Instone Real Estate Group Se · XETR:INS
Instone Real Estate — Non-Deal Roadshow (December 2019)
40 slides from Instone Real Estate's roadshow presentation, Dec 4, 2019
Slide 1: Investor Presentation Roadshow Helsinki / Stockholm
INVESTOR PRESENTATION ROADSHOW HELSINKI / STOCKHOLM 4 DECEMBER 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 | Instone Overview 02 | Portfolio Review 03 | 9M 2019 Financial Performance 04 | Outlook 05 | Appendix 3 |
Slide 4: 2019 Key Achievements
2019 Key Achievements Volume of new permits of €1,017m and increased project portfolio of €5.6bn exp. sales volume y-t-d Since 30 June 2019: Signed 4 forwards sales with institutional buyers of aggregate €815m expected sales volume Operational Successfully re-organized corporate level financin
Slide 5: 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 >28 years >1 million sqm ~1,000 units platform in Germany Management Successfully developed and Sold on average per experience marketed since 1991 annum between ‘15
Slide 6: 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 7: Significant Growth
Significant Growth Source: Company information. 7 | (1) Based on expected sales volume for fully developed projects as of 31 December 2014 (2) Based on expected sales volume for fully developed projects as of 31 December 2016 (3) Based on expected sales volume for ongoing projects when fully develop
Slide 8: 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 9: Selected Projects
Selected Projects Hamburg („Amanda“) ~€91m GDV; ~167 units Berlin („Luisenpark“) ~€236m GDV; ~560 units Bonn („Schumanns Höhe“) Leipzig („Heeresbäckerei“) ~€68m GDV; ~186 units ~€122m GDV; ~345 units Regensburg Frankfurt/Main („Marie“) („Marina Bricks“) ~€210m GDV; ~239 units ~€29m GDV; ~50 units He
Slide 10: Table of Contents
Table of Contents 01 | Instone Overview 02 | Portfolio Review 03 | 9M 2019 Financial Performance 04 | Outlook 05 | Appendix 10 |
Slide 11: Development of Project Portfolio
New projects (YTD 2019): Project Exp. sales volume Exp. Units Development of Project Portfolio Hamburg / Rothenburgsort €182m 716 Herrenberg III / Schäferlinde €56m 141 Project portfolio (exp. sales volume) Leipzig / Rosa-Luxemburg-Strasse €116m 330 Nuremberg / Seetor €103m 199 €362m ~ €5,6bn Nuremb
Slide 12: Project Portfolio (as of 30/09/2019)
Project Portfolio (as of 30/09/2019) Total portfolio by region Volume of sales contracts by customer type Total portfolio by development status Total portfolio by building right status (as of 30/09/19; based on sales volume) (for the period 01/19 - 09/19) (as of 30/09/19; based on sales volume) (as
Slide 13: Development of New Urban Neighbourhood in Frankfurt/Main
Development of New Urban Neigbourhood in Frankfurt/Main (~€ 600m GDV) Project „Westville“ (Kleyer Quarter) in Frankfurt/Main Instone is developing one of the biggest new urban neighbourhoods in Germany Approx. 93k sqm floor area and 51k sqm living space for >3,000 people >1,200 residential u
Slide 14: Acquisition of S&P Stadtbau (Transaction Highlights and Rationale)
Acquisition of S&P Stadtbau (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 b
Slide 15: Table of Contents
Table of Contents 01 | Instone Overview 02 | Portfolio Review 03 | 9M 2019 Financial Performance 04 | Outlook 05 | Appendix 15 |
Slide 16: 9M 2019 Results of Operations
9M 2019 Results of Operations Results of Operations (€m, adj.*) • Gross profit margin of 32.7% reflects exceptionally high 9M 2019 9M 2018 Delta share of revenue contribution from high margin projects in Revenues 302.4 222.5 35.9% first nine month 2019 Project cost -203.5 -162.7 25.1% €m 9M 2019 9M
Slide 17: Revenue Recognition and Volume of Sales Contracts (illustrative)
Revenue Recognition (illustrative) Volume of Sales Contracts (illustrative) Condominium Sale Forward Sale from construction starts: 6 projects from construction starts:1 project from condominium sale: 2 projects from condominium sale: 1 project from forward sales:2 projects from forward sales: 5-7 p
Slide 18: Operating Cash Flow and Leverage
Operating Cash Flow Leverage In € million 9M 2019 9M 2018 In € million 9M 2019 FY 2018 EBITDA 59.7 21.0 Corporate debt 171.7 66.1 Other non-cash items -2.8 -2.8 Project related debt 279.8 199.5 Taxes paid -10.2 -10.9 Financial debt 451.5 265.5 1 Change in working capital -78.6 -35.1 - Cash and cash
Slide 19: 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 20: Table of Contents
Table of Contents 01 | Instone Overview 02 | Portfolio Review 03 | 9M 2019 Financial Performance 04 | Outlook 05 | Appendix 20 |
Slide 21: Confirmed FY 2019 Outlook and Midterm Revenue Guidance
Confirmed FY 2019 Outlook and Midterm Revenue Guidance Outlook FY 2019 Revenue (adj.) Guidance FY 2019 - 2022 € million Previous (03/19) New (09/19) Revenues (adj.) 500 - 550 700 - 750 Gross Profit Margin (adj.) ~28% ~24% EBIT (adj.) 85 - 100 110 - 125 Volume of sales contracts 450 - 550 >1,100 Ther
Slide 22: Table of Contents
Table of Contents 01 | Instone Overview 02 | Portfolio Review 03 | 9M 2019 Financial Performance 04 | Outlook 05 | Appendix 22 |
Slide 23: Project Cost and Platform Cost
Cost of materials cost of land incl. incidental costs Non-deductible 23.3% input tax 31.5% shell works Q3 2019 €k roof and facade Cost of materials -286,251 works 8.8% interior works Project Changes in inventories +87,344 technical building 8.2% equipment Cost Indirect sales cost -1,778 10.4% others
Slide 24: Income Statement (reported)
Income statement (reported) Commentary In €m 9M 2019 9M 20181 1 For the nine months to 30 September 2019, the Instone Group significantly increased its year 1 Total revenue 296.4 210.2 on year revenues to €296.4 million (previous year: €210.2 million). New sales contracts Changes in inventories 86.8
Slide 25: Condensed Balance Sheet
Condensed balance sheet Commentary In €m 30/09/2019 FY 2018 6 As at 30 September 2019, inventories increased to €547.8 million (31 December 2018: Non-current assets 21.3 2.8 €404.4 million) construction progress as well as land acquisitions. Approximately €70.1 of inventories are related to the firs
Slide 26: Condensed Cash Flow Statement
Condensed cash flow statement Commentary In €m 9M 2019 9M 20181 10 Operating cash flow for the nine months to 30 September 2019 amounted to €- 32.0 million Consolidated earnings 38.5 -10.0 (previous year: €1.7 million). The number includes approximately €93.7 million in relation to Other non-cash in
Slide 27: Project Portfolio Key Figures
Project Portfolio Key Figures In € million Q3 19 Q2 19 Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 Volume of sales contracts 183.1 69.0 62.8 206.2 104.2 120.0 30.0 Project Portfolio (as of) 5,384.1 5,091.7 4,790.2 4,763.2 3,620.3 3,589.1 3,408.5 thereof already sold (as of) 1,261.1 1,128.7 1,061.1 998.2 971.9 867
Slide 28: 9M 2019 – Revenue Contribution (Top Projects)
9M 2019 – Revenue Contribution (Top Projects) Project City Adj. Revenues (€m) Quartier Stallschreiber Strasse / Luisenpark Berlin 68.2 Wohnen am Kurpark / Wilhelm IX Wiesbaden 40.3 Marienkrankenhaus Frankfurt/Main 34.5 Heeresbäckerei Leipzig 30.5 City Prag – Wohnen im Theaterviertel Stuttgart 24.6 F
Slide 29: 9M 2019 – Volume of Concluded Sales Contracts (Top Projects)
9M 2019 – Volume of Concluded Sales Contracts (Top Projects) Project City Volume (€m) Units Niederkasseler Lohweg Dusseldorf NA1 221 Quartier Stallschreiber Strasse / Luisenpark Berlin 55.1 100 Marienkrankenhaus Frankfurt/Main 40.5 42 Sebastianstrasse / Schumanns Höhe Bonn 26.6 61 Wohnen am Kurpark
Slide 30: 9M 2019 – Construction Launches
9M 2019 – Construction Launches Project City Exp. Sales Volume (€m) Units City-Prag – Wohnen im Theaterviertel Stuttgart ~110 ~250 Sebastianstrasse / Schumanns Höhe Bonn ~68 ~185 Schwarzwaldstrasse Herrenberg ~48 ~115 West.side Bonn ~35 ~115 Marina Bricks Regensburg ~29 ~50 Theaterfabrik Leipzig ~20
Slide 31: Sales Offer as of 30/09/19 (Top Projects)
Sales Offer as of 30/09/19 (Top Projects) Project City Sales volume (€m) Units Marienkrankenhaus Frankfurt 109.9 92 Beethovenpark Augsburg 101.4 309 Schulterblatt „Amanda“ Hamburg 77.2 100 Quartier Stallschreiber Strasse / Luisenpark Berlin 33.6 40 Schwarzwaldstrasse Herrenberg 33.5 78 Others ~94.4
Slide 32: Project Portfolio as of 30/09/19 (Hamburg, Berlin, NRW)
Project Portfolio as of 30/09/19 (projects >€30m sales volume, representing total: ~€5.1bn) Building Sales volume Land plot right Sales Construction Project Location (expected) acquired started started obtained Hamburg Schulterblatt "Amanda" Hamburg 94 Mio. € Kösliner Weg Norderstedt-Garstedt 102 Mi
Slide 33: Project Portfolio as of 30/09/19 (Rhine-Main, Leipzig)
Project Portfolio as of 30/09/19 (projects >€30m sales volume, representing total: ~€5.1bn) 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 34: Project Portfolio as of 30/09/19 (Baden-Wurttemberg, Bavaria)
Project Portfolio as of 30/09/19 (projects >€30m sales volume, representing total: ~€5.1bn) 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. € Franklin Mann
Slide 35: Summary Transaction Terms and Financing (Acquisition of S&P Stadtbau)
Summary Transaction Terms and Financing (Acquisition of S&P Stadtbau) 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 r
Slide 36: 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“ • The „Mietpreisbremse“ shall be extended by • Properties built after Jan 1, 2014 and subsidised/rent-controlled properties Proposed time
Slide 37: Assessment of Instone Customer Sensitivity to Rent Regulation
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 38: Favourable Regulatory Framework in Germany
Favourable Regulatory Framework in Germany – Construction costs covered by customers’ regular payments Private customers’ payment profile for German residential development projects ■ Derisked: B2C development process per se low-risk via % remaining to be paid regulatory framework (“MaBV”)(1) by cus
Slide 39: Typical Project Cash Flow Profile
Typical Project Cash Flow Profile Notarised land Cash inflow > Start of sales Start of cash outflow Sales Construction acquisition and marketing construction completion completion 100% 90% Cash 80% inflows 70% Completion in % Sales ratio 60% 50% Cash Instone uses MaBV outflows framework to achieve 4
Slide 40: Instone Shareholders, Financial Calendar 2020, Investor Relations Contact
Instone Shareholders: Financial Calendar 2020: 19 March Publication of annual report 2019 8.47% 28 May Publication of quarterly group statement as of 31/03/2020 6.61% 9 June Annual General Meeting, Essen 6.10% 27 August Publication of group interim report as of 30/06/2020 36,988,336 26 Nov Publicati
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