Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — H1 2015 Earnings Presentation

42 slides from Deutsche Wohnen's earnings presentation, Aug 13, 2015

  1. Slide 1: Deutsche Wohnen AG H1 2015 results

    Deutsche Wohnen AG » H1 2015 results Conference Call, 13 August 2015 1

  2. Slide 2: Agenda

    » Agenda 1 Highlights H1 2015 2 Portfolio 3 Financing 4 Financials 5 Guidance & Outlook 6 Q&A 7 Appendix 2

  3. Slide 3: Highlights H1 2015

    » Highlights H1 2015 Financials Operational development In EUR H1 2015 yoy In EUR H1 2015 yoy FFO I (after minorities)1) 142.7m (+25%) NOI letting 236.8m (-0.8%) FFO I/share2) 0.47 (+21%) L-f-l rental growth 2.5% (-1.1pp) (Letting portfolio) FFO II (incl. disposals) 188.9m (+35%) Rent increase poten

  4. Slide 4: Portfolio

    ‘ ) a Deutsche Wohnen » Portfolio deutsche-wohnen.com

  5. Slide 5: Disposal business remains strong

    » Disposal business remains strong 1) Signed with expected closing in FY Privatization Institutional sales H1 2015 H1 2014 H1 2015 H1 2014 No. of units 1,688 1,664 7,400 1,798 Volume 162,982 132,722 478,406 67,908 Price per sqm 1,381 1,221 950 607 Gross margin 40% 45% 8% 8%  Privatization business

  6. Slide 6: Comparison of rental growth - 2013 vs 2015

    » Comparison of rental growth - 2013 vs 2015 Berlin Mietspiegel contribution 2013 2015e Berlin Mietspiegel growth +6.3% +5.4% Total residential units in Berlin c.102,600 c.98,000 Thereof unrestricted units (subject to rent table) c. 86,200 c. 84,7001) No. of units with rent increase c. 37,500 c. 38,

  7. Slide 7: Development of rents and prices in German top cities

    » Development of rents and prices in German top cities Price development in EUR per sqm Highlights Average asking price (multifamily)  Positive price development in all top 5 cities 4.300  However Berlin with EUR 1,940 per sqm still at a +2.5% 3.300 +3.8% +2.3% quite low level in comparison to the

  8. Slide 8: Valuation Overview as of 30 June 2015

    » Valuation Overview as of 30 June 2015  Revaluation of EUR ~0.7bn or EUR 801) per sqm Key figures H1 2015 FY 2014 leading to a multiple expansion by 1.2x to 16.7x Total fair value in EUR 10.3bn 9.8bn  Uplift in Greater Berlin by EUR 1031) per sqm to EUR 1,223 per sqm Area (sqm) in m 8.9 9.2  Als

  9. Slide 9: Portfolio revaluation by cluster

    » Portfolio revaluation by cluster 1) 1) Residential FV FV Multiple Multiple Multiple Fair Value Regions units (30/06/2015) (30/06/2015) in-place rent market rent in-place rent (31/12/2014) # EUR m EUR/sqm (30/06/2015) (30/06/2015) (31/12/2014) EUR/sqm Core+ 123,135 9,291 1,216 17.2 14.4 16.0 1,108

  10. Slide 10: Financing

    » Financing deutsche-wohnen.com . ) Deutsche Wohnen

  11. Slide 11: Background refinancing and implications

    » Background refinancing and implications Bank debt  Intensive competition amongst banks to finance particularly Core+ portfolios  Collateral values of banks went significantly up, more headroom in terms of covenants  Great willingness to provide long term financing, EUR 650m with 10y maturity at

  12. Slide 12: Refinancing leads to optimized financing structure

    » Refinancing leads to optimized financing structure Conditions before and after refinancing Maturity profile incl. bond refinancing before after 1.200 Total debt volume in EUR bn 5.4 ~5.1 1.000 Ø cost of debt 2.35% 1.85% 800 Ø loan amortization 1.09% <0.8% 600 Ø weighted maturity in years 8.6 ~10 4

  13. Slide 13: Financials

    » Financials deutsche-wohnen.com . ) Deutsche Wohnen

  14. Slide 14: GSW integration and efficiency

    » GSW integration and efficiency  Full integration almost completed – faster than planned and with higher synergies (process optimization, restructuring)  Comparable HR framework for all employees (salary structure, employment agreements) Achieve-  One IT system for the entire platform (SAP) for

  15. Slide 15: Efficiency leadership

    » Efficiency leadership DW before DW incl. GSW GSW 2013 2013 2014 H1 2014 H2 2014 H1 2015 pro forma No. of units 90,270 150,219 147,105 148,035 147,105 141,943 Gross rental income1) 353.5 589.7 626.3 313.4 312.9 313.3 (EUR m) Corporate expenses (48.1) (102.2) (90.5) (45.8) (44.7) (36.8) (EUR m) Cost

  16. Slide 16: EBITDA margin further improved

    » EBITDA margin further improved in EUR m H1 2015 H1 2014 EBITDA margins H1 2015 H1 2014 Earnings from Residential Property Management 259.1 259.7 Adj. EBITDA/gross rents 86.6% 77.9% Adj. EBITDA excl. Earnings from Disposals 46.2 25.6 71.9% 69.7% disposals/gross rents Earnings from Nursing and Assis

  17. Slide 17: IFRS result

    » IFRS result in EUR m H1 2015 H1 2014 in EUR m H1 2015 H1 2014 EBITDA (adjusted) 271.4 244.0 Interest expenses (69.1) (92.4) Depreciation (2.7) (3.2) Non-cash interest expenses 1.7 (7.7) At equity valuation 0.9 0.0 (67.4) (100.1) Financial result (net)1) (66.9) (99.6) Interest income 0.5 0.5 EBT (a

  18. Slide 18: FFO I per share performance +21% (yoy)

    » FFO I per share performance +21% (yoy) in EUR m H1 2015 H1 2014 FFO II development in EUR m EBITDA (adjusted) 271.4 244.0 72.9 139.8 188.9 Earnings from Disposals (46.2) (25.6) At equity valuation 0.9 0.0 46.2 Interest expense/ income (68.6) (91.9) 25.6 Income taxes (11.0) (8.5) Minorities (3.8) (

  19. Slide 19: Cash flow creation

    » Cash flow creation EUR m H1 2015 H1 2014 Delta FFO I1) 142.7 114.2 28.5 FFO disposals 46.2 25.6 20.6 FFO II 188.9 139.8 49.1 + ∆ CF disposals2) 316.3 45.9 270.4 - Regular amortization (29.3) (42.2) 12.9 - Capex (33.4) (19.1) (14.3) Corporate Free Cash Flow 442.5 124.4 318.1 Per share 1.46 0.43 1.0

  20. Slide 20: EPRA NAV

    » EPRA NAV in EUR m 30/06/2015 31/12/2014 in EUR m 30/06/2015 31/12/2014 Equity EPRA NAV (undiluted) 6,839.3 5,326.0 6,034.7 4,692.9 (before non-controlling interests) Fair values of derivative Goodwill GSW (535.1) (535.1) 52.4 144.9 financial instruments Adjusted NAV (undiluted) 6,304.2 4,790.9 Def

  21. Slide 21: Guidance & Outlook

    » Guidance & Outlook deutsche-wohnen.com ‘ ) a Deutsche Wohnen 21

  22. Slide 22: Guidance upgrade and summary

    » Guidance upgrade and summary New FFO I target: EUR 285-290m (after minorities)  Letting business remains strong – lack of supply dominates the growth markets and not the regulation  Block sales at attractive margins become more important  Clear commitment to grow further  Growth potential in C

  23. Slide 23: Q&A

    »Q&A deutsche-wohnen.com vr) a Deutsche Wohnen 23

  24. Slide 24: Appendix

    » Appendix deutsche-wohnen.com ‘ ) a Deutsche Wohnen 24

  25. Slide 25: Strong earnings and cash contributions from letting

    » Strong earnings and cash contributions from letting in EUR m H1 2015 H1 2014 In-place rent: H1 15: Current gross rental income 313.3 313.4 EUR 5.78/sqm/month Non-recoverable expenses (6.9) (6.8) Maintenance1) Rental loss (3.5) (4.1) H1 15: EUR 8.66/sqm (H1 14: Maintenance (39.2) (39.6) EUR 8.51/sq

  26. Slide 26: Strong disposal business

    » Strong disposal business Closed in EUR m H1 2015 H1 2014  Free cash flow from sales activities of EUR 362.5m Sales proceeds 507.1 138.4 (949 closed privatization units Cost of sales (12.1) (6.0) and 6,379 closed units institutional sales) Net sales proceeds 495.0 132.4 Carrying amounts of assets

  27. Slide 27: Nursing and Assisted Living

    » Nursing and Assisted Living in EUR m H1 2015 H1 2014 30/06/2015 Facilities Places Income Greater Berlin 12 1,442 Nursing 26.1 27.6 Saxony 7 475 Others 1 131 Living 3.0 3.0 In total 20 2,048 Other 3.8 3.2 Total income 32.9 33.8 Costs Average occupancy Nursing and corporate expenses (8.3) (8.9) Staf

  28. Slide 28: Overview of portfolio as at 30 June 2015

    » Overview of portfolio as at 30 June 2015 1) 30/06/2015 Residential Area In-place New letting Vacancy Fair Share in FV 5) Multiple Yield Multiple Yield 2) 3) 4) units rent rent Value terms of in-place market EUR/sqm/ EUR/sqm/ (FV) FV rent rent # K sqm month month % EUR m % EUR/sqm % % Strategic cor

  29. Slide 29: Portfolio split and strategic focus for investment decisions

    » Portfolio split and strategic focus for investment decisions 1) Strategy cluster Residential units Area % of total In-place Rent Vacancy Multiple Multiple 2) 3) units rent Potential 30/06/2015 in-place market 30/06/2015 rent rent K sqm EUR/sqm/month in % In % Total 141,943 8,598 100% 5.78 21.0% 2.

  30. Slide 30: Like-for-like overview of portfolio as at 30 June 2015

    » Like-for-like overview of portfolio as at 30 June 2015 In-place rent (like-for-like) and vacancy (like-for-like) letting portfolio1) Like-for-like Residential units In-place In-place in % Vacancy Vacancy in % 2) 2) 30/06/2015 rent rent yoy 30/06/2015 30/06/2014 yoy 30/06/2015 30/06/2014 in % in %

  31. Slide 31: Composition of fair value adjustment

    » Composition of fair value adjustment EUR m EUR/sqm EUR/sqm in % Multiple Multiple FV (31.12.2014) 9,785 1,062 15.5 Net of acquisitions / disposals and Balance portfolio changes capitalized investments for (203) 19 and other modernization FV (30.06.2015) after portfolio changes and 9,582 1,081 19 1

  32. Slide 32: Focused and sustainable investments into the portfolio

    » Focused and sustainable investments into the portfolio EUR m H1 2015 H1 2014 16.04 12.62 Maintenance 39.2 39.6 7.38 10.38 4.11 2.19 Modernization 33.4 19.1 Total 72.6 58.7 8.19 8.51 8.66 Total EUR/sqm1) 16.04 12.62 H1 2013 H1 2014 H1 2015 Modernization in EUR/sqm Capitalization rate 46.0% 32.5% Ma

  33. Slide 33: Balance sheet

    » Balance sheet Assets Equity and Liabilities in EUR m 30/06/2015 31/12/2014 in EUR m 30/06/2015 31/12/2014 Investment properties 10,740.3 9,611.0 Total equity 6,231.2 4,876.1 Other non-current assets 600.6 600.6 Financial liabilities 4,294.5 4,779.0 Derivatives 0.4 0.0 Convertibles 808.9 748.7 Defe

  34. Slide 34: Deutsche Wohnen – EUR 500m 1.375% 5yr debut bond

    » Deutsche Wohnen – EUR 500m 1.375% 5yr debut bond Terms & conditions Transaction highlights Issuer  Deutsche Wohnen AG  Bond placement marks last key step of the total Issuer ratings  A3/A- (both stable) EUR 3bn refinancing in two steps  Moody’s: A3 Rating of bond  S&P: BBB+  Free cash flow i

  35. Slide 35: European ratings overview

    » European ratings overview Rating of European Peers A A2 A- A3 BBB+ Baa1 BBB Baa2 1 BBB- Baa3 BB+ Ba1 BB Ba2 Source: Bloomberg S&P Moody's Fitch Notes: 1 BBB- stable outlook (S&P), Baa2 stable outlook (Moody's) Negative Outlook Stable Outlook Positive Outlook „The upgrade of Deutsche Wohnen’s issue

  36. Slide 36: Berlin Mietspiegel

    » Berlin “Mietspiegel” Development of Berlin „Mietspiegel“ Development of inflation1) and Berlin „Mietspiegel“ Rent (EUR/sqm/month) (in % two-year period) +33 Cent +8 Cent +38 Cent +30 Cent 10 Ø +23 Cent 7.9 8 6.3 6 5.8 5.4 3.7 4 3.7 2.9 2.3 2 1.7 1.0 0 2007 2009 2011 2013 2015 Inflation #REF! #REF!

  37. Slide 37: Expected rent increases of ~5.5% from Berlin Mietspiegel

    » Expected rent increases of ~5.5% from Berlin Mietspiegel c. 98,000 total residential units in Berlin1) c. 13,200 restricted units c. 84,700 unrestricted units (subject to rent index) c. 46,400 units currently no increase Leading to ~0.30 EUR/sqm or ~5.5% rent increase (slightly above Mietspiegel a

  38. Slide 38: The drivers of rental growth

    » The drivers of rental growth FY 2013: split of 3.1% rental growth1) FY 2014: split of 2.5% rental growth1) 0.1% 0.1% 0.4% 1.0% 0.5% new lettings new lettings 1.2% rent table rent table rent restricted rent restricted modernization modernization 0.7% 1.6%  After adjusting “Berlin Mietspiegel effec

  39. Slide 39: Strong like-for-like development

    » Strong like-for-like development Letting Strategic Core and growth regions Letting Portfolio Greater Berlin In-place rent (EUR/sqm/month) In-place rent (EUR/sqm/month) +3.5% +2.4% +2.5% +3.2% +2.2% +3.8% +2.1% +3.3% +2.3% +3.1% +3.4% +2.2% 5.39 5.50 5.69 5.83 5.27 5.39 5.60 5.74 4.96 5.12 5.22 4.8

  40. Slide 40: The Berlin-Portfolio at a glance as at 30 June 2015

    » The Berlin-Portfolio at a glance as at 30 June 2015 Pankow Reinickendorf # 8,689  6.12  1.1% # 9,153  5.64  1.9% Friedrichshain-Kreuzberg Mitte # 7,782  5.72  1.5% # 3,452  5.79  1.9% Lichtenberg # 7,570  5.82  1.3% Spandau # 11,813  5.51  2.1% Marzahn-Hellersdorf # 10,242  5.12  1.6

  41. Slide 41: Disclaimer

    » Disclaimer This presentation contains forward-looking statements including assumptions, opinions and views of Deutsche Wohnen or quoted from third party sources. Various known and unknown risks, uncertainties and other factors could cause actual results, financial positions, the development or the

  42. Slide 42: Deutsche Wohnen AG Pfaffenwiese 300 65929 Frankfurt/Main

    Deutsche Wohnen AG Registered Office Berlin Office Pfaffenwiese 300 Mecklenburgische Straße 57 65929 Frankfurt/Main 14197 Berlin Phone: +49 30 897 86 5413 Fax: +49 30 897 86 5409 © 2015 Deutsche Wohnen AG 42

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