SENIOR HOUSING CONCEPT. ESSEC Paris

Transcription

1 SENIOR HOUSING CONCEPT ESSEC Paris May 13th, 2018

2 REZIDENCE ROSA AS AN INVESTMENT IN CZECH REPUBLIC / PRAGUE AN INTRODUCTION Objectives of this document Introduce the key information about Czech republic, senior housing and rental market Introduce the project Rezidence RoSa as the pilot project on the market Show current performance of the project and outline potential future performance Present the key numbers and highlight value Source: Rezidence Rosa; Atkins & Langford Development Atkins & Langford 2

3 CZECH REPUBLIC IS ONE OF THE FASTEST GROWING EUROPEAN COUNTRIES Czech Republic Introduction and key indicators Key indicators Slovakia Source: Czech Statistical Office Capital: Prague Population [2016] 10.6 million GDP per capita (total) 18,200 EUR GDP per capita (% EU avg.) ~65% GDP growth 4.5% 2017 Inflation 2.5% Unemployment 4.2% Currency Czech Crown CZK 1 EUR = Public debt as a % of GDP 37% Member of EU since 2004 Member of NATO since 1999 Atkins & Langford 3

4 POPULATION 65+ IN THE CZECH REPUBLIC WILL GROW SIGNIFICANTLY BOTH IN ABSOLUTELY AND AS A SHARE Age structure of population [million] Share of 65+ on total 17% 19% 22% 23% 25% 27% 30% ,4 1, ,4 1, ,5 1, ,7 0,9 1,7 1,0 1,7 1,0 1,7 2,0 8,7 8,5 8,2 8,0 7,8 7,5 7, years years Source: Czech Statistical Office Czech Republic is seeing similar trend in ageing population as Western Europe and there are strong population years reaching pension age The growth is faster in the 80+ category In 2030, the life expectancy in the Czech Republic should be 79 years for men and 84 years for women, which is comparable to Western Europe 0-64 years Atkins & Langford 4

5 SHARE AND STRUCTURE OF POPULATION IN THE CZECH REPUBLIC IS SIMILAR TO WESTERN EUROPE Share of population over 65 years [2016] 18.3% 12.5% 15.9% 5,4% 4,0% 3,2% 14,3% 19.2% 11,3% 21.1% 18.9% 5,8% 5,9% 4,1% 11,8% 13,8% 15,3% 13,0% Unlike in other CEE countries, the share of older population in the Czech Republic is close to Western Europe The share of 80+ population is expected to grow in the coming years due to increasing life expectancy The situation on Prague is similar to the country average There are ca 250,000 pensioners over 65 years in Prague at the moment Proportion of population aged 80 years and more Proportion of population aged years Source: Czech Statistical Office Atkins & Langford 5

6 BOTH PENSIONS AND AVERAGE SALARIES ARE GROWING BUT PENSION REFORM IS STILL NEEDED Development of pensions and salaries [CZK] Share of average pension on average salary 46% 42% 42% 43% % % Average pension Source: Czech Statistical Office Despite overall growth, share of average pension on average salary is decreasing over time Pensions in Prague are historically ca 10% higher compared to the country average Significant growth in pensions to reach on average more than CZK 13,000 is planned for Q3 Average salary Atkins & Langford 6

7 THERE IS TRADITIONALLY A SHORTAGE OF SUITABLE HOUSING FOR SENIORS AND THE GAP WILL WIDEN Current capacities in social services in the Czech Republic [2016] Beds per 1,000 pensioners [2016] Thousands beds [2016] 65,8 37,2 17,8 Homes for seniors Existing capacities 21,3 Homes with a special regime The infrastructure for senior housing is significantly underdeveloped in the Czech Republic and even more in Prague Out of the 37 thousand beds in the homes for seniors, there are only ca 2000 in Prague the number of beds available per 1,000 pensioners is 9, compared to country average of 19 Missing pension reform and structural shortage of beds leads to high unsatisfied demand in the heavily subsidized facilities Facilities operating on commercial or partially commercial basis are only emerging in the market Unsatisfied demand Source: Czech Social Security Office; Czech Statistical Office Atkins & Langford 7

8 NON-STATE SOCIAL SERVICE FACILITIES ARE STANDARD PART OF THE SYSTEM AND THEIR ROLE WILL GROW Structure of social service facilities and subsidies [2016] Subsidy per bed [CZK '000] Number of available beds State and regional social services facilities Municipal social services facilities Other (non-state) social service facilities Source: Czech Social Security Office; Czech Statistical Office State and municipal facilities account for vast majority of the available facilities Subsidies are still important part of the overall economics of senior housing they account for ca 1/3 of total costs in state and municipal facilities and ca 22% in other facilities The social service subsidy system is rather complicated and requires significant local knowledge Atkins & Langford 8

9 POPULATION 65+ IS MORE DEPENDENT ON REGULATED RENTS NEED FOR AFFORDABLE SENIOR HOUSING Housing in the Czech Republic General versus 65+ [2015] Share on total [2016] 6% 16% 16% 16% 78% 69% Total Regulated rent Czech Republic has relatively high share of ownership of housing, but among the general population, the 65+ category is the most vulnerable one Almost 1/3 of pensioners live in rented homes, which presents large part of their expenditures The system of regulated rent from which pensioners benefit is under pressure due to increasing prices and severe shortage of housing for young families The trend of moving to different home for pension was very uncommon in the past but is increasing due to economic reasons and with next generation of pensioners Category 65+ Market rent Source: European Commission Housing in the EU; Own research Ownership Atkins & Langford 9

10 SHORTAGE OF HOUSING ESPECIALLY IN CITIES DRIVES THE RENTS UP SIGNIFICANTLY IN THE LAST YEARS Average rents and their growth Prague Other regions Praha Praha Praha Praha Praha 5 Jihočeský 157 Jihomoravský Karlovarský Královéhradecký 180 Liberecký Moravskoslezský 142 Praha Olomoucký 172 Praha Pardubický 174 Plzeňský 164 Praha Praha Praha Praha avg. 293 Average rent per sqm Source: Trigema; Rwn research Středočeský Ústecký Vysočina 162 Zlínský 174 Due to economic boom and structural shortage of especially small flats, the rents are growing significantly in bigger cities In Prague, the growth was double digit in the last years and was driven by both high demand and low supply In attractive regional capitals and other bigger cities, the situation is similar to Prague Flats in Prague are typically sold for ca 25 years of rent, in other regions typically for years of rent Average rent per sqm Atkins & Langford 10

11 SENIOR HOUSING CONCEPTS ARE COMMON IN WESTERN EUROPE BUT ONLY EMERGING IN CEE Key players in the market examples Western Europe, Central Europe Major European operators Countries CEE / Czech example Originally Austrian company Entered Czech market in 2008 Currently 13 homes for seniors with almost 1800 beds Since 2015 part of Orpéa Group Total number of beds (thousands) Source: Savills World Research; Operators information; Own research Atkins & Langford 11

12 SENIOR HOUSING CONCEPTS COVER BROAD RANGE OF FACILITIES WITH DIFFERENT OPERATING MODELS Facilities and asset classes in senior housing Senior housing Retirement homes Senior citizens' residences Care homes Assisted living Age-appropriate housing Source: Catella, Market Tracker; Own research Characteristics In contrast to healthcare property, senior housing generally involves a longer stay and hence is focused on comfortable living to a greater extent Interpersonal and group-specific aspects are also important in this form of living Key assumptions We believe that the ageing population will lead to greater demand for such facilities and thus huge investments into more senior housing and healthcare property in future The growth forecasts and increasing expectations of potential clients may lead to onset of new asset classes tailored to target groups specifics Atkins & Langford 12

13 REZIDENCE ROSA IS THE FIRST PRIVATE SENIOR REZIDENCE IN THE CZECH MARKET Concept description Senior Living project with 108 residential units in Prague Located 15 minutes from the city centre by public transport in a residential area, surrounded by schools and parks Modern and unified accommodation standards Social center integrated to the residential part of the project Partnerships Rezidence Rosa concept Concept prepared in cooperation with Ministry of Development of Czech Republic Partnership with Czech Red Cross social services provider Partnership with SBD Prague technical services provider Cooperation with Association of seniors Source: Rezidence Rosa; Atkins & Langford Development Atkins & Langford 13

14 OUR FIRST SENIOR HOUSING PROJECT SUCCESSFULLY DELIVERED THE PROOF OF CONCEPT ALREADY IN 2015 Residence Rosa I Successful pilot project Before After Total floor area 9028 sqm Habitable surface 6025 sqm, commercial floor area 1481 sqm 108 dwellings, out of which 90 senior housing and 10 student housing 106 occupied, 2 reserved apartments (as of January 2018) Building permit Construction works Opening of the residence in March 2015 Total budget EUR 7.2 m Source: Rezidence Rosa; Atkins & Langford Development Atkins & Langford 14

15 VIDEO REZIDENCE ROSA Atkins & Langford 15

16 THE CONCEPT COMBINES PRIVACY OF APARTMENTS WITH COMMON AREAS AND SERVICES A LA CARTE Example of an apartment T2 Typical resident profiles Motivations of future residents Designed for independent seniors Seniors looking for a human size community (50 apartments per residence on average) one building The renting system allows greater number of people to profit from the residence Get a safe, adapted and comfortable housing Break isolation and loneliness Find an alternative solution to a housing non adapted to their needs Get a better safety level Provide limited but adapted services Source: Rezidence Rosa; Atkins & Langford Development Atkins & Langford 16

17 AND BESIDES SERVICES A LA CARTE, THE COMMON AREAS OFFER BROAD RANGE OF SOCIAL ACTIVITIES Example of Common areas Services Library Multipurpose room Events Hallway Source: Rezidence Rosa; Atkins & Langford Development A lady of the house for the whole facility Assistance to daily tasks (administration, small reparations, etc.) Organization, coordination, management and control of the services Management of inner entertainments (workshops, meals) and organization of activities between residents and city services and associations Information and advice role Answer to occasional demands from residents Common spaces: areas to meet (living room, library, etc.) Services on demand: share meals, cleaning, etc. (paid extra) Activities like education, social, theatre, ect. Atkins & Langford 17

18 TO DELIVER MAXIMUM VALUE TO OUR CLIENTS, WE FOLLOW A SERIES OF GUIDING PRINCIPLES Rezidence Rosa concept Guiding principles Key factors We provide Location with excellent transport connection surrounded by nature Lease of serviced apartments for seniors Safety and barrier-free accessibility in the whole areal Accessible in-house services (healthcare, gastro, etc.) Openness, social contact and active participation of clients Solution tailored to the needs and requirements of seniors Complex solution to ensure comfort and efficiency Source: Rezidence Rosa; Atkins & Langford Development Cultural and social life activities with participation of social care institutions in cooperation with local partners and authorities placed in traditional residential location Atkins & Langford 18

19 BASED ON THE EXPERIENCE FROM PILOT PROJECT, THE CONCEPT SHOWS HIGH PROFIT POTENTIAL Sample project KPIs: Revenues, profitability and cash flow Initial investment (equity 39%, debt 61%) CZK 195 m IRR (Net Cash Flow) 18.7% Terminal Value (incl. sale yield 6%) CZK 312 m WACC NPV (Net Cash CZK 98 m 6.5% ROI (equity) 31.6% [CZK m] Revenues total Net Cash-Flow after Debt service Source: Rezidence Rosa; Atkins & Langford Development 5 6 OPEX total Year Total rented area ca 5,500 sqm ca 4,100 sqm residential, ca 1,400 sqm commercial Both revenues and costs projected on almost full occupancy rate (both residential accommodation and commercial spaces) Debt service cover ratio is >2 except first and last year LTV decreases from 61% to 52% over the forecast period through principal repayment EBITDA Atkins & Langford 19

20 IN ORDER TO REPLICATE THE SUCCESS OF RESIDENCE ROSA, WE WANT TO RAISE EUR 100 M BY 2020 Structure of the investment Target investment fund volume and timing Investment periods and estimated performance [EUR m] [average interest p.a.] 5,6% 55,0 40,0 4,0% 5, Total funds to be raised EUR 100 m Source: Rezidence Rosa; Atkins & Langford Development 7 years 10 years Cumulative interest for the investment period CZK 2.5 bn 28% 56% Atkins & Langford 20

21 INVESTMENT IN SENIOR HOUSING IN THE CZECH REPUBLIC/PRAGUE IS AN ATTRACTIVE OPPORTUNITY Description of the opportunity Summary Population 65+ in the Czech Republic and Prague is growing and is becoming and attractive target group with increasing purchasing power In the area of housing, this target group is underserved and the whole area of senior housing in the Czech Republic and Prague is significantly underdeveloped Rents and real estate prices are growing fast in the Czech Republic and Prague and the population 65+ is among the most vulnerable and requires affordable housing Various senior housing concepts are common in Western Europe but only emerging in CEE broad range of facilities with different operating models First project of Rezidence Rosa was opened in 2015 and in the first years of operations proved the attractiveness and economic viability of the concept In , we plan to raise EUR 100 m of equity in total with expected performance of 5.6% (10 years period) Source: Rezidence Rosa; Atkins & Langford Development Atkins & Langford 21