ADLER Real Estate AG: Q1 2019 results presentation May 2019 1
Agenda Introduction and executive summary 1 2 Operational performance Financial performance 3 4 ADLER Real Estate in the Capital Markets Guidance 5 Appendix 6 2
1. Introduction and executive summary 3
Q1 2019 highlights ■ Like-for-like rental growth of 3.9%, average in-place rent increased to €5.52 per sqm/month as of Q1 2019 (FY 2018: €5.49 per sqm/month) Rental ■ Vacancy rate increased due to seasonal effects and capex measures by 0.6ppts to 6.6% as of Q1 2019 operation ■ Significant increase in FFO I from €14.2m in Q1 2018 to €21.6m in Q1 2019 ■ Fully diluted FFO I per share in Q1 2019 at €0.27 (Q1 2018: €0.18) ■ Successful placement of €400 million bond in April 2019 to refinance existing debt ■ WACD stands at 2.25% as of Q1 2019 Financing ■ Temporary increase in LTV due to the acquisition of BCP in April 2018. As of Q1 2019, LTV stood at 61.2% with pro-forma and LTV of 58.9% . Long term target of 50-55% and guidance for FY 2019 of c.55% ■ Fair value of investment properties (incl. inventories) as of Q1 2019 at €4,946.1m (2018: €5,077.1m), slight decrease Valuation and following sale of first part of retail portfolio EPRA NAV ■ Fully diluted EPRA NAV (excluding goodwill) per share of €20.81 , slight improvement on FY 2018 (€20.77) ■ Strong growth through acquisition of BCP in April 2018 Acquisitions / ■ Non-core residential portfolio sold in December 2018 – c.3,700 units with GAV of €179.2m sold at c.3% premium Disposals and ■ Sale of €180.6m (c.37%) of the retail portfolio on 25 March 2019 at c.7.6% premium to the book equity value. other Remaining retail portfolio is expected to be sold by the end of 2019. 4
ADLER Real Estate at a glance Company description Total portfolio sector split 1 Residential ■ ADLER Real Estate AG is one of Germany’s leading residential property companies. ADLER owns c. 58k Development residential units primarily located in - or on the outskirts of - large and growing conurbations in Retail Parks 7.4% Northern, Eastern and Western Germany. 6.4% Berlin ■ Focus on affordable housing in specific regions in Germany, with a portfolio with considerable upside Riverside³ potential in terms of rent uplifts, vacancy reduction and revaluation gains. Benefitting from favourable 7.4% market dynamics in German B-cities ensuring recurring and predictable cash flows. ■ The main business objective is the letting of residential property. Recently, ADLER has also selectively Completed engaged in residential developments (limiting exposure in developments to an amount which complies by the end Total GAV with IG credit rating) in order to complement and diversify the existing portfolio. of 2019 €4.9bn ■ Focus on value creation through organic growth and M&A strategies. In recent years, the company has Residential grown rapidly by making acquisitions, the latest one being Brack Capital Properties N.V. in April 2018 portfolio ■ SDAX-listed since 2015 (also included in FTSE EPRA/NAREIT Global Real Estate Index, GPR General Index, 78.8% DIMAX, CDAX) Total residential portfolio geographical split 2 Residential portfolio KPIs 58,105 Number of units Mecklenburg-Pomerania Schleswig-Holstein 3.1% 1,026 1,800 1.8% 3,546,657 Bremen Rentable area (sqm) Brandenburg 1,515 3,596 2.6% 6.2% Fair value (€/sqm) 1,095 Lower Saxony 31.5% 18,310 2.9% Berlin Average rent (€/sqm/month) 5.52 1,699 6,7% North Rhine-Westphalia 23.8% 13,809 Net rental yield (%) 5.6% Saxony-Anhalt 16.7% 3,878 3.3% 6.6% Vacancy (%) Saxony 9,689 3.9% LfL rental growth (%; YoY) Other units Thuringia 842 1.4 % 1,941 Note: 1 In percentage of gross asset value (“GAV”; investment properties and inventories) 5 2 In percentage of total number of units of residential portfolio 3 Riverside / Wasserstadt- Mitte, Berlin development project is currently valued at €364.6m and is due to be completed by the end of 2019. Further infor mation on page 12
2. Operational performance Finalised internalisation driving operational improvements 6
Operational performance significantly improved following internalization of property and facility management… Total number of residential units* Investment properties Residential portfolio FV per sqm Residential Retail €m €/sqm 70,000 6,000 1,200 1,095 1,095 5,077 58,113 58,105 4,946 60,000 928 5,000 1,000 48,218 47,662 817 46,179 50,000 732 735 4,000 800 3,022 40,000 3,000 600 2,442 2,235 30,000 24,086 4,779 4,648 2,000 400 20,000 1,171 1,000 200 10,000 0 0 0 2014 2015 2016 2017 2018 Q1 2019 2014 2015 2016 2017 2018 Q1 2019 2014 2015 2016 2017 2018 Q1 2019 Residential portfolio vacancy rate Residential average rent (€/sqm/month) Residential portfolio LfL rental growth (YoY) 4.5% €/sqm/month 5.60 5.52 14.0% 12.8% 5.49 3.9% 3.8% 4.0% 11.2% 3.4% 12.0% 5.40 3.5% 10.0% 8.6% 5.21 3.0% 7.9% 5.20 2.5% 8.0% 6.6% 5.04 6.0% 5.02 2.0% 1.5% 6.0% 4.93 5.00 1.2% 1.5% 4.0% 1.0% 4.80 0.3% 2.0% 0.5% 0.0% 4.60 0.0% 2014 2015 2016 2017 2018 Q1 2019 2014 2015 2016 2017 2018 Q1 2019 2014 2015 2016 2017 2018 Q1 2019 7 Note: * Residential portfolio only; includes commercial units within the multi-family houses
Growing property portfolio in attractive B locations ADLER Real Estate portfolio at a glance Overview Overview of top cities (Residential portfolio) Lettable NRI Vacancy Vacancy Fair Value Fair Value Rental NRI NRI YoY YoY NRI Δ Location Units area €m €/sqm/month €/sqm/month rate rate €m €/sqm yield (in- ■ Wilhelmshaven is ADLER´s TOP vacancy Δ €/sqm/month Q1 2019 Q1 2018 sqm Q1 2019 Q1 2019 Q1 2018 Q1 2019 Q1 2019 place rent) location concerning number of Wilhelmshaven 6,895 406,684 23.0 5.11 4.99 2.5% 7.9% 8.1% -0.1% 368.5 906 6.2% units. The demographic Duisburg* 4,925 305,003 19.3 5.51 5.33 3.4% 4.1% 2.7% 1.4% 324.0 1,062 6.0% development in the last four Leipzig* 4,740 254,022 16.4 5.74 4.56 25.9% 6.1% 6.0% 0.1% 362.1 1,425 4.5% years has been stable given the Cottbus 1,868 110,045 5.8 4.74 4.63 2.5% 7.4% 14.7% -7.3% 81.1 737 7.2% ever-increasing use of the Jade- Halle (Saale)* 1,858 105,895 5.3 4.82 4.70 2.6% 12.8% 13.6% -0.7% 85.0 802 6.3% Weser Port, Germany’s only Dortmund* 1,770 102,251 6.8 5.76 4.90 17.6% 3.3% 2.8% 0.5% 110.3 1,078 6.2% deep-sea harbor, and the Berlin 1,699 111,736 7.7 5.88 5.77 2.0% 3.0% 1.8% 1.2% 229.8 2,057 3.3% v increasing importance of the Göttingen* 1,377 85,238 5.8 5.95 5.49 8.4% 4.6% 3.8% 0.8% 120.2 1,410 4.8% naval base Wilhelmshaven. Wolfsburg 1,301 87,614 6.2 6.19 6.04 2.5% 4.6% 4.7% 0.0% 127.8 1,458 4.9% Further increases in the Helmstedt 1,219 70,703 4.3 5.21 5.15 1.2% 2.8% 4.5% -1.7% 61.0 863 7.0% population can be expected in Hannover* 1,119 63,409 5.2 7.04 5.69 23.7% 3.3% 4.0% -0.7% 113.1 1,783 4.6% the future. Essen* 1,040 66,033 4.4 5.73 4.87 17.6% 3.4% 4.8% -1.4% 83.5 1,265 5.2% Kiel* 967 66,588 5.3 6.68 6.31 5.9% 0.5% 4.7% -4.2% 94.6 1,421 5.6% ■ In locations with vacancy rates Borna 900 50,189 2.2 4.67 4.57 2.2% 21.2% 16.0% 5.2% 36.6 730 6.0% above 10%, ADLER has targeted Bremen* 873 53,645 3.9 6.24 4.88 27.8% 3.8% 5.2% -1.4% 68.5 1,277 5.6% tenant improvement capex Chemnitz 850 53,080 2.4 4.65 4.70 -1.0% 10.5% 22.4% -11.9% 42.3 797 5.6% measures. Schöningen 846 50,192 2.6 5.07 5.07 0.1% 16.0% 19.9% -4.0% 38.0 757 6.8% Oberhausen 819 62,642 3.6 5.06 5.17 -2.2% 4.3% 3.1% 1.2% 51.9 828 7.0% Schwerin* 816 48,021 2.6 4.81 4.69 2.6% 5.6% 9.0% -3.4% 42.2 879 6.2% Norden* 795 50,217 3.1 5.36 5.13 4.6% 3.8% 3.4% 0.4% 50.5 1,006 6.2% Source: ADLER Research Top 20 total 36,677 2,203,208 135.9 5.50 5.12 7.5% 6.2% 7.5% -1.3% 2,490.9 1,131 5.5% Other locations 21,428 1,343,450 82.7 5.56 5.26 5.7% 7.1% 8.7% -1.5% 1,393.5 1,037 5.9% Total 58,105 3,546,657 218.6 5.52 5.22 5.8% 6.6% 8.3% -1.8% 3,884.4 1,095 5.6% ▪ Top 20 locations account for c. 63% of total portfolio in terms of units ▪ BCP assets have enhanced overall portfolio diversification with c. 12k residential units in high growth markets such as Leipzig, Dortmund and Hannover 8 * Information in Q1 2019 includes BCP
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