Deutsche Wohnen Se · XETR:DWNI
Deutsche Wohnen — FY2019 Earnings Presentation
52 slides from Deutsche Wohnen's earnings presentation, Mar 25, 2020
Slide 1: Deutsche Wohnen SE Full Year Results 2019
Deutsche Wohnen SE Full Year Results 2019 Conference Call 25 March 2020
Slide 2: Agenda
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Agenda 01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix deutsche-wohnen.com 2
Slide 3: Highlights FY 2019
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Highlights FY 2019 Operating business strong in 2019 ▪ L-f-l rental growth at 3.4% (Berlin at 3.7%), 2019 guidance beat (~3%) ▪ Average gross margin of almost EUR 800m disposal business at 35% ▪ Adj. EBITDA
Slide 4: Portfolio ideally positioned to benefit from existing megatrends
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen portfolio ideally positioned to continue to benefit from the existing megatrends Urbanization Persistent low interest rate period Aging society Real estate prices, Interest rate, Need for ad
Slide 5: Acquisition of attractive development platform to enter new metropolitan regions
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Acquisition of attractive development platform to enter new metropolitan regions ▪ Provide new housing in metropolitan regions with strong supply demand imbalance Strengthen footprint in metropolitan ▪ Cont
Slide 6: Isaria will strengthen our focus on dynamic hotspot regions
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Isaria will strengthen our focus on dynamic hotspot regions Nursing & GAV/GDV* Residential Development** Metropolises % Assisted Living Hamburg (EUR m) (EUR m) (EUR m) (EUR m) EUR 375m EUR 120m Berlin 20,20
Slide 7: Value generation for all stakeholders
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Value generation for all stakeholders Politics Easing conditions in the housing and care unit Tenants markets Affordable and especially, needs-based housing and the Climate possibility to acquire property S
Slide 8: Focussed portfolio attractively valued
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Focussed portfolio attractively valued Reversionary % of total Multiple Multiple Residential units In-place rent Fair value potential1 Vacancy Strategic cluster (measured by in-place rent re-letting rent (#
Slide 9: Like-for-like development above guidance with 3.4%
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Like-for-like development above guidance with 3.4% Residential In-place rent In-place rent Vacancy Vacancy Like-for-like Change Change units 31/12/2019 31/12/2018 31/12/2019 31/12/2018 31/12/2019 (y-o-y) (y
Slide 10: Total value uplift of EUR 1.4bn
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Total value uplift of EUR 1.4bn Components of valuation uplift (EUR bn) Uplift by clusters % 2019 2018 Change of Fair Value Fair Value in 1.4 Fair Value EUR/m² EUR/m² Fair Value 0.4 0.5 Core+ 95.3% 2,490 €
Slide 11: Berlin valuation overview
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Berlin valuation overview Hot Spot Stable City centre & Growth As of 31/12/2019 Big outskirt Total Berlin wealthy City-edge areas settlements southwest Residential units1) 36,138 46,708 28,834 111,680 Share
Slide 12: Ongoing investments into the portfolio
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Ongoing investments into the portfolio FY-2019 FY-2018 Refurbishment & Maintenance per sqm EUR / EUR / 33.37 41.05 45.45 ~40 EUR m EUR m 24.92 sqm1 sqm1 Maintenance (expensed 102.4 9.92 102.9 10.14 through
Slide 13: Strong letting business leading to improved NOI margin
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strong letting business leading to improved NOI margin in EUR m FY-2019 FY-2018 Income from rents (rental income) 837.3 785.5 Income relating to utility/ ancillary costs 359.4 337.4 Income from rental busin
Slide 14: Attractive margins of disposal business despite revaluations
01 Strategy Update & 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 FY-2019 FY-2018 FY-2019 FY-2018 FY-2019 FY-2018 No. of units 314 374 6,867 1,59
Slide 15: Major disposal portfolios in 2019
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Major disposal portfolios in 2019 Residential portfolios Nursing portfolio Region Kiel, Lübeck, Chemnitz Berlin Across Germany No. of units 6,350 2,175 13 externally managed facilities Signing Aug-19 Dec-19
Slide 16: Increasing EBITDA contribution from Nursing business
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Increasing EBITDA contribution from Nursing business Operations (in EUR m) FY-2019 FY-2018 Total income 225.2 98.8 in EUR m FY-2019 FY-2018 Total expenses (206.7) (92.3) Nursing & Assisted Living 207.2 85.2
Slide 17: All business segments contributed towards EBITDA growth
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix All business segments contributed towards EBITDA growth in EUR m FY-2019 FY-2018 Development of cost ratio1 Earnings from Residential Property Management 729.8 656.2 11.7% 11.5% Earnings from Disposals 186.
Slide 18: FFO I per share growth of 10% yoy to EUR 1.50
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix FFO I per share growth of 10% yoy to EUR 1.50 in EUR m FY-2019 FY-2018 EBITDA (adjusted) 901.2 662.0 FFO I margin development2 63.5% Earnings from Disposals (186.1) (43.1) 61.8% 1 Corporate expenses for Dis
Slide 19: Strong capital growth reflected in EPRA NAV per share, up 11%
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strong capital growth reflected in EPRA NAV per share, up 11% in EUR m 31/12/2019 31/12/2018 Equity (before non-controlling interests) 12,700.4 11,559.1 EPRA NAV per share (undiluted) in EUR Fair values of
Slide 20: Strong generation of total shareholder return
01 Strategy Update & 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 2014-2018: +17% CAGR 2014-2018: +20% +11% +3% +9% +18% +8% 1
Slide 21: Conservative long-term capital structure
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Conservative long-term capital structure A- (negative outlook) / Rating A3 (negative outlook) Ø maturity ~ 7.5 years ▪ < EUR 700m upcoming maturities in next 3 years % secured bank debt 63% ▪ Prolongation o
Slide 22: Update on Berlin rent regulation
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Update on Berlin rent regulation Subject Final details of rent freeze law Timing Implications Rent reductions at Landlords are not allowed to receive higher rents Starting from 23rd November 2020 ▪ Rental i
Slide 23: Delivery on guidance 2019 and outlook for 2020
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Delivery on guidance 2019 and outlook for 2020 FY 2019 FY 2020 / comments FFO I 538.1 ▪ FFO I flat 535 (EUR m) Guidance Delivery 35-40% 35.4% LTV ▪ 35-40% target range Guidance Delivery Like-for-like 3% 3.4
Slide 24: Appendix
Appendix
Slide 25: Update on Share Buyback program
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Update on Share Buyback program (as of 20 March 2020) Key Terms of SBB Development of SBB – average price vs volume in shares ▪ Volume Price No. of shares ▪ up to EUR 25m shares, or 41 EUR 200.000 39 EUR 180.000 ▪ up to EUR
Slide 26: Acquisition and Development
Acquisition and Development
Slide 27: Bolt-on acquisition in Dresden-Leipzig metropolitan area
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Bolt-on acquisition in Dresden-Leipzig metropolitan area ▪ 1,318 residential units Attractive age clusters Object of purchase ▪ 144 commercial units Acquisition price ▪ EUR 290m / c. EUR 2,560 per sqm 6% Ne
Slide 28: Isaria – Strong development pipeline across asset classes
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Isaria – Strong development pipeline across asset classes ▪ 13 development projects of ISARIA Regional split of pipeline (by area) Object of purchase AG 4% 9% ▪ c. EUR 600m (enterprise value) Acquisition pr
Slide 29: Berlin rent freeze
Berlin rent freeze
Slide 30: Key points of Berlin rent regulation in force since 23 February 2020
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Key points of Berlin rent regulation in force since 23rd of February 2020 General ▪ Applies to all residential apartments except for subsidized housing stock and new construction (age cluster after 2014) ▪
Slide 31: Deutsche Wohnen Berlin properties clustered by building age
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen Berlin properties clustered by building age Average net cold rent per month Age cluster DW proportion1) Rental ceiling (EUR/sqm/month) based on rental ceiling3) (EUR) < 1918 6% 6.45 387 1919
Slide 32: Size matters – below average apartment size is a clear affordability advantage
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Size matters – Deutsche Wohnen’s below average apartment size is a clear affordability advantage Affordability of average Deutsche Wohnen flat in Berlin Housing cost ratio DW In- DW- rent DW re- Market Hous
Slide 33: Sustainability
Sustainability
Slide 34: CSR Ratings continuously improved
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix CSR Ratings continuously improved Participation Rating Rating Rating Rating Rating (a) = active DW since 2015 2016 2017 2018 2019 (r) = reactive Most Improved Gold 2015 No award No award Gold Award Gold Awa
Slide 35: Portfolio and Financials
Portfolio and Financials
Slide 36: Strong like-for-like development as of 31 December 2019
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strong like-for-like development as of 31 December 2019 2 2 Residential In-place rent In-place rent Vacancy Vacancy Like-for-like Change Change units 31/12/2019 31/12/2018 31/12/2019 31/12/2018 31/12/2019 (
Slide 37: Portfolio valuation 2019 versus 2018
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Portfolio valuation 2019 versus 2018 FV FV Multiple Multiple Residential units Multiple Regions 31/12/2019 31/12/2019 in-place rent re-letting rent (#) spread (EUR m) (EUR/sqm) 31/12/2019 31/12/2019 Core+ 1
Slide 38: Update on Berlin residential market
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Update on Berlin residential market Development of asking rents Development of asking prices for Development of asking prices for (EUR / sqm) multi-family-homes (EUR / sqm) condominiums (EUR / sqm) 6% 9% 5%
Slide 39: Development of rents and wages in Berlin
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Development of rents and wages in Berlin 5.0% Total 4.5% ▪ 33.6% 4.0% ▪ 25.4% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Rent index growth (Mietspiegel) N
Slide 40: Portfolio structure – characteristics meeting strong demand
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Portfolio structure – characteristics meeting strong demand Apartment size (Ø 60 sqm) Year of construction Rental restrictions In-place rent (expiring over time) (Ø 6.94 EUR/sqm/month) 28.3% 28.9% ~9% 28.9%
Slide 41: Deutsche Wohnen's residential portfolio is best-in-class
01 Strategy Update & 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-
Slide 42: The Berlin portfolio at a glance
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix The Berlin portfolio at a glance Pankow Reinickendorf # 9,957 | 2.2% # 9,735 | 0.7% EUR 7.62 | EUR 3,263 EUR 6.91 | EUR 2,513 Lichtenberg Mitte # 8,803 | 0.7% # 4,582 | 0.9% EUR 6.85 | EUR 2,631 EUR 7.40 |
Slide 43: Ownership structure of residential real estate in Germany and Berlin
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Ownership structure of residential real estate in Germany and Berlin # of appartments: 21.2m Private individuals and community of Professional landlords apartment owners 34% 66% Germany ▪ Ownership structur
Slide 44: Excellent macro trends in Berlin
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Excellent macro trends in Berlin GDP growth in Berlin outpaces Germany Real wage index with strong growth in Berlin 5.1% 4.2% 4.3% 4.1% 2.9% 3.1% 3.1% 2.2%2.5% 2.2% 2.2% 2.1% 1.9% 1.9% 1.9% 1.8% 1.8% 1.6% 1
Slide 45: Development of land prices and building permits in Berlin
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Development of land prices and building permits in Berlin Prices for undeveloped land in Berlin (in EUR / sqm) Building permits are decreasing in Berlin 2,934 24.218 2,934 (7%) 2,055 1,197 1,032 22.524 824
Slide 46: Current level of rents and prices in TOP German cities
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Current level of rents and prices in TOP German cities Asking prices multifamily housing (in EUR / sqm)1 Development of rents (EUR/sqm/month)1 DW Greater Berlin (book value) 2.584 DW Greater Berlin (re-lett
Slide 47: Bridge from adjusted EBITDA to profit
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Bridge from adjusted EBITDA to profit in EUR m FY-2019 FY-2018 EBITDA (adjusted) 901.2 662.0 in EUR m 2019 2018 Depreciation (40.9) (9.6) Interest expenses (135.5) (106.3) At equity valuation 2.8 2.6 In % o
Slide 48: Summary balance sheet
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Summary balance sheet Assets Equity and Liabilities in EUR m 31/12/2019 31/12/2018 in EUR m 31/12/2019 31/12/2018 Investment properties 25,433.3 23,781.7 Total equity 13,107.3 11,908.1 Other non-current ass
Slide 49: Management board and areas of responsibilities
01 Strategy Update & Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Management board and areas of responsibilities Michael Zahn Philip Grosse Henrik Thomsen Lars Urbansky Chief Executive Officer Chief Financial Officer Chief Development Officer Chief Operating Officer (Appo
Slide 50: Executive Board compensation system – as of 1 January 2018
01 Strategy Update & 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 comp
Slide 51: 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
Slide 52: Deutsche Wohnen SE
Deutsche Wohnen SE Mecklenburgische Straße 57 14197 Berlin Phone +49 30 89786-5413 Fax +49 30 89786-5419 © 2020 Deutsche Wohnen Gruppe