Grand City Properties Sa · XETR:GYC
Grand City Properties Sa — FY2023 Earnings Presentation
46 slides from Grand City Properties Sa's earnings presentation, March 2024
Slide 1: Financial Results Presentation FY 2023
Berlin FINANCIAL RESULTS PRESENTATION FY 2023 March 2024
Slide 2: Highlights
HIGHLIGHTS GCP
Slide 3: FY 2023 Key Results Summary
FY 2023 KEY RESULTS SUMMARY KEY FINANCIAL RESULTS Balance P&L 2023 change 2022 Dec 2023 change Dec 2022 Sheet Net Rental Cash and €411m 4% €396m liquid €1,230m 187% €429m Income assets (1) Adjusted €320m 4% €308m EBITDA Total equity €5,230m -12% €5,914m 2023 TOP RANGE OF FFO I €184m -4% €192m EPRA N
Slide 4: FY 2023 Key Results Summary
FY 2023 KEY RESULTS SUMMARY PORTFOLIO Dec 2023 Dec 2022 Dec 2023 Dec 2022 Disposals 2023 signed 2023 completed Annualised net €406m €393m Portfolio value €8.6bn €9.5bn >€190m >€300m* rent (*) of which ~180m signed in 2022. Units 63,303 64,281 L-F-L revaluation -9% 1% (excl. Capex) Vacancy 3.8% 4.2%
Slide 5: Key Strategic Achievements: 1. Strengthen Liquidity & Reduce Refinance Risk
KEY STRATEGIC ACHIEVEMENTS: 1. STRENGTHEN LIQUIDITY & REDUCE REFINANCE RISK PRO-ACTIVE REPAYMENT DISPOSALS BANK FINANCING DIVIDEND SUSPENSION OF BONDS ❖ Closed disposals amounting to over ❖ GCP raised >€550 million of new ❖ Buyback of ~€90m of near-term ❖ Dividend suspension in 2023 (for €300 millio
Slide 6: Key Strategic Achievements: 2. Maintain Stable Leverage
KEY STRATEGIC ACHIEVEMENTS: 2. MAINTAIN STABLE LEVERAGE HIGHER INTEREST RATE PRO-ACTIVE APROACH TO GCP MAINTAINED A STABLE AND LOW LEVERAGE WITH ENVIRONMENT DRIVING MANAGE LEVERAGE HEADROOM TO ABSORB FURTHER MARKET DETERIORATION DEVALUATION LOW AND STABLE LTV LOW AND DECREASING NET DEBT/EBITDA(1) ❖
Slide 7: Key Strategic Achievements: 3. Drive Operational Growth
KEY STRATEGIC ACHIEVEMENTS: 3. DRIVE OPERATIONAL GROWTH SOLID L-F-L RENTAL GROWTH SOLID EBITDA GROWTH FUTURE INTERNAL GROWTH POTENTIAL 3.3% 2.8% 2.9% 0.2% Highly supportive market fundamentals provide further tailwinds 0.6% 0.7% Solid like-for-like rental growth driving top-line from relatively for
Slide 8: Operational & Financial Results
OPERATIONAL & FINANCIAL RESULTS 8
Slide 9: Valuation Update: Values Are Back to 2018 Levels in Real Terms
VALUATION UPDATE: VALUES ARE BACK TO 2018 LEVELS IN REAL TERMS VALUATION PARAMETERS Dec 2023 Dec 2022 ❖ In 2023 GCP recorded like-for-like revaluation of -9% excluding capex (-8% including capex). The decrease was driven by the higher discount and cap Rent Multiple 20.9x 23.6x rates as a result of t
Slide 10: P&L Results
P&L RESULTS Selected consolidated statement of profit or loss 2023 2022 NET RENTAL INCOME ADJUSTED EBITDA (in € millions) (in € millions) in € ‘000 unless otherwise indicated 411 Revenue 607,741 582,505 396 +4% +4% 320 308 Net rental income 411,313 396,041 Property revaluations and capital gains (lo
Slide 11: FFO I + II
FFO I + II FFO I FFO I per share (in € millions) (in €) -4% in € ‘000 unless otherwise indicated 2023 2022 -6% 192 184 1.14 Adjusted EBITDA 319,647 308,100 1.07 Finance expenses (56,814) (46,914) Current tax expenses (40,865) (39,120) Contribution to minorities (4,332) (5,097) 2022 2023 2022 2023 Ad
Slide 12: Maintenance & Capex
INSTALLING BALCONIES MAINTENANCE & CAPEX Hamburg (before) REPOSITIONING CAPEX REPOSITIONING CAPEX & MAINTENANCE (in € per average sqm) - Focus remains on improving asset quality 23.7 22.5 - All capex is directed towards value creation and increasing rental income - Other value-add measures include:
Slide 13: Portfolio Overview
PORTFOLIO OVERVIEW ANNUALISED NET RENTAL INCOME vs. GCP VALUE VS REPLACEMENT COST MARKET POTENTIAL (ERV) (Excl. London & in € per sqm) (INCLUDING VACANCY REDUCTION) (in € millions) 4,200 ❖ In addition to the portfolio below, GCP has GCP values remain materially investment property held for sale amou
Slide 14: EPRA NAV Metrics
EPRA NAV METRICS EPRA NAV PER SHARE METRICS (in €) EPRA NAV METRICS (in € millions) EPRA NRV PS EPRA NTA PS EPRA NDV PS EPRA NRV EPRA NTA EPRA NDV -13% -14% -19% -13% -14% -19% 30.8 5,323 4,642 26.7 27.0 26.9 4,606 4,656 23.2 4,014 3,745 21.7 reclassified to reclassified to exclude RETT exclude RETT
Slide 15: Diversified Portfolio with High Growth Potential
DIVERSIFIED PORTFOLIO WITH HIGH GROWTH POTENTIAL 15
Slide 16: Market Fundamentals Remain Highly Supportive
MARKET FUNDAMENTALS REMAIN HIGHLY SUPPORTIVE Market fundamentals provide significant tailwind to continuous operational achievements resulting in higher rents, lower vacancies, supporting valuations Share of each rental rate segment in total rental offerings per annum Germany ❖ Elevated net migratio
Slide 17: London Rental Market Significant Supply–Demand Imbalance
LONDON RENTAL MARKET SIGNIFICANT SUPPLY – DEMAND IMBALANCE INCREASING DEMAND RESULTING COSTS AND DELAYS REMAIN ELEVATED SUPPLY CONTINUES TO LAG IN HIGHER RENTS - As per the most recent Construction Output Price Indices - New completions continue to lag the required level of 66k - London has witnesse
Slide 18: Financial Profile
FINANCIAL PROFILE GCP
Slide 19: Strong Financial Profile
STRONG FINANCIAL PROFILE LIQUIDITY POSITION LOW LEVERAGE INTEREST HEDGING RATIO Wuppertal Fixed & Swapped LOW AND STABLE LTV Capped 45% Board of Directors’ Limit €1.2b Variable 12% December 2023 cash 37% EPRA LTV 36% NET DEBT/ and liquid assets 10% (including perpetual EBITDA + notes as debt) signed
Slide 20: High Headroom for All Covenant Types
HIGH HEADROOM FOR ALL COVENANT TYPES FY 2023 STRESS CASE 1) COVENANT GCP COVENANT LIMIT RESULTS (value decrease until covenant breach) -40% Implies €4.4bn o GCP remains committed to maintain TOTAL NET DEBT / TOTAL NET ASSETS <=60% (1) 33% (Additional total asset further value loss a conservative fin
Slide 21: Bank Financing - Increasing Liquidity and Extending Maturities
BANK FINANCING - INCREASING LIQUIDITY AND EXTENDING MATURITIES STRONG ACCESS TO BANK FINANCING NEW BANK FINANCING Ø MARGIN Ø TERM ❖ GCP raised over €550 million of new bank financing in 2023 at attractive terms. >€550m 1.4% Total new bank financing >7.5 years Total new bank financing Total new bank
Slide 22: Debt Maturity Schedule
DEBT MATURITY SCHEDULE Debt covered Additional debt CURRENT AVERAGE DEBT 1,400 as of December maturities covered COST OF DEBT MATURITY 2022 in 2023 as a result of strategic measures 1.9% 5.3 years 1,200 to strengthen liquidity 1,000 December 2023 Cash and liquid EUR Millions assets + signed disposal
Slide 23: Guidance
GUIDANCE GCP
Slide 24: Guidance
GUIDANCE FY 2024 Key drivers: FFO I €175M – €185M ❖ Low single digit adj. EBITDA increase as a result of the positive like for like rental FFO I per share €1.01 - €1.07 growth partially offset by disposal impacts. Dividend per share* €0.76 - €0.80 ❖ Full year impact from higher perpetual notes coupo
Slide 25: Appendix
APPENDIX GCP
Slide 26: Focus on Central Locations in Berlin and NRW
FOCUS ON CENTRAL LOCATIONS IN BERLIN AND NRW* BEST IN CLASS BERLIN PORTFOLIO WELL DISTRIBUTED NRW PORTFOLIO 23% of GCP’s Portfolio Value 4th Largest city in Germany 70% of the Berlin portfolio is 21% located in top tier of GCP’s Portfolio neighborhoods: Charlottenburg, Wilmersdorf, Mitte, Kreuzberg,
Slide 27: High Quality London Portfolio
HIGH QUALITY LONDON PORTFOLIO* 19% of GCP’s WELL CONNECTED ❖The total London portfolio, including pre-marketed units, consists of Portfolio LONDON PORTFOLIO approx. 3,600 units ❖Over 80% of the portfolio is situated within a short walking distance to an underground/overground station ❖Through strong
Slide 28: Quality East and North Portfolio
QUALITY EAST AND NORTH PORTFOLIO QUALITY EAST PORTFOLIO QUALITY NORTH PORTFOLIO DRESDEN/LEIPZIG/HALLE HAMBURG / BREMEN 14%* 5%* of GCP’s of GCP’s Portfolio Portfolio DIVERSIFICATION INTO GERMANY’S DYNAMIC WELL POSITIONED IN Leipzig & Dresden EASTERN CITIES WITH GERMANY’S LARGEST are the largest citi
Slide 29: German Housing Market – Demand Fundamentals
GERMAN HOUSING MARKET – DEMAND FUNDAMENTALS Smaller Household Size1) 1,600k Positive Net Migration Trends3) 1 person 2 persons 3 persons 4 persons 5 or more persons 1,400k 1,200k 1,000k 800k Forecast 600k scenarios 1) 400k Average of approx. 330k per year 400k 41% 43% 42% 43% 43% 45% 46% 290k 38% 20
Slide 30: German Housing Market – Supply Fundamentals
GERMAN HOUSING MARKET – SUPPLY FUNDAMENTALS Strong increase in construction costs, additionally driven by more regulation 1) 800 Actual Completions vs. Required Completions2) Index January 2000 = 100 700 Est. new required level due to net migration: 600K 600 (until 2002) (from 2009) Additional 500 T
Slide 31: London Rental Market – Renting Favorable Over Owning
LONDON RENTAL MARKET – RENTING FAVORABLE OVER OWNING Ratio of house price to median earnings UK home ownership rate ❖ Doubling of house price to 18.0 household income ratio since 16.0 69% early 2000s leading to the 14.0 decrease in affordability of 53% 12.0 home ownership and supporting rental deman
Slide 32: ESG and Sustainability
ESG AND SUSTAINABILITY ENHANCED REPORTING In order to effectively address the varied interests and priorities of our business partners, investors, tenants, employees and communities The non-financial report was 2023 (NON-)FINANCIAL reviewed with limited assurance by KPMG. It provides REPORT a descri
Slide 33: ESG Goals and Contribution
ESG GOALS AND CONTRIBUTION 33
Slide 34: Environment
ENVIRONMENT GOING FORWARD Cologne Halle Create and deliver a portfolio wide CO2 reduction pathway report by energy auditing the environmental performance of buildings such as the use of energy, waste and water. Continue to switch the electricity supply of all common areas to PPA (Power Purchase Agre
Slide 35: Regulatory Environment – Modernisation
REGULATORY ENVIRONMENT – MODERNISATION - GCP continues to monitor the changes with regards to the modernization and sustainability investments. The German government recently rolled out a new subsidy and tax incentive scheme – however, these have changed continuously in recent years, and, in our opi
Slide 36: Social
SOCIAL TENANTS GCP FOUNDATION EMPLOYEES LOOKING FORWARD GCP values diversity – a fact that is also Entertaining, diverse, convincing: GCP From Dortmund to Halle, from Bremen to underlined with almost 40 nations creates attractive digital alternatives to Mainz: Support for charitable projects represe
Slide 37: Governance
GOVERNANCE 1 BEST-IN-CLASS REPORTING LEADING TO HIGH STANDARDS OF TRANSPARENCY - For the SEVENTH CONSECUTIVE year in September 2023, GCP received the EPRA BPR and sBPR gold awards for its financial reporting and sustainability reporting, respectively. 2 EXPERIENCED LEADERSHIP WITH STRONG AND INDEPEN
Slide 38: Financial Policy
FINANCIAL POLICY GCP FINANCIAL POLICY LTV limit at 45% Debt to debt plus equity ratio at 45% (or lower) on a sustainable basis Maintaining conservative financial ratios with a strong ICR Unencumbered assets above 50% of total assets Long debt maturity profile Good mix of long-term unsecured bonds &
Slide 39: Perpetual Notes Refresher
PERPETUAL NOTES REFRESHER 2023 PERPETUAL NOTES NON-CALL DECISIONS ❖ At the end of 2022, GCP announced its decision not to call the €200 million CHARACTERISTICS PERPETUAL NOTES perpetual notes series which had its first call date in January 2023. ❖ In September 2023, GCP announced its decision not to
Slide 40: Analyst Coverage
ANALYST COVERAGE 19.2 14.2 12.6 12 12 11.75 11.5 10.5 10.4 10.1 10 9.3 9 8.4 8 7 Citigroup Kepler Cheuvreux First Berlin HSBC DZ Bank J.P. Morgan Berenberg Societe Generale Goldman Sachs Oddo BHF Kempen & co UBS Deutsche Bank Jefferies Bank of America Barclays 01.09.2023 15.02.2024 16.11.2023 30.01.
Slide 41: Share Development & Ownership Structure
SHARE DEVELOPMENT & OWNERSHIP STRUCTURE GCP - SHARE PRICE AND TOTAL RETURN SINCE FIRST EQUITY PLACEMENT (19.7.2012) 26 24 Grand City Properties 343% 22 SDAX (rebased) 185% 20 FTSE EPRA/NAREIT 18 97% Germany (rebased) 16 14 12 10 Issue price 8 €2.75 6 4 2 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul
Slide 42: Management
MANAGEMENT Refael Zamir Mr. Zamir is the Chief Executive Officer of Grand City Properties since 2020 (and Daily Manager (administrateur-délégué)). Mr. Zamir has been working for the Group since 2013. He served as Chief Chief Executive Officer Financial Officer from 2014 to 2023 and as Chairman of th
Slide 43: Management
MANAGEMENT Senior Management (continued) Michael Bar-Yosef Mr. Bar-Yosef is responsible for financial modeling and cooperates with equity researchers to analyze their financial models and has more than 10 years of experience. Before joining GCP he served as Senior Financial Analyst a financial and c
Slide 44: Business Risk Profile
CREDIT RATING MATRIX FINANCIAL RISK PROFILE 1 2 3 4 5 6 MINIMAL MODEST INTERMEDIATE SIGNIFICANT AGGRESSIVE HIGH LEVER-AGED 1 aaa/ GCP will continue strengthening its position within the business profile EXCELLENT aa a+/a a- bbb bbb-/bb+ BUSINESS RISK PROFILE aa+ (Vonovia- BBB+)1 2 (GCP) (Aroundtown)
Slide 45: Disclaimer
DISCLAIMER IMPORTANT: This presentation has been provided for information purposes only and is being circulated on a confidential basis. This presentation shall be used only in accordance with applicable law, e.g. regarding national and international insider dealing rules, and must not be distribute
Slide 46: Thank You
THANK YOU Investor Relations Team E-mail: gcp-ir@grandcity.lu www.grandcityproperties.com