LEG Immobilien SE · XETR:LEG
LEG Immobilien — H1 2019 Earnings Presentation
34 slides from LEG Immobilien's earnings presentation, Aug 9, 2019
Slide 1: LEG Immobilien AG H1 2019 Results
LEG Immobilien AG 9 August 2019 H1 2019 Results
Slide 2: Disclaimer
Disclaimer While the company has taken all reasonable care to ensure that the facts stated in this presentation are accurate and that the opinions contained in it are fair and reasonable, this presentation is selective in nature and is intended to provide an introduction to, and an overview of the C
Slide 3: Agenda
Agenda I. HIGHLIGHTS H1-2019 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. BUSINESS UPDATE AND OUTLOOK V. APPENDIX 3 I August 2019
Slide 4: Highlights H1-2019
Highlights H1-2019 Overall strong company development Political discussion: State government of NRW clearly disapproves “rent freezes” as an instrument Disposals: Sale of around 2,700 non-core units successfully executed Acquisitions: Momentum picking-up; more than 1,000 units signed (pipeline
Slide 5: Agenda
Agenda I. HIGHLIGHTS H1-2019 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. BUSINESS UPDATE AND OUTLOOK V. APPENDIX 5 I August 2019
Slide 6: Portfolio Overview
Portfolio Overview Positive rent development across all submarkets Strong results on the basis of tailor-made Minden- Lübbecke management strategies Steinfurt Herford Bielefeld Lippe High-Growth Markets Borken Munster Gütersloh Coesfeld Warendorf 30.06.2019 (YOY) Kleve Hamm Paderborn Hoxter # of u
Slide 7: Rent Development
Rent Development Strong market fundamentals persist L-f-l residential rent (€/sqm/month) L-f-l free financed rent (€/sqm/month) +3.5% +2.9% 6.14 5.77 5.93 5.61 Q2-2018 Q2-2019 Q2-2018 Q2-2019 Performance of free financed units reflects sound underlying fundamentals Rent restricted units: +0.6% y
Slide 8: Capex & Maintenance
Capex & Maintenance Lifting internal growth potential Lifting growth potential while maintaining high capital efficiency +15.0% €117.0m (€13.12/sqm*) €98.5m (€11.41/sqm*) • Investments have increased c. 15% year-over-year €78.3m driven by increased value enhancing capex €62.9m • Capex ratio has incr
Slide 9: Agenda
Agenda I. HIGHLIGHTS H1-2019 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. BUSINESS UPDATE AND OUTLOOK V. APPENDIX 9 I August 2019
Slide 10: Financial Highlights H1-2019
Financial Highlights H1-2019 Margin expansion story continues Net Cold Rent (€m) Adj. Net Rental and Lease Income (€m) Adj. EBITDA (€m) +5.4% +8.9% +8.9% 277.4 292.5 231.8 212.9 200.0 217.8 H1-2018 H1-2019 H1-2018 H1-2019 H1-2018 H1-2019 FFO I (€m) Capex-Adj. FFO I / AFFO (€m) Margin (%) H1-2018 H1-
Slide 11: FFO Calculation
FFO Calculation H1-2019 € million H1-2019 H1-2018 Net cold rent 292.5 277.4 +€15.1m/+5.4% Profit from operating expenses -1.8 -4.2 Maintenance (externally-procured services) -25.4 -26.7 Staff costs -32.1 -30.3 Growth in staff costs mainly due to additional FTE’s for Allowances on rent receivable
Slide 12: FFO Bridge
FFO Bridge H1-2019 €m 200 0.6 2.2 3.0 6.6 -0.1 -2.6 -0.6 8.3 -1.7 -1.1 171.0 100 156.5 0 FFO I Organic Net rental Sales effect Lower Lower l-f-l Lower Higher net Higher net Minorities Others FFO I rental growth operating costs maintenance recurring cash interest cash H1-2018 H1-2019 growth from acqu
Slide 13: Cash Effective Interest Expense
Cash Effective Interest Expense H1-2019 € million H1-2019 H1-2018 Reported interest expense 52.1 47.4 One-time negative effect of €2.2m in H1-2019 from Interest expense related to loan amortisation -11.2 -5.8 smaller repayment of subsidised loans (loan amortisation) vs. positive Interest costs rel
Slide 14: EPRA-Net Asset Value
EPRA-Net Asset Value Further capital growth ahead € million 30.06.2019 31.12.2018 Equity (excl. minority interests) 4,967.3 4,757.6 €469.1m net profit -€30.6m change in OCI Effect of exercising options, convertibles and other rights 618.0 553.9 -€223.3m dividend -€5.5m others NAV 5,585.3 5,3
Slide 15: EPRA-Net Asset Value June 2019
EPRA-Net Asset Value 30 June 2019 1.73 -3.53 -0.07 0.06 7.97 €/ps €/ps 103.14 99.57 €/ps 96.10 €/ps 93.40 EPRA-NAV Pro forma Valuation Retained Dividend Adoption (Net) Effect Pro forma EPRA- EPRA-NAV FY-2018 EPRA-NAV uplift earnings of IFRS 16 from a NAV excl. goodwill excl. goodwill FY-2018, post (
Slide 16: Portfolio Valuation H1-2019
Portfolio Valuation H1-2019 Valuation uplifts driven by letting performance and yield compression Breakdown revaluation gains (€ million) Value drivers Allocation capital growth 48 74 272 €672 m1) 400 550 Rent performance & building Revaluation gains Discount rate Capex Other (IFRS 16 effects) Yie
Slide 17: Portfolio Valuation H1-2019
Portfolio Valuation H1-2019 Growth markets with respective commuter belts drive valuation Valuation uplift by markets (l-f-l), including commercial and other assets Valuation uplift H1-19 Gross yield H1-19 High-Growth Markets 5.9% (7.5% in FY-18) 4.3% (4.5% in FY-18) Münster (6,126 units) 5.5% 3.8%
Slide 18: Portfolio
Portfolio Sound property fundamentals basis for value growth As of 30.06.2019; IAS 40 only, IFRS5 excluded Market Multiples, GAV GAV % of Total Estimated Commercial/ Residential Residential Residential GAV/ In-Place Rental Other Market Units Assets (€m) GAV sqm (€) Rent Multiple Values1) Assets (€m)
Slide 19: Balance Sheet
Balance Sheet Strong balance sheet € million 30.06.2019 31.12.2018 Revaluation €550.2m Capex €74.1m Investment property 11,224.8 10,709.0 Reclassifications (Disposal) Other non-current assets 204.5 175.9 -€154.9m Non-current assets 11,429.3 10,884.9 Acquisitions €10.8m Receivables and other
Slide 20: LTV
LTV Low LTV leaves headroom for growth € million 30.06.2019 31.12.2018 Financial liabilities 4,769.7 4,598.1 Strong balance sheet (LTV target: max. 43%) leaves Leasing liabilities (IFRS 16) 32.9 0.0 headroom for growth investments Cash & cash equivalents 187.6 233.6 Potential for further de- gea
Slide 21: Financing Structure – June 2019
Financing Structure – 30 June 2019 LT financing provides high visibility for future earnings growth Weighted avg. interest (excl. subsidised loans) % as of 30.06.2019 1.4% 1.6% €949m €926m Variable interest 9.2% 1.6% 1.6% 1.6% 1.7% 2.2% €486m €464m Swaps €434m €422m 11.5% €372m €291m Fixed 30.06.201
Slide 22: Agenda
Agenda I. HIGHLIGHTS H1-2019 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. BUSINESS UPDATE AND OUTLOOK V. APPENDIX 22 I August 2019
Slide 23: Business Update
Business Update Portfolio growth continues Rising visibility for acquisition of > 3,000 units Acquisition of more than 1,000 units signed YTD; pipeline of > 2,000 units (in advanced stages) Net portfolio growth likely to continue; slightly negative short term FFO effect expected (mainly due to t
Slide 24: Outlook
Outlook Guidance for 2019 & 2020 2019 2020 KPI FFO I* €338m - €344m €356m - €364m L-F-L rent growth 3.0-3.2% 3.2-3.4% L-F-L vacancy slightly decreasing EBITDA margin ~73% ~74% Investments ~30-32€/sqm ~31-33€/sqm Dividend 70 % of FFO I 70 % of FFO I *excl. disposals or future acquisitions 24 I August
Slide 25: Agenda
Agenda I. HIGHLIGHTS H1-2019 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. BUSINESS UPDATE AND OUTLOOK V. APPENDIX 25 I August 2019
Slide 26: Generating Appealing Shareholder Returns
Generating Appealing Shareholder Returns NAV per share (€), excl. goodwill Dividend per share (€) 99.57 1) 93.40 1) 80.90 1) 3.53 67.15 3.04 2.76 58.92 2.26 52.69 1.96 49.39 1.73 2013 2014 2015 2016 2017 2018 Q2-2019 2013 2014 2015 2016 2017 2018 1) For 2017, 2018, Q2-2019 pro forma NAV per share is
Slide 27: Income Statement
Income Statement H1-2019 € million H1-2019 H1-2018 Net rental and lease income 225.9 206.3 Higher net cold rents (+€15.1m YOY/+5.4%) Net income from the disposal of investment property -0.4 -0.5 Net income from the valuation of investment property 550.2 383.9 Revaluation gains of 5.1% Net income
Slide 28: Acquisitions: Leading Management Skills Paying Off
Acquisitions: Leading Management Skills Paying Off Scalability of platform + cost discipline support value accretive growth Strong volume growth at overhead cost below FY-2013 level… Recurr. admin costs # of units 33.1 36.7 32.1 35.2 33.3 34.0 €35m 150,000 100,000 128,488 130,085 133,969 50,000 106,
Slide 29: LEG – Adj. EBITDA Margin
LEG – Adj. EBITDA Margin Leading profitability despite short term distortion from restricted units Adj. EBITDA margin FY-2018 FY-2017 €m margin % €m margin % As reported 405.2 72.3 385.7 72.1 1) Gap restricted vs. unrestricted rents 33.5 73.7 30.1 73.6 1) €/sqm: €4.77 vs. €6.00 in 2018, €/sqm: €4.74
Slide 30: Rent revisionary potential
Rent revisionary potential Refinancing of subsidised loans lifting value Rent Potential Subsidised Units Number of Units Coming Off Restriction and Rent Upside c. 17,000 In the following 10 years more than # Units c. 8,600 24,000 units will come off rent 2,166 restriction 1,734 1,589 697 827 Uni
Slide 31: LEG Share Information
LEG Share Information Strong outperformance vs. benchmarks including dividends Basic data Well-balanced shareholder structure • Prime Standard, Frankfurt Stock Exchange • Total no. of shares: 63,188,185 • Ticker symbol: LEG BlackRock • ISIN: DE000LEG1110 10.5% • Indices: MDAX, FTSE EPRA/NAREIT, GPR
Slide 32: Financial Calendar
Financial Calendar Date Report/Event 11.03.2019 Annual Report 2018 09.05.2019 Quarterly Statement Q1 as of 31 March 2019 29.05.2019 Annual General Meeting, Düsseldorf 09.08.2019 Quarterly Report Q2 as of 30 June 2019 29.08.2019 Commerzbank Sector Conference, Frankfurt 04.09.2019 Roadshow London, UBS
Slide 33: Contact
Contact Investor Relations Burkhard Sawazki Head of Investor Relations & Strategic Business Analysis Tel: +49 (0) 211 4568-204 burkhard.sawazki@leg.ag Karin Widenmann Benedikt Kupka Senior Manager Investor Relations Manager Investor Relations & & Strategic Business Analysis Strategic Business Analys
Slide 34: Thank you for your interest.
Thank you for your interest.