Deutsche Wohnen Se · XETR:DWNI

Deutsche Wohnen — 9M 2018 Earnings Presentation

35 slides from Deutsche Wohnen's earnings presentation, Nov 14, 2018

  1. Slide 1: Deutsche Wohnen SE 9M 2018 results

    Deutsche Wohnen SE 9M 2018 results Conference Call, 14 November 2018

  2. Slide 2: Agenda

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Agenda 01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen 2

  3. Slide 3: Highlights 9M 2018

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Highlights 9M 2018 Operating business continues to perform well  Reversionary potential remains high with 31% for the total residential portfolio and 37% for Berlin  L-f-l rental growth at 3.5% (Berlin at 3.8%) with rent i

  4. Slide 4: High reversionary potential supports NAV growth

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix High reversionary potential supports NAV growth Strategic cluster Residential units % of total In-place rent1 Fair value Multiple Multiple Rent potential2 Vacancy (#) (measured by (EUR/sqm/month) (EUR/sqm) in-place rent re-l

  5. Slide 5: Dynamic transaction market

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Dynamic transaction market Transaction volume in German Residential (EUR bn) Development of rents in Berlin (EUR/sqm/month) Volume in bn Units sold +5% +12% +9% 30 400,000 361,000 11.10 11.65 9.05 10.15 25 2018e: ~17-18 300,

  6. Slide 6: Strong like-for-like development in particular in Berlin

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strong like-for-like development in particular in Berlin 1 1 Like-for-like Residential In-place rent In-place rent Change Vacancy Vacancy Change 30/09/2018 units 30/09/2018 30/09/2017 (y-o-y) 30/09/2018 30/09/2017 (y-o-y) (#

  7. Slide 7: Almost EUR 1bn acquisitions predominately in Core+ in 2018

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Almost EUR 1bn acquisitions predominately in Core+ in 2018 Berlin Dresden/Leipzig  c. 2,600 units in Berlin  C. 2,700 units  Mostly pre-war buildings (“Altbau“)  Mostly modernized pre-war buildings (“Altbau“) Berlin, Phi

  8. Slide 8: Investments into the portfolio to further accelerate in Q4 2018

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Investments into the portfolio to further accelerate in Q4 2018 9M-2018 9M-2017 Modernization & Maintenance per sqm (annualized) EUR / EUR / EUR m EUR m sqm1 sqm1 29.03 33.37 34.06 ~40 Maintenance (expensed 67.0 8.85 74.1 9.

  9. Slide 9: Strong letting business

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strong letting business in EUR m 9M-2018 9M-2017 Income from rents (rental income) 585.0 553.4 Income relating to utility/ ancillary costs 266.7 252.3 Maintenance expenses as a percentage of rental income at 11.5% (9M 2017:

  10. Slide 10: Attractive margins of disposal business despite revaluations

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Attractive margins of disposal business despite revaluations Disposals Privatization Institutional sales Total with closing in 9M-2018 9M-2017 9M-2018 9M-2017 9M-2018 9M-2017 No. of units 264 571 322 1,603 586 2,174 Proceeds

  11. Slide 11: Increasing FFO contribution from Nursing and Assisted Living

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Increasing FFO contribution from Nursing and Assisted Living Operations (in EUR m) 9M-2018 9M-2017 Total income 73.0 69.4 in EUR m 9M-2018 9M-2017 Total expenses (67.4) (63.1) Nursing & Assisted Living 63.4 60.4 EBITDA opera

  12. Slide 12: Adj. EBITDA margin above 80%

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Adj. EBITDA margin above 80% Development of cost ratio in EUR m 9M-2018 9M-2017 10.9% Earnings from Residential Property Management 500.2 461.6 10.5% 10.0% Earnings from Disposals 13.5 28.5 Earnings from Nursing and Assisted

  13. Slide 13: FFO I per share growth of 10% yoy to EUR 1.03

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix FFO I per share growth of 10% yoy to EUR 1.03 in EUR m 9M-2018 9M-2017 EBITDA (adjusted) 488.1 463.8 FFO I margin development Earnings from Disposals (13.5) (28.5) 68.4% 64.8% 0.0 61.6% 62.8% Long-term remuneration component

  14. Slide 14: EPRA NAV per share +6% versus year end 2017

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix EPRA NAV per share +6% versus year end 2017 in EUR m 30/09/2018 31/12/2017 EPRA NAV per share (undiluted) in EUR Equity (before non-controlling interests) 10,434.0 9,888.2 +13% +6% Fair values of derivative financial instrum

  15. Slide 15: Conservative long-term capital structure

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Conservative long-term capital structure Rating A- / A3; stable outlook Ø maturity ~ 7.9 years  Low leverage, long maturities and strong rating % secured bank debt 68%  Flexible financing approach to optimize financing cos

  16. Slide 16: Strategic Business Update

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strategic Business Update Residential Business 1. Continuous portfolio concentration on growth markets through portfolio acquisitions and disposals 2. Ongoing improvement of existing residential portfolio through permanent r

  17. Slide 17: Guidance 2018 Update

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Guidance 2018 Update Old Guidance New Guidance FFO I (EUR m) ~470  473-478 Guidance Dividend per share (EUR) ~0.86  ~0.86 - 0.87 LTV 34.5% ~35-40% • Aim to keep current A-/A3 Reported (target range) rating • ~ 3% based on

  18. Slide 18: Appendix

    Appendix

  19. Slide 19: Strong like-for-like development as of 30 September 2018

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strong like-for-like development as of 30 September 2018 2 2 Like-for-like Residential In-place rent In-place rent Change Vacancy Vacancy Change 30/09/2018 units 30/09/2018 30/09/2017 (y-o-y) 30/09/2018 30/09/2017 (y-o-y) (#

  20. Slide 20: Attractive spread between in-place and re-letting rent multiples

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Attractive spread between in-place and re-letting rent multiples offer further potential for NAV growth FV FV Multiple Multiple Multiple Fair Value Residential units Regions 30/09/2018 30/09/2018 in-place rent re-letting ren

  21. Slide 21: Current level of rents and prices offer further growth potential

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Current level of rents and prices offer further growth potential Asking prices multifamily housing (in EUR / sqm)1 Asking rents in German top cities (in EUR / sqm)2 DW Berlin DW Berlin (book value) 2,202 3 (re-letting rent)

  22. Slide 22: Re-letting rents continue to outpace in-place rents

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Re-letting rents continue to outpace in-place rents DW rent development in Berlin DW development of multiples in Berlin EUR / sqm 30.0x 27.9x 27.1x 10.00 9.04 25.0x 23.7x 7.6x spread 9.00 8.47 8.00 7.60 37% rent 20.0x 18.7x

  23. Slide 23: Acquisition track record since 2013

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Acquisition track record since 2013 Main acquisitions Fair Value In-place rent (>1,000 units deal size) in EUR/sqm in EUR/sqm Year Residential units Deal Location At Acquisition 30/09/2018 ∆ At Acquisition 30/09/2018 ∆ # Cen

  24. Slide 24: Disposals business remains opportunistic

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Disposals business remains opportunistic Development of privatization business Development of institutional sales business 44% 41% 39% 30% 42% 20% 8% 13% 20% 17% 20,000 95% 2,463 93% 92% 15,000 91% 2,086 91% 15,133 90% 14,81

  25. Slide 25: Portfolio structure – characteristics meeting strong demand

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Portfolio structure – characteristics meeting strong demand In-place rent Apartment size (Ø 60 sqm) Year of construction Rental restrictions (Ø 6.40 EUR/sqm/month) (expiring over time) 30.8% 17.3% 29.0% 11% ~9% 16.2% 16.2% 1

  26. Slide 26: The Berlin portfolio at a glance

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix The Berlin portfolio at a glance Reinickendorf # 9,719 | 6.60 | 1.2% Pankow # 9,841 | 7.20 | 2.7% Lichtenberg Mitte # 8,792 | 6.57 | 0.9% # 4,556 | 7.00 | 2.3% Friedrichshain- Kreuzberg # 8,195 | 6.30 | 5.2% Spandau # 13,761

  27. Slide 27: Berlin – The place to be!

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Berlin – The place to be! Government Industry Innovation High-tech Tourism Science 2nd best Seat of parliament, performing European • 6,500 technology More than 12.9 million Highest density of Siemens signed biggest governme

  28. Slide 28: Deutsche Wohnen's residential portfolio is best-in-class

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen's residential portfolio is best-in-class Siemensstadt, Berlin Hellersdorf, Berlin Carl-Legien-Siedlung, Berlin Südwestkorso, Berlin Oranienkiez, Berlin Hufeisensiedlung, Berlin Dresden Otto-Suhr-Siedlung, Ber

  29. Slide 29: Bridge from adjusted EBITDA to profit

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Bridge from adjusted EBITDA to profit in EUR m 9M-2018 9M-2017 EBITDA (adjusted) 488.1 463.8 in EUR m 9M-2018 9M-2017 Depreciation (6.0) (5.2) Interest expenses (74.8) (74.8) At equity valuation 1.2 1.3 In % of gross rents ~

  30. Slide 30: Summary balance sheet

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Summary balance sheet Assets Equity and Liabilities in EUR m 30/09/2018 31/12/2017 in EUR m 30/09/2018 31/12/2017 Investment properties 21,220.1 19,628.4 Total equity 10,776.4 10,211.0 Other non-current assets 187.2 134.4 Fi

  31. Slide 31: Operational and financial improvements drive margins

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Operational and financial improvements drive margins Adj. EBITDA margin (w/o disposals) FFO I margin Avg. cost of debt 81% 2.5% 1.8% 1.6% 1.3% 1.3% 77% 63% 75% 58% 54% 72% 48% 35% 68% 2014 2015 2016 2017 9M-2018 2014 2015 20

  32. Slide 32: Strong generation of total shareholder return

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strong generation of total shareholder return Development of dividend in EUR per share Development of EPRA NAV (undiluted) in EUR per share CAGR 2013-2017: +24% CAGR 2014-2017: +25% +8% +20% +37% +29% 35.74 0.80 +23% 0.74 +2

  33. Slide 33: Executive Board compensation system – as of 1 January 2018

    01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Executive Board compensation system – as of 1 January 2018 1 Introduction of Share Ownership Guidelines (SOGs) 2 Conversion of the Stock Option Plan into a Performance Cash Plan Reduction of the plan’s complexity and meeting

  34. Slide 34: 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 p

  35. Slide 35: Deutsche Wohnen SE

    Deutsche Wohnen SE Mecklenburgische Straße 57 14197 Berlin Phone +49 30 89786-5413 Fax +49 30 89786-5419 © 2018 Deutsche Wohnen Gruppe

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