LEG Immobilien SE · XETR:LEG
LEG Immobilien — Q1 2017 Earnings Presentation
39 slides from LEG Immobilien's earnings presentation, May 10, 2017
Slide 1: Q1-2017 Results
LEG Immobilien AG 10 May 2017 Q1-2017 Results
Slide 2: Disclaimer
Disclaimer While the company has taken all reasonable care to ensure that the facts stated in this presentation are accurate and that the opinions contained in it are fair and reasonable, this presentation is selective in nature and is intended to provide an introduction to, and an overview of the C
Slide 3: Agenda
Agenda I. HIGHLIGHTS Q1-2017 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. BUSINESS UPDATE AND OUTLOOK V. APPENDIX 3 I May 2017
Slide 4: Highlights Q1-2017
Highlights Q1-2017 Overall company development Property valuation: positive impact from rent development and yield compression in FY-2017 expected Mid single-digit valuation uplift (in %) in Q2 and further capital growth in Q4 expected Extension of capex programme: mid term l-f-l rent growth t
Slide 5: II. Portfolio and Operating Performance
II. PORTFOLIO AND OPERATING PERFORMANCE 5 I May 2017
Slide 6: Portfolio Overview
Portfolio Overview Positive rent development across all submarkets Strong results on the basis of tailor-made Minden- Lübbecke management strategies Steinfurt Herford Bielefeld Lippe High-Growth Markets Borken Munster Gütersloh Coesfeld Warendorf 31.03.2017 (YOY) Kleve Hamm Paderborn Hoxter # of u
Slide 7: Rent Development
Rent Development Attractive portfolio + operational excellence = sound rent growth L-f-l Residential Rent (€/sqm/month) L-f-l Free Financed Rent (€/sqm/month) 5.69 5.40 5.50 5.25 Q1-2016 Q1-2017 Q1-2016 Q1-2017 Rent restricted units: +1.3% year-on-year (like-for-like) Performance of free finance
Slide 8: EPRA-Vacancy Development (like-for-like)
EPRA-Vacancy Development (like-for-like) Low vacancies despite temporary drag from reorganisation High-Growth Markets Stable Markets 3.5% 3.2% 1.5% 1.3% Q1-2016 Q1-2017 Q1-2016 Q1-2017 Higher-Yielding Markets 3.2% 2.9% 5.6% 5.0% Q1-2016 Q1-2017 Q1-2016 Q1-2017 Traditionally weaker Q1 seasonality
Slide 9: Capex & Maintenance
Capex & Maintenance Rising value enhancing investments ahead €25.6m Investments of €2.6/sqm well below (€3.4/sqm) FY-run rate; stronger seasonality in €22.0m coming quarters (€2.6/sqm) Enhanced capex programme starting in H2-2017 €12.7m Outlook FY-2017: c.€24/sqm due to €9.0m enhanced capex pr
Slide 10: III. Financial Performance
III. FINANCIAL PERFORMANCE 10 I May 2017
Slide 11: Financial Highlights Q1-2017
Financial Highlights Q1-2017 Margin expansion on back of attractive scale effects + cost discipline Net Cold Rent (€m) Adj. Net Rental and Lease Income (€m) Adj. EBITDA (€m) 131.9 118.6 104.3 97.8 90.2 84.1 Q1-2016 Q1-2017 Q1-2016 Q1-2017 Q1-2016 Q1-2017 FFO I (€m) Capex-Adj. FFO I / AFFO (€m) Margi
Slide 12: Income Statement
Income Statement Q1-2017 € million Q1-2017 Q1-2016 Higher rental income (+€13.3m/+11.2%) Net rental and lease income 102.6 88.6 Rise in staff costs resulting from crafts business (+€3.0m YOY), offset by decrease in Net income from the disposal of investment property 0.1 -0.1 externally-procured
Slide 13: FFO Calculation
FFO Calculation Q1-2017 € million Q1-2017 Q1-2016 Net cold rent 131.9 118.6 +€13.3m (+11.2% YOY) Profit from operating expenses -1.1 -1.4 Disproportional growth in staff Maintenance (externally-procured services) -9.8 -12.9 costs mainly due to new Staff costs -13.4 -10.2 crafts business (offset
Slide 14: FFO Bridge
FFO Bridge Q1-2017 €m 0.7 0.3 75 12.7 -2.3 -0.6 -0.7 -0.3 2.8 50 75.2 62.6 25 0 Organic Net rental Higher FFO I Disposal Letting Other Higher net Minorities FFO I rental growth recurring Q1-2016 effect costs services cash interest Q1-2017 growth from acquis. admin costs €12.6m (+20.1%) 14 I May 2017
Slide 15: Cash Effective Interest Expense
Cash Effective Interest Expense Q1-2017 € million Q1-2017 Q1-2016 Reported interest expense 38.9 30.1 One-off refinancing effect of €4.9m in Q1-2017 from refinancing of subsidised Interest expense related to loan amortisation -9.9 -6.0 loans (loan amortisation) Prepayment penalties / breakage cost
Slide 16: EPRA-Net Asset Value
EPRA-Net Asset Value Q2 revaluation promises further NAV growth € million 31.03.2017 31.12.2016 Equity (excl. minority interests) 3,458.7 3,414.5 €32.8m net profit €9.9m other comprehensive Effect of exercising options, convertibles and other rights 451.8 435.6 income (derivatives) NAV 3,910.5 3
Slide 17: Portfolio
Portfolio Sound property fundamentals basis for value growth As of 31.03.2017 Multiples, GAV GAV % of Total Estimated Commercial/ Residential Residential Residential GAV/ In-Place Rental Values Other Market Units Assets (€ m) GAV sqm (€ ) Rent Multiple (31.12.2016) Assets (€ m) Total GAV High- Growt
Slide 18: Balance Sheet
Balance Sheet Strong balance sheet € million 31.03.2017 31.12.2016 Additions €29.2m Investment property 7,993.0 7,954.9 Capex €9.0m Prepayment for investment property - 27.3 Other non-current assets 180.5 182.3 Non-current assets 8,173.5 8,164.5 Cash flow from operating Receivables and other a
Slide 19: LTV
LTV Strong credit profile leaves headroom for growth investments € million 31.03.2017 31.12.2016 Financial liabilities 3,943.2 3,774.3 LTV slightly below the current target range of 45-50% Cash & cash equivalents 392.0 166.7 Low LTV leaves headroom for growth investments Net Debt 3,551.2 3,607.6
Slide 20: Financing Structure – 31 March 2017
Financing Structure – 31 March 2017 Post refinancing of subsidised loans and bond issue Weighted avg. interest (excl. subsidised loans), % as of 31.03.2017 1.6% €946m Variable interest 6.4% 2.2% 1.8% €578m 1.7% Swaps 2.2% €535m 1.9% 16.6% €441m €387m €408m 3.5% €365m Fixed 31.03.2017 interest 2.9% €
Slide 21: IV. Business Update and Outlook
IV. BUSINESS UPDATE AND OUTLOOK 21 I May 2017
Slide 22: Business Update
Business Update Extracting superior value from an attractive asset base Acquisitions: Attractive pipeline of midsized deals in core markets • Negotiations for several midsized deals (LEG gained exclusivity) • Financial metrics meet investment criteria: FFO per share accretive Revaluation gains in Q2
Slide 23: Acquisitions: Leading Management Skills Paying Off
Acquisitions: Leading Management Skills Paying Off Operational improvements reflect strong management track record Closing 31.03.2017 Change In-place rent In-place rent In-place rent Units Occupancy Occupancy Occupancy € / sqm € / sqm € / sqm Total Portfolio1) 39,789 4.90 94.6% 5.28 94.9% 0.38 (+7.7
Slide 24: Outlook for 2017 - 2018
Outlook for 2017 - 2018 2017 Guidance FFO I €288m -€ 293m /€ 4.56 -€ 4.64 per share EBITDA margin ~72% L-F-L rent growth 3.0 - 3.3% L-F-L vacancy -20 - -40 bps Investments € 24/sqm ~ Dividend 65% of FFO I 2018 FFO I €310m -€ 316m /€ 4.91 -€ 5.00 per share EBITDA margin ~73% L-F-L rent growth ~3.0% I
Slide 25: Steady Expansion of Leading Profitability
Steady Expansion of Leading Profitability FFO I per share (€) 4.91 – 4.56 – 5.00 4.26 4.64 3.53 2.67 3.04 2.58 2012 2013 2014 2015 2016 2017e 2018e *at mid point FFO I per share CAGR 2014-2018e*: +13.0% (excl. future acquisitions) EBITDA Margin ~ 72 % ~73 % 69.5% 67.3% 66.5 % 64.3 % 2013 2014 2015 2
Slide 26: V. Appendix
LEG genet J ut V. APPENDIX
Slide 27: Generating Appealing Shareholder Returns
Generating Appealing Shareholder Returns NAV per share (€), excl. goodwill Dividend per share (€) 2.76 67.15 58.92 2.26 1.96 52.69 49.39 1.73 2013 2014 2015 2016 2013 2014 2015 2016 27 I May 2017
Slide 28: Net Immigration Expected to Remain at a High Level
Net Immigration Expected to Remain at a High Level Stabilising net immigration with decreasing share of refugees Net Immigration to Germany Key Facts In 2016, net immigration to Germany amounted to about 2.5 m 2) 0.5 million 2) Deutsche Bundesbank forecasts 0.4 million additional immigrants (net
Slide 29: Acquisitions: Leading Management Skills Paying Off
Acquisitions: Leading Management Skills Paying Off Scalability of platform + cost discipline support value accretive growth Strong volume growth at decreasing overhead cost… Recurr. admin costs # of units 36.7 35.2 35.2 33.1 €35m 32.1 150,000 100,000 128,488 50,000 106,961 108,916 90,926 94,311 2012
Slide 30: EPRA Net Initial Yield Q1-2017
EPRA Net Initial Yield Q1-2017 € million 31.03.2017 31.12.2016 Investment properties 7,988.3 7,950.9 Assets held for sale 0.1 57.0 Market value of residential property portfolio (net) 7,988.4 8,007.9 Estimated incidental costs 787.3 789.2 Market value of residential property portfolio (gross) 8,775.
Slide 31: LEG – Adj. EBITDA Margin
LEG – Adj. EBITDA Margin Leading profitability despite short term distortion from restricted units Adj. EBITDA margin FY-2016 FY-2015 €m margin % €m margin % As reported 355.7 69.5 293.7 67.3 1) Gap restricted vs. unrestricted rents 26.3 71.0 22.5 68.9 1) €/sqm: €4.67 vs. €5.56 in 2016, €4.67 vs. €5
Slide 32: Capex Programme
Capex Programme Lifting internal growth potential €10/ €10/ Invest €/sqm sqm sqm 2017 €80m €80m 2018 2019 €5/ sqm €40m €8.3m €29/ €29/ €24/ sqm sqm sqm €5.0m 0.9% €1.9m 0.5% n/a Additional capex Total invest/sqm FFO contribution Additional l-f-l rent growth Additional upside for value enhancing cape
Slide 33: Rent revisionary potential
Rent revisionary potential Refinancing of subsidised loans lifting value Rent Potential Subsidised Units Number of Units Coming Off Restriction and Rent Upside # Units 26,344 2,673 In the following 10 years around 2,432* 1,856 11,000 units will come off rent 1,470 restriction 799 791 498 218 95 10
Slide 34: Mietspiegel Overview
Mietspiegel Overview Expected new Mietspiegel in 2017 Release date High-Growth Stable Higher-Yielding Total (expected) Markets Markets Markets Portfolio 3,902 units 15,148 units 5,876 units 2017 (Q1) 24,926 units (Cologne) (mainly Dortmund, Wuppertal) (Herne, Recklinghausen) 17,715 units2 8,661 unit
Slide 35: LEG Share Information
LEG Share Information Basic data Well-balanced shareholder structure • Prime Standard, Frankfurt Stock Exchange • Total no. of shares: 63,188,185 • Ticker symbol: LEG • ISIN: DE000LEG1110 • Indices: MDAX, FTSE EPRA/NAREIT, GPR 250, BlackRock MFS Stoxx Europe 600 11.5% 9.3% • Weighting (31.03.2017):
Slide 36: Capital Market Financing
Capital Market Financing Diversification of LEG’s funding sources Corporate Bond Convertible Bond Issue Size EUR 500m Issue Size EUR 300m Term / 7 years / Term / 7.2 years / Maturity Date 23 January 2024 Maturity Date 1 July 2021 Coupon 1.250 % p.a. Coupon 0.500 % p.a. Issue 99.409 % Initial Convers
Slide 37: Financial Calendar
Financial Calendar Date Report/Event 10.05.2017 Quarterly Statement Q1 as of 31 March 2017 11./12.05.2017 Roadshow London, Exane BNP Paribas 17.05.2017 Annual General Meeting, Düsseldorf 23.05.2017 Berenberg European Conference, New York 30.05.2017 Roadshow Copenhagen, Bankhaus Lampe 01.06.2017 Kepl
Slide 38: Contact
Contact Investor Relations Burkhard Sawazki Head of Investor Relations Tel: +49 (0) 211 4568-204 burkhard.sawazki@leg.ag Karin Widenmann Katharina Wicher Manager Investor Relations Investor Relations Tel: +49 (0) 211 4568-458 Tel: +49 (0) 211 4568-294 karin.widenmann@leg.ag katharina.wicher@leg.ag L
Slide 39: Thank you for your interest.
Thank you for your interest.