ADLER Real Estate AG: Q3 2019 results presentation November 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
Q3 2019 highlights ■ Like-for-like rental growth of 2.7%, average in-place rent increased to €5.57 per sqm/month as of Q3 2019 (Q3 2018: €5.45 per sqm/month) Operating ■ Vacancy marginally reduced QoQ by 0.1ppts to 6.3% as of Q3 2019* data ■ Increase in FFO I ( +12.9% ) from €54.9m in Q3 2018 to €62.0m in Q3 2019 ■ Fully diluted FFO I per share in Q3 2019 at €0.78 (Q3 2018: €0.70) (+11.4%) ■ WACD stands at 2.05% as of Q3 2019 (Q3 2018: 2.24%) Financing ■ YoY LTV reduction of 10.1 ppts to 56.2% as of Q3 2019 . Guidance for FY 2019 of c.55% and long term target of 50% and LTV ■ Fair value of investment properties (incl. inventories) as of Q3 2019 amounted to €4,904.2m (2018: €5,077.1m). Valuation and Decrease due to disposal of part of the retail portfolio and development in Düsseldorf. EPRA NAV ■ Fully diluted EPRA NAV (excluding goodwill) per share reached €23.91 , increasing by +15.1% on FY 2018 (€20.77) ■ 100% shareholder approval and merger control clearance for ADO Group merger achieved. Merger is expected to close Acquisitions / between 8-10 December 2019 Disposals and ■ Non-core residential portfolio sold in December 2018 – c.3,700 units with GAV of €179.2m sold at c.3% premium other ■ Year to date c. 71% of BCP’s retail portfolio sold (GAV of €341.1m) at c.3.0% discount to ADLER’s current book value Note: 1 Realignment of economical vacancy with physical vacancy, therefore vacancy rate in 2019 higher than at the end of 2018. 4
ADLER Real Estate at a glance Company description Total portfolio sector split 1 Retail Parks Residential • ADLER Real Estate AG is one of Germany’s leading residential property companies owning c.58k 3.2% Development residential units primarily located in Germany’s core regions and focusing on affordable housing 5.3% • The portfolio has considerable upside potential embedded; rent uplifts, vacancy reduction and Berlin Riverside³ revaluation gains 8.4% • ADLER’s currently benefits from favorable market dynamics in German core regions ensuring recurring and predictable returns Completed • ADLER selectively engages in residential developments in order to complement and diversify the existing by the end portfolio at attractive returns by developing multi-use projects Total GAV of 2019 €4.9bn • ADLER clearly focuses on value creation through a combination of organic growth and buy-and-build Residential strategies. In recent years, the company has shown significant acquisitive growth, the latest one of size portfolio being Brack Capital Properties N.V. in April 2018 83.1% Total residential portfolio geographical split 2 Residential portfolio KPIs Number of units 58,089 Mecklenburg-Pomerania Schleswig-Holstein 3.1% 1,026 1,804 1.8% Rentable area (sqm) 3,546, 609 Bremen Brandenburg 1,516 3,592 2.6% 6.2% Fair value (€/sqm) 1,139 Lower Saxony 31.5% 18,310 2.9% Berlin Average rent (€/sqm/month) 5.57 1,699 6,7% North Rhine-Westphalia 23.8% Rental yield (%) 5.5% 13,812 Saxony-Anhalt 16.7% 3,877 3.3% Vacancy (%) 6.3% Saxony LfL rental growth (%) 2.7% 9,672 Other units Thuringia 843 1.4 % 1,938 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 €409.5m 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 1,139 Residential Retail €/sqm 70,000 1,200 €m 1,095 6,000 58,113 58,089 5,077 4,904 60,000 928 1,000 5,000 48,218 47,662 817 46,179 50,000 732 735 800 4,000 40,000 3,022 600 3,000 2,442 2,235 30,000 24,086 4,749 4,578 400 2,000 20,000 1,171 200 1,000 10,000 0 0 0 2014 2015 2016 2017 2018 Q3 2019 2014 2015 2016 2017 2018 Q3 2019 2014 2015 2016 2017 2018 Q3 2019 Residential portfolio vacancy rate Residential average rent (€/sqm/month) Residential portfolio LfL rental growth (YoY) 3.8% 14.0% 12.8% €/sqm/month 4.0% 5.80 3.4% 11.2% 5.57 3.5% 12.0% 5.60 5.49 3.0% 2.7% 10.0% 8.6% 5.40 7.9% 2.5% 8.0% 5.21 6.3% 6.0% 2.0% 5.20 1.5% 6.0% 5.04 5.02 1.2% 1.5% 4.93 5.00 4.0% 1.0% 4.80 0.3% 2.0% 0.5% 0.0% 0.0% 4.60 2014 2015 2016 2017 2018 Q3 2019 2014 2015 2016 2017 2018 Q3 2019 2014 2015 2016 2017 2018 Q3 2019 7 Note: * Residential portfolio only; includes commercial units on ground floor within the multi-family buildings
Growing property portfolio ADLER Real Estate portfolio at a glance Overview Overview of top cities (Residential portfolio) Lettable NRI NRI NRI Vacancy Vacancy Fair Value Fair Value Rental YoY YoY NRI Δ Location Units area €m rate rate €m €/sqm yield (in- €/sqm/month €/sqm/month ■ Wilhelmshaven is ADLER´s TOP vacancy Δ €/sqm/month sqm Q3 2019 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2019 place rent) location concerning number of Wilhelmshaven 6,896 406,713 23.2 5.12 5.05 1.6% 7.1% 6.6% 0.5% 382.1 939 6.1% units. The demographic Leipzig 4,749 254,781 16.8 5.82 5.66 2.8% 5.4% 5.3% 0.0% 380.8 1,495 4.4% development in the last four Duisburg 4,925 305,003 19.7 5.53 5.40 2.4% 2.9% 3.4% -0.6% 327.8 1,075 6.0% years has been stable given the Berlin 1,699 111,736 7.7 5.94 5.82 2.1% 3.0% 3.0% -0.1% 253.7 2,270 3.0% ever-increasing use of the Jade- Wolfsburg 1,301 87,614 6.4 6.27 6.09 3.0% 2.5% 6.1% -3.7% 132.4 1,511 4.8% Weser Port, Germany’s only Göttingen 1,377 85,238 6.0 6.03 5.90 2.1% 2.8% 4.4% -1.6% 124.2 1,457 4.8% deep-sea harbor, and the Hannover 1,113 63,253 5.3 7.19 5.65 27.3% 3.0% 2.4% 0.6% 118.6 1,875 4.5% v increasing importance of the Dortmund 1,770 102,251 7.0 5.82 6.91 -15.8% 2.7% 5.0% -2.3% 111.7 1,092 6.2% naval base Wilhelmshaven. Kiel 970 66,768 5.4 6.75 6.59 2.5% 1.1% 1.9% -0.8% 96.7 1,448 5.5% Halle (Saale) Further increases in the 1,858 105,895 5.5 4.91 4.79 2.5% 11.8% 14.6% -2.7% 88.6 836 6.2% Essen 1,043 66,341 4.4 5.76 5.65 1.9% 4.3% 2.6% 1.7% 85.3 1,286 5.1% population can be expected in Cottbus 1,868 110,045 5.9 4.77 4.68 1.8% 6.6% 14.4% -7.8% 84.5 768 7.0% the future. Düsseldorf 465 28,028 2.7 8.19 7.91 3.5% 3.0% 2.3% 0.8% 73.5 2,624 3.6% ■ In locations with vacancy rates Bremen 873 53,645 3.9 6.28 6.13 2.5% 3.3% 4.1% -0.8% 72.4 1,350 5.4% above 10%, ADLER has targeted Helmstedt 1,219 70,703 4.4 5.24 5.19 1.0% 2.0% 4.1% -2.0% 65.4 925 6.7% Ludwigshafen tenant improvement capex 527 34,128 2.9 7.33 5.28 38.9% 4.4% 1.1% 3.3% 56.2 1,647 5.1% Erfurt 642 38,847 2.6 5.89 5.86 0.4% 7.0% 8.3% -1.3% 55.9 1,438 4.6% measures. Velbert 718 48,041 3.0 5.74 5.68 1.2% 10.4% 5.5% 4.9% 55.3 1,151 5.4% Oberhausen 819 62,642 3.7 5.09 7.04 -27.7% 4.3% 4.7% -0.4% 53.7 858 6.8% Norden 795 50,217 3.2 5.46 4.94 10.4% 2.6% 2.6% 0.0% 52.0 1,035 6.2% Source: ADLER Research Top 20 total 35,627 2,151,888 139.4 5.68 5.55 2.3% 4.9% 5.5% -0.6% 2,670.8 1,241 5.2% other 22,462 1,394,721 81.7 5.40 5.29 2.1% 8.6% 8.7% -0.1% 1,367.6 981 6.0% Total 58,089 3,546,609 221.1 5.57 5.45 2.3% 6.3% 6.8% -0.5% 4,038.3 1,139 5.5% ▪ Top 20 locations account for c. 66% of total portfolio in terms of GAV 8
Capex, maintenance & modernisation Increased capital expenditure leading to portfolio valuation upside and FFO accretion Residential portfolio capex & maintenance (€m) Tenant improvement program in 2019 ■ In 2019 , in addition to ongoing capex / maintenance ADLER will €m Capex Maintenance 80.0 68.7 65.8 be spending an incremental €40 -50m capex, of which €31.2m 70.0 55.4 60.0 has already been deployed, for tenant improvement / vacancy 22.3 17.7 48.7 44.4 50.0 reduction 22.5 15.6 40.0 32.1 30.0 27.5 ADLER’s modernisation program – key measures 48.1 46.4 21.1 20.0 32.9 33.1 10.0 • 16.8 Modernisation of the facade with exterior insulation and finish system and 11.0 0.0 new windows 2015 2016 2017 2018 Q3 2018 Q3 2019 • Extension of the building with elevators • Renewal of the entrance areas Residential portfolio capex & maintenance (€/sqm) • Modernisation of the fresh water with counter and sewage lines • Modernisation of the stairways and electrical lines 24.6 €/sqm Capex Maintenance 25.00 • Roof renovation incl. improvement of thermal insulation 6.62 20.00 17.9 17.6 16.9 • Addition of a full floor with modern floor plans 14.8 15.00 5.81 12.7 5.42 7.15 Modernisation Investment 10.00 9.18 IRR (levered) Completion 17.99 8.40 project volume 12.11 11.50 5.00 10.46 Göttingen €150m 13% 3 years 5.62 4.35 0.00 Wolfsburg €130m 13% 3 years 2015 2016 2017 2018 Q3 2018 Q3 2019 ■ Planning permissions are being obtained, modernisation projects expected to commence in Q2 2020 9
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