Aedas Homes Sa · BME:AEDAS
Aedas Homes Sa — Investor Day (July 2019)
59 slides from Aedas Homes Sa's investor day presentation, Jul 2, 2019
Slide 1: Building on Strong Fundamentals
BUILDING ON STRONG FUNDAMENTALS 2nd July 2019 INVESTOR DAY - JULY 2ND 1
Slide 2: Disclaimer
DISCLAIMER This document has been prepared by Aedas Homes, S.A. (the “Company”) and comprises slides for a presentation to the market of the operational results of the Company and its subsidiaries (the “Group). For the purposes of this disclaimer, “Presentation” means this document, its contents or
Slide 3: Agenda
AGENDA 9:00 – 9:05 HERNANDO DE SOTO – Head of IR 9:05 – 9:15 SANTIAGO FERNÁNDEZ VALBUENA – Chairman of the Board of Directors 9:15 – 9:35 DAVID MARTÍNEZ MONTERO – CEO 9:35 – 9:50 SERGIO GÁLVEZ – CIO 9:50 – 10:05 ALBERTO DELGADO – COO 10:05 – 10:15 MARÍA JOSÉ LEAL – CFO 10:15 – 10:30 PABLO ALONSO – C
Slide 4: Santiago Fernández Valbuena
SANTIAGO FERNÁNDEZ VALBUENA Chairman of the Board INVESTOR DAY - JULY 2ND 4
Slide 5: Shareholder Base
SHAREHOLDER BASE Core Shareholders (according to CNMV) • Founded in 2005 • AuM: $14.3 billion (as of Q1 2019) • 154 employees (>50%) • Focus on: Global Aviation, European Assets, North American Assets, Global Speciality Finance, Global Special Situations Shareholder profile Nationality split (exclud
Slide 6: Aedas Homes Board of Directors
AEDAS HOMES BOARD OF DIRECTORS INDEPENDENT PROPRIETARY EXECUTIVE MRS. CRISTINA MR. EMILE MR. EVAN MR. EDUARDO ÁLVAREZ ÁLVAREZ K.HADDAD CARRUTHERS D’ALESSANDRO BOARD COMMITTEES CHAIRMAN OF AUDIT COMMITTEE THE BOARD MR. SANTIAGO APPOINTMENTS & REMUNERATION FERNÁNDEZ VALBUENA COMMITTEE TECHNOLOGY COMMI
Slide 7: Industry Challenges. Younger generation struggling to get onto the Property Ladder
INDUSTRY CHALLENGES. Younger generation struggling to get onto the Property Ladder Overall affordability levels are reasonable, not so much for younger age group NEW BUILD PRICE / GROSS HOUSEHOLD INCOME 9 8.27 8.23 8.02 7.38 7.43 7.16 6.76 6.78 6.44 6.57 6.35 2007 2008 2009 2010 2011 2012 2013 2014
Slide 8: Rental vs Buy
RENTAL vs BUY Ownership regime of under 35 year olds in Spain 39.5 44.5 47.2 49.5 50.2 53.4 52.2 53.2 57.9 59.5 60.5 55.5 52.8 50.5 49.8 47.8 46.6 46.8 42.1 40.5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Ownership Rental MARKET BROADLY SEGMENTED BETWEEN YOUNGER AGED BUYERS ENTERING RENTAL MA
Slide 9: David Martínez Montero
DAVID MARTÍNEZ MONTERO Chief Executive Officer INVESTOR DAY - JULY 2ND 9
Slide 10: Economic Recovery in Spain Has Been Strong
ECONOMIC RECOVERY IN SPAIN HAS BEEN STRONG GDP (RE-BASED 2014) 114 112 110 108 106 104 102 100 2014 2015 2016 2017 2018 EUROZONE SPAIN FRANCE GERMANY NETHERLANDS ITALY PORTUGAL Source: Macro data INVESTOR DAY - JULY 2ND 10
Slide 11: Spain's GDP Continues to Outperform Eurozone
SPAIN’S GDP CONTINUES TO OUTPERFORM EUROZONE EU VS SPAIN GDP FORECAST (ANNUAL % CHANGE) 4 3.5 3 2.5 2 1.5 1 0.5 0 2014 2015 2016 2017 2018 2019E 2020E 2021E Eurozone Spain Source: INE, BCE INVESTOR DAY - JULY 2ND 11
Slide 12: Spain Leads Job Creation in the Eurozone
SPAIN LEADS JOB CREATION IN THE EUROZONE JOB CREATION (000'S) Q4 2017- Q4 2018 SPAIN NETHERLANDS GERMANY FRANCE BELGIUM GREECE ITALY FINLAND IRELAND PORTUGAL AUSTRIA 0 100 200 300 400 500 600 Source: Eurostat INVESTOR DAY - JULY 2ND 12
Slide 13: Job Creation Spurs Steady Decline in Unemployment
JOB CREATION SPURS STEADY DECLINE IN UNEMPLOYMENT UNEMPLOYMENT % 26.10% 24.58% 24.44% 22.06% 21.05% 20.22% 19.64% 18.13% 17.23% 15.26% 12.82% 10.70% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: INE INVESTOR DAY - JULY 2ND 13
Slide 14: Long Term Projections Supporting Spanish Structural Demand
LONG TERM PROJECTIONS SUPPORTING SPANISH STRUCTURAL DEMAND 1.78 million new households projected for 2018-2033… … this would mean c.120,000 new households per year 49,500,000 20,500,000 49,000,000 20,000,000 48,500,000 NEW HOUSEHOLDS 19,500,000 48,000,000 POPULATION 19,000,000 47,500,000 47,000,000
Slide 15: Room for the Residential Sector to Scale Up
ROOM FOR THE RESIDENTIAL SECTOR TO SCALE UP NEW BUILD DELIVERIES 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Notary Registry INVESTOR DAY - JULY 2ND 15
Slide 16: Price Evolution in Spain 2001-2018
AGAINST A BACKDROP OF PRICE EVOLUTION IN SPAIN 2001-2018… 20% 15% 10% 5% 0% -5% -10% -15% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Tinsa INVESTOR DAY - JULY 2ND 16
Slide 17: Aedas Homes Operates in the Most Dynamic Regions
… AEDAS HOMES OPERATES IN THE MOST DYNAMIC REGIONS % REGIONAL BREAKDOWN OF UNITS TOTAL LANDBANK WEIGHTED HPA 2017-2019: Province HPA as per Tinsa (YoY Q1 2017 – Q1 2019) 16.0% CENTRE 33% (+23.6%) Madrid +23.8% Valladolid +17.4% CATALONIA 15% (15.1%) Tarragona +6.2% Barcelona +16.2% COSTA DEL SOL 22%
Slide 18: House Price Appreciation vs. Construction Cost Inflation
HOUSE PRICE APPRECIATION vs. CONSTRUCTION COST INFLATION A normalizing trend HPA CCI 18 18 16 16 14 14 12 12 10 10 8 8 6 6 4 4 2 2 0 0 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 H2 2019 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 H2 2019 HPA STRONGLY OFFSETTING CCI, WHICH IMPACTS MAINLY ON CONSTRUCTION COS
Slide 19: Aedas Homes Team
AEDAS HOMES TEAM A lean, decentralised structure CEO David Martinez Chief Innovation & Centre Branch Director Marketing Officer Chief of Staff Pablo Alonso Javier Sánchez Emma Martell Catalonia Branch Director Chief of Corporate David Gómez Resources Esther Duarte East Branch Director Juan López Chi
Slide 20: Business Plan
BUSINESS PLAN Excellent visibility on deliveries ACCUMULATED BP KPIS 2-year time lapse grants visibility over timings 20,000 Carefully timed launches to give flexibility upon delivery 18,618 18,000 16,000 15,618 14,000 12,618 12,000 12,099 10,000 9,618 8,773 8,000 6,618 6,000 5,710 4,000 4,038 3,272
Slide 21: Strengthening Our Leading Position
STRENGTHENING OUR LEADING POSITION LAND FEEDER TURN-KEY RENTAL PROJECTS OFFSITE INVESTOR DAY - JULY 2ND 21
Slide 22: Securing Long-Term Land
STRENGTHENING OUR LEADING POSITION. Securing long-term land LAND BANK 100% Fully Permitted (80% Ready to Build) 4-5 years visibility Ready to Build plots 10-25% equity (10-25% Equity + 25% RoFo) sells plots LAND FEEDER 90% equity MARKET SPV INVESTOR Income Acquires Strategic Land - Not Fully Permitt
Slide 23: Adding Value through Turn-Key Rental
STRENGTHENING OUR LEADING POSITION. Adding value through Turn-Key Rental Complementary Core Business Business RETAIL HOMES INSTITUTIONAL LANDLORDS FOR SALE FOR RENTAL • De-risking business plan • Forward purchase agreements • Accelerating consolidation of sites INVESTOR DAY - JULY 2ND 23
Slide 24: Industrialised Construction
STRENGTHENING OUR LEADING POSITION. Industrialised construction 1. Hedge against labour shortages and provide more certainty in schedules and budgets 2. Reduce construction time frames and rotate capital faster 3. Higher quality, less environmental impact, improved Health & Safety standards, better
Slide 25: Key Takeaways
KEY TAKEAWAYS 1 Good fundamentals 2 Execution is on track 3 Strengthening our leading position INVESTOR DAY - JULY 2ND 25
Slide 26: Sergio Gálvez
SERGIO GÁLVEZ Chief Investment & Strategy Officer INVESTOR DAY - JULY 2ND 26
Slide 27: Agenda
AGENDA 1. LAND BANK EVOLUTION 2017 – 2019 2. VISION ON FUTURE LAND INVESTMENT INVESTOR DAY - JULY 2ND 27
Slide 28: Land Bank Evolution: 2017-2019
LAND BANK EVOLUTION: 2017-2019 Unchanged investment guidelines DEMAND DRIVEN DEEP LOCAL EXPERTISE CHERRY PICKED, PLOT BY PLOT SELF SOURCING, BOTH NPLs & ASSETS 100% FULLY PERMITTED LAND INVESTOR DAY - JULY 2ND 28
Slide 29: Demand Driven. Aedas Homes Footprint
DEMAND DRIVEN. AEDAS Homes footprint Concentration within the Big Five Regions = +64% of total housing demand Q3 2017 – 12,690 UNITS H1 2019 – 15,234 UNITS5 Key 2 number of Home Sales 2 1 (of total in Spain) <1% c.26% of total new 1 1 – 2.5% 1 investment since 2.5 – 5% 3 IPO done in Madrid 3 5 – 7.5
Slide 30: Demand Driven. Aedas Homes Footprint
DEMAND DRIVEN. AEDAS Homes footprint Our provinces have experienced stronger performance in the residential market 2007-2018 HOUSING TRANSACTIONS1 AEDAS HOMES 10 PROVINCES OUTPACED THE OTHER 42 80 HPA New-build home Growth2 transactions2 61 AEDAS Homes 10 provinces +7% +7.9% 60 Other 42 provinces +2
Slide 31: Land Bank Evolution: Deep Local Expertise
LAND BANK EVOLUTION: 2017-2019 Unchanged investment guidelines DEMAND DRIVEN DEEP LOCAL EXPERTISE CHERRY PICKED, PLOT BY PLOT SELF SOURCING, BOTH NPLs & ASSETS 100% FULLY PERMITTED LAND INVESTOR DAY - JULY 2ND 31
Slide 32: Deep Local Expertise
DEEP LOCAL EXPERTISE Improved KPIs pointed to the right time to invest in Granada AVAILABLE FULLY PERMITTED NEW HOUSE OFFER DEMAND METRICS NEW HOUSING SUPPLY FULLY LANDPERMITTED LAND Higher income per capita vs New-build homes sold vs total +7.3% 3.9% Spanish average (2017) sold (Q1 2018) 2 SITE 2 N
Slide 33: Deep Local Expertise
DEEP LOCAL EXPERTISE Snapping up the trophy assets: 1st mover advantage 2 SITE 2 UNIVERSITIES UNIVERSITIES 1 TOWN HALL SITE 1 UNIVERSITIES UNIVERSITIES ALHAMBRA INVESTOR DAY - JULY 2ND 33
Slide 34: Deep Local Expertise
DEEP LOCAL EXPERTISE Intensified sourcing and deal-making process to achieve significant volume: 2 sites, 14 plots for more than 800 units SITE 2 2 SITE 2 2 SITE 2. AEDAS INVESTMENT 325 units UNIVERSITIES 3 plots – 1 deal UNIVERSITIES €14.2m RTB cost 1 TOWN HALL SITE 1 SITE 1 UNIVERSITIES UNIVERSITI
Slide 35: Deep Local Expertise
DEEP LOCAL EXPERTISE Launched developments: a snapshot of the proven success of our investment in Granada Taracea Tarsia 2 developments launched on 15 May 2019 170 units 25 units sold in the very first month Units 1st phase: 98 Units 1st phase: 72 ASP (1st phase): € 246k ASP (1st phase): €243k Launc
Slide 36: Land Bank Evolution: Cherry Picked, Plot by Plot
LAND BANK EVOLUTION: 2017-2019 Unchanged investment guidelines DEMAND DRIVEN DEEP LOCAL EXPERTISE CHERRY PICKED, PLOT BY PLOT Superior access to land, bottom-up analysis From 2013 to H1 2017 From H2 2017 to H1 2019 +55 closed deals +45 closed deals INVESTOR DAY - JULY 2ND 36
Slide 37: Land Bank Evolution: Self Sourcing
LAND BANK EVOLUTION: 2017-2019 Unchanged investment guidelines DEMAND DRIVEN DEEP LOCAL EXPERTISE CHERRY PICKED, PLOT BY PLOT SELF SOURCING, BOTH NPLs & ASSETS 100% FULLY PERMITTED LAND INVESTOR DAY - JULY 2ND 37
Slide 38: Land Bank Evolution: 100% Fully Permitted Land
LAND BANK EVOLUTION: 2017-2019 Unchanged investment guidelines DEMAND DRIVEN DEEP LOCAL EXPERTISE CHERRY PICKED, PLOT BY PLOT SELF SOURCING, BOTH NPLs & ASSETS 100% FULLY PERMITTED LAND INVESTOR DAY - JULY 2ND 38
Slide 39: Vision on Future Land Investment
VISION ON FUTURE LAND INVESTMENT Growth based on 3 pillars: organic growth, large scheme opportunities & strategic land I ORGANIC GROWTH • Dynamic approach to land investment, based on our unchanged investment guidelines II LARGE SCHEME OPPORTUNITIES • High exposure to Land in the hands of non-natur
Slide 40: Vision on Future Land Investment: Non-natural Owners
VISION ON FUTURE LAND INVESTMENT High exposure to land in the hands of non-natural owners (opportunity) NON-PERFORMING ASSETS IN SPAIN BY OWNER AND ASSET TYPE NPA TOP BUYERS & SELLERS 2018, Deal Value (€bn) Q4 2017 –Q2 2018, GBV (€bn) NPA MARKET (€285 bn) 141 74 70 Cerberus 16 REOs4 24 Lone Star 15.
Slide 41: Vision on Future Land Investment
VISION ON FUTURE LAND INVESTMENT Growth based on 3 pillars: organic growth, large scheme opportunities & strategic land I ORGANIC GROWTH • Dynamic approach to land investment, based on our unchanged investment guidelines II LARGE SCHEME OPPORTUNITIES • High exposure to Land in the hands of non-natur
Slide 42: Key Takeaways
KEY TAKEAWAYS ORGANIC GROWTH Land bank evolution: 2017-2019 and future land investment Proven capacity to keep investing 1 following the same inv. Guidelines Demonstrated ability to invest in new 2 markets NEW GROWTH Large scheme opportunities - 3 non-natural land owners Privileged access to high qu
Slide 43: Alberto Delgado
ALBERTO DELGADO Chief Operating Officer INVESTOR DAY - JULY 2ND 43
Slide 44: Team. Decentralised operation leveraging on core competencies
TEAM. Decentralised operation leveraging on core competencies COO Total operations team of 127 people Alberto Delgado Centre Branch Catalonia Branch East Branch Costa del Sol Branch Andalusia Branch Director Director Director Director Director Pablo Alonso David Gomez Juan Lopez Jose Ignacio Fernand
Slide 45: Recent Operational Data (as of 24.06.19)
RECENT OPERATIONAL DATA (as of 24.06.19) Careful planning, on track to deliver LAUNCHES (# UNITS) 2,580 2,265 1,748 1,773 2,042 2019 sales(1): 1,307 (51%) 732 UNITS (€252 MN) 2017 2018 2019 (1) Target Real Accumulated launches: 5.345 2019 deliveries: 96 UNITS (€22 MN) SALES COVERAGE OF DELIVERIES (#
Slide 46: 2019 Deliveries (as of 24.06.19)
2019 DELIVERIES (as of 24.06.19) TOTAL DELIVERIES AS TOTAL DELIVERIES AS PROJECT REGIONAL OFFICE FCC(1) FOP(2) PROJECT REGIONAL OFFICE FCC(1) FOP(2) UNITS OF 24.06.19 UNITS OF 24.06.19 Galera Sun Costa del Sol 5 Granted Granted 5 Escalonia Centre 59 H2-19 H2-19 Brisas del Arenal East 11 Granted Gran
Slide 47: Development Milestones
DEVELOPMENT MILESTONES Realistic planning & local focus YEAR 1 YEAR 2 YEAR 3 I LAND INVESTMENT PRODUCT DEFINITION 6–7 MONTHS & PROJECT DESIGN BUILDING PERMITS 6-8 MONTHS MARKETING / SALES 24-28 MONTHS II CONSTRUCTION 18 – 20 MONTHS DEVELOPMENT 27 – 30 MONTHS DELIVERIES & CUSTOMER CARE Building Permi
Slide 48: Local Approach Makes All the Difference
LOCAL APPROACH MAKES ALL THE DIFFERENCE BUILDING PERMIT PROCESS Months From a sample of 5.000 units with 7 MONTH AVERAGE PERIOD building permit granted 0 3 6 9 12 15 18 San Sebastián de los Reyes 15 Pozuelo de Alarcón 14 Las Rozas 11 AVERAGE PERIOD PER REGION 9 CENTRE Madrid Torrejón de Ardoz 8 Alca
Slide 49: Marketing & Sales Case Study. Escalonia (Las Rozas)
MARKETING & SALES CASE STUDY. Escalonia (Las Rozas) Initial Budget Phase 1 Phase 2 Phase 3 ASP ASP ASP ASP Apr-17 Sep-19 TOTAL UNITS - 403 354,000 € 361,000 € 405,000 € 420,000 € /unit /unit /unit /unit PHASE 3 +11% +19% UNITS – 193 LAUNCH – 2019E PHASE 2 UNITS – 150 LAUNCH - 2018 GROSS 87,000 € 102
Slide 50: Construction Case Study. Altos del Pilar (Madrid)
CONSTRUCTION CASE STUDY. Altos del Pilar (Madrid) (€) UNDERGROUND & FACADES & FINISHES STRUCTURE WORKS 10M 9M 8.M 7M 6M ADDENDUM 5M 4M 3M 2M 1M 2-3 month delay 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 (MONTHS) ORIGINAL CONTRACT CURRENT CONTRACT UNITS TOTAL CONTRACT VALUE ADDENDUM VALUE ORIGINA
Slide 51: Key Takeaways
KEY TAKEAWAYS A team leveraging years of 1 experience across markets Checks and balances of the 2 decentralised structure Planning approach is bearing out 3 in the market Committed to delivering 4 excellent product and profits INVESTOR DAY - JULY 2ND 51
Slide 52: María José Leal
MARÍA JOSÉ LEAL Chief Financial Officer INVESTOR DAY - JULY 2ND 52
Slide 53: Deciphering the P&L. Timing & Building Blocks of Cost Structure
DECIPHERING THE P&L. Timing & Building blocks of cost structure 100% ~20 – 24% Target ASP: €330-350k/unit ~48 – 50% 2% ~25– 30% ~ 5% 20%-25% Gross Sales Land Development Interest on Gross Development Direct Costs Margin Net Investment Cost Developer Loans Margin (Marketing, Sales Development and Loc
Slide 54: Cost Structure Case Study. Altos del Pilar (Madrid)
COST STRUCTURE CASE STUDY. Altos del Pilar (Madrid) 100% 19% Target ASP: €330-350k/unit 41% 2% 37% 6% 31% Gross Sales Land Development Interest on Gross Development Direct Costs Margin Net Investment Cost Developer Loans Margin (Marketing, Sales Development and Local Taxes) YEAR 1 YEAR 2 YEAR 3 I LA
Slide 55: Cash Flow
CASH FLOW HARD/SOFT NET MARGIN (PRE- LAND ADVERTISING SALES CASH INFLOWS COSTS/INTEREST TAX) 1.) LAND INVESTMENT (20)% - - - - (20)% 2.) INITIATION OF MARKETING - (2.3)% (0.5)% (0.25)% (3.05)% ACTIVITIES 53% 3.) DEVELOPMENT - (50)% (0.25)% (0.25)% (50.5)% 4.) DELIVERY - (0.7)% (0.25)% (1.5)% 47% 97,
Slide 56: Cash Flow Case Study. Altos del Pilar
CASH FLOW CASE STUDY. Altos del Pilar 53% cash inflow vs. 31% margin 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 -5,000,000 -10,000,000 2017 2018 2019 2020 Costs Revenue CF INVESTOR DAY - JULY 2ND 56
Slide 57: Financial Model. Base Assumptions
FINANCIAL MODEL. Base assumptions… Valuation Date 01 Jan 2019 Future Investments . Year # Units Current Land Bank -> # Expected Units # Additional units per year Avg Selling Price Net margin (%) WIP Discount Factor 9.0% 2021 2651 -> 2651 0 290,000 20.0% 2022 2848 -> 3419 571 290,000 20.0% WIP Plots
Slide 58: Financial Model … Resulting in These Financial Targets
FINANCIAL MODEL … resulting in these financial targets -5% REVENUE €M’s +5% -5% EBITDA €M’s +5% 2019E 380 400 420 67 70 74 2020E 672 707 742 139 146 153 2021E 787 828 869 145 153 161 58 58 INVESTOR DAY - JULY 2ND
Slide 59: Key Takeaways
KEY TAKEAWAYS Confirmation of IPO 1 guidance-slight upside Timing is important when 2 modelling Strong visibility over business plan 3 provides robust financial targets INVESTOR DAY - JULY 2ND 59