Capital Markets Day HOCHTIEF Real Estate Division

Transcription

1 Capital Markets Day HOCHTIEF Real Estate Division October 27th 2008 Hamburg, Quartier 21, Casino Rainer Eichholz, CEO HOCHTIEF Real Estate Division

2 HOCHTIEF AG Corporate Structure Six Divisions HOCHTIEF AG (Holding) HOCHTIEF Americas HOCHTIEF Asia Pacific HOCHTIEF Concessions HOCHTIEF Europe HOCHTIEF Real Estate HOCHTIEF Services Turner Flatiron HOCHTIEF do Brasil Leighton Holdings HOCHTIEF AirPort HOCHTIEF PPP Solutions HOCHTIEF Construction AG Streif Baulogistik HOCHTIEF Projektentwicklung aurelis HOCHTIEF Property Management HOCHTIEF Facility Management HOCHTIEF Energy Management 2

3 HOCHTIEF Real Estate Division (HTRE) Evolution: From HOCHTIEF Development to HOCHTIEF Real Estate 2007 HOCHTIEF Development 2008 HOCHTIEF Real Estate HOCHTIEF Concessions PPP SOLUTIONS HOCHTIEF Real Estate FACILITY MANAGEMENT PROPERTY MANAGEMENT HOCHTIEF Real Estate: Property developments and services for institutional real estate investors. 3

4 HOCHTIEF Real Estate Division (HTRE) Business units HOCHTIEF Projektentwicklung trader developer aurelis brown field developer and asset manager HOCHTIEF Property Management service provider to and representative of institutional real estate owners Common profile across the businesses: Class A properties in top-locations international investors tenants with excellent credit ratings 4

5 HOCHTIEF Real Estate Division (HTRE) Business units At HOCHTIEF Real Estate 860 employees are in charge of: EUR 2.9bn Investments in Project Development 24.5 million sqm Land Bank EUR 23bn Assets under Management PROPERTY MANAGEMENT 5

6 HOCHTIEF Real Estate Division (HTRE) Organization HTRE Management Mr. Eichholz (CEO), Mr. Steinhauer (CFO) Service departments Service departments of HTRE Controlling Accounting Risk- and IT Personnel quality management Service departments of HOCHTIEF AG Finance Legal Communication Business units HT Projektentwicklung (269 employees) aurelis (144 employees) HT Property Management (519 employees) HTRE is an independent profit center with an efficient organization. Date: June 30th

7 Capital Markets Day HOCHTIEF Projektentwicklung October 27th 2008 Hamburg, Quartier 21, Casino Rainer Eichholz, CEO HOCHTIEF Projektentwicklung Westend Duo, Frankfurt (Germany) 7

8 Organization and management Management Robert Bambach (COO) Rainer Eichholz (CEO) Matthias Steinhauer (CFO) Offices in Germany Offices in Europe Berlin Frankfurt Munich Vienna Warsaw Bucharest Austria Poland Romania Cologne Hamburg Osnabrück Budapest Hungary Prague Czech Republic Dusseldorf Heidelberg Stuttgart St. Petersburg Russia Zurich Switzerland Date: June 30th

9 Facts and figures Established 1991 Employees 269 Offices 16 Germany 9 Europe 7 Track Record since 1991 Total number of projects 161 Floor area Half of our customers are perpetual clients Projects highlights EUR 6.2bn cumulated investment volume 2.7 million sqm Rondo 1, Warsaw (office, completion 2005, 75,000 sqm gross floor space) Radisson SAS Blue Heaven, Frankfurt (hotel, completion 2005, 4 Star-Hotel, 440 rooms) Hotel de Rome - Rocco Forte Collection, Berlin (hotel, completion 2006, 5 Star plus) Westend Duo, Frankfurt (office, completion 2006, 32,700 sqm gross floor space) Office-Park Hadovka, Prague (office, completion 1999, 24,560 sqm lettable area) Date: June 30th

10 Rondo 1, Warsaw (Poland) Office Gross floor area 95,000 m² Height 194 m Number of floors 40 Investor Tenants MGPA Ernst & Young S.A. Baker & McKenzie, AT Kearney, VW Bank u.a Realization

11 Blue Heaven, Frankfurt (Germany) Hotel Gross floor area 26,000 m² No. of rooms 440 Investor Tenant Keops Investor- Partners A/S Radisson SAS Hotels & Resorts Realization

12 OpernCarrée, Berlin (Germany) Hotel, Office properties Hotel de Rome, BureauPalais: Behren, Markgrafen, Gendarmen Gross floor area 34,200 m² Operator Investor Hotel Investor Offices Luresa Sir Rocco Forte Commerz Grundbesitz Investment gesellschaft mbh Realization

13 WestendDuo, Frankfurt (Germany) Office Gross floor area 32,700 m² Height Investor Tenants 96 m ING Real Estate Hengeler Mueller, Henderson Global Investors, Europe Arab Bank, Vapiano, Bank of China Realization

14 Our business model (1/2) Value chain propertyacquisition Concept Realization Letting Sale Trader Developer (buy build/rent - sell) Investor Developer (buy build/rent - hold) Fee Developer (service provider) We are a classic Trader Developer 14

15 Our business model (2/2) Trader Developer : Project development for institutional investors, no own real estate portfolio Specializing in commercial real estate Focusing on lucrative office areas in Germany and Central and Eastern Europe Concentration on downtown locations Development of tailor made real estate : Early involvement of tenants and investors Temporary investor : early selling to investors No speculative developments: No commencement of construction without pre-letting Use of synergy potential and integration of other group affiliates in all phases of project development ( best practice and knowledge transfer ) HTP is an independent profit center Sophisticated risk manager We develop Class A products in top locations 15

16 Profitability HTP is usually the sole investor of it s projects Our project portfolio is constantly above our internal hurdle rate of 14% IRR The average return on equity (ROE) of our projects is > 25% p.a. (Ø last 5 years) The average return on investment (ROI) of our projects is 15% p.a. (Ø last 5 years) Our projects are highly profitable. 16

17 Investment volume (1/2) Investment volume (EUR bn) 2,9 3,0 2,5 2,3 1,9 2,0 1,7 1,8 1,6 1,7 1,6 1,4 1,5 1,0 0,8 0,5 0, H1 08 projects Investment volume Includes all projects approved by the investment committee of HOCHTIEF AG Includes all costs for property purchase and all additional costs until completion (design, realization, finance, project management) employees Current investment volume: EUR 2.9bn Date: June 30th

18 Investment volume (2/2) Investment volume (EUR bn) Investment volume (phases, EUR bn) 3,0 2,5 Total investment volume Investment volume of projects under construction 2,3 2,9 3,0 2,5 2,9 2,0 1,5 1,0 0,5 0,0 1,7 1,8 1,4 1,1 0,7 0, H1 08 2,0 1,5 1,0 0,5 0,0 Total 0,4 before land purchase 1,1 after land purchase before construction 1,4 under construction Track Record: All completed projects sold 0,0 after completion Number of projects Floor area in `000 sqm Floor area rented 59% 5% 54% 85% - Projects sold 58% - 4% 58% - 18

19 Commercialization of projects under construction Area rented to tenants in total ( 000 sqm) Status of commercialization (H1 08) Floor area rented Projects sold 250,0 2nd half of the year 1st half of the year 15% 200,0 85% 42% 58% 150,0 103 rented not rented sold not sold 100, % of all lettable space of our projects in realization are rented to tenants (482,000 sqm). Based on the investment volume of all projects in realization 58% are sold to investors H 08 50, Floor area rented 69% 72% 56% 57% 93% 55% 52% 55% 88% 85% 0,0 20 Projects sold 69% 65% 47% 52% 72% 63% 85% 99% 56% 58% H1 08 Commercialization: constantly more than 50% of projects sold. Date: June 30th

20 Market presence (1/2) HT Projektentwicklung 2008 HTP in Europe Markets (of projects under construction EUR 1.4bn) 33% 67% 60% 67% Germany abroad Segments (of projects under construction EUR 1.4bn) 9% 8% HTP successfully entered new markets 11% 72% Office Other Retail Residential Date: June 30th

21 Market presence (2/2) Growth potential: Population & office area 07 Why Eastern Europe? High growth in Eastern Europe Low market entry barriers HTP has know-how and track record Success story for HTP: We are keyplayer in high growth markets HTP enters high growth markets Ø GDP growth ,2 Population in million Office area in million sqm 2,8 1,8 1,7 1,9 1,1 Hamburg Warsaw Bucharest 1.4 % (Germany) 5.1 % (Poland) 6.3 % (Romania) Source: AtisReal, CBRE, citypopulation.de, The Economist 21

22 Sample projects Trianon, Prague (Czech Republic) Prime Location in Prague Kavčí Hory Office Parc, Prague (Czech Rep.) Forward Deal in Czech Republic Location Central Prague Rental area sqm Location Prague Gross floor space sqm Investor Union Investment Realization Investor Europolis Realization

23 Office market (1/3) Key driver for office space demand Investors expect rental income Rents and stability of rental income depends on office space demand In established markets, the key driver for demand are GDP- and employment growth In emerging markets, additionally the growing share of the service sector in the economy as well as the amount of office space per employee adds significantly to the equation Office space per employee Office space demand Employment growth GDP growth share of service sector in economy HTP understands long term trends to provide the right products to clients at the right time. 23

24 Office market (2/3) Situation Rental growth and vacancy reductions Germany: cyclical high in 2008 Prime rent in Frankfurt: 37,50 EUR/sqm Eastern Europe: structural growth Prime rent in St. Petersburg 52 EUR/sqm Change Financial sector no longer demand driver Germany: stagnation of GDP CEE: slower GDP growth Outlook Germany: Decline in the tenant market CEE: Stabilization in the tenant market Office demand reaches high point in 2008/2009 Source: AtisReal, CBRE, DTZ, Colliers, JLL: Office take-up Germany (Top 7 cities, 000 sqm) 0 Internet bubble Flächenumsatz der Top 7 Standorte in T m² st 2008 half nd Halbjahr half n.a st Halbjahr half Office take-up Easter Europe (Top 10 cities, 000 sqm) Flächenumsatz der osteuropäischen Top 10 Standorte in T m² Structural growth Low point of German recession Cyclical high in st 2008 half nd Halbjahr half Halbjahr 1st half n.a. 24

25 Office market (3/3): Expected market development Office market cycle (1st half of of 2008) Stabilization Recovery Growth Slow down HTP locations HTP s markets: growth phase Source: DEGI, October

26 Our customers: Tenants with top credit rating AMB Generali AT Kearney Baker McKenzie Deutsche Bank AG Ernst & Young EUROHYPO AG PRICE WATERHOUSE COOPERS BMW AG Continental AG Deutsche Telekom AG Siemens AG Unilever ACCOR Group Rocco Forte SAS Radisson 26

27 Investment market (1/3) Key driver for real estate demand Investors seek returns Real Estate provides stable returns Real Estate demand depends on performance of alternative asset classes and the liquidity of investors In established markets prevail safety and stable cash flow oriented investors with a lot of equity In emerging markets higher returns go together high value growth opportunities Alternative assets classes Real Estate demand Liquidity of Funds and Trusts Liquidity of investors Cost of dept finance 27

28 Investment market (2/3) Comeback of equity strong investors Net-Capital inflow (Source: BVI) Closed funds declining importance EUR 1.6bn equity to be placed in EUR 3bn potential investment volume Transaction volume 2007 = EUR 9bn (approx. 15%) 2 Open funds growing importance EUR 4bn net equity inflow until 1st half of EUR 16bn potential investment volume in Transaction volume 2007 only EUR 3bn (approx. 4%) 5 Additional cash positions from sales in 2006/2007: In Big Six cities alone EUR 12bn income from sales 6 Insurance companies & pension trusts Committed to increase share of real estate assets Additional investments of EUR 10bn until 2010 Transaction volume in 2007 only EUR 1bn (approx. 2%) Example: Allianz intends to increase real estate investment from EUR 5 to 15bn until Capital inflow of public funds in Germany [mln EUR ] st half 2008 Open ended real estate funds 1 Source: Scope 2 Source: AtisReal 3 Source: BVI Stock funds 4 Source: Immobilienzeitung / Deutsche Bank AG 5 Source: AtisReal 6 Source: AtisReal 7 Source: Immobilienzeitung 28

29 Investment market (3/3) Situation Out customers record continuous capital inflow Equity Our customers promise their investors returns Pressure to invest Change In 2006 and 2007 new customers appeared on the market, purchasing at high prices and high leverages Outlook Out traditional customers return State owned investment trusts aim to increase their share of real estate assets through indirect real estate investments More liquidity for our customers Comeback of investors with strong equity base Source: AtisReal, CBRE, DTZ, Colliers, JLL Transaction volume Eastern Europe (Top 10 cities, mln EUR) Transaction volume Germany (Top 7 cities, mln EUR) 0 Stable Demand Transaktionsvolumen der Top 7 Standorte in Mio EUR st 2008 half nd Halbjahr half n.a Halbjahr 1st half Growing Demand st half nd Halbjahr half n.a Halbjahr 1st half

30 Our customers: Equity strong investors AMB Generali AXA Investment Managers CA Immo CGI DEKA Deutsche Bank Real Estate Fonds Haus Hamburg EuroHypo Europolis ING Real Estate Keops InvestorPartner A.S. SEB Immobilien Investment Union Investment 30

31 Five elements of Real estate development Risk - Concept Timing Property Capital Management 31

32 Volatile markets GDP growth Germany in % 3,5 3,0 2,5 2,0 2,0 3,2 3,0 2,5 How do we manage stable growth in a volatile environment? 1,5 1,0 1,2 1,2 0,8 0,5 0,0-0,5 0,0-0, A long Experience, sophisticated Risk Management and proper Timing! Source: DeStatis 32

33 Risk management at strategic level Strategy Structure Long-term and foreseeing action Clear accountability Risk diversification by broadening portfolio - by expansion into new countries - and expansion into established products Quarterly market report for all European markets Yearly forecasts and ranking of all markets Structured business planning for market entries Detailed watch on our clients and their behavior Clear regional structure Business development department Risk and quality management department Revision department Incentive structure based on project success Individual targets defined with every employee Four eyes principle for every contract signed We anchored strategy and risk management in our organization to avoid risks and capture chances early. 33

34 Risk management at operational level Before investment decision After investment decision Structured investment approval process Detailed reporting and controlling Double check of every project prior to investment decision: HTRE departments and HT departments check projects prior to investment decisions Investment Committee 1 HT examines every single project Hurdle rate: no construction without pre-lease rate or sale of project Monthly reporting for every project s costs, rental and sales progress Status-of-Projects-Meetings: Quarterly project meetings with each regional head to discuss status and strategy for all of his current and prospective pipeline projects We live active risk management. 1 Investment Committee: HOCHTIEF AG management board and heads of corporate central departments 34

35 HOCHTIEF Real Estate Development Goal and strategy Goal Most profitable and innovative Real estate developer in Europe Strategy Expansion into high growth markets Product development Differentiation through technology Increase synergies among HT units 35

36 Strategy: Expansion into high growth markets Short-term Regionalization of international subsidiaries Implement pilot project in Russia Implement pilot project in Romania Implement market entry in Scandinavia Mid-term Market entry in Turkey, Ukraine or Bulgaria Long-term Market entry in another West-European core market HRTE today Planned Market Entry Shortlist Long List In about 5 years we will generate 50% of our business volume outside Germany. 36

37 Strategy: Differentiation through technology Awards for sustainable high rise HTP received two sustainability awards Westend Duo in We designed this building 4 years before Green Building became a hot topic Another Green Building in the pipeline Development of Smart House in Munich Create lighthouse project with a multiplier effect for Green Buildings made by HTP Westend Duo, Frankfurt (Germany) We will be the reference point for Green Buildings Smart House, Munich (Germany) 1 Third prize of the Prime Property Award, Special prize for sustainable construction of the International High Rise Prize of the city of Frankfurt 37

38 Strategy: Product development Logistic Growth in CEE increases commercial transportation Logistic projects in Germany and CEE Health Aging population in Germany Nursing homes in Germany Poor public care in CEE Private Hospitals in Poland Retail Raised attractivness of city centers Inner City Shopping Centers Quarters Demand for healthy inner city residential quarters Inner city brownfields Challenging quarter developments on large plots We will broaden our range of products. Inner city quarters are a new focus. 38

39 Strategy: Increase synergies among HOCHTIEF units Actions Intensify activities with HT Energy Position HTP as preferred bidder in HTFM and HTPM s circle of customers Enhance networking among HTP and HTPM Capitalize access to aurelis land bank Use of know-how and experience of HOCHTIEF Construction Advantages Profit from growing energy consciousness on customer side Identify development potential for HTP in HTPMs managed objects and tenants Access to aurelis properties for further HTP developments HOCHTIEF s life cycle concept provides the profit center HTP a competitive advantage. 39

40 aurelis: Strategic shareholding 40

41 aurelis: Investment rational aurelis is financial investment of HTP offering numerous opportunities aurelis is an investment platform with a land bank in West-Germany s growth regions aurelis owns a demanding real estate portfolio with high value potential The portfolio s value potential is to be captured through development and refurbishments HTP applies its know-how in a wider context and enters the portfolio business HTP increases its market presence in Germany Development of future oriented products like vivid inner city districts High and stable rental income ensures financing HTP lifts the potential of a complex portfolio. 41

42 aurelis: In short aurelis is a real estate company with brownfield properties. Most of the properties are located in West German Cities. Stable rental income ensure financing, attractive land bank ensure mid term upside-potential Comfortable agreements with Deutsche Bahn AG in respect to rental contracts, property borders and environmental issues Our strategy focuses on the reduction of complexity and risk Experienced management team deployed to aurelis and performance based incentivized Already a positive contribution to HTRE s earnings in 2007 Demanded IRR > 14% p.a. aurelis is more than a land bank, it is a very promising opportunity for HTP. 42

43 Project development is a risky business with high returns HOCHTIEF Projektentwicklung prevails as market leader due to its clear cut business model and its sophisticated risk management It is our goal to become the most profitable and most innovative Trader Developer in Europe 43