Adler Group Sa · XETR:ADJ
Adler Group Sa — ADO Properties — H1 2020 Earnings Presentation
41 slides from Adler Group Sa's earnings presentation, Aug 31, 2020
Slide 1: First half 2020 results presentation
First half 2020 results presentation Berlin – 31 August 2020
Slide 2: Agenda
Agenda 1 Successful first half 2020 2 Well diversified German residential portfolio 3 Enhanced focus on developments 4 First half 2020 results 5 Guidance 6 Appendices 2
Slide 3: 1. Successful first half 2020
1. Successful first half 2020
Slide 4: Highlights of H1 2020
1. Highlights of H1 2020 ▪ €114.8m of NRI realized over the first half of 2020, up from €67.5m in H1 19 as a result of the consolidation of Adler per April 2020 ▪ €6.2/sqm/month average residential rent, up from €6.1 in H1 19 Operational ▪ 1.9% like-for-like rental growth at H1 20, down from 3.8% in
Slide 5: Series of transactions successfully completed
1. Series of transactions successfully completed Combination of Offer for ADLER Exercise of call Rights issue & Integration ongoing Next steps ADO & ADLER completed option Bond placement ◼ Business combination ◼ Closing on 9 April ◼ Appointment of ◼ On 8 & 20 May 2020, ◼ Completion of €457m ◼ Launch
Slide 6: Firming up development capabilities by acquiring Consus
1. Firming up development capabilities by acquiring Consus Fourth largest listed European residential player with significant footprint in Top 7 German cities, €11.7bn1 GAV and ~€2.7bn2 ✓ providing a strong platform for growth market cap Integrated German residential platform with unique build-to-ho
Slide 7: 2. Well diversified German residential portfolio
2. Well diversified German residential portfolio
Slide 8: Well diversified German residential rental portfolio
2. Well diversified German residential rental portfolio Creating a geographically well balanced rental portfolio Development of number of units over time1 100,000 Sale to Gewobag of 5,900 units 80,000 74,682 60,000 40,000 20,000 – 2015 2016 2017 2018 2019 1H2020 Development of fair value of investme
Slide 9: Top cities account for 77% of the residential value
2. Top 13 cities account for 77% of the residential value Key portfolio metrics Key cities in a well diversified portfolio Fair Value Fair Value Lettable area *NRI Rental yield Vacancy Vacancy H1 20 Avg. Rent NRI Location Units €m H1 20 €/sqm 1H20 sqm €m H1 20 (in-place rent) H1 20 Δ YoY €/sqm/month
Slide 10: 3. Enhanced focus on developments
3. Enhanced focus on developments
Slide 11: Developments driving growth in the top German cities
3. Developments driving growth in the top 9 German cities Map of top 9 cities Comments Focus on top 9 German cities ▪ Housing shortage is the highest in the larger cities ▪ Rental prices and values will continue to rise in the largest cities ▪ Above average population growth in largest cities to con
Slide 12: Increased focus on developments in top German cities
3. Increased focus on developments in top 9 German cities ◼ Adding housing stock in cities with high housing shortage (Wolfsburg and Göttingen, construction started) Extensions / ◼ Development of new apartments in combination with significant tenant improvements increasing occupancy modernisations ◼
Slide 13: Attractive landbank paving the way for future organic growth
3. Attractive landbank paving the way for future organic growth Projects under Build-to-Hold portfolio Portfolio overview GAV GDV Area Yield on cost # Project Name City (€m) (€bn) (k sqm) (%) Hamburg 1 Benrather Gärten Düsseldorf 106 1.1-1.3 216 5.3% 2 0.3 188 VAI Campus (without 2 Stuttgart 181 0.9
Slide 14: Value uplift potential at Consus could drive future NAV growth
3. Value uplift potential at Consus could drive future NAV growth Illustrative cost and profitability composition ~20-30% Development margin ~€1.0-1.6bn target value uplift Cost of €2.5–€3.0bn ~50-60% construction construction cost (spent over 6–8 years) ~20% Land value ~€1bn Landbank (11 projects)
Slide 15: Unlocking embedded value through selected developments
3. Unlocking embedded value through selected developments Consus Build-to-Hold portfolio | Estimated value (€/sqm) Comments ~1.0 ~2.8 ~3.7 ~1.0-1.6 ~4.7-5.3 1▪ Based on current value, Consus’ 11 projects with a total floor area of ~0.8m in its build-to-hold portfolio have an estimated value of ~€1,2
Slide 16: 4. First half 2020 results
4. First half 2020 results
Slide 17: Resilient operational performance
4. Resilient operational performance Total number of units Investment properties (€m) Residential portfolio FV/sqm (€) 100,000 10,000 9,039 1,800 1,635 1,696 8,551 8,824 1,553 1,622 81,771 81,730 1,600 1,452 75,721 74,682 8,000 80,000 1,400 63,957 66,362 68,149 6,325 1,215 1,200 60,000 6,000 905 4,7
Slide 18: Investments in the portfolio continue
4. Investments in the portfolio continue Total Capex and Maintenance (€m) Maintenance expense (€/sqm) 180 Capex Maintenance 10 8.9 8.6 8 7.2 160 6.5 6.7 6 40.8 140 4 3.4 3.1 2 120 34.4 0 2015 2016 2017 2018 2019 1H19 1H20 100 Capex invested (€/sqm) 80 31.3 30 16.1 26.1 60 124.3 25 34.4 18.9 97.7 16.
Slide 19: Maintaining average cost of debt at attractive levels
4. Maintaining average cost of debt at attractive levels Net loan to value1 Recent developments 70% ▪ In February 2020, c.€300m of non-euro bonds of ADO Group were fully 60% repaid. The repayment was funded through cash and a €175m increase in the 53.5% existing ADLER bridge, increasing the amount t
Slide 20: Actively extending maturities with €339m under discussion
4. Actively extending maturities with €339m under discussion Debt maturity schedule (€m) Recent developments 2,000 ▪ Post the H1 20 balance sheet date, on 29 July 2020 we successfully placed a 1,567 €400m single tranche bond with a 5-year maturity and a 3.25% fixed coupon 1,500 979 in order to refin
Slide 21: 5. Guidance
5. Guidance
Slide 22: Breakdown of H1 2020 reporting
5. Breakdown of H1 2020 reporting Net Rental Income (€m) FFO I (€m) 114.8 44.3 59.4 21.9 55.4 22.4 ADO 1H20 ADLER 2Q20 ADO 1H20 Reported ADO 1H20 ADLER 2Q20 ADO 1H20 Reported 22
Slide 23: 2020 guidance reiterated despite COVID-19
5. 2020 guidance reiterated despite COVID-19 Objectives 2020 Key takeaways 2020 Pro-forma 2020 Guidance Guidance (i.e. combining the (i.e. combining the companies as of the companies for the whole effectuation in April 2020) year 2020) ▪ Acquisition of ADLER successfully completed Net rental income
Slide 24: An experienced management with operational expertise
An experienced management with operational expertise Maximilian Rienecker Thierry Beaudemoulin (Co-CEO & Director) (Co-CEO & Director) ◼ Corporate Strategy ◼ Asset Management ◼ M&A ◼ Transaction/ Acquisition ◼ Financing ◼ Property Management/ Letting ◼ Accounting, Treasury ◼ Technical Management ◼ T
Slide 25: Contact
Contact ADO Properties and ADLER Real Estate Tina Kladnik Head of IR E-mail: [email protected] +49 162 424 68 33 25
Slide 26: 6. Appendices
na SN 4 iY we a aw Fhe ie 7 6. Appendices
Slide 27: Detailed overview on Guidance
Detailed overview on Guidance Proforma NRI and FFO I for 2020E
Slide 28: Annualized pro forma net rental income of €340-360m for 2020E
Annualized pro forma net rental income of €340-360m for 2020E Annualized pro forma NRI in the range of €340-360m for existing portfolio for 2020E Legend 340-360 1▪ First full year effect from the €920m disposal of 5,900 units to Gewobag effective 1 December 2019 2▪ Berlin rental growth at zero under
Slide 29: Annualized pro forma FFO I to grow to €120-140m for 2020E
Annualized pro forma FFO I to grow to €120-140m for 2020E Annualized pro forma FFO I of €120-140m generated by existing portfolio* for 2020E Legend ▪1 First full year effect from the €920m disposal to Gewobag, corrected for impact of lower overhead and lower financing costs 120-140 ▪2 First full yea
Slide 30: Overview of debt instruments
Overview of debt instruments
Slide 31: Overview of debt instruments
Overview of debt instruments Instruments at 30 June 2020 Book value Volume €m Maturity Nominal interest rate Other comments Premature redemption Rate, at which premature redemption is possible €m Adler Bonds 2017/21 495 500 06 Dec 2021 1.50% Anytime Under condition of make whole 2017/24 288 300 06 F
Slide 32: ADO Properties - First half 2020 financials
ADO Properties First half 2020 financials
Slide 33: ADO - Profit and loss statement
ADO - Profit and loss statement Profit and loss statement per 30 June 2020 Comments In €m, except per share data H1 2020 H1 2019 1 Revenue increased due to the consolidation of ADLER since the beginning of Q2 Net rental income 115 68 2020. The selling of 20% of the portfolio in 2019 and the Berlin r
Slide 34: ADO - Statement of other comprehensive income
ADO - Statement of other comprehensive income Other comprehensive income per 30 June 2020 Comments In €m, except per share data H1 2020 H1 2019 1 Reserve financial asset measures mainly the difference in value of the 1. Profit for the year 86 254 strategic stake in Consus between end of 2019 and the
Slide 35: ADO - Balance sheet
ADO - Balance sheet Balance sheet per 30 June 2020 Comments In €m H1 2020 FY 2019 1 Investment properties increased by €4,930m due to consolidation of ADLER; Investment properties including advances 8,825 1 3,631 increase in fair value of €141m in Q2 2020 including ADLER. Investment in Consus 201 2
Slide 36: ADO - FFO and EPRA NRV bridge
ADO - FFO and EPRA NRV bridge FFO calculation EPRA NRV calculation In €m, except per share data H1 2020 H1 2019 In €m, except per share data H1 2020 FY 2019 EBITDA from rental activities 77 47 1 Total equity attributable to owners of the Company 2,935 2,647 Net cash interest -28 -14 Fair value of de
Slide 37: CONSUS - Recent disposals
CONSUS Recent disposals
Slide 38: Disposing non-strategic projects streamlines Consus portfolio
Disposing non-strategic projects streamlines Consus portfolio Sale of 17 Sale of 8 As of projects on projects on Q1-2020 May 08, 2020 Pro-Forma May 20, 2020 Pro-Forma ◼ On May 8, 2020, Consus sold 17 Number of development projects with a 65 17 48 8 402 projects GAV of €0.6bn, reducing project debt b
Slide 39: Transaction overview
Transaction overview Creation of a fully integrated residential real estate platform
Slide 40: The creation of a Germany wide residential real estate platform
The creation of a Germany wide residential real estate platform ✓✓ In December 2019, ADO launched an all share voluntary exchange offer for ADLER and acquired a strategic minority stake in Consus ◼ following successful public offer, ADO owns ~95%1 of ADLER ~95%1 ✓✓ The Group owns ~26%2 in Consus as
Slide 41: 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