Varia US Properties AG · SIX:VARN
Varia US Properties — Corporate Update (May 2020)
28 slides from Varia US Properties's corporate update, May 14, 2020
Slide 1: Varia US Properties AG May 2020 Webinar
VARIA US PROPERTIES AG May 2020 Webinar Strictly confidential
Slide 2: Speakers
SPEAKERS MANUEL LEUTHOLD ■ Chairman, Varia US Properties AG JAUME SABATER ■ Vice-Chairman, Varia US Properties AG ■ Founder and CEO of Stoneweg Group PATRICK RICHARD ■ Delegate of the Board of Directors, Varia US Properties AG ■ Head of US Investments of Stoneweg Group RYAN REYES ■ Chief Invesment O
Slide 3: Agenda
AGENDA ■ Varia US at a glance ■ Q1 2020 property level results ■ Stock Price and dividends ■ COVID 19 update ■ Multifamily market 2020 Outlook ■ Q&A 3 Strictly confidential
Slide 4: Disclaimer
DISCLAIMER This report is strictly confidential to the recipient and has been prepared by Stoneweg SA Additional restrictions may apply according to applicable securities laws of other (the "Asset Manager") and Varia US Properties AG (the "Company") solely for information jurisdictions, including, w
Slide 5: Varia US Properties at a Glance
VARIA US PROPERTIES AT A GLANCE Strategy description Key indicators Gross real estate value USD 915 million Stable and long-term high yield strategy on U.S. multifamily housing with added value creation. Number of properties 53 Number of units 10’896 Focus in middle/low income population on secondar
Slide 6: What we said in 2019 and what we achieved
What we said in 2019 and what we achieved Company Level Comments Propose quarterly distribution to increase liquidity and Introduced in June 2019 + liquidity strategy increased attract new investors ✓ (Volume traded year-over-year increased 2.54 times) No large capital increase in 2019 ✓ No Capital
Slide 7: Q1 2020 property results
Q1 2020 property results Strictly confidential
Slide 8: Q1 2020 property results
Q1 2020 property results Unit Q1 2020 Q1 2019 Change $ Change % Rental Income USD Mio 24.3 20.9 3.4 16.3% Rental Income like for like* USD Mio 21.9 20.7 1.2 5.8% Effective Gross Income USD Mio 27.2 23.1 4.1 17.7% Effective Gross Income like for like* USD Mio 24.4 22.9 1.5 6.6% Operating Expenses USD
Slide 9: Geographic breakdown
GEOGRAPHIC BREAKDOWN Strictly confidential
Slide 10: Debt Financing Structure
DEBT FINANCING STRUCTURE March 2020 Loan maturity breakdown In USD million 120 Fixed Bond Variable 100 80 60 40 20 0 2021 2023 2024 2025 2026 2027 2028 > 2028 Lender breakdown Key figures HUD1) Life Co ■ Mortgage USD 518 m 2.6% Bond 3.1% 8.8% Fannie Mae ■ LTV 56.6% 49.8% ■ Average Rate 4.09% ■ Avera
Slide 11: Stock price and dividends
Stock price and dividends Strictly confidential
Slide 12: Stock price
Stock price YTD 2020 Dividend Units (13.5.20) high to low Yield* Current stock price 31.12.19 stock price Varia US Properties AG 10’896 -13,9% -29,3% 6,8% 5,9% Equity Residential 79’065 -27,6% -40,9% 4,1% 2,8% Avalon Bay 85’000 -24,4% -48,4% 4,0% 2,9% Mid America Apartment Communities 101’954 -18,0%
Slide 13: Value Creation
Value Creation Stock price and dividends in CHF 38% total return for day 1 investors 13 Strictly confidential
Slide 14: Distribution
DISTRIBUTION At company level ▪ The AGM approved quarterly distributions from June 2019 onwards 2,80 2.5 ▪ Objectives: 2,40 0,3 ▪ to provide more regular cash flow for investors ▪ Avoid accumulation of cash at company level 2,00 ▪ Reduce currency risk on cash distributions Extraordinary dividend 1,6
Slide 15: COVID-19 Analysis
COVID 19 - ANALYSIS Strictly confidential
Slide 16: COVID-19 Update – 1st initiatives
COVID-19 Update – 1st initiatives ▪ First priority has been the safety of the onsite teams and the implementation of the CDC recommendations. ▪ Implementation of virtual touring and leasing ▪ Maximize rent collection with payment plans if needed ▪ Keep current tenants and maximize renewals ▪ Impleme
Slide 17: COVID-19 Update – rent collection level
COVID-19 Update – rent collection level ▪ Excellent rent collection levels (market average at 92% in April) 97,4% ▪ Company executed Mapping of tenant risks to focus it’s short rent collection for April* term efforts ▪ Rent collection levels expected to remain high despite 89,0% current rent collect
Slide 18: Demographic Analysis – Overview
Demographic Analysis Overview ▪ Our criteria for determining were as follows: ▪ Low Risk Industries ▪ Healthcare related 66.3% ▪ IT / Tech of Varia’s portfolio (by unit count) ▪ Construction is at a lower risk to potential job loss ▪ Fast food ▪ Essential Retail (CVS, Kroger, Walmart / Target) ▪ Gov
Slide 19: Demographic Analysis – By region
Demographic Analysis By region ▪ While Company’s West Portfolio is considered to have the highest proportion of lower risk tenants, it accounts for less than 10% of the unit count ▪ Company’s SE, SW and Midwest Portfolios are relatively the same size and have similar risk proportions Regional Overvi
Slide 20: Demographic Analysis – Top lowest exposures
Demographic Analysis Top 10 lowest exposures ▪ Below represents Company’s Top 10 Lowest Exposure Properties to potential job loss ▪ Varia’s seven “safest” properties are those in which the majority (if not all) of the tenant base is retired, receives Social Security or Disability checks from the US
Slide 21: Demographic Analysis – Top highest exposures
Demographic Analysis Top 10 highest exposures ▪ Below represents Varia’s Top 10 Highest Exposure Properties to potential job loss ▪ While Stoneweg will continue to monitor each property, this list provides a strong starting point for our most at-risk properties in order to pre- identify where we wil
Slide 22: Expense reduction
Expense reduction ▪ In addition to a demographic analysis, the Stoneweg team reviewed each asset’s budget to reduce any expenses where possible to preserve cash flow at the property level ▪ After reviewing the budgets, Stoneweg has identified $1.1M or $102/unit of planned expenses that can be cut –
Slide 23: Multifamily Market 2020 Outlook
MULTIFAMILY MARKET 2020 OUTLOOK Strictly confidential
Slide 24: 2020 Market Outlook
2020 Market Outlook ▪ Industrial and multifamily asset classes will remain the darlings of the commercial real estate market this year. (GlobeSt, Jan 07 2020) ▪ Suburban Multifamily will continue to outperform in 2020. Buying or building in the suburbs will remain the best bet based on market perfor
Slide 25: 2020 Market Outlook – Key Graphs
2020 Market Outlook – Key Graphs Marcus & Millichap 2020 North America investment forecast 25 Strictly confidential
Slide 26: 2020 Migration Patterns
2020 Migration Patterns* Migration patterns favour South and Southwest *Source: Marcus & Millichap 2020 North America investment forecast 26 Strictly confidential
Slide 27: Targeted markets 2020
Targeted markets 2020 Markets where we currently operate: ▪ Kansas City, KS ▪ Louisville , KY ▪ Cincinnati, OH ▪ Tucson, AZ Idaho ▪ Memphis, TN Nebraska Ohio Indiana New Markets: Utah Colorado Kansas ▪ Columbus, OH Missouri Kentucky ▪ Indianapolis, IN North Carolina Tennessee ▪ Houston, TX Arizona O
Slide 28: Q&A
Q&A Strictly confidential