TAG Immobilien AG · XETR:TEG
TAG Immobilien — FY2017 Earnings Presentation
44 slides from TAG Immobilien's earnings presentation, February 2018
Slide 1: Company presentation FY 2017
Company presentation FY 2017 February 2018 1
Slide 2: Content
Content 22 I. TAG overview and strategy 3 II. TAG portfolio FY 2017 7 III. TAG services business 13 IV. TAG return on capex 17 V. TAG acquisitions and disposals FY 2017 22 VI. TAG financing structure 26 VII. TAG guidance FY 2018 30 VIII. Appendix Portfolio details, valuation details Income state
Slide 3: TAG overview and strategy
33 TAG overview and strategy TAG Immobilien AG | February 2018 | 3
Slide 4: TAG overview
TAG overview 44 TAG is among the leading players in the German listed residential sector and stands for affordable housing in Northern and Eastern Germany GAV (31 Dec-2017): EUR 4.6bn EPRA NAV (31 Dec-2017): EUR 2.0bn Rental income: EUR 303m Market cap (31 Dec-2017): EUR 2.3bn (31 Dec-2017 a
Slide 5: TAG history
TAG history 55 Key milestones Founding of the Focus on real Acquisition of Focus on Takeover of Acquisition of DKB Disposal of the Focus on “Eisenbahn estate business public listed Bau- German listed Colonia Immobilien AG commercial real internal growth Aktien- and listing on the Verein zu residenti
Slide 6: TAG strategy: internal growth as main driver
TAG strategy: internal growth as main driver 66 Segment leadership TAG has been the first to implement the ‘ABBA’* approach in the listed German residential sector TAG is among the largest owners of residential properties in East Germany Capital structure and acquisitions Stable and long-term
Slide 7: TAG portfolio FY 2017
7 TAGTAG acquisitions portfolio 2016 FY 2017 TAG Immobilien AG | February 2018 | 7
Slide 8: TAG portfolio in total as of 31 Dec-2017
TAG portfolio in total as of 31 Dec-2017 88 TAG is a leader in affordable housing in Northern and Eastern Germany. The portfolio is structured in ten defined regions in and around large and mid-sized cities. The management of these regions is conducted in a decentralized fashion. TAG’s local
Slide 9: TAG decentralised management structure
TAG decentralised management structure 99 Strategic centralised functions Portfolio Acquisitions / Central Shared FM Services Management / Sales Procurement Service Center Marketing Fully integrated platform based on SAP system Regional LIMs are incentivised by performance of their respective re
Slide 10: TAG strong vacancy reduction continues
TAG strong vacancy reduction continues 10 10 TAG exhibits strong local presence in its core regions which allows for excellent market knowledge and efficient operation of properties. Levering on its strong local network TAG explicitly aims to acquire smaller and / or geographically diversified p
Slide 11: TAG attractive and efficient rental growth
TAG attractive and efficient rental growth 11 11 TAG creates attractive rental growth from regular rent increases and tenant turnover (“basis l-f-l rental growth”) and Rental growth from vacancy reduction (leading to “total l-f-l rental growth”) achieved with moderate Targeted and efficient
Slide 12: TAG portfolio valuation FY 2017
TAG portfolio valuation FY 2017 12 12 Key metrics Total valuation gain of EUR 549.7m before change in treatment of transaction costs (H1 2017: EUR 296.2m / H2 2017: Dec-2017 Jun-2017 Dec-2016 Dec-2016 EUR 253.5m) leads to c. 14% annual valuation uplift and c. 80 bps (adjusted for (as reported) gro
Slide 13: TAG service business
13 13 TAG service business TAG Immobilien AG | February 2018 | 13
Slide 14: TAG services business
TAG services business 14 14 Facility management (100% owned subsidiary) Caretaker services, cleaning services and gardening APPENDIX In place since 2012 Main target: improve quality in comparison to external services 2016 2017 2018E Revenues (EURm) 6.5 9.2 9.5 c. 46,000 units covered in 2017
Slide 15: TAG services business
TAG services business 15 15 Energy services (100% owned subsidiary) Heating services for tenants (TAG as owner and operator of heating facilities) APPENDIX In place since 2016 Main target: create additional income for TAG and reduce energy costs/ service charges for tenants in EUR/m 2016 201
Slide 16: TAG services business
TAG services business 16 16 Condominium management (100% owned subsidiary) Condominium management (“WEG-Verwaltung”) APPENDIX for homeowners’ associations Includes management for third parties as well as management of units owned by TAG 4 main locations (Berlin, Erfurt, Gera and Hamburg) wit
Slide 17: TAG return on capex
17 TAG acquisitions TAG return on2016 capex TAG Immobilien AG | February 2018 | 17
Slide 18: TAG return on capex
TAG return on capex 18 18 Modernisation is key element of TAG’s strategy Methodology Capex measures can be broken down into Incremental revenues 1 = Return on investment Modernisation of vacant flats Total investment (longer term vacancy) Modernisation during re-letting Incremental revenues
Slide 19: TAG return on capex
TAG return on capex 19 19 Total capex FY 2017: EUR 42.8m FY 2016: EUR 46.5m Single unit program Property based program (Equity financed) (Modernisation capex, partly debt financed) Share of total capex: c.63% in FY 2017 (c.56% in FY 2016) Share of total capex: c. 37% in FY 2017 (c.44% in FY 2016) Re
Slide 20: TAG acquisitions and disposals FY 2017
TAG acquisitions and disposals TAG acquisitions 2016 FY 2017 TAG Immobilien AG | February 2018 | 20
Slide 21: TAG acquisition principles
TAG acquisition principles 21 21 NAV/s & FFO/s accretive purchases only Rigorous pricing discipline Purchase multiples should not be significantly below average portfolio gross yield (currently at 7.4%) Focus on portfolios in existing TAG locations/ regions Low marginal costs for asset and
Slide 22: TAG acquisitions FY 2017
TAG acquisitions FY 2017 22 22 Signing Brandenburg Saxony- Saxony- Saxony Thuringia Total Anhalt Anhalt, Lower Saxony, Thuringia Feb-2017 Mar-2017 Jun-2017 Oct-2017 Nov-2017 2017 Units 1,441 1,252 1,445 328 480 4,946 Current net cold rent 4.77 4.82 4.78 4.91 4.32 4.78 Brandenburg EUR/sqm/month Vacan
Slide 23: TAG disposals FY 2017
TAG disposals FY 2017 23 23 Signing Brandenburg Freiburg Berlin Halle an der Ongoing Total Saale disposals Feb-2017 Jun-2017 Oct-2017 Nov-2017 2017 2017 Units 535 457 267 265 427 1,951 Current net cold Brandenburg rent 3.61 6.21 6.65 3.48 --- --- EUR/sqm/month Vacancy 33.4% 0.0% 3.5% 23.9% --- --- S
Slide 24: TAG financing structure
24 TAG TAG acquisitions financing structure 2016 TAG Immobilien AG | February 2018 | 24
Slide 25: TAG cost of debt and LTV
TAG cost of debt and LTV 25 25 Cost of debt Ø Continuous reduction of average cost of debt from FY 2015 onwards. Average cost of debt as of 31 Dec-2017 3.74% 3.45% excluding already refinanced corporate bond due 3.15% 2.34% Aug-2018 (effective coupon 4.83%) on a pro- forma basis down to 2.14%.
Slide 26: TAG debt financing structure
TAG debt financing structure 26 26 Debt maturity profile as of 31 Dec-2017 Interest rates Corporate bonds EUR 316m (13%) Ø interest rate: Bank loans 4.41% EUR 1,946m (77%) 100% fixed rates Total Ø interest rate: financial debt Convertible bonds 2.24% EUR 2,524m EUR 262m (10%) 98% fixed rates Ø 2
Slide 27: TAG capital market financing
TAG capital market financing 27 27 Use market window to secure attractive financing conditions early on Rationale for the Structure of convertible bond minimizes dilution, gives TAG maximum flexibility with transactions in respect to repayment and impacts positively on FFO I August 2017 Adress
Slide 28: TAG guidance FY 2018
28 TAG TAG acquisitions guidance 2016 FY 2018 TAG Immobilien AG | February 2018 | 28
Slide 29: TAG guidance FY 2018
TAG guidance FY 2018 29 29 FFO EUR 127.4m (guidance 2017: EUR 119m-121m , FY 2016: EUR 97.0, 31% increase Y-o-Y); difference to guidance from Aug-2017 mainly driven by c. EUR 3.2m lower maintenance Results FY 2017 costs and c. EUR 1.9m lower financing costs). FFO/s EUR 0.87 (guidance 2017: EUR 0
Slide 30: Appendix
30 30 APPENDIX APPENDIX TAG Immobilien TAG Immobilien AG | November AG | February 2018 | 30 2017
Slide 31: TAG portfolio details by region
TAG portfolio details by region 31 31 Region Units Rentable IFRS BV In- Vacancy Vacancy Current Re- L-f-l rental L-f-l rental Mainte- Capex # area EURm place Dec- Dec- net cold letting growth growth nance EUR/sqm sqm yield 2017 2016 rent rent Y-o-Y Y-o-Y incl. EUR/sqm APPENDIX EUR/ EUR/ vacancy sqm
Slide 32: TAG vacancy reduction and rental growth
TAG vacancy reduction and rental growth 32 32 Vacancy development per region L-f-l rental growth per region (Y-o-Y) 2017 2017 APPENDIX 2016 2016 TAG Immobilien AG | February 2018 | 32 Basis l-f- l Including vacancy reduction
Slide 33: TAG portfolio valuation details
TAG portfolio valuation details 33 33 Share of Change in FY 2017 Dec-2016 Dec-2016 Dec-2016 Region Dec-2017 Dec-2017 Dec-2017 FY 2017 Share of operational treatment of Net Fair value Fair value Implied Fair value Fair value Implied Revaluation yield performance/ APPENDIX transaction revaluation (IFR
Slide 34: TAG income statement (IFRS)
TAG income statement (IFRS) 34 34 FY 2017 FY 2016 Q4 2017 Q3 2017 1 Strong increase in rental income of EUR 17.8m Y-o-Y (in EUR millions) APPENDIX (adjusted)* (adjusted)* driven by new acquisitions (c. 5,000 units in FY 2017) 1 and total l-f-l rental growth of 3.1%. Rental income 293.0 275.2 75.0 74
Slide 35: TAG EBITDA, FFO and AFFO calculation
TAG EBITDA, FFO and AFFO calculation 35 35 (in EUR millions) FY 2017 FY 2016 Q4 2017 Q3 2017 Net income 313.7 200.7 220.0 19.6 1 Improved EBITDA of EUR 23.1m Y-o-Y mainly APPENDIX + Income tax 82.8 46.0 58.7 4.5 result of higher net rental income (+EUR 16.5m), higher net revenue from services (+EUR
Slide 36: TAG balance sheet (IFRS)
TAG balance sheet (IFRS) 36 36 (in EUR millions) 31 Dec-2017 30 Sep-2017 31 Dec-2016 APPENDIX 1 Book value of investment properties increased by Non-current assets 4,243.8 3,993.8 3,843.6 EUR 388.2m in 2017 mainly due to portfolio valuation Investment property 1 4,166.0 3,925.6 3,777.8 (+EUR 293.0m)
Slide 37: TAG EPRA NAV calculation
TAG EPRA NAV calculation 37 37 EPRA NAV bridge (in EUR / share) APPENDIX (in EUR millions) 31 Dec-2017 30 Sep-2017 31 Dec-2016 Equity (without minorities) 1,625.9 1,409.9 1,350.9 + Deferred taxes on investment properties and financial 362.3 305.9 287.1 derivatives + Fair value of financial 8.4 7.5 4
Slide 38: TAG EPRA Earnings
TAG EPRA Earnings 38 38 (in EUR millions) FY 2017 FY 2016 Q4 2017 Q3 2017 Net income 313.7 200.7 220.1 19.6 APPENDIX Valuation result -293.0 -163.1 -253.7 0.2 Deferred income taxes on valuation result 76.9 43.6 64.1 0.0 Net revenues from sales 0.0 -1.8 0.9 -0.3 Cash taxes on net revenues from sales
Slide 39: TAG LTV calculation
TAG LTV calculation 39 39 APPENDIX (in EUR millions) 31 Dec-2017 30 Sep-2017 31 Dec-2016 Non-current and current liabilities to banks 1,935.4 1,927.1 1,826.5 Non-current and current liabilities from corporate bonds 322.2 322.0 443.7 Non-current and current liabilities from convertible bonds 256.2 25
Slide 40: TAG shareholder structure
TAG shareholder structure 40 40 Shareholder structure as of 31 Dec-2017 APPENDIX Number of shares (issued) 146.5m Market capitalisation (31 Dec-2017) EUR 2.3bn Stock indices MDAX/EPRA Free Float * 100% * Deutsche Börse definition including institutional investors Erfurt Gera Wittenberg TAG I
Slide 41: TAG management board
TAG management board 41 41 APPENDIX Claudia Hoyer Martin Thiel Dr. Harboe Vaagt COO CFO CLO Key responsibilities: Property and Key responsibilities: Controlling, Key responsibilities: Legal, Human Asset Management, Acquisitions and Accounting, Financing, Taxes, Resources and Transactions Dispo
Slide 42: TAG notes
TAG notes 42 42 APPENDIX TAG Immobilien AG | February 2018 | 42
Slide 43: TAG notes
TAG notes 43 43 APPENDIX TAG Immobilien AG | February 2018 | 43
Slide 44: TAG contacts
44 44 TAG TAGcontacts Contacts Martin Thiel Dominique Mann TAG Immobilien AG Martin Thiel CFO Dominique Head Mann of Investor & Public Relations TAG Immobilien AG CFO Head of Investor & Public Relations Steckelhörn 5 Phone: +49 40 380 32-222 Phone: +49 40 380 32-305 Steckelhörn 5 20457 Hamburg Phone