Kempen conference. Amsterdam 30 May 2013

Transcription

1 Kempen conference Amsterdam 30 May 2013

2 Company snapshot Description Dutch REIT: NSI is a real estate asset management company and qualifies as fiscal investment institution under Dutch law (REIT) Full service in house management The company is engaged in asset management, letting, marketing, development, business development and technical building management High Yield Real Estate portfolio with Benelux focus: - Offices and Retail investments in the Netherlands - Majority interest (54.8%) in Intervest Offices & Warehouses (listed on Euronext Brussels) NSI, founded in 1993, is publicly listed on Euronext Amsterdam since 1998 and has 66 employees at year-end 2012 In 2011, NSI and VastNed Offices (VNOI) completed a merger NSI divested the majority of its Swiss portfolio in April 2013 Portfolio Offices Retail Logistics Geographic breakdown (market value 2 ) Belgium 28.9% Switzerland 1.7% Netherlands 69.4% Key financials Gross initial yield (EUR million 1 ) 2012 Gross rental income 161 Netherlands 2012 Offices 10.7% Asset classes Netherlands (market value 2 ) Asset classes Belgium (market value 2 ) Direct investment result 63 Indirect investment result (167) Real estate investments 2,106 Occupancy rate (year-end) 81.1% Retail 7.7% Retail 38.6% Other 3 6.4% Offices 55.0% Logistics 39.5% Offices 60.5% Loan to Value (year-end) 58.2% Direct investment result per share (EUR) 0.99 Belgium Offices 9.5% Dividend per share (EUR) 0.86 Logistics 8.4% 1. Unless stated otherwise; 2. Based on Q1 2013; 3 Consists of Industrial and Residential 2

3 Strategy 1. Portfolio optimisation focusing on high-yielding Office and Retail assets Balanced mixture of Offices & Retail, consistent with development of the asset cycle in both markets - Offices focus: high-yield locations - Retail focus: local shopping centres Aim to be one of the leading players in each asset class 2. Increase value through active management Full spectrum of in house capabilities created excellent letting platform Use local knowledge and integrated teams to quickly respond to clients needs Redevelopment and rebranding of existing assets Introducing new concepts to improve occupancy and rental income Unique combination of integral management and tenant focus to increase both portfolio value and cash flow generation 3. Solid balance sheet Highly committed to loan-to-value (LtV) < 55% ion the short term, <50% on the long term Diversification of funding Interest fixing of at least 80% 3

4 Highlights Q Occupancy total portfolio improved to 81.3% as per 31 March 2013 from 81.1% as per year end 2012 Direct investment result of 13.4 million in Q1 2013, 0.20 per share Total investment result amounted to million in Q1 2013, consisting of 13.4million direct investment result and million indirect investment result. Revaluations of the real estate portfolio amounted to million. LtV slightly decreased to 58.0% on 31 March 2013 from 58.2% as per year end 2012 Swiss retail center HertiZentrum sold at book value, industrial Belgian asset Kortenberg 15% above book value (transfer both assets end May) New dividend policy adopted by AGM, aimed at retaining cash to fund regular capex EUR million 1Q 13 Gross rental income 37.1 Direct investment result 13.4 Indirect investment result (34.6) Real estate investments 2,040 Occupancy rate (end Q1) 81.3% Loan to Value (end Q1) 58.0% Direct investment result per share (EUR) Interim dividend per share (EUR)

5 Highlights Q1 Retail NL 27% of portfolio Occupancy rate at a solid 92.0%, a decrease from 92.5% (year-end 2012), partly due to the sale of two of (nearly) fully let shopping centres Strong retail mix with a approx. 22% share of supermarkets Stable retention rate at 76%. Offices NL 38% of portfolio 2 nd consecutive quarter of occupancy improvement in Dutch offices portfolio from 71.3% as per year-end 2012 to 72.1% as per 31 March Improving trend is expected to continue over NSI realised 3% of the total take up in the Dutch offices market, while NSI's portfolio represents 1.3% of the total Dutch offices market NSI ranked fourth in the Dutch market in total leasing transaction volume in 2012 Transformation of HNK Hoofddorp and Utrecht commenced and expected to be finalised in the autumn of 2013 The retention rate (78%) increased significantly compared with 2012 (47%) Belgium 29% of portfolio Occupancy decreased to 85% due to sale of semi-industrial asset Sale of semi-industrial asset in Kortenberg 15% above book value Increase in leasing transactions in first quarter compared with first quarter of

6 Our key priorities Reducing LtV NSI is highly committed to reduce LtV to below 55% Continue disposal strategy In million of assets sold, another 75 million announced (and partly yet delivered) in 2013 Approx. 100 million used to redeem debt in 2012, 46 million in Q Operational Building on operational strength Increasing occupancy levels Roll out HNK concept Further improving effectiveness and efficiency Continued cost control and driving efficiencies Optimise value per property and sell 6

7 Changed dividend policy Pay out ratio is geared at funding regular capital requirements Average capital expenditure requirements in general 10-15% of direct result Financial prudency to secure future investments Aligning dividend policy with exceptional market circumstances by linking dividend policy to LtV performance Possibility to offer stock dividend in case the circumstances are supportive Meeting REIT criteria for profit distribution LtV Pay out of direct result < 55% % 55%> LtV < 60% 50% in cash > 60% 50% in stock 7

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9 HNK servicing a growing market with higher earnings potential HNK anticipates a growing demand for full service and flexible leasing in Dutch market; changing housing needs of corporates due to changes in way of working Positioning perfectly fits the growing SME segment and growing number of freelancers Lower risk due to spread of contract expiries Utilizing office spaces that are difficult to rent out in traditional leases Results in higher rental fees per sqm compared to traditional model, while tenant is able to optimize their costs

10 HNK- distinctive strength A place to be - inspiring meeting place to work and to meet Highly accessible; Free entrance social heart Memberships Managed offices Traditional offices Offering exactly what tenant needs Services Space Flexibility Translates into a well priced solution, benefiting both tenant and NSI Lower total costs for tenants Higher rent per sqm for NSI HNK Rotterdam Occupancy 30% (total property; 18,000 sqm) Investments in HNK 2.8 million Average rent level managed offices' at 287 per sqm 10

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14 Expiration of Leases We actively manage and anticipate expiration calendar; smoothening the future expiration levels In both the office and retail portfolio; the 2013 expiration calendar is below average. The office portfolio is significantly below 2012 level (23%) Expirations in 2013 involve a smaller number large single tenant contracts compared with 2012: (number of contract expiries) > 10, ,000-10, ,000-5, ,000-3, Representing total m2: 64,269 25,024 7% 11% 19% 13% 21% Retail Offices Industrial rental income x 1,000 14

15 Vacancy development Occupancy expected to improve further improvement in 2013 Expiration calendar in 2013 and 2014 below average with limited expiries of large single tenant contracts Increase in vacancy Retail portfolio, for a large part due to disposal of 2 (nearly) fully let shopping centers Date of merger VNOI 15

16 Portfolio Rent Development Average effective rent/sqm (NL) Effective rent levels are adjusted for incentives remains in line with benchmark Dutch market NSI delivered in 2012 on target to stay above 120/sqm effective rent Alternative strategies in place to increase income per sqm *) The rent level of new leases in Q was impacted by relatively large leases in outer regions 16

17 Property values NSI wrote down 270 million since 2008 in Dutch office portfolio, 377 including pro forma VNOI revaluations over that period (approx. 38%) Revaluations primarily driven by yield shifts Lack of reference due to lackluster market; increased influence of assumptions Development activity and pipeline all time low Valuation level below replacement costs 17

18 Active acquisition & disposal strategy Portfolio Philips Pensioenfonds and Swiss assets Excluding acquisition VNOI ( 971 million) 415 million 250 million 18

19 Consolidated direct and indirect investment result Key observations (x 1,000) Q Q Q Gross rental income (GRI) 41,499 40,317 37,075 Service costs not recharged to tenants - 1,482-1,141-1,136 Operating costs - 4,938-4,884-4,247 Net rental income 35,079 34,292 31,692 Administrative costs - 1,816-1,930-1,525 Financing costs - 14,007-14,464-13,859 Direct investment result before tax 19,284 17,898 16,308 Corporate income tax Direct investment result attributable to noncontrolling interests - 3,023-2,844-2,876 Indirect investment result 16,181 14,958 13,415 Indirect result - 33,302-42,126-34,573 Total result -17,121-27,268-21,158 Gross rental income in Q decreased to 37.1 million (Q4 2012: 40.3 million) as a result of disposals and 2.0 million exceptionals in Q NSI continued its focus on strict cost discipline; operating costs (11.5%) and administrative costs (4%) reflect efficient ratios Financing costs decreased in Q to 14.0 million (Q4 2012: 14.5 million). Higher margins and financing costs were offset by lower Euribor rates and hedging costs and a reduction in outstanding loans ( 43 million). Downward revaluations of 42.4 million mainly related to Dutch offices portfolio ( 33.3 million) LtV slightly decreased from 58.2% at year end 2012 to 58.0% ICR at 2.3 (year end 2012: 2.5) 19

20 Financial Highlights Balance sheet x 1, Real estate investments 2,294,260 2,106,091 1,981,787 Shareholders equity 895, , ,779 Shareholders equity NSI 763, , ,679 Debts to credit institutions (excluding derivatives) 1,315,693 1,226,432 1,183,219 Loan to value (%) Average interest rate (%) Average maturity loans (years) Fixed interest debt (%) Interest coverage ratio NAV EPRA NAV

21 Financing Extending average duration of loan portfolio and addressing upcoming maturities well before expiration is key priority Timely addressing million maturing debt in 2013, million (55%) of debt, initially maturing in 2013, already covered in 2012 refinancing arrangements NSIs largest syndicated loan facility ( 243 million outstanding debt), maturing in 2013 and 2014 and reflecting the majority of the debt maturing in 2013, is in an advanced stage of negotiation. Approx. 60% of Dutch outstanding debt ( 507 million) successfully refinanced in 2012 Average maturity 2.1 years Managing interest costs Rising margins vs low swap/euribor rates Lowering hedging costs through expiring swaps Reduction outstanding debt Average cost of funding expected to rise 21

22 capital sum Loan Duration x durations loans until >2019 X 1,000 Fixed Floating Total Working capital Hedged % Fixed Maturity Interest % NL 179, , ,968 80, , % % CH 0 25,781 25, % % BE 75, , ,985 21, , % % Total 254, ,948 1,102, , , % % Hedge portfolio of swaps: No overhedged positions Swaps reviewed for potential redemption or extention 22

23 Prospects Operational Further improvement occupancy in Dutch office portfolio throughout 2013 Further roll out HNK concept to anticipate growing demand for flexible and full service office solutions Continue to actively pursue favorable mix in retail portfolio Financing Further reducing LTV by selling non strategic assets, including sale of remaining assets Switzerland Revised dividend policy Average costs of funding expected to rise Further extending debt maturities Direct result FY 2013 expected to develop in range 50 to 56 million; expected to improve in

24 Q & A 24