Rolling Up German Real Estate

Transcription

1 Rolling Up German Real Estate Initiative Immobilien-Aktie Frankfurt / Main Frank Schaich, CEO Page 1

2 1. Snapshot 2. Fair Value s strategy 3. Real estate portfolio 4. Direct investments 5. Participations 6. Financials 7. Outlook 2008 / Fair Value s share 9. Highlights Page 2

3 1. Snapshot BUSINESS MODEL > Focuses on the acquisition, management, leasing and sale of commercial properties in Germany > Direct and indirect investments primarily in office, light industrial / logistics and retail properties in German secondary cities and regional centers ( hidden champions ) > First German UPREIT: Participation in closed-end funds provides unique market access (volume: 140 bn) > REIT status (since December 6, 2007) offers numerous competitive advantages: eased acquisitions (exit tax privilege), exemption from income and trade tax, high dividend payouts, mandatory solid financing > Broadly diversified real estate portfolio in regional and sectoral perspectives > Lean, cost-effective structures through outsourcing of property management, accounting and asset management Teltow Neuss Pinneberg Page 3

4 2. Strategy DIRECT INVESTMENTS > Direct acquisition of commercial properties to generate additional rental income and cash flows > Investment focus: Office and logistics premises in secondary cities and regional centers > Volumes: 5 50 million > Vehicle: REIT structure offers competitive advantages PARTICIPATIONS (CLOSED-END FUNDS) > Continued acquisition of participations in certain closed-end real estate funds > Motivation: Widespread market ( 140 billion) and large potential for yield improvement > Investment criteria: Attractive growth and return perspectives > Instrument: tested roll up process Realizing both value potential and attractive returns Target portfolio: Office around 50% of rental income, around 25% logistics and retail each Page 4

5 3. Real estate portfolio an overview PORTFOLIO STRUCTURE MARKET VALUES* > Direct Investments and Participations > million market value of overall portfolio > million Fair Value s share of market value PORTFOLIO STRUCTURE RENTABLE AREA Fair Value s Share Associated Companies 304,385 m² *Excluding office building at Dusseldorf Airport *As of June 30, 2008 (in million) Direct Investments * 42,940 m² Subsidiaries 117,479 m² > Total of 81 properties with a total rental area of 464,804m² (overall) > Fund Portfolio: Interests in 13 closed-end real estate funds comprising diversified asset base > Direct Investments: Portfolio of bank branches in the Hamburg metropolitan area plus one office building at Dusseldorf Airport (completion in July 2008, 4,730m²) Broad diversification of real estate portfolio Page 5

6 3. Real estate portfolio an overview PORTFOLIO SPLIT BY SECTORS* Other 5% Retail 42% *According to potential rent POTENTIAL RENTAL RETURN IN %* Logistics /Light Industrial 8% Office 45% > 21.5 million Fair Value s share of rental income > Rental income originates from four different sectors > 7.1 years average residual term of leases underscore stability of rental income > 95.6% occupancy (on potential rent) provides for sustained earnings strength > 8.3% return on Fair Value's share of market value *Based on proportionate market values Growing and predictable rental income Page 6

7 4. Direct investments SPARKASSE PORTFOLIO > Purchase of 32 commercial properties, mostly used as bank branches in 12/2007 > Main tenant: Sparkasse Südholstein > 42,940 m² total rental area > 49.0 million total market value > Sustainability through occupancy rate above 96.4% and remaining lease term of 13.5 years > 6.6% return on market value > Portfolio offers attractive, long-term and secure rental income Neumuenster Direct acquisition to establish strong cash flow position Page 7

8 4. Direct investments AIRPORT OFFICE II, DUSSELDORF > Acquisition of Airport Office, II at Dusseldorf International Airport in 10/2007 > Highly attractive location in direct proximity of the terminal building > Completion in July 2008 > 4,730 m² rental area > 12.6 million purchase price > Since September 2008 fully let 7% p.a. return on acquisition cost further strengthens cash flow Page 8

9 5. Participations PORTFOLIO STRUCTURE > 5 majority participations (subsidiaries) > 8 minority participations (associated companies) > 49 properties in 13 closed-end funds > 421,864 m² total rental area of the portfolio > million total market value > million Fair Value s share > Highly diversified portfolio Active influence on management of the funds to generate additional value Page 9

10 6. Financials FIRST HALF OF 2008 CONSOLIDATED INCOME STATEMENT thousand Rental income Income from operating and incidental costs Ground rent Expenses for investment properties Net rental result General administrative expenses Other operating income and expense (balanced) Valuation result Operating income Income from equity-accounted investments Other investment result Minority interests Net interest expenses Financial result Consolidated profit Earnings per share ( ) January 1 to June , (117) 0 (1,282) 0 5,323 0 (1,470) (244) (2,459) 0 1,464 (141) 1, (949) 0 (1,273) 3 (675) > Revenues of 6.7 million recorded; thereof 5.0 million were due to the fully consolidated majority interests in five closed-end real estate funds, further 1.7 million stemmed from Fair Value's portfolio of directly held properties > Net rental result of 5.3 million > Valuation loss of 2.46 million > Additional income of T 1,547 from equityaccounted participations > Financial result at T (675), also accounting for minority interest and net interest expenses > Consolidated net income of T 789 in the first half of 2008 (corresponds to earnings per share of 0.08) Page 10

11 6. Financials FIRST HALF OF 2008 EQUITY-ACCOUNTED INVESTMENTS thousand Rental revenues Income from operating and incidental costs Real-estate related operating expenses Net rental result General administrative expenses Other operating income and expenses Valuation result (net) Operating result Other interest expenses Change in market values for the loans Net interest expenses Financial result Fair Value s share after consolidation H ,900 1,853 (3,945) 15,808 (871) (14) (5,041) 9,882 (4,782) 687 (4,095) 5,787 1,547 > Total revenues of 17.9 million recorded by associated companies > Net rental result of 15.8 million achieved > Valuation net loss of 5.0 million > Operating result thus totaled 9.9 million > Net interest expenses amounted to 4.1 million (Other interest expenses of 4.8 million as well as increased market values for loans of 0.7 million) > Financial result of 5.8 million > After considering Fair Value s share in funds, profits of 1.5 million were consolidated in group s financial result Page 11

12 6. Financials FIRST HALF OF 2008 FUNDS FROM OPERATIONS thousand Consolidated net income (economic result) Amortization of intangible assets and depreciation of property, plant and equipment Income from the disposal of participating interests Valuation result Income from equity-accounted investments Withdrawals from equity-accounted investments Minority interests Distributions to minority interests Income from restructuring financial derivatives Result from the valuation of derivative financial instruments Cash flow from operating activities (funds from operation) FFO per share in H ,459 (1,547) (341) (1,469) (286) 1, > Consolidated net income (economic result) of 0.8 million adjusted for valuation result > Income from equity-accounted investments ( 1.5 million) not considered as cash position > Withdrawals from equity-accounted investments of 0.7 million > Minority interests totaled 0.9 million > Additional income from restructuring financial derivatives amounted to 1.5 million > As a result, Fair Value achieved cash flow from operating activities (funds from operations) of 1.3 million in first six months of 2008 > FFO per share of 0.14 reflects Fair Value s earnings strength Page 12

13 6. Financials FIRST HALF OF 2008 CONSOLIDATED BALANCE SHEET Assets Equity & Liabilities > Total assets rose to million (December 31, 2007: million) Non-current assets 220,338 95,452 Equity > 95% of total assets are non-current; thereof 69% related to investments property and 26% related to equity-accounted investments in associated companies > Reduction of short-term assets to T (December 31, 2007: T ) caused by decrease in other receivables and assets Current assets 75,496 60,587 11, , ,535 Non-current liabilities Current liabilities > Compared to December 31, 2007 liabilities just marginally changed > Shareholder s equity (Net Asset Value) rose to T 95,452 (December 31, 2007: T 94,663) > Net Asset Value (NAV) per share on June 30, 2008 increased again to (December 31, 2007: 10.06) Page 13

14 7. Outlook 2008 / 2009 PERSPECTIVE AND OPPORTUNITIES > Fair Value aims to successively increase its proportion of direct investments from around 25% to around 50% > Focus on acquisition of office and logistics premises using its REIT status > Target: doubling the non-current assets by the end of 2009 compared to 12/2007 > million expected consolidated net income for 2008 according to IFRS (after anticipated valuation expenses of 2.2 million and prior to growth-related costs and income) Neubrandenburg > million expected consolidated net income for 2009 according to IFRS (after anticipated valuation expenses of 2.4 million and prior to growth-related costs and income) > planned dividend per share for 2008 (based on 9,406,882 currently issued shares) Munich Page 14

15 8. Fair Value s share NAV vs. SHARE PRICE ATTRACTIVE INVESTMENT OPPORTUNITY Share price *Publication of revised NAV as per September 30 with interim report (publication on November 28, 2008) Page 15

16 9. Highlights > Highly diversified portfolio of German commercial real estate properties focused on secondary cities and regional centers > Growth through acquisition of additional participations in closed end-funds and direct investments > New asset class: Fair Value is the first (and only) UPREIT in Germany > Established and tested roll-up process for closed end-real estate funds USP in an enormous market (size: 140 billion) Langen > Unique market access allows for realization of potential value gains > REIT status offers competitive advantage concerning direct acquisitions from institutional owners (exit tax privilege) > Experienced management and cost efficient organizational structures Rostock Page 16

17 Annex MANAGEMENT BOARD Frank Schaich > Over 25 years of experience in international real estate (Germany, Canada, USA, Poland, The Netherlands) > Employed by IC Real Estate Group for over 19 years, mostly in executive positions > Member of the Managing Board of IC Immobilien Holding AG since 2002 (IPO 2006) > Chief Executive Officer of Fair Value since September 17, 2007 Frank Schaich CEO/CFO Tried-and-tested experience and expertise of all areas of the real estate business Manfred Heiler CIO Manfred Heiler > Over 30 years of experience in international real estate (Germany, France, Luxemburg, Poland, Austria, Canada, USA) > Executive positions in several real estate companies (Commerz Real Immobilien, Dr. Höcherl Gewerbebau, Thurn und Taxis) > Member of Fair Value s Managing Board since December 1, 2007 Page 17

18 Annex HIGH POTENTIAL IN A VOLATILE ENVIRONMENT Overview of key data Sector WKN (German Securities Code) / ISIN: Stock exchange symbol Share capital Number of shares (no-par value bearer shares) Proportion per share in the share capital Initial listing High / low 2008 Market capitalization on October 9, 2008 Market segment Stock exchanges Designated Sponsor Indices Real estate (REIT) A0MW97 / DE000A0MW975 FVI 47,034, ,406,882 5, November 16, / million Prime Standard Prime Standard: Frankfurt, XETRA OTC: Stuttgart, Berlin-Bremen, Dusseldorf, Munich WestLB RX REIT All Shares-Index RX REIT-Index Page 18

19 Annex HIGH POTENTIAL IN A VOLATILE ENVIRONMENT Shareholder structure Page 19