Adler Group Sa · XETR:ADJ
Adler Group Sa — H1 2021 Earnings Presentation
51 slides from Adler Group Sa's earnings presentation, Aug 31, 2021
Slide 1: Results presentation
Results presentation 31 August 2021
Slide 2: First half 2021 agenda
01. First half 2021 Highlights 02. Portfolio & Operational performance 03. Financial performance 04. ESG targets 05. Guidance 2021 06. Appendix 2 Holsten Quartier, Hamburg
Slide 3: Strong H1 2021 results – increasing Guidance
Strong H1 2021 results – increasing Guidance FFO 1 full-year Guidance increased from €127-133m to €135-140m Financial performance Portfolio & Developments ESG achievements NRI +51.5% to €174m +4.3% Like-for-like rental growth Entering the top 5% of real estate companies globally NRI Run-rate
Slide 4: H1 2021 – Company KPIs
H1 2021 – Company KPIs YoY YoY Assets overview - breakdown (€m) H1 2021 H1 2020 Operating Results (€m) H1 2021 H1 2020 Delta (%) Delta (%) Yielding portfolio value 8,885 7,989 +11.2% Total revenue 299.2 174.6 71.4% Development pipeline value 3,685 835 +341% Net rental income 174.0 114.8 51.5% Build-
Slide 5: Portfolio & Operational performance
Portfolio & Operational performance 5
Slide 6: Leading German residential player sustainably positioned for growth
Leading German residential player sustainably positioned for growth Yielding assets Fourth largest European residential player with significant footprint in Top 7 German cities, providing a ✓ €8.9bn GAV strong platform for growth through build-to-hold landbank c.70k residential units c.20% reversion
Slide 7: The Adler Group's Organic Growth Long-term Vision
The Adler Group’s Organic Growth Long-term Vision The Top 7 Cities build-to-hold landbank will add significant size, enhanced quality and increased profitability, while realizing c.€1bn of development profits Yielding assets & operational evolution Combined portfolio post run-rate build-to-hold port
Slide 8: Strong LFL rental growth of +4.3% driving valuation uplift
Strong LFL rental growth of +4.3% driving valuation uplift Success with sale of rental Significant progress on Update on build-to- hold Further rent increases and assets build-to-sell developments developments value uplift ✓ Continued active capital recycling ✓ Sale of an office asset (July 2021), ✓
Slide 9: Rental Portfolio
Rental Portfolio 9
Slide 10: Enhancing portfolio quality through active capital recycling
Enhancing portfolio quality through active capital recycling… Streamlining of portfolio through active capital recycling has freed up over €503m which will be re-deployed in higher quality new build-to-hold product, in line with our strategy Number of rental units over time Disposals and acquisition
Slide 11: … structurally driving value, up +6.4% in H1 2021
… structurally driving value, up +6.4% in H1 2021 Fair value increase on the back of strong LFL rental growth and further positive yield development and capex investments across the core yielding portfolio Yielding assets GAV (€bn) Fair value (€/sqm) Like-for-like fair value growth (%) 9.0 8.9 8.9 P
Slide 12: Accelerated LFL rental growth across the yielding residential portfolio
Accelerated LFL rental growth across the yielding residential portfolio Portfolio continues its trend of delivering sector leading LFL growth across Berlin as well as our other locations, driving consistently superior value uplift profile Residential average rent (€/sqm/m) LFL residential rental gro
Slide 13: Structurally low vacancy, with c.20% reversionary potential
Structurally low vacancy, with c.20% reversionary potential across the yielding portfolio Embedded reversionary potential will continue to support superior LFL growth, even before our planned additional modernisation capex efforts Yielding portfolio vacancy rate (%) 20% reversionary potential (NRI R
Slide 14: Consistent and effective maintenance spend requiring less modernisation capex
Consistent and effective maintenance spend requiring less modernisation capex going forward Total CAPEX and Maintenance (€m) Maintenance expense (€/sqm) 8.9 8.6 Maintenance 165 Procurement Modernization Capex 6.5 7.2 6.7 optimization and 149 6.3 Capex increased scale 41 132 31 3.4 2.8 34 95 2015 201
Slide 15: Realising +4.3% LFL rental growth with ample potential for the future
Realising +4.3% LFL rental growth with ample potential for the future given 20% embedded reversionary Strong performance in H1 2021 with sector leading LFL rental growth of 4.3%, and still approximately 20% reversionary potential to current market rents across the portfolio Rental yield Q2 21 Avg. S
Slide 16: Developments
f GROUP #& FVADLER / Develop R-=~3 3
Slide 17: Funding of build-to-hold through active capital recycling
Funding of build-to-hold through active capital recycling Portfolio breakdown Segmentation development portfolio Development portfolio composition as per H1 2021 A Build-to-hold development pipeline – Located in top 7 cities Core landbank in Germany’s Top 7 cities to deliver quality 13 build-to-
Slide 18: Development pipeline - Valuation changes explained
Development pipeline - Valuation changes explained The development portfolio will decline following sales and addition to the yielding portfolio whilst adding selective build-to-hold projects in Top 7 cities Development portfolio - Overview of valuation changes since consolidation (€bn of GAV) Obser
Slide 19: Significant progress in build-to-hold pipeline driving future growth
A Significant progress in build-to-hold pipeline driving future growth Portfolio overview Recent developments Completion of the build-to-hold pipeline should add c.10,500 units Hamburg 2 to the rental portfolio at an anticipated gross yield on cost 4.1% 0.4 182 Given the central locations of the
Slide 20: Build-to-hold portfolio – five projects already under construction
Build-to-hold portfolio – five projects already under A construction Construction Building Construction Area Total capex % of Capex Yield on # Project Name City GAV (€m) Period permit started (k sqm) (€m) spent cost1) (%) 1 SLT 107 Schwabenlandtower Stuttgart 2019-2022 16 63 25% 69 3.9% 2 Cologn
Slide 21: Forward sales - three projects to be delivered by YE 2021
B1 Forward sales - three projects to be delivered by YE 2021 Fully de-risked and self funded through forward sales to institutional buyers Stage of Ernst-Reuter-Platz, fully leased Area # Project Name City Buyers Construction Period GAV (€m) completion and handed over to the buyer (k sqm) (%)1 1 R
Slide 22: Successfully completing three condominium projects
B2 Successfully completing three condominium projects Palatium, Dreizeit and Westend condo projects expected to handed over to buyers in the next couple of months Stage of Construction Area % units # Project Name City GAV (€m) #Units completion Period (k sqm) sold (%) Westend Ensemble - Grand Ouest
Slide 23: Strategic upfront disposals of c.€1bn progressing well
Strategic upfront disposals of c.€1bn progressing well C as market gathers renewed interest for developments Area # Project Name City Remarks (k sqm) 1 2stay Frankfurt Frankfurt 41 Sold in Q3, expected closing Q4 2021 2 Arthur-Hoffmann-Straße Leipzig 2 Sold in Q3, expected closing Q4 2021 3 NewFrank
Slide 24: Build-to-hold developments fully covered until early 2025
A Build-to-hold developments fully covered until early 2025 through active capital recycling CAPEX to be funded from cash generation of Build-to-sell division and highly attractive construction financing Annual overview of envisaged CAPEX for the build-to-hold development projects (€m) Capex envisag
Slide 25: Adding c.€3.8bn of high-quality rental product by 2025
A Adding c.€3.8bn of high-quality rental product by 2025 Once completed, build-to-hold projects will contribute a value of €5.6bn to our GAV and have released a fair value uplift of €1bn Annual overview of cumulative GDV delivery of the build-to-hold development projects (€m) Construction not starte
Slide 26: €96m NRI added by 2027
A €96m NRI added by 2027 Expecting a substantial margin improvement given limited cost leakage of 5-10% only Annual overview net rental income of the build-to-hold development projects (€m)1 Net rental income of completed projects 207 207 Run-rate €96m NRI 111 96 86 9 52 35 19 16 10 10 5 5 5 2022 20
Slide 27: Financial performance
Financial performance 27
Slide 28: Significant operational improvements driving growth in financial KPIs
Significant operational improvements driving growth in financial KPIs Total revenue EBITDA from rental activities Comments €m €m Financial performance of the yielding portfolio 112.5 299.2 On the back of strong +4.3% LFL rental growth and 77.3 full consolidation of ADLER Real Estate, NRI 174.6 +46
Slide 29: Further simplification of capital structure and strengthening of debt KPIs
Further simplification of capital structure and strengthening of debt KPIs Bond placements Secured financing and RCF Debt KPIs Key messages ✓ €1.5bn bonds issued in January to ✓ Arranged two 7 year secured loans in ✓ Average cost of debt reduced 1 Great track record of successful access repay €330m
Slide 30: Well balanced maturity schedule with only 14% of debt maturing until YE 2022
Well balanced maturity schedule with only 14% of the debt maturing until YE 2022 Overview of debt maturities (€m) Comments 6% 8% 13% 13% 10% 19% 7% 24% c.€2.5bn of debt refinanced during H1 2021, more than 30% of total extending the overall 2,017 maturity to 4.3 years Upcoming maturities are cov
Slide 31: Well balanced maturity profile with strengthened financial KPIs
Well balanced maturity profile with strengthened financial KPIs Debt KPIs for H1 2021 Sources of funding Bond covenants Total interest-bearing net debt (€m) 7,983 Undrawn RCF (€m) 300 Required Current level Secured debt Covenants level (30 Jun 2021) 39% Net LTV 52.3%1/ 54.7%2 4% LTV ICR (x) 2.6 (Fin
Slide 32: LTV moving towards 50% on the back of anticipated disposals
LTV moving towards 50% on the back of anticipated disposals Pro-forma LTV evolution (%) Legend 54.7% 1 Disposal of 2stay and Arthur-Hoffmann projects as well 1.1% as another non-strategic disposal 2 Expected sale of strategic upfront disposals generating 0.7% €259m in cash proceeds 1.4% 3 Revaluatio
Slide 33: Receivables backed by underlying assets with near term realisation
Receivables backed by underlying assets with near term realisation Overview of selected financial assets / receivables Expected timing – run-down of the receivables Outstanding Right of # Description Type amount Year withdrawal / (€m) Security . Partners Immobilien Capital Management bought 7 non-s
Slide 34: ESG targets
ESG targets 34
Slide 35: External ESG recognition, top 5% globally
External ESG recognition, top 5% globally ✓ First ESG rating of 10.7 points, certifying a low ESG risk, ranking the company as the 46th Sustainalytics best real estate company out of 1,001 globally rating ✓ Adler Group is among the top 5% real estate companies in terms of ESG ✓ Adler Group became a
Slide 36: CO2 reduction roadmap
CO2 reduction roadmap aiming to reduce Adler Group’s emissions by 50% until 2030 A reduction of CO2 emissions from currently 36 kg C02/m2 in 2021 to 18 kgC02/m2 in 2030 equals a reduction of 80.000t C02 each year until 2030, for the 4.4 Mio m2 in the Adler Group portfolio Make existing buildings gre
Slide 37: ESG is a high priority for Adler Group
ESG is a high priority for Adler Group ESG excellence as a key strategic pillar Specific goals related to Adler’s main fields of work Property More future • Optimization of the inventory for climate neutrality: energetic Per m2 Management refurbishment and renovation, replacement of heating systems
Slide 38: Guidance 2021
Guidance 2021 38
Slide 39: Raising Guidance for YE 2021
Raising Guidance for YE 2021 on the back of strong operational and financial performance New FY 2021 Guidance Old FY 2021 Guidance Significant increase in YE 2021 targets underpinned by as of 31 Aug 2021 as of 31 Mar 2021 strong improvement in operational performance ✓ Strong increase in NRI Guidanc
Slide 40: Guidance - Net rental income for FY21E of €340-345m
Guidance - Net rental income for FY21E of €340-345m NRI in the range of €340-345m for existing portfolio for 2021E Legend 340-345 1 First full year effect from the various disposals throughout 2020 2 Reversal of the Mietendeckel reductions in 2020 already accounted for in NRI 3 Given the accounting
Slide 41: Guidance – FFO 1 for FY21E of €135-140m
Guidance – FFO 1 for FY21E of €135-140m FFO 1 in the range of €135-140m for existing portfolio for 2021E Legend 135-140 1 First full year effect from the various disposals throughout 2020 2 Reversal of the Mietendeckel reductions in 2020 already accounted for in NRI 3 Given the accounting treatment
Slide 42: Appendix
GROUP FIADLER 42 Appendix
Slide 43: Composition of debt structure and average cost of debt
Composition of debt structure and average cost of debt have been significantly improved Volume €m IFRS €m Maturity Nominal interest rate Other comments Premature redemption Rate, at which premature redemption is possible ADLER Real Estate Bonds (unsecured) 2017/21 170 170 6 Dec 2021 1.50% Anytime Un
Slide 44: Composition of the Board of Directors
Composition of the Board of Directors Dr. Peter Maser Maximilian Rienecker Thierry Beaudemoulin Chairman of the Board Director, Co-CEO Director, Co-CEO German, born in 1961 German, born in 1985 French, born in 1971 Partner Deloitte Legal Co-CEO Adler Group Co-CEO Adler Group • Chairman of the Nomina
Slide 45: Experienced management team with a real estate track record
Experienced management team with a real estate track record Maximilian Rienecker Thierry Beaudemoulin Co-Chief Executive Co-Chief Executive Officer Officer Sven-Christian Frank Jürgen Kutz Theodorus Gorens Chief Legal Officer Group Development Group Integration Carsten Wolff Michael Grupczynski Gerr
Slide 46: EBITDA from rental activities and EBITDA total
EBITDA from rental activities and EBITDA total EBITDA from rental activities EBITDA total In € million H1 2021 H1 2020 In € million H1 2021 H1 2020 Net rental income 174 115 Income from rental income 230 148 Income from facility services and recharged utilities costs 56 33 Income from property devel
Slide 47: FFO 1 and FFO 2
FFO 1 and FFO 2 FFO 1 calculation FFO 2 calculation In € million, except per share data H1 2021 H1 2020 In € million, except per share data H1 2021 H1 2020 Net rental income 174 115 EBITDA total 167 2 82 Income from facility services and recharged utilities costs 56 33 Net cash interest -55 -28 Inco
Slide 48: Balance sheet
Balance sheet Balance sheet Comments In € million H1 2021 FY 2020 1 The fair values of the build-to-hold project developments and the yielding investment properties were assessed Investment properties including advances 10,937 1 10,111 by CBRE and NAI Apollo, respectively and show the impact of posi
Slide 49: EPRA NAV metrics
EPRA NAV metrics EPRA NAV metrics calculation In € million, except per share data H1 2021 FY 2020 EPRA Measure NAV NRV NTA NDV NAV NRV NTA NDV Total equity attributable to owners of the Company 4,427 4,427 4,427 4,427 4,146 4,146 4,146 4,146 Revaluation of inventories 105 105 105 105 52 52 52 52 Def
Slide 50: Net LTV
Net LTV LTV calculation Comments In € million H1 2021 FY 2020 1 The selected financial assets have been decreased to €735m and contain purchase price receivables Corporate bonds and other loans and borrowings 7,870 7,653 amongst others, they include 1) netted financial receivables (€241m) 2) trade r
Slide 51: Disclaimer
Disclaimer THIS PRESENTATION AND ITS CONTENTS ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, JAPAN OR ANY JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL. This presentation (“Presenta