10th Annual General Meeting Vienna, 20 May 2011
Market overview and company development 2010 Earnings performance and balance sheet indicators 2010 Implementation of strategy Overview 1 st Quarter 2011 Outlook 2011
HIGHLIGHTS FISCAL YEAR 2010 + Strongest operating results in company history + Earnings before interest, taxes, depreciation and amortisation (EBITDA) up 76 % to EUR 184.9 million + Earnings before interest and taxes (EBIT) increased by 9% to EUR 103.2 million + Revenues amounted to EUR 547.2 million. + Funds from operations (FFO), at EUR 53.6 million, below prior-year level (EUR 72.6 million; considering special effects the FFO was at the level of 2009) + Group profit for the year up 8% to EUR 25.7 million + Increase in rental income and double-digit profit margins in sales business + Rental income up 16% to EUR 188 mill. organic rental growth and ECO rents + Proceeds on property sales EUR 325.1 million due to strong demand by private investors (previous year: EUR 361.3 million) + Selling margins significantly improved on the previous year (+ 30% to 13% IFRS margin) + Solid balance sheet and financing structure, also taking into account takeover of ECO + 37.5 % equity ratio and Loan-to-Value (LTV) ratio of 59% EBITDA Revenues in EUR mill. in EUR mill. -2.3 % 200 +76% 184.9 600 560.2 547.2 500 150 400 100 50 105.0 2009 2010 300 200 2009 2010 Group profit for the year in EUR mill. 40 30 20 10 0 23.8 25.7 2009 2010 3
RESULTS FINANCIAL YEAR 2010 HIGH-QUALITY AND STABLE-VALUE PROPERTY PORTFOLIO Property indicators in A G CEE Total Number of objects number 409 1,360 42 1,811 Rental units/ parking spaces number 7,299 / 6,779 16,906 / 4,517 989 / 598 25,194 / 11,894 Total usable space sqm 954,679 1,405,184 93,186 2,453,049 Property assets EUR mill. 1,623.7 1,439.8 174.8 3,238.3 Vacancies - strategic / actual Average rent residential % EUR/sqm/ month 1.59 / 16.69 7.24 / 3.96 9.94 / 31.69 5.14 / 9.97 4.96 5.26 5.50 5.19 Yield % 4.36 6.26 3.45 5.18 + Like-for-Like (without ECO) 3.6% increase of rental income + Consolidation of ECO brings positive rental income + Significant reduction of vacancies due to active asset management in the conwert portfolio Property assets by region A 5.4% G Other regions 44.5% 50.1% Development property assets 1241 1161 95 2497 1225 1194 98 2517 1623.7 1439.8 174.8 3238.3 + Yield rose to 5.18% in 2010 (2009: 4.88%) + Austria: 4.36% (2009: 3.86%) + Germany: 6.25% (2009: 5.91%) Austria Germany Other regions Total 4
RESULTS FINANCIAL YEAR 2010 LONG-TERM INCREASE IN RENTS IN THE RESIDENTIAL SEGMENT Development average rents per sqm and month in EUR 10 8 6 4 2 0 20 10 5.81 0 7.21 8.18 8.20 7.98 7.87 7.81 8.25 3.14 3.59 3.96 4.45 4.73 Development of vacancies in % 16.9-11 % 15.1 6.9 5.1 10 10.0 2009 2010 5.09 5.09 5.19 2003 2004 2005 2006 2007 2008 2009 2010 Retail/Offices Appartments Strategic vacancies Total vacancies Average residential rent at EUR 5.19/sqm per month (+2%) Increases for new rentals of apartments + 8.69/sqm in Austria and 5.36/sqm in Germany Total vacancies down 11% to 15% + Significant reduction by 30% in Germany + Without ECO portfolio vacancies at 12% Strategic vacancies reduced to 5% + Rising demand increasingly leads to activation of strategic vacancies Actual vacancies at 10% + Completion of developments will reduce vacancies further + ECO portfolio let to higher degree or sold 10
RESULTS FINANCIAL YEAR 2010 SUCCESSFUL SALES PROGRAM IMPLEMENTED + Proceeds on the sale of properties of EUR 325.1 million due to strong demand from private investors + Sales margin improved significantly on the previous year (+ 30% on 13% IFRS margin) + Profit therefore at record level of EUR 38 million + Overall 2,057 residential units sold (2009: 1,715) + 457 freehold flats (2009: 395) + 70 apartment buildings (2009: 65) with 1,600 apartments + Sales in Germany again exceed EUR 100 million + Sales business characterised by strong sales of individual apartments + Selling prices 13% above valuation and 28% above investment costs + ECO sales also carried out with positive IFRS margins 6
RESULTS FINANCIAL YEAR 2010 STABLE REVENUES FROM PROPERTY SERVICES Property management in 1,000 sqm 5000 4000 3000 2000 1000 0 Service revenues in EUR million 80 60 40 20 0 70.6 4,103 4,138 4,191 2,589 2,765 2,863 1,514 1,373 1,328 2008 2009 2010 RESAG alt+kelber 70.5 30.4 33.9 86.4 52.0 40.2 36.6 34.4 2008 2009 2010 Service revenues increased significantly by 23% 40% of total service revenues from third parties (2009: 52%) New mandates for third parties in Germany + Management for second closed-end DWS residential property fund 57,618 managed units with 4.19 mill. sqm (2008: 55,781 units with 4.14 mill. sqm) + approx. 45% or 1.88 mill. sqm in third-party business Broker: 6,687 rental units brokered (2009: 7,609 units) + Thereof 54% in third-party business EUR 3.32 bn. assets under management (2009: EUR 3.34 bn.) Internal Property Services Property Services for third parties 7
Market overview and company development 2010 Earnings performance and balance sheet indicators 2010 Implementation of strategy Overview 1 st Quarter 2011 Outlook 2011
OVERVIEW CONSOLIDATED INCOME STATEMENT 2010 in 2010 2009 Change Rental income EUR mill. 187.7 162.3 +16% Proceeds on sale of properties EUR mill. 325.1 361.3-10% Service revenues EUR mill. 34.4 36.6-6% Revenues EUR mill. 547.2 560.1-2% Earnings before interest and tax, depreciation and amortisation (EBITDA) EUR mill. 184.9 105.0 +76% Net gain from fair value adjustments EUR mill. 2.4 1.6 +50% Significant increase in rental income by 16% EBITDA soared by 76% to EUR 184.9 million EBIT up 9% to EUR 103.2 million Earnings before interest and tax (EBIT) EUR mill. 103.2 94.9 +9% Financial results EUR mill. -91.1-63.0 - Earnings before tax (EBT) EUR mill. 12.2 31.9-38% Group profit for the year EUR mill. 25.7 23.7 +8% Funds from Operations (FFO) 1) EUR mill. 53.6 72.6-26% Net Rental Income (NRI) 2) EUR mill. 103.9 94.6 +10% 1) FFO: FFO: Earnings before tax (EBT) minus the net gain from fair value adjustments + difference between cash gains on sale to IFRS gains on sale + depreciation + non-cash parts of financial result and investment costs 2) NRI: net rental income is gross rental income of a period less operational costs passed on and direct property expenses /income. 9
OVERVIEW BALANCE SHEET INDICATORS 2010 Balance sheet indicators in 31.12.2010 31.12.2009 Change Non-current assets EUR mill. 2,847.9 2,428.9 +17% Current assets EUR mill. 702.9 533,6 +32% Total assets EUR mill. 3,550.8 2,962.5 +20% Equity EUR mill. 1,330.1 1,279.9 +4% Non-current liabilities EUR mill. 1,642.3 1,305.9 +26% Current assets EUR mill. 578.3 376.5 +54% Equity and liabilities EUR mill. 3,550.8 2,962.5 +20% Loan-to-Value (LTV) % 59.0 55.2 - Equity ratio % 37.5 43.2 - Gearing % 151.8 115.1 - Book value (NAV) / share EUR 15.6 15.7-1% Balance sheet total significantly increased on the previous year + Non-current and current assets increased significantly + Equity ratio at 37.5% due to takeover of ECO Business- Immobilien AG + Goodwill reduced by 27% from EUR 162.7 mill. to EUR 118.4 mill. due to impairment + Intangible assets reduced from EUR 42.7 million to EUR 4.6 million due to impairment 10
OVERVIEW OF FINANCING STRUCTURE 2010 + Cash-effective average interest rate 4.16% after hedging + Approx. 10.7 years average terms of all loans incl. convertible and bonds + Broad and long-term spread of borrowings + Low prolongation volume in the following years + 85% of loan volume hedged against interest risks + Buyback Convertible 2007-2014 at nominal value of EUR 34.3 mill. (average price 61%) Prolongation in EUR mill. Financial expenses in EUR mill. Liabilities to banks in EUR mill. 300 250 200 150 100 50 0 155 60 77 44 38 2011 2012 2013 2014 2015 100 80 60 40 20 0 84.8 78.0 95.1 2008 2009 2010 1800 1600 1400 1200 1000 800 600 400 200 0 506 354 807 2010 41 banks < EUR 47 mill. 6 banks Range: EUR 47 mill. EUR 68 mill. 5 banks Range: EUR 73 mill. EUR 260 mill. 11
Market overview and company development 2010 Earnings performance and balance sheet indicators 2010 Implementation of strategy Overview 1 st Quarter 2011 Outlook 2011
NEW STRATEGIC ORIENTATION IMPLEMENTATION + Concentration on core residential business + Refocusing on the development, letting and rental of residential properties as core business + Commercial properties will gradually be sold + Geographic focus + Targeted reduction of property portfolio in Austria and exit from Eastern Europe + Business in Germany will be optimised and strengthened, portfolio will be increased especially in Berlin and West German metropolitan areas + Expansion of service business + Intensified cooperation with institutional investors in Germany and Austria + Implementation of a new organisation structure + Streamlining of the organisation + Using synergies by combining organisation units in Austria and Germany + Improving efficiency by cost savings and better cost to revenue ratio + Improvement of transparency and Corporate Governance + New code of conduct implemented and published + Comprehensible strategy as indicator of future developments communicated + External evaluation 2010 of the Code of Corporate Governance + Related-party transactions prohibited 13
NEW STRATEGIC ORIENTATION IMPLEMENTATION IN Q1/2011 + Reduction of the property portfolio in Austria and Germany by EUR 50 million + Sale of properties worth EUR 40.1 million in Austria + Sales in the Czech Republic amounting to EUR 9.6 million + Sale of residential and commercial properties amounting to EUR 100 million in Germany with effect on revenues in Q2 + New acquisition in Berlin with 1,690 residential units and 160 commercial units + Properties in highly sought-after central locations in the western part of Berlin + Attractive development and value increasing potential + Sustainable potential for increasing rents + Expansion of service business with institutional partners + Second DWS residential property fund with a volume of EUR 160 million will be taken into management in May 2011 + Negotiations with core Austrian fund promoter to manage institutional residential real estate portfolio 14
Market overview and company development 2010 Earnings performance and balance sheet indicators 2010 Implementation of strategy Overview 1 st Quarter 2011 Outlook 2011
HIGHLIGHTS 1st QUARTER 2011 + Strong operating growth in comparison with the prior-year quarter + Rental revenues up 37 % from EUR 39.2 million to EUR 53.9 million + Revenues rose by 37% to EUR 126.8 million + EBITDA up 21% to EUR 30.2 million + EBIT improved by 24% to EUR 27.6 million + Group profit after income tax rose from EUR 4.1 million to EUR 6.0 million + Increase in NAV + Book value / share (NAV) increased significantly by 2.2% to EUR 15.90 per share + Improved balance sheet structure + Equity ratio increased to 38.4% (12/2010: 37.5%) + Loan-to-value ratio (LTV) of 58.5% + Positive development of proceeds on sale of properties + Q1-proceeds on property sales 44% higher than in Q1/2010 (from EUR 45.3 million to EUR 65.3 million) + Profit margin of 11.4% + Q2 proceeds on property sales of EUR 99.3 million already concluded in Q1 16
FINANCIAL INDICATORS 1st QUARTER 2011 Balance sheet indicators in 1-3/2011 1-3/2010 2010 Equity EUR mill. 1,351.6 1,266.6 1,330.1 Fremdkapital EUR mill. 2,165.5 1,268.7 2,220.6 Equity ratio % 38.4 41.4 37.5 Loan-to-Value (LTV) % 58.5 54.3 59 Key company figures in 1-3/2011 1-3/2010 2010 Rental income EUR mill. 53.9 39.2 187.7 Proceeds on sale of properties EUR mill. 65.3 45.3 325.1 Service revenues EUR mill. 7.7 8.2 34.4 Revenues EUR mill. 126.8 92.6 547.2 Earnings before interest and tax, depreciation and amortisation (EBITDA) EUR mill. 30.2 24.9 184.9 Funds from Operations (FFO) 1) EUR mill. 14.9 15.0 53.6 Stock exchange indicators in 1-3/2011 1-3/2010 2010 Basic earnings / share EUR 0.06 0.05 (0.29) Diluted earnings / share EUR 0.06 0.05 (0.29) Book value (NAV) / share EUR 15.90 15.84 15.56 1) FFO: FFO: Earnings before tax (EBT) minus the net gain from fair value adjustments + difference between cash gains on sale to IFRS gains on sale + depreciation + non-cash parts of financial result and other costs 17
STUCTURE OF CONWERT / MARKET ESTIMATES + Consortium led by Petrus Advisers long-term core shareholder + holds 18% of the stocks + Running share buyback programme Development of the conwert share EUR 11.40, 18/05/2011 Market Cap. roughly 1 billion -28% discount to NAV Shareholder Structure Petrus Advisers 18 % Analyst Research after communication new strategy Bank Recommen. PT Aurel-BGC Buy 14.00 CA Cheuvreux Outperform 13.80 Credit Suisse Buy 11.00 Deutsche Bank Buy 13.50 DZ Bank Buy 15.30 Erste Group Hold 12.00 Institutional 50 % Per March 2011 Retail 32 % HSBC Neutral 13.50 J.P. Morgan Neutral 12.50 Rabobank Buy 13.60 RCB Buy 14.00 Silvia Quandt Buy 14.00 SRC Research Buy 14.50 UniCredit Buy 13.70 Consensus 13.70 Per 18.05.2011 NAV as of 31/03/2011 EUR 15.90 per share 18
Market overview and company development 2010 Earnings performance and balance sheet indicators 2010 Implementation of strategy Overview 1 st Quarter 2011 Outlook 2011
MARKET OUTLOOK 2011 Financial market environment favourable for conwert + Currently still low interest level + Uncertainty in financial markets: fear of inflation + Institutional preference for tangible assets, especially residential properties Economic environment in conwert core markets favourable + General upward business trend + Falling unemployment rate Positive demographic development of the residential market in Vienna + Population growth in metropolitan areas + Rising number of households, higher per capita demand for sqm + New construction significantly below need for residential space, cuts of subsidies Persisting strong demand for closed-end property funds in Germany + Growth opportunities in the segment funds management 20
TARGETS 2011 Reduction of existing gap between NAV and share price + Admission to the ATX as of 21 March 2011 contributes to making share more attractive + Intensive investor contact and convincing strategy will bring further trust by investors Focus on increasing value and profitability Implementation of now strategic orientation + Concentration on the core residential business and the core markets Austria and Germany + portfolio expansion in German metropolitan areas, sale of apartment buildings in Vienna + Consistent expansion of long-term service business with institutional investors Increase conwert s earnings power further + Tapping potential to increase rents and reduce vacancies further + Reduce debt level + Targeted sales in line with strategic reorientation Further improvement of productivity Neutral valuated EBIT of + 15% and NAV growth of 2.5% - 3% Sustainable dividend policy based on a high-profit business model 21
DISCLAIMER This presentation includes various forecasts and expectations as well as statements concerning the future development of the conwert Group. These statements are based on assumptions and estimates, and may be connected with known and/or unknown risks and uncertainties. Actual developments and results as well as the financial, earnings and asset position of the Group may therefore differ materially from these expectations and assumptions. The reasons for such variances may include market fluctuations, the development of property prices and rents as well as financial markets and foreign exchange rates, changes in national or international laws and regulations or fundamental changes in the economic and political environment. For this reason, future-oriented statements are only related to the day on which they are made. conwert will accept no obligation to revise or adjust such statements to reflect new information or future results. MAY 2011