ADLER REAL ESTATE AG COMPANY PRESENTATION NOVEMBER 2014

Transcription

1 ADLER REAL ESTATE AG COMPANY PRESENTATION NOVEMBER 214

2 Disclaimer This document and its contents are confidential and not meant for forwarding, transmission, publication, duplication, or disclosure (in whole or part) to other persons. Outside of Germany the distribution of this document may be restricted by applicable laws. This document does not constitute an offer to sell or an invitation to make an offer to buy or subscribe for securities. This document and the information contained therein may not be distributed in the United States of America, Canada, Australia, Japan or other jurisdictions, in which such offer, respectively, such invitation to make an offer to buy or subscribe for securities is not allowed. This document does not constitute an offer to sell securities in the United States. Securities, including the bond of ADLER Real Estate Aktiengesellschaft within this offer may not be sold or offered for sale within the United States or to or for the account of / in favour of US citizens (as defined in Regulation S under the U.S. Securities Act of 1933 in the current version (the "Securities Act") unless they are registered under the regulations of the Securities Act or unless they are subject to an exemption from registration. Neither ADLER Real Estate Aktiengesellschaft nor any other person intend to register the offer or a part thereof in the United States or to make a public offer of the securities in the United States. This document includes 'forward-looking statements'. Forward-looking statements are all statements, which do not describe facts of the past, but containing the words "believe", "estimate", "expect", "anticipate", "assume", "plan", "intend", "could", and words of similar meaning. These forward-looking statements are subject to inherent risks and uncertainties since they relate to future events and are based on current assumptions and estimates of ADLER Real Estate Aktiengesellschaft, which might not occur at all or occur not as assumed. They therefore do not constitute a guarantee for the occurrence of future results or performances of ADLER Real Estate Aktiengesellschaft. The actual financial position and the actual results of ADLER Real Estate Aktiengesellschaft, as well as the overall economic development and the regulatory environment may differ materially from the expectations, which are assumed explicitly or implicitly in the forward-looking statements and do not comply to them. Therefore, investors are warned to base their investment decisions with respect to ADLER Real Estate Aktiengesellschaft on the forward-looking statements mentioned in this document. 2

3 Contents 1. Introduction 2. Business Realignment 3. Asset Management 4. Figures & Metrics 5. Capital Markets 6. Appendix I ADLER and Macro Environement 7. Appendix II Portfolio Overview 3

4 1. INTRODUCTION

5 1.1 ADLER s History 188 Company formation until 1999 from 2 Business fields: manufacturing of bicycles, automobiles and office machinery Start of the real estate development projects; Change of name into ADLER REAL ESTATE AG 2-25 Commercial real estate development projects (e.g. Heidelberg Technology Park, Frankfurt Stock Exchange, Airrail Center Frankfurt a.m.) 25 U.S. Investor becomes major shareholder 26 Consolidation and capital increase Asset management for AIG Global Real Estate 27 Acquisition of the operative residential property business of Münchener Baugesellschaft (entry into the residential property market) Real estate portfolio optimization Change in shareholder group and implementation of new investment strategy as holder of German residential real estate Successful acquisition of various German residential real estate portfolios and takeover of listed real estate company ESTAVIS AG More than 13 years of business activity 5

6 1.2 Group Governance Organisational Chart ADLER REAL ESTATE AG Supervisory Board Dr. D. Hoffmann, T. Katzuba von Urbisch, T. Schmid Executive Committee Management Board A. Harloff, T. de Vargas Machuca A. Harloff Corporate Communications Investor Relations J. Bretschneider C. Hillermann Corporate Governance, Compliance & Human Resources Finance / Accounting & Controlling Bank Financing Legal Sales / Project Development Asset Management / Acquisition A. Wolf C. Wolff P. Hoffmann U. Müller / M. Spörl P. Stommel S. Jäger internal external as at November 214 Lean Organizational Structure to Maximize Shareholder Value 6

7 1.3 Management and Supervisory Board Experienced and international team Axel Harloff Chief Executive Officer Tomas de Vargas Machuca Executive Director Axel Harloff holds a Master of Business Administration, joined the Management Board of ADLER Real Estate AG in February 23 and has had sole responsibility for conducting the Group's Management Board affairs since 211. He formerly held leading positions in the real estate industry, e.g. at HBAG Real Estate AG and HIH Hamburgische Immobilienhandlung. He has lead ADLER through the strategic changes and implementing the new business model. Tomas de Vargas Machuca holds a B.A. and an MSc in Economics from Bocconi University in Milan, Italy. He has over 14 years of banking, private equity and real estate financing experience. Prior to ADLER, he was an Executive Director at UBS Investment Bank s Real Estate Finance, responsible for co-investing, originating, structuring and executing senior, mezzanine and equity positions secured over real estate assets across Continental and Eastern Europe. Before, Tomas was at Credit Suisse s European Real Estate Finance team as a Vice-President responsible for the pan-european Real Estate Market. Dr. Dirk Hoffmann Chairman of the Supervisory Board Dr. Dirk Hoffmann holds a Juris Doctor degree. Based on his work as board member and CEO of various banks, he possesses over 2 years experience in corporate management. He is an established attorney in Berlin and a member of various Supervisory Boards. Dr. Hoffmann has been Chairman of the Supervisory Board of ADLER Real Estate Aktiengesellschaft since June 212. Thomas Katzuba von Urbisch Vice Chairman of the Supervisory Board Thomas Katzuba von Urbisch, Monte-Carlo, is lawyer and entrepreneur. He is managing director of MACLAREN GmbH as well as owner of FARBOURG SARL, Monaco. Thilo Schmid Member of the Supervisory Board Thilo Schmid, is an Investment Manager and responsible for Venture Capital and Real Estate investments at a Swiss family office. Strong Management and Supervisory Board with a wide range of experience 7

8 2. BUSINESS REALIGNMENT

9 2.1 Realigned Business Model From real estate development to high yielding residential investments Up to May 212 Repositioning 213 / 214 Growth Optimisation 215 / 216/ Acquisition of land 2. Building permission 3. Joint Venture investments 1. Acquisition of German residential real estate 2. Asset Management/ IT Infrastructure 3. Property/Facility Management 1. Further acquisitions 2. Sale of peripherial/ non-core assets 3. Deleveraging Income Drivers Income Drivers Income Drivers Rental income Rental income Brokerage 1 Sales Sales Sales 1 Development; Co-investment Residential real estate Development; Co-investment Residential real estate Privatisation 1 Brokerage and Sales in its business activity Privatization relates to sales of properties and portfolios for a) third parties 2) proprietary assets and mainly consists of the activities of Accentro; 2 Sales in its business activity Development ; Co-investment relates to sales of properties and portfolios held by the Group as assets hold for sale Company repositioned to capitalize on market opportunities 9

10 2.2 Growth Milestones Jan. 214: ADL acquires remaining 47.2% to own the 1,96 units across 6 federal states 1. Feb. 214: ADL announces intended public takeover bid to shareholders of Estavis AG 23. May 214: Acquisition of c. 8,5 units with focus on Saxony, Saxony-Anhalt and NRW 25. June 214: Takeover of ESTAVIS successfully completed, 92.7% of share capital taken over 3. Sept 214: Implementation of special residential property management software 23. Oct 214: ADL secures acquisition of housing association in Lower Saxony with c. 6,75 units 21. Oct 214: Successful disposal of noncore legacy assets 28. Oct 214: ADL subsidiary acquires c. 4,3 residential units. Increase in Group portfolio to c. 32, units January February March April May June July August September October November December 28. March 214: Corporate bond, EUR 5m 22. April 214: Capital Increase by payment in kind in the form of conversion against shares of ESTAVIS AG 15. July 214: Corporate Bond Tap, EUR 5m 29. Oct 214: Capital Increase c. 1% of share capital, i.e. 2.85m new shares ADLER REAL ESTATE AG has continued its strong growth in 214 1

11 2.3 ADLER s Current and Future Strategy for Growth Country focus regionally diversified Investment focus Asset and Property Management Financial structure Residential real estate Non-City Center locations, urban areas and Berlin Predominantely Oberand Mittelzentren Stable Cash-Flow Little or no deferred R&M + CAPEX Focus on ADLER s strong asset management capabilities Centralised IT platform Local property managers with local property knowledge Medium to long-term LTV at c. 55% in line with industry peers Diversified sources of finance to provide flexibility Medium to long term loan maturity with c. 8 years remaining Annual loan amortization as of Sept 14 of c. EUR 7m Four pillars fueling the company s strategic growth and acceptance in the market place 11

12 2.4 Geographical Exposure Geographical Overview Top 6 Lower Saxony Units (#): 9,85 North Rhine-Westphalia Units (#): 9,6 3.6% % 3.5% 6.7% 5.1% 15.3% Thuringia Units (#): 1,1 Berlin Units (#): 1,6 Saxony-Anhalt Units (#): 2,1 Saxony Units (#): 4,8 Geographical Highlights 1. Berlin s residential market thrives. From June 212 to 213, Berlin saw a population increase of c. 5, and > 2, new households. Strong demand of apartments and houses is reflected in the rents and prices that have been growing over the years. 2. North Rhine Westphalia is the most populous state in Germany with 17.8m inhabitants as at 212 (21.8% of the total 81.7m). NRW s GDP output of EUR 582bn accounts for 22% of total German GDP. 3. Lower Saxony has the 4th lowest unemployment rate among federal states, i.e. 6.6%. Further, it ranks within top 4 GDP contributors (EUR 23bn, 8.7% of total). > 1 units c. 31,2 4. As at end 212, Saxony has the highest GDP output among newly formed federal states with EUR 96bn, accounting for 3.65% of total GDP. Note: Total number of units= residential and commercial investment properties; distribution according to total units as of (incl. closed as well as notarised deals), overview excludes c.3,7 units in Schleswig Holstein, Mecklenburg W. Pommerania, Brandenburg, Hesse, Bavaria, Bremen, Baden-Wuerttemberg, Rhineland Palatinate, Thuringia Top 5 federal states account for c. 89% of total portfolio 12

13 3. Asset Management

14 3.1 Asset Management Structure ADLER s Asset Management capabilities are built around four pillars and a proprietary IT infrastructure 1. Operational Asset Management ADLER ASSET MANAGEMENT Technical Asset Management Finance and Accounting Legal 1. In-House Asset Management a. Operational Asset Management: Supervising and instructing subcontracted Property Managers on a daily basis. b. Technical Asset Management: Technical know-how ensuring proactive planning and execution of investment measures. c. Dedicated Asset Managers overseeing rental income and expenses in adherance to ADLER s Business Plan, reporting back in regards to covenants and all other property financial matters. d. Legal team supporting contract negotiations. 2. Centralized IT Infrastructure PM Centralized Platform PM PM PM a. Property Managers input data into ADLER s proprietary Property Management software which in turn feeds into ADLER servers. b. Centralised platform ensuring availability of real-time data. c. The platform produces key metrics necessary for Benchmarking and optimising the different portfolios. Uniform Accounting ensures frictionless data processing and consolidation within the Group. d. IT infrastructure includes an additional internal control software supporting Property Managers requests and handles orders to third-party service providers. Its central nature ensures both time and cost-efficiency 3. External Local Property Management Cluster 1 External Cluster 2 Cluster 3 Cluster 4 a. Decentralised Property Management structure i. Property Manager with specific local area knowledge ii. On-site presence allowing for prompt customer care and reletting services iii. Competitive and transparent pricing at c. 4% of the property s NRI Optimized Asset Management Structure to Maximize Value 14

15 3.2 Asset and Property Management - Setup Geographical Coverage and Regional Clusters ADLER s current Asset and Property Management setup applied: 1. ADLER s Asset Management team consists of 35 employed professionals with many years of experience in both Asset and Property Management Hamburg Berlin a. 2 qualified Engineers with a combined professional experience of more than 3 years, covering all technical matters relating to the assets including CAPEX and Maintenance planning b. 31 internal Asset and Property Managers in daily contact with external local Property Managers of the portfolios to ensure the timely implementation of the agreed business plans. While continuously monitoring the business plans the Asset Managers are also reviewing and optimising where necessary the various processes relating to the operation of the assets. - Frankfurt c. 2 qualified lawyers with more than 3 years of combined experience in the German property sector. Experience and specialisation includes real estate privatisation, lease agreement structuring and negotiation across both Residential and Commercial sectors, contract negotiation with Property Managers and asset sale contract negotiation and formulation 2. ADLER offices in Hamburg, Berlin and Frankfurt 3. Properties diversed across 7 regional clusters with dedicated Property Managers in each cluster ADLER Office Cluster covered by internal AM 4. Long standing experience in respective areas with proven track record 5. ix-haus reporting system Integrated and Proactive Asset and Property Management Setup 15

16 4. FIGURES & METRICS

17 EUR Millions EUR Millions EUR 4.1 Strong Growth in Accordance with New Strategy ADLER s Investment Properties rose c. 74x from FY 212 to September 214 Strong Growth in Fair Value of ADLER s Net Assets 1, ,2 1, , 8 CAGR 212 9M % FY 212 FY 213 9M FY 212 FY 213 9M 214 Investment Properties IFRS Diluted EPRA NAV EPRA NAV/ Share Diluted EPRA NAV / Share ADLER s strong growth positively reflected in balance sheet data 17

18 EUR Millions 4.2 Successful Integration of a Number of Large Portfolios The number of total units increased sharply Surge in Gross Rental Income* reflects strong acquisition activities 35, 31,2 25 3, 25, 2, 15, 1, 5, ,9 6,5 6 4, CAGR % 7,8 1,9 1,1 2,4 21,2 8,5 2,6 24,6 3,4 FY 212 Q1 213 H M 213 FY 213 Q1 214 H1 214 Q3 214 incl. in Q4 closed deals Note: FY 213 includes the acquired interest in a portfolio announced in Oct 213 and Jan 214; 2,6 units refer to investment properties of ESTAVIS, numbers are rounded 6,75 Q3 214 incl. in Q4 notarised deals FY 213 ADLER successfully integrated a number of large portfolios Growth 213 9M 214 c. 4x 125 Q3 214 incl. in Q4 closed deals 151 Q3 214 incl. in Q4 notarised deals Note: *Total gross rental income show a 12 months run rate, for discussion purposes only 18

19 4.3 ADLER - Key Figures EURm (unless otherwise specified) FY 212 FY 213 9M 214 Balance Sheet Total assets ,297.3 Gross Asset Value ,112.4 Investment properties ,71.8 Equity EPRA NAV Equity ratio 6.4% 18.9% 21.57% Net debt LTV 3.1% 7.2% 69.67% LTV excl. Convertible Bonds n.a. 66.2% 66.84% Profit & Loss Revenue EBITDA EBT Net income Per share information EPRA NAV per share (EUR) Diluted EPRA NAV per share (EUR) Number of shares (m) Strong year-on-year growth and attractive fundamentals 19

20 4.4 Profit & Loss in T EUR FY 212 FY 213 9M 213 9M 214 Comment Total revenues 5,719 19,235 11,47 62,342 Change in inventories -3, ,593 Other operating income 2, ,423 Income from fair-value adaption of investment properties 1,72 59,613 47,388 14,95 Total operating income 5,85 78,241 57, ,123 Cost of materials -1,352-1,234-5,786-31,228 Personnel expenses , ,851 Depreciation & Amortisation Other operating expenses -1,133-2, ,547 Expenses from fair-value adaption of invest. properties -14 Income from at-equity valued investment associates -1,326 6,562 8, EBIT 98 7,895 59, ,42 Interest expenses ,692-5,94-25,753 Interest income EBT ,17 54,59 12,471 Income tax ,141-12,319-19,41 Consolidated result 45 46,876 42,19 11,157 Strong growth in revenues by >46% year on year as portfolio acquisitions start to contribute Valuations conducted by, inter alia, from independent appraisers Cost of materials includes expenses from ancillary costs Other operating expenses includes nonrecurring costs with regards to the takeover of ESTAVIS as well as the costs associated with portfolio acquisitions Interest expenses increased due to the higher financing volume, includes one-off items associated with the refinancing of some of the existing assets Deferred taxes arising due to fair value adjustments and deferred taxes on loss carry-forwards were recognized as taxes on income 2

21 4.5 Balance Sheet In T EUR FY 212 FY 213 9M 214 Comment Investment properties 14,45 417,865 1,71,831 Loans to associated companies 1,579 1,136 1,136 Shares in associated companies 3,672 3,46 6,21 Total non-current assets 2, ,6 1,114,196 Cash and cash equivalents 1,84 5,874 36,2 Total current assets 23,137 37, ,62 Total assets 43,765 46,888 1,297,258 Capital stock 15, 16,548 29,13 Equity 26,449 86, ,78 Liabilities for deferred taxes ,57 42,923 Liabilities from convertible bond 18,382 35,63 Liabilities from corporate bond 33,283 14,511 Financial liabilities 9, ,567 7,92 Total liabilities 17, ,943 1,17,478 Equity and liabilities 43,765 46,888 1,297,258 Note: Showing summary of balance sheet; besides investment properties, loans and shares to/in associated companies, total non-current assets also include intangible assets, deferred tax assets and PPE, Financial liabilities includes both current and non-current liabilities to banks Investment properties grew by c. EUR 654m from FY 13 to 9M 14, as the nine months into 214 has seen investments in real estate portfolios and a listed RE company ESTAVIS AG Primarily related to a co-investment in the USA and minority interests of ESTAVIS AG Share capital increase by EUR 12.1M: 12 million new common bearer shares through contribution by paymenet in kind in the light of ESTAVIS takeover; 92.7% acceptance rate, exchanged at 14/25 The total shareholder s equity increases from EUR 87M to EUR 28M, attributable, primarily to the consolidation of ESTAVIS AG and the portfolio of c. 8,5 units in June 14. Issuance of EUR 5M Corporate Bond, 6.% p.a. and consolidation of ESTAVIS bonds in H1 214; Tap of EUR 5M in Q3 214 Financial liabilities increase due to high investment activity throughout 9M

22 4.6 Cash Flow Statement ADLER s operating and financing strength reflected in its Cash Flow Statement In TEUR FY 212* FY 213 9M 214 Comment Cash and cash equivalents at start of period 4,483 1,84 5,874 Net cash flow from operating activities 453 1,911 6,864 Strong growth in cash inflows from rental income and disposal of both real estate and interests in real estate companies; Acquisitions for the purpose of trading are included Net cash flow from investment activities -3,534-94,198-92,638 Cash outflows are dominated by the acquisition of interests in two residential real estate portfolios = Net cash flow from financing activities ,77 116,1 Cash and cash equivalents at end of period 1,84 5,874 36,2 Cash flow from financing activities saw the refinancing of three portfolios and the capital raising for the acquisition of the c. 2.4 and c. 8,5 units closed in Feb 14 and June 14 respectively * The previous year s figures were adjusted due to the implementation of IAS 19 (revised 211) ADLER with strong operating, acquisition and capital raising capabilities 22

23 4.7 EPRA NAV ADLER s fair value on a long-term basis has experienced strong growth In TEUR FY 212 FY 213 9M 214 Comment Total Shareholder's Equity 26,449 86, ,78 + Hidden reserves 4,682 4,79 4,232 Properties held at cost in inventories are adjusted to fair value + Net deferred taxes ,18 39,698 + Derivatives n.a. 1,356 1,534 EPRA NAV 3,616 18,28 325,244 Tax implications for fair value adjustments not expected to materialize No. of shares (thousands) 15, 16,548 29,13 EPRA NAV per share (EUR) Diluted EPRA NAV 3, , ,142 Diluted no. of shares (thousands) 15, 24,5 36,521 Diluted EPRA NAV per share (EUR) Share price at EUR 7.27 on (Börse Frankfurt) Discount of c. 23% ADLER is currently trading at a significant discount to its EPRA NAV 23

24 EUR Millions EUR Millions 4.8 Capital Structure Highlights ADLER s Running Debt Schedule as at September 214 ADLER s Corporate Loan-to-Value (LTV) stood at 67% as at 9M % WACD c. 8 years WAM 354 1,6 1,4 1,2 7% 7% 66% 67% 8% 7% 6% , 8 6 3% 879 5% 4% 3% % > FY 212 FY 213 9M 214 1% % ADLER ESTAVIS Convertible Bond ADLER Convertible Bond Net Debt LTV % LTV % (excl. Convertibles) No major debt maturities before 223 Note: LTV calculated as net financial liabilities to banks and corporate bonds over total assets 24

25 5. CAPITAL MARKETS

26 5/12 7/12 8/12 1/12 11/12 1/13 2/13 4/13 5/13 7/13 8/13 1/13 11/13 1/14 2/14 4/14 5/14 7/14 8/14 1/14 11/14 1/15 2/15 4/15 5/15 7/15 8/15 EUR 5.1 Capital Market Performance ISIN: DE587 WKN: 58 Ticker: ADL Strong momentum since realignment Basic information share price EUR (lhs) PT 12* Shares outstanding Major indices 31,863,424 CDAX, Prime Standard Index, DIMAX Realignment (5.212) Stock exchange listings Frankfurt a. M. Designated sponsor Close Brothers Seydler Bank AG Share price (EUR) 7.27 Market Cap (EURm) Day avg. volume 152,594 4 Source: Bloomberg, Börse Frankfurt XETRA closing price, market information as at Source: Bloomberg, *Close Brothers Seydler s 12-months price target ( ) ADLER s market cap increases more than 15x from c.15m in May 12 to c. 233m in Nov 14 26

27 ADLER well perceived by Capital Markets Corporate bond 13/18 - oversubscribed ISIN DEA1R1A42 Convertible bond 13/17 - oversubscribed Convertible bond 13/18 successfully placed Corporate bond 14/19 succesfully placed - ISIN DEA11QF Volume: 35m Coupon: 8.75% p.a. 2 1 Volume: 1m Coupon: 6.% p.a. Strike price: EUR Volume: 11.25m Coupon: 6.% p.a. Strike price: EUR Volume: 1m Coupon: 6.% p.a Successfully raised c. 18m within past 12 months on capital markets 27

28 No. of units traded EUR 5.4 Increase in ADLER s stock liquidity ADLER s average trading volumes have increased significantly to c. 15, no. of units 16, 1,2, 14, 12, No. of units (3 day avg.) EUR (3 day avg.) 1,, 1, 8, 8, 6, 6, 4, 4, 2, 2, Source: Bloomberg, Börse Frankfurt, Company reports/websites Significant increase in stock liquidity from c. 5, in Sept 13 to c. 15, in Nov 14 28

29 5.5 ADLER s Equity Performance vs. Peers Strong growth positively reflected in market data ADLER has outperformed peers and benchmarks 45% 4% 35% 3% 25% 2% 15% 1% 5% % ADLER REAL ESTATE AG DEUTSCHE WOHNEN AG-BR GAGFAH SA GRAND CITY PROPERTIES GSW IMMOBILIEN AG PATRIZIA IMMOBILIEN AG TAG IMMOBILIEN AG WESTGRUND AG DAXSUBS ALL REAL EST PRC Solactive DIMAX Germany Source: Bloomberg, company reports ADLER has outperfomed peers and benchmarks 29

30 6. APPENDIX I ADLER REAL ESTATE AG

31 6.1 ADLER - Shareholder Structure Shareholder structure Basic information Shares outstanding 31,863,424 Free Float 43.61% Wecken & Cie 9.73% Uhlandstr. Inv. GmbH 9.49% Major indices Stock exchange listings CDAX, Prime Standard Index, DIMAX Frankfurt a. M. Designated sponsor Close Brothers Seydler Bank AG Share price (EUR) 7.27 Market Cap (EURm) 232 Mezzanine IX Investors S.A % Source: Company information; market data Bloomberg and Boerse Frankfurt XETRA, closing price as at Note: Shareholder structure as at Recent Directors Dealings 15WpHG (no. of purchased items) Dr. Dirk Hoffmann 5. Chairman of the Supervisory Board 48. Thomas Katzuba von Urbisch Vice-Chairman of the Supervisory Board 2.9% of share capital Free Float reaches > EUR 1 M 31

32 Spain Greece Portugal Ireland Italy Euro Area France Belgium Sweden United Netherlands Germany Austria Switzerland 6.2 Germany vs Europe Strong macroeconomical environment relative to Eurozone Germany s Real GDP is expected to grow by 1.4% in 214 Germany s unemployment rate expected to stand at 5.5% at year end 214 Germany has the lowest perceived credit risk among European countries German GDP expected to be slightly ahead of Euro Area Spain Greece Italy Portugal France Euro Area Germany Austria Switzerland UK % Source: IMF World Economic Outlook, Oct E 213E 212 bps % Germany has a low unemployment rate compared to other European countries Source: IMF World Economic Outlook, Oct 213 GERMANY SPAIN EUROPE E 214E Germany shows a stable CDS rate development FRANCE UK ITALY 1/8 4/9 1/9 4/1 1/1 4/11 1/11 4/12 1/12 4/13 1/13 Source: Bloomberg; Note: 5yrs CDS spreads Germany: High real estate returns vs comparatively low country risk 32

33 6.3 Stable attractive bank financing market in Germany Favorable market conditions for German real estate investments The German residential lending market has remained fairly stable since 26 thanks to the Pfandbrief banks (31.3% share in 212) and has seen accelerating growth since * Issuance Market Issuance Market Issuance Market Issuance Market Issuance Market Issuance Market Issuance Market Issuance Market size share size share size share size share size share size share size share size share Institution ( bn) (%) ( bn) % ( bn) % ( bn) % ( bn) % ( bn) % ( bn) % ( bn) % Big banks % % % % % % % % Regional banks % % % % % % % % Branches of foreign banks.1.%.3.% 1.3.1% 1.2.1% % 1.4.1% 1.2.1% 1.1.1% Landesbanken % % % % % % % % Savings banks % % % % % % % % Regional institutions of credit cooperatives.6.%.3.%.3.%.3.%.3.2%.3.%.3.%.3.% Credit cooperatives % % % % % % % % Real estate credit institutions % % % % % % % % Building and loan associations % % % % % % % % Special purpose banks % % % % % % % % Total 1, % % % % % % % % Year on year growth* -1.2% -.7%.1%.6% 1.1% 1.9% 1.6% Note: * 213 up until Q3 213 Source: Bundesbank website, vdp website Regional banks market share has grown from 9.9% in 212 to 14.2% in 213* 33

34 millions bn 6.4 North Rhine Westphalia, Lower Saxony and Saxony In depth As at 212, NRW is the most populous federal state with 17.8m, accounting for 21.8% of the total 81.7m. NRW s GDP accounts for 22% of German GDP Saxony has the highest GDP output among newly formed federal states, reaching 96.6 billion in 212, 3.65% of total 2,643 billion North-Rhine Westphalia most populous federal state ,945 Population Population/km2 2,382 1, ,5 4, 3,5 3, 2,5 2, 1,5 1, 5 7 GDP per capita % 12.3% 11.5% 12.% 12% % 1.2% 1% 8.1% 8.5% 8% 6.6% 9.8%7.5%6.9% 6.7% 5.7%5.3% 6% 4% 2% % GDP output per federal state Source: Statistische Ämter des Bundes und der Länder Unemployment rate per federal state 3.7%3.9% 6, 5, 4, 3, 2, 1, Source: Statistisches Bundesamt Source: Bundesagentur für Arbeit 34

35 Thousands 6.5 Attractive outlook in German residential real estate Rising shortfall in housing, low home ownership, and increasing immigration fuel demand 1,6 1,4 1,2 1, Persistent annual gap between construction and demand cumulates to shortfall of 1.3M homes by 225 Actual house construction p.a. Housing demand until 225 p.a. Gap cumulative 1.3M Home ownerships remains at historically low levels at c.45% % % 44.9% % 45.% % 45.1% Housing completions in thousands units Ownership in % of population E 214E 45.2% 45.1% 45.% 44.9% 44.8% 44.7% 44.6% Source: EUROCONSTRUCT, Positive immigration balance into Germany underpins demand for housing E 215E 216E 217E 218E 219E 22E 221E 222E 223E 224E Source: Statista 214 1,5 1, , E Immigration Emmigration Immigration balance Source: Destatista, 214 Rising shortfall in housing and increasing immigration fuel demand for residential real estate 35

36 Mar-7 Jun-7 Sep-7 Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 EUR / SQM 6.6 Residential real estate Replacement Costs Rents in Germany have, on average, increased at lower rates than prices of new construction as well as price of existing housing Replacement costs of c.eur1,5-2,/sqm are c.8% above the current residential real estate market average of c. EUR 85/SQM 14 2, Price new construction Rent Price existing , 1,5 1, 5 85 Avg Value/SQM +135% +76% 2, 1,5 Avg Replacement Costs/ SQM Source: Immobilienscout 24 Source: DAIG, company reports/presentations, market avg. DAIG, DW, TAG, Westgrund and other peers Construction costs remain significantly above average value of similar stock 36

37 7. APPENDIX II PORTFOLIO OVERVIEW

38 7.1 ADLER Portfolio in pictures Snapshot of Duisburg Assets 38

39 7.2 ADLER Portfolio in pictures Snapshot of Düsseldorf Assets 39

40 7.3 ADLER Portfolio in pictures Meissen Dresden Leipzig Leipzig, Dresden and Region 4

41 7.4 ADLER Portfolio in pictures Rostock Helmstedt Kiel Lübeck 41

42 7.5 ADLER Portfolio in pictures Dresden Gelsenkirchen Großenhain Querfurt Burg Weißenfels Glauchau 42