Investis Holding SA · SIX:IREN
Investis Holding SA — H1 2019 Earnings Presentation
43 slides from Investis Holding SA's earnings presentation, Aug 29, 2019
Slide 1: Half-Year Results 2019
HALF-YEAR RESULTS 2019 Zurich – 29 August 2019
Slide 2: Disclaimer
Disclaimer This communication contains specific forward-looking statements, beliefs or opinions, including statements with respect to objectives, which are based on current beliefs, expectations and projections about future events and assumptions of the management of Investis Holding SA ("Investis")
Slide 3: Focus points – Agenda
Focus points Agenda ▪ Highlights on Group performance for the HY 2019 and market trends ▪ Performance for the HY 2019 ▪ Outlook ▪ Appendix HALF-YEAR RESULTS 2019 – IR-PRESENTATION - 29 AUGUST 2019 3
Slide 4: Investis key facts
1994 CHF 0.9 bln CHF 1.34 bln 154 8.3% 0.6 % CHF 112m CHF 52.47 Founded Market Cap Portfolio Properties EBIT margin Average Net profit NAV value 98% Real Estate interest per share Focus on Services rate Lake Geneva
Slide 5: Very focused and attractive portfolio around the Lake Geneva
Very focused and attractive portfolio around the Lake Geneva Strategy buy and hold – realise rent upside potential VD: 25% ▪ Residential ▪ Middle segment (no luxury apartments) ▪ Low vacancy rates ▪ Lake Geneva region GE: 73% VS: 2% HALF-YEAR RESULTS 2019 – IR-PRESENTATION - 29 AUGUST 2019 5
Slide 6: Case study: Buy and hold strategy
Case study: Buy and hold strategy Acquisition costs/ appraisal value Rent Rue du Nant 30 – Geneva in CHF/m in CHF/k Acquisition in December 1998 1998 Residential block built in 1986 with 1.9 339 40 residential units and 2 retail units 2014 Renovation of bathrooms and kitchens 2015 Additional energy
Slide 7: Real Estate Market in Geneva
Real Estate Market in Geneva Basic parameters influencing the real estate market 2019 in the Lake Geneva region Im- /Migration/ Demography Construction activity Regulations Capital Markets ▪ Into Switzerland ▪ Limited activity especially in GE ▪ Tax regime for corporations ▪ CHF interest rates expec
Slide 8: Population growth expected to continue but demand shifts
Real Estate Market in Geneva Population growth expected to continue but changes/shift in demand 1. Half of the expected household growth in Geneva until 2040 (expected anywhere between 26‘000 and 43‘000 households depending on different scenarios 1) ) will be composed of one person households – agin
Slide 9: Lake Geneva region amongst the highest average asking rents
Residential Real Estate Market Switzerland Lake Geneva region amongst the highest average asking rents at +/- chf 300/sq Switzerland Swiss Midlands Zurich Central CH As of June 2019 Lake Geneva North-West CH East CH Ticino region Zurich Lake Geneva region (GE, VD and VS) Asking rents (CHF/ sq m p.a.
Slide 10: Residential Real Estate Market in Switzerland: adverts
Residential Real Estate Market in Switzerland Reduction of adverts time in Geneva and Lower number of adverts in Geneva over Lausanne contrasting with the trend the last 3 y 2016/17 2017/18 2018/19 Switzerland (Lhs) Geneva (Rhs) 60 56 400 10 372 375 360 344 9 Adverts time (number of days) Number of
Slide 11: Vacancy rates are set to remain low in key markets
Residential Real Estate Market in Switzerland Vacancy rates are set to remain low in Investis’ key markets Vacancyrate in 2018 Vacancy rate below avg / drop in # of construction permits Vacancy rate above avg / drop in # of construction permits Vacancy rate below avg / rise in # of construction perm
Slide 12: Why interest rates will not increase
Why interest rates will not increase … Real interest rate is to remain negative for the near future 10y Swiss Gvt Bond 3m LIBOR Development of inflation month by months Mortgage rates for new business: Nominal interest rate: 10y Swiss Gvt Bond 10y fix LIBOR Roll-over 3months (3y) Real interest rate:
Slide 13: Real Estate Market in Switzerland – to sum up
Real Estate Market in Switzerland – to sum up Investis is active in markets where there is a constant situation of undersupply in the residential market – Lake Geneva region is Investis’ USP and highly differentiates from its peers in the Swiss residential market: ▪ Residential properties in city ce
Slide 14: Focus points – Agenda
Focus points Agenda ▪ Highlights on Group performance for the HY 2019 and market trends ▪ Performance for the HY 2019 ▪ Outlook ▪ Appendix HALF-YEAR RESULTS 2019 – IR-PRESENTATION - 29 AUGUST 2019 14
Slide 15: Main developments in HY 2019
Main developments in HY 2019 – very pleasing operating performance Investis Group: − EBITDA before revaluations at CHF 22.9m; +17% above HY 2018 − Net profit CHF 90m above HY 2018 due to − Excellent operating performance by both segments − Higher revaluation gains − Reversal of deferred tax Properti
Slide 16: Investis Group: financial performance HY 2019
Investis Group: Overview on the financial performance for the HY 2019 (CHFm) HY 2019 ∆ in % HY 2018 HY 2017 HY 2016 HY 2019 Revenues Revenue 98.6 +0.8 97.9 93.6 79.3 28% EBITDA 22.9 +16.5 19.6 17.6 13.0 before revaluations/disposals 72% Income from revaluations / from 34.3 +224.9 10.6 17.8 17.6 disp
Slide 17: Properties: geographical concentration in Lake Geneva
Properties: The geographical concentration in the lake Geneva region is as an ASSET… Significant growth in rental income coupled with consummated rental increases (CHFm) ∆ in % HY 2019 HY 2018 HY 2017 HY 2016 ▪ Like-for-like rental growth +0.7% (PY 1.0%) ▪ Further lowering vacancy rate to 2.1% Reven
Slide 18: Properties: further expanding portfolio
Properties: Further expanding portfolio -> adding value & rental growth -> buy and hold Investment Properties: 154 properties – 2,872 residential units by category: by canton: by apartment type 1) : 8% 2% 12% 29% 25% 28% 73% 31% 92% Residential Commercial GE VD VS 1-room 2-room 3-room other Low vaca
Slide 19: Properties: further potential for rent increases
Properties: further potential for rent increases still intact Rent potential based on CBRE appraisal (CHFm) (CHFm) +14% +4.1% +1.0% 27.0 28.1 Current rent Market rent 1) 23.3 20.5 20.2 17.5 18.1 40.8 6.3% 41.9 15.3 71% of rental income indexed with annual adjustment to the Swiss Consumer 13.1 12.2 P
Slide 20: Real Estate Services: target of high single digit EBIT margin
Real Estate Services: target of high single digit EBIT margin to be achieved for FY2019 Both activities achieving their respective targets Revenue split (CHFm) HY 2019 ∆ in % HY 2018 HY 2017 HY 2016 Revenue 73.6 +0.5 73.2 72.6 68.7 EBIT 6.1 +66.5 3.7 3.7 1.5 46% 54% EBIT margin 8.3% 5.0% 5.0% 2.1% ▪
Slide 21: Real Estate Services: active nationwide with local brands
Real Estate Services: active nationwide with well-known local brands Focus on two Activities and two national brands for PROPERTY MANAGEMENT FACILITY SERVICES ▪ Property management ▪ Caretaking services ▪ Co-ownership associations ▪ Cleaning services ▪ Center management ▪ Building technology ▪ Letti
Slide 22: Positive non-recurring impact on the tax line
Investis Group: Positive non-recurring impact on the tax line Release of CHF 61m of deferred taxes after popular vote on TRAF tax reform in the Canton of Geneva (CHFm) HY 2019 ∆ in % HY 2018 HY 2017 HY 2016 ▪ Financial income includes: − Gain on sale of Régie du Rhône CM EBIT 56.0 +91.7 29.2 34.3 29
Slide 23: Solid balance sheet – NAV per share CHF 52.47
Solid Balance sheet prevails – significant increase in NAV per share to CHF 52.47 Strengthened shareholders equity to 46% Balance Sheet (CHFm) 30.06.2019 ∆ in % 31.12.2018 31.12.2017 31.12.2016 Cash and cash equivalents 17 -49.0 33 51 53 Properties portfolio 1,340 -0.4 1,345 1,121 981 Total assets 1
Slide 24: Attractive financial profile with flexibility in leverage
Attractive financial profile with strong resilience supported by flexibility in leverage Translation from mortgages financing to unsecured senior debt over the last 3.5 years as per 31.12.2015 as per 30.06.2019 Privileged creditors 8% 6% (mortgages) reduced from 92% to 1% CHF 366m CHF 562m 92% 92% M
Slide 25: Focus points – Agenda
Focus points Agenda ▪ Highlights on Group performance for the HY 2019 and market trends ▪ Performance for the HY 2019 ▪ Outlook ▪ Appendix HALF-YEAR RESULTS 2019 – IR-PRESENTATION - 29 AUGUST 2019 25
Slide 26: IPO commitments from June 2016 will be achieved in time
IPO Commitments done back in June 2016 ………. will be achieved in time 1. Investments into Portfolio and achieve rental income of > CHF 50m by 2019 2. Strengthening Real Estate Services and achieve high single digit EBIT margin by 2019 3. Debt restructuring by 2019 no subordination of bond holders uns
Slide 27: Outlook
Outlook ▪ Further growth in Properties segment ▪ High single digit EBIT margin for Real Estate Service segment Post Closing event - Signing and completion of the sale Régie du Rhône SA - Acquisition of a property portfolio of 6 residential properties in Geneva for CHF 62m with an annualised full occ
Slide 28: Focus points – Agenda
Focus points Agenda ▪ Highlights on Group performance for the HY 2019 and market trends ▪ Performance for the HY 2019 ▪ Outlook ▪ Appendix HALF-YEAR RESULTS 2019 – IR-PRESENTATION - 29 AUGUST 2019 28
Slide 29: Main achievements since IPO
Main achievements since IPO ▪ Development of the property portfolio – Portfolio value up 53% since IPO to CHF 1.3 bln – CHF 489m invested since 30.6.2016 – Annualised full occupancy property rent increased to CHF 56.6m from CHF 41.8m (June 2016) – Revaluation gains: 2016: CHF 47m / 2017: CHF 25m / 2
Slide 30: Leading Swiss residential property company in Lake Geneva region
Investis Group is a leading Swiss residential property company in the Lake Geneva region and a national real estate services provider Strategy and investment policy Continuation of the buy-and-hold strategy through selected investments in the properties segment Preservation and increase of portfolio
Slide 31: Fundamental business strengths
Fundamental business strengths Value proposition PROPERTIES REAL ESTATE SERVICES Pure Swiss player Stable financing and financial flexibility to take advantage of market opportunities Established position with high barriers to entry and differentiated success factors Highly entrepreneurial managemen
Slide 32: Entrepreneurial business since 1994
Investis Group has been an entrepreneurial business since 1994 Celebrating 25th anniversary in 2019 1994 Foundation ▪ Foundation of «Compagnie Foncière de la Cité» with own funds 1994 – Investment and formation of a large ▪ Accumulation of residential properties in the Lake Geneva region mainly 2005
Slide 33: Executive Board and Board of Directors
Highly entrepreneurial and experience management in place Riccardo Boscardin Stéphane Bonvin Chairman Independent member CEO Investis Group Member of the Audit and Compensation Head of Properties Committee Albert Baehny René Häsler Vice-Chairman BOARD OF DIRECTORS CFO Investis Group Independent memb
Slide 34: Organisation
Organisation HALF-YEAR RESULTS 2019 – IR-PRESENTATION - 29 AUGUST 2019 34
Slide 35: Additional information on the Real Estate Market
Additional information on the Real Estate Market HALF-YEAR RESULTS 2019 – IR-PRESENTATION - 29 AUGUST 2019 35
Slide 36: Proving successful in a very regulated environment
Proving successful in a very regulated environment – positive net migration an asset Although investment activity is rising in the residential sector in Geneva it cannot cover the demand CHFmillion ▪ Limited availability and high regulatory obstacles in the Office Other commercial Residential 3'000
Slide 37: Geneva and Basel show the highest yield
Residential Real Estate Market in Switzerland While bond yield negative - Geneva Less geographic disparities in Lausanne and and Basel show the highest yield Geneva 2.6 Average monthly rent Q2 2018 (net, in CHF for a 4 room apartment, new, 110m2, medium standard, good micro location) 2.5 2.4 2.3 Gen
Slide 38: Vacancy rate in Geneva still very low
Residential Real Estate Market in Switzerland Vacancy rate in GE still very low – approaching its long-term average level Switzerland Geneva 2.00 1.80 1.60 1.62 Vacany rate (in %) 1.40 1.20 1.00 0.80 0.60 0.53 0.40 0.20 0.00 HALF-YEAR RESULTS 2019 – IR-PRESENTATION - 29 AUGUST 2019 38
Slide 39: Undersupply situation in key markets
Residential Real Estate Market in Switzerland Undersupply situation in most Investis’ key markets in 2018 Shortageof apartments: Over 1’000 500 to 1’000 Basel No more than500 St-Gallen Surplusof apartments: No more than250 Zurich 250 to 500 500 to 750 750 to 1’000 Over 1’000 Neuchatel Luzern Bern Ch
Slide 40: Rebound in rental growth higher in big city centers
Residential Real Estate Market in Switzerland Rebound in rental growth is higher in ..... and overall population in these big city centers ..... large centers are expected to grow New leases Index Q1 2019=100 Smaller centers Population in ‘000 Big city centers Switzerland Source: WüestPartner Source
Slide 41: Supply of residential properties in big city centres
Residential Real Estate Market in Switzerland The supply of residential properties in …. while the construction activity is big city centres does not grow ….. is still shrinking # of apartments per quarter # of apartments p.a. Outskirts Agglomeration of small &middle sized city centers Small&middle
Slide 42: Net immigration rising while construction permits decrease
Residential Real Estate Market in Switzerland While net immigration is rising again in 2019 the number of residential property to be build (with building permission) is decreasing Net immigration into CH per nationality Construction permit for apartments # of accomodation unit per quarter Approved a
Slide 43: Thank you for your attention!
Thank you for your attention! HALF-YEAR RESULTS 2019 – IR-PRESENTATION - 29 AUGUST 2019 43