Nsi Nv · EURONEXT:NSI
Nsi Nv — FY2021 Earnings Presentation
57 slides from Nsi Nv's earnings presentation, Jan 25, 2022
Slide 1: Preliminary Results 2021
PRELIMINAR Y PRELIMINARY RESULTS RESULTS 25 JANUARY 2022 25 JANUARY NSI Preliminary Results 2021 1
Slide 2: Disclaimer
Disclaimer This presentation is made for the sole benefit of financial analysts and qualified institutional investors and is not to be considered as an incentive to invest or as an offer to acquire NSI shares. The information provided herein is extracted from NSI financial reports and press releases
Slide 3: Company mission statement
“We enable our customers to achieve maximum productivity and growth, providing best-in-class flexible space solutions and services in modern, healthy, sustainable buildings in prime locations.”
Slide 4: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. ESG 4. Developments 5. Financials 6. Final remarks Annex NSI Preliminary Results 2021 4
Slide 5: Key highlights 2021
Introduction Key highlights 2021 • EPRA Vacancy – Decrease of 1.1pp to 5.9% Operational • Rental growth – Increase in like-for-like net rents 3.0% performance • Rent collection – 98.6%1 → 99.6% for Offices/HNK • Operating Margin – up by 2.9 pp to 81.6% • EPRA EPS – € 2.38 (1.3% higher than same peri
Slide 6: Strong operational performance and sound balance sheet
Introduction Strong operational performance and sound balance sheet Key metrics Change in net rents Net rents like-for-like (%) Revenue and earnings 2021 2020 Change % 5.2% Operating margin 81.6% 78.7% 2.9pp 3.0% 3.0% Net rents like-for-like 3.0% 0.8% 2.2pp 1.9% 0.8% EPRA Earnings per share (€) 2.38
Slide 7: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. ESG 4. Developments 5. Financials 6. Final remarks Annex NSI Preliminary Results 2021 7
Slide 8: Disposal of twelve assets in 2021
Portfolio & market Disposal of twelve assets in 2021 Final leg of non-core asset rotation H1 Vareseweg Kruisweg 661-665 Neuhuyskade HNK Dordrecht Delf-Techpark Hoofdweg City: Rotterdam City: Hoofddorp City: Den Haag City: Dordrecht City: Delft City: Rotterdam m2: 6,432 m2: 1,057 m2: 2,688 m2: 5,766
Slide 9: Acquisition of four assets in 2021
Portfolio & market Acquisition of four assets in 2021 In 2021 NSI acquired four assets for a combined price of € 100.8m (excluding acquisition costs). The four properties are located in the city centre of Amsterdam, Amsterdam Zuidoost, in the city centre of Rotterdam and in the Bio Science Park in L
Slide 10: Exposure to Leiden Bio Science Park
Portfolio & market Exposure to Leiden Bio Science Park A growth market with opportunities Bio Science Park Assets 1. Newtonweg 1 2. Archimedesweg 17 4 3 3. Archimedesweg 6 2 4. Archimedesweg 30 1 5. Mendelweg 30 11 5 ▪ Assets NSI NSI Preliminary Results 2021 10
Slide 11: Over the past five years NSI has generated a 10.5% unlevered IRR
Portfolio & market Over the past five years NSI has… parted ways with 61 Dutch and one Belgian cities reduced the total travel distance to its assets from 9.800km1 to 1.500km acquired one asset for every eight assets it sold sold assets at a rate of one every two weeks generated a 10.5% unlevered IR
Slide 12: Moved to a more concentrated, efficient portfolio
Portfolio & market …moved to a more concentrated, efficient portfolio… Number of assets Average asset value (€m) 350 30 26.0 300 25 250 -84% +465% 20 200 323 15 150 10 100 165 52 50 5 4.6 7.0 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Disp
Slide 13: With an emphasis on growth locations
Portfolio & market …with an emphasis on growth locations Weight of portfolio (based on market value) €1.2b €1.1b €1.2b €1.3b €1.3b €1.4b 7% 5% 9% 15% 3% 3% 3% 7% 28% 5% 4% 4% 8% 7% Other Netherlands 44% 4% 7% 6% 9% 3% 13% 14% 4% 16% 10% 6% 11% Eindhoven 2% 10% Leiden 3% 6% 16% 10% Den Haag 5% Rotter
Slide 14: Asset rotation track record in detail
Portfolio & market Asset rotation track record in detail Disposals Book value Capex since Adjusted Adjusted Assets Sales Price (€m) Gain/Loss (%) 12/16A (€m) 2016 (€m) Gain/Loss (€m) Gain/Loss (%) Office 86 262 264 1% 6 -4 -2% Retail1 44 399 376 -6% 13 -36 -9% Total 130 661 640 -3% 19 -40 -6% Acquis
Slide 15: Asset rotation driving attractive unlevered IRR
Portfolio & market Asset rotation driving attractive unlevered IRR in €m 1,346 1,160 273 99 661 474 Portfolio in 2016 Disposals1 Acquisitions Revaluation of Revaluation of Current portfolio2 acquisitions standing assets Total Return Historical IRR (%)3 10.5% 1) Based on the book values as of Decembe
Slide 16: A concentrated Netherlands investment portfolio
Portfolio & market A concentrated Netherlands investment portfolio Exposure to Amsterdam expected to increase Total portfolio Amsterdam 18.4% split Developments € 1.4bn Of portfolio in (€) 1 Vitrum 79.5% 58% 2 Vivaldi III 18 offices 3 HNK 3 Laanderpoort 2 other NSI Preliminary Results 2021 16
Slide 17: Strong leasing result despite covid challenges
Portfolio & market Strong leasing result despite covid challenges Vacancy rate well below market average of 9.0% EPRA vacancy rate EPRA vacancy rate HNK 22% 21.4% 37.1% 20% 18.4% 18% 29.8% 16% 13.8% 14% 23.1% 23.2% 12% 10% 14.5% 14.9% 15.3% 13.6% 8% 7.1% 7.0% 0.5% 11.6% 11.2% 5.9% 10.4% 6% 9.1% 0.6%
Slide 18: Remaining portfolio vacancy is highly concentrated
Portfolio & market Remaining portfolio vacancy is highly concentrated Strong focus to lease up these assets in 2022 EPRA vacancy 22.0% Offices HNK Other 15.5%1 11.2% 11.4% 9.1% Total vacancy: 5.9% 3.9% 4.3% 3.4% 0.4% Total Amsterdam Other Netherlands Top 5 assets with vacancy City Contribution to to
Slide 19: Positive asset revaluations over 2021
Portfolio & market Positive asset revaluations over 2021 Lower net initial yield due to revaluations and better portfolio Total portfolio (€m) EPRA Net initial yield (%) 85 Positive revaluation EPRA NIY 80 75 Negative revaluation 70 65 60 6.0% 55 5.5% 5.2% 50 45 4.6% 4.5% 40 81 4.1% 35 71 30 25 20 1
Slide 20: Dutch office market 2021
Portfolio & market Dutch office market 2021 Investment volumes Offices Netherlands (€ bn) Prime Yields (%) 8 8,0% 6.7 6.8 6.3 5.9 6 5.1 6,0% 4.3 4 3.8 3.3 2.3 4,0% 1.9 2 1.4 1.1 0 2,0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Slide 21: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. ESG 4. Developments 5. Financials 6. Final remarks Annex NSI Preliminary Results 2021 21
Slide 22: ESG is integral to the NSI strategy
ESG ESG is integral to the NSI strategy Clear path to improve sustainability Sustainability Actions in 2021 EPC score (by value) 2% 2% 12% 11% F&G 7% 12% • Further improvements to EPC ratings: 81% now label A (vs 74% in 2020) E D C • Feasibility study and estimated costs for improving BREEAM ratings
Slide 23: Sustainability: reducing energy- and carbon intensity
ESG Sustainability: reducing energy- and carbon intensity Working towards a Paris-proof asset portfolio Energy Intensity (KWh/m2) in 2020 Carbon Intensity (kgCO2/m2) in 2020 166 25 21 109 <50 0 Peer Benchmark1 NSI Paris Proof Peer Benchmark1 NSI Paris Proof Energy Intensity (KWh/m2) Carbon Intensity
Slide 24: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. ESG 4. Developments 5. Financials 6. Final remarks Annex NSI Preliminary Results 2021 24
Slide 25: Current development pipeline overview
Developments Current development pipeline overview Three projects in Amsterdam Vitrum Size (current sqm) 11,600 Size (completion) 13,400 Est. total cost (€) 100–110m Laanderpoort Size (current sqm) 13,000 Size (completion) 39,000 Est. total cost (€) 180–200m Estimated Vivaldi III yield on cost: Size
Slide 26: Vitrum
Developments Vitrum Q2 Q4 Q2 Q4 Q4 H2 2019 2020 2020 2021 2021 2022 2024 Start project Completion of Start Completion of Expected start Expected Sketch Design negotiations Preliminary Design construction completion with (VO) Municipality Source: Cepezed NSI Preliminary Results 2021 26
Slide 27: Laanderpoort
Developments Laanderpoort Q4 Q4 Q2 Q1 Further Design process, Q1 H2 2018 2019 2020 2021 2022 Tender and Permits 2023 2025 Start Signed co- Signed Letter of Sketch Design Preliminary Design Expected start Expected discussions with operation Intent (LOI) with (SO) agreed by (VO) approved by constructi
Slide 28: Vivaldi III
Developments Vivaldi III Q3 Q4 Q2 Q4 Q3 H2 2019 2020 2020 2021 2021 2022 2025 Start project Agreement Letter Approval preliminary Final design (DO) approved Expected start Expected with Municipality design (VO) by by the Municipality and construction completion (Afsprakenbrief) Municipality zoning p
Slide 29: Amsterdam office market: expected development completions 2022-2025
Developments Amsterdam office market Expected development completions 2022 - 2025 Total expected sqm’s delivered, consisting of new office developments and refurbishments 981 of existing assets in 2022-2025 (in ‘000 sqm) 363 Other Amsterdam 116 City Centre 350 248 Zuid-Oost 283 Speculative1,2 196 In
Slide 30: Example of future potential beyond 2025 Amsterdam South-East
Developments Example of future potential beyond 2025 Amsterdam South-East Current situation Current plans 6 5 2 4 1 3 Estimated Asset (owned by NSI) Size (LFA) Market projects1 Size (GFA Office + residential) completion 1. Hogehilweg 6 3,097 sqm Brisk 4,000 sqm + 270 apartments Q4 2021 2. Hogehilweg
Slide 31: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. ESG 4. Developments 5. Financials 6. Final remarks Annex NSI Preliminary Results 2021 31
Slide 32: Rent Collection 2021
Financials Rent Collection 2021 Over 98% rent collection in 2021 Deferred 1% 39% Collectable Overdue 1.4% 99% Collected 98.6% Waived 1% 61% Uncollectable Restructured Rent collection bridge 2021 101.9 100.5 -0.8 0.0 0.0 0.0 -0.5 13,4 12,6 75.9 Rent invoiced Service charge VAT Invoiced total Waived1
Slide 33: EPRA Earnings
Financials EPRA Earnings 2021 2020 Change % Gross rental income 77.5 76.9 0.8% Service costs not recharged -1.9 -1.8 5.4% Operating costs -12.4 -14.6 -15.4% Net rental income 63.3 60.5 4.6% Administrative costs -7.6 -7.1 7.3% Net financing result -9.3 -8.4 10% Direct investment result before tax 46.
Slide 34: EPRA Earnings (€ per share)
Financials EPRA Earnings (€ per share) 2.44 2.43 -0.02 2.42 2.41 2.40 -0.04 2.39 2.38 0.00 0.13 2.37 2.36 2.35 2.34 -0.04 2.33 2.32 2.31 0.00 2.30 2.38 2.29 2.35 2.28 0.03 0.02 0.01 0.00 EPRA EPS 2020 GRI Service costs Operating costs Administrative costs Net financing result Other EPRA EPS 2021 not
Slide 35: EPRA NTA
Financials EPRA NTA (€ per share) 49 0.00 48 0.52 47 46 3.24 -2.16 2.38 48.23 45 -0.19 44 44.44 0 EPRA NTA EPRA Dividend Effect of Revaluation Result Other EPRA NTA 31 Dec. 2020 Earnings stock on 31 Dec. 2021 dividend sales NSI Preliminary Results 2021 35
Slide 36: Main balance sheet KPIs
Financials Main balance sheet KPIs Metrics consistently favourable Cost of debt Loan to value 2.3% 2.2% 60% 2.1% 2.1% 2.0% 36.9% 36.9% 40% 35% 27.4% 29.2% 28.2% 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Covenant Target range LTV Interest coverage ratio Average maturity (years) 7.2x 5.4 6.8x
Slide 37: Extending debt maturity profile
Financials Extending debt maturity profile Aiming for long term stability Loans maturity profile December 2021 (€m)¹ Achievements and strategy Achievements in 2021 • Amended and Extended € 300m Green RCF ‒ Maturity from April 2024 to December 2026 Term loan ‒ Included sustainability-linked margin ad
Slide 38: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. ESG 4. Developments 5. Financials 6. Final remarks Annex NSI Preliminary Results 2021 38
Slide 39: High Dutch CPI will drive lease indexation in 2022
Final remarks High Dutch CPI will drive lease indexation in 2022 Inflation: 2.7% in 2021; probably higher in 2022 Contractual indexation Fixed 4% Fixed at 2% Not indexed 0.1% 99.9% Indexed CPI 75% 25% CPI with cap* Variable 96% Indexation capture potential Contractual CPI indexation (%) 10.0% 10% Ma
Slide 40: Next steps to further strengthen the long term position of NSI
Final remarks Next steps to further strengthen the long term position of NSI Fully in line with our purpose Real estate portfolio • Further expand in focus markets; strengthen existing clusters • Explore value add potential and possible new growth segments • Continued capital recycling Development p
Slide 41: Action plan 2022
Final remarks Action plan 2022 Real estate portfolio • Manage and extend 2022 lease expiries • Lower vacancy rate to below 5% • Opening of HNK Amsterdam Sloterdijk and HNK Rotterdam Alexander Progress in development projects • Take final decision to start construction Vivaldi III in Q3 2022 • Select
Slide 42: Intention to maintain dividend at €2.16 per share
Final remarks Developments will drive EPS growth after 2025 Intention to maintain dividend at €2.16 per share EPRA EPS EPRA EPS Pro forma1 €2.70 – 2.80 €2.40 – 2.50 €2.40 – 2.50 €2.20 – 2.30 Maintaining dividend €2.05 – 2.10 (€2.16/share) 2022 2023 2024 2025 > 2025 1. Pro forma EPRA EPS reflects ‘ce
Slide 43: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. ESG 4. Developments 5. Financials 6. Final remarks Annex NSI Preliminary Results 2021 43
Slide 44: A disciplined journey towards a more focussed portfolio
Annex A disciplined journey towards a more focussed portfolio Total portfolio end 20211 Disposals 2016-2021 58.5% * 1. Based on book values as of 31-12-2021 NSI Preliminary Results 2021 44
Slide 45: Segment information: Key portfolio metrics
Annex Segment information Key portfolio metrics 31 December 2021 Dec. 2020 Change Offices HNK Other TOTAL Number of properties 38 11 3 52 60 -13.3% Market value (€)1 1,078 249 28 1,355 1,253 8.1 % Annual contracted rent2 55 18 3 76 84 -10.0 % Market rent 63 21 3 87 93 -6.7 % Lettable area (sqm k) 27
Slide 46: Segment information: Offices split
Annex Segment information Offices split 31 December 2021 Dec. 2020 Change Amsterdam Other Netherlands TOTAL Number of properties 18 20 38 43 -11.6% Market value (€)1 681 397 1,078 931 15.8% 2 Annual contracted rent 30 24 55 58 -5.5% Market rent 37 26 63 63 -0.4 % Lettable area (sqm k) 141 133 274 29
Slide 47: Segment information: Yields
Annex Segment information Yields EPRA net initial yield Gross initial yield Reversionary yield Dec. 2021 Dec. 2020 Dec. 2021 Dec. 2020 Dec. 2021 Dec. 2020 Offices 4.0% 4.4% 5.4% 6.2% 6.2% 6.8% HNK 4.6% 4.3% 7.4% 7.8% 8.4% 9.2% Other 4.4% 6.1% 9.6% 9.6% 11.4% 9.6% TOTAL 4.1% 4.5% 5.9% 6.7% 6.7% 7.5%
Slide 48: Segment information: Expiries and reversion
Annex Segment information Expiries and reversion Total portfolio1 (€m) Offices portfolio (€m) 100 0 0 0 90 0 0 0 80 0 0 0 70 0 0 2022 2023 2024 2025 2026 >2026 TOTAL 60 Contract rent 9,5 3,2 8,6 7,5 8,5 17,3 54,7 ERV 12,6 3,5 9,1 7,9 8,6 18,9 60,5 # Contracts 43 22 35 27 22 41 190 50 Reversionary po
Slide 49: Consolidated financial statements: Income statement
Annex Consolidated financial statements Income statement Offices HNK Other Other Other Corporate¹ TOTAL (€ m) Amsterdam Amsterdam Netherlands Netherlands Gross rental income 30.4 23.2 4.5 12.9 6.6 77.5 Service costs not recharged -0.2 -0.4 -0.2 -0.8 -0.3 -1.9 Operating costs -3.0 -4.3 -0.8 -2.7 -1.6
Slide 50: Consolidated financial statements: Balance sheet
Annex Consolidated financial statements Balance sheet (€ m) 31 December 2021 31 December 2020 Real estate investments 1,338 1,240 Assets classified as held for sale 0 0 Other assets 22 18 Cash and cash equivalents 8 0 Total assets 1,368 1,258 Shareholders' equity 948 854 Interest bearing loans 389 3
Slide 51: Consolidated financial statements: EPRA NAV / NTA
Annex Consolidated financial statements EPRA NAV / NTA 31 December 2021 31 December 2020 (€ m) EPRA NTA per share EPRA NTA per share IFRS Equity attributable to shareholders 948 48.15 854 44.29 Diluted NAV 948 48.15 854 44.29 Diluted NAV at fair value 948 48.15 854 44.29 Fair value of financial inst
Slide 52: Property market data: Amsterdam
Annex Property market data Amsterdam Stock (m sqm) Prime yields 6.3 7.0% 6.2 6,3% 6.2 6,0%6,0% 6.0% 5,8% 6.1 6.1 6.1 5,5% 6.1 6.1 6.1 6.0 6.0 6.0 5,0% 6.0 5.0% 5.9 5.9 5.9 4.0% 4.0% 3,7% 5.8 3,4% 5.8 3,3% 3,2% 3,3% 3.0% 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2010 2011 2012 2
Slide 53: Property market data: Utrecht
Annex Property market data Utrecht Stock (m sqm) Prime yields 2.9 7.0% 6,7% 6,8% 6,8% 6,6%6,6% 6,3% 2.8 6.0% 5,8% 5,8% 2.8 2.8 5.2% 5,2% 5,0% 5,0% 2.7 2.7 2.7 5.0% 2.7 2.7 2.7 2.7 2.7 2.7 2.6 2.6 4.0% 2.6 3.0% 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2010 2011 2012 2013 2014 2
Slide 54: Property market data: Rotterdam
Annex Property market data Rotterdam Stock (m sqm) Prime yields 3.6 7.0% 6,4%6,4% 6,5% 3.5 6,3% 6,3% 3.5 3.5 3.5 6.0% 5,8% 3.5 5,5% 3.4 5,2% 3.4 3.4 5.0% 4,8% 4,8% 4,8% 4,8% 3.4 3.3 3.3 4.0% 3.3 3.3 3.3 3.3 3.0% 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2010 2011 2012 2013 2014
Slide 55: Property market data: The Hague
Annex Property market data The Hague Stock (m sqm) Prime yields 4.2 4.1 4.1 7.0% 4.1 6,4% 6,5% 4.1 4.1 6,3% 6,3% 4.1 4.1 6,1%6,2% 6,0% 6,0% 4.0 6.0% 4.0 5,5% 5,2% 5,0% 5,0% 3.9 3.9 5.0% 3.8 3.8 3.7 4.0% 3.7 3.6 3.7 3.6 3.0% 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2010 2011 20
Slide 56: Property market data: Eindhoven
Annex Property market data Eindhoven Stock (m sqm) Prime yields 1.8 8.0% 7,6% 7,6% 7,1%7,2% 7,0% 7,0% 1.7 6,8% 6,8% 7.0% 6,3% 6,0% 6,0% 6,0% 1.6 1.6 6.0% 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 5.0% 1.4 1.4 1.4 4.0% 3.0% 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2010 2011 2012
Slide 57: NSI Preliminary Results 2021
NSI Preliminary Results 2021 57