Koninklijke Heijmans N.v. · EURONEXT:HEIJM
Koninklijke Heijmans — Heijmans — Merger or Acquisition (June 2023)
49 slides from Koninklijke Heijmans's merger presentation, Jun 21, 2023
Slide 1: Investor Presentation: Heijmans to acquire Van Wanrooij
Investor Presentation Heijmans to acquire Van Wanrooij 21 JUNE 2023
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by and is the responsibility of Heijmans N.V. This presentation is being supplied to you solely for your information and use at the presentation which will be or was held on June 21, 2023. The information may not be further distributed or passed on to o
Slide 3: Today's presenters
Today’s presenters Ton Hillen Gavin van Boekel Heijmans CEO Heijmans CFO 3
Slide 4: Van Wanrooij, a renowned company in property development and construction
Van Wanrooij, a renowned company in property development and construction… • Property development: • Average sales & development of 1,200 homes p.a. • Land bank of c.14k homes • 95%+ houses (vs. apartments) • Primarily in the greater-Eindhoven area • Construction: 600 – 700 homes p.a. • 220 full-tim
Slide 5: A unique opportunity to accelerate and diversify our property development activities
… providing a unique opportunity to accelerate and diversify our property development activities 2022A Revenues1 Land bank per Jan 2023 FTEs per Jan 2023 Property development Apartments Heijmans Construction Houses Van Wanrooij Infra +c.14k units +€0.4bn +220 FTE €2.2bn 29k units 5,144 4,924 220 €1.
Slide 6: Key investment highlights
Key investment highlights 1 • Strong match on activities, enabling Heijmans to increase exposure to Housing shortage 2022 the property development market characterized by strong long-term demographic characteristics 2 • Well positioned land bank (c.14k homes), providing a direct improvement both in
Slide 7: Key transaction parameters
Key transaction parameters • Heijmans will acquire Van Wanrooij for an Enterprise Value of €298m, leading to a purchase price of the shares of €291m at the effective date of 01-01-2023, price will be increased with interest rate till closing • The acquisition will be conservatively funded through a
Slide 8: Agenda
Agenda Current strategy of Heijmans Property Development Strategic rationale of the transaction Governance and integration Financial highlights of the combination Terms of the transaction Closing remarks Q&A Appendix 8
Slide 9: Heijmans Property Development delivers a broad range of inner city and suburban homes
Heijmans Property Development currently delivers a broad range of inner city and suburban homes… • Heijmans Property Development has a leading position in area and real estate development, and extensively collaborates with (local) governments and housing corporations • Development of both large and
Slide 10: Aiming for a mixed land bank in terms of customers, type of homes and locations
… aiming for a mixed land bank in terms of customers, type of homes and locations… Btbc Houses (low-rise buildings) Inner city BTCvs. vs. BTB vs. Inner cityvs. vs. Suburban Btc Apartments (high-rise buildings) Suburban BTC Houses Inner city BTB Apartments ’60s neighbourhoods Sub-urban 30% 30% 35% 37
Slide 11: Focus on development of affordable and sustainable concepts
…with a focus on development of affordable and sustainable concepts Key themes Property development mix 1. Affordability of housing and offering appropriate solutions for spatial planning and permit issues 30% 40% 2. Increased complexity requires distinctive knowledge, concepts and choices 30% 3. Fo
Slide 12: Agenda
Agenda Current strategy of Heijmans Property Development Strategic rationale of the transaction Introduction to van Wanrooij Van Wanrooij’s fit with Heijmans’ strategic agenda Governance and integration Financial highlights of the combination Terms of the transaction Closing remarks Q&A Appendix 12
Slide 13: Van Wanrooij is primarily a developer, with a standardised in-house construction business
Van Wanrooij is primarily a developer, with a standardised in-house construction business Property development 40 Construction 118 • Sales & development of on average • Capacity of 600-700 homes per 1,200 homes per year (over 90% year, construction of remaining suburban) homes are outsourced to thir
Slide 14: Van Wanrooij has an attractive land bank, standardised concept and efficient organisation
Van Wanrooij has an attractive land bank, highly standardised development concept and efficient organisation 1 • Highly attractive land bank: C. 14k homes to be developed - mostly in attractive suburban regions (80% in the greater-Eindhoven area) 2 • Active in suburban regions: Primarily active in B
Slide 15: Highly attractive land bank, primarily in suburban regions
Highly attractive land bank, primarily in suburban regions • The vast majority (c.80%) of the portfolio is located in Portfolio by object type (100% = c.14k) the attractive greater-Eindhoven area Houses 4% Apartments • Primarily focused on suburban developments, having several benefits compared to i
Slide 16: Strong property development track record
Strong property development track record • Van Wanrooij has a sales & development track record of on average 1,200 homes p.a. Historical • Development result was very strong in recent years at an average gross margin of >50k per home since 2019 • Going forward, Van Wanrooij is expected to continue t
Slide 17: In-house construction activities with a capacity of 600-700 homes per year
In-house construction activities with a capacity of 600-700 homes per year • Construction company that has a capacity of building 600-700 Position in the value chain homes per year • Focuses exclusively on the construction of homes developed by Calculation Van Wanrooij’s Project Development division
Slide 18: Agenda
Agenda Current strategy of Heijmans Property Development Strategic rationale of the transaction Introduction to van Wanrooij Van Wanrooij’s fit with Heijmans’ strategic agenda Governance and integration Financial highlights of the combination Terms of the transaction Closing remarks Q&A Appendix 18
Slide 19: Underlying market characteristics are favourable
Underlying market characteristics are favourable • Despite the current headwind, the underlying market characteristics are favorable for the housing market: • Population growth, migration, aging population and smaller average households create structurally growing demand for housing; • Current 315K
Slide 20: The acquisition results in a better balance of the land bank
The acquisition of Van Wanrooij results in a better balance of the land bank • In recent years Heijmans has successfully developed many suburban areas, replenishment of suburban areas in the land bank is needed • Inventory of land bank positions, including off-balance sheet rights and obligations, r
Slide 21: Van Wanrooij's land bank offers a direct improvement in size and mix
Van Wanrooij’s land bank offers a direct improvement, both in size and mix • Van Wanrooij has an attractive land bank, with Heijmans’ current and pro-forma combined land bank c.14k homes to be developed • Offers a direct improvement in the mix of house vs. apartment positions 30% 40% • Houses are co
Slide 22: The combined land bank is excellently positioned geographically
The combined land bank is excellently positioned geographically Housing shortage 2022 Housing shortage 2031 • Further population growth - and in particular further growth in the # of households - is leading to a substantial housing shortage, especially in growth areas • Combined inventory is almost
Slide 23: Opportunities to expand our conceptual construction activities
The acquisition provides opportunities to expand our (conceptual) construction activities • Heijmans aims to build conceptually on an industrial scale with sufficient variety in look & feel and flexibility for the consumer • In 2022, Heijmans purchased a factory to build timber-frame houses Industri
Slide 24: Win-win driven by strong cultural fit and complementary skill sets
Win-win driven by strong cultural fit and complementary skill sets • Flexible, open/transparent • Entrepreneurial family business and solution-oriented • No-nonsense culture • Ownership, collaboration, + • Autonomy for the teams result-orientated • Strong processes and • Strong in area development c
Slide 25: Agenda
Agenda Current strategy of Heijmans Property Development Strategic rationale of the transaction Governance and integration Financial highlights of the combination Terms of the transaction Closing remarks Q&A Appendix 25
Slide 26: Owners will remain involved for 24 months after signing
Owners will remain involved for 24 months after signing • Van Wanrooij will be run independently with current name and own headquarters Owners • Van Wanrooij’s owners are committed to a proper handover and continue their integration and will remain with the company during the first two involvement y
Slide 27: Agenda
Agenda Current strategy of Heijmans Property Development Strategic rationale of the transaction Governance and integration Financial highlights of the combination Terms of the transaction Closing remarks Q&A Appendix 27
Slide 28: Van Wanrooij will add €50m - €70m of EBITDA in the medium / long-term
Van Wanrooij will add €50m - €70m of EBITDA in the medium / long-term • Addition of €30m - €40m of underlying EBITDA1 p.a., driven by › Incremental sale & development of 1,000 homes p.a Incremental construction of 600 homes p.a. Short-term • After closing it will directly positively contribute to th
Slide 29: Agenda
Agenda Current strategy of Heijmans Property Development Strategic rationale of the transaction Governance and integration Financial highlights of the combination Terms of the transaction Closing remarks Q&A Appendix 29
Slide 30: Key transaction terms
Key transaction terms • Enterprise value at the effective date: € 298m Valuation • Purchase price shares (excluding the interest rate till closing): € 291m Conditions • Customary conditions, including receipt of regulatory clearances • Closing anticipated in Q3 2023 Timelines • Effective date as per
Slide 31: Conservative funding structure
Conservative funding structure • Acquisition to be financed with › Sub-10 equity issue (amounting to €23.5m), to be placed in full with selling shareholders, with 3 year lock-up period underpinning selling shareholders’ confidence in the combination › €150 million from freely available cash balances
Slide 32: Agenda
Agenda Current strategy of Heijmans Property Development Strategic rationale of the transaction Governance and integration Financial highlights of the combination Terms of the transaction Closing remarks Q&A Appendix 32
Slide 33: Investment case for the combined company
Compelling investment case for the combined company 1 1 Increasing exposure to highly profitable sector with supportive long-term market trends 2 Direct improvement of land bank both in size and mix (#2 land bank in NL) 3 3 Ability to scale-up Heijmans’ industrial & conceptual production, incl. the
Slide 34: Agenda
Agenda Current strategy of Heijmans Property Development Strategic rationale of the transaction Governance and integration Financial highlights of the combination Terms of the transaction Closing remarks Q&A Appendix 34
Slide 35: Questions & Answers
heijmans Questions & Answers
Slide 36: Agenda
Agenda Current strategy of Heijmans Property Development Strategic rationale of the transaction Governance and integration Financial highlights of the combination Terms of the transaction Closing remarks Q&A Appendix Views on current market dynamics Koop-aannemingsovereenkomst (KAO) vs. gescheiden k
Slide 37: Population growth and aging population create structurally growing demand for housing
Population growth and aging population create structurally growing demand for housing Population growth (m) Households (m) Single person 0.7% Two person or more 8.4 8.7 18.4 18.5 18.6 7.7 8.0 18.3 7.4 17.8 18.0 18.1 18.2 6.8 7.1 17.3 17.4 17.5 17.6 5,2 17.0 17.1 17.2 4,9 5,1 4,7 4,8 4,5 4,6 2,7 2,9
Slide 38: Backlog of issued permits will lead to an increasing housing shortage
Combined with a backlog of issued permits, this will lead to an increasing housing shortage Issued building permits in the NL (#k) New housing built in the NL (#k) 100 75.8 80 71,5 70,0 71,2 74,2 67.2 63.4 63,0 66,6 60 54,8 48,7 49,3 45,2 48,4 50.0 50.0 40 20 0 ’20 ’21 ’22 ’23F ’24F ’12 ’13 ’14 ’15
Slide 39: Despite short-term challenges…
Despite short-term challenges… Interest rates (%) Consumer confidence 3% Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 0 2% -10 -20 1% -30 0% -40 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 -50 -1% -60 • Rapidly rising mortgage interest and energy costs over the last year have resulted in re
Slide 40: Long-term demand for housing needs to be addressed
… long-term demand for housing needs to be addressed Target new homes to be built by 2030 (#k) Fall in number of new homes in '23 and '24 (#k) 100 Affordable housing 80 300 300 Social housing (corporations) 60 900k Affordable housing (corporations) 40 Other 20 50 0 250 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’1
Slide 41: With the shift to more sustainable construction…
With the shift to more sustainable construction… • Shift to sustainable, energy-efficient Greenhouse gas emissions built environment (Mton/yr) and climate-neutral construction 50 Actual CO2 emissions Target CO2 emissions 45 following the Paris Climate Agreement 40 and the Nitrogen Reduction and Natu
Slide 42: Increased standardisation in construction processes is expected to address challenges
… increased standardisation in construction processes is expected to address challenges • Standardized construction processes Share prefab construction in housing development (%) such as modular construction are an 50% innovative and efficient way to meet 40% sustainability requirements 30% • A stan
Slide 43: Consolidation within the sector will help capture the opportunity
Consolidation within the sector will help capture the opportunity and address challenges BPD Heijmans incl. VW 4.417 6.466 • Real estate development and housing Residential Stebru 2.847 Heijmans ‘as is’ 2.682 market is highly fragmented property 2.435 VolkerWessels transactions by largest 50 BAM Vor
Slide 44: Agenda
Agenda Current strategy of Heijmans Property Development Strategic rationale of the transaction Governance and integration Financial highlights of the combination Terms of the transaction Closing remarks Q&A Appendix Views on current market dynamics Koop-aannemingsovereenkomst (KAO) vs. gescheiden k
Slide 45: Koop-aannemingsovereenkomst (KAO) vs. Gesplitste koop-aanneming (GKA)
Koop-aannemingsovereenkomst (KAO) vs. Gesplitste koop-aanneming (GKA) 1 Assumptions: KOA GKA • Under KAO, construction • €500k total revenues are accounted for on the revenues per P&L of Property Development and house €500k €500k construction costs are invoiced • All construction activities are • Un
Slide 46: Agenda
Agenda Current strategy of Heijmans Property Development Strategic rationale of the transaction Governance and integration Financial highlights of the combination Terms of the transaction Closing remarks Q&A Appendix Views on current market dynamics Koop-aannemingsovereenkomst (KAO) vs. gescheiden k
Slide 47: Details on bank financing (1/2)
Details on bank financing (1/2) • Fully committed expansion of bank financing with the current banking consortium (ABN AMRO, ING and Rabobank), to take effect upon closing • €80 million Term Loan A • Repaid on a quarterly basis in 4 years after closing • Interest margin of 1.9% - 2.9%, depending on
Slide 48: Details on funding structure (2/2)
Details on funding structure (2/2) • Financial covenants and the security package remain unchanged • Heijmans expects an opening Leverage Ratio (net debt / rolling EBITDA) close to 1.0, which results in interest margins after Closing in a range of 2.15-2.50% • RCF is used for the financing the trans
Slide 49: heymans
heymans