Nsi Nv · EURONEXT:NSI
Nsi Nv — H1 2020 Earnings Presentation
54 slides from Nsi Nv's earnings presentation, Jul 13, 2020
Slide 1: NSI Interim Results Half Year 2020
NSI Interim Results Half Year 2020 13 July 2020 NSI Half Year Results 2020 1
Slide 2: Mission statement
“We enable our customers to achieve maximum productivity and growth, providing best-in-class flexible space solutions and services in modern, healthy, sustainable buildings in prime locations.”
Slide 3: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. Developments 4. Financials 5. Final remarks Annex NSI Half Year Results 2020 3
Slide 4: Key highlights H1 2020
Introduction Key highlights H1 2020 • EPRA Vacancy – 7.8%, like-for-like increase 0.1% Operational • Rental growth – Strong increase in like-for-like net rents 4.0% performance • Rent collection – Q1: 99.5% → Q2: 95.7%1 • Developments – 10 year lease agreement signed for Bentinck Huis, The Hague • E
Slide 5: Strong operational performance and sound balance sheet
Introduction Strong operational performance and sound balance sheet Key metrics Increasing rents Net rents like-for-like(%) Revenue and earnings 30 Jun 2020 30 Jun 2019 Change % 5.5% 5.2% 4.0% 2.2pp Operating margin 77.8% 76.3% 1.5pp Net rents like-for-like 4.0% 1.8% 2.2pp 1.9% EPRA Earnings per sha
Slide 6: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. Developments 4. Financials 5. Final remarks Annex NSI Half Year Results 2020 6
Slide 7: Acquisition ONE20
Portfolio & market update Acquisition ONE20 High quality office building renovated in 2015 into a sustainable multi tenant asset Teleportboulevard 120, Amsterdam Impressions Area: 9,743 sqm Tenant: Multi-tenant Vacancy (at acquisition → current): 31.0% → 25.0% GIY / Reversionary yield: 3.5% / 6.3% W
Slide 8: Creating a safe work environment
Portfolio & market update Creating a safe work environment One-off € 400k in costs Five rules in our offices Keep 1,5 meter distance from others Wash your hands as often as possible Caugh or sneeze in your elbow cavity Follow the proposed routing Give each other enough space NSI Half Year Results 20
Slide 9: Target cities prove their value
Portfolio & market update Target cities prove their value Emphasis on G5 growth locations Total portfolio EPRA vacancy Target Cities vs Other Occupancy 6.4% 21.4% Vacancy Target Other Cities 78.6% 93.6% € 1,135 m € 127 m Offices HNK Other 26.7% 22.2% 12.7% 13.3% 7.0% 8.2% 3.1% 3.9% 0.0% Amsterdam Ot
Slide 10: Temporary slowdown in letting activity
Portfolio & market update Temporary slowdown in letting activity 2020 tenant enquiries Tenant enquiries (sqm) ‘000 sqm 400 New (active) Signed Deal 350 Withdrawn On Hold 300 Active 250 34% 200 150 17% 100 10% 51% 27% 17% 50 64% 61% 43% 49% 0 Pre- Q2 2020 Pre- Q2 2020 Pre- Q2 2020 Pre- Q2 2020 Pre- Q
Slide 11: Strong operational performance
Portfolio & market update Strong operational performance Vacancy rate at market average EPRA vacancy rate -17.2pp 23.8% 24.3% 0.8% 22.3% 2.1% 21.4% 0.3% 20.8% 2.7% 18.4% 2.0% 2.6% 13.8% 4.1% 2.7% 0.1% 7.8% 7.1% 0.6% 2012 2013 2014 2015 2016 2017 2018 2019 2020 H1 EPRA Vacancy LFL Disposals / Acquisi
Slide 12: Dutch office market H1 2020
Portfolio & market update Dutch office market H1 2020 Investment volumes Offices Netherlands (€bn) Prime Yields (%) 2.6 2.6 7.0 2.3 2.0 2.0 6.0 1.7 1.5 5.2% 5.0 1.3 1.3 1.3 1.2 1.1 4.4% 1.0 4.2% 1.0 4.0 0.9 0.7 0.7 3.0 3.0% 2.0 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 20
Slide 13: Negative revaluations over H1 2020
Portfolio & market update Negative revaluations over H1 2020 Limited impact on portfolio value Total portfolio¹ (€m) Offices (€m) 60 30 Positive revaluation Negative revaluation 40 20 20 10 0 0 -20 -10 -40 -20 -60 -30 Total Offices HNK Other Amsterdam Other Other Target Cities Netherlands Net -4.1%
Slide 14: ESG is an integral part of the strategy
Portfolio & market update ESG is an integral part of the strategy ESG Bentinck huis from energy label D to A • EPC score A for 62.7% of the portfolio Green roof New cooling system with • Implementing data analytics to monitor energy consumption highest energy performance • Pilot on asset indicates 1
Slide 15: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. Developments 4. Financials 5. Final remarks Annex NSI Half Year Results 2020 15
Slide 16: Bentinck Huis refurbishment: Before & after
Developments update Bentinck Huis refurbishment Before & after Before After NSI Half Year Results 2020 16
Slide 17: Bentinck Huis refurbishment: Initial expectations vs reality
Developments update Bentinck Huis refurbishment Initial expectations vs reality Expectations (2018) Reality (2020) Result Delay in renovation permit 3 months Change in scope of project 3 months Core & Shell Fire safety issues 2 months Q2 2019 Q2 2020 Completion date COVID-19 2 months Aggressive plan
Slide 18: Amsterdam office market vacancy vs stock
Developments update Amsterdam office market vacancy vs stock Development pipeline offers potential Stock Owner occupied1 Pre-let1 Speculative1 Vacancy (LHS) ‘000 sqm 15% 6,600 454 6,300 10% 170 45 6,000 5% 3.7% 5,983 5,700 0% 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20
Slide 19: Sizeable development pipeline over next decade
Developments update Sizeable development pipeline over next decade Substantial value add potential New build area Increase in area Expected Expected Current Area (sqm) (sqm) Start delivery phase Near Term Amsterdam Preliminary Vitrum 11,700 TBD H1 2022 Q4 2023 South-Axis design Amsterdam Laanderpoor
Slide 20: Redevelopment Laanderpoort Amsterdam
Developments update Redevelopment Laanderpoort Amsterdam 87.5% of floor area pre-let H1 2020 news Signed & announced cooperation and lease agreement with ING • Paul de Ruiter Architects has been commissioned for the project • New buildings will total 40,000 sqm • Design team contracted • Expected st
Slide 21: Vitrum refurbishment
Developments update Vitrum refurbishment Modernising iconic bridge building, close to prime South-Axis H1 2020 news Major refurbishment • Status: Sketch design completed • Modernizing façade and office floors • Architect commissioned: Cepezed • Large new reception area • Expected start construction
Slide 22: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. Developments 4. Financials 5. Final remarks Annex NSI Half Year Results 2020 22
Slide 23: Rent Collection Q2 2020
Financials update Rent Collection Q2 2020 A customised approach 25% Collectable Deferred 44% 56% Overdue 4% Open Paid 96% 75% Uncollectable Restructured 46% 54% Waived Rent collection bridge Q2 2020 25.4 0.5 24.3 0.4 0.1 0.2 3.3 3.1 19.0 Rent invoiced Service charge VAT Invoiced total Waived1 Restru
Slide 24: EPRA Earnings
Financials update EPRA Earnings H1 2020 H1 2019 Change % Gross rental income 37.9 42.1 -10.0% Service costs not recharged -0.8 -1.0 -14.2% Operating costs -7.6 -9.0 -16.1% Net rental income 29.5 32.2 -8.1% Administrative costs -3.6 -3.8 -4.0% Net financing result -4.1 -5.2 -20.4% Direct investment r
Slide 25: EPRA Earnings per share
Financials update EPRA Earnings (€ per share) 1.25 1.20 1.15 0.00 -0.27 0.06 1.10 1.24 0.01 1.05 1.14 0.09 1.00 0.01 0.00 EPRA EPS GRI Service costs Operating costs Administrative costs Net financing result Other EPRA EPS H1 2019 not recharged H1 2020 NSI Half Year Results 2020 25
Slide 26: EPRA NAV
Financials update EPRA NAV (€ per share) 49.5 49.0 48.5 1.15 -1.12 48.0 -0.19 47.5 47.0 46.5 -2.94 46.0 45.5 47.97 45.0 0.01 -0.07 -0.01 44.5 44.79 0.5 0.0 EPRA EPRA Dividend Effect of Revaluation Result Unwinding Other EPRA NAV Earnings stock on swaps NAV 1 Jan 2020 dividend sales 30 Jun 2020 NSI H
Slide 27: Balance sheet de-risked, cost of debt stable
Financials update Balance sheet de-risked, cost of debt stable Significant capacity to invest remains Loan-to-value Cost of debt 58.0 5.2% 4.9% -28.8pp -3.1% 48.9 45.4 3.7% 43.3 44.1 36.9 36.9 2.8% 2.3% 2.0% 2.1% 2.1% 29.2 27.4 2012 2013 2014 2015 2016 2017 2018 2019 2020 H1 2013 2014 2015 2016 2017
Slide 28: Extending maturities to prepare for next phase
Financials update Extending maturities to prepare for next phase Loans maturity profile Jun 2020 (€m)¹ Strategy and achievements Strategy • Further extending and diversifying maturities • Further diversifying funding sources • Refinancing 2020 secured debt with unsecured facilities • Maintain balanc
Slide 29: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. Developments 4. Financials 5. Final remarks Annex NSI Half Year Results 2020 29
Slide 30: Leesman survey: Working from home experiment
Final remarks Leesman survey Working from home experiment Working from home My home environment enables me to work productively 1. On average, employees’ home working experience appears to be No relatively good 23% 2. The largest benefits are in support of different types of conversations while the
Slide 31: Leesman survey: Working at the office
Final remarks Leesman survey Working from home experiment Working at the office My workplace enables me to work productively 1. Expectations towards the office may have changed while people have been working from home No 2. The experience provided in the workplace will have an impact on 37% an emplo
Slide 32: Final remarks
Final remarks Final remarks • Per 10 July 90.4% of rent collected for Q3 and July • EPRA EPS guidance for 2020 reinstated: €2.30 - €2.40 • Interim dividend confirmed at € 1.04 • Strong balance sheet a highly valuable asset • Market evidence in H2 as liquidity returns to investment markets • WFH expe
Slide 33: Table of contents
Table of contents 1. Introduction 2. Portfolio & market 3. Developments 4. Financials 5. Final remarks Annex NSI Half Year Results 2020 33
Slide 34: Strategy set out in February 2017 executed
Annex Strategy set out in February 2017 executed A clear focus A focus entirely on Dutch offices… ✓ Location – Economic growth centres (Amsterdam, The Hague, Rotterdam, Positioning Utrecht, Eindhoven, Den Bosch, Leiden and selective others) ✓ Potential – Larger, high quality, high margin, more effic
Slide 35: Significant improvement in Key Performance Indicators 2016 - 2020
Annex Significant improvement in Key Performance Indicators 2016 - 2020 Delivering on all targets set out in the Q1 2017 business plan Jun 2020 Dec 2016 Vacancy rate 7.8% 21.4% 13.6pp Number of Assets (#) 63 165 102 Average asset Value (€m) 20.0 7.0 13.0 % of assets in offices¹ 94% 66% 28pp
Slide 36: Rent collection Q3 2020
Annex Rent collection Q3 2020 Rent collection in Q3 up compared to Q2 in first 10 days 2020 Q2 per 10 Apr. Q3 per 10 Jul. Offices 86.3% 92.3% HNK 83.9% 86.5% Other 56.6% 84.8% TOTAL 83.5% 90.4% +6.9% 90.4% 83.5% Offices HNK Other 92% 87% 86% 84% 85% 57% Q2 per 10 Apr. Q3 per 10 Jul. NSI Half Year Re
Slide 37: Corona pandemic decreases returns
Annex Corona pandemic decreases returns Excellent performance in the past 3 years Total return per share (€) NAV growth Dividend 10.38 8.22 5.25 4.18 2.96 3.09 2.02 0.80 2.16 2.16 2.16 2.16 2.16 1.04 -3.68 -3.18 -2.14 -1.52 2015 2016 2017 2018 2019 H1 2020 Total 7.9% -4.0% 12.1% 14.3% 26.1% -4.5% re
Slide 38: A concentrated portfolio in growth locations
Annex A concentrated portfolio in growth locations Emphasis on G5 growth locations Total portfolio Disposals 2016-2019 NSI Half Year Results 2020 38
Slide 39: NSI portfolio composition – increasing focus
Annex NSI portfolio composition – increasing focus Emphasis on G5, especially Amsterdam € 1.1bn € 1.2bn € 1.2bn € 1.1bn € 1.2bn € 1.3bn € 1.3bn 5% 6% 10% 17% 5% 4% 9% 11% 11% 34% 41% 47% 10% 16% 28% 28% 11% 18% 25% 21% 20% Target 8% 90% cities 26% 8% 17% 5% 51% 51% 16% 45% 36% 27% 15% 23% 14% 7% 201
Slide 40: Average asset size target > € 20m
Annex A more concentrated portfolio of larger assets Average asset size target > € 20m Number of assets Average asset value (€m) 350 20.0 20 300 18 250 16 +335% -80% 14 200 12 10 150 8 100 6 63 4 50 2 0 0 2012 2013 2014 2015 2016 2017 2018 2019 H1 2012 2013 2014 2015 2016 2017 2018 2019 H1 2020 2020
Slide 41: Over € 1.2bn of transaction volume in 5 years
Annex Over € 1.2bn of transaction volume in 5 years Average transaction volume over € 200m p.a. Annual transaction volumes (€m) 600 Acquisitions Disposals 400 595 200 169 139 161 61 32 34 0 -48 -16 -63 -121 -129 -242 -200 -618 -400 -600 -800 2015 2016 2017 2018 2019 H1 2020 Total NSI Half Year Resul
Slide 42: Acquisitions 2017-2020
Annex Acquisitions 2017-2020 Uniceflaan 1 Bijlmerdreef 100 Parnassusweg 101 Archimedesweg 6 Kennedyplein 101 Kingsfordweg 43-117 Utrecht Amsterdam Amsterdam Leiden Eindhoven Amsterdam 12,079 13,300 11,700 7,239 6,642 12,709 20.5 33.8 45.0 17.5 13.6 36.8 2017 2017 2017 2017 2017 2018 Lange Voorhout 7
Slide 43: Increase in EPRA vacancy due to COVID-19
Annex Increase in EPRA vacancy due to COVID-19 Flexible offices respond quicker EPRA Vacancy rate Offices EPRA Vacancy rate HNK -25.1pp -46.2pp 29.9% 62.1% 28.0% 27.3% 55.1% 22.9% 47.4% 21.3% 43.6% 37.1% 15.9% 29.8% 11.1% 23.1% 23.2% 13.6% 14.5% 15.9% 11.6% 12.8% 4.8% 9.1% 4.1% 2012 2013 2014 2015 2
Slide 44: Key portfolio metrics
Annex Key portfolio metrics 30 June 2020 Dec 2019 Change Offices HNK Other TOTAL Number of properties1 45 14 4 63 65 -3.1% Market value (€)² 932 255 76 1,262 1,287 -1.9% Annual contracted rent³ 55 19 7 82 81 0.6% Market rent⁴ 62 23 7 92 92 -0.3% Lettable area (sqm k) 302 127 53 482 491 -2.0% Average
Slide 45: Offices split
Annex Offices split 30 June 2020 Other Target Dec 2019 Change Amsterdam Other NL TOTAL Cities Number of properties1 16 24 5 45 46 -2.2% Market value (€)² 554 359 18 932 945 -1.4% Annual contracted rent³ 31 23 2 55 54 1.9% Market rent⁴ 35 24 2 62 61 0.6% Lettable area (sqm k) 144 145 13 302 309 -2.0%
Slide 46: Yields
Annex Yields EPRA net initial yield Gross initial yield Reversionary yield Q2 2020 Dec. 2019 Q2 2020 Dec. 2019 Q2 2020 Dec. 2019 Offices 4.6% 4.5% 6.2% 6.0% 6.9% 6.7% HNK 4.5% 4.6% 7.5% 7.5% 9.0% 8.8% Other 6.4% 5.8% 9.2% 8.8% 9.4% 9.4% TOTAL 4.7% 4.6% 6.6% 6.4% 7.5% 7.3% Target Cities 4.5% 4.4% 6.3
Slide 47: Expiries and reversion
Annex Expiries and reversion Total portfolio (€m) Offices portfolio (€m) 90 70 60 50 80 40 30 70 20 10 0 60 2020 2021 2022 2023 2024 > 2024 TOTAL Contract rent 1,030 13,498 8,968 3,889 4,862 23,248 55,495 ERV 990 14,641 9,166 3,901 4,908 25,090 58,696 50 # Contracts 18 43 36 22 24 46 189 Reversionar
Slide 48: Amsterdam office market
Annex Amsterdam office market Stock (m sqm) Prime yields 6.75 7.0% 6.6 6.5 6.5 6.50 6.4 6.0% 5.8% 5.6% 5.6% 5.5% 5.5% 6.3 6.3 5.2% 6.3 6.25 5.0% 4.8% 6.1 4.3% 6.0 6.0 6.0 4.0% 3.8% 6.00 5.9 3.0% 2.9% 3.0% 3.0% 0.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2010 2011 2012 2013
Slide 49: Utrecht office market
Annex Utrecht office market Stock (m sqm) Prime yields 2.55 7.0% 6.3% 2.52 2.52 6.1% 6.1% 2.51 5.8% 5.9% 5.8% 2.51 6.0% 5.7% 2.50 2.50 5.3% 2.49 5.0% 2.47 5.0% 2.47 4.3% 4.2% 2.46 4.0% 2.45 2.45 2.44 4.0% 2.44 3.0% 0.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2010 2011 2012
Slide 50: Rotterdam office market
Annex Rotterdam office market Stock (m sqm) Prime yields 3.7 7.0% 3.66 3.62 3.63 3.63 6.2% 3.59 5.8% 5.8% 5.8% 3.6 3.56 6.0% 5.6% 5.7% 3.55 5.5% 5.3% 5.1% 3.5 5.0% 3.45 4.4% 4.0% 4.2% 3.39 3.4 3.36 3.37 4.0% 3.35 3.0% 0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2010 2011 201
Slide 51: The Hague office market
Annex The Hague office market Stock (m sqm) Prime yields 4.6 7.0% 4.51 6.2% 4.5 5.9% 6.0% 6.0% 5.9% 5.8% 4.40 6.0% 5.6% 5.7% 4.4 4.37 4.32 5.3% 4.32 4.29 4.3 5.0% 4.6% 4.18 4.3% 4.4% 4.2 4.11 4.1 4.06 4.07 4.07 4.0% 4.04 4.0 3.0% 0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2
Slide 52: Segment information
Annex Segment information Income statement HY 2020 Offices HNK Other Other Other Corporate¹ TOTAL (€ m) Amsterdam Target Other NL Amsterdam Target Other NL Cities Cities Gross rental income 14.4 10.5 0.9 2.4 4.6 1.7 3.4 37.9 Service costs not recharged -0.1 -0.2 -0.1 -0.1 -0.1 -0.2 -0.1 -0.8 Operati
Slide 53: Balance sheet
Annex Balance sheet (€ m) 30 June 2020 31 December 2019 Real estate investments 1,253 1,263 Assets classified as held for sale 0 16 Other assets 13 11 Cash and cash equivalents 2 1 Total assets 1,268 1,291 Shareholders' equity 858 903 Interest bearing loans 345 316 Debts to credit institutions 0 13
Slide 54: NSI Half Year Results 2020
NSI Half Year Results 2020 54