TAG Immobilien AG · XETR:TEG
TAG Immobilien — Q1 2018 Earnings Presentation
48 slides from TAG Immobilien's earnings presentation, May 2018
Slide 1: Company presentation Q1 2018
Company presentation Q1 2018 May 2018
Slide 2: Content
Content 22 I. TAG overview and strategy 3 II. TAG portfolio Q1 2017 7 III. TAG acquisitions and disposals FY 2017 10 IV. TAG vacancy reduction and rental growth 14 V. TAG valuation 17 VI. TAG return on capex 19 VII. TAG services business 24 VIII. TAG financing structure 28 IX. TAG guidance FY 2018 3
Slide 3: TAG overview and strategy
33 TAG overview and strategy TAG Immobilien AG | May 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 Mar-2018): EUR 4.7bn EPRA NAV (31 Mar-2018): EUR 2.0bn Rental income: EUR 302m Market cap (31 Mar-2017): EUR 2.5bn (31 Mar-2018 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 German listed Colonia Immobilien AG commercial real internal growth Aktien- and listing on the Bau-Verein zu residentia
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 Q1 2018
7 TAGTAG acquisitions portfolio Q1 2016 2018 TAG Immobilien AG | May 2018 | 7
Slide 8: TAG portfolio in total as of 31 Mar-2018
TAG portfolio in total as of 31 Mar-2018 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 acquisitions and disposals
TAG acquisitions and disposals TAG acquisitions 2016 FY 2017 TAG Immobilien AG | May 2018 | 10
Slide 11: TAG acquisition principles
TAG acquisition principles 11 11 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 12: TAG acquisitions FY 2017
TAG acquisitions FY 2017 12 12 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 rent EUR/sqm/month 4.77 4.82 4.78 4.91 4.32 4.78 Brandenburg Vacancy 19
Slide 13: TAG disposals FY 2017
TAG disposals FY 2017 13 13 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 Brandenburg Current net rent 3.61 6.21 6.65 3.48 --- --- EUR/sqm/month Vacancy 33.4% 0.0% 3.5% 23.9% --- --- Sellin
Slide 14: TAG vacancy reduction and rental growth
TAG vacancy reduction and TAG acquisitions rental growth 2016 TAG Immobilien AG | May 2018 | 14
Slide 15: TAG strong vacancy reduction
TAG strong vacancy reduction 15 15 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 portfolios
Slide 16: TAG attractive and efficient rental growth
TAG attractive and efficient rental growth 16 16 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 Targeted and efficient capex st
Slide 17: TAG valuation
17 TAG acquisitions TAG valuation 2016 TAG Immobilien AG | May 2018 | 17
Slide 18: TAG portfolio valuation overview
TAG portfolio valuation overview 18 18 Key metrics Total valuation gain in 2017 of EUR 549.7m before change in treatment of transaction costs led to c. 14% annual valuation uplift and Mar-2018 Dec-2017 Dec-2016 Dec-2016 c. 80 bps gross yield reduction: (adjusted for (as reported) transaction c.
Slide 19: TAG return on capex
19 TAG acquisitions TAG return on2016 capex TAG Immobilien AG | May 2018 | 19
Slide 20: TAG return on capex
TAG return on capex 20 20 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 of flats during re-letting Incrementa
Slide 21: TAG return on capex
TAG return on capex 21 21 Total capex Q1 2018: EUR 13.0m FY 2017: EUR 42.8m Modernisation of flats Large modernisation measures (Equity financed) (Modernisation capex, partly debt financed) Share of total capex: c.55% in Q1 2018 (c.63% in FY 2017) Share of total capex: c.45% in Q1 2018 (c.37% in FY
Slide 22: Modernisation of vacant flats (longer term vacancy)
Modernisation of vacant flats (longer term vacancy) 22 22 Case Study – Brandenburg/ Havel „Christinenstraße“ Pre modernisation Measures Post modernisation Units: 18 out of 96 Interior refurbishment: New flooring Painting Bath and kitchen refurbishment Calculation Description (in EUR thousa
Slide 23: Modernisation large modernisation measures
Modernisation large modernisation measures 23 23 Case Study – Chemnitz „Usti-Nad-Labem Street“ Pre modernisation Measures Post modernisation Floor plan changes including conversion into larger apartments (from 72 to 66 units) Facade-, roof- and electric modernisation New sanitary facilities
Slide 24: TAG services business
24 24 TAG service business TAG Immobilien AG | May 2018 | 24
Slide 25: TAG services business
TAG services business 25 25 Facility management (100% owned subsidiary) Caretaker services, cleaning services and gardening 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 No. of e
Slide 26: TAG services business
TAG services business 26 26 Energy services (100% owned subsidiary) Heating services for tenants (TAG as owner and operator of heating facilities) In place since 2016 Main target: create additional income for TAG and reduce energy costs/ service charges for tenants in EUR/m 2016 2017 2018E R
Slide 27: TAG services business
TAG services business 27 27 Condominium management (100% owned subsidiary) Condominium management (“WEG-Verwaltung”) 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) within the T
Slide 28: TAG financing structure
28 TAG TAG acquisitions financing structure 2016 TAG Immobilien AG | May 2018 | 28
Slide 29: TAG cost of debt and LTV
TAG cost of debt and LTV 29 29 Cost of debt Ø Continuous reduction of average cost of debt from FY 2015 onwards. Average cost of debt as of 31 Mar-2018 3.45 3.15 excluding already refinanced corporate bond due 2.34 2.35 Aug-2018 (effective coupon 4.83%) on a pro- forma basis down to 2.14%. Sal
Slide 30: TAG debt financing structure
TAG debt financing structure 30 30 Debt maturity profile as of 31 Mar-2018 Interest rates Corporate bonds EUR 316m (13%) Ø interest rate: Bank loans 4.41% EUR 1,898m (77%) 100% fixed rates Total Ø interest rate: financial debt Convertible bonds 2.25% EUR 2,476m EUR 262m (10%) 99% fixed rates Ø 2
Slide 31: TAG capital market financing
TAG capital market financing 31 31 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 32: TAG guidance FY 2018
32 TAG TAG acquisitions guidance 2016 FY 2018 TAG Immobilien AG | May 2018 | 32
Slide 33: TAG guidance FY 2018
TAG guidance FY 2018 33 33 Guidance FFO EUR 135m-137m (7% increase Y-o-Y) FY 2018 (unchanged, to be reviewed FFO/s EUR 0.93 (7% increase Y-o-Y) post Q2 2018) Dividend/s EUR 0.70 (8% increase Y-o-Y, equals 75% of FFO) Senftenberg FFO in EURm FFO per share in EUR Dividend per share in EUR c.136.
Slide 34: Appendix
34 34 APPENDIX APPENDIX TAGTAG Immobilien Immobilien AG AG | November | May 2018 | 34 2017
Slide 35: TAG portfolio details by region
TAG portfolio details by region 35 35 Region Units Rentable IFRS BV In- Vacancy Vacancy Current Re- L-f-l rental L-f-l rental Mainte- Capex # area EURm place Mar- Dec- net rent letting growth growth nance EUR/sqm sqm Mar- yield 2018 2017 EUR/ rent Y-o-Y Y-o-Y incl. EUR/sqm APPENDIX 2018 sqm EUR/ vac
Slide 36: TAG vacancy reduction and rental growth
TAG vacancy reduction and rental growth 36 36 Vacancy development per region L-f-l rental growth per region (Y-o-Y) Q1 2018 Q1 2018 APPENDIX Basis l-f- l Including vacancy reduction 2017 2017 TAG Immobilien AG | May 2018 | 36
Slide 37: TAG portfolio valuation details
TAG portfolio valuation details 37 37 Share of Region Mar-2018 Mar-2018 Mar-2018 Q1 2018 operational Dec-2017 Dec-2017 Dec-2017 Share of yield Fair value Fair value Implied Valuation performance/ Fair value Fair value Implied compression APPENDIX (in EUR millions) (IFRS) (EUR/sqm) multiple result ot
Slide 38: TAG income statement (IFRS)
TAG income statement (IFRS) 38 38 Q1 2018 Q4 2017 FY 2017 1 Increase in net rent of EUR 0.6m q-o-q driven by total l- (in EUR millions) APPENDIX f-l rental growth and net effect from portfolio 1 transactions. Net rent* 75.6 75.0 293.0 Expenses from property 2 Net rental income increased by EUR 0.7m
Slide 39: TAG EBITDA, FFO and AFFO calculation
TAG EBITDA, FFO and AFFO calculation 39 39 (in EUR millions) Q1 2018 Q4 2017 FY 2017 Net income 26.7 220.0 313.7 APPENDIX + Income tax 7.1 58.7 82.8 + Net financial result 15.6 14.6 82.4 EBIT 49.4 293.3 478.9 + Adjustments 1 Improved EBITDA of EUR 1.3m q-o-q mainly as a result of higher net rental i
Slide 40: TAG balance sheet (IFRS)
TAG balance sheet (IFRS) 40 40 (in EUR millions) 31 Mar-2018 31 Dec-2017 APPENDIX Non-current assets 4,154.7 4,243.8 Investment property 4,076.9 4,166.0 Deferred tax assets 45.1 45.4 Other non-current assets 32.7 32.4 Current assets 366.2 339.2 Real estate inventory 48.7 48.1 Cash and cash equivalen
Slide 41: TAG EPRA NAV calculation
TAG EPRA NAV calculation 41 41 Higher EPRA NAV mainly driven by net income in (in EUR millions) 31 Mar-2018 31 Dec-2017 Q1 2018. Next portfolio valuations at 30 Jun-2018 and APPENDIX Equity (without minorities) 1,650.9 1,625.9 31 Dec-2018 + Deferred taxes on investment properties and 366.0 362.3
Slide 42: TAG EPRA Earnings
TAG EPRA Earnings 42 42 (in EUR millions) Q1 2018 Q4 2017 FY 2017 Net income 26.7 220.1 313.7 APPENDIX Valuation result 0.5 -253.7 -293.0 Deferred income taxes on valuation result 3.6 64.1 76.9 Net revenues from sales 0.5 0.9 0.0 Fair value valuation of derivative financial instruments 0.0 0.7 1.2 B
Slide 43: TAG LTV calculation
TAG LTV calculation 43 43 APPENDIX (in EUR millions) 31 Mar-2018 31 Dec-2017 Non-current and current liabilities to banks 1,899.0 1,935.4 Non-current and current liabilities from corporate bonds 321.0 322.2 Non-current and current liabilities from convertible bonds 256.1 256.2 Cash and cash equivale
Slide 44: TAG shareholder structure
TAG shareholder structure 44 44 Shareholder structure as of 31 Mar-2018 APPENDIX Number of shares (issued) 146.5m Market capitalisation (31 Mar-2018) EUR 2.5bn Stock indices MDAX/EPRA Free Float * 100% * Deutsche Börse definition including institutional investors Bestensee Rostock Jänschwald
Slide 45: TAG management board
TAG management board 45 45 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 46: TAG notes
TAG notes 46 46 APPENDIX TAG Immobilien AG | May 2018 | 46
Slide 47: TAG notes
TAG notes 47 47 APPENDIX TAG Immobilien AG | May 2018 | 47
Slide 48: TAG contacts
48 48 TAG contacts Martin Thiel Dominique Mann TAG Immobilien AG CFO Head of Investor & Public Relations Steckelhörn 5 Phone: +49 40 380 32-0 Phone: +49 40 380 32-305 20457 Hamburg Fax: +49 40 380 32-388 Fax: +49 40 380 32-388 Phone: +49 40 380 32-0 Fax: +49 40 380 32-388 ir@tag-ag.com ir@tag-ag.com