LEG Immobilien SE · XETR:LEG

LEG Immobilien — 9M 2019 Earnings Presentation

32 slides from LEG Immobilien's earnings presentation, Nov 15, 2019

  1. Slide 1: LEG Immobilien AG 9M-2019 Results

    LEG Immobilien AG 15 November 2019 9M-2019 Results

  2. Slide 2: Disclaimer

    Disclaimer 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 C

  3. Slide 3: Agenda

    Agenda I. HIGHLIGHTS 9M-2019 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. BUSINESS UPDATE AND OUTLOOK V. APPENDIX 3 I November 2019

  4. Slide 4: Highlights 9M-2019

    Highlights 9M-2019 Overall company development: Delivering on key value drivers  Acquisitions: Approx. 5,700 units signed (YTD), pipeline of several smaller deals  Capital growth: Another valuation uplift of around 3% expected in Q4 (~8% in FY-2019)  Financing: Further reduction of avg. interest

  5. Slide 5: Agenda

    Agenda I. HIGHLIGHTS 9M-2019 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. BUSINESS UPDATE AND OUTLOOK V. APPENDIX 5 I November 2019

  6. Slide 6: Portfolio Overview

    Portfolio Overview Positive rent development across all submarkets Strong results on the basis of tailor-made Minden- Lübbecke management strategies Steinfurt Herford Bielefeld Lippe High-Growth Markets Borken Munster Gütersloh Coesfeld Warendorf 30.09.2019  (YOY) Kleve Hamm Paderborn Hoxter # of u

  7. Slide 7: Rent Development

    Rent Development Strong market fundamentals L-f-l residential rent (€/sqm/month) L-f-l free financed rent (€/sqm/month) +3.7% +2.9% 6.20 5.82 5.98 5.65 Q3-2018 Q3-2019 Q3-2018 Q3-2019  Performance of free financed units reflects sound underlying fundamentals  Rent restricted units: +0.5% year-on-y

  8. Slide 8: Capex & Maintenance

    Capex & Maintenance Lifting internal growth potential Investment (€m) +11.8% €194.9m (€21.88/sqm1) €174.4m (€20.32/sqm1) • Investments increased by 11.8% year-over-year driven €120.3m €136.5m by increased value enhancing capex • Capex ratio increased to 70.0% • Outlook of 30-32 €/sqm in 2019 (capex

  9. Slide 9: Agenda

    Agenda I. HIGHLIGHTS 9M-2019 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. BUSINESS UPDATE AND OUTLOOK V. APPENDIX 9 I November 2019

  10. Slide 10: Financial Highlights 9M-2019

    Financial Highlights 9M-2019 Margin expansion story continues Net Cold Rent (€m) Adj. Net Rental and Lease Income (€m) Adj. EBITDA (€m) +5.5% +7.9% +8.0% 417.0 439.8 350.1 324.4 305.9 330.5 9M-2018 9M-2019 9M-2018 9M-2019 9M-2018 9M-2019 FFO I (€m) Capex-Adj. FFO I / AFFO (€m) Margin (%) 9M-2018 9M-

  11. Slide 11: FFO Calculation

    FFO Calculation 9M-2019 € million 9M-2019 9M-2018 Net cold rent 439.8 417.0  +€22.8m/+5.5% Profit from operating expenses -0.9 -3.3 Maintenance (externally-procured services) -36.9 -37.6 Staff costs -48.8 -45.2  Growth in staff costs mainly due to additional FTE’s for crafts Allowances on rent rec

  12. Slide 12: FFO Bridge

    FFO Bridge 9M-2019 1.3 0.4 2.2 €m 9.7 2.7 12.6 -1.6 -5.9 -2.2 300 -2.3 200 259.1 242.2 100 0 FFO I Organic Net rental Sales effect Lower Lower l-f-l Lower Lower net Higher net Minorities Others FFO I rental growth operating costs maintenance recurring cash interest cash 9M-2018 9M-2019 growth from a

  13. Slide 13: Cash Effective Interest Expense

    Cash Effective Interest Expense 9M-2019 € million 9M-2019 9M-2018 Reported interest expense 92.7 72.0  Interest expenses related to extraordinary loan Interest expense related to loan amortisation -29.5 -9.2 amortisation of €20.2m due to early conversion of convertible (€17.7m) and Interest costs r

  14. Slide 14: EPRA-Net Asset Value

    EPRA-Net Asset Value Further capital growth ahead € million 30.09.2019 31.12.2018  €486.2m net profit Equity (excl. minority interests) 5,527.4 4,757.6  €551.5m equity conversion  -€41.5m change in OCI Effect of exercising options, convertibles and other rights 86.7 553.9  -€223.1m dividend  -€

  15. Slide 15: Portfolio

    Portfolio Sound property fundamentals basis for value growth As of 30.09.2019; IAS 40 only, IFRS5 excluded Market Multiples, GAV GAV % of Total Estimated Commercial/ Residential Residential Residential GAV/ In-Place Rental Other Market Units Assets (€m) GAV sqm (€) Rent Multiple Values1) Assets (€m)

  16. Slide 16: Balance Sheet

    Balance Sheet Strong balance sheet  Revaluation €551.6m € million 30.09.2019 31.12.2018  Capex €132.4m Investment properties 11,276.6 10,709.0  Reclassifications (Disposal) -€178.9m Other non-current assets 222.6 175.9  Acquisitions €25.9m Non-current assets 11,499.2 10,884.9  IFRS 16 and Other

  17. Slide 17: LTV

    LTV Low LTV leaves headroom for growth € million 30.09.2019 31.12.2018 Financial liabilities 4,577.2 4,598.1  Strong balance sheet (LTV target: 40-43%) after equity Leasing liabilities (IFRS 16) 32.1 0.0 conversion of the 2014/2021 convertible leaves headroom Cash & cash equivalents 382.3 233.6 for

  18. Slide 18: Financing Structure – 30 September 2019

    Financing Structure – 30 September 2019 LT financing provides high visibility for future earnings growth Weighted avg. interest (excl. subsidised loans) % as of 30.09.2019 1.3% 1.6% €962m €908m Variable interest 9.9% 1.6% 1.6% €536m 1.7% 2.2% Swaps €458m €420m 12.7% €360m 1.0% €290m Fixed 4.2% 30.09

  19. Slide 19: Agenda

    Agenda I. HIGHLIGHTS 9M-2019 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. BUSINESS UPDATE AND OUTLOOK V. APPENDIX 19 I November 2019

  20. Slide 20: Business Update

    Business Update Accelerating external growth Portfolio growth supported by the broadening of the regional scope  LEG remains net buyer with acquisition of portfolios with c. 5,700 units YTD (thereof 210 newly built apartments)  Purchase of c. 2,600 units outside of NRW underpins LEG’s sourcing cap

  21. Slide 21: Business Update

    Business Update Accelerating external growth Acquisitions Residential Purchase price Rent multiple Price / sqm FFO p.a. signed in 2019 units 5,516 approx. €500m 21.7x €1,433 c. €13m (FY 2020) Top 5 locations Units Federal state Market segment Bremen 1,160 Bremen  stable Greater Aachen region1 1,094

  22. Slide 22: Outlook

    Outlook Guidance for 2019 & 2020: higher FFO target 2019 2020 KPI prev. FFO I €338m - €344m €370m - €380m €356m-€364m prev. L-F-L rent growth 3.0-3.2% c. 3.0% c. 2.8% (3.0 % excl. refinancing) prev. 3.2-3.4% L-F-L vacancy prev. slighty stable (≙3.3%) slightly decreasing (~3.0%) decreasing EBITDA mar

  23. Slide 23: Agenda

    Agenda I. HIGHLIGHTS 9M-2019 II. PORTFOLIO AND OPERATING PERFORMANCE III. FINANCIAL PERFORMANCE IV. BUSINESS UPDATE AND OUTLOOK V. APPENDIX 23 I November 2019

  24. Slide 24: Generating Appealing Shareholder Returns

    Generating Appealing Shareholder Returns NAV per share (€), excl. goodwill Dividend per share (€) 100.521) 93.401) 80.901) 3.53 67.15 3.04 2.76 58.92 2.26 52.69 1.96 49.39 1.73 2013 2014 2015 2016 2017 2018 Q3-2019 2013 2014 2015 2016 2017 2018 1) For 2017, 2018, Q3-2019 pro forma NAV per share is s

  25. Slide 25: Income Statement

    Income Statement 9M-2019 € million 9M-2019 9M-2018 Net rental and lease income 340.2 315.2  Higher net cold rents (+€22.8m YOY/+5.5%) Net income from the disposal of investment property -0.8 -0.7 Net income from the valuation of investment property 551.6 383.5  Revaluation gains of 5.1% Net income

  26. Slide 26: Acquisitions: Leading Management Skills Paying Off

    Acquisitions: Leading Management Skills Paying Off Scalability of platform + cost discipline support value accretive growth Strong volume growth at overhead cost below FY-2013 level… Recurr. admin costs # of units 33.1 36.7 32.1 35.2 33.3 34.0 €35m 150,000 100,000 128,488 130,085 133,969 50,000 106,

  27. Slide 27: LEG – Adj. EBITDA Margin

    LEG – Adj. EBITDA Margin Leading profitability despite short term distortion from restricted units Adj. EBITDA margin FY-2018 FY-2017 €m margin % €m margin % As reported 405.2 72.3 385.7 72.1 1) Gap restricted vs. unrestricted rents 33.5 73.7 30.1 73.6 1) €/sqm: €4.77 vs. €6.00 in 2018, €/sqm: €4.74

  28. Slide 28: Rent revisionary potential

    Rent revisionary potential Refinancing of subsidised loans lifting value Rent Potential Subsidised Units Number of Units Coming Off Restriction and Rent Upside  In the following 10 years more than # Units c. 17,000 c. 8,800 24,000 units will come off rent 2,166 restriction 1,733 1,589 697 827  Uni

  29. Slide 29: LEG Share Information

    LEG Share Information Strong outperformance vs. benchmarks including dividends Basic data Well-balanced shareholder structure • Prime Standard, Frankfurt Stock Exchange • Total no. of shares: 69,009,836 (68,573,216 as at 30.09.2019) • Ticker symbol: LEG MFS • ISIN: DE000LEG1110 9.6% • Indices: MDAX,

  30. Slide 30: Financial Calendar

    Financial Calendar Date Report/Event 11.03.2019 Annual Report 2018 09.05.2019 Quarterly Statement Q1 as of 31 March 2019 29.05.2019 Annual General Meeting, Düsseldorf 09.08.2019 Quarterly Report Q2 as of 30 June 2019 15.11.2019 Quarterly Report Q3 as of 30 September 2019 20.11.2019 Roadshow London,

  31. Slide 31: Contact

    Contact Investor Relations Burkhard Sawazki Head of Investor Relations & Strategic Business Analysis Tel: +49 (0) 211 4568-204 [email protected] Karin Widenmann Senior Manager Investor Relations & Strategic Business Analysis Tel: +49 (0) 211 4568-458 [email protected] LEG Immobilien AG Ph

  32. Slide 32: Thank you for your interest.

    Thank you for your interest.

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