Results Analyst & Investor Conference / Conference call March 27, 2008

Transcription

1 Results 2007 Analyst & Investor Conference / Conference call March 27, 2008

2 Agenda Highlights 2007 Results 2007 Outlook and guidance 2008 Shareholder structure / Share price 2

3 2007 a challenging Year Peak year in terms of transactions driven by economic recovery and a positive initial yield spread Market Credit crunch Stock market pushed real estate companies valuations too hard given the overall limited cash flow risk Deutsche Wohnen Setting out for New Horizons Substantial increase in size Company has more than doubled with GEHAG acquisition New management Re-orientation of company s strategy, business model and structure 3

4 Deutsche Wohnen: With > 50,000 residential units clear no. 2 listed residential player in Germany Deutsche Wohnen at a glance Portfolio of approx. 51,100 residential units located predominantly in Berlin and the Rhine-Main area/ Rhineland-Palatinate Additional complementary businesses High-quality nursing homes and senior citizens residences with more than 1,500 beds in the greater areas of Berlin, Dresden and Hamburg Innovative provider of multimedia solutions for cable TV, internet and telephone with 75,600 connections Market capitalization: 580 m ( 22 per share) Trading volume/day (6 months): 1.9 m Indices: SDAX, MSCI, EPRA Frankfurt Berlin Dt. Wohnen portfolio (1) Gehag portfolio 1) Smaller regional sub-portfolios are not included 4

5 Roadmap integration Deutsche Wohnen (1) Overview of project stages STAGE 1 (Oct 1 Oct 26, 2007) Definition project targets and timeframe Development of detailed task list and responsibilities Set project management STAGE 2 (Oct 29, 2007 Feb 8, 2008) Creation of new structures and operating processes Quantification of costs and benefits Start of transformation STAGE 3 (Since Feb 11, 2008) Implementation of new structures operating processes personnel measures Focus on operating processes and structures 5 Focus on contents and conception Focus on implemetation

6 Roadmap integration Deutsche Wohnen (2) Status Structure + organization New corporate structure: Holding implemented Integration projects: 10 out of 23 projects completed IT-migration/SAP-implementation: Started completion targeted end for 2008 Financials Rental growth target 2007: overachieved Staff: Reduction by 140 out of approx. 500 tarteted; thereof 50% already contracted Costs: Annual labour cost savings of approx. 10 million by 2009; thereof 2.6 million realized Business model + assets Clear business and product model Portfolio strategy finalized Attractive assets in regions with growth potential 6

7 Agenda Highlights 2007 Results 2007 Outlook and guidance 2008 Shareholder structure / Share price 7

8 Key financial highlights million Official Result 2007 Pro Forma 2007 Revenues Corporate expenses EBITDA EBIT Net income Earnings per share ( per share) 1) FFO (incl. privatization, per share) Dividend EUR 0.00 NAV per share EUR ) Based on 26.4 million shares 8

9 Adjustment of 2006 result Discovery of accounting error by the German Financial Reporting Enforcement Panel Background: First time consolidation of DB consolidated financial statements have to be adjusted 8.8 million lower net income > no cash impact No impact on current net assets and results of operations million Result ) Before adjustment Result ) Adjusted Revenues Expenses Revenues due to merger EBITDA EBIT Net income ) 2006 Fiscal Year from July 1 to Dec 31, 2006 = 6 months 9

10 Segments million Actual Result 2007 Pro Forma 2007 Result from rental business Result from privatization business Corporate expenses (33.7) (45.2) Non-core businesses 4.1 7,6 EBITDA Depr. + revaluation movements Interest result (75.9) (82.9) One-offs (incl. lucky buy) 50.2 (15.1) Taxes (incl. EK02) (36.0) (81.1) Net income

11 Rental business: Average residential net cold rent YTD (like for like) ( per sqm) +2.9% +4.4% +3.6% 11 Note Deutsche Wohnen: Excluding portfolio acquisitions in H1/2007

12 Rental business: Re-letting - 4,600 new leases signed = 9% of total residential portfolio ( per sqm) +8% +17% +13% Deutsche Wohnen GEHAG Group Average net cold rent Dec 31, 2007 Average rent new leases 12 Note Deutsche Wohnen: Excluding portfolio acquisitions in H1/2007

13 Rental business: Maintenance and refurbishment cost Pro forma Maintenance and refurbishment: (= per sqm in average) 38.6 million Thereof: current maintenance: 19.7 million reletting: 14.6 million refurbishment recharchable to tenants ( 559 BGB): 5.1 million 13

14 Result from rental business Based on Enterprise Value of residential business (see below): Gross rental yield 7.3% Net cold rental yield 6.4% NOI yield 5.1% Enterprise Value (EV) as at Dec 31, 2007 Equity Value million + Financial debt 2,180 million = EV residential 2,734 million million Pro Forma 2007 Total Gross rental income Vacancy loss (14.6) Net cold rent Utility expenses (net) (8.1) Net rental income Maintainance and capex 38.6 Result from rental business = NOI Result from sales 3.4 Corporate expenses (45.2) Non-core businesses 7.6 EBITDA Depr. + revaluation movements Interest result (82.9) One-offs (incl. lucky buy) (15.1) Taxes (incl. EK 02) (81.1) Net income

15 Result from privatization business Total 883 (2006: 1,791) Thereof tenant privatization 528 Thereof bloc sales 355 Total Tenant privatization In blocs Units sold Average sales prices 1,105 per sqm 1,332 per sqm 730 per sqm million Pro Forma 2007 Result from rental business Proceeds from privatizations 70.5 Book value (61.9) Cost of sales (5.2) Result from sales 3.4 Corporate expenses (45.2) Non-core businesses 7.6 EBITDA Depr. + revaluation movements Interest result (82.9) One-offs (incl. lucky buy) (15.1) Taxes (incl. EK02) (81.1) Net income

16 Corporate expenses Excluding nursing and cable business Number of employees: 1,531 Thereof core: 514 Non-core: 883 Cost savings (labour) of 2.6 million p.a. already realized million Pro Forma 2007 Result from rental business Result from sales 3.4 Personnel expenses 30.8 Ongoing G&A 14.5 Corporate expenses (45.2) Non-core businesses 7.6 EBITDA Depr. + revaluation movements Interest result (82.9) One-offs (incl. lucky buy) (15.1) Taxes (incl. EK02) (81.1) Net income

17 Non-core businesses Nursing homes (Katharinenhof) Key figures 2007 Revenues million Expenses million EBITDA 6.6 million Cable business (AKF) million Pro Forma 2007 Result from rental business Result from sales 3.4 Corporate expenses (45.2) Nursing Homes (Katharinenhof) 6.6 Cable business (AKF) 2.6 Other (1.6) Non core businesses 7.6 Key figures 2007 Revenues 2007 Expenses 2007 EBITDA 9.1 million 6.6 million 2.6 million EBITDA Depr. + revaluation movements Interest result (82.9) One-offs (incl. lucky buy) (15.1) Taxes (incl. EK02) (81.1) Net income

18 Revaluation of residential portfolio Undertaken by Cartella = independent appraisor Cluster specific discount rates between 5.50 % and 8.25 %, with an average of 5.8 % 68% of portfolio is of superior quality million Pro Forma 2007 Result from rental business Result from sales 3.4 Corporate expenses (45.2) Non core businesses 7.6 EBITDA Fair Value in million per/sqm Group 3, ) 985 thereof DW 1, ) 921 GEHAG 1, ) 1,044 Based on Rents Multiple Yield Group % thereof DW % GEHAG % 1) Incl. undeveloped areas and properties under construction not included in revaluation as at June 30, Depreciation (6.3) Valuation result total Thereof DW 30.3 Thereof GEHAG Depr. + revaluation movements Interest result (82.9) One-offs (incl. lucky buy) (15.1) Taxes (incl. EK02) (81.1) Net income 231.4

19 One-offs and taxes One offs taxes EK 02 liability: 74, 9 million non cash EK 02 basket of 3.2 billion volume Cash payments: 9.6 million p.a. million Pro Forma 2007 Result from rental business Result from sales 3.4 Corporate expenses (45.2) Non core businesses 7.6 EBITDA Depr. + revaluation movements Interest result (82.9) Non-recurring expenses (5.6) Restructuring (9.5) One-offs (15.1) EK 02 (74.9) Cash tax 1.7 Deferred tax (7.9) Taxes (incl. EK02) (81.1) Net income

20 Key financial figures 20 Key Figures Pro Forma 2007 Portfolio Number of own residential units 51,127 Rentable area 3.3 million sqm P & L Net cold rent million Average net cold rent 4.89 per sqm Average sales price tenant privatization 1,332 per sqm FFO incl. Privatization 10.2 million Balance sheet Investment properties 3.3 billion Total assets 3.5 billion Equity 0,9 billion Financial debt 2.2 billion Ratios and yields EPS 8.77 per share FFO per share incl. privatization 0.39 per share EBITDA margin 33%

21 FFO calculation million Pro Forma 2007 EBITDA Interest income 3.4 Interest expenses Taxes on income 1.7 FFO incl. privatization 10.2 FFO per share (EUR per share) 0.39 FFO yield (%) 1.9% Segment result privatization 3.4 FFO excl. privatization

22 Solid Financing Debt Structure 2.2 billion financial debt, thereof 312 million subsidized (13.6%) Loan to value ratio (LTV): 67.2% Attractive cost of financial debt Long-term maturities profile Average interest rate: 4.74% p.a. 94% hedged Average duration: > 7 years Renewals 2008/2009: Each year approx. 34 million 22

23 Net Asset Value NAV development in per share ) Due to EK02 / tax liability based on new tax legislation Dec 31, 2006 Jun 30, 2007 Sept 30, 2007 Dec 31, ) Excluding GEHAG 23

24 Agenda Highlights 2007 Results 2007 Outlook and guidance 2008 Shareholder structure / Share price 24

25 2008 German residential market may hold up well (1) Economy Continues to pull out of recession Unemployment rate decreasing Individual income increasing Export industry remains strong Interest rates are declining from their peak in mid 2007 But prevailing market uncertainties Residential Markets in reasonably good shape Opportunities in the major cities of Munich, Hamburg, Frankfurt and Berlin - Lack of new developments (historically low level) - Rising number of households - Increasing space utilisation per person There will be a flight to quality Secondary assets are more vulnerable Strong sentiment that assets have to be worked harder to offer returns 25

26 2008 German residential market may hold up well (2) Rents Disparate rental growth development Likely to trickle down into second tier cities like Nuremberg, Leipzig and Dresden Rising rents are expected in large urban cities like Hamburg, Munich, Frankfurt and Berlin Berlin jumps into the top ten markets in Europe Berlin housing market will outperform the rest of Germany (PWC Urban Land Emerging Trends in Real Estate Europe 2008 ) Investments Investors have shifted their focus back onto NAV and discount FFO is still important Germany will show -- if any -- only modest yield expansion To a lesser extent than other markets in Europe Transactions have dried up esp. large-scale deals Reduction in interest rates and less debt market volatility could create additional demand for property 26

27 2008 Create preconditions for sustainable growth Realign and position Deutsche Wohnen as a highly efficient provider of superior quality residential products Finalize integration / restructuring 27 Complete new structure Improve quality and efficiency of core processes Establish competitive cost structure Create service mentality Outsourcing of routine services and non-core functions Clear product and portfolio strategy with focus on: Upper-price segment: 68% of the current portfolio in good locations and/or of good quality Inner-city locations without rent controls Core / value-add functions

28 2008 Create preconditions for sustainable growth Rental growth estimates 2.9%; i.e per sqm (from 4.89 per sqm) Vacancy down to 6.2% (from 6.4%) Maintenance & capex stabile with per sqm (2007: per sqm) Disposal estimates Privatisation: appr. 500 units at 1,400 per sqm (2007: 1,332) Blocksales: appr. 2,500 units at Fair Value Improved cash Result from rental business, sales and dispositions will be sufficient to 28 Cover capex investments Dividend for 2008 in line with FFO growth Disposals could support extraordinary loan repayments/decrease LTV and/or acquisitions/growth

29 Key financial highlights 2008e million 2008e Pro Forma 2007 Net cold rent Privatization Corporate expense EBITDA

30 Agenda Highlights 2007 Results 2007 Outlook and guidance 2008 Shareholder structure / Share price 30

31 Shareholder structure Private shareholders (approx.) 12.0% 24.2% Oaktree Institutionals < 3% each 39.0% 24.8% 7 Institutionals > 3% each As at March 27,

32 Share price DWNI vs. EPRA indices in Deutsche Wohnen EPRA Europe EPRA Germany Deutsche Wohnen bearer share (DWNI; Xetra) vs. EPRA Europe and EPRA Germany indices from Jan 2 to March 25, 2008; indexed chart rebased to

33 Disclaimer This presentation contains forward-looking statements including assumptions, opinions and views of Deutsche Wohnen or quoted from third party sources. Various known and unknown risks, uncertainties and other factors could cause actual results, financial positions, development or performance of the company to differ materially from the estimations expressed or implied herein. The company does not guarantee that the assumptions underlying such forward-looking statements are free from errors nor do they accept any responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecasted developments. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and accordingly, non of the company or any of its parent or subsidiary undertakings or any of such person s officers, directors or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. Deutsche Wohnen does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation. 33

34 Results 2007 Analyst & Investor Conference / Conference call March 27, 2008