Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — Investor Day (November 2015)

44 slides from Deutsche Wohnen's investor day presentation, Nov 20, 2015

  1. Slide 1: Capital markets day

    Deutsche Wohnen AG » Capital markets day 20 November 2015

  2. Slide 2: Agenda

    » Agenda 1 Strategy outlook 2 Portfolio management strategy 3 Technical project management 4 Case studies 5 Property management 6 Q&A 2

  3. Slide 3: Timetable

    » Timetable 1 Registration 9:00 2 Presentations 9:30 3 Q&A 11:30 4 Lunch break 12:00 5 Property tour 12:45 6 End of tour at Tegel airport 16:30 3

  4. Slide 4: Strategic outlook

    ‘ ) a Deutsche Wohnen » Strategic outlook deutsche-wohnen.com

  5. Slide 5: What Deutsche Wohnen stands for

    » What Deutsche Wohnen stands for More than 90% of total portfolio value 1 Focused quality portfolio in dynamic growth regions in Germany in Core+ 2 Strong like-for-like rental growth and tangible NAV upside potential c. 3.5%(a) rental growth expected in 2015 3 Efficiency leadership with best-in-cla

  6. Slide 6: Clear focus on value creation: internal growth, selected bolt-on acquisitions and efficient financing

    » Clear focus on value creation: internal growth, selected bolt-on acquisitions and efficient financing  Strong fundamentals in our residential markets  Clear commitment to continue successful internal growth Internal ₋ Re-letting crystallizing market rents (rent potential > 20% for 75% of letting

  7. Slide 7: Portfolio management strategy

    » Portfolio management strategy 7

  8. Slide 8: All processes are focused to create value

    » All processes are focused to create value Portfolio Management Creating Organic Growth Technical Property Project Management Management 8

  9. Slide 9: Established process for strategic clustering of the portfolio

    » Deutsche Wohnen has an established process for the strategic clustering of its portfolio (a) (b) Strategy cluster Residential units % of total In-place rent Rent potential Vacancy measured by 30/09/2015 30/09/2015 30/09/2015 fair value EUR/sqm/month Strategic core and growth 143,960 99% 5.85 20.3%

  10. Slide 10: Active portfolio management based on analytical scoring approach

    » Deutsche Wohnen's active portfolio management is based on an analytical scoring approach Macro analysis Score Micro analysis  Asset-by-asset strategy approach  Efficient scoring and clustering approach focussing on key KPI‘s  Zoom in on strategic Core and Core+ regions and highly concentrated l

  11. Slide 11: Macro scoring model to rate the housing market

    » Macro scoring model to rate the housing market Key scoring parameters Historic real estate data  Change in households Core +  Change in-place rent “growth”  Population growth Prognostic real estate data  Population and household prognoses Macro economic data Core  Unemployment rate “yield” 

  12. Slide 12: Micro scoring structure to rate the specific asset

    » Micro scoring structure to rate the specific asset Micro score Score 3.1 Performance Condition Location Weighting 40% Weighting 30% Weighting 30% Traceable and consistent classification Score 2.9 Score 3.2 Score 3.1 Fair value EUR / sqm Building envelope Infrastructure  Property-on-property base

  13. Slide 13: Micro scoring structure example

    » Micro scoring structure example - simple, important key figures Micro score Score 3.1 On-site inspections Quarter Location: Date: Performance Condition Location District: Urban district: Weighting 40% Weighting 30% Weighting 30% I. Infrastructure Good Mean Bad Score 2.9 Score 3.2 Score 3.1 1) Shop

  14. Slide 14: Ongoing portfolio optimization supported by scoring

    » Ongoing portfolio optimization supported by scoring Benchmark approach 140.000 120.000 100.000 80.000 60.000 Performance Condition 40.000 Location 20.000 0 1 1,5 2 2,5 3 3,5 4 4,5 5 5,5 6 develop 1 develop 2  No generic strategies  Decisions based on consistent evaluation standards 1 Project Kre

  15. Slide 15: TOP – Best score settlements

    » TOP – Best score settlements – 20% of our properties are listed Carl Legien, Berlin-Prenzlauer Berg Onkel-Toms-Hütte, Berlin-Zehlendorf Krankenhausviertel, Berlin Pankow Scoring output Scoring output Scoring output Score 1.9 Score 2.2 Score 2.5 Rank 1 / 2,149 Rank 29 / 2,149 Rank 107 / 2,149 Perfo

  16. Slide 16: FAMOUS – world cultural heritage properties

    » FAMOUS – 5% of our properties are world cultural heritage Siemensstadt, Berlin Spandau/ Hufeisensiedlung, Berlin, Britz Weiße Stadt, Berlin Reinickendorf Charlottenburg-Wilmersdorf Scoring output Scoring output Scoring output Score 2.6 Score 2.6 Score 2.6 Rank 200 / 2,149 Rank 241 / 2,149 Rank 222

  17. Slide 17: FLOP – Worst score settlements

    » FLOP – Worst score settlements Hellersdorfer Promenade, Volksparkviertel Lichtenrade, Westl. Heerstraße, Berlin-Spandau Berlin-Hellersdorf Berlin-Tempelhof-Schöneberg Scoring output Scoring output Scoring output Score 3.7 Score 4.0 Score 3.9 Rank 1,933 / 2,149 Rank 2,098 / 2,149 Rank 2,038 / 2,149

  18. Slide 18: Development Portfolio – fundament for sustainable growth

    » Development Portfolio – fundament for creating sustainable growth Investment identification process Portfolio management Deutsche Wohnen Portfolio Technical Project Management  Development and needs of the EUR 280m 2015-2018  Condition enhancement market EUR 120m after 2018 EUR 400m total invest

  19. Slide 19: Technical project management

    » Technical project management 19

  20. Slide 20: Long-standing experience in technical project management

    » Long-standing experience in technical project management Project Key responsibilities management  Technical portfolio management  Technical due diligence Object Specialist Construction  Project development planners planners firm  Project coordination and control: Purchase of capital goods + or

  21. Slide 21: Stringent project management process ensures seamless execution

    » Stringent project management process ensures seamless execution 1 Inventory analysis 2 Planning 3 Execution Project management through own architects and engineers Development Planning Preparation Execution Closing Planning order Award of contracts Completion  External  Architects  External arc

  22. Slide 22: Reasonable use of standardization to drive efficiency

    » Reasonable use of standardization to drive efficiency Individual and integral planning Standardization through:  Roof insulation  Material product catalogues  Standard price catalogues  Bathroom types Lean Construction Individual planning for projects, while standardizing processes 22

  23. Slide 23: In-depth technical knowledge of our assets is essential

    » In-depth technical knowledge of our assets is essential Property database Technical portfolio analysis Device and inspection app  150,000 apartments  Modernization potential  2,000 business entities  Maintenance needs  50 construction components  Identifying technical risks Information manag

  24. Slide 24: Sample projects

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

  25. Slide 25: Hellersdorfer Promenade – enhancing value

    » Hellersdorfer Promenade – enhancing value Overview of project Location Background & KPI's Rent (EUR / sqm / month) FV (EUR / sqm)  ~1,150 apartments in Berlin- Hellersdorf Unrefurbished ~540 History prefabricated ~4 (in-place)  Acquired in 2013 buildings (11x IPR)  Started modernization in 2014

  26. Slide 26: Hellersdorfer Promenade – technical background

    » Hellersdorfer Promenade – enhancing value Overview of project Technical background Modernization Thermal insulation  Built in the 1980ies composite system  Prefabricated building  Can be added onto an  Renovation of technical building equipment existing façade  Insulation of the facade  Cons

  27. Slide 27: Kreuzberg – creating a new residential quarter

    » Kreuzberg – creating a new residential quarter Overview of project Location CENTER POINT OF BERLIN Otto-Suhr- Siedlung Spring Project 3,000 residential units in two settlements in Berlin-Kreuzberg Background & KPI's Rent (EUR / sqm / month) FV (EUR / sqm)  Social housing from the 60ies & 70ies at

  28. Slide 28: Kreuzberg – technical background

    » Kreuzberg – creating a new residential quarter Overview of project Technical background Modernization  Built in the 1960ies  Renovation of technical building equipment  Energetic refurbishment  New outdoor facilities  EUR 83m investment, EUR 550 per sqm Redensification  Redensification and a

  29. Slide 29: Potsdam – new construction and modernization

    » Potsdam – new construction and modernization Overview of project Location 91 apartments and 12 townhouses Background & KPI's Rent (EUR / sqm / month) FV (EUR / sqm)  Acquired portfolio with 90 unrefurbished apartments Cash cow with History <4.5 (in-place) -  Empty plot of land capex backlog High

  30. Slide 30: Potsdam – modernization

    » Potsdam – modernization Overview of project Technical background Modernization  Built in the 1930ies  Renovation of technical building equipment  Renewal and insulation of the roof  Bathroom refurbishment  Renewal of heating system  New outdoor facilities  EUR 3m total investment  EUR 620

  31. Slide 31: Potsdam – new construction

    » Potsdam – new construction Overview of project Technical background New construction  91 apartments (25 barrier free)  12 town houses  3 elevators  Flexible plots  Floor heating  Mineral insulation  Loggia / balconies  Parquet floor  EUR 20m investment  EUR 2,200 per sqm construction cos

  32. Slide 32: Long term new construction potential

    » Long term new construction potential Quickly realizable Large projects Plot size 61 ha 105 ha Number of apartments c. 1,700 units c. 7,000 units Living space c. 105,000 sqm c. 500,000 sqm Invest c. EUR 300m c. EUR 1,300m 32

  33. Slide 33: Property management

    » Property management deutsche-wohnen.com ‘ ) a Deutsche Wohnen 33

  34. Slide 34: Property management in numbers

    » Property management in numbers Central Functions Local Functions Berlin & Frankfurt 16 Service points with 5,000 to 12,000 units each 230 Employees 335 Employees  Responsibilities:  Responsibilities: ₋ Rent development and operating cost ₋ Re-letting management ₋ Commercial services ₋ Receivable

  35. Slide 35: Property management is focused on rental growth

    » Property management is focused on rental growth Current regulations Modernization New  Generally market rent level (no limit) Upgrading apartments In tight housing markets “local customary rent” + contracts (demand driven) 10%  Maximum increase of 15% in 4 years (Berlin)  Not higher than the so

  36. Slide 36: Standardized process for repairs ensuring efficient daily business

    » Standardized process for repairs ensuring efficient daily business Outsourced functions Notice of damage Service provider Repair Payment by DW (E-mail or telephone) sends craftsman (90% within 48 hours)  200k single  Service Providers  Small repairs and  Small repairs cases p.a. have fixed loc

  37. Slide 37: Efficient but individual re-letting investment

    » Efficient but individual re-letting investment Outsourced function Letting agent defines Service Provider Realization of higher Vacant apartment refurbishment needs makes refurbishment rent potential Letting agent:  Calculation phase  Recurring workstreams / measures  Verifies condition of  Yi

  38. Slide 38: What is a service provider?

    » What is a service provider? 1)  Many established players with 40-600k units under management (each)  Competitive market in areas with high portfolio concentration  Main service components: Business model: ₋ Coordination of works (maintenance, capex, refurbishment) Technical Facility Management

  39. Slide 39: Summary

    » Summary deutsche-wohnen.com . ) Deutsche Wohnen 39

  40. Slide 40: DW's investment approach primarily driven by value growth

    » DW's investment approach primarily driven by value growth Our general principle 2014 / 2015e Cluster Growth driver ROI  Generate (1) value potential which is most important and (2) rent potential Rent table adj. 13%1)  Invest into assets with the highest rent upside (30% Operate in our develop s

  41. Slide 41: Realized yields – example Onkel-Toms-Hütte

    » Realized yields – example Onkel-Toms-Hütte Return based on rent increases (cash yield) Return deriving from value creation decisive  Rent increase after modernization ~30% within three years  Based on historic evidence completely modernized Core+  Yield based on total investments at ~5%, howeve

  42. Slide 42: Q&A

    » Q&A deutsche-wohnen.com vr) a Deutsche Wohnen 42

  43. Slide 43: 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

  44. Slide 44: Deutsche Wohnen AG contact details

    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 44

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