H1-2020 Results
Presentation - Conference Call for Analysts & Investors, 11 August 2020
Lars Schnidrig, CEO & Dr. Kai Klinger, CMO
Disclaimer
This presentation contains forward-looking statements that are subject to various risks and uncertainties. Such statements are based on a number of assumptions, estimates, projections or
plans that are inherently subject to significant risks, as well as uncertainties and contingencies that are subject to change.
Actual results can differ materially from those anticipated
in the forward-looking statements of CORESTATE Capital Holding S.A.
(the "Company") as a result of a variety of factors, many of which are
beyond the control of the Company, including those
set forth from time to time in the Company's press releases and reports and those set forth from time to time in the Company's analyst and investor calls and discussions. The company does not assume any obligation to update the forward-looking statements contained in this presentation.
This presentation does not constitute an offer to sell or a solicitation or offer to buy any securities of the Company, and no part of this presentation shall form the basis of or may be relied upon in connection with any offer or commitment whatsoever.
This presentation is being presented solely for information purposes and is subject to change without notice.
Glossary
€ = Euro
$ = (US)Dollar
-
= percentage a = actual acc. = according adj. = adjusted aggr. = aggregated approx. = approximately c(a) = circa
e = expected
(F)Y = (financial) year(s) H = half year(s)
LTM = last twelve months M = month(s)
Q = quarter(s) k = thousand(s) m = million(s) bn = billion(s)
2
Highlights of Q2-2020
Operations Considerably Impacted by COVID-19 Pandemic
- General market uncertainty and restraints lead to slow-down in RE transactions in April and May, since June markets recover gradually with focus on lower risk-return profiles
- Minor organic RE AuM growth in Q2 of +1.2%
- Resilient performance in AM & PM and private debt business
- Operational pressure on value-add investments esp. in Serviced Apartments and Retail lead to re- valuations and smaller one-off effects in alignment capital
- Challenging environment for STAM in Paris
- Supervisory Board extended and renewed on virtual AGM with focus on independence, various profiles of competency and diversity
- Significant net debt reduction and deleveraging within next 18-24M
- Capital Market Day shifted to 19 November 2020
3
COVID-19 Accelerates Group's Strategic Re-Positioning
Enhanced Market Approach
- Consistent changes in product offerings with high focus on core/core+
- Examples of current product range: residential in B-cities, logistic, student housing, city quarters, affordable housing in A-cities, commercial with A-tenants
- Comprehensive re-brandingand new positioning scheduled for 2021
- Strengthening of equity raising in DACH region
- Group-wideefficiency program launched: simplification, productivity and digitalization
COVID-19 as Catalyst for
Shift of Investment Focus
Risk
2020 2019
Shift in pro- | Oppor- |
tunistic | |
duct range | |
Value-add | |
Core+ | |
Core | |
Return |
4
Assets under Management on Record High
Assets under Management
- +3.4% net organic growth in RE AuM in H1-2020
- Planned decrease in non-Real Estate AuM of € 0.3bn
€ 28.2bn | |||||||
€ 26.3bn | € 3.5bn | € 3.2bn non-RE | |||||
Non-Real Estate | |||||||
+9.2% | 9% | ||||||
Logistics/Other | 14% | ||||||
5% | |||||||
Retail | 15% | ||||||
29% | |||||||
Office | 28% | € 24.9bn RE | |||||
€ 22.8bn | 23% | ||||||
Micro Living | 26% | ||||||
Residential | |||||||
26% | |||||||
25% | |||||||
FY-2019 | H1-2020 |
Sourcing pipeline
- Deal pipeline impacted by COVID-19, but showing signs of recovery
- High percentage in advanced contractual status
in exclusivity / DD
24%
c € 4.6bn
in LOI
10%
under review / identified 66%
5
Real Estate Debt Shows Robust Performance
Through the Crisis
Uses of Mezzanine Funds at the End of H1-2020
▪ Total committed fund volume: c € 1.3bn | Residential | Retail | |
▪ # of financed projects: 63 | |||
71% | 15% | ||
▪ Ø size of mezzanine financing: c € 21m | 63 | ||
▪ Very high demand from developers | projects | Office | |
▪ Fund raising burdened by changed risk appetite from investors | 14% | ||
Regional Break Down of Current Outstanding Financings
in m€
c 70% of lending volume goes to Top7 cities in Germany
306
198 | |||||||||
144 | 113 | 93 | 81 | 88 | 18 | 17 | |||
65 | 59 | 40 | |||||||
6
COVID-19 Leads to Significant Shifts in Fee Pattern
H1-2020 Revenue Split-Up
in m€ (H1-2019)
12.1 (15.5)
47.4 (40.4)
24.9 (23.6)
-0.1(0)
4.1 (10.9)
4.9 (16.4) 2.3 (14.2)
95.6 (121)
Acquisition rel. fees | ▪ | Slow-down followed by partial recovery |
Asset & property mgt. | ▪ | Stable performance |
Coupon particip. fee | ▪ | HFS shows solidity even in times of crisis |
Promote/sales fee | ▪ | Value-add market remains nearly closed |
Mezzanine loans | ▪ | Reduced balance sheet exposure |
Alignment capital | ▪ | Market uncertainties impacting re-valuations |
Warehousing/ | ▪ | Disciplined approach |
RE operations | ||
Aggr. revenues | ▪ Recovery of transaction market as main |
driver for further upside | |
7
Changing Market Conditions Burdening Cost Structure
Key P&L Figures H1-2020 | ||||||
in m€ | ||||||
Aggr. revenues | 95.6 | 100% | ▪ Higher OpEx ratio (>50%) driven by group's fixed | |||
Expenses from RE investment mgt. | -46.0 | |||||
48.1% | cost basis and weaker revenue lines esp. in | |||||
warehousing and alignment capital | ||||||
Alignment capital expenses | -8.3 | 8.7% | ||||
▪ Increase of alignment capital expenses due to | ||||||
Warehousing expenses | -3.5 | |||||
3.7% | higher efforts on COVID-19 affected co- | |||||
investments (Serviced Apartments, Retail) | ||||||
G&A expenses | -16.5 | 17.3% | ||||
▪ G&A burdened by HR related one-off items incl. | ||||||
Other income | 4.5 | |||||
4.7% | first measures of efficiency program (€ 5-10m in | |||||
FY2020) | ||||||
EBITDA | 25.9 | 27.1% | ||||
▪ D&A includes IFRS 16 effect and consolidation of | ||||||
D&A | -16.3 | |||||
17.1% | STAM | |||||
▪ Adjustments on net profit level | ||||||
EBIT | 9.6 | 10.0% | ||||
− Management contracts € 12.6m | ||||||
Financial result | -9.2 | 9.6% | ||||
− DTA € -1.7m | ||||||
Net profit | 0.4 | 0.4% | ||||
Adj. net profit | 11.4 | 11.9% | ||||
8
Key Balance Sheet Figures in times
Debt Overview at the End of June 2020
in m€
585 1) | 55 | |
Bank & | ||
other debt | 119 | |
(incl. € 33m in | ||
warehousing | 530 | |
debt) | ||
Senior | 296 | |
bond | ||
Convertible 193 bond
Total debt 1) | Cash 2) | Net debt |
- Seasonal cash outflow in Q2
- Net debt reduction planned via
- Placements out of inventories, associates/JVs and financial instruments (>€ 200m in 18-24M)
- Cash flow from operations
- Financial leverage IFRS 16-adjusted at 4.0x 3) mid-term target range of between 2.0x and 3.0x remains in place
- Main financial instruments not affected by higher leverage (>3.5x limits only issuing of new debt instruments)
- No substantial redemptions/refinancing needs until end of 2022
- Total financial debt adjusted for rental and leasing liabilities
- incl. restricted cash
- Net debt / EBITDA LTM of € 131.4m; excl. IFRS 16 adjustments, financial leverage would be at 4.2x
9
Outlook
2020: High Uncertainties in Transaction Markets, but Prudent Signals for a Revival*
- Acquisition-basedfees still with broad ranges
- current expectation: Bottoming-out in Q2, recovery under way and improvement in Q4
- Asset & property management fees will remain steady (incl. fees from real estate debt business)
- Only minor earnings' contributions from warehousing and alignment capital
- Cost base broadly unchanged
- € 5-10mone-off costs in 2020 from efficiency program
- Operationally clearly profitable
Well Positioned to Return Stronger from the Crisis
- Increasing pressure towards real estate investments ("lower for longer")
- Attractive product range driven by megatrends urbanization
- Corestate to refine and standardise its brand identity with focus on ESG
- Expansion of sales in the DACH region
- Under the caveat of no long-lastingsupra-regional shutdowns or other public measures with severe impacts on transaction environment
10
IR Contact and Financial Calendar 2020
Investor Contact
Financial Calendar 2020
Dr. Kai G. Klinger
Chief Markets Officer
Phone: +49 69 3535630-106ir@corestate-capital.com
25 February 24 March 12 May 05 June
11 August
- November
- November
Publication preliminary results for FY 2019
Annual financial report 2019
Publication results for Q1
Annual General Meeting
Publication results for H1
Publication results for first nine months
Capital Markets Day
Please note that these dates may be subject to change
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Corestate Capital Holding SA published this content on 11 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 August 2020 17:12:16 UTC