LEG Immobilien SE · XETR:LEG

LEG Immobilien — 9M 2015 Earnings Presentation

40 slides from LEG Immobilien's earnings presentation, Nov 12, 2015

  1. Slide 1: LEG Immobilien AG 9M Results 2015

    LEG Immobilien AG 9M Results 2015 12th November 2015

  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.I.I. Highlights 9M-2015 II. I.I. Portfolio and Operating Performance III. I.I. Financial Performance I.I. Business Update and Outlook IV. V. I.I. Appendix Chart 3

  4. Slide 4: Highlights 9M-2015

    I.I.I. Highlights 9M-2015 Chart 4

  5. Slide 5: Highlights 9M-2015

    Highlights 9M-2015 Overall company development  Termination of the business combination agreement with Deutsche Wohnen  Acquisition of 13,800 units – strong affirmation of stand-alone growth strategy  LEG expands leading market position (c.20,000 units YTD) in NRW allowing for attractive scale ef

  6. Slide 6: Portfolio and Operating Performance

    II. I.I. Portfolio and Operating Performance Chart 6

  7. Slide 7: Portfolio Overview

    Portfolio Overview Strong operational performance across all submarkets High-Growth Markets Minden- Lübbecke 30 Sep 2015  (YOY) Steinfurt Herford # of units 33,561 +5.9% Bielefeld Munster Lippe In-place rent (sqm) €5.83 (€5.85*) +2.1% (+2.8%*) Borken Coesfeld Gutersloh Warendorf Kleve EPRA-Vacancy

  8. Slide 8: Rent Development

    Rent Development Attractive portfolio + operational excellence = strong rental growth L-f-l Residential Rent (€ /sqm /month) L-f-l Free-financed Rent (€ /sqm /month) 5.55 5.36 5.22 5.09 Q3-2014 Q3-2015 Q3-2014 Q3-2015  Sound growth despite absence of major cost rent adjustments (for restricted unit

  9. Slide 9: EPRA-Vacancy Development (like-for-like)

    EPRA-Vacancy Development (like-for-like) Attractive portfolio + operational excellence = low vacancies Stable Market with High-Growth Markets Attractive Yields 3.8% 3.7% 1.3% 1.3% Q3-2014 Q3-2015 Q3-2014 Q3-2015 Higher-Yielding 3.2% Markets 3.1% 5.3% 5.0% Q3-2014 Q3-2015 Q3-2014 Q3-2015  High occup

  10. Slide 10: Capex & Maintenance

    Capex & Maintenance Well maintained asset base & high capital efficiency €70.0m (€9.9/sqm) €55.0m  FY-2015 guidance of around (€8.7/sqm) €15/sqm reiterated 33.5  Rising investments in Q4- 2015 expected 26.7  FY-2015 capex ratio of 50% also reaffirmed (48.0% in 9M-2015)  Investments yielding attr

  11. Slide 11: Financial Performance

    III. I.I. Financial Performance Chart 11

  12. Slide 12: Financial Highlights 9M-2015

    Financial Highlights 9M-2015 Margin expansion on back of sound topline growth + cost discipline Rental Income (€m) Net Rental and Lease Income (€m) Adj. EBITDA (€m) 325.3 286.6 242.4 225.4 213.1 195.5 9M-2014 9M-2015 9M-2014 9M-2015 9M-2014 9M-2015 Margin (%) FFO I (€m) Capex-Adj. FFO I / AFFO (€m)

  13. Slide 13: Income Statement 9M-2015

    Income Statement 9M-2015 Condensed Income Statement (€ million) FY-2014 9M-2015 9M-2014  Higher rental income (+€38.7m/+13.5%) Net rental and lease income 284.9 242.4 213.1  NRI-margin increased from 74.4% to 74.5% YOY (75.8% to 76.1% w/o one-time costs) Net income from the disposal of investment

  14. Slide 14: FFO Calculation 9M-2015

    FFO Calculation 9M-2015 € million 9M-2015 9M-2014 Rental income 325.3 286.6  +€38.7m (+13.5% YOY) Profit from operating expenses -0.6 1.0 Maintenance -36.5 -28.3 Staff costs -27.4 -24.4 Allowances on rent receivables -4.7 -3.6 Other -10.4 -15.1 Non-recurring project costs (rental and lease) 1.8 0.9

  15. Slide 15: FFO Bridge 9M-2015

    FFO Bridge 9M-2015 €m 200 2.9 3.7 1.0 -4.2 -1.2 150 27.9 -0.6 5.0 100 158.5 124.0 50 0 Organic Net growth Higher net Higher Higher recurr. Lower Lower FFO I FFO I rent from income mainte- admin. net cash net cash Others 9M-2014 9M-2015 growth acquisitions multimedia nance (l-f-l) costs interest taxe

  16. Slide 16: Focus: Cash Effective Interest Expense 9M-2015

    Focus: Cash Effective Interest Expense 9M-2015 € million FY-2014 9M-2015 9M-2014  Refinancing costs of Reported interest expense 128.5 145.9 93.8 €46.7m (P+L effective) Interest expense related to loan amortisation -24.6 -27.4 -16.9  Including valuation of the convertible (€4.8m) Prepayment penalt

  17. Slide 17: EPRA-Net Asset Value 9M-2015

    EPRA-Net Asset Value 9M-2015 Yield compression ahead + hidden reserves from services business € million 30.09.2015 31.12.2014  -€21.9m net loss (early Equity (excl. minority interests) 2,410.6 2,476.2 * refinancing of loans and fair value measurement of Effect of exercising options, convertibles an

  18. Slide 18: First Moderate Yield Compression in Q4 2015

    First Moderate Yield Compression in Q4 2015* Strong momentum in orange markets Markets Change Total valuation uplift €265m - €285m (+4.4 – 4.7%) Orange markets c.+7.5% Green and purple markets c.+2.5 – 2.8% Selected Markets Cities Segment Valuation Uplift Dusseldorf High-Growth ~9.0% Cologne High-Gr

  19. Slide 19: Balance Sheet 9M-2015

    Balance Sheet 9M-2015 Strong balance sheet secures defensive profile € million 30.09.2015 31.12.2014  Additions €189.9m Investment property 6,093.5 5,914.3  Capex €33.5m Prepayment for investment property 0.6 16.8  Reclassification -€47.5m Other non-current assets 140.9 155.1 *  Cash flow from o

  20. Slide 20: LTV 9M-2015

    LTV 9M-2015 Strong credit profile and efficient capital structure maintained € million 30.09.2015 31.12.2014 Financial debt 3,344.3 2,960.3 Cash & cash equivalents 378.2 129.9 Net Debt 2,966.1 2,830.4  Positive impact on LTV Investment properties from future conversion of 6,093.5 5,914.3 convertibl

  21. Slide 21: Financing Structure - 30 September 2015

    Financing Structure - 30 September 2015 Variable 1 - 2 years 3 - 5 years 6 - 8 years >= 9 years interest 9.40% 3.7% 34.60% 10.4% 30.90% 27.3% 25.20% 58.6% 7.6% €710m Swaps Fixed €525m 29.9% interest €435m 62.5% €363m €335m €288m €228m €232m €144m €152m €102m €30m €35m €2m 2015 2016 2017 2018 2019 20

  22. Slide 22: Business Update and Outlook

    I.I. Business Update and Outlook IV. Chart 22

  23. Slide 23: Business Update

    Business Update Value accretive growth on basis of a highly focused management platform NRW market: Strong fundamentals suggest catch-up potential  Many core markets in still early stage of the cycle with accelerating demand growth  Affordable living in NRW key beneficiary of paradigm change of ri

  24. Slide 24: NRW Population Development

    NRW Population Development Many cities just entering upswing phase Cities entering upswing mode Index = 1975 CAGR 2011 - 2014 120 End of 115 declining population 110 105 0.2% Bielefeld 100 0.1% Mönchengladbach 0.1% Krefeld 95 0.4% Dortmund 90 85 0.6% Essen 80 1975 1978 1981 1984 1987 1990 1993 1996

  25. Slide 25: NRW cities showing significant upside potential

    NRW cities showing significant upside potential 31.1% Purchasing power* / household Gross rent / household 26.6% 24.6% % Gross rent ratio 23.3% EUR 4,132 18.8% 18.7% 18.5% 3,897 3,534 3,590 3,294 3,096 2,851 1,285 871 907 758 671 581 611 Munich Berlin Cologne Dusseldorf Dortmund NRW Essen Source: CB

  26. Slide 26: Business Update

    Business Update Value accretive growth on basis of a highly focused management platform Efficiency program beating expectations / EBITDA margin target raised  Comprehensive approach covering all processes and functions; harvesting the fruits of a concentrated portfolio  Upward revision of cost sav

  27. Slide 27: Portfolio Overview – Excellent Fit to LEG's Portfolio

    Portfolio Overview – Excellent Fit to LEG‘s Portfolio Key Figures Highlights Residential units c.13,800  Highly concentrated portfolio structure allows efficient property management Total sqm c.862 k  Portfolio is located in urban regions/commuter belts benefitting from strong migration to Germany

  28. Slide 28: Transaction Parameters – Attractive Portfolio Yield

    Transaction Parameters – Attractive Portfolio Yield Key Figures Assets Located in Urban Regions of NRW Purchase price c.€600m Asset value/sqm (€) c.€710 Rental yield/multiple (in-place rents) 7.8% (12.8x) Rental yield/multiple (estimated rental values) 8.2% (12.2x) Signing mid December 2015 Munster

  29. Slide 29: Overview Acquisitions Year-to-Date

    Overview Acquisitions Year-to-Date Deal Units Geographic Annual In place Vacancy Purchase Market Signing Expected closing # acquired focus net cold rent rent/sqm rate price 1 713 Cologne, high growth/ EUR 3.5m EUR 5.33 2.9% April 2015 not disclosed retroactively as of Leverkusen, stable 1 June 2015

  30. Slide 30: Acquisitions: Creating Tangible Value

    Acquisitions: Creating Tangible Value 31.10.2015 Closing Change In-place rent In-place rent In-place rent Units Occupancy Occupancy Occupancy € / sqm € / sqm € / sqm Portfolio incl. Vitus transaction 20,869* 5.12 95.9% 4.87 95.5% 0.25 (+5.1%) ~ +40 bp Dynamic rent growth confirms attractive reversio

  31. Slide 31: Raised Outlook for 2016 & New Guidance 2017

    Raised Outlook for 2016 & New Guidance 2017 2015 Guidance FFO I: €200m - €204m /€3.47 - €3.54 per share L-F-L rent growth: 2.4 - 2.6% L-F-L vacancy: Approx. 2.8% (FY-14 comparable: 2.8%) Dividend: 65% of FFO I 2016 €254m - €259m (up from €233 - €238m)/ €4.00 - €4.09 FFO I: + upside from Vonovia acqu

  32. Slide 32: Steady Expansion of Leading Profitability

    Steady Expansion of Leading Profitability FFO I (€m) 279-284 254-259 200-204 163.6 136.5 141.2 *at mid point 2012 2013 2014 2015e 2016e 2017e FFO I CAGR 2014-2017e*: +19.8% (excl. future acquisitions) EBITDA Margin ~ 72 % > 69 % > 67 % 66.5 % 64.3 % 2013 2014 2015e 2016e 2017e Chart 32

  33. Slide 33: Appendix

    LEG JI ewohnt get: Chart 33

  34. Slide 34: Mietspiegel overview

    Mietspiegel overview Expected new Mietspiegel in 2015 Release date High-Growth Stable Market1 Higher-Yielding Total (expected) Market1 Market1 Portfolio1,2 2015 (Q1) 4,861 units 13,663 units 1,386 units 19,919 units (mainly Cologne) (mainly Dortmund) (mainly Herne, Marl) 6,602 units 2,124 units 2015

  35. Slide 35: LEG – Adj. EBITDA Margin

    LEG – Adj. EBITDA Margin Leading profitability in the sector Adj. EBITDA margin 2014 2013 €m margin % €m margin % As reported 259.3 66.5 231.7 64.3 Gap restricted vs. unrestricted rents* 21.2 68.2 22.5 66.4 * €/sqm: €4.61 vs. €5.33 in 2014, €4.50 vs. €5.24 in 2013  EBITDA as reported distorted by r

  36. Slide 36: Portfolio (as of 30 Sep 2015)

    Portfolio (as of 30 Sep 2015) Sound property fundamentals basis for value growth GAV GAV % of Total Commercial/ Residential Residential Residential GAV/ In-Place Other Market Units Assets (€m) GAV sqm (€) Rent Multiple Assets (€m) Total GAV High- Growth 33,561 2,372 41% 1,113 16.0x 158 2,530 Markets

  37. Slide 37: LEG Share Information

    LEG Share Information Basic Data Shareholder Structure  Prime Standard, Frankfurt Stock Exchange BlackRock 17.57%  Total no. of shares: 58,259,788 (as of June 30, 2015)  Ticker symbol: LEG CBRE Clarion  WKN: LEG111/ ISIN: DE000LEG1110 5.40%  Indices: MDAX, FTSE EPRA/NAREIT, GPR 250, Stoxx Europ

  38. Slide 38: Financial Calendar

    Financial Calendar Date Report/Event 12.11.2015 Quarterly Report 9M as of 30 September 2015 13.11.2015 Roadshow Amsterdam, Kempen 18.11.2015 Roadshow London, Morgan Stanley 19.11.2015 Roadshow Paris, KeplerCheuvreux 13.01.2016 J.P. Morgan European Real Estate CEO Conference, London 20.01.2016 Unicre

  39. Slide 39: Contact LEG Immobilien AG – Investor Relations Team

    Contact LEG Immobilien AG – Investor Relations Team Burkhard Sawazki Head of Investor Relations Phone: +49 211 4568 204 [email protected] Karin Widenmann Katharina Golke Manager Investor Relations Investor Relations Phone: +49 211 4568 458 Phone: +49 211 4568 294 [email protected] kathari

  40. Slide 40: Thank you for your interest.

    Thank you for your interest.

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