CORESTATE Capital. Company Presentation. May / June 2018

Transcription

1 CORESTATE Capital Company Presentation May / June 2018

2 Disclaimer This presentation contains forward-looking statements that involve a number of risks and uncertainties. Such statements are based on a number of assumptions, estimates, projections or plans that are inherently subject to significant risks, as well as uncertainties and contingencies that are subject to change. Actual results can differ materially from those anticipated in the forward-looking statements of CORESTATE Capital Holding S.A. (the Company ) as a result of a variety of factors, many of which are beyond the control of the Company, including those set forth from time to time in the Company s press releases and reports and those set forth from time to time in the Company s analyst calls and discussions. The Company does not assume any obligation to update the forward-looking statements contained in this presentation. This presentation does not constitute an offer to sell or a solicitation or offer to buy any securities of the Company, and no part of this presentation shall form the basis of or may be relied upon in connection with any offer or commitment whatsoever. This presentation is being presented solely for information purposes and is subject to change without notice. Glossary: = Euro; $ = (US)Dollar; (F)Y = (financial) year(s); H = half year(s); M = month(s); Q = quarter(s); % = percentage; a = actual; acc. = according; adj. = adjusted; aggr. = aggregated; approx. = approximately; ca. = circa; e = expected; k = thousand(s); m = million(s); bn = billion(s) CORESTATE Capital HoldingS.A. Page 2

3 Agenda 1 Business model and investment highlights 2 Operating performance & financials (Q1-2018) CORESTATE Capital HoldingS.A. Page 3

4 CORESTATE a Leading Real Estate Investment Manager The CORESTATE business model Real Estate equity CORESTATE acquires Real estate assets for third-party investors and manages the assets on its clients behalf Covers the full value chain of an investment incl. acquisition, asset/property management and disposal Real Estate debt Out of a fund backed by institutional money, HFS (2) provides mezzanine capital to finance Real estate projects in German-speaking region Participation fee recognised beyond 7% hurdle Up to 93% of recurring fee income since 2012 Non-Real Estate assets Non-Real estate assets including media, shipping, life insurance and aviation Assets are held within the portfolio until maturity with limited renewal mandate 48% of AuM 30% of AuM 22% of AuM A leading fully integrated Real Estate Investment manager Assets under management (AuM) of c. 22 bn (1) 67% of assets are located in Germany Diversified offering across asset classes (residential, office, retail, student housing, micro-living) Covers full spectrum of services and risk profiles Matching needs of different investor types (institutional, family office and retail) Tangible acquisition pipeline of 5.5 bn reflects strong sourcing capabilities of organic growth More than 560 FTEs in 41 offices in 7 countries with direct access to local Real estate markets Accretive growth strategy in a fragmented market from a solid base in Germany Financial Outlook 2018 Agg. Revenues m Adj. EBITDA m Adj. Net Income m Notes: (1) Including HFS, HL and ATOS. Total AuM and transaction volume as per 31 March 18 (2) Acquired by CORESTATE in July 2017 CORESTATE Capital HoldingS.A. Page 4

5 Strong Recurring Fee Income Streams Providing Stability Types of fees Recognition of fee income Duration Revenue share Potential repackaging in Real Estate investment livecycle Sourcing / acquisition Investment / property management Exit / Realisation Acquisition Warehousing Asset management Couponparticipation fee Property management Exit fees Capital gain and Promote Recurring fee income recognised as percentage of AuM Profit distribution upon successful transfer of asset into main fund or sale Recurring fee income recognised as percentage of AuM Recurring return participation by HFS above pre-defined return hurdle rate Recurring fee income recognised as percentage of AuM Profit distribution upon successful sale of fund assets Income recognised upon successful exit of CORESTATE s alignment investments 0 6 months years 0 6 months Target range: >80% of recurring revenue (achieved) Target range: <20% of successbased revenue (achieved) Recurring Success based Predominant share of Revenues expected to be recurring CORESTATE Capital HoldingS.A. Page 5

6 Comprehensive and Integrated Multi-Boutique Platform Offers Broad Assortment and Further Optionality for External Growth New CORESTATE platform enhances client choice on more products and different risk-return profiles standardized back and front office processes high quality proposition on products and structures x-selling between HFS and Real estate equity investments Products Strict set of acquisition criteria drives approach to external growth Access to new investors Access to new geography Access to new asset class potential for external growth Focus on Real estate AuM Crossselling opportunities Equity Mezzanine Debt ü ü High % of recurring revenues EPS accretion Clients Semi Institutional Institutional Retail CORESTATE Capital HoldingS.A. Page 6

7 Second Largest Listed European Investment Manager by Real Estate AuM Overview of selected European listed Investment Managers AuM (in billions) (3) Real Estate 39 Market capitalisation (1) (in billions) Diversified Alternative Assets EBITDA 2018E (1) (in millions) (4) na 88 Comments Sufficiently large AuM base facilitating broad market coverage and diversification CORESTATE has been included into the German SDAX index as of 19 March 2018 and has over 600 m of free float market capitalisation (5) Market capitalisation about 1bn providing attractive acquisition currency and potential to significantly increase trading liquidity subject to higher free float Considering only Real estate, CORESTATE already amongst largest listed managers in Europe Notes: (1) Capital IQ as of February 2018, EBITDA forecast based on broker consensus (2) Latest company information as of Q (3) DIC Asset runs a hybrid model, including own portfolio, funds and other investments (4) 2018E EBIT estimate (source: equity research) (5) Based on per share and 21 m shares outstanding as of 8 March 2018 CORESTATE Capital HoldingS.A. Page 7

8 Ample Room for Growth in European Sector Landscape Acquisition Opportunities for CORESTATE High degree of fragmentation providing consolidation opportunities (1) Number of asset managers by size > 30bn 10-30bn < 10bn Real estate managers Concentration of Real estate AuM by top 5 managers (2) Top 5 Managers 16% 94 Average AuM ( bn) Comments The European Real estate asset management market is fragmented there are over 90 asset managers with AuM below 10bn (1) Financial institutions are refocusing on their core business and are considering the sale of non-strategic assets High and rising regulatory costs impose a meaningful burden on smaller asset managers that lack scale Client demand and market requirements are becoming increasingly sophisticated, giving larger asset managers a competitive edge Rest 84% (3) (1) Property Funds Research and Institutional Real Estate Inc., Global Investment Managers 2016 (2) Includes short-term, intermediate-term, long-term, multisector, high-yield, bank-loan and retirement-income categories CORESTATE Capital HoldingS.A. Page 8

9 Highly Experienced Management Team with New CEO Dr. Michael Bütter CEO Lars Schnidrig CFO Thomas Landschreiber CIO & Co-Founder Philipp La Pierre Co-CIO Stefan Scherrer COO Key Responsibilities Strategy Organisation & corporate functions Real estate management Human resources and risk management Key Responsibilities Financing Investor Relations Accounting and consolidation Controlling and reporting Tax and investment structuring Key Responsibilities Deal sourcing Acquisition structuring Transaction execution Asset disposals Equity raising and client relations Key Responsibilities Expansion of investor contacts Management of the Institutional business Key Responsibilities Platform integration of acquired entities Realisation of synergy potentials Experience >18 years expertise in Real estate and corporate governance Selected experience: CEO of Immobilien Scout, board member at TLG Immobilien; was at Vonovia Experience >17 years of CFO experience on board / senior management level Selected experience: Vonovia Finance B.V, Vonovia SE, HypoVereinsbank AG Experience >27 years of executing Real estate transactions Selected experience: Cerberus Capital Management and UniCredit Experience >17 years of experience in the Real Estate industry Selected experience: Union Investment Real Estate, ING Real Estate Investment Management Experience Selected experience: Credit Suisse Asset Management (COO EMEA division) CORESTATE Capital HoldingS.A. Page 9

10 Key Investment Proposition 1 Fully integrated Real estate investment manager with 22bn (1) AuM and diversified product offering 2 Strong recurring fee income streams provide stability 3 Unique sourcing capabilities with 5.5bn pipeline drive superior organic AuM growth 4 Diversified investor base with growing allocation to Real estate provides sustainable fundraising base 5 Accretive external growth opportunities from sector consolidation based on a scalable platform 6 Strong profitability, efficient balance sheet structures and attractive dividend capacity (1) Including HFS, HL and ATOS. Total AuM as per year-end 2017 CORESTATE Capital HoldingS.A. Page 10

11 Agenda 1 2 Business model and investment highlights Operating performance & financials (Q1-2018) CORESTATE Capital HoldingS.A. Page 11

12 Highlights of Q Corporate Governance Management Board realignment completed Successful AGM and distribution of 42m to shareholders ( 2 per share) Operational Performance Decent start in the year with promising Q1 results Corporate Structure Rebranding ATOS, fully integrated in CORESTATE Further progress in business process standardization and operational alignment Capital Markets & Financing 300m senior unsecured bond placed in March Increase of free float to >63% and SDAX inclusion One additional broker initiated research coverage with buy recommendation CORESTATE Capital HoldingS.A. Page 12

13 Development of Assets under Management Increasing Real Estate AuMs Strong Sourcing Pipeline Compensation of decrease in run-down portfolio by strong organic growth in RE AuMs Slight seasonal impact from typical deal restraint in the first quarter 21.9bn 21.6bn Run-down Aviation 5.7bn 4.8bn 3% +3,7% 3% -0.9bn decrease in non RE AuMs in exclusivity 10% in LoI/due diligence 15% Other 8% RE AuMs 7% 26% Office 29% 5.5bn Retail Micro apartments 23% 8% 16.2bn 26% 9% 16.8bn RE AuMs Residential 32% 32% under review/identified 75% Q4/2017 Q1/2018 CORESTATE Capital HoldingS.A. Page 13

14 Update on Mezzanine Financing of HFS Profile of HFS Funds end of March 2018 Total fund volume ~ 1,2bn # of financed projects 58 Ø size of mezzanine financing 15.4m Since Q share on German residential increased Residential 79% Retail 16% Office 5% Regional break down of current financing (in m ) More than 60% of financed projects located in Top7 German cities (m ) CORESTATE Capital HoldingS.A. Page 14

15 Examples of New Product Offerings High Street VIII Garbsen Schwenningen Rostock Sindelfingen Sizeable and well-diversified portfolio of prime retail properties throughout Germany 5 retail assets in prime locations of mid-sized cities (112k sqm, 95% occupied, Ø-lease length 8.8Y) Annual cash distribution of around c. 6.00% Aggregated investment size (AIC) is around c. 250m (18.2x), equity commitment of c. 100m CORESTATE Opportunity Deutschland I Augsburg Kiel Hannover Hallbergmoos Target volume of up to 800m with equity contributions of 400m Cash distribution of 4.50% p.a. for a seven-year term Already existing seed portfolio of 7 properties Portfolio generates a total rental income of c. 17m p.a., has a WALE of 5 years and a lettable area of 218k sqm which are currently 90% occupied CORESTATE Capital HoldingS.A. Page 15

16 Fee & Earnings Performance Fully on Track Q Revenuee Stream in m 18,2 Acquisition related fees Driven by favourable organic growth (i.a. BVK/micro apartments transaction) 14,2* 31,8 Asset & property mgt. Stable fee income from and equity and debt funds 0,3 Promote & sales fee Will increase over the year 3,0 Alignment capital In line with budget 8,5 Warehousing/ RE operations Scheduled sale of bigger asset in H2 as main trigger for more earnings 61,9 Aggregated revenues Solid top line start of 2018 * Coupon participation fee (pro rata temporis) CORESTATE Capital HoldingS.A. Page 16

17 Financial Performance of First Quarter 2018 Key P&L Figures in m Q Aggr. Revenues % Management expenses % Alignm. Capital/Warehousing Exp % G&A expenses* % EBITDA % Adj. EBITDA % D & A % EBIT % Financial result % Also decent quarter in terms of expenses and earnings Operational management expenses mainly fixed cost driven G&A incl. 1.4m cost of management board realignment 6.0m extra depreciation on management contracts Positive accounting effect on financial result of c. 3m mainly from derivatives 1.1m deferred tax asset from one-off items in adj. Net Profit Net profit % Adj. Net Profit % * incl. other expenses CORESTATE Capital HoldingS.A. Page 17

18 Successful Debut Bond Issuance Terms of Senior Unsecured Bond Placement as of March 2018 Issuance volume 300m Coupon 3.5% Date of issuance 23 March 2018 Maturity April 2023 Rating BB+, Outlook stable (S&P) First coupon date 15 October 2018 Rationale and Maturity Profile Capital structure harmonized and simplified with two key financing instruments Maturity profile extended Source for further growth (warehousing, acquisitions..) 106 ~ 200 will be refinanced from new bond proceeds Corporate debt Potential to convert into equity Convertible bond new bond 67 1 ( m) CORESTATE Capital HoldingS.A. Page 18

19 Key Debt Figures and Leverage Debt overview as of Bank & other debt Senior bond Convertible bond Stadttor Kronberg Danone Warehousing assets in placement process 507 ~ Leverage reduced to 3.3x (Q4-2017: 4.2x) mainly due to onward consolidation effects of strategic acquisitions In H planned deconsolidation of warehousing asset with underlying debt of c. 190m generates de-leverage potential of approx. -1.2x Typical range for additional warehousing assets build up through the year would be between m Total debt Cash Net debt in H scheduled debt disposals Net Debt adj. EBITDA (LTM)* 3.3x -1.2x * Adj. EBITDA (LTM) = 155.7m from Q2/2017-Q1/2018 CORESTATE Capital HoldingS.A. Page 19

20 Outlook 2018 More to come in 2018 on operations Execution of deal pipeline and client growth More new business projects at Hannover Leasing (Club Deals) Expansion of student housing activities in Europe Strengthen branches in London and Madrid Ongoing structured market screening on M&A targets Financial Outlook 2018 Confirmed Aggr. Revenues * Mio. Adj. EBITDA Mio. Adj. Net Income Mio. * Aggregate Revenues include Revenues and Gains from Real Estate Investment Management, Share of Profit and Loss from Associates and Joint Ventures, and Total Income from Real Estate Operations / Warehousing CORESTATE Capital HoldingS.A. Page 20

21 Appendix

22 Appendix Research and Shareholder Information Average target price 69.0 (100% Buy) +46% +41% % +54% +39% +41% Upside to price target ( 46,65 share price as of 11 May 2018) Buy Hold Sell 15 Mar Apr May Mar Mar May 2018 Shareholder structure & important share events Ralph Winter 17.8% Sandra Ketterer 8.9% Norbert Ketterer 9.6% 21,329,417* shares Free Float 63.6% (incl. 4.7% Management) 4 Oct Feb Sept 2017 First Day of Trading c. 23m Capital Increase Share Placement (c. 157m) by Flygon 21 Nov 2017 Placement of Convertible Bond ( 200m) 27 Feb March 2018 Share Placement (c. 20%) by R. Winter and M. Hoensbruch Inclusion in SDAX * As of 31 March 2018 CORESTATE Capital HoldingS.A. Page 22

23 Appendix Diversified Product Offering with Focus on Germany AuM break down by asset and investor class (1) Aviation 3% Other (run down) 22% Real estate debt 30% DEBT Real Estate AuM break down by asset class and country Student Housing/ Micro Living 9% Retail 26% AuM: 22 bn Other Real Estate 7% AuM: 17 bn Office 26% EQUITY Real estate equity products 48% Residential 32% BeNeLux 9% Retail 27% Institutional 57% Semi- Institutional 16% Rest of Europe 1% AuM: 22 bn Switzerland and Austria 5% AuM: 17 bn Germany 85% Comments Successful steps to reduce run-down Portfolio Focus on profitable core Real Estate Business Broad range of asset classes and Real estate segments providing flexibility and diversification Aviation business profitable and with 3.9 bn fund raising track record since 2008 Other asset types consisting of non strategic products in run-off mode after acquisition of Hannover Leasing Mezzanine debt products provided via HFS Ability to provide broader product offering and capture broader portfolio allocation from clients Comprehensive cross-selling opportunities Notes: (1) Including third party property management mandates. CORESTATE Capital HoldingS.A. Page 23

24 Appendix Long-dated fund maturity profile Maturities by type of funds (1)(2) 45.6% Mostly run down that is more than offset by acquisition pipeline Run down assets mostly with low margins and very limited earning contribution HFS funds are in evergreen structure 10.6% 1.8% 3.4% 6.5% 5.5% 6.0% 3.2% 3.6% 0.7% 1.8% 7.3% 2.6% 1.4% Real Estate Equity Funds Real Estate Debt Funds Aviation Other (Run Down) c. 84% of investment vehicles mature after 2020 Notes: (1) Maturities are defined as the contractual end of the AM contract. It is expected that most of the contracts are renewed or a transfer of the assets into another CORESTATE vehicle takes place. (2) HFS funds maturities considered; excluding third party property management; AuM with no finite maturity are shown in the bucket. CORESTATE Capital HoldingS.A. Page 24

25 Appendix Q Profit & Loss Statement ( m) Q1/2018 Q1/2017 Revenue from Acquisition Related Fees Revenue from Asset and Property Management Revenue from Promote and Sales Fees realized Revenue from Real Estate Investment Management Management expenses (18.8) (7.8 Earnings from Real Estate Investment Management 31.5 (0.46) Net Rental Income Revenue from Service Charges Net Gain from Selling Property Holding Companies Income from other Warehousing activities Total Income from Real Estate Operations / Warehousing Expenses from Real Estate Operations / Warehousing (2.3) (0.45) Earnings from Real Estate Operations / Warehousing Earnings from Alignment Capital General, Administrative and Other Expenses (2.4) (2.8) Other Income (0.3) 0 EBITDA Depreciation and Amortisation (6.5) (0.16) EBIT Net Financial Expenses 0.7 (0.3) EBT Income Tax Expenses (3.1) 0.1 Net Profit for the Period * of which attributable to equity holders * As of 31 March 2018 CORESTATE Capital HoldingS.A. Page 25

26 Appendix Balance Sheet as of 31 March 2018 ( m) Non-Current Assets Goodwill Intangible Assets Investment in Associates and Joint Ventures Total Non-Current Assets Current Assets Inventories Receivables Cash and Cash Equivalents Total Current Assets Total Assets Equity Total Equity Long-term Financial Liabilities to Banks Other Long-term Financial Liabilities Other Non-Current Liabilities Total Non-Current Liabilities Current Liabilities Short-term Financial Liabilities to Banks Other Short-term Provisions Other Short-term Financial Liabilities Other Current Liabilities Total Current Liabilities Total Equity and Liabilities CORESTATE Capital HoldingS.A. Page 26

27 Appendix FY 2017 Profit & Loss Statement ( m) FY 2017 FY 2016 Revenue from Acquisition Related Fees Revenue from Asset and Property Management Revenue from Coupon Participation Fees 53.7 Revenue from Promote and Sales Fees Realised Revenue from Real Estate Investment Management Management expenses (50.8) (23.2) Earnings from Real Estate Investment Management Net Rental Income Revenue from Service Charges Net Gain from Selling Property Holding Companies Total Income from Real Estate Operations / Warehousing Expenses from Real Estate Operations / Warehousing (5.0) (4.0) Earnings from Real Estate Operations / Warehousing Earnings from Alignment Capital General, Administrative and Other Expenses (35.4) (10.0) Other Income EBITDA Depreciation and Amortisation (20.9) (0.3) EBIT Net Financial Expenses (20.8) (2.8) EBT Income Tax Expenses (6.6) (1.3) Net Profit for the Period of which attributable to equity holders Comments 1. Strong increase in Revenues from Real Estate Investment Management providing an attractive and stable source of recurring revenues 2. Showing a recurring income from sale of Warehousing Assets 3. Increase of G&A and Other Expenses is mainly driven by business combination of HL and HFS as well as one-off acquisition related expenses 4. Net financial expenses increase mainly due to the acquisition financing of HFS CORESTATE Capital HoldingS.A. Page 27

28 Financial Calendar Feb 2018 Preliminary results of FY Mar 2018 Publication annual financial report Apr 2018 Annual General Meeting 15 May 2018 Publication Q1 financial report 14 Aug 2018 Publication H1 financial report 06 Sep 2018 Capital Markets Day Investor Contact 13 Nov 2018 Publication Q3 financial report Dates subject to change CORESTATE Capital Holding S.A. CORESTATE Capital Group 4, rue Jean Monnet L-2180 Luxembourg corestate-capital.com Dr. Kai G.Klinger Head of Investor Relations & Capital Markets Phone: