Grand City Properties Sa · XETR:GYC
Grand City Properties Sa — FY2017 Earnings Presentation
38 slides from Grand City Properties Sa's earnings presentation, March 2018
Slide 1: Presentation of the Financial Results for the Year 2017
Cologne Mannheim Duisburg PRESENTATION OF THE FINANCIAL RESULTS FOR THE YEAR 2017 MARCH 2018 Essen Berlin Bremen Hannover
Slide 2: Table of Contents
Table of Contents 1 Highlights 2 Financial and Portfolio performance 3 ESG Outperformer 4 Guidance 5 Appendix 2
Slide 3: Highlights – Corporate Milestones
1 HIGHLIGHTS – CORPORATE MILESTONES STRENGTHENED MARKET POSITION CREDIT RATING UPGRADE MAY 2017 SEP 2017 Baa2 Baa1 A3 Feb 2015 Sep 2017 LONG-TERM TARGET BBB BBB+ A- Jul 2015 Nov 2016 DEC 2017 MOST AWARDED COMPANY BY EPRA HIGH SUSTAINALYTICS SCORE GCP’s up-listing to the Prime Standard in May 2017 re
Slide 4: Highlights – Continued Portfolio Growth Internally and Externally
1 HIGHLIGHTS – CONTINUED PORTFOLIO GROWTH INTERNALLY AND EXTERNALLY VACANCY REDUCTION RENT PER SQM (IN €) VALUE PER SQM (IN €) INVESTMENT PROPERTY (€BN) Continued internal and external growth through acquisitions and by continuously improving upon key operational metrics, with Like-for-Like rental g
Slide 5: Highlights – Proven Shareholder Value Creation
1 HIGHLIGHTS – PROVEN SHAREHOLDER VALUE CREATION FFO I PER SHARE (IN €) DIVIDEND PER SHARE (IN €) +7% +7% DIVIDEND FFO I YIELD* YIELD* 5.8% 3.8% *Based on a share price of €19.2 ** 2017 dividend subject to AGM approval EPRA NAV (IN €MILLIONS) EPRA NAV PER SHARE (IN €) EPRA NAV EPRA NAV per share EPR
Slide 6: Highlights – Strong Financial Structure
1 HIGHLIGHTS – STRONG FINANCIAL STRUCTURE CAPITAL MARKET ACTIVITY SUPPORTING EFFECTIVE DEBT MANAGEMENT STRONG DEBT COVER RATIOS (1-12/2017) PRO-ACTIVE DEBT REDEMPTION Continues strong access to capital markets with MANAGEMENT: €1.8 billion raised since January 2017: €200 million equity capital incre
Slide 7: Profit & Loss
2 PROFIT & LOSS NET RENTAL INCOME (IN € MILLIONS) For the 12 months ended December 31st 2017 2016 € million Revenue 497 443 Rental and operating income 495 436 CAGR 2014-2017 Net rent 328 285 +31% Capital gains, property revaluations and other income 616 598 Property operating expenses (239) (204) A
Slide 8: Adjusted EBITDA & FFO
1 ADJUSTED EBITDA & FFO ADJUSTED EBITDA (IN € MILLIONS) For the 12 months ended December 31st 2017 2016 € million CAGR Adjusted EBITDA 248 225 2014-2017 Finance expenses (40) (36) +30% Current tax expenses (28) (27) Contribution to minorities (1.7) (1.5) FFO I 178 160 Total result from disposal of p
Slide 9: EPRA NAV
2 EPRA NAV Dec 2017 Dec 2016 EPRA NAV (IN € MILLIONS) € million Per share € million Per share Equity per the financial statements 3,850 3,065 EPRA NAV EPRA NAV Incl. perpetual notes Equity attributable to perpetual notes investors (666) (667) Equity excluding perpetual notes 3,184 2,398 CAGR Effect
Slide 10: EPRA NAV Bridge
> EPRA NAV BRIDGE GRAND CITY Properties S.A, 666 3,993 168 3,327 Dec 2016 June 2017 2016 Dividend 2017 2017 Dec 2017 Equity Dec 2017 EPRA NAV Equity Increase Distribution Profitand other | Changein EPRA NAV attributable to EPRA NAV deferred taxes Perpetual Notes incl. Perpetual and derivatives Inves
Slide 11: Investment Property
2 INVESTMENT PROPERTY INVESTMENT PROPERTIES (IN € BN) Valuation parameters* 2017 2016 Rental multiple 18.2 15.6 CAGR Value per sqm 1,155 924 2014-2017 +43% Valuators assumptions set by independent valuators: INVESTMENT PROPERTIES Market rental growth p.a. 1.5% 1.4% Management cost per unit 262 265 O
Slide 12: Portfolio Distribution
2 PORTFOLIO DISTRIBUTION DISTRIBUTION BY VALUE DECEMBER 2017 Hamburg Bremen Hannover Berlin Halle Leipzig NRW Dresden Frankfurt Mainz Nuremberg/ Fuerth Focus on value-add Kaiserslautern Mannheim opportunities in densely populated areas in Germany Munich 12
Slide 13: Portfolio Overview
2 PORTFOLIO OVERVIEW Diversification among areas of sustainable economic fundamentals and demographic prospects PORTFOLIO OVERVIEW DECEMBER 2017 Value Area EPRA Annualized net In-place rent Number of units Value per sqm Rental yield (in €M) (in k sqm) vacancy rent per sqm (in €) (in €M) (in €) NRW 1
Slide 14: Best in Class Berlin Portfolio - Dec 2017
2 BEST IN CLASS BERLIN PORTFOLIO - DEC 2017 …with Berlin as the single largest city in the portfolio… PORTFOLIO OVERVIEW BERLIN 24% of GCP’s Portfolio Berlin - Friedrichshain Berlin - Charlottenburg Berlin - Mitte Berlin - Prenzlauerberg QUALITY LOCATIONS IN TOP TIER NEIGHBORHOODS OF BERLIN* 70% of
Slide 15: Portfolio NRW - Dec 2017
2 PORTFOLIO NRW - DEC 2017 …and well positioned in Germany’s largest metropolitan area… PORTFOLIO DISTRIBUTION* 28% POPULATION DENSITY IN NRW of GCP’s Portfolio Essen Cologne Gelsenkirchen Dortmund Duisburg 15 * by value
Slide 16: Portfolio East and North - Dec 2017
2 PORTFOLIO EAST AND NORTH - DEC 2017 …with further diversification in Germany’s fast growing Eastern and largest Northern cities EAST PORTFOLIO* NORTH PORTFOLIO* 16% 7% of GCP’s of GCP’s Portfolio Portfolio Dresden Leipzig Halle Hamburg Hannover Bremen 16 * by value
Slide 17: Financial Policy
2 FINANCIAL POLICY GCP financial policy Strive to achieve A- global rating in the long term LTV limit at 45% Debt to debt plus equity ratio at 45% (or lower) on a sustainable basis Maintaining conservative financial ratios with a strong ICR Unencumbered assets above 50% of total assets Long debt mat
Slide 18: Loan-to-Value
2 LOAN-TO-VALUE Dec 2017 Dec 2016 COST OF DEBT € million All-time low spreads Investment property 6,426 4,851 Series D 2021 0.21% Assets held for sale 117 146 Series E 2025 0.76% Equity accounted investees 37 118 1.6% Perpetual notes 1.79% Total value 6,580 5,114 Total Debt 2,796 2,415 Cash and liqu
Slide 19: Capital Structure
2 CAPITAL STRUCTURE HEDGING STRUCTURE FINANCING SOURCE MIX 99% Hedged 17% 14% Bank Debt 19% 21% Straight Bond 8% 7% Convertible 56% 58% Equity Dec 2016 Dec 2017 MATURITY SCHEDULE ø approx 8.5 Years 19
Slide 20: Debt Coverage and Credit Rating
2 DEBT COVERAGE AND CREDIT RATING COVER RATIOS UNENCUMBERED ASSETS *) Adjusted EBITDA / interest **) Adjusted EBITDA / (interest + loan amortization) CORPORATE CREDIT RATING S&P Moody’s A-/A3 BBB+ Baa1 GCP was the first Baa2 BBB German RE company to receive an international BBB- credit rating BB+ BB
Slide 21: Maintenance, Capex and Modernization
2 MAINTENANCE, CAPEX AND MODERNIZATION GCP invested 2.4€/sqm CAPEX STRATEGY resulting in 0.5% L-F-L in-place rent growth Repositioning capex: Modernization: Aimed at increasing property Aimed at improving standards of Improve asset attractiveness Increase Rent quality and support value the apartment
Slide 22: ESG - Outperformer
3 ESG - OUTPERFORMER Overall score November 2017 91st Percentile GCP is ranked #30 among 311 Real Estate Peers EPRA BPR GOLD + MOST IMPROVED for financial reporting standards EPRA sBPR GOLD + MOST IMPROVED for sustainability reporting GCP’s continuous ESG efforts have been recognized by Sustainalyti
Slide 23: 2018 Guidance
4 2018 Guidance FY 2017 FY 2018e FFO I (in € million) 178 196-201 FFO I per share (in €) 1.12 1.19-1.22 Dividend per share (in €) 0.731 0.77-0.79 Rent like for like growth 3.5% Over 3% LTV 36% <40% 1) Subject to AGM approval Continuous FFO I growth, should result in further value creation and in ret
Slide 24: Appendix
5 APPENDIX 24
Slide 25: Portfolio Potential
5 PORTFOLIO POTENTIAL RESIDENTIAL IN-PLACE RENT COMPARED TO MARKET RENT CURRENT ANNUALIZED NET RENTAL INCOME VS MARKET POTENTIAL 85% 15% Below market level at market level * including vacancy reduction 6% of units 11 years subject to rent restrictions from Average tenancy length subsidization Large
Slide 26: Proven Ability to Access Capital Markets
5 PROVEN ABILITY TO ACCESS CAPITAL MARKETS Feb-18 Tap issuance of Series H, 2032 straight bonds of € 145m to an aggregate nominal amount of €255m Strong start in 2018, issuing Feb-18 Issuance of Series K, 2026 straight bonds of CHF 125m under the EMTN, currency hedge, coupon of 0.96% p.a. €850m so f
Slide 27: Analyst Coverage
5 ANALYST COVERAGE ANALYST RESEARCH TARGET PRICE GCP‘s operations are researched by leading real estate market analysts, who Key Index inclusions: conduct independent equity research and target price recommendations MDAX FTSE EPRA/NAREIT Global Developed Europe Developed Eurozone Germany
Slide 28: Share Development and Structure
5 SHARE DEVELOPMENT AND STRUCTURE SHARE PRICE AND TOTAL RETURN SINCE FIRST EQUITY PLACEMENT (19.7.2012) Share Price Since First Equity Placement (19.7.2012) SHARE PRICE/CONVERSION PRICE SHARE OWNERSHIP STRUCTURE THROUGHOUT THE COMPANY’S ISSUANCES Basic amount of shares: 164.8 million/ Fully diluted
Slide 29: Tightening Bond Spreads
5 TIGHTENING BOND SPREADS STRAIGHT BOND SERIES D SPREAD OVER MID-€-SWAP, REMAINING 3.5 YEARS STRAIGHT BOND SERIES E SPREAD OVER MID-€-SWAP, REMAINING 7 YEARS 3.75% PERPETUAL NOTES SPREAD OVER MID-€-SWAP 29
Slide 30: Most Successful IPO Since 2007
5 MOST SUCCESSFUL IPO SINCE 2007* According to the Frankfurter Allgemeine Zeitung Grand city properties is the most successful IPO in Germany since 2007 among 106 IPOs Source: Frankfurter Allgemeine Zeitung February 9, 2017 30 Nr. 34, page 23
Slide 31: Management
5 MANAGEMENT CEO Christian Windfuhr Mr. Windfuhr is Grand City Properties’ CEO. Before joining Grand City Mr. Windfuhr served as CEO of Maritim Hotels, with 40 hotels in Germany. Prior to this he served as CEO of Mövenpick. He achieved the financial turnaround of Mövenpick, drove international expan
Slide 32: Management
5 MANAGEMENT Senior Management (continued) Uwe Schillinger Mr. Schillinger is GCP’s Director for Technical Service and responsible for the Facility Management. He has 12 years experience in facility management Head of Facility Management and joined GCP in 2006. Mr. Schillinger is an engineer in elec
Slide 33: Credit Rating Matrix
5 CREDIT RATING MATRIX 1 2 3 4 5 6 Min Modest Aggre- High - Intermediate Significant ssive Lever- imal aged 1 aaa Excellent bbb- / aa a+/a a- bbb GCP will continue /bb+ aa+ strengthening its position within the business profile Business risk profile 2 aa/ (Aroundtown) (Vonovia- BBB+)* Strong aa- a+/
Slide 34: Maintaining Strong and Diverse Financing Sources
MAINTAINING STRONG AND DIVERSE 5 FINANCING SOURCES GCP HAS MORE THAN 50 NON-RECOURSE SEPARATE BANK LOANS FROM AROUND 20 BANKS REVOLVING CREDIT FACILITIES Strong corporate credit lines All credit facilities do not with international banking have a Material Adverse leaders of approx. €100 Change (MAC)
Slide 35: Hannover Mannheim Berlin
Hannover Mannheim Berlin Dresden Essen Duisburg Leipzig Hamburg Berlin 35
Slide 36: Cologne Berlin Halle
Cologne Berlin Halle Gelsenkirchen Leipzig Berlin Berlin Frankfurt am Main Nuremberg 36
Slide 37: Berlin Leipzig Munich
Berlin Leipzig Munich Bremen Wuppertal Dortmund 37
Slide 38: Contact and Disclaimer
5 CONTACT Katrin Petersen Head of Communications E-mail: katrin.Petersen@grandcity.lu www.grandcityproperties.com 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 accordanc