Investor Presentation • Aug 14, 2015
Investor Presentation
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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 Company's business. Any opinions expressed in this presentation are subject to change without notice and neither the Company nor any other person is under any obligation to update or keep current the information contained in this presentation. Where this presentation quotes any information or statistics from any external sources, you should not interpret that the Company has adopted or endorsed such information or statistics as being accurate.
This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realised from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation, and supply and demand. The Company has based these forward-looking statements on its views and assumptions with respect to future events and financial performance. Actual financial performance could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. The information contained in this presentation is subject to change without notice and the Company does not undertake any duty to update the information and forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.
This presentation does not constitute an offer or invitation to purchase or sell any shares in the Company and neither this presentation or anything in it shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever.
I. Highlights H1-2015
II. Portfolio and Operating Performance
| Total Portfolio | |||||
|---|---|---|---|---|---|
| 30 June 2015 | (YOY) |
||||
| # of units | 107,347 | +12.1% | |||
| In-place rent (sqm) | €5.16 (€5.20)* | +2.0% (+2.6%)* | |||
| EPRA-Vacancy | 3.3% (3.2%)* | +12 bps (+7 bps)* |
| High-Growth Markets | ||||
|---|---|---|---|---|
| 30 June 2015 |
(YOY) |
|||
| # of units | 33,574 | +6.0% | ||
| In-place rent (sqm) | €5.79 (€5.81)* |
+2.1% (+2.6%)* |
||
| EPRA-Vacancy | 1.5% (1.3%)* |
+20 bps (+/-0 bps)* |
| Stable Markets with Attractive Yields | ||||
|---|---|---|---|---|
| 30 June 2015 | (YOY) |
|||
| # of units | 42,638 | +21.0% | ||
| In-place rent (sqm) | €4.89 (€4.89)* |
+2.2% (+2.3%)* |
||
| EPRA-Vacancy | 3.7% (3.7%)* |
-10 bps (-10 bps)* |
| Higher-Yielding Markets | ||||
|---|---|---|---|---|
| 30 June 2015 | (YOY) |
|||
| # of units | 29,678 | +8.3% | ||
| In-place rent (sqm) | €4.78 (€4.79)* |
+2.4% (+2.6%)* |
||
| EPRA-Vacancy | 5.3% (5.2%)* |
+30 bps (+30 bps)* |
* like-for-like
Attractive portfolio + operational excellence = strong rental growth
III. Financial Performance
Margin expansion on back of sound topline growth + cost discipline
| Condensed Income Statement (€ million) |
FY-2014 | H1-2015 | H1-2014 | ||
|---|---|---|---|---|---|
| Net rental and lease income |
284.9 | 159.1 | 139.5 | Higher rental income (+€25.8m/+13.7%) NRI-margin increased from 73.8% to 74.1% YOY despite |
|
| Net income from the disposal of investment property | -1.7 | 1.2 | -0.3 | some higher maintenance | |
| Net income from the valuation of investment property | 143.0 | 0.0 | 0.0 | ||
| Net income from the disposal of real estate inventory | -3.1 | 0.0 | -1.6 | Slightly higher one-time project costs Recurring admin. costs rose |
|
| Net income from other services | -0.3 | 0.1 | 0.6 | by €1.9m to €16.7m mainly due to first time consolidation |
|
| Administrative and other expenses | -41.6 | -19.8 | -16.8 | and other extraordinary effects; in-line with budget Decreasing cost base in 2016 expected to contribute to further margin expansion |
|
| Other income | 0.5 | 0.4 | 0.2 | ||
| Operating earnings |
381.7 | 141.0 | 121.6 | One-time refinancing costs (-€44 m) |
|
| Net finance costs |
-162.2 | -146.2 | -44.4 | Net income from fair value measurement of derivatives (-€36.3m; thereof -€35.8m from convertible) |
|
| Earnings before income taxes |
219.5 | -5.2 | 77.2 | ||
| Income tax expense |
-62.7 | -5.1 | -22.3 | Cash taxes -€1.1m (including an aperiodic effect of -€1.0m) |
|
| Consolidated net profit |
156.8 | -10.3 | 54.9 |
| € million |
H1 2015 | H1 2014 | |
|---|---|---|---|
| Rental income | 214.8 | 189.0 | +€25.8m (+13.7% YOY) |
| Profit from operating expenses | -1.8 | 0.3 | |
| Maintenance | -22.8 | -18.6 | |
| Staff costs | -18.8 | -16.7 | Decreasing cost ratio reflects |
| Allowances on rent receivables | -3.3 | -2.4 | operating synergies from acquisitions in core markets |
| Other | -6.8 | -10.0 | |
| Non-recurring project costs (rental and lease) |
1.2 | 0.5 | |
| Current net rental and lease income | 162.5 | 142.1 | +€20.4m (+14.4% YOY) |
| Current net income from other services | 1.2 | 1.7 | |
| Staff costs | -11.2 | -11.0 | |
| Non-staff operating costs | -7.6 | -4.8 | |
| LTIP (long-term incentive programme) | 0.1 | 0.6 | |
| Non-recurring project costs (admin.) | 1.6 | 0.3 | |
| Extraordinary and prior-period expenses | 0.4 | 0.1 | Efficiency programme: On track to reach targeted cost |
| Current administrative expenses | -16.7 | -14.8 | savings of €5m in 2016 |
| Other income and expenses | 0.4 | 0.2 | |
| Adjusted EBITDA | 147.4 | 129.2 | +€18.2m (+14.1% YOY) |
| Cash interest expenses and income | -45.9 | -46.7 | |
| Cash income taxes | -0.1 | -0.9 | +€19.8m supported by topline |
| FFO I (not including disposal of investment property) | 101.4 | 81.6 | growth and margin expansion |
| Net income from the disposal of investment properties | 1.2 | -0.3 | |
| FFO II (including disposal of investment property) | 102.6 | 81.3 | |
| Capex | 16.0 | 16.2 | Higher costs for capex & maintenance in H2 |
| Capex-adjusted FFO I (AFFO) | 85.4 | 65.4 |
| € million |
FY-2014 | H1-2015 | H1-2014 | |
|---|---|---|---|---|
| Reported interest expense |
128.5 | 113.2 | 61.0 | Refinancing costs of ~€44m |
| Interest expense related to loan amortisation |
-24.6 | -20.7 | -10.4 | Including valuation of |
| Prepayment penalties | 0.0 | -6.6 | 0.0 | the convertible (€3.2m) and effects |
| Interest charges relating to valuation of assets/liabilities |
-2.3 | -0.5 | -1.0 | from refinancing (€6.0m) |
| Leasing related interest expense | -1.5 | -0.8 | -0.7 | |
| Interest expenses related to changes in pension provisions |
-4.0 | -1.4 | -2.0 | |
| Other interest expenses | -0.2 | -36.8 | 0.2 | Release of swaps (refinancing) ~€37m |
| Bank charges | -0.3 | 0.0 | 0.0 | |
| Interest income | -1.0 | -0.5 | -0.5 | Lower ø cost of debt |
| Cash effective interest expense | 94.5 | 45.9 | 46.7 | Interest coverage improved further (3.2x up from 2.8x YOY) |
| € million |
30.06.2015 | 31.12.2014 |
|---|---|---|
| Equity (excl. minority interests) |
2,447.5 | 2,491.6 |
| Effect of exercising options, convertibles and other rights |
359.9 | 308.7 |
| NAV | 2,792.5 | 2,786.0 |
| Fair value measurement of derivative financial instruments | 119.3 | 136.1 |
| Deferred taxes | 417.9 | 372.5 |
| EPRA-NAV | 3,329.7 | 3,294.6 |
| Number of shares fully-diluted incl. convertible (m)* |
63.394 | 62.043 |
| EPRA-NAV per share in € | 52.52 | 53.10 |
| Goodwill, resulting from synergies | 25.9 | 25.9 |
| Adjusted EPRA-NAV (excl. goodwill) |
3,303.8 | 3,268.7 |
| Adjusted EPRA-NAV per share in € | 52.12 | 52.69 |
Capital increase (€72.9m)
Property valuation
*Actual number of shares outstanding 58.260m
| € million |
30.06.2015 | 31.12.2014 | |
|---|---|---|---|
| Investment property | 6,000.9 | 5,914.3 | Additions €73.9m Capex €16.0m |
| Prepayment for investment property |
111.4 | 16.8 | Reclassification -€6.3m |
| Other non-current assets | 141.3 | 155.8 | |
| Non-current assets | 6,253.6 | 6,086.9 | Cash flow from operating activities (€68.2m) |
| Receivables and other assets | 73.7 | 35.9 | Dividend distribution |
| Cash and cash equivalents | 247.5 | 129.9 | (-€111.8m) Net acquisitions and |
| Current assets | 321.2 | 165.8 | capex measure |
| Assets held for disposal | 8.3 | 58.4 | (-€154.0m) |
| Total Assets | 6,583.1 | 6,311.1 | Capital increase (€72.9m) |
| Equity | 2,447.5 | 2,491.6 | Equity ratio of 37.2% |
| Non-current financial liabilities | 2,643.5 | 2,546.5 | |
| Other non-current liabilities |
602.0 | 612.3 | |
| Non-current liabilities | 3,245.5 | 3,158.8 | |
| Current financial liabilities | 626.7 | 413.8 | |
| Other current liabilities | 263.4 | 246.9 | |
| Current liabilities | 890.1 | 660.7 | |
| Total Equity and Liabilities |
6,583.1 | 6,311.1 |
| € million |
30.06.2015 | 31.12.2014 |
|---|---|---|
| Financial debt | 3,270.2 | 2,960.3 |
| Cash & cash equivalents | 247.5 | 129.9 |
| Net Debt |
3,022.7 | 2,830.4 |
| Investment properties | 6,000.9 | 5,914.3 |
| Properties held for sale | 8.3 | 58.4 |
| Prepayment for investment properties |
111.4 | 16.8 |
| Property values |
6,120.6 | 5,989.5 |
| Loan to Value (LTV) in % | 49.4 | 47.3 |
| Equity | 2,447.5 | 2,491.6 |
| Volume: | €900m |
|---|---|
| Average credit margin: |
< 100 basis points |
| One-off charges: | ~€51m |
| Payback period: | ~3 years |
| Average debt maturity: |
~10 years |
| Average interest cost: |
< 2.1% (replaced loans 3.86%) |
Refinancing structure post final closing of early refinancing:
IV. Business Update and Outlook
Average rent multiples NRW (built after 1948)
| Recent acquisitions showing rising level of rent multiples in NRW | ||||
|---|---|---|---|---|
| H1 2015 | Units | Price | Multiple | Market |
| Deal #1 | 750 | €45.5m | ~15.4 | high-growth (opportunistic portfolio) |
| Deal #2 | 636 | not disclosed | ~18.0 | high-growth |
| Deal #3 | 3,500 | €225m | ~15.8 | stable |
| Deal #4 | 2,037 | not disclosed | ~13.0 | stable / higher-yielding |
| 31.07.2015 | Closing | Change | |||||
|---|---|---|---|---|---|---|---|
| Units | In-place rent € / sqm |
Occupancy | In-place rent € / sqm |
Occupancy | In-place rent € / sqm |
Occupancy | |
| Portfolio incl. Vitus transaction |
20,084* | 5.03 | 95.6% | 4.85 | 95.4% | 0.19 (+3.8%) | ~ +20 bp |
Dynamic rent growth confirms attractive reversionary potential
Average in-place rents +3.8% (within avg. 14.6 months)
Result does not yet contain rent adjustments of NRW Vitus portfolio (scheduled for Q4-2015)
Further growth acceleration ahead
* Acquisitions since end-2012
| 2015 | Guidance |
|---|---|
| FFO I: | €200m - €204m/ €3.47 - €3.54 (up from €3.42 - €3.50); excl. future acquisitions |
| L-F-L rent growth: | 2.4% - 2.6% (up from 2.3 – 2.5%) |
| L-F-L vacancy: | Approx. 2.8% (FY-14 comparable: 2.8%) |
| Maintenance/Capex: | €15/sqm (capex ratio c. 50%) |
| Dividend: | 65% of FFO I |
| 2016 | Guidance |
|---|---|
| FFO I: | €233m - €238m/ €4.00 - €4.09 (up from €3.91 - €3.98); excl. future acquisitions |
V. Appendix
| Release date (expected) |
High-Growth Market1 |
Market1 Stable |
Higher-Yielding Market1 |
Total Portfolio1,2 |
|---|---|---|---|---|
| 2015 (Q1) | 4,865 units (mainly Cologne) |
13,666 units (mainly Dortmund) |
1,386 units (mainly Herne, Marl) |
19,926 units |
| 2015 (Q2) | 6,602 units (mainly Münster) |
2,124 units (mainly Hattingen) |
8,726 units | |
| 2015 (Q3) | 1,431 units (mainly Bocholt) |
4,973 units (mainly Essen, Wuppertal) |
635 units (mainly Höxter) |
7,714 units |
| 2015 (Q4) | 6,357 units (mainly Monheim, Bonn) |
2,179 units (mainly Witten) |
1,107 units (mainly Dorsten) |
9,643 units |
| Total 1,2 | 19,255 units | 22,942 units | 3,128 units |
46,009 units |
| Thereof: - Bocholt - Bonn - Cologne - Dorsten - Dortmund - Essen - Krefeld - Monheim - Münster - Witten |
1,412 units 2,311 units 3,917 units 3,510 units 6,078 units |
12,547 units 2,307 units 1,119 units 1,518 units |
1,071 units | 1 Sub-portfolios also include |
| - Wuppertal |
2,031 units | restricted units 2 Total Portfolio also includes 684 units Non NRW |
| Adj. EBITDA margin | 2014 | 2013 | ||
|---|---|---|---|---|
| €m | margin % |
€m | margin % | |
| As reported |
259.3 | 66.5 | 231.7 | 64.3 |
| Gap restricted vs. unrestricted rents* | 21.2 | 68.2 | 22.5 | 66.4 |
* €/sqm: €4.61 vs. €5.33 in 2014, €4.50 vs. €5.24 in 2013
| Date | Report/Event |
|---|---|
| 14.08.2015 | Quarterly Report H1 as of 30 June 2015 |
| 19./20.08.2015 | Roadshow London, Deutsche Bank |
| 15.09.2015 | Roadshow Boston, Berenberg |
| 16./17.09.2015 | Bank of America Merrill Lynch Global Real Estate Conference, New York |
| 22.09.2015 | Berenberg and Goldman Sachs German Corporate Conference, Munich |
| 23.09.2015 | Baader Investment Conference, Munich |
| 01.10.2015 | Société Générale Pan European Real Estate Conference, London |
| 12.11.2015 | Quarterly Report 9M as of 30 September 2015 |
Contact
Burkhard Sawazki Head of Investor Relations Phone: +49 211 4568 204 [email protected]
Karin Widenmann Katharina Golke Manager Investor Relations Investor Relations Phone: +49 211 4568 458 Phone: +49 211 4568 294 [email protected] katharina.golke@leg-nrw.de
Hans-Boeckler-Str. 38 40476 Dusseldorf Germany
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