ANNUAL RESULTS 2015 MARCH 22, 2016
01 OVERVIEW & INVESTMENT HIGHLIGHTS
Overview ADO the pure-play Berlin residential specialist Investment highlights 1 2 3 4 Berlin residential pure play with a 1.5bn quality portfolio Efficient, fully integrated and scalable platform with clear strategy to create value. This unique platform allows management to have in-depth knowledge of the Berlin market from almost a decade of local presence Exceptional rental growth demonstrated with 6.5% average annual like-for-like growth over the past four years (2012-2015) supported by quality portfolio, smart targeted capex investments and active management Conservative financial strategy with c. 45-50% target LTV, c. 5.5 years weighted average maturity, with low (2.3%) average cost of debt and marginal cost of debt of 1.6% supporting FFO profile Key portfolio metrics (end of Q4 2015) Buildings 300 Residential Units 14,856 Commercial Units 883 Total Units 15,739 Lettable area (K sqm) 1,058 Property value 1.5bn EPRA NAV 844m Current cash position 134m LTV 43.6% In-place rent 74.7m Our properties a focussed residential portfolio¹ Commercial² 11% Other 2% with potential for privatization³ Privatization potential c. 11% Privatization portfolio 3% Binzstr. Pankow Hefnersteig, Siemensstadt Otawistr. Wedding Residential 87% Hold portfolio 97% 1 Based on in-place rent total portfolio 2 Commercial in-place rent mainly as part of residential buildings 3 Based on residential lettable area 2
Highlights of 2015 Successful IPO Pricing at NAV and 45% share price performance since Fast track inclusion into the EPRA and SDAX index Current market capitalisation exceeding 1 billion Free float of 63% Strong operational performance Annual l-f-l rental growth of 7.3% in 2015 and 6.5% p.a. over the period 2012-2015 Capex per sqm of 20.8 compared to 21.3 over the period 2012-2015 Vacancy reduction of 1.7% like for like EBITDA margin of 78% reflecting efficient organisational structure Strong financial performance FFO 1 of 30.7 million ( 1.04 per share) exceeding the 27-28 million target by approx. 10% Proposed dividend of 12.25 million ( 0.35 per share), representing pay-out ration of 40% of total FFO 1 3
Highlights of 2015 (continued) Positive valuation Total portfolio value of 1.5 billion in 2015 or 1,419 per sqm ( 1,700 per sqm for Central locations) Portfolio valued at 20.0x in-place rent, 16.8x at CBRE market rent assumptions or 15.6x at new letting rates Bi-annual portfolio revaluations going forward Good start of privatisations 54 apartments sold in 2015 ahead of 50 first year target at an average sales price of 2,801 per sqm More focus on acquisition of condo blocks ( 33m in 2015) Given strong expected price increases, privatisation target set to only 100 units in 2016 Delivered on acquisition targets 1,250 units acquired in 2015 post-ipo for 160 million 650 units acquired in 2016 YTD for 60 million 4
ADO delivers on operational and financial targets Target at IPO (July 2015) Realization - 2015 1 Like-for-like rental growth Approximately 5% 7.3% 2 EBITDA margin 78%-79% 78.6% 3 FFO I forecast 2015 27-28 m 30.7 m 4 Privatizations 50 units in 2015 54 units 5 Investment of primary proceeds Spend 200m primary proceeds in 12 18 months post IPO On-track with 215m of investments, including 55m taken over in Q1 2016 6 LTV LTV range of 45% - 50% 43.6% 7 Dividends Payout ratio of 30% to 40% Recommended dividend of 0.35 per share representing a 40% payout ratio 8 Long-term growth Doubling the portfolio to 30,000 units by 2020 Over 1,250 units acquired in 2015 post IPO, another 650 units in 2016 ADO remains committed to realize its operational and financial targets 5
02 ADO PORTFOLIO AND STRATEGY
ADO has a high-quality, centrally located Berlin portfolio ADO portfolio focused on Central locations W Spandau Reinickendorf Charlottenburg -Wilmersdorf Steglitz- Zehlendorf N Mitte Central S Pankow Friedrichsha in-kreuzberg Neukölln Tempelhof- Schöneberg Lichtenberg Marzahn- Hellersdorf Treptow- Köpenick Building locations: Central locations 1 North East South West New acquisitions 2 E High quality turn of the century 55% 5% < 1918 1919-1949 % of buildings 29% % of buildings 26% 22% 19% 12% 12% 10% 1950-1964 1965-1972 Year of construction 1973-1990 5% 1991-2002 mostly low rise buildings 3% < 4 5 6 7-11 12-18 # of floors 1% >18 Key metrics residential portfolio (end of Q4 2015) 1 Central locations 4 North East South West Total Property value (in mill. ) 748 265 110 106 273 1,502 Number of units 6,104 3,068 1,192 811 3,681 14,856 Avg. Rent in / sqm / month 6.22 5.53 6.75 6.01 5.28 5.82 Avg. New letting rent in / sqm / month 2 8.81 6.48 10.91 3 8.17 6.34 7.95 Occupancy (physical) 96.4% 97.3% 97.0% 97.9% 93.7% 96.0% 1 All values except the property value are for the residential portfolio only 2 Based on the last three months 3 Positively impacted by the high turn over and high rent level of the Löwenberger Straße project. Normalized for this effect the avg. new letting rent East would be 8.06 / sqm 4 Berlin s central locations comprise the districts Charlottenburg-Wilmersdorf, Friedrichshain, Kreuzberg, Mitte, North Neukölln, North Steglitz, Prenzlauerberg, South Reinickendorf and Schöneberg 100% exposure within Berlin city borders with 50% in Central Locations 7
Strong growth profile with more than 8,000 units acquired in 2015 of which 1,250 have been acquired since the IPO in July Acquisitions since IPO N Reinickendorf Pankow Residential Condo Spandau W Charlottenburg -Wilmersdorf Steglitz- Zehlendorf Mitte Central Friedrichshain -Kreuzberg Neukölln Tempelhof- Schöneberg S Lichtenberg Marzahn- Hellersdorf Treptow- Köpenick E Otto-Suhr-Allee Charlottenburg Plönzeile Treptow Schönwalder Str. Spandau Total Acquisitions (2015) Condo Central locations 1 North East South West Total Property value (Fair value m)² 33 166 223 47 31 237 737 Value per sqm ( ) 1,813 1,713 1,129 1,539 1,698 1,025 1,244 Total sqm (k) 18 97 197 31 18 231 592 Run rate net rents ( m) 1.2 7.4 12.7 2.2 1.4 13.7 38.8 Commerical units 9 127 50 18 10 46 260 Residential units 262 1,323 2,731 447 204 3,347 8,314 Avg. rent / sqm / month ( ) 6.66 6.20 5.42 6.14 6.45 5.22 5.55 Avg. New letting rent / sqm / month ( ) - 8.49 6.15 8.29 8.29 6.01 6.66 Reversionary potential - 37% 13% 35% 29% 15% 20% Occupancy (sqm) 79.7% 97.6% 97.4% 97.7% 97.7% 93.5% 95.3% 1 Berlin s central locations comprise the districts Charlottenburg-Wilmersdorf, Friedrichshain, Kreuzberg, Mitte, North Neukölln, North Steglitz, Prenzlauerberg, South Reinickendorf and Schöneberg 2 As of end of 2015 737m of accretive portfolio acquisitions closed and integrated in 2015 ensuring a balanced growth profile 8
Active asset management and smart targeted capex investments are the key drivers of our business model Residential like-for-like rental growth 1 (%) From modernization capex From fluctuation w/o capex and vacancy reduction 5.8% 2.5% 1.5% 1.8% 2012 1 Includes vacancy changes 4.7% 1.3% 1.0% 2.4% 2013 Regular rent increases 8.0% 3.3% 1.6% 3.1% 2014 7.3% 3.8% 2.7% 0.8% 2015 Avg.: 6.5% Average of 6.5% p.a. residential like-for-like rental growth over the past four years, driven by: 1 2 Growth beyond rent table through targeted capex investments, improving the quality and rent level of the portfolio Rent increases to market levels through tenant fluctuation without capex & reducing portfolio vacancy by active marketing with location specific approach Maintenance & capex ( / sqm) 2012 2013 2014 2015 Avg. 2012-2015 Maintenance 3.9 6.0 6.5 6.3 5.7 Capitalized maintenance 4.6 5.7 7.6 4.6 5.6 Modernization capex 9.7 7.4 13.2 9.9 10.0 Total 18.2 19.1 27.2 20.8 21.3 3 High regular rent increases implemented up to the legal limits. Effects of the 2015 Mietspiegel will mostly crystalize in 2016 Exceptional rental growth continues at 7.3% in 2015 2016 target of at least 5% 9
Like-for-like vacancy reduction of 170bps by active management delivers additional growth Vacancy split¹ 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 4.8% 0.4% 2.5% 4.0% 0.5% 1.7% 3.1% 0.9% Only 0.8% of current vacancy is held by marketing 2.7% of the vacancy result from units currently being refurbished The Carlos-Portfolio accounts for 2.1% of total vacancy with the biggest part resulting from the ongoing construction work as the portfolio is still in its stabilization phase 1.5% 1.0% 0.5% 0.0% 1.9% 1.0% 0.4% 0.4% Q4 2014 Q4 2015 Total 1.5% 0.7% Q4 2015 like-for-like Marketing Marketing (Carlos) Construction Construction (Carlos) Privatization Vacancy rate in the original portfolio dropped by 170bps to 3.1% The increase in our privatisation vacancies is a result of our successful privatization program where at the year end contracts for another 17 units have already been signed and another 21 units have been reserved for buyers representing 0.3% of total vacancies (or 0.5% of like-for-like vacancies) 1 Based on physical vacancy, residential only. Like-for-like excludes Carlos and BMB portfolios. Commercial vacancy rate Q4 15 5.5% vs Q4 14 3.6% Significant vacancy reduction in 2015 10
Case studies Löwenberger Straße Investment & turnaround summary Investment strategy & execution What we have done Key metrics (per March, 2016) Location Lichtenberg Acquisition price 13m Current fair value 23m Number of units 380 Avg. rent / sqm / month: At acquisition 8.36 Current average 9.65 Avg. new lettings 13.29 Reversionary potential 38% Target occupancy 98.0% Clear repositioning strategy executed to improve tenant structure with focus on students and young professionals Unit refurbishments program completed; 2,135k capex spent on 228 units ( 285 / sqm) to create up-to-date standards 656k capex spent on 24 public projects (staircases, elevators ) Achieved rent level and occupancy confirm the strategy Before After Occupancy Average rent & New letting rents ( ) Total net rental cash flow per month (k ) 100% 90% 80% 70% 60% 50% 70.2% 59.0% 82.7% 96.1% 14 12 10 8 6 8.36 Average rent New letting rent 8.65 8.48 10.25 9.01 13.29 9.65 120 110 100 90 80 70 60 50 68.3 +58% since acquisition +93% since all time low 55.7 107.6 Turnaround of Löwenberger Straße successfully completed generating a 50% value uplift 11
Case studies Carlos Portfolio Integration and improvement ongoing Key metrics (per March, 2016) Location Spandau & Reinickendorf Acquisition price 376m Number of residential units 5,749 Avg. rent / sqm / month: At acquisition 5.19 Current average 5.28 Avg. new lettings 5.96 Rent restricted units 48% Clear short & long term strategy Improve profitability through insourcing management and services which where outsourced by the former owner (esp. facility management and quartier management) Realize rental income and value potential by (1) reducing vacancy and (2) rent waivers given by the former owner Maximize rental income through re-letting and realize significant rent potential in the portfolio compared to market rents Focus on fluctuation capex to realize maximum rental upside Primarily unit refurbishments and limited selective investments in buildings and facades with a building-by-building approach 312 new lettings signed since acquisition with an average new letting rent of 14% above average in place rent Capex investment program is on-going and on track, currently 351 units are finished The overall vacancy has dropped since year end from 4.9% to 4.8% Preparations for rent increases under the cost rent system are progressing and will be executed in 2016. Rent waivers agreed by the former owner could already be reduced by 17% Year end valuation has increased by close to 10% compared to acquisition values Our hands-on management combined with a targeted investment strategy delivers the first positive effects 12
Privatization activities on target Privatization results and outlook 54 units sold in year 2015 for gross proceeds of 10m, generating 65% value uplift compared to average book value of Central locations Comparably low taxable profit of 15% results from the fact that most units have already been acquired as condominiums and therefore been carried at higher book values We decided to slightly adjust the target for units to be sold as condominium in 2016 to around 100 as we expect further price increases for condominiums especially in inner city locations Sales profit Avg. sales price vs. portfolio value /sqm 3,000 2,500 2,000 1,500 1,000 500 0 1,700 Avg. Portfolio value Central locations 31/12/15 2,801 Avg. sales price year 2015 Current condominium conversion potential - Pipeline Units 2,000 1,156 1,711 1,600 1,200 800 555 400 Value-oriented condo sales at prices exceeding fair value driven by strong demand Low interest rate environment and continuing population growth are supporting demand Ability to privatize is an important enabler for acquisitions in the current competitive environment 0 Converted & Conversion in progress Eligible for conversion Total 54 units sold in year 2015 for an average sales price of 2,801 per sqm 13
03 FINANCIAL OVERVIEW
NAV per share of 24.10, with 44% LTV and free cash of more than 100 million to be used for further acquisitions Comments In m Dec 31, 2015 DEC 31, 2014 (Audited) (Audited) Investment properties 1 1,459 731 Other non-current assets 4 1 Non-current assets 1,463 732 Cash and cash equivalents 2 134 10 Other current assets 1 73 59 Current assets 207 69 Total assets 1,670 801 Interest bearing loans 3 785 433 Amounts due to related parties 4-186 Other liabilities 42 25 Deferred tax liabilities 48 26 total Liabilities 875 670 Total equity attributable to shareholders of the company 4 786 130 Non-controlling interests 9 1 Total Equity 795 131 Total shareholder s equity and liabilities 1,670 801 Add back shareholder loans (to be converted upon IPO) - 186 Adjusted Equity 786 316 EPRA NAV 844 355 No. of shares 35 25 EPRA NAV per share 5 24.10 14.19 1 Total portfolio value of 1,502m as at 31 December, 2015 includes investment and trading properties. The fair value of the portfolio was assessed by CBRE as of December 31, 2015. The Company will update the valuation on a bi-annual basis 2 35m cash has been deployed for acquisitions in Q1 2016. The remaining free cash enables us to acquire up to 120m of additional properties whilst maintaining our LTV strategy 3 Interest bearing loans include 766m loans from banks and a loan from Harel Insurance in an amount of 19m related to the WayPoint portfolio 4 The 2014 number refers to loans and capital notes from ADO Group Ltd. As part of the IPO, the loans were converted to equity as a nonrefundable capital (surplus) contribution without issuance of new shares. The further increase in equity results from the capital raised in the IPO and the profit of 2015 5 Our EPRA NAV per share is 24.10 as of December 31, 2015. An increase by 18% compared to our post IPO proforma EPRA NAV of 20.35 15
15.6x 15.9x 15.4x 18.0x 17.9x 17.0x 15.9x 17.1x 15.7x 14.8x 13.8x 17.6x 16.8x 15.6x 19.6x 22.1x 20.3x 20.0x Total portfolio value of 1.5 billion with further upside Portfolio Valuation Central 1 North East South West Total Fair Value ( k) 1 748 265 110 106 273 1,502 Discount rate (%) 4.9% 5.3% 5.2% 5.0% 5.4% 5.1% Average in-place rent 2 6.22 5.53 6.75 6.01 5.28 5.82 CBRE market rent 2 7.64 6.27 7.55 7.51 5.88 7.06 Avg. new letting rent 2 8.81 6.48 8.06 8.17 6.34 7.63 Reversionary potential 42% 17% 19% 36% 20% 31% 1 45m of fair value is attributable to condominiums 2 Residential in /sqm. Normalized new letting rent for the east is based on assumption that Löwenberger project will contribute to the new letting rent only based on its proportion of sqm W Spandau 1,063 Reinickendorf Charlottenburg -Wilmersdorf Steglitz- Zehlendorf 1,180 Value per sqm ( ) N S Pankow 1,700 Mitte Central 1,572 Friedrichsha in-kreuzberg Neukölln Tempelhof- Schöneberg Lichtenberg Marzahn- Hellersdorf 1,525 Treptow- Köpenick Building locations: Central locations North East South West New acquisitions E Rent multipliers Share of fair value (%) West 18% South 7% East 7% Central locations 50% Central locations North East South West Total Current rent CBRE market rent New letting rent North 18% New letting rents imply a 6.4% yield on current portfolio value 16
Solid balance sheet with a targeted LTV of 45% to 50% and further upside potential from decreasing funding costs Key financing figures and strategy Total debt of 785m - primarily mortgage backed/secured Average cost of debt of 2.3% 97% of interest is fixed or hedged No near term maturities with avg. weighted maturity of c. 5.5 years Mid-term target LTV of c. 45-50% allowing fast execution of acquisitions from primary proceeds and target maturity for mortgage debt between 5 to 7 years In 2016, the Company expects to refinance at least 150m decreasing the average interest rate to below 2% Refinancing overview 2015 & 2016E Diversified funding profile with weighted average debt maturity of approx. 5.5 years Bank debt ( m) 700 600 500 400 300 200 100-1.7% - 3.5% 1.3% 170 3.0% Average interest rate (as of 31 st December) 1 28 13 574 2016 2017 2018 2019 2020+ % Average interest rate 2.0% 33m +150m 3.4% 3.4% 1.6% 2015 2016 Old interest rate New interest rate Refinancing volume 2.6% 2.3% Max. 2.0% 2014 2015 2016 1 2016 outlook after expected refinancing of at least 150 million of loans Solid financing structure supporting FFO with an LTV target of 45% to 50% 17
Overview of profit and loss Comments In m Year 2015 Year 2014 Q4 2015 Income from rental activities 1 65.8 33.7 19.0 Cost of rental activities (11.4) (6.1) (3.1) Net operating income 54.4 27.6 15.9 Overhead costs (5.9) (3.0) (1.8) EBITDA from rental activities 2 48.5 24.6 14.1 EBITDA from rental activities margin (%) 78.6% 76.9% 78.2% Net result from privatization sales 1.5 0.1 0.5 EBITDA total 50.0 24.7 14.6 Financial cost interest bearing loans 3 (17.7) (11.1) (5.1) Financial costs shareholder loans/net others 4 (6.5) (2.7) 0.4 IPO related expenses 5 (0.4) - (0.1) Depreciation & Amortization (0.3) (0.1) (0.1) EBT 25.1 10.8 9.7 1 Income from rental activities increased by 95% driven by rental growth of 7.3% and acquisitions. Quarter-on-quarter growth was 5%. Q4 reflects an annualized income from rental activities of 76 million (around 80 million including Q1 acquisitions) Strong rental growth supported by our investment strategy In % 2015 2014 CAPEX 3.8% 3.3% Fluctuation 2.7% 1.6% Cost Rents 0.0% 0.3% Regular Increases 0.8% 2.8% Total 7.3% 8.0% 2 EBITDA from rental activities increased by 97%. Q4 2015 results represent an annualized EBITDA of 56 million (around 60 million including Q1 acquisitions) 3 Financing relies predominately on bank financing provided by German mortgage banks. The average interest rate is 2.3% 4 Includes mostly non-cash interest on loans from ADO Group which were all converted into equity at July 23, 2015 upon the completion of the IPO 5 One-off expenses related to the IPO that were classified to the P&L in the financial statements 18
FFO1 of 1.04 per share for the full year 2015 Comments In m Year 2015 Year 2014 Q4 2015 EBITDA from rental activities 1 48.5 24.6 14.1 Net cash interest (17.7) (11.1) (5.1) FFO1 (from rental activities) 2 30.7 13.5 8.9 Maintenance capital expenditures 3 (4.1) (3.4) (1.7) AFFO from rental activities 26.6 10.1 7.2 Net profit from privatizations 4 1.5 0.1 0.5 FFO2 (incl. disposal results) 32.2 13.6 9.4 FFO 1 per share 1.04 0.54 0.26 FFO2 per share 1.09 0.55 0.27 Note: On July 23, 2015 the Company issued 10m new shares as part of the IPO. The number of shares is calculated as the weighted average number of shares for the period. 2 Maintenance and CAPEX In / per sqm 2015 2014 Maintenance 6.3 6.5 Capitalized maintenance 4.6 7.6 Modernization CAPEX 9.9 13.2 Total 20.8 27.2 1 EBITDA from rental activities has close to doubled driven by our strong 7.3% l-f-l rental growth and successful acquisitions. The annualized Q4 figures represent an EBITDA of more than 56 million ( 52 million in Q3) 2 FFO1 has increased by more than 125% due to our operational performance and the relative improvement of our net cash interest expenses which only increased by 60%. The annualized Q4 results imply an FFO yield of 5% on our Adjusted EPRA NAV (without free cash of 135 million which will be used for further acquisitions) 3 Total investment into the portfolio in 2015 amounted to 20.8 per sqm. The reduced cost per sqm compared to year 2014 on the modernization capex and capitalized maintenance results mainly from the high levels of investments in 2014. The investment was in line with historic levels which supported our strong like-for-like rental growth of 6.5% on average Maintenance capital expenditures (public) refers to investments to preserve the quality and value of properties and does not include investment capex 4 Our privatization business started at the end of 2014. In 2015 we sold 54 units, in line with our 2015 target. The comparably low taxable profit of 15% results from the fact that most of these units have already been acquired as condominiums and have therefore been carried at higher values in our books compared to assets which have been acquired as rental only properties. The average sales price of 2,801 per sqm compares to an average portfolio value for Central locations, which we see as most comparable, of 1,700 per sqm 19
Guidance 1 2 3 We anticipate like-for-like rental growth going forward to be at least 5% which would have positive impact over our portfolio value, NAV and NAV per share By the end of 2016 we anticipate our FFO1 run-rate to be at least 45 million without the positive effect of additional acquisitions Average cost of debt by the end of year 2016 will be reduced to below 2% with a LTV in the range of 45% to 50% after refinancing at least 150 million of existing loans 4 We expect to privatize around 100 units p.a. from 2016 onwards 5 The dividend pay-out ratio is expected to be between 30% to 40% of FFO1. For 2015 the Board of Directors recommended a dividend of 0.35 per share, a 40% pay-out ratio Steglitzer Damm Steglitz Ahornstr. Steglitz Stettiner Str. Wedding Grimmstr. Tempelhof Gutenbergstr. Köpenick Kaiser-Friedrich-Str. Charlottenburg 20
Financial Calendar 2016 May 03, 2016 Annual General Meeting May 04, 2016 Ex-dividend date May 19, 2016 Publication Q1 financial report Aug 17, 2016 Publication Q2 financial report Nov 17, 2016 Publication Q3 financial report Kirchhofstr. Spandau Martin-Opitz-Str. Wedding Putbusser Str. Wedding Schichauweg Tempelhof Schildhornstr. Steglitz Sommerstr. Reinickendorf 21
Information on the share Share price development Shareholder structure 30.00 27.50 ADO (Xetra) SDAX FTSE EPRA/NAREIT Germany 25.00 22.50 20.00 17.50 15.00 30.06.2015 22.07.2015 30.09.2015 31.12.2015 30.12.2015 18.03.2016 Free float 62.95% ADO Group 37.05% Key data on the shares of ADO Properties S.A. Stock exchange Market segment ISIN WKN Ticker symbol Frankfurt Stock Exchange Regulated market (Prime Standard) LU1250154413 A14U78 ADJ Primary listing July 23, 2015 Total number of shares outstanding 35,000,000 Indices All data as of March 18, 2016 SDAX; FTSE EPRA/NAREIT Global Index; FTSE EPRA/NAREIT Developed Europe Index; FTSE EPRA/NAREIT Germany Index 22
04 CONTACT INFORMATION ADO Properties 20 Rue Eugene Ruppert L-2453 Luxemburg City Luxemburg Investor Relations IR@ado.properties +352 26 493 412