Deutsche Wohnen Se · XETR:DWNI
Deutsche Wohnen — 9M 2019 Earnings Presentation
35 slides from Deutsche Wohnen's earnings presentation, Nov 13, 2019
Slide 1: Deutsche Wohnen SE 9M 2019 results
Deutsche Wohnen SE 9M 2019 results Conference Call, 13 November 2019
Slide 2: Agenda
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Agenda 01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix deutsche-wohnen.com 2
Slide 3: Highlights 9M 2019
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Highlights 9M 2019 Berlin rental freeze ▪ Rent reductions and unrealized rental growth could lead to up to EUR ~330m cumulated cash flow risk (thereof EUR ~100m in 2024) ▪ High legal uncertainty on constitutionality and vali
Slide 4: Key points of “Berlin rent price cap” – draft bill
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Key points of “Berlin rent price cap” – draft bill General ▪ Applies to all residential apartments except for subsidized housing stock and new construction (age cluster after 2014) ▪ Rents are basically fixed to the rent lev
Slide 5: Deutsche Wohnen Berlin properties clustered by building age
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen Berlin properties clustered by building age Average net cold rent per month Age cluster DW proportion1) Rental ceiling (EUR/sqm/month) based on rental ceiling3) (EUR) < 1918 6% 6.45 387 1919-1949 32% 6.27 376
Slide 6: Impact of regulation on rental- and investment policy
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Impact of regulation on rental- and investment policy Deutsche Wohnen regards the proposed regulation as unconstitutional ▪ Possibility for fast legal clarification by highest court through abstract constitutional review ini
Slide 7: Stable like-for-like rental growth
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Stable like-for-like rental growth 1 1 Like-for-like Residential In-place rent In-place rent Change Vacancy Vacancy Change 30/09/2019 units 30/09/2019 30/09/2018 (y-o-y) 30/09/2019 30/09/2018 (y-o-y) (#) (EUR/sqm/month) (EUR
Slide 8: Focussed portfolio with strong fundamentals
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Focussed portfolio with strong fundamentals Strategic cluster Residential units % of total In-place rent1) Fair value Multiple Multiple Reversionary Vacancy 30/09/2019 (#) (measured by (EUR/sqm/month) (EUR/sqm) in-place rent
Slide 9: Strong letting business
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Strong letting business in EUR m 9M-2019 9M-2018 Maintenance & Refurbishment per sqm (annualized) Income from rents (rental income) 622.5 585.0 34.06 41.05 38.54 ~40 Income relating to utility/ ancillary costs 286.1 266.7 In
Slide 10: Attractive margins of disposal business despite revaluations
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Attractive margins of disposal business despite revaluations Disposals Privatization Institutional sales Total with closing in 9M-2019 9M-2018 9M-2019 9M-2018 9M-2019 9M-2018 No. of units 250 264 479 322 729 586 Proceeds (EU
Slide 11: Recent 6k disposals of Core locations at attractive gross margins
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Recent 6k disposals of Core locations at attractive gross margins Key facts Distribution of locations sold (# units) Units ~6,350 348 Average rent per sqm EUR 6.04 465 Vacancy rate 3.3% 584 Annualized in-place rent EUR 28m 5
Slide 12: Olav portfolio – value generation through selective disposals
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Olav portfolio – value generation through selective disposals Acquisition in Q4-2015 Disposals until 30-Sep-2019 After disposals Units ~13,600 Units ~6,600 Units ~7,000 Average rent per sqm EUR 5.97 Average rent per sqm EUR
Slide 13: Increasing FFO contribution from Nursing and Assisted Living
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Increasing FFO contribution from Nursing and Assisted Living Operations (in EUR m) 9M-2019 9M-2018 Total income 168.8 73.0 in EUR m 9M-2019 9M-2018 Total expenses (154.7) (67.4) Nursing & Assisted Living 155.2 63.4 EBITDA op
Slide 14: Stable adj. EBITDA margin despite higher corporate expenses
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Stable adj. EBITDA margin despite higher corporate expenses in EUR m 9M-2019 9M-2018 Development of cost ratio Earnings from Residential Property Management 549.6 500.2 11.5% 11.3% Earnings from Disposals 24.8 13.5 Earnings
Slide 15: FFO I per share growth of 12% yoy to EUR 1.16
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix FFO I per share growth of 12% yoy to EUR 1.16 in EUR m 9M-2019 9M-2018 FFO I margin development1) EBITDA (adjusted) 567.0 488.1 Earnings from Disposals (24.8) (13.5) 65.1% 65.9% 61.0% 61.5% Corporate expenses for Disposals 2
Slide 16: EPRA NAV per share +3% versus year end 2018
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix EPRA NAV per share +3% versus year end 2018 in EUR m 30/09/2019 31/12/2018 EPRA NAV per share (undiluted) in EUR Equity (before non-controlling interests) 11,881.0 11,559.1 +6% +12% +3% Fair values of derivative financial in
Slide 17: Conservative long-term capital structure
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Conservative long-term capital structure A- (stable outlook) / Rating A3 (negative outlook) Ø maturity ~ 7.6 years ▪ Within the first 9 months EUR 1.6bn have been refinanced long-term for an average interest rate of 1.3% and
Slide 18: Guidance 2019 unchanged
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Guidance 2019 unchanged FY-2018 FY-2019 Main drivers comments Reported Guidance FFO I ▪ Approximately EUR 535m (+12% yoy) 479.4 535 (EUR m) ▪ Unchanged dividend payout ratio of 65% of FFO I 2018 2019 guidance 0.97 Dividend p
Slide 19: Appendix
Appendix
Slide 20: Like-for-like development as of 30 September 2019
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Like-for-like development as of 30 September 2019 2) 2) Like-for-like Residential In-place rent In-place rent Change Vacancy Vacancy Change 30/09/2019 units 30/09/2019 30/09/2018 (y-o-y) 30/09/2019 30/09/2018 (y-o-y) (#) (EU
Slide 21: Portfolio valuation by regions
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Portfolio valuation by regions Regions Residential units FV FV Multiple Multiple Multiple Fair Value (#) 30/09/2019 30/09/2019 in-place rent re-letting rent in-place rent 31/12/2018 (EUR m) (EUR/sqm) 30/09/2019 30/09/2019 31
Slide 22: Dynamic transaction market
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Dynamic transaction market Transaction volume in German Residential (EUR bn) Development of rents in Berlin (EUR/sqm/month) Volume in bn Units sold +5% +1% +9% 25 400,000 10.49 10.34 23 9.83 20 338,000 9.00 300,000 17 2016 2
Slide 23: Current level of rents and prices
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Current level of rents and prices Asking prices multifamily housing (in EUR/sqm)1) Asking rents in German top cities (in EUR/sqm)2) DW Berlin DW Berlin (book value) (re-letting rent) 9.18 2,462 +17% Cologne +21% Dusseldorf 3
Slide 24: Acquisition track record since 2013
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Acquisition track record since 2013 Main acquisitions Fair Value In-place rent (>1,000 units deal size) in EUR/sqm in EUR/sqm Year Residential units Deal Location At Acquisition 30/09/2018 ∆ At Acquisition 30/09/2018 ∆ # Cen
Slide 25: Investments into the portfolio to remain high in Q4 2019
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Investments into the portfolio to remain high in Q4 2019 9M-2019 9M-2018 Maintenance & Refurbishment per sqm (annualized) EUR/ EUR/ 34.06 41.05 38.54 ~40 EUR m EUR m sqm1) sqm1) Maintenance (expensed 69.0 8.86 67.0 8.85 30.9
Slide 26: Portfolio structure – characteristics meeting strong demand
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Portfolio structure – characteristics meeting strong demand Apartment size (Ø 60 sqm) Year of construction Rental restrictions In-place rent (expiring over time) (Ø EUR 6.82/sqm/month) 30.0% 29.6% 28.6% 11% ~8% 26.7% 18% 18.
Slide 27: The Berlin portfolio at a glance
01 Highlights 02 Market and Portfolio 03 Financials 04 Appendix The Berlin portfolio at a glance Pankow Reinickendorf # 9,957 | 2.8% # 9,739 | 0.7% EUR 7.49 | EUR 3,144 EUR 6.83 | EUR 2,368 Lichtenberg Mitte # 8,803 | 1.2% # 4,592 | 1.6% EUR 6.76 | EUR 2,531 EUR 7.27 | EUR 2,827 Friedrichshain- Kreu
Slide 28: Deutsche Wohnen's residential portfolio is best-in-class
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Deutsche Wohnen's residential portfolio is best-in-class Siemensstadt, Berlin Hellersdorf, Berlin Carl-Legien-Siedlung, Berlin Südwestkorso, Berlin Oranienkiez, Berlin Hufeisensiedlung, Berlin Dresden Otto-Suhr-Siedlung, Ber
Slide 29: Bridge from adjusted EBITDA to profit
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Bridge from adjusted EBITDA to profit in EUR m 9M-2019 9M-2018 EBITDA (adjusted) 567.0 488.1 in EUR m 9M-2019 9M-2018 Depreciation (29.9) (6.0) Interest expenses (96.7) (74.8) At equity valuation 1.7 1.2 In % of gross rents
Slide 30: Summary balance sheet
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Summary balance sheet Assets Equity and Liabilities in EUR m 30/09/2019 31/12/2018 in EUR m 30/09/2019 31/12/2018 Investment properties 24,688.3 23,781.7 Total equity 12,241.8 11,908.1 Other non-current assets 441.5 291.2 Fi
Slide 31: Strong generation of total shareholder return
01 Highlights 02 Market and Portfolio 03 Financials 04 Appendix Strong generation of total shareholder return Development of dividend in EUR per share Development of EPRA NAV (undiluted) in EUR per share CAGR 2014-2018: +18% CAGR 2014-2018: +24% +18% +9% +8% +20% +37% 42.26 0.87 0.80 +29% 35.74 +23%
Slide 32: Executive Board compensation system – as of 1 January 2018
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Executive Board compensation system – as of 1 January 2018 1 Introduction of Share Ownership Guidelines (SOGs) 2 Conversion of the Stock Option Plan into a Performance Cash Plan Reduction of the plan’s complexity and meeting
Slide 33: Management board and areas of responsibilities
01 Highlights 02 Market and Portfolio 03 Financials and Outlook 04 Appendix Management board and areas of responsibilities Michael Zahn Philip Grosse Henrik Thomsen Lars Urbansky Chief Executive Officer Chief Financial Officer Chief Development Officer Chief Operating Officer (Appointed until 31/12/
Slide 34: 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 p
Slide 35: Deutsche Wohnen SE
Deutsche Wohnen SE Mecklenburgische Straße 57 14197 Berlin Phone +49 30 89786-5413 Fax +49 30 89786-5419 © 2019 Deutsche Wohnen Gruppe