Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — Investor Presentation (November 2017)

43 slides from Deutsche Wohnen's investor presentation, November 2017

  1. Slide 1: Deutsche Wohnen SE Company presentation November 2017

    Deutsche Wohnen SE » Company presentation November 2017 1

  2. Slide 2: Content

    » Content 1 Deutsche Wohnen at a Glance 2 German Residential Real Estate Market 3 Portfolio and Business Segments 4 Key Financials 5 Strategic Focus 6 Key Investment Highlights 7 Appendix 2

  3. Slide 3: Deutsche Wohnen business model "Made in Germany"

    1» Deutsche Wohnen business model “Made in Germany” 1 ~160,000 residential units and 51 Nursing & Assisted Living facilities with Fair Value of EUR ~18 bn 2 Focus on metropolitan areas in Germany, 75% of assets in Berlin 3 3rd largest listed landlord in Europe with market cap of ~EUR 13bn 4 Committe

  4. Slide 4: German Residential is resilient throughout recessions

    2» German Residential is resilient throughout recessions Germany: GDP and rent growth 12% Avg. German GDP growth 1.5% 10% CAGR Top 6 cities German rent growth 3.4% CAGR Berlin rent growth 3.8% 8% 6% 4% 2% 0% -2% -4% -6% -8% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 German GDP growth Top

  5. Slide 5: Market and sector specific trends underpin the investment case

    2» Market and sector specific trends underpin the investment case Net immigration and new construction in Berlin Berlin with strongest population growth forecast Development of residents: Boomtown Berlin 300,000 Change in number of residents 2015 - 2035 (in %) 20 254,500 14.5 250,000 15 Berlin expec

  6. Slide 6: Current level of rents and prices offer significant growth potential

    2» Current level of rents and prices offer significant growth potential Asking prices multifamily housing (in EUR / sqm) Asking rents in German top cities (in EUR / sqm) DW Berlin DW Berlin (book value) 1,884 (re-letting rent) 8.31 Dusseldorf Berlin 2,499 9.79 Cologne Dusseldorf 2,627 10.00 Berlin C

  7. Slide 7: Our Residential Letting Business

    3» Our Residential Letting Business Focused quality portfolio in dynamic growth regions in Germany Strategic cluster Residential % of total In-place rent1) Fair value Multiple Multiple Rent potential2) Vacancy units measured by in-place market fair value EUR/sqm/month EUR/sqm rent rent in % in % Str

  8. Slide 8: Re-letting rents have outpaced in-place rents

    »3 Our Residential Letting Business Re-letting rents have outpaced in-place rents DW rent development in Berlin DW development of multiples in Berlin EUR / sqm 30.0x 9.000 8.31 24.7x 23.7x 25.0x 8.000 7.60 7.02 6.3x spread 6.92 30% rent 18.7x 20.0x 7.000 6.54 potential 16.1x 14.4x 18.9x 18.4x 17% re

  9. Slide 9: Deutsche Wohnen's portfolio is best-in-class

    3» Our Residential Letting Business Deutsche Wohnen's portfolio is best-in-class Südwestkorso, Berlin Siemensstadt, Berlin Otto-Suhr-Siedlung, Berlin Oranienkiez, Berlin Hellersdorf, Berlin Carl-Legien-Siedlung, Berlin Hufeisensiedlung, Berlin Dresden 9

  10. Slide 10: Our Disposal segment

    »3 Our Disposal segment Disposals business remains opportunistic • xxx Development of privatization business Development of institutional sales business 20,000 95% 2,400 44% 41% 39% 29% 20% 8% 13% 16% 2,047 92% 2,100 15,000 91% 91% 90% 14,272 1,800 10,000 12,669 90% 1,564 1,394 9,596 1,500 1,181 5,0

  11. Slide 11: Nursing & Assisted Living segment

    3» Nursing & Assisted Living segment Nursing identified as attractive driver for further external growth Assets including operations  Fragmented market with promising fundamental outlook offers Facilities Beds Occupancy room for consolidation Region # # rate Managed by owner  Significant investmen

  12. Slide 12: Nursing & Assisted Living segment

    3» Nursing & Assisted Living segment Uferpalais, Berlin Im Schlossgarten, Brandenburg Wolkenstein, Saxony Wilsdruff, Saxony Quellenhof, Saxony Am Schwarzen Berg, Lower Saxony Garpsen, Lower Saxony Am Auensee, Saxony Oberau, Bavaria Blankenese, Hamburg Zum Husaren, Hamburg Am Lunapark, Saxony 12

  13. Slide 13: Operational and financial improvements drive margins

    4» Operational and financial improvements drive margins Adj. EBITDA margin (w/o disposals) FFO I margin 78.7% Avg. cost of debt 3.2% 2.5% 1.8% 1.6% 1.4% 74.9% 59.6% 71.8% 54.5% 47.9% 34.7% 67.5% 30.7% 66.3% FY 2013 FY 2014 FY 2015 FY 2016 9M 2017 FY 2013 FY 2014 FY 2015 FY 2016 9M 2017 Concentrated

  14. Slide 14: Strong generation of total shareholder return

    4» Strong generation of total shareholder return Development of dividend in EUR per share Development of EPRA NAV (undiluted) in EUR per share Yoy growth +29% +23% +37% +6% CAGR 2013- 9M 2017: +21% Dividend per share +6% +29% CAGR 2013- 2017e: +23% +29% 31.55 1.21 29.68 1.14 +23% 0.95 23.02 0.75 0.7

  15. Slide 15: Conservative long term capital structure

    4» Conservative long term capital structure Rating A- / A3; stable outlook  Low leverage, long maturities and strong rating Ø maturity1) ~ 8.2 years  Flexible financing approach to optimize financing costs – unencumbered assets increased to > EUR 4bn % secured bank debt1) 66%  No significant matu

  16. Slide 16: Full year guidance remains unchanged

    4» Full year guidance remains unchanged 2017 2016 update Main drivers Guidance FFO I (EUR m) 384 ~425  Operational performance and recent acquisitions Dividend per Based on 65% pay-out ratio from FFO I share (EUR) 0.74 ~0.78  and current shares outstanding 35-40% LTV 37.7% (target  Aim to keep cu

  17. Slide 17: Key strategic priorities to accelerate rental and value growth

    5» Key strategic priorities to accelerate rental and value growth  To unlock reversionary potential, reletting investments of EUR 7,800 on average per unit invested, at a return of 12% (yield on cost)  Complex Capex programme for 30,000 units by 2021, thereof almost 50% are in Investments existing

  18. Slide 18: Highlights of business model

    6» Highlights of business model 1 Resilient and growing residential real estate market in Germany 2 Focused quality portfolio in dynamic growth regions in Germany 3 High quality asset base with high rent and value upside potential 4 Low risk and efficient financing structure 5 Strong and predictable

  19. Slide 19: Appendix (9M 2017)

    » Appendix (9M 2017) deutsche-wohnen.com ‘ ) a Deutsche Wohnen

  20. Slide 20: Highlights 9M 2017

    » Highlights 9M 2017 Strong operating business  L-f-l rental growth of 4.2% for letting portfolio – for Berlin even at 5.0% as Mietspiegel effects start to come through  Adjusted EBITDA (excl. disposals) up 7.5% yoy to EUR 435.3m  Attractive NOI margin of 77.4% despite increased maintenance costs

  21. Slide 21: Strong like-for-like development in particular in Berlin

    » Strong like-for-like development in particular in Berlin 2) 2) Like-for-like Residential units In-place rent In-place rent Change Vacancy Vacancy Change 30/09/2017 number 30/09/2017 30/09/2016 y-o-y 30/09/2017 30/09/2016 y-o-y EUR/sqm EUR/sqm in % in % Strategic core and growth regions Core+ 131,6

  22. Slide 22: Strong like-for-like development in particular in Berlin (2)

    » Strong like-for-like development in particular in Berlin (2) 2) 2) Like-for-like Residential units In-place rent In-place rent Change Vacancy Vacancy Change 30/09/2017 Number 30/09/2017 30/09/2016 y-o-y 30/09/2017 30/09/2016 y-o-y EUR/sqm EUR/sqm in % in % Letting portfolio1) 150,302 6.32 6.07 4.2

  23. Slide 23: Focused and increasing investments into the portfolio

    » Focused and increasing investments into the portfolio 9M 2017 9M 2016 Modernization & Maintenance per sqm EUR / EUR / 16.51 19.98 24.92 ~30 EUR m EUR m sqm1) sqm1) Maintenance (expensed 74.1 9.95 64.4 8.75 through p&l) ~ 20 15.29 Modernization 10.53 (capitalized on 142.1 19.08 83.5 11.34 6.92 bala

  24. Slide 24: NOI margin at 77.4%

    » NOI margin at 77.4% in EUR m 9M 2017 9M 2016 Rental income 553.4 526.1 Non-recoverable expenses (8.0) (6.2) Rental loss (4.3) (4.8) Maintenance (74.1) (64.4) Others (5.4) (6.0) Maintenance expenses as a percentage of rental income increased from 12.2% to 13.4% Earnings from Residential Property 46

  25. Slide 25: Attractive margins of disposal business despite significant revaluations

    » Attractive margins of disposal business despite significant revaluations Disposals Privatization Institutional sales Total with closing in 9M 2017 9M 2016 9M 2017 9M 2016 9M 2017 9M 2016 No. of units 571 1,061 1,603 2,544 2,174 3,605 Proceeds (EUR m) 83.8 125.5 115.7 175.5 199.5 301.0 Book value 6

  26. Slide 26: Increasing FFO contribution from Nursing and Assisted Living

    » Increasing FFO contribution from Nursing and Assisted Living Operations (in EUR m) 9M 2017 9M 2016 in EUR m 9M 2017 9M 2016 Total income 69.4 52.4 Nursing 53.9 41.5 Total expenses (63.1) (47.1) Living 6.5 4.9 EBITDA operations 6.3 5.3 Other 9.0 6.0 EBITDA margin 9.1% 10.1% in EUR m 9M 2017 9M 2016

  27. Slide 27: EBITDA margin continues to be strong

    » EBITDA margin continues to be strong in EUR m 9M 2017 9M 2016 Development of cost ratio Earnings from Residential Property Management 461.6 444.7 11.6% 10.0% 10.5% Earnings from Disposals 28.5 46.4 Earnings from Nursing and Assisted Living 36.9 13.7 Segment contribution margin 527.0 504.8 Q3 2015

  28. Slide 28: FFO growth of 9% mainly driven by operations and acquisitions

    » FFO growth of 9% mainly driven by operations and acquisitions in EUR m 9M 2017 9M 2016 FFO I margin development EBITDA (adjusted) 463.8 451.4 64.8% 61.6% 59.6% Earnings from Disposals (28.5) (46.4) 57.6% Long-term remuneration component 51.3% 1.2 1.6 48.4% (share based) At equity valuation 1.3 1.5

  29. Slide 29: EPRA NAV per share stable in 9M 2017

    » EPRA NAV per share stable in 9M 2017 in EUR m 30/09/2017 31/12/2016 EPRA NAV(1) per share (undiluted) in EUR Equity (before non-controlling interests) 8,842.2 7,965.6 29.68 31.55 6% 23.01 Fair values of derivative financial 20.0 47.0 + 29% instruments Deferred taxes (net) 2,328.7 2,004.4 EPRA NAV

  30. Slide 30: Bridge from adjusted EBITDA to profit

    » Bridge from adjusted EBITDA to profit in EUR m 9M 2017 9M 2016 in EUR m 9M 2017 9M 2016 EBITDA (adjusted) 463.8 451.4 Interest expenses (74.8) (79.3) Depreciation (5.2) (4.6) In % of rental income ~14% ~15% At equity valuation 1.3 1.5 Non-cash interest expenses (17.2) (9.9) (91.4) (92.0) (89.2) Fi

  31. Slide 31: Summary balance sheet

    » Summary balance sheet Assets Equity and Liabilities in EUR m 30/09/2017 31/12/2016 in EUR m 30/09/2017 31/12/2016 Investment properties 17,941.0 16,005.1 Total equity 9,146.6 8,234.0 Other non-current assets 132.2 108.6 Financial liabilities 4,793.6 4,600.0 Deferred tax assets 0.7 0.7 Convertibles

  32. Slide 32: Early refinancing of the convertible bonds due 2020 and 2021

    » Early refinancing of the convertible bonds due 2020 and 2021 Refinancing CB 2020 in Feb 2017 Refinancing CB 2021 in Sep 2017 Notional amount €250m €800m €400m €800m Issue date Nov 2013 Feb 2017 Aug 2014 Oct 2017 Maturity Nov 2020 Jul 2024 Sep 2021 Jan 2026 Coupon p.a. 0.500% 0.325% 0.875% 0.600% I

  33. Slide 33: The Berlin portfolio at a glance

    » THE BERLIN-PORTFOLIO AT A GLANCE Reinickendorf Pankow # 9,443  6.33  1.8% # 9,781  6.89  2.6% Mitte Friedrichshain-Kreuzberg # 4,602  6.68  2.6% # 8,005  6.13  4.5% Lichtenberg # 8,702  6.34  0.8% Spandau # 13,777  6.23  1.9% Marzahn-Hellersdorf # 14,874  5.67  0.6% Charlottenburg-Wi

  34. Slide 34: Appendix (Miscellaneous)

    » Appendix (Miscellaneous) 34

  35. Slide 35: Berlin's key facts

    » Berlin's key facts Population - 2016 Residential units - 2016 Population Berlin ~3.5m Number of residential units 1,916,517 Number of households ~2m Home ownership ratio ~15% Population forecast (2035) ~4.0m Completed new construction ~11,000 Vacancy and rents Economic data Average vacancy rate Av

  36. Slide 36: Unique market characteristics in German Housing Market

    » Unique market characteristics in German Housing Market Germany - Home ownership ratio Berlin – Home ownership ratio < 20% 48% 52% > 80% Homeowner Non-Homeowner Homeowner Non-Homeowner Source: Eurostat Source: CBRE, UBS Homeownership – Germany vs Europe Germany UK France Netherlands EU Average Ital

  37. Slide 37: Mechanisms of rent development in dynamic markets like Berlin

    » Mechanisms of rent development in dynamic markets like Berlin Current regulations Indefinite rental contracts New Freedom of contract at market rent level letting BUT rental cap at „customary rent“ +10% (so called Mietpreisbremse) Exceptions from rental cap: new construction and extensively refurb

  38. Slide 38: Valuation in perspective of rent potential and affordability

    » Valuation in perspective of rent potential and affordability Affordability of average Deutsche Wohnen flat in Berlin Housing cost ratios across major European cities4) DW in-place Market rent 37% Rent (EUR/sqm) 6.37 10.001) 33% 32% DW 30% 29% 27% 25% Average ancillary cost (EUR/sqm) 2.50 22% 18-25

  39. Slide 39: Deutsche Wohnen well positioned in capital markets

    » Deutsche Wohnen well positioned in capital markets Share Price Development LTM 40.00 Share price (€, indexed to DWNI) 38.00 36.00 34.00 32.00 30.00 LTM +23.5% 28.00 L30D +2.7% 26.00 24.00 Okt 16 Nov 16 Dez 16 Jan 17 Feb 17 Mrz 17 Apr 17 Mai 17 Jun 17 Jul 17 Aug 17 Sep 17 Deutsche Wohnen EPRA Europ

  40. Slide 40: History of Deutsche Wohnen

    » History of Deutsche Wohnen 2006: 1924: Acquisition of Eisenbahn-Siedlungs- Foundation Gesellschaft and Fortimo GmbH GEHAG (Berlin) 1925: 1998: Privatisation Beginning of modern housing development 2010: 2013: Moving up to Takeover of GSW MDAX Immobilien AG 2007: Merger 2012: Acquisition of the Bau

  41. Slide 41: Management board and areas of responsibilities

    » Management board and areas of responsibilities Michael Zahn Lars Wittan Philip Grosse Chief Executive Officer Chief Investment Officer Chief Financial Officer (CEO) (CIO) (CFO) More than 20 years in the firm Since 2007 at Deutsche Wohnen, Since 2013 at Deutsche Wohnen, since 2011 member of the sin

  42. Slide 42: 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

  43. Slide 43: Deutsche Wohnen SE contact details

    Deutsche Wohnen SE Mecklenburgische Straße 57 14197 Berlin Phone: +49 30 897 86 5413 Fax: +49 30 897 86 5419 © 2017Deutsche Wohnen SE

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