Aroundtown Sa · XETR:AT1
Aroundtown Sa — Merger or Acquisition (November 2019)
49 slides from Aroundtown Sa's merger presentation, Nov 18, 2019
Slide 1: Together creating the leading European commercial real estate company
TOGETHER CREATING THE LEADING EUROPEAN COMMERCIAL REAL ESTATE COMPANY 18 November 2019
Slide 2: Disclaimer
Disclaimer IMPORTANT: This presentation has been provided for information purposes only and is being circulated on a confidential basis. This presentation shall be used only in accordance with applicable law, e.g. regarding national and international insider dealing rules, and must not be distribute
Slide 3: Key terms of the recommended all-share tender offer
Key terms of the recommended all-share tender offer ◼ All share voluntary tender offer by Aroundtown for 100% of the share capital of TLG Financial terms ◼ 1 TLG share = 3.6 Aroundtown shares ◼ The implied exchange ratio of 3.6 is determined on the basis of Aroundtown and TLG reported EPRA NAVs for
Slide 4: Creating the leading pan-European office/hotel/residential real estate company
Creating the leading pan-European office/hotel/residential real estate company, with over €25bn asset base Creating a Pan-European leader in Commercial Real Estate with enhanced free float and liquidity Berlin Well-located & diversified portfolio, top tier cities within Germany & the NL, strongest a
Slide 5: The combined company will be a top real estate player in Europe
The combined company will be a top 3 real estate player in Europe Total assets1 (EUR bn) Office and hotel focused real estate companies2 Selected other real estate companies 66.1 50.9 28.1 26.6 24.7 22.7 20.4 17.4 15.5 13.6 12.8 12.2 11.8 11.0 4 5.4 Icade Gecina Vonovia Covivio³ Land Securities Brit
Slide 6: Combined company with over €25bn of assets focused on strongest asset classes and regions
Combined company with over €25bn of assets with focus on the strongest asset classes and regions 1 + NRW 13% Munich 9% Berlin 43% Berlin 20% Munich 11% Berlin 24% Frankfurt/Rhine-Main 13% Frankfurt 10% Portfolio by Bremen 1% Value: Value: Dresden/Leipzig/ Value: London 4% Rostock 19% region¹ Nurembe
Slide 7: Top tier cities within asset classes
Top tier cities within asset classes... + Frankfurt Frankfurt 14% Berlin 37% 17% NRW 9% Munich 16% Berlin 16% Amsterdam 7% Frankfurt 29% Berlin 20% Wiesbaden/Mainz/ Hamburg 4% Mannheim 3% Office Rotterdam 4% Stuttgart 1% Other 6% Utrecht 3% Others 2% Nuremberg 1% NRW 8% Munich 19% Hannover 3% Hambur
Slide 8: Enhanced exposure to top cities with strong fundamentals
…and enhanced exposure to top cities with strong fundamentals Rostock Hamburg Amsterdam Berlin Siemens Office Campus, Central Station Office Campus, Spreestern, Berlin Die Welle, Berlin Munich Frankfurt Leipzig/Dresden Rotterdam Hannover Prime Center Office, Bristol Prime Center, Berlin Main Triange
Slide 9: Berlin - Potsdamer Platz
Berlin - Potsdamer Platz: The prime commercial and tourist center landmark AT -property Strong overlap in top tier cities, positioning the combined company as a leading landlord TLG -property Potsdamer Platz Potsdamer Platz Office Office Crowne Plaza Potsdamer Platz Hotel Checkpoint Charlie Potsdame
Slide 10: Berlin - Alexanderplatz City Center
Berlin - Alexanderplatz City Center landmark AT -property Strong overlap in top tier cities, positioning the combined company as a leading landlord TLG -property Berlin Mitte Berlin Mitte Residential (GCP) Berlin Prime Center Mitte Residential (GCP) Hotel Prenzlauer Berg Greifswalder str. Berlin Mit
Slide 11: Berlin – Top tier locations around Kurfürstendamm
Berlin – Top tier locations around Kurfürstendamm landmark AT -property Strong overlap in top tier cities, positioning the combined company as a leading landlord TLG -property Berlin City Center Mitte Moxy by Marriot Berlin Office Mitte Hotel AC by Marriot Potsdamer Platz Berlin Mitte Hotel Ku’Damm
Slide 12: Highly performing hotel portfolio
Highly performing hotel portfolio Combined hotel portfolio with approx. 160 hotels valued at €4.8 bn at long-term and fixed leases to third party hotel operators Largest hotel portfolio among listed European real estate and TLG’s hotel portfolio would benefit from an integration due to the strong ma
Slide 13: Increasing portfolio quality with strong tenant structure
Increasing portfolio quality with strong tenant structure at low dependency ◼ Aroundtown has a limited dependency on single tenants and industry due to ◼ The size of Aroundtown’s portfolio with a large tenant base of over 3,000 tenants ◼ The strong focus on diversification of the tenant base ◼ Benef
Slide 14: Reversionary potential – embedded value-add extraction expertise
Reversionary potential – embedded value-add extraction expertise Strong track record of like-for-like rental growth Significant Reversionary potential fueling future internal growth (in € millions) +33% Strong track record of continuously 975 extracting potential +15% 733 269 233 June 2019 annualize
Slide 15: Acceleration and more profitable development pipeline
Combination will result in acceleration and more profitable development pipeline Combined development potential with high High geographical overlap geographical overlap in top tier cities1 ▪ Both companies’ strong development pipeline is focused on top tier cities with significant embedded value of
Slide 16: Strong synergies identified across the entire value chain
Strong synergies identified across the entire value chain 1 ◼ Efficiency gains through utilization of scalable platform, systems, low cost structure from larger purchasing power Operational ◼ Synergies through cost reduction on corporate level through centralization, joint functions and lower corpor
Slide 17: Synergy potential overview - increasing the combined FFO
Synergy potential overview - increasing the combined FFO Estimated improvements in FFO1 FFO p.a. Efficiency gains through joint operations, joint HQ, strong portfolio Operational synergies €24-€34m overlap, cost optimization on corporate cost level, ancillary cost reduction, scale benefits, IT syste
Slide 18: Increasing operational profitability
Increasing operational profitability Synergy potential from savings and efficiency gains in operational and corporate expenses expected to have partial impact from year 1 after the envisioned merger and are expected to be fully captured within 3-4 years Increasing profitability margins by 2.5% to 3.
Slide 19: Envisioned merger will be credit rating enhancing
Envisioned merger will be credit rating enhancing... ... and will provide tailwinds to reach rating target of “A-” and “A” in the long-term Considerations for rating increase to reach the long-term rating target of A category Increased Size Larger Footprint Increased Profitability Greater Diversific
Slide 20: Enhance credit rating to accelerate refinancing benefits for Aroundtown
Enhance credit rating which can accelerate refinancing benefits for Aroundtown in-place debt1 Current bonds of real estate companies rated at A- are yielding below 0.5%, well below AT’s current average cost of debt of 1.7% A potential merger will support reaching faster an A- rating (and A at a late
Slide 21: Financial synergies reducing the cost of TLG's debt and perpetual notes
Merger to create financial synergies reducing the cost of TLG’s debt and perpetual notes1 TLG’s existing debt and perpetual balance will benefit from the credit rating of the combined entity. For TLG stand alone, reaching an A- rating is highly unlikely without a merger, and therefore a potential me
Slide 22: Combined debt maturity schedule
Combined debt maturity schedule Aroundtown Bonds Aroundtown Bank Loans Aroundtown Perpetual Notes TLG Bonds TLG Bank Loans TLG Perpetual Notes Total in €bn ~75% of total maturing of the combined companies ~85% of total maturing of the combined companies 2.8 2.9 2.1 1.8 1.5 1.3 1.1 0.8 0.4 0.4 0.2 0.
Slide 23: Enhanced credit rating decreases financing cost for future growth
Enhanced credit rating decreases financing cost for future growth The combined company will continue its accretive growth, thus funding through debt and perpetual issuances Capital Market Activities of AT and TLG TLG AT and TLG issued on average €4.4 billion per annum of debt and Aroundtown was the
Slide 24: Sustaining the conservative financial policy
Sustaining the conservative financial policy The combined company remains committed to its conservative financial policy The LTV will remain below 45% after the merger, following the conservative financial policy. Focus remains on conservative financial ratios with a high interest cover ratio Proact
Slide 25: Management expertise to accelerate the redevelopment pipeline
Additional benefit from management expertise supporting to accelerate the redevelopment pipeline FFO of TLG’s Development projects after completion Experience and knowledge of the market, as well as its track record in (not included in the merger synergies calculations) improving development rights,
Slide 26: The combined business is built on the value-add model
The combined business is built on the value-add model ◼ Larger scale in similar locations and asset types ◼ Portfolio with significant value-add potential ◼ Significant value-add potential in the ◼ Management ability to accelerate like-for- ◼ Strong capital market access to funding core portfolio li
Slide 27: Revised and stronger governance
Revised and stronger governance CHAIRMAN Chairman with a casting vote to be nominated by TLG 7-8 members in total, (if acceptance rate >40% ) out of which 3-4 independent CEO To be nominated by Aroundtown CFO To be nominated by TLG (if acceptance >50%) Co- One of TLG’s nominees CEO will be Co-CEO CI
Slide 28: The transaction is accretive to both shareholder groups
The transaction is accretive to both shareholder groups 1 FFO Accretion on a per share basis ~ ~ ◼ The deal would be FFO accretive ~ ~ for shareholders in year one and (€ / share) FFO increasing with synergies and acceleration of 2 3 4 over €100m4: ◼ ~25% accretive ▪ Transaction is accretive to both
Slide 29: Timeline / next steps
Timeline / next steps ✓ Nov 18, 2019: Signing of Business Combination Agreement (BCA) and publication of the decision to make an offer (Section 10 announcement) Q1 2020: Expected closing 4 weeks offer period 2 weeks additional offer period Timeline Nov-19 Dec-19 Jan-20 Feb-20 Oct 27, 2019: Announcem
Slide 30: Appendix
IMMOBILIEN 4 ©@ AROUNDTOWN** 29
Slide 31: Combined portfolio overview (June 2019)
Combined portfolio overview (June 2019) Breakdown by asset type Investment Lettable area Annualized net property (€m) (m sqm) EPRA Vacancy WALT rent (€m) Value/sqm (€) Rental Yield Office 10,458 4,084 9.3% 4.8 486 2,561 4.6% Hotels 4,755 1,475 5.1% 15.1 230 3,224 4.8% Logistics / Wholesale / Other 1
Slide 32: Quality Frankfurt assets in central locations
Quality Frankfurt assets in central locations landmark AT -property Strong overlap in top tier cities, positioning the combined company as a leading landlord TLG -property Frankfurt Stadtmitte Office InterContinental Frankfurt Hotel Frankfurt HBF Frankfurt Office Campus Offices Offices Frankfurt Hau
Slide 33: Frankfurt Overview – Eschborn & Niederrad
Frankfurt Overview – Eschborn & Niederrad landmark AT -property Centrally located office and hotel assets in key business districts TLG -property Frankfurt-Eschborn business district is an important FFM business district and easily accessible Eschborn Office Strong overlap in top tier cities, positi
Slide 34: Leipzig - Centrally located top tier assets
Leipzig - Centrally located top tier assets at Leipzig Hauptbahnhof landmark AT -property Strong overlap in top tier cities, positioning the combined company as a leading landlord TLG -property Main central train station Office Leipzig main central train station Main central train station Office Mai
Slide 35: Dresden - Prime assets in historic city center
Dresden - Prime assets in Dresden’s historic city center landmark AT -property Strong overlap in top tier cities, positioning the combined company as a leading landlord TLG -property Main Central Train Station Main Central Train Station Hotel City Center Main Central Train Station Retail Office City
Slide 36: Mannheim - Well positioned office and hotels
Mannheim - Well positioned office and hotels in central Mannheim landmark AT -property Strong overlap in top tier cities, positioning the combined company as a leading landlord TLG -property City Center Hotel Luisenpark University of Mannheim / Mannheim main central Luisenpark Mannheim Palace train
Slide 37: Stuttgart - Well connected quality assets
Stuttgart - Well connected quality assets in Stuttgart’s office district landmark AT -property Strong overlap in top tier cities, positioning the combined company as a leading landlord TLG -property Stuttgart government seat Stuttgart Center Office Stuttgart Center Office Stuttgart Center Office 36
Slide 38: Hamburg
Hamburg landmark AT -property Strong overlap in top tier cities, positioning the combined company as a leading landlord TLG -property Hamburg Business District Hamburg Business District Office Office Hamburg Business District Science Campus Office Hamburg Business District Office Mercure Hamburg Bus
Slide 39: Regional Market overview
Regional Market overview NRW Bremen Hamburg ◼ GDP share 2017 : 21% of total national ◼ GDP growth1 : 3.3% ◼ GDP growth1: 2.4% ◼ GDP growth1: 1.7% ◼ Migration balance2: 1.1% ◼ Migration balance2: 0.9% ◼ Migration balance2: 0.7% ◼ Population density3: 1,734 per km2 ◼ Population density3: 2,397 per km2
Slide 40: Germany/NL – growing and top tier economies
Germany/NL – growing and top tier economies GDP per capita in 2009 – 2018 (in €) GDP per capita in 2009 – 2018 (in €) EU (28) Czechia Germany Spain 131.1 France Italy Hungary Netherlands Poland Slovakia UK €45,000 Netherlands, €41,600 Germany, €35,900 €35,000 France, €32,800 UK, €32,400 EU (28), €28
Slide 41: Germany/NL – strong labor market
Germany/NL – strong labor market Development of gross monthly wages Germany (in €) Unemployment rate Aug 2019 3,880 3,771 13.8% 3,703 3,612 3,527 3,449 3,391 9.4% 3,311 8.5% 3,227 3,141 3.5% 3.8% 3.1% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Germany Netherlands UK France Italy Spain Source:
Slide 42: German office market low supply and strong demand
German office market low supply and strong demand… Low supply and strong demand… Office employment growth remains strong Continuously strong demand at low supply Office workers in million persons Office space in million sqm Office space from 2008-2018 in % Office workers from 2008-2018 in % 2.6 85 3
Slide 43: German office market: increasing rents and lower vacancies
German Office market …lead to increasing rents and lower vacancies Strong economic fundamentals and high office employment drive up demand, whilst supply is lacking, reducing vacancies Putting upward pressure on rents Strong reductions in vacancy in top locations Prime rent yoy in % Prime rents yoy
Slide 44: German office market: investor appetite reduces yields
German Office market meanwhile investor appetite reduces yields Low treasury yields and continued high demand, especially in office… Bund yields fall to historic lows Investment volume in property market Market share could also reach a high level in 2019 5 years 10 years 30 years Residential portfol
Slide 45: Netherlands office market
Netherlands office market …resulting from favorable developments Current trends show very favorable market developments… Asking rents 2015 –> 2018 Vacancy reduction1) 2) -580bps +9% 2015 –> 2018 Available Supply -42% 2015 –> 2018 Office take-up 2015 -> 2018 +42% Office Employment1) 2015 -> 2017 +7.5
Slide 46: German hotel market overview
German hotel market overview Continued strong demand growth Overnight stays across all hotel accommodation types in Germany RevPar development Rated hotels by category Millions (€) 5-star 1-star Domestic demand International demand 300 72 74 2-star 123 78 70 70 Millions 65 413 69 71 62 63 250 65 66
Slide 47: UK/London hotel market
UK/London hotel market Positive developments and forecasts Continued growth in main KPIs, forecasted to grow further Strong investor appetite for hotel assets London Loans Portfolio Single Forecast RevPAR growth (%) A: Actual F: Forecast 2018A 2019F 2020F RevPAR growth p.a. (%) 10 12% Occupancy % 83
Slide 48: German wholesale and logistics
German wholesale and logistics Benefiting from improved market conditions Weaker currency is supporting the pound based hotel industry. According to forecasts from PwC, Occupancy in London hotel market will still grow slightly, despite pressure from new supply. Furthermore, ADR and RevPAR are expect
Slide 49: Macro fundamentals support GCP
Macro fundamentals support GCP Population density 2018 Population Development (persons per sqkm) Annualized growth in rent price index (2012-2017) 237 Bremen 2.2% 85 82.8 83.0 83.2 Hessen 1.7% 82.2 82.5 81.2 Berlin 1.7% 80.5 80.8 Millions of people 121 Bayern 1.5% 80 Nordrhein-Westfalen 1.5% Nieders