions) Nuremberg * Adjusted for one-time costs 9
Slide 10: Key Financials (4)
KEY FINANCIALS (4) EPRA NAV (in € millions) Munich EPRA NAV per share EPRA NAV incl. perpetual notes per share EPRA NAV Number of shares NAV EPRA NAV EPRA NNNAV in €m unless otherwise indicated including perpetual notes (in 000’) Dec 2017 3,692 3,327 3,993 3,207 Dec 2017 per share (in €) €22.4 €20.2
Slide 11: Debt Schedule
DEBT SCHEDULE Berlin Leipzig Investment grade rating by S&P of BBB+ (A-2 Short Term) and from Moody’s of Baa1 with a stable outlook. The ratings are supported by a strong financial profile which validates the success of the business model GCP’s long maturity schedule enables the Company to fully foc
Slide 12: Debt Structure and Cover Ratios
DEBT STRUCTURE AND COVER RATIOS Interest Coverage Ratio* & Debt Service Coverage Ratio* * 2017 Unencumbered assets* * adjusted EBITDA / interest ** adjusted EBITDA / (interest + loan amortization), DSCR aka fixed charge coverage ratio * calculated as the ratio of the unencumbered assets to the total
Slide 13: Financing Sources
FINANCING SOURCES GCP has over 50 non-recourse separate bank loans from over 20 banks Munich Cologne Revolving Credit Facilities GCP signed strong corporate credit lines with international banking leaders of approx. €100 million All credit facilities do not have a Material Adverse Change (MAC) claus
Slide 14: GCP Financial Policy
GCP FINANCIAL POLICY GCP financial policy Strive to achieve A- global rating in the long term LTV limit at 45% Debt to debt plus equity ratio at 45% (or lower) on a sustainable basis Maintaining conservative financial ratios with a strong ICR Cologne Unencumbered assets above 50% of total assets Lon
Slide 15: Peer Analysis (Largest 4)
PEER ANALYSIS (LARGEST 4) DECEMBER 2017 Peer companies Lower Upper Range Range Business Amount of units 87k 130k 347k In-place rent (€ per m2) 5.65 5.5 6.4 EPRA vacancy rate 7.0% 3.5% 1.8% Book value per sqm (€) 1,155 1,091 1,886 NRI multiple 18.2x 17.0x 24.6x Credit rating BBB+ , Baa1 stable BBB+ /
Slide 16: Credit Rating Matrix
CREDIT RATING MATRIX 1 2 3 4 5 6 Min Modest Aggre- High - Intermediate Significant ssive Lever- imal aged 1 aaa Excellent bbb- / aa a+/a a- bbb /bb+ aa+ GCP will continue strengthening its position within the business profile Business risk profile 2 aa/ (Aroundtown) (Vonovia- BBB+)* Strong aa- a+/a
Slide 17: Analyst Coverage
ANALYST COVERAGE GCP‘s operations are followed by leading real estate market analysts, who conduct independent equity research and provide price targets Analyst Research Target Price Key Index inclusions: MDAX FTSE EPRA/NAREIT Global Developed Europe Developed Eurozone Germany Stoxx Al
Slide 18: Outperforming
OUTPERFORMING Share Price and Total Return Since First Equity Placement (19.7.2012) Share price/conversion price throughout the Company’s issuances Frankfurt Stock Exchange Placement (Prime Standard) First equity 19.07.2012 issuance (€2.75 per share) Number of shares 164,788,883 (basic) Ownership st
Slide 19: Outperforming
OUTPERFORMING Straight Bond Series D Spread over mid-€-swap, remaining 3.5 years Straight Bond Series E Spread over mid-€-swap, remaining 7 years 3.75% Perpetual notes Spread over mid-€-swap 19
Slide 20: ESG Measures
ESG Measures Environmental Social Corporate Governance • GCP implements environment- • Tenant satisfaction is a top • Experienced and diverse friendly measures throughout its priority and an essential part of management board portfolio, with the goal of GCP’s business strategy • Four committees cons
Slide 21: Sustainability Awards and Ratings
Sustainability awards and ratings (September 2017) (November 2017) 91st Percentile GCP was ranked by Sustainalytics in the 91st percentile GCP was awarded the sBPR (sustainability among over 300 real estate best practices recommendations) Gold peers worldwide for its ESG Award + Most Improved Award,
Slide 22: Management
MANAGEMENT CEO Mr. Windfuhr is Grand City Properties’ CEO. Before joining Grand City Mr. Windfuhr served as CEO of Maritim Hotels, with 40 hotels in Christian Germany. Prior to this he served as CEO of Mövenpick. He achieved the financial turnaround of Mövenpick, drove international Windfuhr expansi
Slide 23: Summary
SUMMARY Experienced management team with unique knowledge of the market Proven expertise with established Investing in track record Berlin value-add assets with Top geographical distribution in downside Germany protection In-house IT/software to support a strong team High EBITDA & FFO margins and op
Slide 24: Appendix
Nuremberg Duisburg Gelsenkirchen APPENDIX Berlin Hannover Dresden 24
Slide 25: Germany: Robust Macro Economic Base
GERMANY ROBUST MACRO ECONOMIC BASE Low debt level and budget surplus positions Germany well above the average EU Increasing economic status with increasing wages and lower unemployment, resulting in higher than average purchasing power and disposable income Debt/GDP 2016 Unemployment rate 2016 Gross
Slide 26: Germany: Increasing Residential Demand
GERMANY INCREASING RESIDENTIAL DEMAND Increasing population from strong migration balance, increasing urbanization levels along small/single person household sizes in cities is fueling the strong demand German Population 2012-2016 Migration Balance 2012-2015 (in millions) Urbanization level 2009-201
Slide 27: Germany: Low Residential Supply
GERMANY LOW RESIDENTIAL SUPPLY, SIGNIFICANTLY BELOW DEMAND LEVELS The supply of housing vs demand went into deficit in 2015, reflecting the significant supply shortage Construction over the last 15 years has been exceptionally low and completions even lower Apartments number surplus (deficit) in Ger
Slide 28: Berlin Market Overview
BERLIN MARKET OVERVIEW Key drivers: Capital city, positive net migration balance, public administration and start-up hub Strong population growth attributable to migration – 40k-50k net migration growth p.a. Highest population density at 4,000 residents per km² and the second most populous EU inner
Slide 29: North Rhine-Westphalia Market Overview
NORTH RHINE-WESTPHALIA MARKET OVERVIEW Key drivers: Economic growth and urbanization Highest populated federal state in Germany with increased population growth in 2015 Strongest economic region in Germany, generating 21% of the country’s GDP in 2015 Home to 30 of 80 largest German cities High popul
Slide 30: Dresden/Leipzig/Halle Market Overview
DRESDEN/LEIPZIG/HALLE MARKET OVERVIEW Key drivers: IT and Key Technology sectors Strong population growth figures from high birth rates Software and IT sector experiences most growth across industry and services sectors Strong share of SMEs, 63% employment share compared to German average of 43% Maj
Slide 31: Proven Ability to Access Capital Markets
PROVEN ABILITY TO ACCESS CAPITAL MARKETS Feb-18 Tap issuance of Series H, 2032 straight bonds of € 145m to an aggregate nominal amount of €255m Feb-18 Issuance of Series K, 2026 straight bonds of CHF 125m under the EMTN, currency hedge, coupon of 0.96% p.a. Issuance of Series J, 2027 straight bonds
Slide 32: GCP Covenant Package
GCP COVENANT PACKAGE The straight bonds and the convertible bond are unsecured and have the below covenant package: Overview of Covenant Package Covenant Type GCP (BBB+ from S&P, Baa1 from Moody’s) 1 Limitation on Debt Total Debt / Assets <=60%(1) 2 Limitation on Secured Debt Secured Debt / Tota
Slide 33: Moody's Rating Peer Comparison
MOODY’S RATING PEER COMPARISON Rating Sub- Broad Rating Rating Sub-Factor Factor Factor Weight Measure Score Measure Score Measure Score Measure Score Measure Score Measure Score (LTM H1 2017) (12-18 Month (LTM Q3 16) (FY 2016) (FY 2016) (LTM H1 17) Forward View) Liquidity Coverage 8.00% A A A A A A
Slide 34: Most Successful IPO in Germany Since 2007
ACCORDING TO THE FRANKFURTER ALLGEMEINE ZEITUNG… GRAND CITY PROPERTIES IS THE MOST SUCCESSFUL IPO IN GERMANY SINCE 2007 AMONG 106 IPOS Source: Frankfurter Allgemeine Zeitung February 9, 2017 34 Nr. 34, page 23
Slide 35: Business Model and Acquisition Criteria
BUSINESS MODEL AND ACQUISITION CRITERIA Deal-sourcing network Due Diligence & negotiation of best possible deal terms Acquisition established for over 13 years Take-over Repositioning + Capex Long term Increase Rent & occupancy Hold (90%) Decrease operating costs & non- Yield & value increas
Slide 36: Asset Management, Sales & Marketing, Operations
Bremen Düsseldorf Asset Management Operations / Acquisitions & Sales & Marketing Construction Maintenance Due Diligence Customer Relation Management (CRM) through Proprietary and Centralized IT system Continuous monitoring of portfolio operations, costs and staff performance Systematic tenant lead f
Slide 37: Rent Increase
RENT INCREASE Automated rent increase calculation Market limitation Legal limitation Jennifer Weniger Rental team Gelsenkirchen Essen Leipzig 37
Slide 38: ESG Measures: Environmental and Sustainability
ESG Measures: 91st Percentile Environmental and sustainability RENEWABLE ENERGY • Two thirds of properties have been switched to electricity from 100% renewable sources in the past two years, with the goal of gradually switching when the opportunity arises • All of GCP’s offices are supplied with en
Slide 39: ESG Measures: Social Responsibility
ESG Measures: 91st Social Responsibility Percentile EPRA Award 1st place Neighborhood and community initiatives Outstanding Contribution • The creation and maintenance of a comfortable community feeling is of high priority to Grand City, to Society and this is the target of our various initiatives f
Slide 40: ESG Measures: Tenant Satisfaction
EPRA Award 1st place ESG Measures: Outstanding Contribution to Society for outstanding service provided to Tenant Satisfaction its tenants Best-in-class tenant service through professional and 24/7 availability A dedicated and professional service team is available 24/7 for existing and prospective
Slide 41: ESG Measures: Tenant Satisfaction with IT Support
ESG Measures: Tenant satisfaction with IT support EPRA Award 1st place Outstanding Contribution to Society Advanced IT/software systems to monitor the complete portfolio and to for outstanding service provided to identify fluctuations of tenants, with immediate control over newly acquired its tenant
Slide 42: Contact and Disclaimer
CONTACT Katrin Petersen Head of Communications E-mail: katrin.Petersen@grandcity.lu www.grandcityproperties.com Halle DISCLAIMER IMPORTANT: This presentation has been provided for information purposes only and is being circulated on a confidential basis. This presentation shall be used only in accor
Grand City Properties — Investor Presentation (March 2018) on 6ix