Vonovia Se · XETR:VNA
Vonovia — 9M 2015 Earnings Presentation
45 slides from Vonovia's earnings presentation, Nov 3, 2015
Slide 1: 9M Results Conference Call
9M Results Conference Call Note: This version excludes the slides 3 November 2015 on the tender offer to Deutsche Wohnen shareholders. The extended version of this Rolf Buch, CEO presentation can be found on the transaction webpage on Vonovia‘s website. Dr. A. Stefan Kirsten, CFO
Slide 2: Highlights - Operations
Highlights - Operations 2015 guidance increased on back of strong 9M performance & faster integration of acquisitions FFO1 of €590m-600m (prev. €560m-580m), FFO1/share of €1.27-1.29 (prev. €1.20-1.24) EPRA NAV/share €29.00-30.00 (prev. €27.50-28.50) Adj. NAV/share (excl. goodwill) €23.50-24.50 (prev
Slide 3: Business Strategy Unchanged since IPO
Business Strategy Unchanged since IPO Reputation & Customer Satisfaction • Continuing strong performance Traditional Property Mgmt. 1 • Gagfah and Südewo integrations ahead of Strategy plan and de facto completed 5 Acquisition Strategy • Roadmap to LTV reduction in place 2 Financing Strategy • Diver
Slide 4: Operating Performance
Operating Performance Residential in-place rent (like-for-like, €/sqm) Vacancy rate (total portfolio, %) +2.9% 5.77 -0.2 pp 5.61 3.6 3.4 30 Sep 2014 30 Sep 2015 30 Sep 2014 30 Sep 2015 Adjusted EBITDA (€m) Fair value (€m) 733.9 23,148.7 34.1 2,209 12,759.1 400.2 35.7 +9.5% 981 2,017 +1.8% 964 364.5
Slide 5: Operating Performance (cont’d)
Operating Performance (cont’d) FFO1 (€m) NAV (€m) 12,662.4 432.2 0.93 6,578.0 27.17 205.0 +14.2% +17.9% 0.81 1,365 23.04 +20.3% 1,135 22.67 -5.1% 21.51 9M 2014 9M 2015 31 Dec. 2014 30. Sep 15 EPRA NAV per share (€) (2014 TERP-adjusted) Adj. NAV per share (€) (2014 TERP-adjusted) FFO1 per share (€) (
Slide 6: 2015 Guidance Increased
2015 Guidance Increased FY 2014 Guidance 20151 Change abs. Change % Guidance 20151 (TERP-adjusted) (August) (on midpoint) (on midpoint) (November) L-f-l rental growth 2.5% 2.6-2.8% +15bps +5.5% 2.8-2.9% Vacancy 3.4% ~3% ~3% Rental Income €789.3m €1,400-1,420m €1,400-1,420m FFO1 (incl. hybrid) €286.6
Slide 7: Gagfah and Südewo Synergies
Gagfah and Südewo Synergies Development of our estimate on total run rate synergies from Gagfah and Südewo December 2014 June 2015 November 2015 €47m operational €75m operational €75m op. (Gagfah) €84m €130m €142m €12m op. (Südewo) (only Gagfah) (only Gagfah) (Gagfah and Südewo) €37m financial €55m
Slide 8: Vonovia’s Scale and Platform Benefits Have Been Proven Multiple Times by Now
Vonovia’s Scale and Platform Benefits Have Been Proven Multiple Times by Now Incremental margin1 improvement of our ... resulting in significant enhancement of overall acquisitions due to scalable platform... margins EBITDA rental margin before integration EBITDA rental margin 2 EBITDA rental margin
Slide 9: Sales Results 2015 YTD
Sales Results 2015 YTD Privatization 9M 2014 9M 2015 Change (€m) Change (%) # units sold 1,778 1,748 -30.0 -1.7 Income from disposal of properties (€m) 184.4 183.2 -1.2 -0.7 Fair value disposals (€m) -134.9 -133.6 1.3 -1.0 Adjusted profit from disposal of properties (€m) 49.5 49.6 0.1 0.2 Fair value
Slide 10: Two Significant Portfolio Transactions Agreed since September 30, 2015
Two Significant Portfolio Transactions Agreed since September 30, 2015 Transaction 1 Transaction 2 Northern Location NRW Germany No. of units Ca. 14k Ca. 6k Vacancy rate 6.4% 9.4% NCR €4.84 €4.77 Expected Closing Q1 2016 Q4 2015 LoI signed with two separate buyers for a combined volume of ca. 20k un
Slide 11: Substantial Reduction of Sales Portfolio
Substantial Reduction of Sales Portfolio Non-strategic and Non-core (`000 units) Expected sales volume going forward (`000 units) 49 Q1 2015 volume of non-core + non-strategic ~9 ~9 ~9 1 - 4 Changes between Q1 and Q3 = 45 Q3 2015 volume of non-core + non-strategic NRW portfolio (adj. for 2k units fr
Slide 12: Updated Portfolio Clustering Offers Strong Potential for Value-enhancing Modernization
Updated Portfolio Clustering Offers Strong Potential for Value-enhancing Modernization In-place rent Residential Share units (€/sqm Vacancy in terms of FV In-depth portfolio review of residential) Operate 192,106 5.64 2.5% 56% Gagfah portfolio has identified Optimize apartments 36,849 6.19 2.5% 13%
Slide 13: Portfolio KPIs by Segments (Q3 2015 pro forma)
Portfolio KPIs by Segments (Q3 2015 pro forma) in-place rent new letting rent Fair Value Share Fair Value Multiple Share rent Cluster Vonovia Forecast Residential units (€/sqm (€/sqm residential Vacancy in m€ in terms of FV [€/sqm] in-place rent controlled residential) in 2015) Operate 121,308 5.99
Slide 14: Portfolio KPIs by Top 25 Cities (Q3 2015 pro forma)
Portfolio KPIs by Top 25 Cities (Q3 2015 pro forma) In-place rent New letting rent Fair Value Share Fair Value Multiple in- Share City Residential units (€/sqm (€/sqm Vacancy rate (€m) in terms of FV (€/sqm) place rent rent controlled residential) residential in 2015) Berlin 30,613 5.76 7.11 1.6% 2,
Slide 15: Modernization Program as Important Value Driver
Modernization Program as Important Value Driver Investment Track Record Modernization as a Continued Focus Yield target unchanged (~7% unlevered) Yield 7.2% 7.2% ~7% ~7% Successful roll-out to Gagfah assets 430-500 Preparations for 2016 program to start in Q1/2016 well advanced and on track 330-350
Slide 16: Significant Fair Value Growth Expected for End of 2015
Significant Fair Value Growth Expected for End of 2015 Value driver Fair value growth* Operating performance (rent, redemption of rent control, etc.) €250-300m Investments (effects of modernization program) €330-350m Market development / yield compression €900-1,050m Total €1,500-1,700m * Represents
Slide 17: Maturity Profile and Financing Sources
Maturity Profile and Financing Sources Debt maturity profile as of September 30, 2015 (€ m) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 from 2027 Mortgages Structured Loans Bond Hybrid Hybrid (Equity) CMBS CMBS included at c
Slide 18: Forward Hedging Increased Certainty
Forward Hedging Increased Certainty New allocation of interest rate risk … Standardized market-instruments have been used Closed forward hedges in the total amount of EUR 2.7bn assure 86% of the financial synergies of the Gagfah transaction as promised for Rounded % figures 2017 … projects a well-ba
Slide 19: 2016 Stand-alone Guidance Demonstrates Increasingly Positive Momentum
2016 Stand-alone Guidance Demonstrates Increasingly Positive Momentum Guidance 20151 Change abs. Change % Guidance 2016 (November) (on midpoint) (on midpoint) (November) L-f-l rental growth 2.8-2.9% +5bps +1.8% 2.8-3.0% Vacancy ~3% ~3% Rental Income €1,400-1,420m +€100m +7.1% €1,500-1,520m FFO1 (inc
Slide 20: FFO Bridge 2015E to 2016E
FFO Bridge 2015E to 2016E Q3 Q4 2015 2016 LTV LTV 50% <46% 777 ~10 ~40 €m ~77 690-710 77 36 595 39 €1,400 rental €43m Gagfah income @ 2.9% operational (€55m total minus €12m realized in 2015) €32m Gagfah financial (€37m total minus €5m realized in 2015; €19m run €1.50 FFO1/share rate of €5m realized
Slide 21: LTV
LTV Dec. 31, 2015 Operational Valuation Portfolio pro forma incl. expected Sep. 30, 2015 effects Q4 effect Sales valuation uplift and disposals €bn Non-derivative financial liabilities 12.2 -0.3 -0.2 11.8 Foreign currency effects -0.2 -0.2 Cash and cash equivalents -0.5 +0.2 -0.5 -0.8 Adjusted net d
Slide 22: Summary Operations
Summary Operations Underlying business performance remains strong with increasing momentum, as reflected in raised-again 2015 guidance as well as in new 2016 stand-alone guidance Completed portfolio management structure provides ample opportunity for organic value-enhancing growth Disposals of non-s
Slide 23: Appendix
APPENDIX Q3 Results Presentation, 03 November 2015 Page 23
Slide 24: KPI Definitions
KPI Definitions Description Calculation IFRS profit or loss for the period adjusted by FFO1 is calculated as the profit or loss for the period adjusted for sales-related, • the profit or loss from sales • the effects from property held for sale non-recurring, non-cash or similar items. It approximat
Slide 25: Consolidation Scope
Consolidation Scope DAIG DeWAG Vitus Gagfah Franconia Südewo 9M 2014 9 months 6 months - - - - FY 2014 12 months 9 months 3 months - - - 9M 2015 9 months 9 months 9 months 7 months 6 months 3 months FY 2015 Guidance 12 months 12 months 12 months 10 months 9 months 6 months FY 2016 Guidance 12 months
Slide 26: 9M 2015 Key Figures
9M 2015 Key Figures €m 9M 2015 9M 2014 Change (€) Change (%) Residential units (k) 366,918 183,983 182,935 99.4 Rental income 1,019.4 572.7 446.7 78.0 Vacancy rate (%) 3.4 3.6 -0.2 -0.2 pp Monthly in-place rent/ sqm (like-for-like, €) 5.77 5.61 0.16 2.9 Adjusted EBITDA Rental 699.8 364.5 335.3 92.0
Slide 27: P&L
P&L €m 9M 2015 9M 2014 Change (€m) Change (%) Comments Income from property letting 1,470.3 823.5 646.8 78.5 Increase mainly acquisition-related (residential units 367k vs 184k), additionally in-place rent on a like-for-like basis Rental income 1,019.4 572.7 446.7 78.0 increased by 2.9% Ancillary co
Slide 28: EBITDA
EBITDA Bridge to Adjusted 9M 9M Change Change 9M 9M Change Change EBITDA (€m) 2015 2014 (€) (%) Rental Segment (€m) (€) (%) 2015 2014 Profit for the period 193.5 122.0 71.5 58.6 Average number of units over the period 316,735 180,685 136,050 75.3 Net interest result 297.8 203.4 94.4 46.4 Rental inco
Slide 29: FFO
FFO Actuals Change €m 9M 2015 9M 2014 €m % Adjusted EBITDA 733.9 400.2 333.7 83.3% (-) Interest expense FFO -251.8 -153.5 -98.3 64.4% (-) Current income taxes -15.8 -6.0 -9.8 163.3% (=) FFO2 466.3 240.7 225.6 93.7% (-) Adjusted EBITDA Sales -34.1 -35.7 1.6 -4.5% (=) FFO1 432.2 205.0 227.2 110.8% the
Slide 30: Maintenance and Modernization
Maintenance and Modernization Maintenance and modernization (€m) 9M 2015 9M 2014 Change (€m) Change (%) Comments Maintenance expenses 167.8 106.4 61.4 57.7 Compared to 9M 2014 significant increase due to measures in Gagfah Portfolio Capitalized Maintenance 81.3 16.9 64.4 381.1 Modernization program
Slide 31: Maintenance & Modernization Development
Maintenance & Modernization Development Maintenance (€/sqm) Capitalized maintenance (€/sqm) Modernization (€/sqm) 35.00 31-32 30.00 29.12 25.00 19.95 14.47 20.00 18.43 15.95 6.19 15.00 14.06 5.59 3.95 2.42 Cash Flow 2.89 1.84 1.29 2.02 0.89 FFO 1 10.00 AFFO 10.82 11.93 12.23 5.00 10.28 10.71 0.00 20
Slide 32: Balance Sheet
Balance Sheet €m Sep 30, 2015 Dec 31, 2014 Comments Investment Properties 23,018.2 12,687.2 Increase driven by Gagfah acquisition € 8,184.8m, SÜDEWO acquisition € Other non-current assets 2,938.5 292.8 1,742.1m as well as the “Franconia” acquisition € 298.1m Total non-current assets 25,956.7 12,980.
Slide 33: NAV
NAV Actuals Change September December €m % €m 30, 2015 31, 2014 Equity attributable to shareholders 9,853.7 4,932.6 4,921.1 99.8 Deferred taxes on investment property/ properties for sale 2,697.6 1,581.0 1,116.6 70.6 Fair value of derivative financial instruments1 150.5 88.1 62.4 70.8 Deferred taxes
Slide 34: Goodwill
Goodwill Actuals Sep. 30, 2015 Dec. 31, 2014 €m Goodwill DeWAG 10.7 10.7 Goodwill Vitus 95.3 95.3 Goodwill Gagfah 2,192.4 - Goodwill Südewo 338.2 - Total Goodwill (as of reporting date) 2,636.6 106.0 Q3 Results Presentation, 03 November 2015 Page 34
Slide 35: Bond and Rating KPIs as per September 30, 2015
Bond and Rating KPIs as per September 30, 2015 Bond KPIs Covenant Level Actual LTV <60% 46% Total Debt / Total Assets Secured LTV <45% 28% Secured Debt / Total Assets ICR >1.80x 2.89x LTM1 EBITDA / LTM Interest Expense Unencumbered Assets >125% 260% Unencumbered Assets / Unsecured Debt Rating KPIs C
Slide 36: Development of Unencumbrance Ratio
Development of Unencumbrance Ratio Unencumbrance ratio dropped from 50% pre GAGFAH down to 32% including GAGFAH S&P provides up to 18 months (i.e. 30 Sept 2016) to reach 50% unencumbrance ratio Further reductions of secured financings Prepayment of existing 50% secured loans in Q3/Q4 2015 Unencumbra
Slide 37: Evolution of Average Interest Costs / Interest Rate Sensitivity
Evolution of Average Interest Costs/ Interest Rate Sensitivity Evolution of average interest costs 5.0 4.4% 4.4% 4.4% 4.5 4.0 3.5% 3.5% 3.4% 3.4% 3.3% 3.5 3.2% 2.9% 2.9% 2.9% 3.0 2.5 2.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 15 Q2 15 Q3 15 Development Outlook Reduction of average inte
Slide 38: Bonds / Rating
Bonds / Rating Corporate Investment grade rating as of 2015-09-30 Rating agency Rating Outlook Last Update Standard & Poor’s BBB+ Stable 10 Mar 2015 Bond ratings as of 2015-09-30 Final Maturity Amount Issue price Coupon Rating Date 3 years 2.125% € 700m 99.793% 2.125% 25 July 2016 BBB+ Euro Bond 6 y
Slide 39: CMBS Overview as of September 30, 2015
CMBS Overview as of September 30, 2015 Name Amount Coupon Final Maturity Date German Residential Funding 2013-1 Limited € 1,865m 2.80% 27 Aug 2018 German Residential Funding 2013-2 Limited € 682m 2.67% 27 Nov 2018 Taurus 2013 (GMF1) PLC €1,035m 3.35% 21 May 2018 Expected prepayment fees for early CM
Slide 40: Portfolio Management Strategy
Portfolio Management Strategy Portfolio Management Strategy Value-driven asset management approach in locations with above-average development potential Operate: rent growth, vacancy reduction, effective and sustainable maintenance STRATEGIC spending and cost savings. Upgrade buildings: comprehensiv
Slide 41: FFO Build-up
FFO Build-up FFO 1 (€m) FFO1/ Gagfah +€39m share Südewo +€36m *based on closing price of 30 Dec. 2014 (€28.12) FFO1 780-800 **based on closing price of 23 Oct. 2015 (€29.33) yield €1.76- 670-680 1.72 590-600 €1.44- 1.46 6.0%** €1.27- 1.29 4.9%** 4.4%** 287 €1.00 3.4%* 2014 2015 guidance 2015 full- y
Slide 42: Gagfah integration ahead of plan
Gagfah integration ahead of plan Granular integration processes finalized Headline 1 Segmentation of combined portfolio completed Bottom-up synergy analysis completed All functions agreed with works council IT integration of financial data completed / one integrated SAP-IT platform for the entire Gr
Slide 43: Acquisition Pipeline Update
Acquisition Pipeline Update Acquisition Pipeline 2015 (as of 30 September 2015) 180 167k 160 140 59% 120 residential units 98k 44% 100 38% 80 74k 63k 60 12% 40 20k 20 0 Examined Detailed analysis Due diligence, partly Bids Signed ongoing Q3 Results Presentation, 03 November 2015 Page 43
Slide 44: IR Contact & Financial Calendar
IR Contact & Financial Calendar Contact Financial Calendar Investor Relations 2015 Vonovia SE March 5 Full year results 2014 Philippstr. 3 44803 Bochum Apr 30 Annual General Meeting Germany Jun 01 Interim report Q1 2015 +49 234 314 1609 Aug 19 Interim report H1 2015 investorrelations@vonovia.de Nov
Slide 45: 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