Deutsche Wohnen Se · XETR:DWNI
Deutsche Wohnen — H1 2017 Earnings Presentation
33 slides from Deutsche Wohnen's earnings presentation, Aug 11, 2017
Slide 1: Deutsche Wohnen SE H1 2017 results
Deutsche Wohnen SE » H1 2017 results Conference Call, 11 August 2017 1
Slide 2: Agenda
» Agenda 1 Highlights 2 Market and Portfolio 3 Financials 4 Q&A 2
Slide 3: Highlights H1 2017
» Highlights H1 2017 Operating business continues to be strong: L-f-l rental growth of 3.2% for total portfolio - including the effects of the new Berlin rent index >4% for 2017 expected Re-letting rents have significantly outpaced in-place rents – reversionary potential incl. capex increased to EUR
Slide 4: Market and sector specific trends underpin the investment case
» Market and sector specific trends underpin the investment case Net immigration and new construction in Berlin Construction cost and land prices in Berlin 3,000 120 300,000 250,000 Increasing +277% 115 200,000 2,000 shortage 150,000 110 100,000 1,000 +117% 105 50,000 +115% - - 100 2012 2013 2014 20
Slide 5: Re-letting rents have outpaced in-place rents
» Re-letting rents have outpaced in-place rents DW rent development in Berlin DW development of multiples in Berlin EUR / sqm 30.0x 9.00 8.08 8.20 25.1x 23.7x 7.60 25.0x 8.00 6.92 7.02 31% rent 18.7x 6.9x spread 7.00 6.54 potential 20.0x 16.1x 14.4x 18.9x 17% rent potential 15.0x 18.2x 6.00 1.3x 6.1
Slide 6: Focused and concentrated portfolio with attractive reversionary potential
» Focused and concentrated portfolio with attractive reversionary potential Strategic cluster Residential % of total In-place rent1) New-letting rent Rent potential2) Vacancy units (measured by 30/06/2017 30/06/2017 30/06/2017 30/06/2017 (#) fair value) (EUR/sqm/month) (EUR/sqm/month) (in %) (in %)
Slide 7: Continued strong dynamics result in significant value uplift
» Continued strong dynamics result in significant value uplift Residential FV FV Multiple Multiple Multiple Fair Value Regions units 30/06/2017 30/06/2017 in-place rent market rent in-place rent 31/12/2016 (#) (EUR m) (EUR/sqm) 30/06/2017 30/06/2017 31/12/2016 (EUR/sqm) Core+ 140,122 15,732 1,812 23
Slide 8: Berlin rent index delivered highest increase since inception
» Berlin rent index delivered highest increase since inception 2013 2015 2017e Berlin rent table („Mietspiegel“) growth +6.3% +5.4% +9.4% Total residential units in Berlin c.102,600 c.98,000 c. 111,000 Thereof unrestricted units (subject to rent table) c. 86,200 c. 84,7001) c. 102.000 No. of units w
Slide 9: Strong like-for-like development as of 30 June 2017
» Strong like-for-like development as of 30 June 2017 1) 1) Like-for-like Residential In-place rent In-place rent Change Vacancy Vacancy Change 30/06/2017 units 30/06/2017 30/06/2016 (y-o-y) 30/06/2017 30/06/2016 (y-o-y) (#) (EUR/sqm) (EUR/sqm) (in %) (in %) Strategic core and growth regions Core+ 1
Slide 10: EUR 1bn Capex programme fully on track
» EUR 1bn Capex programme fully on track H1 2017 H1 2016 Holistic investment approach focused on EUR / EUR / significant quality improvement - on average we EUR m EUR m sqm1) sqm1) spend c. EUR 630 per sqm Maintenance (expensed through − EUR 75.2m was spent on modernization in 49.7 10.05 43.7 8.90 p
Slide 11: Example of capex, roof extensions and new construction in a protection area
» An example where capex, roof extensions and new construction is planned in one building complex located in a ‘protection area’ Capex and roof extensions Floor addition + roof extension New construction Expected Planned actions No. of units Investment EUR / sqm Facade, windows, cellar insulation, p
Slide 12: New construction pipeline offers attractive additional growth
» New construction pipeline offers attractive additional growth Zoned Land / Redensification Description Location Units Almost 50% of mid-term pipeline already in Berlin 470 planning phase with construction work expected to Existing construction plan start in 2018 Frankfurt 180 Low hurdle for buildi
Slide 13: Strong earnings and cash contributions from letting
» Strong earnings and cash contributions from letting in EUR m H1 2017 H1 2016 Development of maintenance in EUR per sqm Rental income 366.5 347.8 10.05 Non-recoverable expenses (5.3) (4.4) Rental loss (2.5) (3.4) 8.90 Maintenance (49.7) (43.7) 8.66 Others (2.7) (4.2) Earnings from Residential Prope
Slide 14: Disposals business remains opportunistic
» Disposals business remains opportunistic • xxx Development of privatization business Development of institutional sales business 44% 41% 39% 33% 20,000 20% 8% 13% 16% 95% 2,100 1,925 92% 15,000 91% 91% 1,564 90% 14,171 1,700 12,669 1,394 10,000 90% 1,181 9,596 1,300 5,000 2,099 900 0 85% FY-2014 F
Slide 15: Disposal business continues to deliver attractive margins
» Disposal business continues to deliver attractive margins Disposals Privatization Institutional sales Total with closing in H1 2017 H1 2016 H1 2017 H1 2016 H1 2017 H1 2016 No. of units 305 749 1,502 1,505 1,807 2,254 Proceeds (EUR m) 40.9 90.0 110.2 130.9 151.1 220.9 Book value 30.7 65.2 95.3 113.
Slide 16: Increasing FFO contribution from Nursing and Assisted Living
» Increasing FFO contribution from Nursing and Assisted Living Operations (in EUR m) H1 2017 H1 2016 in EUR m H1 2017 H1 2016 Total income 45.9 34.6 Nursing 35.5 27.4 Total expenses (41.8) (31.3) Living 4.3 3.2 EBITDA operations 4.1 3.3 Other 6.1 4.0 EBITDA margin 8.9% 9.5% in EUR m H1 2017 H1 2016
Slide 17: Best in class EBITDA margin
» Best in class EBITDA margin in EUR m H1 2017 H1 2016 Development of cost ratio 11.7% Earnings from Residential Property Management 306.3 292.1 10.9% Earnings from Disposals 20.5 36.7 9.9% Earnings from Nursing and Assisted Living 24.7 8.7 Segment contribution margin 351.5 337.5 H1 2015 H1 2016 H1
Slide 18: Operational improvements and acquisitions drive FFO growth
» Operational improvements and acquisitions drive FFO growth in EUR m H1 2017 H1 2016 FFO per share development in EUR EBITDA (adjusted) 311.1 303.2 0.70 0.69 Earnings from Disposals (20.5) (36.7) 0.62 Long-term-remuneration component 0.06 1.2 2.0 0.11 (share based)1) 0.15 + 7% + 26% At equity valua
Slide 19: EPRA NAV per share up 6% in H1 2017
» EPRA NAV per share up 6% in H1 2017 in EUR m 30/06/2017 31/12/2016 EPRA NAV per share (undiluted) in EUR Equity (before non-controlling interests) 8,809.2 7,965.6 29.68 31.42 +6% 23.02 Fair values of derivative financial 21.2 47.0 + 29% instruments Deferred taxes (net) 2,312.0 2,004.4 EPRA NAV (un
Slide 20: Conservative long term capital structure
» Conservative long term capital structure Rating A- / A3; stable outlook Low leverage, long maturities and strong rating Ø maturity ~ 8.0 years Flexible financing approach to optimize financing costs – unencumbered assets increased to > EUR 3.5bn % secured bank debt 67% No significant maturities un
Slide 21: Like for like rental growth guidance increased
» Like for like rental growth guidance increased 2017 2017 2016 update Main drivers old New FFO I (EUR m) 384 ~425 ~425 Operational performance and recent acquisitions Dividend per Based on 65% pay-out ratio from FFO I 0.74 ~0.78 ~0.78 share (EUR) and current shares outstanding 35-40% 35-40% LTV 37.
Slide 22: Appendix
» Appendix deutsche-wohnen.com . 22
Slide 23: Continued strong market dynamics result significant value uplift
» Continued strong market dynamics result significant value uplift Summary Key figures 2014 2015 2016 H1 2017 Total fair value 9.8bn 11.7bn 15.5bn 17.1bn Revaluation of EUR 886m or EUR 129 per sqm, (EUR) leading to a multiple expansion by 1.3x to 22.8x − Core+ regions contribute c. EUR 800m, thereof
Slide 24: Attractive spread between in-place and market rent multiples
» Attractive spread between in-place and market rent multiples offer further potential for NAV growth Residential FV FV Multiple Multiple Multiple Fair Value Regions units 30/06/2017 30/06/2017 in-place rent market rent in-place rent 31/12/2016 (#) (EUR m) (EUR/sqm) 30/06/2017 30/06/2017 31/12/2016
Slide 25: Strong like-for-like development as of 30 June 2017
» Strong like-for-like development as of 30 June 2017 2) 2) Like-for-like Residential In-place rent In-place rent Change Vacancy Vacancy Change 30/06/2017 units 30/06/2017 30/06/2016 (y-o-y) 30/06/2017 30/06/2016 (y-o-y) (#) (EUR/sqm) (EUR/sqm) (in %) (in %) Letting portfolio1) 150,611 6.22 6.02 3.2
Slide 26: Selective bolt-on acquisitions of quality assets
» Selective bolt-on acquisitions of quality assets Overview of acquisitions in residential since 2016 Overview of acquisitions in nursing and assisted living since 2016 Berlin Dresden Leipzig Total Assets only Assets & Total Operations # of units 4,039 1,019 445 5,503 Asset investments 420 54 473 (i
Slide 27: Illustration of acquired assets
» Illustration of acquired assets Berlin Leipzig Dresden Nursing & Assisted Living 27
Slide 28: New construction: First successful PPP in Potsdam serves as role model
» New construction: First successful “PPP” in Potsdam serves as role model Key facts Size • > 1,400 residential units • ~ 130,000 sqm residential area Pre Capex Total investment volume • EUR 350-400m (incl. cost for land) Expected rent level • EUR 9 per sqm, with upside potential Expected constructi
Slide 29: Bridge from adjusted EBITDA to profit
» Bridge from adjusted EBITDA to profit in EUR m H1 2017 H1 2016 in EUR m H1 2017 H1 2016 EBITDA (adjusted) 311.2 303.2 Interest expenses (49.8) (53.2) Depreciation (3.5) (3.0) In % of gross rents ~14% ~15% At equity valuation 0.7 0.9 Non-cash interest expenses (11.9) (5.5) Financial result (net) (6
Slide 30: Summary balance sheet
» Summary balance sheet Assets Equity and Liabilities in EUR m 30/06/2017 31/12/2016 in EUR m 30/06/2017 31/12/2016 Investment properties 17,768.2 16,005.1 Total equity 9,111.8 8,234.0 Other non-current assets 147.9 108.6 Financial liabilities 4,670.7 4,600.0 Deferred tax assets 0.7 0.7 Convertibles
Slide 31: The Berlin portfolio at a glance
» THE BERLIN-PORTFOLIO AT A GLANCE Reinickendorf Pankow # 9,464 • 6.24 • 1.6% # 9,747 • 6.69 • 2.5% Mitte Friedrichshain-Kreuzberg # 4,610 • 6.56 • 2.9% # 8,005 • 6.08 • 3.7% Lichtenberg # 8,836 • 6.17 • 1.4% Spandau # 13,779 • 6.08 • 1.8% Marzahn-Hellersdorf # 14,872 • 5.54 • 0.6% Charlottenburg-Wi
Slide 32: 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
Slide 33: Deutsche Wohnen SE Pfaffenwiese 300 65929 Frankfurt/ Main
Deutsche Wohnen SE Registered Office Berlin Office Pfaffenwiese 300 Mecklenburgische Straße 57 65929 Frankfurt/ Main 14197 Berlin Phone: +49 30 897 86 5413 Fax: +49 30 897 86 5419 © 2017 Deutsche Wohnen SE