Vonovia Se · XETR:VNA
Vonovia — Non-Deal Roadshow (October 2017)
74 slides from Vonovia's roadshow presentation, October 2017
Slide 1: Company Presentation – Non-deal Roadshow to Asia
Company Presentation Non-deal Roadshow to Asia October 2017
Slide 2: 1. Our Market 2. Our Company 3. Our Numbers
1. Our Market 2. Our Company 3. Our Numbers Non-deal Roadshow to Asia – October 2017 page 2
Slide 3: German Residential – Safe Harbor and Low Risk
German Residential – Safe Harbor and Low Risk Evergreen contracts in a regulated market safeguard sustainable growth Contrary to most other jurisdictions such as the USA, residential lease agreements are evergreen contracts (VNA’s avg. lease length is 13.5 years); rental growth is regulated and not
Slide 4: German Residential – Landlords Benefit from Structural Imbalance between Supply and Demand
German Residential – Landlords Benefit from Structural Imbalance between Supply and Demand New supply falls short of demand Consensus estimates see a current shortage of around 1 million apartments in urban areas. Three main constraints stand in the way of material changes in the short and even medi
Slide 5: German Residential – Favorable Fundamentals
German Residential – Favorable Fundamentals Low home ownership ratio – Germans prefer to rent Rental housing very affordable in Germany With the exception of Switzerland, Germany has the Affordability in Germany is higher than in the UK or lowest homeownership ratio in Europe. France. Rental regulat
Slide 6: German Residential – Favorable Fundamentals
German Residential – Favorable Fundamentals Fragmented ownership structure Growing number of smaller households Germany is the largest housing market in Europe with While the overall population in Germany is expected to ~42m housing units, of which ~23m are rental units. slightly decline, the number
Slide 7: 1. Our Market 2. Our Company 3. Our Numbers
1. Our Market 2. Our Company 3. Our Numbers Non-deal Roadshow to Asia – October 2017 page 7
Slide 8: Vonovia at a Glance
Vonovia at a Glance Germany‘s largest owner and operator of residential real estate. Pan-German portfolio with >350k apartments and >€30bn gross asset Size value across 15 urban regional markets. IPO in 2013; DAX 30 constituent since 2015 with a market cap of ~€17bn, 100% free float1 and ~€45m avera
Slide 9: If You Want to Know Where Germans Live - Follow the Light
If You Want to Know Where Germans Live - Follow the Light Illustration of Germany at Night Source: www.bundeswahlleiter.de Non-deal Roadshow to Asia – October 2017 page 9
Slide 10: Strong Overlap with Vonovia Portfolio
Strong Overlap with Vonovia Portfolio Illustration of Germany at Night Source: www.bundeswahlleiter.de Note: Vonovia Strategic Portfolio High-influx cities (“Schwarmstädte”). For more information: http://investoren.vonovia.de/websites/vonovia/English/4050/financial-reports-_-presentations.html Non-d
Slide 11: Proven and Unchanged Strategy since IPO
Proven and Unchanged Strategy since IPO Reputation & Customer Satisfaction Systematic optimization of operating performance and core business productivity Traditional through leveraging scaling effects 1 Property Management High degree of standardization and industrialization throughout the entire o
Slide 12: 1. Our Market 2. Our Company 3. Our Numbers
1. Our Market 2. Our Company 3. Our Numbers Non-deal Roadshow to Asia – October 2017 page 12
Slide 13: Track Record
Track Record Operating KPIs fully under control Steady efficiency gains 6.02 84.8% 87.0% 79.6% 82.2% 3.5% 3.4% 5.75 67.7% 70.9% 60.8% 63.8% 5.58 2.7% 5.40 2.4% 2013 2014 2015 2016 2013 2014 2015 2016 In-place rent (€/sqm) Vacancy rate (%) EBITDA margin EBITDA margin (excl. maintenance) Proof of busi
Slide 14: Valuation Going Up but still Moderate
Valuation Going Up but still Moderate Fair value (€/sqm) 2,500 1,800 1,264 1,341 964 1,054 792 812 839 901 2010 2011 2012 2013 2014 2015 2016 H1 2017 VNA modular Market costs construction for new costs constructions Fair values have been consistently moving up but Adj. NAV (€/share) are still well b
Slide 15: Sustainable Growth in FFO and Dividends
Sustainable Growth in FFO 1 and Dividends Number of months until costs are earned by recurring Sustainable and growing cash flow with attractive pay-out income1 ratio ~1.882 12 1.63 Dividend 10 (ca. 70%) 70 % 1.30 of FFO 1 FFO 1 1.12 8 number of months 1.00 0.95 0.94 Other (ca. 30%) 6 0.74 Taxes 0.6
Slide 16: Accelerating Rent Growth Momentum
Accelerating Rent Growth Momentum Continuously sustainable rent growth contribution Rent growth drivers (last 12M) H1 2017 H1 2016 Delta from market rent growth plus accelerated rent growth from modernization with an increase by 80 bps y-o-y. Sitting tenants 3.8-4.0% organic rent growth for 2017 par
Slide 17: Smooth Maturity Profile with Diverse Funding Mix
Smooth Maturity Profile with Diverse Funding Mix Debt maturity profile (€m) and cost of finance (%) 3,000 4.0% 2,500 3.0% 2,000 1,500 2.0% 1,000 Current unsecured reoffer yield (7-8 years) 1.0% 500 0 0.0% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 from 2028 Mortgages Structured Loans Bon
Slide 18: Pro-active Portfolio Management Clustering
Pro-active Portfolio Management Clustering Non-core, Vienna non- 2% strategic, Austria 2% Strategic units of conwert portfolio have initially all been included Privatize 5% in Operate and will be reclassified to UB and OA in the context of Operate the regular annual portfolio clustering in the fall.
Slide 19: Growing Investment Volume
Growing Investment Volume Investments into the portfolio are increasingly meaningful organic growth drivers and provide independence from acquisition opportunities. Average 7% hurdle rate (unlevered) for each program year with investments in year one generally lead to rent growth in year two. Increa
Slide 20: Growing Contribution from Value-add Business
Growing Contribution from Value-add Business Concept Economics Expansion of core business to extend the value chain by NAV does not account for Vonovia’s Value-add Business. offering additional services and products that are directly Applying the impairment test WACC1 to the 2017E Adj. linked to our
Slide 21: Guidance (JPY currency)
Guidance (JPY currency) EUR USD JPY 2015 2016 2017 2015 2016 2017 2015 2016 2017 Actuals Actuals Guidance Actuals Actuals Guidance Actuals Actuals Guidance Organic rent growth (eop) 2.9% 3.3% 3.8% - 4.0% 2.9% 3.3% 3.8% - 4.0% 2.9% 3.3% 3.8% - 4.0% Occupancy (eop) 97.3% 97.6% >97.5% 97.3% 97.6% >97.5
Slide 22: Guidance (HKD currency)
Guidance (HKD currency) EUR USD HKD 2015 2016 2017 2015 2016 2017 2015 2016 2017 Actuals Actuals Guidance Actuals Actuals Guidance Actuals Actuals Guidance Organic rent growth (eop) 2.9% 3.3% 3.8% - 4.0% 2.9% 3.3% 3.8% - 4.0% 2.9% 3.3% 3.8% - 4.0% Occupancy (eop) 97.3% 97.6% >97.5% 97.3% 97.6% >97.5
Slide 23: Guidance (SGD currency)
Guidance (SGD currency) EUR USD SGD 2015 2016 2017 2015 2016 2017 2015 2016 2017 Actuals Actuals Guidance Actuals Actuals Guidance Actuals Actuals Guidance Organic rent growth (eop) 2.9% 3.3% 3.8% - 4.0% 2.9% 3.3% 3.8% - 4.0% 2.9% 3.3% 3.8% - 4.0% Occupancy (eop) 97.3% 97.6% >97.5% 97.3% 97.6% >97.5
Slide 24: Guidance (MYR currency)
Guidance (MYR currency) EUR USD MYR 2015 2016 2017 2015 2016 2017 2015 2016 2017 Actuals Actuals Guidance Actuals Actuals Guidance Actuals Actuals Guidance Organic rent growth 2.9% 3.3% 3.8% - 4.0% 2.9% 3.3% 3.8% - 4.0% 2.9% 3.3% 3.8% - 4.0% (eop) Occupancy (eop) 97.3% 97.6% >97.5% 97.3% 97.6% >97.5
Slide 25: IR Contact & Financial Calendar
IR Contact & Financial Calendar Contact Financial Calendar 2017 2017 Rene Hoffmann Nov 8 Interim results 9M 2017 Head of Investor Relations Nov 13-16 Management Roadshow (Europe) Vonovia SE Nov 17 Roadshow (Brussels)* Nov 28 UBS Global Real Estate CEO/CFO Conference (London) Philippstraße 3 Nov 28 R
Slide 26: Appendix
Appendix Non-deal Roadshow to Asia – October 2017 page 26
Slide 27: Liquid Large-cap Stock
Liquid Large-cap Stock Shareholder structure (as of June 30, 2017) Share information First day of trading July 11, 2013 8.5% Number of shares outstanding 476.5 million 7.5% Free float based on Deutsche 92.5% Blackrock Börse definition 5.3% Norges ISIN DE000A1ML7J1 3.0% Ticker symbol VNA Lansdowne Sh
Slide 28: Scalable Organization
Scalable Organization Asset Management Property Management ~355,000 apartments 38 Business Units 6 Business Units 5 Business Units 4 Business Units 8 Business Units 7 Business Units 8 Business Units Local Local property management, letting, care-taking North East South-East South Middle West 6 Regio
Slide 29: No Correlation between Interest Rates and Asset Yields
No Correlation between Interest Rates and Asset Yields Valuation methodology for German residential properties is primarily based on market prices for assets – not on interest rates While market prices are affected by general interest rate levels, there is no significant correlation. Other factors s
Slide 30: Three Valuation Layers with Different Volatilities
Three Valuation Layers with Different Volatilities High degree of stability and predictability of underlying business (layer 1) and portfolio valuation (layer 2) is not reflected in share price development (layer 3), as equity markets appear to apply valuation parameters that are substantially less
Slide 31: H1 2017 Highlights
H1 2017 Highlights Built-in organic growth dynamics continue Accelerated organic rent growth of 3.7% y-o-y (prior year: 2.8%) Adj. EBITDA Operations up 8.9% y-o-y. FFO 1 per share up 15.7% y-o-y (18.1% on average NOSH). Execution of 2017 investment program running at full speed 98% of projects for €
Slide 32: Built-in Organic FFO Growth Continues in H1
Built-in Organic FFO 1 Growth Continues in H1 The average portfolio size was similar y-o-y. Organic rent growth, better average portfolio quality and increased contribution from Value-add Business drove 8.9% Adj. EBITDA Operations growth in spite of temporary additional cost load from conwert. 15.7%
Slide 33: LTV Well within Target Range, Debt/EBITDA Multiple of 11.2x
LTV Well within Target Range Debt/EBITDA Multiple of 11.2x LTV down to 43.2% and well within target range of 40%-45%. €m Jun. 30, 2017 Mar. 31, 2017 Dec. 31, 2016 (unless indicated otherwise) Non-derivative financial liabilities 14,257.6 14,435.3 13,371.0 Foreign exchange rate effects -137.2 -194.8
Slide 34: FFO 1 per Share +15.7%
FFO 1 per Share +15.7% Driven by better operational performance and lower interest expenses, FFO 1 per share was up 15.7% y-o-y for eop NOSH and up 18.1% for avg. NOSH. Number of shares outstanding increased from 466.0m to 476.5m (+2.2%) as a result of the scrip dividend and the conwert acquisition.
Slide 35: Investment Program well on Track
Investment Program well on Track Fully on track to execute 2017 investment program at an average yield on cost of ~7% unlevered. 98% of projects committed or already completed. Investment program for calendar year 2017 (€m) Distribution of investment funds for 2017 program year 730 10 2 425 Space Cr
Slide 36: Ramping Up Space Creation
Ramping Up Space Creation The bottleneck is not availability of projects, Space creation pipeline (number of apartments from infill projects and roof extensions) building capacity or financing but construction permits including all preliminary approvals 2,000 necessary. By way of planning, applying
Slide 37: Portfolio Valuation Update
Portfolio Valuation Update Valuation as of June 30 comprised the 20 largest cities of our Value uplift across the 25 locations reviewed1 portfolio, plus five additional locations, representing ca. 2/3 of the entire portfolio fair value. All other locations and values were left unchanged and adjusted
Slide 38: Adj. NAV per Share Up 7.6% in H1 2017
Adj. NAV per Share Up 7.6% in H1 2017 Driven by the operating performance, the inclusion of conwert and the H1 valuation, the Adj. NAV per share is up 7.6% in the first six months in spite of the 2.2% increase in the number of shares outstanding. €m Jun. 30, 2017 Mar. 31, 2017 Dec. 31, 2016 (unless
Slide 39: Sales – Steady Cash Flow at Attractive Margins
Sales – Steady Cash Flow at Attractive Margins Overall sales volume lower than in prior-year period mostly as a result of portfolio transaction with LEG including privatizations in H1 2016. Non-core / Non-strategic sales include a relatively large share of commercial properties from conwert portfoli
Slide 40: Improvements Across All KPIs
Improvements Across All KPIs H1 2017 H1 2016 Delta Average number of residential sqm `000 22,226 21,938 +1.3% In-place rent (eop) €/month/sqm 6.12 5.89 +3.9% Organic rent growth % 3.7 2.8 0.9pp Vacancy rate (eop) % 2.9 2.8 +0.1pp Rental income €m 833.2 774.7 +7.6% Cost per average unit € 276 277 -0.
Slide 41: All Strategic Markets Show Upward Potential
All Strategic Markets Show Upward Potential Fair Value In-place rent Regional Market (€m) (€/sqm) Residential Living area Vacancy Total Residential (€/sqm) Organic rent growth Multiple Average rent growth forecast CBRE (5 yrs) Average rent growth (%) from Optimize units ('000 sqm) (%) (p.a., €m) (p.
Slide 42: Substantial Reduction of Portfolio Locations
Substantial Reduction of Portfolio Locations 03/2015 (incl. Südewo) 12/2016 Strategic Portfolio 818 locations 665 locations <400 locations Vonovia location High-influx cities (“Schwarmstädte”). For more information: http://investoren.vonovia.de/websites/vonovia/English/4050/financial-reports-_-prese
Slide 43: Maintenance
Maintenance €m H1 2017 H1 2016 Delta (unless indicated otherwise) €7.2/sqm €6.7/sqm 1.4 1.3 Expenses for maintenance -127.3 -119.0 7.0% 5.7 5.4 Capitalized maintenance -31.5 -29.3 7.5% Total -158.8 -148.3 7.1% Maintenance capitalization H1 2017 H1 2016 20% 20% ratio Expenses for maintenance Capitali
Slide 44: Reconciliation IFRS Profit to FFO
Reconciliation IFRS Profit to FFO €m (unless indicated otherwise) H1 2017 H1 2016 Delta IFRS PROFIT FOR THE PERIOD 1,064.6 147.9 +>100% Financial result 148.6 276.1 -46.2% Income taxes 588.0 109.9 +>100% Depreciation and amortization 14.9 10.0 +49.0% Income from fair value adjustments of investment
Slide 45: IFRS P&L
IFRS P&L €m (unless indicated otherwise) H1 2017 H1 2016 Delta Income from property letting 1,171.6 1,100.0 6.5% Other income from property management 20.8 19.4 7.2% Income from property management 1,192.4 1,119.4 6.5% Income from disposal of properties 701.9 850.5 -17.5% Carrying amount of properti
Slide 46: IFRS Balance Sheet (1/2 – Total Assets)
IFRS Balance Sheet (1/2 – Total Assets) €m (unless indicated otherwise) Jun. 30, 2017 Dec. 31, 2016 Delta Assets 2,957.8 2,743.1 7.8% Intangible assets 130.5 115.7 12.8% Property, plant and equipment 30,495.7 26,980.3 13.0% Investment properties 648.4 585.9 10.7% Financial assets 109.4 15.2 >100% Ot
Slide 47: IFRS Balance Sheet (2/2 – Total Equity and Liabilities)
IFRS Balance Sheet (2/2 – Total Equity and Liabilities) €m (unless indicated otherwise) Jun. 30, 2017 Dec. 31, 2016 Delta Equity and liabilities Subscribed capital 476.5 466.0 2.3% Capital reserves 5,673.4 5,334.9 6.3% Retained earnings 7,136.3 6,665.4 7.1% Other reserves 81.8 1.5 >100% Total equity
Slide 48: Bonds / Rating
Bonds / Rating Corporate Investment grade rating Rating agency Rating Outlook Last Update Standard & Poor’s BBB+ Stable 06. Sep 16 Bond ratings Name Tenor & Coupon ISIN Amount Issue price Coupon Final Maturity Date Rating Bond 002 (EUR-Bond) 6 years 3.125% DE000A1HNW52 € 600m 99.935% 3.125% 25 July
Slide 49: Covenants and KPIs (June 30, 2017)
Covenants and KPIs (June 30, 2017) Bond KPIs Covenant Level Jun. 30, 2017 LTV <60% 40% Total Debt / Total Assets Secured LTV <45% 10% Secured Debt / Total Assets ICR >1.80x 4,1x Last 12M EBITDA / Last 12M Interest Expense Unencumbered Assets >125% 224% Unencumbered Assets / Unsecured Debt Rating KPI
Slide 50: Acquisitions – Opportunistic but Disciplined
Acquisitions – Opportunistic but Disciplined Acquisition pipeline (‘000 units) – excl. Gagfah Acquisition criteria No quantitative acquisition target. 140 Any potential acquisition must meet all four stringent 127 acquisition criteria assuming a 50/50 equity/debt 120 financing. 100 91 83 80 74 Strat
Slide 51: Historical Key Figures (1/2)
Historical Key Figures (1/2) Financial Key Figures (€m, unless stated otherwise) H1 2017 2016 2015 2014 2013 Rental income 833.2 1,538.1 1,414.6 789.3 728.0 Adjusted EBITDA Operations 607.6 1,094.0 957.6 503.4 442.4 Adjusted EBITDA Rental 573.5 1,046.2 924.4 482.6 433.0 Adjusted EBITDA Value-add Bus
Slide 52: Historical Key Figures (2/2)
Historical Key Figures (2/2) Key Balance Sheet Figures (€m, unless stated otherwise) Jun. 30, Dec. 31, Dec. 31, Dec 31, Dec 31, 2017 2016 2015 2014 2013 Fair value of real estate portfolio 30,830.2 27,115.6 24,157.7 12,759.1 10,326.7 Adjusted NAV 15,771.0 14,328.2 11,273.5 6,472.0 5,123.4 Adjusted N
Slide 53: Vacancy Rates – Annual Comparison
Vacancy Rates – Annual Comparison Q-by-Q development 2012 – 2016 5% 4.5% 2012 4.4% 4.4% 2013 4.0% 3.9% 3.9% 3.9% 4% 3.8% 3.7% 2014 3.6% 3.5% 3.5% 3.4% 3.4% 3.4% 2015 3% 2.8% 2.8% 2.8% 2016 2.7% 2.4% 2% Q1 Q2 Q3 Q4 Non-deal Roadshow to Asia – October 2017 page 53
Slide 54: Vonovia History
Vonovia History Seed portfolios of today‘s Vonovia have origin in public housing provided by government, large employers and similar landlords with a view towards offering affordable housing. At beginning of last decade, private equity invested in German residential on a large scale including into w
Slide 55: Impressions
Impressions Frankfurt Frankfurt Frankfurt Essen Non-deal Roadshow to Asia – October 2017 page 55
Slide 56: Impressions
Impressions Dortmund Dresden Dresden Dresden Non-deal Roadshow to Asia – October 2017 page 56
Slide 57: Impressions
Impressions Essen Dortmund Dortmund Essen Non-deal Roadshow to Asia – October 2017 page 57
Slide 58: Optimize Apartment
Optimize Apartment Before After Non-deal Roadshow to Asia – October 2017 page 58
Slide 59: Optimize Apartment
Optimize Apartment Before After Non-deal Roadshow to Asia – October 2017 page 59
Slide 60: Upgrade Building
Upgrade Building Before After Non-deal Roadshow to Asia – October 2017 page 60
Slide 61: Upgrade Building
Upgrade Building Before After Non-deal Roadshow to Asia – October 2017 page 61
Slide 62: Upgrade Building
Upgrade Building Before After Non-deal Roadshow to Asia – October 2017 page 62
Slide 63: Modernization - Impressions
Modernization - Impressions Before After Addition of new floor plus modernization investment Addition of new floor plus modernization investment Upgrade Building Upgrade Building Non-deal Roadshow to Asia – October 2017 page 63
Slide 64: Floor Addition
Floor Addition Non-deal Roadshow to Asia – October 2017 page 64
Slide 65: Floor Addition
Floor Addition Before After Non-deal Roadshow to Asia – October 2017 page 65
Slide 66: Modular Construction
Modular Construction Pictures taken at the production site of our cooperation partner Modulbau Lingen. Non-deal Roadshow to Asia – October 2017 page 66
Slide 67: Modular Construction
Modular Construction Non-deal Roadshow to Asia – October 2017 page 67
Slide 68: Modular Construction
Modular Construction Non-deal Roadshow to Asia – October 2017 page 68
Slide 69: Modular Construction
Modular Construction Non-deal Roadshow to Asia – October 2017 page 69
Slide 70: Modular Construction
Modular Construction Non-deal Roadshow to Asia – October 2017 page 70
Slide 71: Neighbourhood Development “Eltingviertel”
Neighbourhood Development “Eltingviertel” Non-deal Roadshow to Asia – October 2017 page 71
Slide 72: VTS Van
VTS Van Non-deal Roadshow to Asia – October 2017 page 72
Slide 73: Disclaimer
Disclaimer This presentation has been specifically prepared by Vonovia SE and/or its affiliates (together, “Vonovia”) for internal use. Consequently, it may not be sufficient or appropriate for the purpose for which a third party might use it. This presentation has been provided for information purp
Slide 74: For Your Notes
For Your Notes Non-deal Roadshow to Asia – October 2017 page 74