Instone Real Estate Group Se · XETR:INS
Instone Real Estate — Non-Deal Roadshow (September 2019)
42 slides from Instone Real Estate's roadshow presentation, Sep 23, 2019
Slide 1: Investor Presentation Roadshow September 2019
INVESTOR PRESENTATION ROADSHOW SEPTEMBER 2019
Slide 2: Disclaimer
INSTONE REAL ESTATE Disclaimer BY VIEWING THIS PRESENTATION, YOU AGREE TO BE BOUND BY THE FOLLOWING TERMS AND CONDITIONS REGARDING THE INFORMATION DISCLOSED IN THIS PRESENTATION. THIS PRESENTATION HAS BEEN PREPARED BY INSTONE REAL ESTATE GROUP AG (THE "COMPANY", TOGETHER WITH ITS SUBSIDIARIES, "INST
Slide 3: Table of Contents
Table of Contents 01 | 2019 Key Achievements 02 | Corporate Acquisition 03 | Portfolio Review 04 | Update Operating Environment 05 | H1 2019 Financial Performance 06 | Outlook 07 | Appendix 3 |
Slide 4: 2019 Key Achievements
2019 Key Achievements H1 2019 business development in line with our expectations – Construction launched for 5 projects (€160m exp. sales volume); €132m of concluded sales contracts Successfully re-organized corporate level financing with 3-year term loan (€200m) in Q2 and promissory note (€98.5
Slide 5: Table of Contents
Table of Contents 01 | 2019 Key Achievements 02 | Corporate Acquisition 03 | Portfolio Review 04 | Update Operating Environment 05 | H1 2019 Financial Performance 06 | Outlook 07 | Appendix 5 |
Slide 6: Transaction Highlights and Rationale
Transaction Highlights and Rationale 1 Acquisition of highly skilled resources and well Well established platform in new region with 30+ years track record in residential established platform in attractive region of Northern development Bavaria, previously not covered by Instone 2 C. €300m secured p
Slide 7: Summary Transaction Terms and Financing
Summary Transaction Terms and Financing Total consideration of €74m for all outstanding equity and financial debt and including all transaction costs • €4m consideration for the platform • €67.5m consideration for acquired projects; equivalent to 8% post tax unlevered return on capital for Instone •
Slide 8: Table of Contents
Table of Contents 01 | 2019 Key Achievements 02 | Corporate Acquisition 03 | Portfolio Review 04 | Update Operating Environment 05 | H1 2019 Financial Performance 06 | Outlook 07 | Appendix 8 |
Slide 9: Development of Project Portfolio
] New projects (YTD 2019): Development of Project Portfolio Exp. sales Exp. Units Project / Location volume (~) Project portfolio (exp. sales volume) Hamburg / Rothenburgsort €182m 716 Instone Hamburg / Behringstrasse €34m 70 Herrenberg III / Schäferlinde €55m 141 Leipzig / Rosa-Luxemburg-Str. €116m
Slide 10: Large Project in a German Metropolitan Region
Large Project in a German Metropolitan Region Large inner-city project in German metropolitan region Around 124K sqm gross floor area >1,200 units Existing masterplan Expected sales volume of ~€600m and gross margin of ~18%; Attractive IRR Expect the purchase agreement for the property w
Slide 11: Table of Contents
Table of Contents 01 | 2019 Key Achievements 02 | Corporate Acquisition 03 | Portfolio Review 04 | Update Operating Environment 05 | H1 2019 Financial Performance 06 | Outlook 07 | Appendix 11 |
Slide 12: Rent regulation: Proposals of Federal Government & Berlin Senat
Rent regulation: Proposals of Federal Government & Berlin Senat Federal Government Berlin Senat (proposal for Berlin only) Mietpreisbremse Mietendeckel „Rent cap“ New apartments built after Jan 1, 2014 are excempt from rent cap, Proposed time table: • The „Mietpreisbremse“ shall be extended by als
Slide 13: How will Instone be affected?
How will Instone be affected? Instone customers by type - sales volume 2017- H1/2019 Instone customers by type - unsold per H1/2019 Buy-to-let investors • Institutional buyers have recently made Buy-to-let Institutional 20,1% for a significant portion of Instone sales Institutional buyers investors
Slide 14: Assessment of Instone Customer Sensitivity
Assessment of Instone Customer Sensitivity Owner occupiers Institutional buyers Buy to let investors ▪ Will continue to be the largest single source ▪ Municipal and state owned property ▪ Historically focused on Instones listed property Relevance of sales for Instone companies key buyers of rent res
Slide 15: Persistent supply demand imbalance for residential units in Germany
Persistent supply demand imbalance for residential units in Germany Germany A-Cities Berlin 20.900 36% 15.345 (units) Frankfurt 5.583 4.385 27% Hamburg 10.200 8.772 16% Munich 12.474 8.357 49% Cologne 6.888 3.142 119% Dusseldorf 3.144 2.667 18% Stuttgart 3.614 78% 2.034 Leipzig 4.201 1.901 121% Nure
Slide 16: Table of Contents
Table of Contents 01 | 2019 Key Achievements 02 | Corporate Acquisition 03 | Portfolio Review 04 | Update Operating Environment 05 | H1 2019 Financial Performance 06 | Outlook 07 | Appendix 16 |
Slide 17: H1 2019 Results of Operations
H1 2019 Results of Operations H1 2019 Results of Operations (€m, ppa adj.) H1 2019 H1 2018 Delta Revenues 174.2 139.4 25.0% • Gross profit margin of 33.6% reflects exceptionally high Project cost -115.7 -103.0 12.3% share of revenue contribution from high margin projects in H1 2019 Gross profit 58.5
Slide 18: Revenue Recognition and Volume of Sales Contracts (illustrative)
Revenue Recognition (illustrative) Volume of Sales Contracts (illustrative) €700-750m > €1,100m €174m €132m Revenues from projects in First time revenue Total amount H1/2019 Revenues from projects in First time revenue Total amount 2019 Concluded sales contracts Concluded sales contracts Total amoun
Slide 19: Operating Cash Flow and Leverage
Operating Cash Flow Leverage In € million H1 2019 H1 2018 In € million H1 2019 H1 2019 FY 2018 EBITDA 34.3 12.1 actual pro-forma* Other non-cash items -0.1 3.7 Corporate debt 67.0 101.2 66.1 Taxes paid -6.3 -4.5 Project related debt 215.1 255.1 199.5 Change in working capital -26.4 -67.4 Financial d
Slide 20: Financing Structure Provides Basis for Growth
Financing Structure Provides Basis for Growth Financing structure • Corporate level refinancing largely completed Term loan Promissory note Syndicated RCF €200m €98.5m 3 years 3/5 years 3 years • • €200m term loan signed in Q2 Successful completion of new €98.5m promissory note P&L sharing agree
Slide 21: Table of Contents
Table of Contents 01 | 2019 Key Achievements 02 | Corporate Acquisition 03 | Portfolio Review 04 | Update Operating Environment 05 | H1 2019 Financial Performance 06 | Outlook 07 | Appendix 21 |
Slide 22: Increased FY 2019 Outlook
Increased FY 2019 Outlook Outlook FY 2019 • Increased FY 2019 outlook in consideration of large project in German metropolitan € million Previous (03/19) New (09/19) region Revenues (adjusted) 500 - 550 700 - 750 • Expected significant rise of adjusted revenues, adjusted EBIT and volume of Gross Pro
Slide 23: Mid-term Revenue Guidance Confirmed & Fully Covered by Existing Projects
Mid-term Revenue Guidance Comfirmed & Fully Covered by Existing Projects Revenue* Guidance (adjusted) €900m - €1,000m >€1,000m • Medium term guidance for adjusted revenues until FY 2022 confirmed €600m - €700m • Guidance for FY 2020-2022 adjusted revenues fully covered by existing projects • Further
Slide 24: Table of Contents
Table of Contents 01 | 2019 Key Achievements 02 | Corporate Acquisition 03 | Portfolio Review 04 | Update Operating Environment 05 | H1 2019 Financial Performance 06 | Outlook 07 | Appendix 24 |
Slide 25: Project Cost and Platform Cost
Cost of materials cost of land incl. incidental costs Non-deductible 20,8% input tax 27,6% shell works H1 2019 €k roof and facade works Cost of materials -160,563 9,8% interior works Project Changes in inventories +48,358 11,5% 9,3% technical building equipment Cost Indirect sales cost -1,294 8,9% 1
Slide 26: Income statement (reported)
Income statement (reported) Commentary In €m H1 2019 H1 20181 1 In the first half year of 2019, the Instone Group increased its revenues significantly compared 1 Total revenue 170.1 131.5 to the same period in the previous year. Revenues amounted to €170.1 million (adjusted Changes in inventories 48
Slide 27: Condensed balance sheet
Condensed balance sheet Commentary In €m H1 2019 FY 2018 6 As at 30 June 2019, inventories had risen to €453.0 million (previous year: €404.4 million). Non-current assets 13.7 2.8 This increase in inventories results from the increased completion of work-in-progress and 6 Inventories the increase in
Slide 28: Condensed cash flow statement
Condensed cash flow statement Commentary In €m H1 2019 H1 20181 10 Cash flow from operations of the Instone Group amounting to €1.5 million in the half year Consolidated earnings 24.8 -7.4 under review (previous year: €–26.6 million) was mainly marked by the increase in payment Other non-cash income
Slide 29: Project Portfolio Key Figures
Project Portfolio Key Figures In € million Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Volume of sales contracts 69.0 62.8 206.2 104.2 120.0 30.0 Project Portfolio (as of) 5,091.7 4,790.2 4,763.2 3,620.3 3,589.1 3,408.5 thereof already sold (as of) 1,128.7 1,061.1 998.2 971.9 867.8 779.9 In units Q2 19 Q1 1
Slide 30: Project Portfolio (as of 30/06/19)
Project Portfolio (as of 30/06/19) Portfolio summary as of 30.06.2019 Breakdown by region; based on sales volume Breakdown by status; based on sales volume • €5,092 expected sales volume • C. 91% in key metropolitan regions • 47 projects • 11,628 units • €1.4 bn exp. sales volume (28% of portfolio)
Slide 31: H1 2019 – Revenue Contribution (Top Projects)
H1 2019 – Revenue Contribution (Top Projects) Project City Adj. Revenues (€m) Quartier Stallschreiber Strasse / Luisenpark Berlin 44.1 Wohnen am Kurpark / Wilhelm IX Wiesbaden 24.1 Marienkrankenhaus Frankfurt 21.1 City Prag – Wohnen im Theaterviertel Stuttgart 18.9 Heeresbäckerei Leipzig 18.8 Frankl
Slide 32: H1 2019 – Volume of Sales Contracts (Top Projects)
H1 2019 – Volume of Sales Contracts (Top Projects) Project City Volume (€m) Units Quartier Stallschreiber Strasse / Luisenpark Berlin 37.0 70 Marienkrankenhaus Frankfurt 28.4 29 Sebastianstrasse / Schumanns Höhe Bonn 19.9 45 Theaterfabrik Leipzig 14.5 49 Wohnen am Kurpark / Wilhelms IX Wiesbaden 14.
Slide 33: H1 2019 – Construction Launches
H1 2019 – Construction Launches Project City Exp. Sales Volume (€m) Units City-Prag – Wohnen im Theaterviertel Stuttgart ~110 ~250 Theaterfabrik Leipzig ~20 ~75 Sebastianstrasse / Schumanns Höhe (1st section) Bonn ~18 ~55 Friedrich-Ebert-Strasse Leipzig ~10 ~15 Fregestrasse Leipzig ~2 ~5 Total ~160
Slide 34: Sales Offer as of 30/06/19 (Top Projects)
Sales Offer as of 30/06/19 (Top Projects) Project City Sales volume (€m) Units Marienkrankenhaus Frankfurt 121.8 105 Quartier Stallschreiber Strasse / Luisenpark Berlin 51.3 70 Schwarzwaldstrasse Herrenberg 47.6 117 Sebastianstrasse / Schumanns Höhe Bonn 36.1 103 Wohnen am Kurpark / Wilhelms IX Wies
Slide 35: Project Portfolio as of 30/06/19 (projects >€30m)
Project Portfolio as of 30/06/19 (projects >€30m sales volume, representing total: ~€4.9bn) Building Sales volume Land plot right Sales Construction Project Location (expected) acquired started started obtained Hamburg Essener Straße Hamburg 94 Mio. € Schulterblatt Hamburg 91 Mio. € Kösliner Weg Nor
Slide 36: Project Portfolio as of 30/06/19 (projects >€30m)
Project Portfolio as of 30/06/19 (projects >€30m sales volume, representing total: ~€4.9bn) Building Sales volume Land plot right Sales Construction Project Location (expected) acquired started started obtained Rhine-Main Wiesbaden-Delkenheim, Lange Seegewann Wiesbaden 92 Mio. € Siemens-Areal Frankf
Slide 37: Project Portfolio as of 30/06/19 (projects >€30m)
Project Portfolio as of 30/06/19 (projects >€30m sales volume, representing total: ~€4.9bn) Building Sales volume Land plot right Sales Construction Project Location (expected) acquired started started obtained Baden-Wurttemberg City-Prag - Wohnen im Theaterviertel Stuttgart 126 Mio. € Wohnen am Saf
Slide 38: Instone is a leading residential developer in Germany
Instone is a leading residential developer in Germany Proven track record First mover in building up a nationwide residential developer platform in Germany 28 years >1 million sqm ~1,000 units Company experience Successfully developed and Sold on average per Focus on developing modern, urban, multi-
Slide 39: Instone has positioned itself as a leading and scalable real estate development platform
Instone has successfully positioned itself as a leading and scalable real estate development platform with rapid growth prospects 2019–Future 2015–2016 High-quality scalable platform with strong 2013–2014 Nationwide platform sourcing capabilities: with expanded project Acquisition of S&P Stadtbau 20
Slide 40: Rigorous control over the entire development process
Rigorous control over the entire development process Planning Acquisition application Sales Construction Completion €€€€€ No speculative land banking High building density 30% pre-sales hurdle rate Strong construction Positive track record assessment prior to construction management background conce
Slide 41: S&P Stadtbau - Operating in an Attractive Market
S&P Stadtbau - Operating in an Attractive Market 2018 Purchasing power p.c. Purchasing power index (€) (%) • Metropolitan region Nuremberg (c. 1.3m residents) is ranked #1 in economic growth in S&P markets Erlangen 27.875 121.2 Germany Regensburg 25.853 110.9 • Further population growth of c. 8% exc
Slide 42: Financial Calendar: Contact
Financial Calendar: Contact 16 Sept 19 Roadshow Frankfurt Thomas Eisenlohr 20 Sept 19 Roadshow Paris Head of Investor Relations 24-25 Sept 19 Roadshow London Instone Real Estate Group AG 15-17 Oct 19 Roadshow New York/Boston/Toronto Grugaplatz 2-4, 45131 Essen 26 Nov 19 Publication of Quarterly Stat
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