Varia US Properties AG · SIX:VARN
Varia US Properties — FY2017 Earnings Presentation
30 slides from Varia US Properties's earnings presentation, Apr 13, 2018
Slide 1: Presentation Full-Year 2017 Results
PRESENTATION FULL-YEAR 2017 RESULTS 1 Strictly confidential
Slide 2: Important Notice
IMPORTANT NOTICE This presentation includes forward-looking information and Although we believe that its expectations reflected in any statements, including statements concerning the outlook for such forward-looking statement are based upon reasonable our business. These statements are based on curr
Slide 3: Agenda
AGENDA APRIL 13, 2018 Key achievements Financials Portfolio and growth strategy Outlook Q&A 3 Strictly confidential
Slide 4: Today's Speakers
TODAY’S SPEAKERS MANUEL LEUTHOLD JAUME SABATER MARTOS PATRICK RICHARD ■ Chairman, ■ Vice Chairman, ■ Delegate of the Board of Varia US Properties AG Varia US Properties AG Directors, Varia US ■ CEO of Stoneweg SA, Properties AG the Asset Manager of ■ Head of US Investments Varia US Properties AG of
Slide 5: Key Achievements
KEY ACHIEVEMENTS 5 Strictly confidential
Slide 6: 2017 Key Achievements (1/2)
2017 KEY ACHIEVEMENTS (1/2) ■ GROWTH ■ Size of the portfolio doubled ■ Full investment of the equity raised at IPO by end of June ■ Value-add strategy implemented ■ Strong real estate market ■ Average leverage of 60.52% ■ Average interest rate of 4.19% ■ DISTRIBUTION AND PERFORMANCE ■ USD 4.15 earni
Slide 7: 2017 Key Achievements (2/2)
2017 KEY ACHIEVEMENTS (2/2) ■ CONSOLIDATION ■ Reinforced acquisition and asset management team in the US ■ Additional resources for the Board of Directors ■ Strong reputation in the real estate market 7 Strictly confidential
Slide 8: Financials FY 2017
FINANCIALS FY 2017 8 Strictly confidential
Slide 9: 2017 Key Figures (1/2)
2017 KEY FIGURES (1/2) EFFECTIVE FAIR VALUE TOTAL GROSS PORTFOLIO INCOME 2016: USD 64.6 million INCOME ADJUSTMENT 2016: USD 39.1 million 2016: USD 21.2 million USD million 65.8 USD million 22.4 USD million 88.2 TOTAL REPAIR AND YEAR I OPERATING CAPEX BELOW CAPEX EXPENSES THRESHOLD INVESTED 2016: USD
Slide 10: 2017 Key Figures (2/2)
2017 KEY FIGURES (2/2) NET PROFIT EARNINGS OPERATING FOR THE PER SHARE 2016: USD 3.37 PROFIT PERIOD 2016: USD 30.6 million 2016: USD 16.2 million USD million 48.9 USD million 34.9 USD 4.15 NAV NAV PER SHARE PER SHARE 2016: USD 33.65 (EXCLUDING DEFERRED TAXES) 2016: USD 35.93 USD 34.38 USD 35.74 10 S
Slide 11: Profit and Loss (Consolidated)
PROFIT AND LOSS (CONSOLIDATED) Period from Sept. 28, 2015 In USD million As of December 31, 2017 through Dec. 31, 2016 Rental income 59.9 36.5 Other income 5.8 2.6 Bargain on purchase of subsidiary - 4.2 Net gain from fair value adjustment on invest. property 22.4 21.2 Total income 88.2 64.6 Total o
Slide 12: Financial Position (Consolidated)
FINANCIAL POSITION (CONSOLIDATED) Assets in USD million As of December 31, 2017 As of December 31, 2016 Total current assets 94.7 98.0 Total non-current assets 573.5 351.8 Total assets 668.2 449.8 Liabilities and equity in USD million As of December 31, 2017 As of December 31, 2016 Total current lia
Slide 13: Operating Results (not audited)
OPERATING RESULTS (not audited) In USD million As of December 31, 2017 As of December 31, 2016 Realized income 65.8 39.1 Total Operating expenses (36.5) (19.2) Net Operating Income 29.3 19.9 Finance cost (13.6) (8.4) Operating results before taxes and 15.7 9.0 exceptional Expensed capex (2.6) (2.6)
Slide 14: Portfolio and Growth Strategy
PORTFOLIO AND GROWTH STRATEGY 14 Strictly confidential
Slide 15: Three Individual Investment Strategies
THREE INDIVIDUAL INVESTMENT STRATEGIES ■ Investment in US multifamily real estate properties situated in strong urban locations in supply-constrained markets ■ Mid- to long-term investment perspective through three individual investment strategies: A Value-adding strategy Value Acquisition, refurb
Slide 16: Portfolio Development
PORTFOLIO DEVELOPMENT ■ Portfolio value of USD 617.9 million ■ 50 assets ■ 8,245 units ■ 18 different States in the US ■ Florida down to 24% (2016: 41%) ■ Geographical diversification ■ Larger assets ■ Closer to metropolitan areas 16 Strictly confidential
Slide 17: Portfolio 2017 Key Figures (1/2)
PORTFOLIO 2017 KEY FIGURES (1/2) AVERAGE GROSS MONTHLY POTENTIAL RENT PER UNIT INCOME 2016: USD 674 2016: USD 49.7 million USD 716 USD million 83.9 AVERAGE MARKET OCCUPANCY VALUE PER UNIT RATE 2016: USD 64,160 2016: 95.5% USD 74,950 94.3% 17 Strictly confidential
Slide 18: Portfolio 2017 Key Figures (2/2)
PORTFOLIO 2017 KEY FIGURES (2/2) NET ANNUALIZED CASH FLOW CASH FLOW 2016: USD 8.2 million 2016: USD 8.6 million USD million 16.7 USD million 19.7 CASH ON CASH ANNUALIZED YIELD CASH ON CASH 2016: 7.7% YIELD 2016: 8.37% 7.82% 9.22% 18 Strictly confidential
Slide 19: Portfolio Growth in 2017
PORTFOLIO GROWTH IN 2017 Washington Maine Seattle to Portland North Dakota Minnesota Montana Vermont Oregon South Wisconsin New York Dakota Idaho Michigan Wyoming Iowa Pennsylvania Nevada Nebraska Indianapolis, Louisville Ohio Maryland Indiana West Sacramento, Reno Illinois Virginia Colorado Virgini
Slide 20: Adding Value to the Portfolio
ADDING VALUE TO THE PORTFOLIO ▪ In 2017, a total of 239 units have been rehabbed (compared to the plan of rehabbing 207 units) ▪ An average rent increase of USD 107 per month has been achieved, resulting in a rent uplift of more than 10% (average rents are close to USD 850 per month in rehabbed unit
Slide 21: Rehabbed Units
REHABBED UNITS 21 Strictly confidential
Slide 22: Strong Performance of 2017 Portfolio
STRONG PERFORMANCE OF 2017 PORTFOLIO 22 Strictly confidential
Slide 23: Outlook
OUTLOOK 23 Strictly confidential
Slide 24: Already 4 Assets Acquired in 2018
ALREADY 4 ASSETS ACQUIRED IN 2018 NAME LOCATION PRICE UNIT EQUITY EXPECTED USD m AV. YIELD River Oaks Tucson (AZ) 20.5 300 9.8 9.4% Tierra Pointe Albuquerque (NM) 26.0 352 11.3 9.2% Cinnamon Tree Albuquerque (NM) 21.5 398 9.8 9.3% Meadows Memphis (TE) 13.5 200 6.2 9.0% River Oaks Cinnamon Tree Tierr
Slide 25: Targets 2018
TARGETS 2018 INVESTMENT → Deploy the new capital raised by the end of June 2018 with new property acquisitions in line with Varia’s strategy → Finalize the acquisition of the Non-Controlling Interests of the portfolio STRATEGY → Focus on the existing portfolio, especially in terms of renovation, in
Slide 26: Tax Reform Impact
TAX REFORM IMPACT ■ Varia will significantly benefit from the tax reform that was adopted at the end of 2017, among others because of the reduction of the tax rates for companies. ■ Total estimated tax burden: ■ 24.4% before tax reform ■ 15.4% after tax reform ■ In 2017, the impact was the following
Slide 27: Interest Rate Increase
INTEREST RATE INCREASE ■ Significant increase of the interest rates in the first two months of the year (now flattening) ■ Interest rates applicable currently 4.3% - 4.5% ■ Targeted yield over duration of the loan (7-10 years) still between 9-10% ■ Interest only 27 Strictly confidential
Slide 28: Summary
SUMMARY ▪ Well-performing multifamily property portfolio in the U.S. COMPANY ▪ Promising acquisition pipeline in growing urban submarkets ▪ Cash flow optimization through attractive financing and rehabilitation as well as solid cash flow generation allowing for high distribution to shareholders ▪ Bo
Slide 29: Financial Calendar
FINANCIAL CALENDAR ■ Annual General Meeting 2018 24 May 2018 ■ Half-Year Results 2018 30 August 2018 29 Strictly confidential
Slide 30: Q&A
Q&A 30 Strictly confidential