Vonovia Se · XETR:VNA
Vonovia — Debt Investor Presentation (December 2019)
41 slides from Vonovia's debt investor presentation, December 2019
Slide 1: Fixed Income Investor Presentation
Fixed Income Investor Presentation Asia Roadshow December 2019 Olaf Weber, Head of Finance and Treasury Thorsten Arsan, Head of Corporate Finance
Slide 2: Agenda
Agenda Company Business Additional Overview Update Information pages 3-14 pages 16-18 pages 21-40 Fixed Income Investor Presentation page 2 Asia Roadshow December 2019
Slide 3: We are Europe's Leading Residential Landlord
We are Europe‘s Leading Residential Landlord … Company Overview Business Update Additional Information Vonovia was Germany’s first and only real estate company to be included in the DAX-30 index Owner and full-scale operator of ca. 417k apartments in multifamily 38k apartments2 Stockholm (29k) Gothe
Slide 4: … with a Long History
… with a Long History. Company Overview Business Update Additional Information 2018 onwards 2013 until 2018 Opportunistic expansion into IPO selected European Beginning of metropolitan areas in 2013 ~2000 consolidation in the until German residential Professionalization market While Germany is 2013
Slide 5: Our Business is Built around Megatrends
Our Business is Built around Megatrends… Company Overview Business Update Additional Information % of population living in cities Increasing urbanization in 87% Germany and Europe meets a 84% structural supply/demand 79% imbalance in most European cities. 77% Owning apartments in the right locations
Slide 6: … and Based on a Proven 4+2 Strategy
… and Based on a Proven 4+2 Strategy. Company Overview Business Update Additional Information Avg. # of Property apts.(‘000) 179 184 324 343 348 388 71% 74% 75% Management 68% Mergers & Traditional 61% 64% 5 Acquisitions 1 Efficient 830 754 645 570 operations of 498 445 scalable 2013 2014 2015 2016
Slide 7: We Operate and Manage Across Four Segments
We Operate and Manage Across Four Segments … Company Overview Business Update Additional Information Rental Value-add Development Recurring Sales Efficient Ancillary service business Construction of Disposal of management of for internal savings and apartments for (i) own individual apartments own p
Slide 8: … as a Full-scale Owner and Operator
… as a Full-scale Owner and Operator. Company Overview Business Update Additional Information Property Ca. 1,500 letting agents and Best-in-class service levels Management caretakers across our local markets Face to the customer and ears and eyes on the ground Fully SAP Ca. 5,000 employees in wholly
Slide 9: We are Proud of our Impeccable Trajectory
We are Proud of our Impeccable Trajectory, … Company Overview Business Update Additional Information Efficient operations1 Robust capital structure 75% 4,6 4,7 74% 71% 68% 64% 61% 3,7 49% 50% 47% 830 42% 43% 754 40% 645 3,0 570 2,7 498 445 2,2 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2
Slide 10: … our Solid Capital Structure
… our Solid Capital Structure, … Company Overview Business Update Additional Information Sep. 30, Dec. 31, KPI / criteria 2019 2018 • Unwavering commitment to Corporate rating (S&P) BBB+ BBB+ LTV 40.3% 42.8% BBB+ rating Net debt/EBITDA multiple1 11.1x 11.4x • Maintain diverse funding mix to ICR 4.9x
Slide 11: … Our Sustainable Cash Flow Generation and Value Growth
… Our Sustainable Cash Flow Generation and Value Growth . Company Overview Business Update Additional Information Sustainable cash flow growth 3 sources of sustainable value growth Trajectory Rental income Growing. Construction Development cost below costs - Maintenance Broadly stable. Scalable rela
Slide 12: We Take Social Responsibility Seriously
We Take Social Responsibility Seriously. Company Overview Business Update Additional Information Environment We continue to reduce CO2 emissions through EPRA Gold energy efficient building modernizations and ~4% Award use alternative energy sources. building For Vonovia‘s modernization We are mindfu
Slide 13: We Assess Investment Opportunities on the Basis of Non-Discussable Criteria
We Asses Investment Opportunities on the Basis of Non-Discussable Criteria. Company Overview Business Update Additional Information The objective under the criteria is to safeguard discipline in acquisitions and M&A: Stakeholders must be better off with the acquisition than without. Residential real
Slide 14: Why Vonovia?
Why Vonovia? Company Overview Business Update Additional Information Attractive market fundamentals supported by long-term megatrends Clearly defined strategy successfully and consistently executed since IPO Resilient business model with stakeholder returns in the form of sustainable cash flow growt
Slide 15: Agenda
Agenda We are Business Additional Vonovia update information pages 3-14 pages 16-18 pages 21-40 Fixed Income Investor Presentation page 15 Asia Roadshow December 2019
Slide 16: Q3.2019 Business Highlights
Q3.2019 Business Highlights Company Overview Business Update Additional Information Y-o-y increase across all four segments Performance Adj. EBITDA Total €1,331.1m (+16.7%) Group FFO €932.8m (+10.7%) and €1.72 per share (+5.5%; eop shares) Adj. NAV per share €48.92 (+9.0% since YE 2018) NAV & Est. H
Slide 17: Substantial Growth in All Four Segments
Substantial Growth in All Four Segments from Larger Portfolio Volume and Performance Improvements Company Overview Business Update Additional Information 16.7% Adj. EBITDA Total growth and 10.7% Group FFO growth on the back of a 2.4% larger portfolio and performance improvements. While the operating
Slide 18: Bridge from Group FFO 2019E to 2020E
Bridge from Group FFO 2019E to 2020E Company Overview Business Update Additional Information +7% €m (midpoint) 120 - 170 ca. -6 ca. -55 1,275 (+4.9% y-o-y) – B 1,325 (+9.1% y-o-y) C 1,215 A 2019E EBITDA Total Berlin rent freeze Interest, tax and 2020E consolidation A Organic EBITDA growth plus acqui
Slide 19: Agenda
Agenda We are Business Additional Vonovia update information pages 3-14 pages 16-18 pages 21-40 Fixed Income Investor Presentation page 19 Asia Roadshow December 2019
Slide 20: Additional Information contents
Company Overview Business Update Additional Information Residential Market Fundamentals (Germany) 21-27 Political and Public Debate about Housing (Germany) 28-29 Portfolio 30-31 Investment Program 32 Rent Growth Analysis 33-34 Acquisitions 35-38 LTV and Covenants 39-40 Disclaimer 41 Fixed Income Inv
Slide 21: Robust Rent Growth in Regulated Environments
Residential Market Fundamentals (Germany) Robust Rent Growth in Regulated Environments Company Overview Business Update Additional Information In regulated markets like Germany, rent growth is stable and largely independent from GDP developments In unregulated markets like the USA, rent growth fluct
Slide 22: Completions Substantially below Required Volumes
Residential Market Fundamentals (Germany) Completions Substantially below Required Volumes Company Overview Business Update Additional Information Germany (‘000 units) 700 Average annual residential completions of the last five 600 years fall short of estimated required volumes: 500 Germany: only 75
Slide 23: Housing Affordability and Urbanization
Residential Market Fundamentals (Germany) Housing Affordability and Urbanization Company Overview Business Update Additional Information Housing affordability1 (%) 26,2 26,2 26,1 26,7 25,7 23,7 24,2 23,5 24,0 24,1 21,9 22,6 20,8 20,4 Euro Area Germany France Sweden Austria Netherlands UK 2007 2017 P
Slide 24: Household Sizes and Ownership Structure
Residential Market Fundamentals (Germany) Household Sizes and Ownership Structure Company Overview Business Update Additional Information Growing number of smaller households Fragmented ownership structure While the overall population in Germany is expected to Germany is the largest housing market i
Slide 25: Large Gap between In-place Values and Replacement Costs
Residential Market Fundamentals (Germany) Large Gap between In-place Values and Replacement Costs Company Overview Business Update Additional Information Vonovia (German portfolio) – fair value per sqm (€; total lettable area) vs. construction costs Factor 2.5x – 3x 1,677 1,475 1,264 964 1,054 901 2
Slide 26: Quick Guide to Key Real Estate Regulation Terminology
Residential Market Fundamentals (Germany) Quick Guide to Key Real Estate Regulation Terminology Company Overview Business Update Additional Information While German rental regulation has a variety of special terms there are a few that are particularly relevant to understand rental regulation. While
Slide 27: Berlin-specific Rent Legislation: Freeze & Reduction
Residential Market Fundamentals (Germany) Berlin-specific Rent Legislation: Freeze & Reduction Company Overview Business Update Additional Information On Oct. 22, the Berlin Senate agreed on the draft bill for a Berlin-specific rent freeze law; parliamentary hearings are expected to take place in No
Slide 28: Vonovia Leads by Example and Is Part of the Solution (I)
Political and Public Debate about Housing (I) Vonovia Leads by Example and Is Part of the Solution Company Overview Business Update Additional Information As the market leader, Vonovia leads by example when it comes to stakeholder reconciliation We offer our customers a product that is very close to
Slide 29: Vonovia Leads by Example and Is Part of the Solution (II)
Political and Public Debate about Housing (II) Vonovia Leads by Example and Is Part of the Solution Company Overview Business Update Additional Information While this is a never-ending responsibility, we have come a long way in our effort to be part of the solution Largest homebuilders in Germany1 “
Slide 30: Substantial Reduction of Portfolio Locations
Substantial Reduction of Portfolio Locations Company Overview Business Update Additional Information 03/2015 (incl. Südewo) 09/2019 Strategic Portfolio 818 locations 498 locations ~400 locations 347k units 356k units 350k units Vonovia location High-influx cities (“Schwarmstädte”). For more informat
Slide 31: Portfolio Cluster
Rental Segment Portfolio Cluster Company Overview Business Update Additional Information Sweden 5% Austria 6% Ca. 60% of German portfolio earmarked for Non-core 1% Recurring investment strategy, safeguarding long-term Sales 8% sustainability of our Optimize Apartment and Upgrade Building investment
Slide 32: Investment Program
Investment Program Company Overview Business Update Additional Information Evolution of Investment Program (€m) In contrast to reactive maintenance (expensed and New Construction 1,300 - capitalized) which is spent to protect future EBITDAs, Upgrade Buildings 1,600 Optimize Apartments ~1,400 investm
Slide 33: Three Sources of Rent Growth
Three Sources of Rent Growth Company Overview Business Update Additional Information Vonovia‘s investment program proactively addresses the challenges of a more sensitive rent growth environment and enables us to largely compensate for the slight decline in market rent growth opportunities which is
Slide 34: Substantial Rent Growth Pipeline
Substantial Rent Growth Pipeline Company Overview Business Update Additional Information Increasingly comprehensive investment projects incl. neighborhood developments and new construction result in more extended periods between investment and full rent growth realization. 6% of 2017 investment prog
Slide 35: Acquisitions – Opportunistic but Disciplined
Acquisitions – Opportunistic but Disciplined Company Overview Business Update Additional Information Acquisition pipeline (‘000 units) 340 2013: Dewag+ Vitus (~41 k)1 2015: Gagfah (~145 k) 1 2015: Südewo (~19 k) 1 2016: conwert (~23 k) 1 2017: Buwog (~48 k) 1 252 240 2018: Victoria Park (~14 k) 1 20
Slide 36: Acquisition Track Record
Acquisition Track Record Company Overview Business Update Additional Information Fair Value (€/sqm)1 In-place rent (€/sqm)1 Residential units Sep 30, Sep 30, Year Deal TOP Locations @ Acquisition ∆ @ Acquisition ∆ # 2019 2019 Berlin, Hamburg, DEWAG 11,300 1,344 2,356 75% 6.76 8.05 19% Cologne, Frank
Slide 37: Update Hembla Acquisition
Update Hembla Acquisition Company Overview Business Update Additional Information Agreement to acquire ca. 69% of voting rights and ca. 61% of shares announced on Sep. 23, Acquisition from 2019 (subject to merger clearance, which we expect to receive shortly) Blackstone Closing expected for the firs
Slide 38: European Acquisition Activities
European Acquisition Activities Company Overview Business Update Additional Information Cautious approach to minimize risk. Currently ca. 14%1 of the portfolio located outside Germany. We continue to monitor the German market and our defined European target markets in accordance with our acquisition
Slide 39: LTV at Lower End of Target Range
LTV at Lower End of Target Range Company Overview Business Update Additional Information LTV as of Sep. 30, 2019, was 40.3%; Net debt/EBITDA multiple was 11.1x. Against the background of the stable cash flows and the strong long-term fundamentals in our portfolio locations, largely driven by a struc
Slide 40: Covenants and KPIs (Sep 30, 2019)
Covenants and KPIs (Sep 30, 2019) Company Overview Business Update Additional Information Bond KPIs Covenant Level Sep 30, 2019 LTV <60% 40% Total Debt / Total Assets Secured LTV <45% 13% Secured Debt / Total Assets ICR >1.80x 4.9x Last 12M EBITDA / Last 12M Interest Expense Unencumbered Assets >125
Slide 41: Disclaimer
Disclaimer Company Overview Business Update Additional Information This presentation has been specifically prepared by Vonovia SE and/or its affiliates (together, “Vonovia”) for internal use. Consequently, it may not be sufficient or appropriate for the purpose for which a third party might use it.