COMPANY PRESENTATION JUNE 2018

Transcription

1 Cologne Berlin Leipzig COMPANY PRESENTATION JUNE 2018 Munich Berlin

2 COMPANY OVERVIEW GCP is a specialist in residential real estate, value-add opportunities Key financials 1-3/2018 annualized in densely populated areas in Germany Net Rental Income Adjusted EBITDA FFO I FFO I per share Dividend per share 361m 271m 198m Key facts and figures Investment properties 1.20 (Yield 5.7%*) Units Net Rentable Area EPRA Vacancy In-place rent Market cap Indices S&P rating Moody s rating EPRA awards 65% of FFO I 0.78 (3.7% dividend yield*) * based on a share price of 21 Number of employees 6.4bn 85k 5.4m sqm 7.2% 5.75 /sqm ~ bn* As of March 2018 EPRA NAV MDAX, FTSE EPRA/NAREIT, STOXX All Europe 800, GPR 250 BBB+ EPRA NAV including perpetual notes Net profit 1-3/2018 Baa1 Loan-to-Value 3.5bn 4.1bn 132m 37% 21.0 per share 25.0 per share 0.71 per share Gold for annual report 2016 and Most Improved Award Gold for sustainability and Most Improved Award Award 1 st place Outstanding Contribution to Society 91 st Percentile

3 PORTFOLIO OVERVIEW Regional Distribution Regional distribution March 2018 (by value) Bremen GDP growth 1 : 3.3% Migration balance 2 : 0.9% Population density 3 : 1,709 per km 2 Hamburg GDP growth 1 : 2.4% Migration balance 2 : 0.9% Population density 3 : 2,366 per km 2 Berlin GDP growth 1 : 3.1% Migration balance 2 : 1.2% Population density 3 : 3,948 per km 2 3 NRW GDP share 2015 : 21% of total national GDP growth 1 : 1.7% Migration balance 2 : 0.7% Population density 3 : 524 per km 2 Mannheim GDP growth (BW) 1 : 2.3% Migration balance 2 : 1.2% Population density 3 : 2,109 per km 2 inhabitants per sqkm (2013) Below to to to 1000 Above 1000 Frankfurt am Main GDP growth (HE) 1 : 2.2% Migration balance 2 : 1.5% Population density 3 : 2,951 per km 2 Dresden/Leipzig/Halle GDP growth (SN) 1 : 1.4% Migration balance 2 : 0.5%-1.4% Population density 3 : 1, per km 2 Nuremberg/Fuerth GDP growth (BA) 1 : 2.8% Migration balance 2 : 1.0% Population density 3 : 2,735 per km 2 1.GDP Growth: Data from the respective federal state is used in case city data is not available 2. Migration balance: Average annual migration balance , domestic & foreign migration 3. Population density: Residents per Sqk (2015)

4 PORTFOLIO OVERVIEW* (Mar 2018) Best in Class Berlin Portfolio 24% of GCP s Portfolio Largest European metropolitan area Well distributed within NRW 29% of GCP s Portfolio 2/3 of the Berlin portfolio is located in top tier neighborhoods: Charlottenburg, Wilmersdorf, Mitte, Kreuzberg, Lichtenberg, Schöneberg, Neukölln, Steglitz and Potsdam. Quality East Portfolio Dresden/Leipzig/Halle 15% of GCP s Portfolio Quality North Portfolio Bremen/Hamburg/Hannover 7% of GCP s Portfolio 1/3 is in affordable locations located primarily in Reinickendorf, Treptow, Köpenick and Marzahn-Hellersdorf. 4 * all breakdowns are by values

5 PORTFOLIO OVERVIEW WELL DISTRIBUTED PORTFOLIO Quality real estate portfolio Value (in M) Area (in k sqm) EPRA Vacancy Annualized net rent (in M) In-place rent per sqm (in ) Number of units Value per sqm (in ) Rental yield MARCH 2018 NRW 1,850 1, % ,386 1, % Berlin 1, % ,076 2, % Dresden/Leipzig/Halle 948 1, % , % Mannheim/KL/Frankfurt/Mainz % ,146 1, % Nuremberg/Fürth/Munich % ,471 1, % Bremen/Hamburg/Hannover % ,445 1, % Others 1,129 1, % , % Total 6,439 5, % ,023 1, % Cologne Leipzig Berlin 5

6 PORTFOLIO POTENTIAL TO COME Residential in-place rent compared to market rent prices Annualized net rental income vs. market potential including vacancy reduction Large upside potential for rent increase to market levels with very limited downside risk In-place rent like-for-like growth of 2.5% and occupancy like-for-like growth of 0.5% in March 2018, for a total like-for-like net rental income growth of 3% 6% of the portfolio s units are subject to rent restriction due to subsidization Average tenancy length is 11 years 6 Düsseldorf Gelsenkirchen Berlin

7 KEY FINANCIALS (1) Net Rent (in millions) Adj. EBITDA (in millions) Cologne Berlin Neu-Isenburg Berlin 7

8 KEY FINANCIALS (2) FFO I (in millions) FFO I per share (in ) AFFO & FFO II (in millions) Nuremberg Berlin 8

9 KEY FINANCIALS (3) Portfolio value (in 000) Total equity (in millions) * incl. Apr 2018 perpetual notes issuance Net Profit (in millions) Nuremberg 9 * adjusted for one-time costs

10 KEY FINANCIALS (4) EPRA NAV (in millions) Munich EPRA NAV per share (in ) EPRA NAV incl. perpetual notes per share (in ) 10 in m unless otherwise indicated NAV EPRA NAV EPRA NAV including perpetual notes EPRA NNNAV Mar ,835 3,461 4,131* 3,360 Mar 2018 per share (in ) * 20.4 Per share growth +4% +4% +3% +5% Dec ,692 3,327 3,993 3,207 Dec 2017 per share (in ) * 4.5 billion and 27.2 per share pro forma including the perpetual notes issued in April 2018 Number of shares (in 000 ) 165, ,004

11 GCP TOP CLASS FINANCIAL RATIOS BBB+by S&P Baa1by Moody s with a long-term target to reach A- ICR 5.9x unencumbered assets 64% 4.3 bn of assets Well above policy of 50% Average debt maturity 8.3 years with no significant maturities in the next years LTV 37% Well below board limit of 45% Cost of Debt 1.6% 11

12 DEBT SCHEDULE Berlin Leipzig Investment grade rating by S&P of BBB+ (A-2 Short Term) and from Moody s of Baa1 with a stable outlook. The ratings are supported by a strong financial profile which validates the success of the business model GCP s long maturity schedule enables the Company to fully focus on lifting its assets potentials, with no significant maturities in the near term Over 50 separate bank loans non recourse, non cross-collateral and non cross-default from over 20 different financial institutions Healthy and conservative capital structure with a low cost of debt of 1.6% Debt Maturity Schedule Loan-to-Value 12

13 DEBT STRUCTURE AND COVER RATIOS Interest Coverage Ratio* & Debt Service Coverage Ratio* * (Q1 2018) Unencumbered assets* * adjusted EBITDA / interest ** adjusted EBITDA / (interest + loan amortization), DSCR aka fixed charge coverage ratio * calculated as the ratio of the unencumbered assets to the total value of investments properties Hedging structure Financing source mix 13 * including the perpetual notes issued in April 2018

14 FINANCING SOURCES GCP has over 50 non-recourse separate bank loans from over 20 banks Munich Cologne Revolving Credit Facilities GCP signed strong corporate credit lines with international banking leaders of approx. 100 million All credit facilities do not have a Material Adverse Change (MAC) clause Berlin Revolving Credit Facilities as an additional liquidity source, increasing the financial flexibility at a very low cost 14

15 GCP FINANCIAL POLICY GCP financial policy Strive to achieve A- global rating in the long term LTV limit at 45% Debt to debt plus equity ratio at 45% (or lower) on a sustainable basis Maintaining conservative financial ratios with a strong ICR Cologne Unencumbered assets above 50% of total assets Long debt maturity profile Good mix of long-term unsecured bonds & non-recourse bank loans Maintaining credit lines from several banks which are not subject to Material Adverse Effect Dividend of 65% of FFO I per share Leipzig 15 Berlin Dresden Dortmund

16 PEER ANALYSIS (LARGEST 4) MARCH 2018 Lower Range Peer companies Upper Range Business Amount of units 85k 130k 394k In-place rent ( per m 2 ) EPRA vacancy rate 7.2% 3.3% 2.1% Book value per sqm ( ) 1,184 1,095 1,892 NRI multiple 18.5x 16.9x 24.5x Credit rating BBB+ / Baa1 BBB+ / Baa1 A- / A3 Key financials Total cost of debt 1.6% 1.8% 1.3% LTV 37% 46% 35% Interest Coverage Ratio (ICR) 5.9x 4.9x 6.9x Net debt-to-ebitda 9.3x 14.1x 10.5x GCP has the lowest downside risk among the peer group 16

17 Business risk profile CREDIT RATING MATRIX 1 Min - imal 2 Modest 3 Intermediate 4 Significant 5 Aggressive 6 High Leveraged 1 Excellent 2 Strong aaa / aa+ bbbaa a+/a a- bbb /bb+ GCP will continue strengthening its position within the business profile aa/ aaa+/a A- BBB+ BBB bb+ bb (DW) (Aroundtown) (GCP) (Vonovia- BBB+)* (FDR) 3 Satisfactory a/a- bbb+ BBB/BBB- BBB-/bb+ bb b+ (Alstria) 4 Fair bbb / bbb - bbb- bb+ bb bb- b 5 Weak 6 Vulnerable bb+ bb+ bb bb- b+ b/b- bb- bb- bb- b+ b b- * rating anchor of Vonovia is BBB, their final rating, after the effects of modifiers, is BBB+ Strong position within the investment grade scaling with a long-term rating of BBB+ (A-2 short term) from S&P and Baa1 from Moody s Credit Rating development GCP s anchor rating positions the company well for further rating improvements The Board of Directors of GCP has decided to strategically aim for A- rating from S&P and A3 rating from Moody s, and will continue to implement measures to achieve this target 17

18 ANALYST COVERAGE GCP s operations are followed by leading real estate market analysts, who conduct independent equity research and provide price targets Analyst Research Target Price 18 Key Index inclusions: MDAX FTSE EPRA/NAREIT Global Developed Europe Developed Eurozone Germany Stoxx All Europe 800 GPR 250 MSCI World IMI Core Real Estate

19 OUTPERFORMING Share Price and Total Return Since First Equity Placement ( ) Share price/conversion price throughout the Company s issuances Ownership structure Placement First equity issuance Number of shares (basic, as of 31 March 2018) Number of shares (fully diluted, as of 31 March 2018) Symbol (Xetra) Frankfurt Stock Exchange (Prime Standard) ( 2.75 per share) 164,788, ,957,326 GYC 19

20 OUTPERFORMING Straight Bond Series D Spread over mid- -swap, remaining 3.5 years Straight Bond Series E Spread over mid- -swap, remaining 7 years 3.75% Perpetual notes Spread over mid- -swap 20

21 ESG Measures Environmental Social Corporate Governance GCP implements environmentfriendly measures throughout its portfolio, with the goal of reducing its carbon footprint Gradually switching to energy sources from 100% renewable energy Reducing energy consumption through tenant education and raising awareness Environmental report according to EPRA sbpr guidelines published June 2017 Tenant satisfaction is a top priority and an essential part of GCP s business strategy Over a hundred tenant events are organized annually throughout portfolio locations Partnering with local organizations and initiatives Employee commitment through development programs Experienced and diverse management board Four committees consisting mostly of independent directors for comprehensive oversight: Audit, Risk, Remuneration and Nomination Prudent control mechanisms as well as internal and external risk management systems GCP is committed to maintaining a high standard of corporate responsibility towards its stakeholders 21

22 Sustainability awards and ratings In April 2018, GCP published its first sustainability report, demonstrating the Company s commitment to sustainability by presenting to investors, business partners, employees and other stakeholders its activities and achievements and to embed the high ESG criteria of the Company. The report can be found on our company website in the Sustainability section; grandcityproperties.com/sustainability (August 2017) GCP was awarded the sbpr (sustainability best practices recommendations) Gold Award + Most Improved Award, as well as 1 st place for Outstanding Contribution to Society for outstanding service provided to its tenants (November 2017) 91 st Percentile GCP was ranked by Sustainalytics in the 91 st percentile among over 300 real estate peers worldwide for its ESG efforts, also ranking as Outperformer 22

23 MANAGEMENT CEO Christian Windfuhr Mr. Windfuhr is Grand City Properties CEO. Before joining Grand City Mr. Windfuhr served as CEO of Maritim Hotels, with 40 hotels in Germany. Prior to this he served as CEO of Mövenpick. He achieved the financial turnaround of Mövenpick, drove international expansion, publicly listed the company, and worked out a strategic partnership with Kingdom Holding (HRH Prince Alwaleed) and JP Morgan. Served as Director of TUI, Europe s largest tour operator. He served high positions in Holiday Inn, Kempinski, & Southern Sun. Graduated at Cornell University. Board of Directors Refael Zamir CFO Mr. Zamir is Grand City s CFO and Chairman of the Board. Mr. Zamir has over 10 years of international experience in finance and accounting. Before joining GCP at the beginning of 2013, Mr. Zamir served as a manager for Ernst & Young in the real-estate and financial institutions sectors. Mr. Zamir is a CPA and holds a BA and MBA in finance and business administration. Simone Runge- Brandner Independent director Ms. Runge-Brandner is an independent Director and member of the audit-, remuneration- and nomination committee. Her past positions include Deal Manager (Director) at UBS Deutschland AG, Vice President Real Estate Finance/ Investment Funds, Credit Manager at Dekabank Frankfurt and Credit Manager Real Estate Finance at Helaba Frankfurt. Ms. Runge-Brandner has a Diploma in International business administration. Daniel Malkin Independent director Mr. Malkin is an independent Director and member of the audit-, remuneration- and nomination committee. Before joining Grand City, he served as an Investment & fund Manager of fixed income investment funds at Excellence Investment Bank. Has a BA in Business Administration. Advisory Board Yakir Gabay Mr. Gabay is the chairman of the Advisory Board. Before GCP, Mr. Gabay was chairman & managing partner of an investment company which managed over $30 billion of assets, before that he was the CEO of the investment banking of Bank Leumi. Mr. Gabay holds a MBA and BA in Accounting/Economics, and is a CPA. Andrew Wallis Vice chairman, Advisory Board Member. Mr. Wallis was owner and CEO of a large German property management company. Previously he spent 10 years as an investment banker in the city of London for Merrill Lynch and JP Morgan. Mr. Wallis holds an MBA and a CFA. Claudio Jarczyk Advisory Board member. Prior to GCP, Mr. Jarczyk served as an Executive Director at BerlinHyp Bank specializing in real estate financing with a focus on international clients, as a Chief International Executive at Landesbank Berlin and as an International Division- Department Manager at Bayerische Vereinsbank Munich. Mr. Jarczyk holds a Dipl.Kfm. / MBA at Munich University. 23 Audit Committee Consists of the two independent directors Daniel Malkin and Simone Runge-Brandner

24 SUMMARY Experienced management team with unique knowledge of the market Proven expertise with established track record Top geographical distribution in Germany Berlin Investing in value-add assets with downside protection In-house IT/software to support a strong team High EBITDA & FFO margins and operational performance Originate transactions at the source profiting from the full value chain Defensive portfolio with upside potential Conservative financial leverage with best financial profile in German real estate market Permanent capital and rating improvement & reduction in cost of debt 24 Generating superior risk adjusted returns for our shareholders & bondholders

25 Nuremberg Duisburg Gelsenkirchen APPENDIX Berlin Hannover Dresden 25

26 GERMANY ROBUST MACRO ECONOMIC BASE Low debt level and budget surplus positions Germany well above the average EU Increasing economic status with increasing wages and lower unemployment, resulting in higher than average purchasing power and disposable income Debt/GDP 2017 Unemployment rate 2017 Gross Monthly Wage Source: Eurostat - 1 Budget Surplus/Deficit 2017 Source: Eurostat - 2 Unemployment rate Source: destatis - 1 Purchasing power in PPS (EU=100) Source: Eurostat - 3 Sources: Source: destatis - 2 Source: Eurostat - 4 Eurostat 1: 26 Eurostat 2: Eurostat 3: destatis 1: Eurostat 4: destatis 2: Genisis database

27 GERMANY INCREASING RESIDENTIAL DEMAND Increasing population from strong migration balance, increasing urbanization levels along small/single person household sizes in cities is fueling the strong demand German Population 2012-Jun 2017 Migration Balance (in millions) Urbanization level Source: destatis - 1 Average household size (# people) Source: destatis - 2 Single Person households as % total Source: worldbank Population Density 2016 (residents per km²) % % % 30% % % 0.0 0% 27 Household Size Source: BofAML Global Research June 2017 German Average Single Households Source: BofAML Global Research June 2017 German Average Source: Eurostat destatis 1: destatis 2: Genisis database Worldbank: Eurostat:

28 GERMANY LOW RESIDENTIAL SUPPLY, SIGNIFICANTLY BELOW DEMAND LEVELS The supply of housing vs demand went into deficit in 2015, reflecting the significant supply shortage Construction permits over the last 15 years has been exceptionally low and completions even lower Completion, whilst far below demand, is reaching capacity Building permits at low levels (000 ), significantly below demand levels Capacity utilization of construction workers Source: DG HYP German Real Estate Market 2017 Construction permits Completion Source: Citi Research, DE STATIS Statistisches Bundesamt, European Commission ECONOMIC BRIEF 025 MAY 2017 Annual demand range estimate 350, ,000 28

29 BERLIN MARKET OVERVIEW Key drivers: Capital city, positive net migration balance, public administration and start-up hub Strong population growth attributable to migration 40k-50k net migration growth p.a. Highest population density at 4,000 residents per km² and the second most populous EU inner city after London Strong base in public administration and other services, illustrated by employment in service sector 89%, industry and manufacturing 11% Germany s strongly growing start-up capital, offering countercyclical GDP diversification One of Europe s fastest growing tourist destinations The country s most popular university among students and one of the most popular university cities world wide Nominal GDP Population growth (2014-Jun 2017) Median rent development Berlin 12,00 11, ,00 8,00 7,00 6, Source: JLL Residential city profile Berlin Purchase price development Berlin 4,000 3,500 3,000 2,500 2, Source: destatis.de - Genisis database Source: statistik Berlin Brandenburg 1, Source: JLL Residential city profile Berlin

30 NORTH RHINE-WESTPHALIA MARKET OVERVIEW Key drivers: Economic growth and urbanization Highest populated federal state in Germany with a population of approx. 18 million Strongest economic region in Germany, generating 21% of the country s GDP in 2017 Home to 30 of 80 largest German cities High population density with 524 inhabitants per sqm, compared to national average of 230/sqm NRW houses 37 of Germany s largest 100 companies 12,00 Median rent development Cologne Median rent development Düsseldorf 11,50 11,00 10,50 Nominal GDP , ,50 Source: destatis.de - Genisis database ,600 3,200 2,800 2,400 2, Source: JLL Residential city profile Cologne Purchase price development Cologne Source: JLL Residential city profile Düsseldorf Purchase price development Düsseldorf 4,000 3,500 3,000 2,500 2,000 1, Source: JLL Residential city profile Cologne Source: JLL Residential city profile Düsseldorf

31 DRESDEN/LEIPZIG/HALLE MARKET OVERVIEW Key drivers: IT and Key Technology sectors Strong population growth figures from high birth rates Software and IT sector experiences most growth across industry and services sectors, the state of Saxony is in the top 5 of patent applications per capita across German states Strong share of SMEs, 63% employment share compared to German average of 43% Major industrial clusters: Microelectronics, Biotechnology, Automotive Population growth 2017 Median rent development Leipzig Source: JLL Residential city profile Leipzig Source: statsitical bureaus of respective cities Nominal GDP Sachsen Purchase price development Leipzig 1,800 1,600 1,400 1, Source: destatis.de - Genisis database , Source: JLL Residential city profile Leipzig

32 BREMEN/HAMBURG/HANNOVER MARKET OVERVIEW Key drivers: Major ports, Education, Science and Research and Aerospace industry Hamburg is the 2 nd and Bremen the 4 th busiest port in Europe, boosting international trade Hamburg is a major European education, science and research hub, with nearly 20 universities Hamburg is Germany s second largest city and boasts the highest GDP per capita of all German states Bremen is an important economic center with a focus on international trade, aerospace and automotive industries as well as food industry Hannover is the capital and economic center of the German state Lower Saxony, and is home to large multinationals Population growth Hamburg Median rent development Hannover 12.0 Median rent development Hamburg Population growth Bremen Source: JLL Wohnungsmarkt Bericht Hannover 2017 Purchase price development Hannover 8.0 Source: JLL Residential city profile Hamburg 4, Purchase price development Hamburg 3,700 3,100 2, Source: JLL Wohnungsmarkt Bericht Hannover , Source: JLL Residential city profile Hamburg

33 PROVEN ABILITY TO ACCESS CAPITAL MARKETS Jun-18 Issuance of Series M, 2033 straight bonds of 40m under the EMTN, coupon of 1.7% p.a. till 2023 May-18 Issuance of Series L, 20-year straight bonds of JPY 7.5bn ( 57m) due 2038 under the EMTN, currency hedge, coupon of 1.4% p.a. Apr-18 Feb-18 Feb-18 Issuance of 350 million perpetual notes, coupon of 2.5% p.a. Feb-18 Tap issuance of Series H, 2032 straight bonds of 145m to an aggregate nominal amount of 255m Issuance of Series K, 2026 straight bonds of CHF 125m under the EMTN, currency hedge, coupon of 0.96% p.a. Issuance of Series J, 2027 straight bonds of 500m under the EMTN, coupon of 1.5% p.a. and repayment of 170m of Series F Convertible bonds (4 year maturity) and 41m of Series D (3.5 year maturity) extending the average maturity EQUITY AND BOND BOOKRUNNERS Feb-18 Issuance of Series I, 2028 straight bonds of HKD 900m under the EMTN, currency hedge, effective coupon of 1% p.a. until 2023 Oct-17 Jul-17 Issuance of Series H, 2032 straight bonds of 110m under the EMTN, coupon of 2% p.a Issuance of Series G, 2026 straight bonds of 600m under the EMTN programme, coupon of 1.375% p.a and repayment of 321m of Series D (2% coupon, 4 years to maturity) extending the average maturity and reducing the cost of debt 33 Jul-17 Established 1.5 billion Euro Medium Term Note (EMTN) Programme Jun-17 Equity capital increase of 198 million at 18 per share Sep-16 Issuance of 200 million perpetual notes, coupon of 2.75% p.a. Feb-16 Issuance of Series F, 2022 convertible bonds of 450m, coupon of 0.25% p.a, conversion price of Jan-16 Completion of the conversion of Series C convertible bonds ( 275m) Sep-15 Tap issuance of 150m of 10 year straight bond to an aggregate nominal amount of 550m Sep-15 Equity capital increase of 151m at 15.9 per share Jul-15 Tap issuance of perpetual notes of additional 100m Apr-15 Issuance of Series E, 10-year straight bond of 400m with a coupon of 1.5% p.a. Mar-15 Tap issuance of perpetual notes of additional 250m Feb-15 Issuance of 150m perpetual notes, coupon 3.75% Oct-14 Redemption of straight bonds with nominal amount of 350m. Issuance of 7-year straight bond of 500m with a coupon of 2% p.a. Jun-14 Tap issuance of convertible bonds with gross proceeds of 140m Apr-14 Tap issuance of existing straight bonds with gross proceeds of 160m Feb-14 Issuance of Series C, 5-year convertible bonds of 150m and a coupon of 1.50% p.a Dec-13 Equity capital increase of 176m at 6.5 per share Oct-13 Full conversion of 100m Series A convertible bonds into equity Jul-13 Issuance of Series B, 7-year straight bonds of 200m with a coupon of 6.25% p.a. Feb-13 Equity capital increase of 36m at 4.5 per share Oct-12 Issuance of Series A, 5-year convertible bonds of 100m with a coupon of 8% p.a. Jul-12 Equity capital increase of 15m at 2.8 per share

34 GCP COVENANT PACKAGE The straight bonds and the convertible bond are unsecured and have the below covenant package: Overview of Covenant Package Covenant Type 1 Limitation on Debt GCP (BBB+ from S&P, Baa1 from Moody s) Total Debt / Assets <=60% (1) 2 Limitation on Secured Debt Secured Debt / Total Assets <=45% (2) 3 Interest Coverage Ratio 4 5 Adjusted EBITDA / Net Cash Interest >= 2.0x (3) Maintenance of Unencumbered Assets Unencumbered Assets / Unsecured Net Debt >= 125% (4) Change of Control Protection Notes: 1) Total Net Debt / Total Net Assets 2) Secured Net Debt / Total Assets 3) All issuances under the EMTN programme require min. coverage of 1.8x 4) Net Unencumbered Assets / Net Unsecured Indebtedness 34 Cologne Berlin

35 MOODY S RATING PEER COMPARISON Broad Rating Factor Rating Sub-Factor Rating Sub- Factor Weight Measure (LTM H1 2017) Score Measure (12-18 Month Forward View) Score Measure (LTM Q3 16) Score Measure (FY 2016) Score Measure (FY 2016) Score Measure (LTM H1 17) Score Liquidity and Funding Liquidity Coverage 8.00% A A A A A A Ba Ba Ba Ba Ba Ba Debt Maturities ratio 6.25% Aa Aa Aa Aa Aa Aa Aa Aa Aa Aa Aa Aa FFO Payout ratio 4.00% 25.7% Aa 65%-75% Baa 59% A 62.5% Baa 29.8% Aa 68% Baa Amount of Unencumbered Assets 6.25% 67.5% Baa 66%-68% Baa 26% B 19% Caa 8.8% Caa 8% Caa Effective Leverage: Debt / Gross Leverage and Assets 9.00% 41.8% Baa 42%-44% Baa 37% Baa 46.9% Baa 35.3% Baa 57% Ba Capital Net Debt/EBITDA 9.00% 10.6x Caa 9x-10x B 9.4x B 11.6x Caa 10.4x Caa 12.1x Caa Structure Secured Debt/Gross Assets 6.25% 14.1% Baa 14%-15% Baa 29% Ba 40.7% B 34.5% B 46% B Access to Capital 6.25% A A A A A A A A Ba Ba Ba Ba Franchise/Brand Name 4.00% Baa Baa Baa Baa A A A A Baa Baa Baa Baa Market Positioning and Asset Quality Cash Flow and Earnings Indicated Rating from Grid Gross Assets 4.00% $7.62 bn Baa $7.5bn- $8.0bn Baa $17.2 bn A $8.93 bn Baa $2.82 bn Baa $4.78 bn Baa Diversity location/tenant/industry/economic 4.00% A A A A Baa Baa A A Baa Baa Baa Baa Development % Gross Assets 5.00% 0% Aa 0% Aa 0% Aa 0% Aa 0% Aa 0% Aa Asset Quality 5.00% Ba Ba Ba Ba A A A A A A Ba Ba EBITDA/Revenues 6.00% 75.4% Aa 70%-75% A 52% Ba 64.1% Baa 63.0% Baa 69% A EBITDA Margin Volatility 3.00% 5% Baa 0%-5% Baa 17% Caa 4.4% Baa 5.0% Baa 10% Ba Fixed Charge Coverage 9.00% 4.6x Aa 4.8x-5.5x Aa 5.0x Aa 3.5x A 3.7x A 2.7x Baa JV/Fund Business % Revenues 5.00% 0% Aa 0% Aa 0% Aa 0% Aa 0% Aa 0% Aa % A3 A3 Baa1 Baa2 Baa3 Ba1 Actual Rating Assigned Baa1 A3 Baa1 Baa2 Baa3 According to Moody's grid result, GCP s indicated rating is Baa1. The Board of Directors of GCP has decided to strategically aim for A3/A- rating, and will continue to implement measures to achieve this target. 35 the results in this page are as publicly reported by Moody's and based on their analysis

36 BUSINESS MODEL AND ACQUISITION CRITERIA Deal-sourcing network established for over 14 years Due Diligence & negotiation of best possible deal terms Acquisition Take-over Repositioning + Capex Increase Rent & occupancy Decrease operating costs & nonrecoverable costs Improve tenant satisfaction In-house proprietary IT software Yield & value increase Long term asset financing Long term Hold (90%) Sale at high capital gains (up to 10% p.a.) Frankfurt am Main Diversified and large base deal sources Acquisition criteria Private Equity Loan funds Institutional investors cherry-pick best deals Broker network Receivers Banks Court Auctions Distressed owners Screening process Acquisition in densely populated areas and major cities High cash flow generating assets Vacancy reduction potential Rent level per sqm is below market level (under-rented), upside potential and low downside risk Purchase price below replacement costs and below market values Potential to reduce the operating cost per sqm 36

37 Bremen Düsseldorf Asset Management Sales & Marketing Operations / Maintenance Construction Acquisitions & Due Diligence Customer Relation Management (CRM) through Proprietary and Centralized IT system Continuous monitoring of portfolio operations, costs and staff performance Systematic tenant lead following Spot opportunities for rent increases Manage re-letting risks Collection monitoring Customer retention 37 Neu-Isenburg

38 RENT INCREASE Automated rent increase calculation Market limitation Legal limitation Jennifer Weniger Rental team Gelsenkirchen Essen Leipzig 38

39 ESG Measures: Environmental and sustainability 91 st Percentile RENEWABLE ENERGY Two thirds of properties have been switched to electricity from 100% renewable sources in the past two years, with the goal of gradually switching when the opportunity arises All of GCP s offices are supplied with energy from 100% renewable resources Cost savings of 23% have been achieved to date as a result HEATING SYSTEMS Replacing heating systems to district heating with the focus on renewable resources or centralized gas with the focus on climate-neutral produced gas 1/3 of the portfolio uses gas supplied heating, of which 28% has been switched to climate-neutral gas CO2 missions reduced by 20k tons as a result. A further 13% will be switched in the next two years, and the remainder gradually as existing contracts expire New gas contracts are signed only with suppliers that provide 100% climate-neutral gas EFFICIENCY AND IMPROVEMENTS Working with external providers to ensure efficient waste separation and management, optimizing recycling process Creating awareness among our tenants through various language-independent handouts, posters and explanatory videos regarding energy and heating saving behavior and proper trash disposal Working on a Photovoltaic pilot project that will supply 150 apartments with solar energy, with potential to expand GCP continuously reviews its portfolio to identify potential energy-saving measures or reduction of CO2 emissions Goal of continuously reducing the carbon footprint 39

40 ESG Measures: Social Responsibility 91 st Percentile Neighborhood and community initiatives The creation and maintenance of a comfortable community feeling is of high priority to Grand City, and this is the target of our various initiatives GCP organizes over 150 family-friendly tenant events such as Easter egg hunts, barbeques, summer and Christmas-related festivities to foster and support a community feeling, as well as various contests Supporting local associations such as kids soccer clubs, language schools, homework initiatives for children and educational projects, social and consulting services, back-to-school equipment, various cultural events, etc. Additionally, free spaces are provided for activities such as art projects or workshops EPRA Award 1 st place Outstanding Contribution to Society for outstanding service provided to its tenants Modernization and accessibility measures Installations of playgrounds (both indoor and outdoor), fitness trails, BBQ spaces Elderly-friendly installations, e.g. elevators, ramps, stair lifts, bathrooms Partnering with local bodies and organizations to support the creation of community spaces and contributing to a comfortable residential environment Employee commitment Leadership Program provides employees the opportunity for personal development and internal advancement potential Providing benefits such as a dedicated, free-of-charge fitness center and classes at the Company s operational headquarters Regular trainings for all staff (expert in-house and external trainers) High employee retention rate, including among management 40

41 ESG Measures: Tenant Satisfaction EPRA Award 1 st place Outstanding Contribution to Society for outstanding service provided to its tenants Best-in-class tenant service through professional and 24/7 availability A dedicated and professional service team is available 24/7 for existing and prospective tenants, reachable through toll-free numbers, , and the recently launched GCP mobile app GCP s Service Center is certified with two TÜV service quality certificates, and in March 2017 passed the demanding annual TÜV inspection Ticketing system: tenant applications and requests are documented in detail to allow for an efficient follow-up on all stages of the request setting up schedule for repairs, visiting master apartments, discussing timetables etc. A ticket is not closed until a request has been followed up to ensure tenant satisfaction 41

42 ESG Measures: Tenant satisfaction with IT support Advanced IT/software systems to monitor the complete portfolio and to identify fluctuations of tenants, with immediate control over newly acquired assets EPRA Award 1 st place Outstanding Contribution to Society for outstanding service provided to its tenants Operational excellence with tenant management software - top service to ensure tenant satisfaction and reduce termination Tenant portal app for smartphones, enabling tenants to communicate with property management, and submit and monitor the status of service requests Tenants are able to book and manage consultations with property management through the app 42

43 CONTACT Katrin Petersen Head of Communications DISCLAIMER IMPORTANT: Halle 43 This presentation has been provided for information purposes only and is being circulated on a confidential basis. This presentation shall be used only in accordance with applicable law, e.g. regarding national and international insider dealing rules, and must not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by the recipient to any other person. Receipt of this presentation constitutes an express agreement to be bound by such confidentiality and the other terms set out herein. This presentation includes statements, estimates, opinions and projections with respect to anticipated future performance of the Group ("forward-looking statements"). All forward-looking statements contained in this document and all views expressed and all projections, forecasts or statements relating to expectations regarding future events or the possible future performance of Grand City Properties S.A. or any corporation affiliated with Grand City Properties S.A. (the Group ) only represent the own assessments and interpretation by Grand City Properties S.A. of information available to it as of the date of this document. They have not been independently verified or assessed and may or may not prove to be correct. Any forward-looking statements may involve significant risks and uncertainties and should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. No representation is made or assurance given that such statements, views, projections or forecasts are correct or that they will be achieved as described. Tables and diagrams may include rounding effects. This presentation is intended to provide a general overview of the Group's business and does not purport to deal with all aspects and details regarding the Group. Accordingly, neither the Group nor any of its directors, officers, employees or advisers nor any other person makes any representation or warranty, express or implied, as to, and accordingly no reliance should be placed on, the accuracy or completeness of the information contained in the presentation or of the views given or implied. Neither the Group nor any of its directors, officers, employees or advisors nor any other person shall have any liability whatsoever for any errors or omissions or any loss howsoever arising, directly or indirectly, from any use of this information or its contents or otherwise arising in connection therewith. Grand City Properties S.A. 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.