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Instone Real Estate Group AG
Investor Presentation • Aug 8, 2024
226_ip_2024-08-08_60e80b67-b5b4-45d2-8b6c-e5f75949135f.pdf
Investor Presentation
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Results Presentation
Q2 2024
Instone
Essen, 8 August 2024
Q2 2024 Highlights
Q2 Highlights \& Outlook
Moderate demand recovery continues; slight growth acceleration in H2 expected
Operational Highlights
- Sales: Retail Demand above previous year's level; institutional investors remain reluctant but expect to close at least one deal in H2
- Construction costs: largely stable
- Acquisitions: first two bargain deals signed in attractive A-cities; focus reshifting to future growth
- Financing: Smoothing of the maturity profile through partial extension of the promissory loan ( $€ 100 \mathrm{~m}$ ) previously due in 2025
H1 results: very solid profitability maintained in tough environment
- Revenues: €255.4m (-8.6\% yoy)
- Gross profit margin: $25.7 \%$ (H1-2023: $25.8 \%$ )
- EAT: $€ 20.5 \mathrm{~m}(-14.2 \%$ yoy $)$
- Sales: $€ 121.9 \mathrm{~m}(+71.4 \%$ yoy $)$
Outlook for 2024 reiterated
- Revenues: €500-600m
- Gross profit margin: $-22 \%$
- EAT: $€ 30-40 \mathrm{~m}$
- Sales: $>\epsilon 300 \mathrm{~m}$
Sales ratio: year on year recovery continues
New builds prices have bottomed out; CPI growth receding
House price inflation ${ }^{1}$
In $\%$
Construction price inflation ${ }^{2}$
In $\%$
1 Bulwiengesa data; for house price index, quarterly data condo prices in top 7 cities (new build)
© Instone Group
2 Statistisches Bundesamt
Price development: yield expansion partly offset by continued dynamic rent growth
Price discovery - yields approaching mean levels ${ }^{1}$
New-build rent development - Strong momentum persists ${ }^{2}$
- The impact of yield expansion due to higher rates is mitigated by accelerating rent growth ${ }^{1}$
- Historically stable yields for good quality residential assets
- Beginning of price stabilisation implies that yields may rise somewhat further, driven by rental growth, towards the long-term mean of $4 \%$
- Subsidy schemes for affordable housing support stabilisation at comparatively low yields
66
New-build rents rise faster than existing rents...In a year-on-year comparison, average asking rents in the metropolitan areas increased by 10.6 per cent
[^0]
[^0]: 1 Historical periods based on sellers' price indications (Bulwiengesa); forward 2023-2024 gross rental income yield based on market data (CBRE, avg. top 7 German cities) 2 Bulwiengesa: newly built apartments, top-7 cities average
Under construction projects de-risked as nearly 90\% sold
Project portfolio as of 30/06/2024 by development (GDV)
- Projects with GDV of c. $€ 2.9$ bn are "under construction" of which $90 \%$ already sold
- Of the c. $€ 2.8$ bn sold volume as of the reporting date c. $€ 2.25$ bn has been recognised in revenues
- Some $€ 1.5$ bn of land bank with zoning rights obtained (GDV)
- Land value c. $€ 450 \mathrm{~m}+$ outstanding land payment c. $€ 150 \mathrm{~m}$ (c.15\% of pre-sales GDV)
Q2 2024 Financial Performance \& Outlook
Adjusted Results of Operations: Solid profitability maintained
| Km | Q2 2024 | Q2 2023 | Change | HI-2024 | HI-2023 | Change |
|---|---|---|---|---|---|---|
| Revenues | 135.9 | 156.0 | (12.9\%) | 1) 255.4 | 279.5 | (8.6\%) |
| Project cost | (103.0) | (117.6) | (12.5\%) | (189.8) | (207.3) | (8.4\%) |
| Gross profit | 32.9 | 38.4 | (14.3\%) | 65.6 | 72.2 | (9.1\%) |
| Gross Margin | $24.2 \%$ | $24.6 \%$ | (25.7\%) | $25.8 \%$ | ||
| Platform cost | (19.2) | (13.7) | $40.1 \%$ | (36.9) | (33.0) | $11.8 \%$ |
| Share of results of JVs | 3.8 | 2.8 | 4.7 | 4.1 | ||
| EBIT | 17.6 | 27.5 | (36.0\%) | 33.4 | 43.3 | (22.9\%) |
| EBIT Margin | $13.0 \%$ | $17.6 \%$ | $13.1 \%$ | $15.5 \%$ | ||
| Financial \& other results | (2.5) | (6.6) | (5.7) | (10.0) | ||
| EBT | 15.2 | 20.9 | (27.3\%) | 27.8 | 33.3 | (14.2\%) |
| EBT Margin | $11.2 \%$ | $13.4 \%$ | $10.9 \%$ | $11.9 \%$ | ||
| Taxes | (4.2) | (5.5) | (7.3) | (9.4) | ||
| Tax rate | $27.6 \%$ | $26.3 \%$ | $26.3 \%$ | $28.3 \%$ | ||
| EAT | 10.9 | 15.4 | (29.2\%) | 20.5 | 23.9 | (15.6\%) |
| EAT Margin | $8.0 \%$ | $9.9 \%$ | $8.0 \%$ | $8.6 \%$ | ||
| EAT post minorities | 11.0 | 15.4 | (28.7\%) | 20.4 | 24.2 | (15.5\%) |
| EPS ${ }^{1}$ | 0.25 | 0.36 | (30.1\%) | 0.47 | 0.56 | (16.1\%) |
1) Lower construction output, in line with expectations - bulk of revenues is based on pre-sold units
2) High gross margin reflects quality of projects and cost control with inhouse construction management; expected lower gross margin for FY-2024e based on project mix
3) Platform costs are largely in line with annualised target of around $€ 70 \mathrm{~m}$ (some higher costs for one-time LTIP provisions due to higher share price)
4) JV result reflects positive contribution of Berlin JV
5) Improved financial result mainly due to lower net debt
6 Lower tax rate of c. $24 \%$ in FY-2024 expected mainly due to higher expected share of earnings from JV leading to stable EAT margins of $8 \%$, in line with expectations
Strong balance sheet
| $\mathcal{C} m$ | 30/06/2024 | 31/12/2023 |
|---|---|---|
| Corporate debt | 181.1 | |
| Project debt ${ }^{1}$ | 277.8 | |
| Financial debt ${ }^{1}$ | 458.8 | 454.5 |
| Cash and cash equivalents and term deposits ${ }^{1}$ | (254.6) | |
| Net financial debt ${ }^{1}$ | 204.2 | 186.8 |
| Inventories and contract asset / liabilities | 1,295.4 | |
| $\mathrm{LTC}^{1,2}$ | ( $15.8 \%$ | $15.1 \%$ |
| Adjusted EBIT (LTM) ${ }^{3}$ | 76.2 | |
| Adjusted EBITDA (LTM) ${ }^{3}$ | 81.4 | |
| Net financial debt ${ }^{1} /$ adjusted EBITDA | $2.5 x$ | 2.1x |
- Maintaining very moderate LTC of $15.8 \%$
- ... and also very solid net debt/adjusted EBITDA of $2.5 x$ at trough of earnings cycle
- Balance sheet offers ample headroom for growth
Financially strong position
| Cash Flow ( $€ \mathrm{~m}$ ) | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 |
|---|---|---|---|---|
| EBITDA adj. | 19.0 | 28.8 | 36.1 | 45.8 |
| Other non-cash items | 2.2 | (5.5) | (3.7) | (6.8) |
| Taxes paid | (4.3) | (2.0) | (7.7) | (3.3) |
| Change in working capital | 30.1 | 13.0 | (5.4) | (76.1) |
| Operating cash flow | 47.0 | 34.3 | 19.3 | (40.4) |
| Land plot acquisition payments (incl. RETT) ${ }^{1}$ | 1.1 | 4.1 | 1.8 | 9.7 |
| Operating cash flow excl. investments | 48.1 | 38.4 | 21.1 | (30.7) |
- Sound cash generation from high share of pre-sold projects; significant positive operating cash flow expected also for FY-2024 (prior to land plot acquisitions)
- EUR 1.8m new land payments relating to prior year commitments
- Only limited impact of recent acquisitions on short term liquidity (total purchase price c. $€ 30 \mathrm{~m}$ ); new land plots expected to be partially financed with debt (c.50\%)
| Liquidity ( $€ \mathrm{~m}$ ) | Total | t/o drawn |
t/o available |
| Corporate debt | |||
| Promissory notes | 175.0 | 175.0 | - |
| Revolving Credit Facilities | 151.6 | - | 151.6 |
| Cash and cash equivalents and term deposits ${ }^{2}$ | 254.6 | ||
| Total corporate funds available | 406.2 | ||
| Project debt $^{2}$ | |||
| Project finance $^{2,3}$ | 464.7 | 271.7 | 193.0 |
- Net cash position on corporate level
- Clear intention to seize growth opportunities in the land market from a position of strength
Financing: Successful smoothing of maturity profile
Maturity profile (corporate debt) as of 30/06/2024
Weighted average corporate debt maturity
2.0 years
Weighted average corporate interest costs
$4.4 \%$
Share of corporate debt with floating interest
$0 \%$
Secured/unsecured as of 30/06/2024
Project debt, secured
Corporate debt
- Successful smoothing of maturity profile through partial extension of the $€ 100 \mathrm{~m}$ promissory note - € 35 m extended to $2026 \& 2028^{1}$
- Majority of financial debt is project related
- Net cash position on corporate level
Outlook: On track for FY 2024 targets
Gm
Revenues (adjusted)
500-600
Gross profit margin (adjusted)
$\sim 22 \%$
EAT (adjusted)
$30-40$
Volume of concluded sales contracts
300
Appendix
Project portfolio key figures
| €m | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 |
|---|---|---|---|---|---|---|---|---|---|
| Volume of sales contracts | 34.0 | 88.0 | 120.1 | 20.2 | 18.4 | 52.7 | 42.0 | 104.6 | 58.0 |
| Project Portfolio | 7,124.9 | 6,885.8 | 6,972.0 | 7,015.5 | 7,182.6 | 7,600.4 | 7,668.8 | 7,827.4 | 7,727.4 |
| thereof already sold | 2,784.8 | 2,781.1 | 2,693.4 | 2,822.7 | 2,868.8 | 2,958.7 | 2,987.3 | 2,945.4 | 2,891.4 |
| thereof already realized revenues | 2,246.3 | 2,140.7 | 2,022.5 | 2,089.4 | 2,002.2 | 1,944.7 | 1,902.7 | 1,721.0 | 1,597.1 |
| Units | Q2 2024 | Q1 2023 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 |
|---|---|---|---|---|---|---|---|---|---|
| Volume of sales contracts | 68 | 213 | 195 | 37 | 28 | 110 | 44 | 199 | 96 |
| Project Portfolio | 14,760 | 14,252.0 | 14,252.0 | 14,269.0 | 15,148.0 | 16,107.0 | 16,209.0 | 16,580.0 | 16,644.0 |
| thereof already sold | 6,448 | 6,430.0 | 6,217.0 | 6,588.0 | 7,017.0 | 7,198.0 | 7,309.0 | 7,265.0 | 7,179.0 |
(Unless otherwise stated, the figures are quarterly values)
Diversified project portfolio across most attractive German regions
Project portfolio as of 30/06/2024 by region (GDV)
- 46 projects / 14,760 units / 1,304m sqm of saleable space
- $96 \%$ in metropolitan regions
- 78 average sqm / unit
- €5,683 ASP / sqm
- Additional four JV projects (INS share of GDV: €630m)
Significant pipeline; well prepared to seize market opportunities
Project portfolio development (GDV)
In $€$ bn
Expected future cash flows suggest significant upside?
Fundamental Instone value rests on three distinct pillars
(1) Pre-sold projects
- c. $€ 2.9$ bn currently under construction
- t/o c. $€ 2.7$ bn pre-sold ( $90 \%$ )
- In addition c. $€ 180 \mathrm{~m}$ pre-construction already pre-sold
$\rightarrow$ Tangible and substantially de-risked cash-flow profile
(2) Land bank - Residual unsold and paid land bank recognised at cost² of $€ 450 \mathrm{~m}$
$\rightarrow$ Substantial incremental value
(3) Future potential - Ability to source new projects
- Highly attractive opportunities likely to materialise within 12-24 months
- Additional income streams from various strategic initiatives
(As of 30 June 2024; in EUR million)
De-risked free cash flow from projects under construction ${ }^{1} \sim 330 \mathrm{~m}$
Unsold land bank at cost ${ }^{2} \quad \sim 450 \mathrm{~m}$
Notional gross asset value ${ }^{2} \quad \sim 780 \mathrm{~m}$
Net debt
$-204.1$
Notional value to shareholders ${ }^{3} \quad>570 \mathrm{~m}$
Growth Opportunities Act with attractive tax incentives for newbuild properties (scenario analysis)
| Model assumptions | |
|---|---|
| Price/sqm | $5,700 €$ |
| Lettable space | 85 sqm |
| Purchase price | $484,500 €$ |
| Ancillary costs | $38,760 €$ |
| Land (18\% of total purchase price) | $94,187 €$ |
| Building costs | $429,073 €$ |
| Building costs per sqm | $5,048 €$ |
| Rental yield | $4 \%$ |
| Rental growth p.a. | $2.5 \%$ |
| Equity ratio (30\%) | $156,978 €$ |
| Debt interest rate | $3.5 \%$ |
| Income tax | $44 \%$ |
- Tax incentives allow for fast payback of capital and highly attracitve inflation protected post tax returns for buy-to-let investors
- Tax free diposal gains after 10 years
| Payback of capital from tax incentives | ||
|---|---|---|
| 4 years | 10 years | |
| Total depreciation | 142,658 € | 218,532 € |
| Depreciation as \% of total purchase price | $27.3 \%$ | $41.8 \%$ |
| Tax incentive | $63,212 €$ | $96,831 €$ |
| Tax incentive as \% of total purchase price | $12.1 \%$ | $18.5 \%$ |
| Tax incentive as \% of equity | $40.3 \%$ | $62 \%$ |
| Attractive post tax returns | ||
|---|---|---|
| Average RoE (cash returns) | $12.8 \%$ | $9.5 \%$ |
| Tax free disposal gains after 10 years |
- Growth Opportunities Act:
- 5\% degressive on new build properties
- plus additional 5\% linear depreciation over 4 years (according to § 7 ) if tax relevant building costs are $<5,200 € /$ sqm and energy standard of QNG 40 certitification is met
Project portfolio as of 30/06/2024
(projects > €30m sales volume, representing total: - €7.1bn)
| Project | Location | Sales volume (expected) |
Lettable space (sqm) |
Land plot acquired |
Planning right obtained |
Sales start | Construction started |
|---|---|---|---|---|---|---|---|
| Hamburg | |||||||
| Kösliner Weg | Norderstedt | $93 \mathrm{~m} €$ | 24,589 | (2) | (2) | 2025 | |
| Sportplatz Bult | Hanover | $117 \mathrm{~m} €$ | 24,007 | 2029 | |||
| RBO | Hamburg | $218 \mathrm{~m} €$ | 29,876 | (3) | (3) | (3) | (3) |
| Büntekamp | Hanover | $165 \mathrm{~m} €$ | 25,044 | (4) | (4) | 2025 | |
| Berlin | |||||||
| Nauen | Nauen | $167 \mathrm{~m} €$ | 29,051 | (5) | (5) | 2025 | |
| Fontane Gärten | Potsdam | $66 \mathrm{~m} €$ | 9,563 | (6) | (6) | (6) | (6) |
| NRW | |||||||
| Unterbach | Düsseldorf | $199 \mathrm{~m} €$ | 38,537 | (7) | (7) | (7) | (1) |
| Literaturquartier | Essen | N/A | 17,981 | (8) | (8) | (8) | (8) |
| REME | Mönchengladbach | $128 \mathrm{~m} €$ | 28,315 | (9) | 2025 | ||
| west.side | Bonn | $203 \mathrm{~m} €$ | 63,603 | (10) | (10) | (10) | (10) |
| Gartenstadtquartier | Dortmund | $93 \mathrm{~m} €$ | 25,514 | (11) | (11) | 2025 | |
| Bickendorf | Cologne | $625 \mathrm{~m} €$ | 145,492 | (12) | 2028 | ||
| 6-Seen Wedau | Dulsburg | $78 \mathrm{~m} €$ | 16,605 | (13) | (13) | 2024 | |
| Kempen | Kempen | $50 \mathrm{~m} €$ | 11,103 | (14) | (14) | 2025 | |
| Grafental | NRW | $186 \mathrm{~m} €$ | 29,693 | (15) | (15) | 2024 |
Project portfolio as of 30/06/2024
(projects > $€ 30 \mathrm{~m}$ sales volume, representing total: $€ 7.1 \mathrm{bn}$ )
| Project | Location | Sales volume (expected) |
Lettable space (sqm) |
Land plot acquired |
Planning right obtained |
Sales start | Construction started |
|---|---|---|---|---|---|---|---|
| Rhine-Main | |||||||
| Delkenheim | Wiesbaden | $113 \mathrm{~m} €$ | 51,304 | (2) | (3) | (4) | (5) |
| Schönhof-Viertel | Frankfurt | $615 \mathrm{~m} €$ | 90,449 | (6) | (7) | (8) | (9) |
| Friedberger Landstr. | Frankfurt | $298 \mathrm{~m} €$ | 38,241 | (10) | 2027 | ||
| Elisabethenareal | Frankfurt | $84 \mathrm{~m} €$ | 9,989 | (11) | (12) | 2025 | |
| Steinbacher Hohl | Frankfurt | N/A | 13,746 | (13) | (14) | (15) | (16) |
| Gallus | Frankfurt | $46 \mathrm{~m} €$ | 5,791 | (17) | (18) | 2027 | |
| Westville | Frankfurt | N/A | 101,224 | (19) | (20) | (21) | (22) |
| Heusenstamm | Heusenstamm | $191 \mathrm{~m} €$ | 33,432 | (23) | 2025 | ||
| Kesselstädter | Mainta | $229 \mathrm{~m} €$ | 38,315 | (24) | 2025 | ||
| Polaris | Hofheim | $64 \mathrm{~m} €$ | 10,250 | (25) | (26) | 2024 | |
| Rheinblick | Wiesbaden | $303 \mathrm{~m} €$ | 51,751 | (27) | 2026 | ||
| Eichenhege | Mainta | $115 \mathrm{~m} €$ | 18,055 | (28) | 2027 | ||
| Lahnstraße | Frankfurt | $76 \mathrm{~m} €$ | 10,205 | (29) | (30) | 2025 | |
| Leipzig | |||||||
| Parkresidenz | Leipzig | $273 \mathrm{~m} €$ | 64,962 | (31) | (32) | (33) | (44) |
| Rosa-Luxemburg | Leipzig | $161 \mathrm{~m} €$ | 25,966 | (34) | (35) | 2025 | |
| Heide Süd | Halle | $56 \mathrm{~m} €$ | 10,388 | (36) | (37) | 2025 |
Project portfolio as of 30/06/2024
(projects > €30m sales volume, representing total: - €7.1bn)
| Project | Location | Sales volume (expected) |
Lettable space (sqm) |
Land plot acquired |
Planning right obtained |
Sales start | Construction started |
|---|---|---|---|---|---|---|---|
| Baden-Württemberg | |||||||
| Rottenburg | Rottenburg | $170 \mathrm{~m} €$ | 33,912 | ||||
| Hemenberg III, Schäferlinde | Herrenberg | $78 \mathrm{~m} €$ | 14,238 | (1) | 2026 | ||
| Hemenberg II, Zeppelinstraße | Herrenberg | $80 \mathrm{~m} €$ | 13,586 | (1) | 2025 | ||
| Bavaria South | |||||||
| Ottobrunner | Munich | $107 \mathrm{~m} €$ | 10,869 | ||||
| Beethovenpark | Augsburg | N/A | 19,109 | ||||
| Bavaria North | |||||||
| Eslarner Straße | Nuremberg | $62 \mathrm{~m} €$ | 12,570 | ||||
| Lagarde | Bamberg | $91 \mathrm{~m} €$ | 17,779 | (1) | (1) | ||
| Schopenhauer | Nuremberg | $64 \mathrm{~m} €$ | 11,206 | ||||
| Seetor | Nuremberg | $112 \mathrm{~m} €$ | 16,134 | ||||
| Boxdorf | Nuremberg | $65 \mathrm{~m} €$ | 10,099 | ||||
| Thumenberger | Nuremberg | $120 \mathrm{~m} €$ | 16,291 | ||||
| Worzeldorf | Nuremberg | $70 \mathrm{~m} €$ | 11,660 | (1) | 2026 | ||
| Lichtenreuth | Nuremberg | $84 \mathrm{~m} €$ | 11,653 |
Note: Semi-filled circle means that the milestone has already been achieved for sections of the project (land plot acquisition, start of sales or construction). Concerning the building rights the semi-filled circle means that the zoning process has been initiated. No circle for "land plot acquired" means that the land has not yet been purchased but secured by contract
Favourable regulatory framework leading to attractive cash flow profile
Private Customer's Payment Profile for German residential development projects
German regulatory framework for customer payments compared to other European markets
- De risked: B2C development process per se low-risk via regulatory framework ("MaBV")'
- Certainty: No cancellation possibilities
- Capital-light: Predefined payment schedule limiting equity requirement from Instone
- Very favourable payment schedules vs. other European countries, particularly UK, Ireland and Spain
Funding requirements minimized due to high pre-sales levels
Illustrative cumulative financing profile of a typical B2C Instone project
- Debt financing land c.50\% (with zoning c.75\%)
- Debt financing construction up to c.80\%
- Revenue recognition: GDV $x$ Sales Progress (\%) x Construction Progress (\%)
Supportive German subsidy schemes
Key positives from new subsidy scheme
The German government increases tax depreciation and invest >lbn p.a. to support owner-occupiers (help-to-buy) and new build of rental apartments
| Programme details | - Name: Social housing subsidies - Budget: 3.15bn in 2012 (18.5bn total volume until 2027) - $40 \%$ of investment born by the federal states |
- Name: Degressive Depreciation (Growth Opportunities Act) - Volume: 5\% depreciation p.a.; can be combined with 5\% special depreciation ( 57 EstG) if tax relevant selling price excl. land is below 5,200 / sqm (QNG criteria must be met) |
- Name: "Wohneigentum für Familien" = homes for families - Volume: EUR 350 million - Start: Oct. 16, 2023 |
- Name: "Klimafreundlicher Neubau" = climate friendly new-build - Volume: EUR 0.76 billion (KFN.) ${ }^{1}$ - Start: 2023 Renewal, February 2024 |
|---|---|---|---|---|
| Recipient | - Beneficiary: Housing companies, institutional and private investors - Eligibility - New construction, extension or conversion of new living space; - Modernisation of existing space - Social rental apartments or owner-occupied residential properties |
- Buy-to-let investors - For newly built residential properties |
- Families with at least 1 child <18 years living in their household - Household income of max. €90,000 (up from €60,000 previously) plus €10,000 per child - Required to own at least $50 \%$ of the building (as only home in Germany) |
- Resi landlords, other institutional or private investors |
| Objective | - Support the construction and modernisation of social housing | - Expected to have a 1 positive impact on the return expectations - Increased willingness to pay from private buy-to-let investors (due to full tax deductibility from personal income) - Boost construction of rental apartments |
- Help-to-buy: Build or buy new home/condominium for own use for the first time (for at least 10 years) - Energy efficiency: - at least energy standard KfW40 (plus additional requirements regarding GHG emissions defined in regulation - "Qualitätssiegel Nachhaltiges Gebäude") - Higher subsidies possible with the additional certificate for sustainable buildings "QNG" |
- New build of energy efficient buildings - Energy efficiency - at least energy standard KfW40 plus additional requirements regarding GHG emissions defined in regulation "Qualitätssiegel Nachhaltiges Gebäude" - Higher subsidies possible with additional certificate for sustainable buildings "QNG" - Use of fossil fuels not allowed |
| Subsidies | - Loan per apartment $=200 \mathrm{k}$ - Amortisation discount $=30-35 \%$ - Interest rate: 0-0.5\% - Required minimum energy standard of 55 |
- Increase of depreciation on newly built residential properties from (currently) $3 \%$ linear to $5 \%$ degressive p.a.; threshold for special depreciation from 4,800 to 5,200 / sqm | - No direct grant; max. one housing unit - Subsidized mortgages, reduced interest costs ( $0.01 \%-0.8 \%$ ) by federal KfW Bank - 90,000 EUR-270,000 EUR loan volume (with QNG certificate) - Will be accepted as equity substitute |
- No direct grant - Subsidized mortgages ( $2.52 \%-3.02 \%$ ) by federal KfW Bank (volumes per unit) - Max. 100,000 EUR loan volume - Up to 150,000 EUR with QNG certificate |
Driving sustainable success: how value creation is linked to sustainability
Major ESG-KPls achievements
- EU Taxonomy-compliant revenues: c.90\% in FY2023 (up from 86.7\% in FY2022)
- Improved share of projects/objects with energy requirements at least NZEB -10\%': 100\% in FY2023 (up from 97.4\% in FY2022)
- GHG emissions scope 1 and 2 reduced by $46.1 \%$ from the base year 2020, in line with SBTi
- Implementation of 5 working groups with focus on ESG topics (predominantly reduction Scope 3 emissions) comprising 30 employees
- Social impact scoring model which is applied to each project
- Successfully implementation of the diversity target by increasing female representation on the supervisory board to $>30 \%$
- On track with implementation of CSRD/ESRS reporting
Key objectives
Predominantly EU taxonomy-compliant
100\% of project/object portfolio with energy requirements of NEZB-10\% by 2030
GHG emissions scope 1 and 2 reduction target of $42 \%$ reached. Review of new targets.
Net Zero climate neutrality by 2045
$>50 \%$ of revenues from affordable housing by 2030
Clear pathway to reduce GHG emissions scope 1 to 3
Scope 1 \& 2 emissions: projected vs. achieved
CO2 in $t \mathrm{~m}$
20202021202220232024202520262027202820292030
Scope 3 emissions target curve (net zero) based on SBTi4
CO2 $\mathrm{kg} / \mathrm{m}^{2}$
- Scope 1 and 2 emissions reduced by $46.2 \%$ in 2023 vs. base year 2020 (in line with SBTI requirements) through gradual conversion from construction sites to green electricity and replacement of company vehicles with electric vehicles
- For scope 3 emissions ( $\sim 99 \%$ of total emissions), an average reduction of energy intensity (GHG scope 3 emissions) by $5.9 \%$ in 2023 compared to the previous year
ESG: Top rating underscores commitment to industry leadership
Instone Real Estate Group SE
Real Estate Development Germany
ETR:INS
ESG Risk Rating
Low Risk
| $\mathbf{\nabla}$ | MED | HIGH | SEVERE |
|---|---|---|---|
| 0-10 | 10-20 | 20-30 | 30-40 |
SUSTAINALYTICS
a Morningstar company
- INS among the top 3\% of the 288 global real estate development companies
- Top 5\% across all sectors
Major ESG-KPls - achievements
| Major KPls | 2023 | 2022 | |
|---|---|---|---|
| E | Taxonomy-compliant revenues (in \%) | 90.0 | 86.7 |
| GHG emissions / scope 1 and 2 abs. | $1,437 \mathrm{t} \mathrm{CO}_{2} \mathrm{e}$ | $2,390 \mathrm{t} \mathrm{CO}_{2} \mathrm{e}$ | |
| GHG emissions in relation to net project space | $1,447 \mathrm{~kg} \mathrm{CO}_{2} \mathrm{e} / \mathrm{sqm}$ | $1,537 \mathrm{~kg} \mathrm{CO}_{2} \mathrm{e} / \mathrm{sqm}$ | |
| Water consumption in relation to reveneues ${ }^{2}$ | $0.000056 \mathrm{ccm} / €$ | $0.000056 \mathrm{ccm} / €$ | |
| Charging stations for EVs | 1,855 | 1,433 | |
| Brownfield developments (land plot size) | 423,793sqm | $\sim 532,000$ sqm | |
| S | Shares of affordable housing: social / subsidized / nyoo/ privately financed | $16 \% / 1 \% / 6 \% / 78 \%$ | $18 \% / 1 \% / 7 \% \% / 78 \%$ |
| Share of female employees in management positions (below C-level) | $20 \%$ (1st) / $28 \%$ (2nd)/ | $20 \%$ (1st)/ $28 \%$ (2nd)/) | |
| Number of daycare places / playgrounds | $1,759 / 118$ | $1,713 / 109$ | |
| Code of Conduct for employees and contractors (UN Charter) | $100 \%$ | $100 \%$ | |
| G | Employee compliance and data protection training | $100 \%$ | $100 \%$ |
| Compliance cases (suspected) | 0 | 0 | |
| Diversity Supervisory Board (female share) | $33 \%$ | $20 \%$ | |
| Client Satisfaction (range 1-5; 1 best) | 1.3 | 1.7 |
Instone share
Basic data
- ISIN:
DE000A2NBX80
- Ticker symbol:
INS
- No of shares:
46,988,336
- Market cap:
€445.4m
- Average daily trading volume: $€ 0.2 \mathrm{~m}$
- Market segment: $\quad$ Prime Standard, Frankfurt
Financial calendar
August 08 Group Interim Report for the first half of 2024
September $\quad \mathrm{tbd} \quad$ Roadshows London \& Paris
September 23 Berenberg \& Goldman Sachs German Corporate Conference, Munich
September 24 Baader Investment Conference, Munich
October 17 Warburg Small and Midcap Conference, Munich
November 07 Quarterly Statement for the first nine months of 2024
The Instone Management Board
Kruno Crepulja
CEO
- CEO since 2008 (of Instone's predecessor formart)
- Comprehensive experience as an engineer, site manager and project developer
- 17-year career on the management boards of large development companies
- Appointed until 31 December 2025
David Dreyfus
- CFO, effective September 1, 2023
-
28 years of experience in corporate finance and capital markets, including as Director with Lazard and Senior Partner of Lilja \& Co.
- Dreyfus already advised Instone in preparation and execution of its IPO in 2017 and 2018
- Appointed until 31 December 2027
Andreas Gräf
- COO since 2008 (of Instone's predecessor formart)
- Established the residential development as a standalone business model at HOCHTIEF
- Working in the construction and real estate sector for 30 years
- Appointed until 31 December 2025
Investor Relations Contact
Burkhard Sawazki
Head of IR and Capital Market Communication \& Strategy
T +49 201 45355-137
M +49 1732606034
[email protected]
Tania Hanson
Roadshows \& Investor Events
T +49 201 45355-311
M +49 15253033602
[email protected]
Disclaimer
BY VIEWING THIS PRESENTATION, YOU AGREE TO BE BOUND BY THE FOLLOWING TERMS AND CONDITIONS REGARDING THE INFORMATION DISCLOSED IN THIS PRESENTATION. THIS PRESENTATION HAS BEEN PREPARED BY INSTONE REAL ESTATE GROUP SE (THE "COMPANY", TOGETHER WITH ITS SUBSIDIARIES, "INSTONE").
For the purposes of this notice, "presentation" means this document, its contents or any part of it. This presentation does not, and is not intended to, constitute or form part of, and should not be construed as, an offer to sell, or a solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities of the Company, nor shall it or any part of it form the basis of or be relied upon in connection with or act as any inducement to enter into any contract or commitment or investment decision whatsoever. This presentation is neither an advertisement nor a prospectus and recipients should not purchase, subscribe for or otherwise acquire any securities of the Company. This presentation is made available on the express understanding that it does not contain all information that may be required to evaluate, and will not be used by the attendees / recipients in connection with, the purchase of, or investment in, any securities of the Company. This presentation is accordingly not intended to form the basis of any investment decision and does not constitute or contain any recommendation by the Company, its shareholders or any other party. The information and opinions contained in this presentation are provided as at the date of this presentation, are subject to change without notice and do not purport to contain all information that may be required to evaluate the Company. The information in this presentation is in draft form and has not been independently verified. Parts of the financial information in this presentation are preliminary and unaudited. Certain financial information (including percentages) in this presentation has been rounded according to established commercial standards. As a result, the aggregate amounts (sum totals or sub totals or differences or if numbers are put in relation) may not correspond in all cases to the aggregated amounts of the underlying (unrounded) figures appearing elsewhere in this presentation. No reliance may or should be placed for any purpose whatsoever on the information contained in this presentation or on its completeness, accuracy or fairness. None of the Company, its shareholders, or any other party accepts any responsibility whatsoever for the contents of this presentation, and no representation or warranty, express or implied, is made by any such person in relation to the contents of this presentation. The information in this presentation is of a preliminary and abbreviated nature and may be subject to updating, revision and amendment, and such information may change materially. None of the Company, its shareholders, or any other party undertakes or is under any duty to update this presentation or to correct any inaccuracies in any such information which may become apparent or to provide you with any additional information. Recipients should not construe the contents of this presentation as legal, tax, regulatory, financial or accounting advice and are urged to consult with their own advisers in relation to such matters. In particular, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on any projections, targets, ambitions, estimates or forecasts contained in this presentation and nothing in this presentation is or should be relied on as a promise or representation as to the future. This presentation may contains forward looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes," "estimates," "anticipates," "expects," "intends," "may," "will" or "should" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this presentation and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our prospects, growth, strategies, the industry in which Instone operates and potential or ongoing acquisitions or sales. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance and that the development of our prospects, growth, strategies, the industry in which Instone operates, and the effect of acquisitions or sales on Instone may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if the development of Instone's prospects, growth, strategies and the industry in which Instone operates are consistent with the forward-looking statements contained in this presentation, those developments may not be indicative of our results, liquidity or financial position or of results or developments in subsequent periods not covered by this presentation. Nothing that is contained in this presentation constitutes or should be treated as an admission concerning the financial position of the Company and/or Instone.
Thank you
Instone Real Estate Group SE
Grugaplatz 2-4, 45131 Essen
E-Mail: [email protected]
Internet: instone-group.de/en