Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — FY2014 Earnings Presentation

43 slides from Deutsche Wohnen's earnings presentation, Mar 26, 2015

  1. Slide 1: Full year results 2014

    Deutsche Wohnen AG » Full year results 2014 Conference Call, 26 March 2015 1

  2. Slide 2: Agenda

    » Agenda 1 Highlights FY-2014 2 Portfolio 3 Financials 4 Conwert update 5 Guidance & Outlook 6 Q&A 7 Appendix 2

  3. Slide 3: Highlights FY-2014

    » Highlights FY-2014 Financials Operational development In EUR FY-2014 yoy In EUR FY-2014 yoy FFO I (before minorities) 223.5m (+95%) NOI letting 460.6m (+75%) FFO I (after minorities)1) 217.6m (+90%) L-f-l rental growth 2.5% (-0.8pp) (entire letting portfolio) FFO I /share2) 0.76 (+17%) Rent increa

  4. Slide 4: Strong position in the capital markets

    » Strong position in the capital markets 2nd largest listed real estate company in Germany Outperformance of indices in 2014 150  Free float market cap increased by ~57% from MDAX EPRA Europe EUR 3.7bn (Dec. 2013) to EUR 5.8bn (Dec. 2014) EPRA Germany 140 Deutsche Wohnen  Ø daily trading volume in

  5. Slide 5: Portfolio

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

  6. Slide 6: Portfolio Overview

    » Portfolio Overview Kiel Portfolio development underlines shift to growth regions with significant upside potential Lübeck Total residential holdings: ~147,000 units  Thereof ~87% in dynamic Core+ regions (~ 128,000 units) Berlin Hanover  Thereof ~73% in Greater Berlin (>106,000 units) Potsdam Br

  7. Slide 7: Valuation Overview as of 31-Dec-2014

    » Valuation Overview as of 31-Dec-2014 Key figures 2014 2013  Revaluation of EUR ~1bn or EUR 118 per sqm leading to a multiple Total fair value in expansion by 1.3x to 15.5x EUR 9.8bn 8.9bn  Main uplift from portfolio in Greater Berlin and Rhine-Main area Area (sqm) in m 9.22 9.41  ~1/3 derive fr

  8. Slide 8: Composition of fair value adjustment

    » Composition of fair value adjustment EUR m EUR/sqm EUR/sqm in % Multiple Multiple FV (31.12.2013) 8,881 944 14.2 Net of acquisitions / disposals and Balance portfolio changes capitalized investments for (52) 14 and other modernization FV (31.12.2014) after portfolio changes and 8,829 958 14 1.5% 1

  9. Slide 9: 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) In-place rent (EUR/sqm) +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 4.83 4.99 5.10

  10. Slide 10: 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

  11. Slide 11: Acquisitions

    » Acquisitions Berlin I (1,639 res. units) Key figures Residential units 3,079 Residential area (sqm in thous.) 212 Gross rental income (EUR m) 15,1 In-place rent (EUR/sqm) 5.54 Rent potential 14% Dresden (293 res. units) Berlin II (293 res. units) Vacancy 4.1% NOI contribution (EUR m) 12.6 Purchase

  12. Slide 12: Disposal of 5,750 residential units in Berlin

    » Disposal of 5,750 residential units in Berlin Divestment rational Key figures Residential units 5,750  Reduction of the overallocation in the districts of Residential area (sqm in thous.) 400 Reinickendorf/Spandau Gross rental income p.a. (EUR m) 24.0  Realization of an attractive book gain base

  13. Slide 13: Focused and sustainable investments into the portfolio

    » Focused and sustainable investments into the portfolio 1) FY-2014 FY-2013 18.94 16.51 EUR m EUR m 15.03 9.26 Maintenance 88.8 59.4 4.67 6.92 Modernization 64.1 26.8 9.68 10.36 9.59 Total 152.9 86.2 Total EUR/ sqm2) 16.51 15.03 FY-2012 FY-2013 FY-2014 Modernization in EUR/sqm Capitalization rate 41

  14. Slide 14: Financials

    » Financials deutsche-wohnen.com . ) Deutsche Wohnen 14

  15. Slide 15: Strong earnings and cash contributions from letting

    » Strong earnings and cash contributions from letting in EUR m FY-2014 FY-2013 In-place rent: FY-14: EUR 5.69 /sqm Current gross rental income 626.3 372.9 Non-recoverable expenses (13.8) (9.6) Earnings Maintenance1) from letting: Rental loss (8.9) (4.9) FY-14: EUR 9.59 /sqm + EUR 214m Maintenance (8

  16. Slide 16: Benchmark EBITDA margin among the Peer Group

    » Benchmark EBITDA margin among the Peer Group in EUR m FY-2014 FY-2013 EBITDA margins FY-2014 FY-2013 Earnings from Residential Property Management 505.8 292.3 adj. EBITDA / gross rents 75.9% 72.5% Earnings from Disposals 52.4 23.0 adj. EBITDA excl. disposals / 67.5% 66.3% gross rents Earnings from

  17. Slide 17: Strong integration track record

    » Strong integration track record DW before GSW DW incl. GSW 2013 2011 2012 2013 2014 pro forma No. of units (avg.) 48,699 57,914 86,999 146,710 149,776 Gross rental income1) 196.4 240.0 353.5 589.7 626.3 Corporate expenses (32.9) (40.4) (48.1) (102.2) (90.5) Cost per unit (676) (698) (553) (697) (6

  18. Slide 18: Profit more than tripled to EUR 889m (+318%)

    » Profit more than tripled to EUR 889m (+318%) in EUR m FY-2014 FY-2013 in EUR m FY-2014 FY-2013 EBITDA (adjusted) 475.3 270.2 Interest expenses (183.4) (122.0) Non-cash interest expenses (3.0) (11.8) Depreciation (6.1) (5.5) (186.4) (133.8) At equity valuation (0.5) 0.0 2) 2) Interest income 1.0 1.

  19. Slide 19: Recurring FFO per share performance +16.9% (y-o-y)

    » Recurring FFO per share performance +16.9% (y-o-y) in EUR m FY-2014 FY-2013 FFO2) development in EUR m Profit 889.3 212.7 88.1 137.5 270.0 Earnings from Disposals (52.4) (23.0) Depreciation 6.1 5.5 52.4 Valuation investment properties (952.7) (100.9) Valuation SWAP and convertible bonds 111.5 (10.

  20. Slide 20: EPRA NAV I per share up by 24.7%

    » EPRA NAV I per share up by 24.7% in EUR m 31/12/2014 31/12/2013 in EUR m 31/12/2014 31/12/2013 1) Equity (before non-controlling EPRA NAV (undiluted) 5,326.0 4,153.0 4,692.9 3,777.8 interests) 2) Fair values of derivative financial Goodwill GSW (535.1) (535.1) 144.9 156.5 instruments Adjusted NAV

  21. Slide 21: Cash flow creation and dividend coverage

    » Cash flow creation and dividend coverage EURm 2011 2012 2013 2014 FFO I1) 47.5 68.2 114.5 217.6 FFO disposals 10.6 19.9 23.0 52.4 2014 refinancing and FFO II 58.1 88.1 137.5 270.0 further synergies will + ∆ CF disposals2) 54.0 51.2 49.9 83.0 improve cash flow - Regular amortization -30.2 -36.0 -51

  22. Slide 22: Conwert update

    » Conwert update deutsche-wohnen.com ‘ ) a Deutsche Wohnen 22

  23. Slide 23: Key terms of the offer – acceptance period has started

    » Key terms of the offer – acceptance period has started  Cash offer: 11.50 EUR per Conwert share, providing a 4.8% premium to the pre- announcement share price of Conwert and a 21.5% premium to the 6-months- VWAP of EUR 9.47 Terms  Convertible bond holders are offered 111.9% for the 2016 converti

  24. Slide 24: Add on acquisition – no game changer

    » Add on acquisition – no game changer  Approx. 90% of assets are based in Germany (c. 25,000 residential units)  Core+ / Core portfolio of ~15,000 units in Berlin, Potsdam, Dresden, Vienna and Adding a major Leipzig Core+ and Core  Large part of the commercial portfolio to be sold residential po

  25. Slide 25: Guidance & Outlook

    » Guidance & Outlook deutsche-wohnen.com ‘ ) a Deutsche Wohnen 25

  26. Slide 26: Guidance 2015

    » Guidance 20151) 1 FFO I: at least EUR 250m (after minorities) 2 Dividend policy: 60% of FFO I 3 Mid term target: overall cost ratio of 12% from 2016 onwards 4 LTV: ~50% by the end of 2015 5 Opportunistic portfolio strategy: accretive acquisitions and disposals will continue 1) Without acquisitions

  27. Slide 27: Guidance 2015

    » Guidance 2015 32.0 (15.0) >250 8.0 10.0 217.6 1) FFO I (w/o disposals) Synergies Rent increases1) Interest & tax Disposals 2) FFO I 2015e (w/o disposals) 3)  At least EUR 250m FFO I after minorities targeted for 2015  EUR 500m earnings from residential property management expected  EUR 14m earn

  28. Slide 28: Q&A

    »Q&A deutsche-wohnen.com vr) a Deutsche Wohnen 28

  29. Slide 29: Appendix

    » Appendix deutsche-wohnen.com ‘ ) a Deutsche Wohnen 29

  30. Slide 30: Strong disposal business

    » Strong disposal business Closed in EUR m FY-2014 FY-2013  Free cash flow from sales activities of EUR 135.4m Sales proceeds 257.4 169.6 (2,016 closed privatization units Cost of sales (12.1) (10.3) and 2,099 closed units institutional sales) Net sales proceeds 245.3 159.3 Carrying amounts of asse

  31. Slide 31: Nursing and Assisted Living

    » Nursing and Assisted Living in EUR m FY-2014 FY-2013 31/12/2014 Facilities Places Income Greater Berlin 12 1,442 Nursing 55.4 52.0 Saxony 7 475 Living 6.0 3.0 Others 2 257 Other 6.8 4.9 In total 21 2,174 Total income 68.2 59.9 Costs Average Occupancy Nursing and corporate expenses (18.6) (16.4) St

  32. Slide 32: Overview of portfolio as at 31 December 2014

    » Overview of portfolio as at 31 December 2014 31/12/2014 Residential Area 1) 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 (FV) FV rent rent # K sqm EUR/sqm EUR/sqm % EUR m % EUR/sqm % % Strategic core and grow

  33. Slide 33: Portfolio split and strategic focus for investment decisions

    » Portfolio split and strategic focus for investment decisions Strategy cluster Residential1) Area % of total In-place Rent Vacancy Multiple in- Multiple 2) 3) units units rent Potential 31/12/2014 place rent market rent 31/12/2014 K sqm EUR/sqm in % in % Total 147,105 8,946 100 5.69 19.6 2.2 15.5 1

  34. Slide 34: Portfolio revaluation by cluster

    » Portfolio revaluation by cluster 1) 1) 1) Residential Initial Value 1) Initial Value 1) FV FV Multiple Multiple Initial Multiple Regions units (31.12.2013) (31.12.2013) (31.12.2014) (31.12.2014) in-place rent market rent (31.12.2013) # EUR m EUR/sqm EUR m EUR/sqm (31.12.2014) (31.12.2014) Strategi

  35. Slide 35: Like-for-like overview of portfolio as at 31 December 2014

    » Like-for-like overview of portfolio as at 31 December 2014 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) 31/12/2014 rent rent 31/12/2014 31/12/2013 # 31/12/2014 31/12/2013 EUR/sqm EUR/

  36. Slide 36: Dynamic rent potential in Core+ regions (letting portfolio)

    » Dynamic rent potential in Core+ regions (letting portfolio) New-letting rent in New-letting 3) In-place rent in EUR/sqm 1) Rent potential EUR/sqm2) contracts2) 31.12.2013 5.66 19.6% 6.76 8,058 Core+ 31.12.2014 5.80 22.7% 7.11 7,756 Greater 31.12.2013 5.58 17.2% 6.54 6,495 Berlin 31.12.2014 5.71 21

  37. Slide 37: Balance sheet

    » Balance sheet Assets Equity and Liabilities in EUR m 31/12/2014 31/12/2013 in EUR m 31/12/2014 31/12/2013 Investment properties 9,611.0 8,937.1 Total equity 4,876.1 3,944.3 1) 1) Other non-current assets 600.6 595.7 Financial liabilities 4,779.0 5,161.5 Derivatives 0.0 2.7 Convertibles 748.7 250.2

  38. Slide 38: EPRA NAV I per share up by 24.7%

    » EPRA NAV I per share up by 24.7% in EUR m 31/12/2014 31/12/2013 in EUR m 31/12/2014 31/12/2013 Equity (before non-controlling EPRA NAV I (undiluted) 5,326.0 4,153.0 1) 4,692.9 3,777.8 interests) Fair values of derivative financial Goodwill GSW (535.1) (535.1) 2) 144.9 156.5 instruments Adjusted NA

  39. Slide 39: Sustainable financing

    » Sustainable financing Key figures financing Maturity profile as of 31/12/2014 (EUR m)  Total nominal debt volume EUR 5.5bn  Ø weighted maturity ~8.7 years 400  Ø cost of debt ~2.45% 250  Ø mandatory redemptions ~1.1% 870 797 703 695 654  Interest rate fixed or hedged ~86% 499 428  Two conver

  40. Slide 40: Portfolio structure – characteristics meeting strong demand

    » Portfolio structure – characteristics meeting strong demand Apartment size Year of construction 30.8% 31.5% < 40 sqm, >= 75 sqm, 10% 19% 19.4% 40 to < 55 14.9% 65 to < 75 sqm, 29% sqm, 18% 3.0% 0.4% 55 to < 65 sqm, 24% <= 1918 1919 - 1950 - 1970 - 1980 - >= 2000 1949 1969 1979 1999 Rental restrict

  41. Slide 41: The Berlin-Portfolio at a glance

    » THE BERLIN-PORTFOLIO AT A GLANCE Reinickendorf Pankow # 11,649  5.47  2.1% # 8,767  6.03  1.1% Mitte Friedrichshain-Kreuzberg # 3,639  5.76  1.5% # 7,782  5.65  1.4% Lichtenberg # 7,606  5.75  1.0% Spandau # 15,200  5.37  2.6% Marzahn-Hellersdorf # 8,605  4.97  2.5% Charlottenburg-Wi

  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 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 43

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