1. travel
2. tourist destinations
3. france

Eiffage - Vélizy Meudon
Capital Markets
Day
20th November 2014
Rheintrasse - Berlin
B&B potsdamerstr. - Berlin
Euromed Center - Marseille
1 – Strategy of Foncière des Régions
2 – German Residential Real Estate market
3 – A winning strategy in German Residential
4 – A leader in Hotel investments
5 – Property tour
New Vélizy – Vélizy Meudon
Capital Markets
Day
20th November 2014
CB 21
Liebenwalder Strasse - Berlin
La Défense
Strategy of
Foncière des
Régions
New Vélizy – Vélizy Meudon
B&B Potsdamerstr. - Berlin
1 – Strategy of Foncière des Régions
Carré Suffren - Paris
-
Our strategic positioning
-
Our Real Estate policy
-
Our objectives
One focus and two diversifications
€16 billion portfolio
€9.5 billion Group Share
Offices
65%
Other 1%
Germany
17%1
Group
Share
German
Residential 17%1
Italy 22%
Group
Share
France
60%
Non strategic
9%1
Hotels/Service
sector 9%
Südstern - Berlin
DS Extension – Vélizy (78)
A quality portfolio
5
Foncière des Régions – Capital Markets Day – 20th November 2014
1Post
operations signed in Q3
Our portfolio: strong fundamentals
1 Success of our partnership strategy
High occupancy rate
5.9 years of firm duration*
Sustainable rental income
20%
96.7%*
94.8%
16%
95.8% 95.5% 96.0%
12%
4%
5%
5%
11%
12%
8%
4%
+ 2.2% + 2.1%
3%
+ 1.2% + 0.2%*
+ 0.6%
2010 2011
2012 2013
9M
2014
H2
2014
2016
2018
2020
2022
Beyond
Firm maturity dates of leases, as a % of annualised rents
Excluding residential portfolio
2010
2011
2012 2013
9M
2014
Change in LFL rents vs. n-1
2 The benefits of the diversification
Exposure to
complementary markets
Resiliency
3
Strong track-record
High historical ROE
A strong profitability
Net Recurring Income year n / Epra NAV year n-1
(per share)
6.5%
2010
6
6.5%
2011
Foncière des Régions – Capital Markets Day – 20th November 2014
6.3%
2012
6.3%
2013
6.4%**
H1
2014
* End-September, excl. Logistics
** Based on our guidance of Net Recurring
Income for 2014
An integrated platform
• Full control of the value chain
France Offices
Offices
France
• A dedicated team managing a €1.3 bn development pipeline
Euromed Center - Marseilles
• Largest REIT in Italy
Italy Offices
Offices
Italy
• Most experienced local team
• Strong, integrated property management platform
German Residential
Residential
German
• Mastering the entire value-chain
• Sole integrated platform in European REITs
Hotels
• Unique competency to follow the Hotels operators strategies
Expertise 360° for a dynamic asset management policy
7
Foncière des Régions – Capital Markets Day – 20th November 2014
A long-standing shareholding and governance
Delfin
27.6%
Eiffage Construction – Vélizy Meudon
Public
44%
Group
Crédit Agricole
7.4%
Eiffage Construction – Vélizy Meudon
Group
Covea
Finance
13.4%
Assurances
du Crédit
Mutuel
7.6%
Management Committee
Best practice governance
Average of 45 years old and 10 years experience
at Foncière des Régions
•
Corporate governance in accordance with
AFEP MEDEF principles
3 committees:
o
Strategy and Investment
o
Audit
o
Appointment and Compensation
•
•
50% Independent Board Members
Separation of the functions of Chairman of the Board
(Jean Laurent) and CEO (Christophe Kullmann)
•
•
•
Christophe Kullmann: CEO, 13 years at FdR
Olivier Estève: Deputy CEO, 12 years at FdR
Aldo Mazzocco: Deputy CEO, CEO Beni Stabili, 7 years at FdR
•
•
•
•
•
•
Marjolaine Alquier: Head of Audit and Internal Control, 11 years at FdR
Thierry Beaudemoulin: CEO of Immeo and FDL, 8 years at FdR
Yves Marque: COO, 7 years at FdR
Tugdual Millet: CFO, 12 years at FdR
Dominique Ozanne: CEO FDM, 11 years at FdR
Philippe Le Trung: Head of Corporate Development & Communication,
6 years at FdR
Support for the Group’s development and strategy
8
Foncière des Régions – Capital Markets Day – 20th November 2014
Qualitative transformation of portfolio
2011
Group Share
H1 2014
44%
20%
+120%
Green Offices1
17% of
portfolio
8.5% of
portfolio
+100%
German
Residential2
10% of
portfolio
2% of
portfolio
Thales – Vélizy Meudon
-80%
Logistics2
85% of
portfolio
+€700 m
Portfolio on
our promising markets2
Focus
91% of
portfolio
Quality
Leverage
2
9
Foncière des Régions – Capital Markets Day – 20th November 2014
1 France
Portfolio at end-June 2014 post acquisitions
and disposals signed in Q3
Improved financial profile
Group Share
H1 2014
Net debt
€4.8 bn
LTV
46.2%
ICR
2.8
vs 2.5 in 2011
Cost of debt
3.5%
vs 4.2% in 2011
Average maturity
4.2 years
S&P rating
BBB- Stable outlook
vs 47.1% in 2011
vs 3.3 years in 2011
since Sept. 2012
Improvement of the debt profile
Investor mortgages
17%
2011
Bank
mortgages 61%
Investor mortgages 1%
(-8 pts vs H1 2014)
Bonds 13%
Corporate credit
facilities 9%
Bank
mortgages 36%
Bonds 40%
(+7 pts vs H1 2014)
H1 20141
Corporate credit facilities 23%
A secured and diversified debt profile offering flexibility
10
Foncière des Régions – Capital Markets Day – 20th November 2014
1
Post bond issue and Imser refinancing
1 – Strategy of Foncière des Régions
Cisco – Issy les Moulineaux
-
Our strategic positioning
-
Our Real Estate policy
-
Our objectives
Portfolio
Promising markets
France Offices: the success of key locations
€4.1 bn in assets
group share
96.2% occupancy
rate
€4.7bn (100%)
€4.1bn (GS)
5.4 years
of firm lease
maturity
Our positioning
Key accounts
Qualitative locations
1st
87% in Paris,
ring and
in major regional cities
Competitive rents
(250 – 350 €/m²)
The success of the partnership model
12
Foncière des Régions – Capital Markets Day – 20th November 2014
Promising markets
France Offices: the success of key locations
1
Portfolio
€4.7bn (100%)
€4.1bn (GS)
Illustration of strategic location: Vélizy-Meudon
• At the heart of the 2nd employment area and 3rd foreign companies
headquarters area of Paris Region
• 45,000 employees for 1,000 companies
• Strong consumption area: Vélizy 2 shopping center (18 million
visitors per year)
• Well-connected: Tramway L6 since 2014 with connexions to the
metro lines and RER; 15’ road to Paris and 20’ to Orly Airport
• Pioneer in Vélizy-Meudon in 2003
A strategic location for Foncière des Régions
• 6 operations between 2003 and 2014: 163,000 m² of assets
• €375 million and 9% of France Offices portfolio Group Share (€670 million at 100%)
13
Foncière des Régions – Capital Markets Day – 20th November 2014
Portfolio
Promising markets
France Offices: the success of key locations
€4.7bn (100%)
€4.1bn (GS)
Follow the ongoing expansion of the Vélizy-Meudon area
2003
….
2006
….
2008
58,000 m²
104,000 m²
….
2011
….
10,000 m²
2014
….
46,400 m²
36,000 m²
• 46,400 m², €192 million investments (€96 million GS), 15% value creation
November 2014: delivery of New Vélizy
2015: delivery of Campus Eiffage
• 9-year firm lease with Thales at 250€/m²
• 23,000 m², €106 million investments (€53 million GS)
• 12-year firm lease with Eiffage at €270/m²
• 13,100 m², €68 million investments (€34 million GS)
2016: extension for Dassault Systèmes
• New 10-year firm lease for the whole campus (69,300 m²) at delivery
More to come with 90,000 m² of building permissions, including Canopée, Opale, etc.
14
Foncière des Régions – Capital Markets Day – 20th November 2014
Promising markets
France Offices: the success of key locations
2
Portfolio
€4.7bn (100%)
€4.1bn (GS)
Illustration of strategic location: Lyon
• 2nd largest French Office market
Large market depth
Strong regional economy
5,8 million m²
€250-295 /m² prime rents
Competitor to Paris
5.2% vacancy rate
• Key location for Foncière des Régions
Silex I - Lyon
€153 million of assets (N°1 Regional Market for Foncière des Régions)
Mainly Orange and EDF sales and leaseback
• 2016: delivery of Silex I (10,600 m²)
€47 million project, target rent of 280€/m²
In La Part-Dieu: largest business district in Lyon (1 million m² of Offices), 3% vacancy rate
• 2018: delivery of Silex II (30,700 m²)
Silex I - Lyon
Value creation potential via an active asset management policy
15
Foncière des Régions – Capital Markets Day – 20th November 2014
Portfolio
Promising markets
France Offices: the success of key locations
€4.7bn (100%)
€4.1bn (GS)
Active asset management strategy with developments
€1.3 bn development
pipeline
Turnkey developments
15 committed projects for €453m in
Paris/inner suburbs, Lyon and Marseilles
14 projects managed for €830m
New developments
Low letting risk
2/3 prelet on the committed pipeline
Restructurings
Strong risk-adjusted
profitability
Target yield > 7%
Value creation > 10%
Greencorner – St Denis
Bose – St Germain en Laye
High historical value creation in the development pipeline
16
Foncière des Régions – Capital Markets Day – 20th November 2014
Steel – Paris 16
Portfolio
Promising markets
France Offices: the success of key locations
€4.7bn (100%)
€4.1bn (GS)
Open to selective acquisitions in Paris / 1st ring
Acquisition in October of “Liberté et Coupole” complex in Charenton-le-Pont (38,000 m²)
• Good conditions: €162 million including duties (4,263 €/m²)
• New partnership: 9-year firm triple net lease with Natixis, 6.5% yield with no incentive
• Key location: strategic location for Natixis and the BPCE group
4’ walk to the metro line 8; close to major train stations; excellent road access
Gare de
Lyon
Gare d’
Austerlitz
Subsidiaries of
Group BPCE
Liberté &
Coupole
Liberté et Coupole – Charenton-le-Pont
Direct connection to Paris CBD
via metro line 8
17
Foncière des Régions – Capital Markets Day – 20th November 2014
Promising markets
Italian Offices: ongoing qualitative transformation
Portfolio
€4.1bn (100%)
€2.1bn (GS)
2 strategic priorities since acquisition
• 91% core assets vs 71% in 2008 through €1.4 billion transactions (acquisitions and disposals)
Transformation
of the portfolio
• Maintain high occupancy rate (95.3%1) and long firm maturity lease (6.7 years1)
• Best assets on the market (lettings around 500€/m² in H1 2014)
• Increase access to unsecured financing:
2013: convertible bonds
Transformation
of the debt profile
H1 2014: 2 bonds issues (€250 million² 5-year at 3.5% ; €350 million² 4-year at 4.125%)
• A new step with Imser refinancing in H2 2014: €500 million² bank loans with a 2.5% cost
Our investment policy
• Prime assets (successes of San Fedele and San Nicolao refurbishments)
Focus on the Milan market • New assets with competitive rents (Symbiosis)
• €223 million of investments in Milan since 2011
Capitalizing on a leadership position in Italy
18
Foncière des Régions – Capital Markets Day – 20th November 2014
1
Core portfolio
² At 100%
Portfolio
Promising markets
German Residential: acceleration of investments
€1.6 bn1 in assets
group share
€2.7bn1 (100%)
€1.6bn1 (GS)
957 €/m² of
average asset
value
97.9% occupancy
rate
A conviction since 2005
Economic cycle
different from Offices
A promising
market
A strong expertise on
residential property and
property management
Our investment policy: continue to focus on targeted locations (i.e. Berlin and Dresden)
gneisenaustr21
kurfürstendamm131
Wormser Strasse
10 years of property and asset management successes
19
Foncière des Régions – Capital Markets Day – 20th November 2014
1
Post acquisitions and disposals signed in Q3
Portfolio
Promising markets
Hotels/Service Sector: a leader in Europe
€0.8 bn in assets
group share
404 Hotels in
Europe
€3.2bn (100%)
€0.8bn (GS)
100% occupancy
rate
7.1 years of firm
maturity lease
• A conviction since 2005:
New strategy by Hotels
operators
A promising
market
Strong
profitability
• Exposure through Foncière des Murs:
Full control of Foncière des Régions: the limited partner, 1st shareholder at 28.3%
• Our investment policy:
Continue to reinforce our positioning in Hotels
Sofitel - Lyon
Pursue the European and brand diversifications
Monitor changes in strategy by the Hotels operators (management contracts)
Boost our leadership position in Europe
20
Foncière des Régions – Capital Markets Day – 20th November 2014
1 – Strategy of Foncière des Régions
New Vélizy – Vélizy Meudon
-
Our strategic positioning
-
Our Real Estate policy
-
Our objectives
Our objectives: quality and profitability
• A unique Partner and Key Accounts positioning
Offices in France and Italy
• High visibility of leasing revenues
• Qualitative dynamic via developments and selective acquisitions
• Integrated local German platform
German Residential
• Organic growth via indexation and property management
• Pursue acquisitions in Berlin and new markets
CB 21 – La Défense
• Positioning as market leader
Hotels
• Reinforcement in Hotels in Europe
• Seize opportunities from operators new strategies
• Secured profile
Debt profile
• 45% LTV policy
• Diversification of financing sources
Gneisenaustr21 - Berlin
A continuous active recycling strategy
22
Foncière des Régions – Capital Markets Day – 20th November 2014
Our objectives: quality and profitability
Resilience due to promising markets
Recurring Net
Income
Organic growth embedded
Quality of
cash-flows
Debt management
Active asset management policy
Net Asset Value
Strong development pipeline
Value creation
Acquisition policy
Attractive dividend policy (84% current payout – 5.8% dividend yield*)
23
Foncière des Régions – Capital Markets Day – 20th November 2014
* At a share price of 72€
Foncière des Régions
Capital Markets Day
German Residential Real Estate
Current State of the Market
20 November 2014
Table of Contents
German Residential RE - Current State of the Market
1
Key German Macro Trends
2
German Residential Real Estate
3
Snapshot Berlin
4
Snapshot Regulation
5
Summary & Q&A
25
2
Key German Macro Trends
1
GDP & CPI
1 German GDP
2 German CPI
GDP change (in %, CPI adjusted, qoq annualised & seasonally adjusted)
yoy
CPI change (in %, qoq annualised & not seasonally adjusted)
qoq
yoy
qoq
0,8
1,1
Source: destatis, Barkow Consulting
Source: destatis, Barkow Consulting
 German GDP growth turned negative in Q2
 CPI remains below target corridor
3
26
2014 Q3
2014 Q1
2013 Q3
2013 Q1
2012 Q3
2012 Q1
2011 Q3
2011 Q1
2010 Q3
2010 Q1
2009 Q3
2009 Q1
2008 Q3
0,8
2008 Q1
2014 Q1
2013 Q3
2013 Q1
2012 Q3
2012 Q1
2011 Q3
2011 Q1
2010 Q3
2010 Q1
2009 Q3
2009 Q1
2008 Q3
2008 Q1
-0,2
Key German Macro Trends
1
Inflation & Household Income
3 Development of Interest Rates
4 Development of German Household Income
5 Year SWAP Rate, in %
Change in disposable income, in %
In %
yoy
0,5
Source: Deutsche Bundesbank, Barkow Consulting
2014 Q1
2013 Q3
2013 Q1
2012 Q3
2012 Q1
2011 Q3
2011 Q1
2010 Q3
2010 Q1
2009 Q3
2009 Q1
2008 Q3
2008 Q1
2014 Q3
2014 Q1
2013 Q3
2013 Q1
2012 Q3
2012 Q1
2011 Q3
2011 Q1
2010 Q3
2010 Q1
2009 Q3
2009 Q1
2008 Q3
2008 Q1
0,5
Source: destatis, Barkow Consulting
 Interest rates at record lows
 Household income fairly steadily increasing
4
27
Key German Macro Trends
1
Business Confidence & Consumer Climate
5 Business Confidence
6 Consumer Climate
Net saldo of positive and negative, in %
Status
Quo
Net saldo of positive and negative, in %
Expectations
Status
Quo
Expectations
-0,7
5,8
-2,0
Source: ifo, Barkow Consulting
Source: OECD, Barkow Consulting
 Business expectations peaked at the end of 2013
 Consumer climate peaked at the beginning of 2014
5
28
2014 Q3
2014 Q1
2013 Q3
2013 Q1
2012 Q3
2012 Q1
2011 Q3
2011 Q1
2010 Q3
2010 Q1
2009 Q3
2009 Q1
2008 Q3
2008 Q1
2014 Q3
2014 Q1
2013 Q3
2013 Q1
2012 Q3
2012 Q1
2011 Q3
2011 Q1
2010 Q3
2010 Q1
2009 Q3
2009 Q1
2008 Q3
2008 Q1
-6,8
Key German Macro Trends
1
Real Estate Investment Market
7 Development of Real Estate Investments
8 Office Yields, Lending Costs & Yield Spread
In EUR bn
Resi
In %, ave prime office yield top 5 German cities, 5 year loan
2014 ytd
Com
RE
Yield
28%
Loan
Rate
Spread
68
15,00
72%
13,00
11,00
4.61
47
9,00
7,00
35
5,00
3,001.98
1,00+2.63
-1,00
Source: Atis Real, BNP Real Estate, CBRE, JLL, Barkow Consulting
2014 Q2
2013 Q3
2012 Q4
2012 Q1
2011 Q2
2010 Q3
2009 Q4
2009 Q1
2008 Q2
2007 Q3
2006 Q4
2006 Q1
2005 Q2
2004 Q3
2003 Q4
2003 Q1
2014 ytd
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
-3,00
Source: CBRE, Barkow Consulting ‘ Credit Benchmark Model‘
 Real Estate investment market to reach a post crisis high
 Real Estate carry trade at record high
6
29
German Residential Real Estate
2
Germany‘s Largest Cities in Context
9 Germany‘s Largest Cities vs. London
In m citizens
0,6
0,7
8.4
2013
1,0
2008
0.9m
1,4
7,5
1,7
London
Stuttgart
Frankfurt
Cologne
Munich
Hamburg
Berlin
3,4
Source: destatis, ONS, Barkow Consulting
 Germany’s Top 5 cities together are still a bit smaller than London
 London almost added a city like Cologne since 2008
7
30
2
10
German Residential Real Estate
Market Structure by Owner Group
German Housing Units by Owner Group
40.5m Units
Professional Owners
8.3m Units
Small Private Landlords
14.9m Units
Owner Occupiers
17.3m Units
Co-Operatives
2.1m units
1- & 2-Family Houses
4.5m Units
1- & 2-Family Houses
13.8m Units
Public Housing (Cities)
2.3m Units
Multi-Housing
10.5m Units
Multi-Housing
3.5m Units
Public Housing (Other)
0.3m Units
Com. Companies
3.2m Units
Churches/Foundations
0.3m Units
Source: destatis Zensus 2011, GDW, Barkow Consulting
 German housing market dominated by owner occupiers and private landlords
 Large parts of the market not (entirely) profit driven
8
31
German Residential Real Estate
2
Market Structure by Owner Group
11 German Housing Market by Owner Group
12 Fragmentation of the German Housing Market
Share of total housing units, in %
Comercial
Share of total housing units, in %
0,2%
Non
com
36,9%
0,7%
5,3%
6,6%
0,8%
5,6%
2,2%
1,0%
2,8%
42,6%
Source: destatis Zensus 2011, Barkow Consulting
Top 201-300
Top 101-200
Top 51-100
Top 11-50
Top 10
Listed Sector
Com Companies
Non Profit Org.
Public Housing
Co-operatives
Private Landlords
Owner Occupiers
2,8%
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
 Commercial housing sector is relatively small
 German housing market is extremely fragmented (and intransparent)
9
32
German Residential Real Estate
2
Market Structure by Owner Group
13 German Housing Market Top 10 Players
Aggregate portfolio of 10 largest German housing owners, in ‘000 units
14 Development of the Listed Housing Platform
Residential portfolios of listed RE Companies, in EURbn
CAGR
AGR
7.5%
7.5%
CAGR
10.7%
17,6
910
1 016
1 072
1 130
52,8
35,2
2011
2012
2013
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
2014
2010
2014
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
 Largest German housing players have grown substantially …
 … driven by stellar growth of listed players
10
33
German Residential Market
2
Home Ownership & Vacancy
15 German Home Ownership by State
16 German Housing Vacancy Rate by State
In % of housing stock
West
in % of housing stock
East
West
East
61%
45%
10,0%
4,5%
15%
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
Germany E
Germany W
Germany
Saxony
Saxony-Anhalt
Thuringia
M-W P
Saarland
Brandenburg
RP
BW
Bavaria
Hesse
NRW
Bremen
Lower Saxony
Berlin
S-H
Hamburg
Germany E
Germany W
Germany
Saarland
RP
Lower Saxony
BW
Bavaria
S-H
Hesse
Thuringia
Brandenburg
NRW
Saxony-Anhalt
Bremen
M-W P
Saxony
Hamburg
Berlin
1,6%
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
 German home ownership keeps rising, but stays low in international context
 Vacancy rates declining, huge difference between East and West
11
34
2
German Residential Real Estate
Housing Stock & New Supply
17 German Housing Stock
18 German Housing Construction
Housing units, in m
Housing units, in ‘000
40.9
603
38.4
215
159
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
34.2
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
 New construction is steadily increasing since 2009
 New construction still very low compared to historical average of 341k since 1991
12
35
2
German Residential Real Estate
Population & Migration
19 German Population
20 German Migration
Citizens, in m
Citziens, in ‘000
Out
of
Into
Net
Balance
1,226
81.8
80.8
Census
2011 …
798
80.3
428
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
79.8
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
 Net migration turned positive in 2010
 Net migration in 2013 at highest level since 1995
13
36
German Residential Market
2
Population Forecasts
21 Population Forecast
22 Population Forecast by State
In m
Historic
Hi
Change in population 2012 - 2030, in %
Mid
Lo
West
East
7%
80.8
-9%
Source: destatis, Barkow Consulting
Source: destatis, IW, Bertelsmann foundation, Barkow Consulting
 German population expected to shrink
 East suffering more than West
14
37
Germany
-19%
Saxony-Anh.
Thuringia
Meck W Pom
Saarland
Saxony
Brandenburg
NRW
Lower Saxony
Rhine.-Pal.
Hesse
Schl.-H.
Bad.-Württ.
Bremen
Berlin
Bavaria
2060
2055
2050
2045
2040
2035
2030
2025
2020
2015
2010
2005
2000
1995
1990
-20%
Hamburg
-3,6%
German Residential Market
2
Household Development
23 Average Household Size
24 Development of Households
In persons per household
2012
Change in number of households 2012 - 2030, in %
2030
3,5%
1,5%
2,1
1,9
West
Source: destatis, Barkow Consulting
1,9
1,8
East
2,0
-8,9%
1,9
Germany
West
East
Germany
Source: destatis, Barkow Consulting
 Average household size expected to shrink further
 Number of households expected to rise in West Germany
15
38
German Residential Real Estate
2
Future Demand & (Under-) Supply
25 Future Housing Demand by City
Net change 2012-2030, future housing demand in sqm, large cities, in %
26 Future Demand Gap
Average future demand vs. new construction 2012, in ‘000 housing units pa
10
Source: Bertelsmann foundation, IW, Barkow Consulting
Bremen
Essen
Dortmund
Stuttgart
Cologne
Frankfurt aM
Düsseldorf
Leipzig
Dresden
Hamburg
Munich
Berlin
Munich
Dresden
Leipzig
Hamburg
Frankfurt aM
Berlin
Düsseldorf
Stuttgart
Cologne
Bremen
Dortmund
Essen
15%
Source: Bertelsmann foundation, destatis, IW, Barkow Consulting
 Large cities expected to grow
 New construction does not keep up with population growth
16
39
German Residential Real Estate
2
Price & Rent & Price/Rent
27 German Housing Prices & Rents
28 German Housing Price/Rent-Multiple
Indexed to 100, existing flats
Price
Average house price/average rent, flats
Rent
115,6
New
Existing
25,6
25,4
113,3
99,5
23,3
20,8
20,5
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
18,3
Q1 2004
Q3 2004
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
Q1 2008
Q3 2008
Q1 2009
Q3 2009
Q1 2010
Q3 2010
Q1 2011
Q3 2011
Q1 2012
Q3 2012
Q1 2013
Q3 2013
Q1 2014
Q3 2014
Q1 2004
Q3 2004
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
Q1 2008
Q3 2008
Q1 2009
Q3 2009
Q1 2010
Q3 2010
Q1 2011
Q3 2011
Q1 2012
Q3 2012
Q1 2013
Q3 2013
Q1 2014
Q3 2014
90,2
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
 House prices started to rise after the crisis
 Valuation roughly in line with 10 year ago levels
17
40
German Residential Real Estate
2
Valuation Parameters
29 Cost of Financing a Flat
30 Price to Disposable Income
Indexed to 100
New
Average house price (flat) to disposable income per household
Existing
New
Existing
5,3
5,0
4,4
3,3
3,2
63,7
2,7
Source: destatis, Barkow Consulting ‚Credit Benchmark Model‚ Barkow Consulting
Q1 2004
Q3 2004
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
Q1 2008
Q3 2008
Q1 2009
Q3 2009
Q1 2010
Q3 2010
Q1 2011
Q3 2011
Q1 2012
Q3 2012
Q1 2013
Q3 2013
Q1 2014
Q3 2014
Q1 2004
Q3 2004
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
Q1 2008
Q3 2008
Q1 2009
Q3 2009
Q1 2010
Q3 2010
Q1 2011
Q3 2011
Q1 2012
Q3 2012
Q1 2013
Q3 2013
Q1 2014
Q3 2014
64,2
Source: destatis, empirica, Barkow Consulting
 Financing costs at record lows
 Price/Disposable Income ratio lower than 10 years ago
18
41
German Residential Real Estate
2
Top/Flop Cities by Price & Rent
31 Top Flop City by Price
32 Top Flop City by Rent
EUR/sqm
EUR/sqm/month
9,620
20.30
4,980
12.30
4,960
8,40
2,090
5.30
3,30
Berlin
480
Source: F+B, Barkow Consulting
7.30
4.20
Munich
630
Weißenfels
780
Berlin
4,20
980
Staßfurt
2 930
Munich
15.7
Source: F+B, Barkow Consulting
 Huge regional differences of price …
 … and rent levels
19
42
German Residential Real Estate
2
Top/Flop Cities by Population Growth & Disposable Income
33 Top Flop Cities by Population Growth
34 Top Flop Cities by Disposable Income
Change in population 2007-2013, adjusted for Zensus 2011, in %
Disposable income per capita, FY 2012, in EUR
German
Ave. 0 %
7%
German
Ave. 20,507
39 524
4%
26 718
17 601
15 782
-12%
Frankfurt am Main
Berlin
Hoyerswerda
Heilbronn
Baden-Baden
Berlin
Weimar
1
12
109
1
2
87
109
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
Source: Akselrod Consulting|Barkow Consulting 'German Resi Co Data Base'
 Berlin scores well on population growth
 Berlin does not score well on disposable income per capita
20
43
Snapshot Berlin
3
Ranking Results
35 Berlin Ranking Results
Rank No.
Rent
Level
Price
Level
Population
Growth
Disp.
Income
Disp. Inc.
Growth
Rank
131
102
12
87
74
Out of
507
507
115
109
109
Source: destatis F+B, Barkow Consulting
 Berlin price and rent level still moderate
 Berlin stands out on population growth, but ranks weak on disposable income
21
44
Snapshot Berlin
3
Berlin‘s Top Housing Players
36 Large Berlin Housing Owners
Housing units in % of total Berlin housing stock
Listed
Public
Top10: ca. 24%
Public vs. Listed
5,7%
41%
Westgrund
IMW
conwert
Buwog
S-IMMO
FDR
TAG
Dt Ann
GAGFAH
WBM
GESOBAU
Stadt & Land
HOWOGE
degewo
GEWOBAG
Dt Wohnen
59%
Source: Company data, Barkow Consulting
 Top 10 Berlin housing owners comprise ca. 24% of the market
 Public housing still a dominant factor in Berlin and larger than the combined listed
platform
22
45
Snapshot Berlin
3
Simplified Supply, Demand & Absorption Model
37 Population Growth & New Construction
Population pa growth in % of population, new construction pa in % of
housing stock
Pop
38 Net Absorption
In ‘000 housing units
Repl
Constr
2,37%
Pop
Total
50 000
40 000
1,81%
30 000
20 000
1,30%
0,62%
10 000
0
-10 000
0,36%
0,29%
-20 000
-30 000
-40 000
Source: Office for Statistics Berlin-Brandenburg, Barkow Consulting
-50 000
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-0,95%
Source: Office for Statistics Berlin-Brandenburg, Barkow Consulting
 Population growing faster than housing stock since 2004
 Net absorption of 155k housing units during the last 10 years
23
46
Snapshot Berlin
3
Rents & Rental Growth by District
39 Berlin Rents by District
40 Berlin Rental Growth by District
Market rent per 12/2013, in EUR/sqm/month
Market rent, CAGR 2009-2014
10,00
13%
8,02
6,61
8%
Berlin Ave
Spandau
Lichtenberg
SteglitzZehlendorf
TempelhofSchöneberg
Pankow
CharlottenburgWilmersdorf
Neukölln
FriedrichshainKreuzberg
Berlin Ave
Reinickendorf
TreptowKöpenick
Lichtenberg
Neukölln
TempelhofSchöneberg
Mitte
Source: JLL, CBRE, GSW, Barkow Consulting
Treptow-Köpenick
Source: JLL, CBRE, GSW, Barkow Consulting
SteglitzZehlendorf
Pankow
Mitte
CharlottenburgWilmersdorf
FriedrichshainKreuzberg
5%
 >30% difference in rental levels across districts
 Berlin Mitte with highest growth over the last five years
24
47
Snapshot Berlin
3
Prices & Vacancy by District
41 Berlin House Prices by District
42 Berlin Vacancy Rates by District
In % per 12/2013
In EUR/sqm per 12/2013
4,6%
3 462
3,6%
3,1%
2 474
Source: JLL, CBRE, GSW, Barkow Consulting
 Berlin Mitte > 2x the price level of Reinickendorf
 Relatively little variation in vacancy rates across districts
25
48
Berlin Ave
FriedrichshainKreuzberg
TempelhofSchöneberg
CharlottenburgWilmersdorf
Lichtenberg
Neukölln
Steglitz-Zehlendorf
Mitte
MarzahnHellersdorf
Spandau
Reinickendorf
Berlin Ave
Reinickendorf
Neukölln
TempelhofSchöneberg
SteglitzZehlendorf
Treptow-Köpenick
Source: JLL, CBRE, GSW, Barkow Consulting
Lichtenberg
Pankow
CharlottenburgWilmersdorf
FriedrichshainKreuzberg
Mitte
1 659
4
Snapshot Regulation
Rent Control - Existing Rental Contracts
43 Overview of Rent Control
What?
44 Rent Control by Federal State
• Rent increase limited to 15%
in three years (old contracts)
State
When?
Where?
How Long?
Conditions
Source: Draft Law, Barkow Consultin
• After introducion, 05/2013
the earliest
• Focus on ‚Housing Hot Spots‘
• Five years max
• State needs to take
improvement measures
Annoucement
Start
Communities
Bayern
17/04/2013
15/05/2013
1 (Munich)
Berlin
07/05/2013
19/05/2013
1 (Berlin)
Bayern
23/07/2013
01/08/2013
89
Hamburg
30/07/2013
01/09/2013
1 (Hamburg)
NRW
26/05/2014
01/06/2014
59
Brandenburg
08/07/2014
01/09/2014
30
Bremen
13/08/2014
01/09/2014
1 (Bremen)
Hesse
15/09/2014
01/10/2014
30
Source: Press Releases, Barkow Consulting
 Rent increase limited to 15% in three years in ‘Hot Housing Markets’
 Rent control already introduced in 7 federal states, only one of which in the East so far
26
49
4
45
Snapshot Regulation
Rental Cap - New Rental Contracts
What?
• Rent increase limited to 10% above comparable rent
(new contract)
When?
• Introduction during 2015 likely
Where?
How Long?
• Focus on ‚Housing Hot Spots‘
• Not applicable to new construction
• Five years max (likely)
Conditions?
• State needs to take improvement measures
Open Issues
• Comparable rent
• Substantial refurbishement vs. new construction
• Definition of ‚Housing Hot Spots‘
 Rent increases capped at 10% above comparable rent
 Introduction likely in 2015
27
50
5
Summary & Q&A
Your Questions, Our Answers
Macro
46
Market Structure
Valuation
Demographics
• German growth momentum slowing
• Interest rates as low as it gets?
• This market IS different (home ownership,
fragmenation, federal structure, regional diversity etc.)
• Parameters do not point to general overvaluation
• Selected large cities might be different
• Recent migration compensates low birth rate
• Population expected to shrink long term
• Housing demand in large cities still to rise
Berlin
• Ranks well on population growth and rent level (still
low)
• Does not rank well on disp. income and income growth
Regulation
• Recent regulation limits future rental increases
• ‚Housing Hot Spots‘ will be effected (including Berlin )
 Questions
 Answers
28
51
Please Contact
Peter Barkow
Barkow Consulting GmbH
Rethelstr. 38
40237 Düsseldorf
PH: +49 (0) 211 17 17 256
PB@BarkowConsulting.com
www.BarkowConsulting.com
DISCLAIMER
This presentation was prepared by Barkow Consulting GmbH (“The Author”) as a basis for discussion of certain financial issues
described herein. This presentation may not be reproduced, summarized or disclosed, in whole or in part, without the prior
written authorization of The Author, and by accepting this presentation, you hereby agree to be bound by the restrictions
contained herein.
This presentation is based on publicly available data which has not been independently verified by The Author. Any estimates
and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be
correct. Neither The Author, any of its affiliates, or any of its direct or indirect shareholders, or any of its or their respective
members, consultants, employees or agents provides any guarantee or warranty (express or implied) or assumes any
responsibility with respect to the authenticity, origin, validity, accuracy or completeness of the information and data contained
herein or assumes any obligation for damages, losses or costs (including, without limitation, any direct or consequential losses)
resulting from any errors or omissions in this presentation.
The economic valuations contained in this presentation are necessarily based on current market conditions, which may change
significantly over a short period of time. Changes and events occurring after the date hereof may, therefore, affect the validity of
the conclusions contained in this presentation and The Author assumes no obligation to update and /or revise this presentation
or the information and data upon which it was based.
Rheinstraße - Berlin
Capital Markets
Day
20th November 2014
A winning strategy
in German
Residential
Opelnerstr. 34 - Berlin
Nollendorfstraße. - Berlin
3 – A winning strategy in German Residential
Süstern - Berlin
-
A strong conviction since 2005
-
Property management: capturing organic growth
-
A unique asset management capacity
-
Outlook: still a lot to capture
Foncière des Régions German Residential portfolio
€2.7 billion portfolio1
€1.6 billion Group Share 1
Offices
65%
€ 9.5 bn
Group
Share
Non strategic
9%1
German Residential 17%1
Foncière des Régions operates in German Residential through its
subsidiary Immeo (60.9%) alongside some long-term investment partners
Hotels/Service
sector 9%
3
56
Foncière des Régions – Capital Markets Day – 20th November 2014
1Post
operations signed in Q3
A conviction since 2005
What we thought in 2005
Today, our choice to pursue German
Residential investments has been
validated by our track record
Since its creation Foncière des Régions has always
been in the residential market
Strong integrated platform: Immeo
German economy: sound fundamentals; growth in
purchasing power and household consumption
Germany has proved to be very strong economically
and has improved demographic trends
A progressive change in ownership structure
(externalization and institutionalization)
One of the best performing
property markets in Europe
Strong track record
An attractive risk / return profile
LFL rents/year:
Still a lot of upside to capture
4
57
Foncière des Régions – Capital Markets Day – 20th November 2014
+2% in Rhine-Ruhr since 2005
+3% in Berlin since 2011
A long track-record in German Residential
A 3-step portfolio creation
2005
2006
2007
2008
❶ Acquisition
2009
2010
2012
2011
❷ Organic growth
2008 - 2011:
2011:
Acquisition of 5,000 residential
units in Rhine-Ruhr
Business plan implementation: value
creation and increase in profits
Beginning of geographical diversification
Acquisition of 40,000 additional residential
units in Rhine-Ruhr
Integration of the platform Immeo Wohnen
•
•
•
•
Decrease in vacancy rate
Increase in rents
Portfolio modernization
Targeted sales of mature assets
•
11,497 units acquired from 2011 to 2014 in Berlin,
Dresden and Leipzig
2013-2014:
Increase in Fonciere des Régions German exposure
Fonciere des Régions directly owns 60.9% of Immeo AG
2007:
Acquisition of 2,270 residential units
in Datteln (Rhine-Ruhr)
Duisburg
Foncière des Régions – Capital Markets Day – 20th November 2014
2014
❸ New markets
2005:
2006:
5
58
2013
Essen
Our portfolio: quality and growth
Growth and qualitative repositioning since 2012
End of September 20141
End of 2012
Non-core
(18%)
Non-core
(37%)
Portfolio of
€0.8 billion
GS
Berlin / Dresden
(10%)
Portfolio of
€1.6 billion
GS
Core
Rhine-Ruhr
(53%)
Core
Rhine-Ruhr
(47%)
Berlin / Dresden
(35%)
German Residential exposure
End of September 20141
(€m and %)
• 40,438 residential units (773 commercial units)
• 2.7 million m²
• 5.4€/m² average rent
• 97.9% occupancy rate
• €2.7 bn value (€1.6 bn GS)
• 6.5% average yield
other RhineRuhr
397,38
15%
Oberhausen
137,1
5%
Mülheim
182,3
7%
Essen
506,4
19%
6
59
Foncière des Régions – Capital Markets Day – 20th November 2014
Portfolio of
€2.7 billion
total share
Berlin /
Dresden
960,53
35%
Duisburg
513,8
19%
1Post
operations signed in Q3
Our portfolio: quality and growth
Total share
Rhine-Ruhr: held & managed portfolio with disposal potential
2006-2014: delivering returns
• Strong cash-flows
• Transformation of the portfolio:
• c. 20,000 units or €1.0 billion of assets sold including €740 million since 2011
• c. 10% average margin on acquisition price
Essen
Rhine-Ruhr portfolio now:
•
€1.7 billion1 in assets
•
29,577 units1 ; 96.6% occupancy rate
•
886€/m² average value
•
5.0€/m² average rent
•
c. 10% rent reversion potential in the portfolio
•
Subsidised units:
o
10% of the portfolio
o
4.4€/m² average rent vs 5.0€/m² market rent
Duisburg
Solid cash-flows and good liquidity
7
60
Foncière des Régions – Capital Markets Day – 20th November 2014
1Post
operations signed in Q3
Our portfolio: quality and growth
Total share
Berlin: a prime portfolio
•
€760 million1 in assets ; 98.0% occupancy rate
•
7,488 units1 ; 1,333€/m² average value
•
6.4€/m² average rent
•
> 25% rent reversion potential in the portfolio
•
73% were built < 1945
•
Well-suited for privatizations
A well-located Berlin portfolio
Gneisenaustraße - Berlin
Source: Immobilienscout24
A unique inner city Berlin residential portfolio built up in 3 years
8
61
Foncière des Régions – Capital Markets Day – 20th November 2014
1Post
operations signed in Q3
Strong fundamentals in our markets
2 complementary markets
High return and stable market
• Largest economic region in Germany
Rhine Ruhr
• Growth in households
• Low homeownership
• Stable market and high yields
Oppenlern Straße. - Berlin
• Liquid market
High potential market driven by positive economic and demographic trends
• Largest city in Germany
Berlin
• Low unemployment rate; increase in purchasing power
• Growth in population and household
• Lack of supply
• Increase in rents and value
• Pursue acquisitions in Berlin and other targeted locations
Our
strategy
• Focus on high-quality assets in performing sub-markets
• Organic growth and privatization potential
9
62
Foncière des Régions – Capital Markets Day – 20th November 2014
Essen
Dynamic investment markets
Berlin: growth potential
Rhine – Ruhr: an attractive risk-profitability profile
• Preferred location for residential investments
• A liquid market for block transactions
• Cap rates have just begun to decrease
• Growth in residential investment volume in Essen, Duisburg and
• Net yields: 4.25% - 6.00%
• Further capital growth to come
Oberhausen over the past few years
• Net yields: 5.75% - 6.75%
• Capital growth prospect for selective locations (Essen, etc.)
German Residential investment volume
2005 – 2014 in €billion
German Residential investments by origins
20
18
Other;
2%
16
14
MiddleEast; 1%
12
North
America;
2%
10
8
Germany
; 79%
6
Europe;
16%
4
2
0
9 month investments
10-year average
10
63
Foncière des Régions – Capital Markets Day – 20th November 2014
Source: BNP Paribas Real Estate
A strong platform: Immeo
Foncière des Régions development in Germany supported by a strong local platform
• 353 employees
• A close presence in the local markets : Oberhausen ; Berlin and Dresden
• Fully integrated skills :
• Asset management, sales, property management, technical management
• Support functions: financing, accounting, controlling, IT …
• Additional activity of Management for third parties :
• 10,000 residential units
• 24 hotels
• A very well known brand in its market
A stable and experienced management team
• Thierry Beaudemoulin, 43: CEO, 20 years in Residential, 9 at Foncière des Régions
• Dr. Daniel Frey, 47: Vice CEO and CFO, 17 years in Residential, 10 at Foncière des Régions
• Walter Ziegler, 58: COO, over 25 years in Residential, 8 at Foncière des Régions
• Marcus Bartenstein, 36: CIO, 12 years in Residential, 9 at Foncière des Régions
11
64
Foncière des Régions – Capital Markets Day – 20th November 2014
Main office in Oberhausen
All business expertise integrated
Property management
•
•
•
•
Increase rents
Reduce vacancy
Optimise operating costs
Implement modernization plans
Asset Management
Financial management
• Debt profile optimization
• Financial cost management
Profitability
and
value creation
• Follow up on markets opportunities
• Make acquisitions in high-potential
markets
• Sell mature assets
Our businesses are dedicated to profitability and value creation
12
65
Foncière des Régions – Capital Markets Day – 20th November 2014
High-quality financial indicators
Total share
Good operating performance
•
Epra operating margin of 72.1% in H1 2014 vs 69.6% in 2008 (excluding sales revenues)
•
Net Recurring Income / Epra NAV: 6.4% in H1 2014
A secured financial profile
•
LTV: 48.2%
•
ICR: 2.4x
•
Average cost of debt: 3.5%
6.4 years of average debt maturity
222
287
254
236
173
•
Most recent financing: €145 million at 2% on 10 years
•
85% of debt fixed or hedged
•
Average hedging maturity : 6.7 years
126
78
2014
27
38
2015
2016
2017
2018
2019
2020
2021
2022
Oppelner Straße - Berlin
Strengthening our strong financial profile
13
66
Foncière des Régions – Capital Markets Day – 20th November 2014
** Based on annualized Net Recurring Income and Epra NAV at end-2013
A strong track record: Rhine-Ruhr
Total share
Acceleration in like-for-like value growth
CAGR: +1.8%
Regular decrease in vacancy rate
886
16,0%
14,0%
12,0%
10,0%
8,0%
6,0%
4,0%
2,0%
0,0%
872
CAGR: +0.6%
852
836
825
2008
841
824
2009
2010
2011
2012
2013
Non core
Core
2008
June
2014
2009
2010
2011
vacancy rate financial non core
Appraisal value: like-for-like growth cacthing up since 2011
Performing well in a stable market
Foncière des Régions – Capital Markets Day – 20th November 2014
2013
30/06/2014
core
Rents: like-for-like increase of +1.6% per year since 2008
Duisburg
14
67
2012
A strong track record: Berlin
Case study 1: acquisition in 2011 (1,641 units)
Increase in rents and value
•
Increase in rents: + 14%
•
Vacancy reduction: -68% (up to 1.3%)
•
Value/m²: +31%
•
Ca. 50% due to rent increase and 50% due to yields decrease
Wormser Straße - Berlin
Still a lot to capture
8.1€/m²
6.7€/m²
June-2014
15
68
1,750€/m²
1,349€/m²
Market rent
Foncière des Régions – Capital Markets Day – 20th November 2014
June-2014
Value for
privatization
Kurfürstendamm - Berlin
A strong track record: Berlin
Case study 2: acquisition in 2012 (697 units)
Increase in rents and value
•
Increase in rents: +4%
•
Vacancy reduction: -43% (up to 3.3%)
•
Value/m²: +19%
•
Compression in cap rate
Pistoriusstraße - Berlin
Still a lot to capture
7.5€/m²
5.8€/m²
June-2014
16
69
1,500€/m²
1,157€/m²
Market rent
Foncière des Régions – Capital Markets Day – 20th November 2014
June-2014
Value for
privatization
Pistoriusstraße - Berlin
3 – A winning strategy in German Residential
Fregestr. - Berlin
-
A strong conviction since 2005
-
Property management: capturing organic growth
-
A unique asset management capacity
-
Outlook: still a lot to capture
Property management
Immeo: a long track record
A long track record in Property Management
• Immeo as of today:
• 100,000 people living in our apartments
• 55,000 lease contracts under management thereof 10,000 for third parties (German and European funds)
• 5,500 new lease contracts per year
A close involvement in the local markets
• 35 Immeo Service Centers in Rhine-Ruhr region and Berlin, Dresden and Leipzig
An experienced team and a structured organization
• 1,000,000 calls per year
• 12,000 contacts with clients for re-letting per year
• 8,000 client contacts for sales per year
Rhine-Ruhr Region
1 main office in
Oberhausen
26 local offices in 12
cities
18
71
Foncière des Régions – Capital Markets Day – 20th November 2014
Berlin
5 local offices
Leipzig
1 local office
Dresden
3 local offices
Property management
Immeo: a well-known brand
1
Service quality
•
Structured process
•
Performing tools
2
•
Involvement in local life and dynamic communication policy
Partnership with social and welfare associations, cultural events and
art exhibitions, schools …
•
Involvement in residential projects for handicapped people
•
Permanent Internet presence with actual letting offers
•
Radio and panels advertising
Increase our brand recognition in our markets
19
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Foncière des Régions – Capital Markets Day – 20th November 2014
Property management
Immeo: structured marketing processes
❶ Tenant
prospection
❷ Letting
process
❸ Customer
relationship
❶ Tenant prospecting on
• WEB (external sources)
• www.immeo.de
• Wallpapers
• Flashcodes on the buildings
• Local newspapers
• Radio
• Viral marketing
• Earlier Immeo tenant
❷ Letting Process
• Visitation of a flat
• Schufa consultation
• Signature of the contract
• Tenant-handbook
❸ Customer Relationship
• Local offices
• 24h-Callcenter
• Emergency call (365 days p.a.)
• Personal contact persons
• Online-Service
• FAQs
• “Streetworkers ”
20
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Foncière des Régions – Capital Markets Day – 20th November 2014
Property management
Immeo: best-of-class IT capabilities
Budget
Supplier Relationship Management
•
Web based supplier accounting system
“Handwerkerkopplung”
Portfolio Management tool
•
Web based supplier marketplace
•
Web based announcement “ARRIBA“
MyPort
Geo-Information-System
Marketing / tenant prospection
Protection company for
general creditworthiness
21
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Foncière des Régions – Capital Markets Day – 20th November 2014
Property management
OPEX / CAPEX policy
Total share
• Good quality and well maintained portfolio: low OPEX requirements
• Rhine-Ruhr: CAPEX for modernization
• Berlin (since 2011): extending CAPEX for organic growth
CAPEX/OPEX
in €/m²
CAPEX/OPEX
in € million
16,0
45
14,0
40
12,0
35
30
10,0
25
8,0
20
6,0
15
4,0
10
2,0
5
0,0
0
2007
2008
2009
CAPEX (€m)
2010
OPEX (€m)
2011
2012
OPEX €/m²
2013
Fc. 2014
CAPEX €/m²
Dynamic CAPEX policy to enhance value creation
22
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Foncière des Régions – Capital Markets Day – 20th November 2014
Property management
A strong track record: Rhine-Ruhr
High value creation developement project: Essen-Margarethenhöhe
• Creation of 15 new apartments from 53 old garages
• Project started in 2013, completion in December 2015
• Status as of today: 9 apts. sold; 2 apartments under reservation
• Total amount of modernizations: €3.3 million
• Net margin after cost: 15%
23
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Foncière des Régions – Capital Markets Day – 20th November 2014
Property management
A strong track record: Berlin
Example of a successful track record: Lüderitzstr. 62-64; Müllerstr. 116, 117; Sansibarstr. 52-64
• €395,000 CAPEX
• façade and staircase
BEFORE
• 18 single flats modernization
• 26% profitability on CAPEX:
• Significant improvement in the vacancy rate
• +16% increase in the rent/m²
Rent €/m²/month
97.9%
6,00
5,90
5,80
5,70
AFTER
5,60
5,50
5,40
5,30
89.7%
5,20
5,10
2012-10
2012-11
2012-12
2013-01
2013-02
2013-03
2013-04
2013-05
2013-06
2013-07
2013-08
2013-09
2013-10
2013-11
2013-12
2014-01
2014-02
2014-03
2014-04
2014-05
2014-06
2014-07
2014-08
2014-09
5,00
Occupancy rate
24
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Foncière des Régions – Capital Markets Day – 20th November 2014
3 – A winning strategy in German Residential
Südstern - Berlin
-
A strong conviction since 2005
-
Property management: capturing organic growth
-
A unique asset management capacity
-
Outlook: still a lot to capture
Asset management
A unique asset management capacity
• Follow up on markets opportunities
• Sell mature assets
The tasks
• Acquisitions on high potential markets
• 6 Asset managers located in Oberhausen and Berlin:
Big block sales > €10 million
Investment
The team
• 1 sales department: 23 employees
Block sales < €10 million
Block sales back office
Privatizations and specific sales
€4.5 billion acquisitions and disposals since 2005
26
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Foncière des Régions – Capital Markets Day – 20th November 2014
Asset management
A unique asset management capacity
Acquisitions
guidelines
•
Growing cities in demography and economy
•
Inner cities locations
•
Good technical conditions
•
Rent and value creation potential
•
Net yield > 5% after costs & CAPEX
•
IRR > 11%
•
Liquid products
•
Ability to quickly achieve complex deals:
Our strengths
•
Experience in European share deals
•
5-10 deals closed per years / 1,000 received per year
•
Good network allowing us to enter off-market transactions
•
Strong support from our financial partners (insurance
companies and lending banks)
27
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Foncière des Régions – Capital Markets Day – 20th November 2014
Asset management
A unique asset management capacity
•
Pre-identification of a non-core portfolio:
•
Sales
guidelines
potential for privatizations: condominium, plot of lands…
•
•
Our strengths
non strategic assets benefiting from a high value creation
mature assets in several cities for block sales
Experienced sales department managing the block sales back
office and the sales unit by unit
•
Extensive knowledge of the key investors in our markets
•
High-performance asset management tools to rapidly create a
complete data room
28
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Foncière des Régions – Capital Markets Day – 20th November 2014
Asset management
Our acquisition policy and process
Transaction A
in 2011
•
€80 million transaction value
•
off-market transaction with direct contact to the seller
•
Seller: Austrian company
•
Winning cards:
ability to takeover 3 Austrian companies
complex refinancing situation with 3 existing banks
6 weeks due diligence to finalize the transaction
Positioning vs
Foncière des
Régions acquisition
criteria
•
Growing cities
Berlin

i
•
Inner cities locations
90%

i
•
Good technical conditions
Yes

i
•
Reversionary potential
+40%

i
•
Net yield > 5% after costs & CAPEX
Yes

i
•
IRR > 11%
Yes

i
•
Liquid products for privatization
100%

i
Südstern
- Berlin
29
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Foncière des Régions – Capital Markets Day – 20th November 2014
Fregestraße - Berlin
Asset management
Our acquisition policy and process
Transaction B
in 2012
•
€46 million transaction value
•
Off-market transaction shared with a partner
•
Seller: trustee on behalf of Danish banks
•
Winning cards :
convince the existing banks to avoid the filing for insolvency
complex acquisition structure
6 weeks due diligence to finalize the transaction
Positioning vs
Foncière des
Régions acquisition
criteria
•
Growing cities
Berlin

i
•
Inner cities locations
90%

i
•
Good technical conditions
mixed
•
Reversionary potential
+30%

i
•
Net yield > 5% after costs & CAPEX
Yes

i
•
IRR > 11%
Yes

i
•
Liquid products for privatization
100%

i
Neumeisterstraße
- Berlin
30
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Foncière des Régions – Capital Markets Day – 20th November 2014
Palisadenstraße - Berlin
Asset management
Our acquisition policy and process
Transaction C
in 2014
•
€240 million transaction value
•
Off-market transaction with only one competitor
•
Seller: Danish institutional investors
•
Winning cards :
binding offer within 1 week (subject to DD)
proposal of an optimized transaction structure
no financing conditions
6 weeks due diligence to finalize the transaction
Positioning vs
Foncière des
Régions acquisition
criteria
•
Growing cities
Berlin, Dresden 
i
•
Inner cities locations
80%

i
•
Good technical conditions
Yes

i
•
Reversionary potential
+25%

i
•
Net yield > 5% after costs & CAPEX
Yes

i
•
IRR > 11%
Yes

i
•
Liquid products for privatization
50%
Zaunkönigweg - Berlin
31
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Foncière des Régions – Capital Markets Day – 20th November 2014
Freiberger Straße - Berlin
Asset management
Our acquisition policy and process
Transaction D
in 2014
•
1,925 units with €180 million transaction value
•
Off-market transaction shared with a partner
•
Seller: North-American investors
•
Winning cards :
restructuring of a blocked exclusivity process of another investor
within 2 weeks proposal of an optimized transaction structure in sharing portfolio
8 weeks due diligence to finalize the transaction
Positioning vs
Foncière des
Régions acquisition
criteria
•
Growing cities
Berlin

i
•
Inner cities locations
100%

i
•
Good technical conditions
Yes

i
•
Reversionary potential
+30%

i
•
Net yield > 5% after costs & CAPEX
Yes

i
•
IRR > 11%
Yes

i
•
Liquid products for privatization
80%

i
Straussberger Platz - Berlin
32
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Foncière des Régions – Capital Markets Day – 20th November 2014
Lietzenburger Straße - Berlin
3 – A winning strategy in German Residential
kurfürstendamm - Berlin
-
A strong conviction since 2005
-
Property management: capturing organic growth
-
A unique asset management capacity
-
Outlook: still a lot to capture
Outlook
Well-positioned to seize the growth potential
A still
promising
market
• Organic growth through indexation and active property management
• Investments in markets with positive economic and demographic trends and limited supply
Liebenwalder str. - Berlin
Strong
financial
performances
• Continue to improve operating performances
• Pursue the reduction of the cost of debt
• Good ROE
Qualitative
recycling
strategy
• Pursue developments in Berlin and new markets with a high growth potential
• Disposal of non core assets
• Objective: portfolio mainly in Berlin and new markets
Our strategy: quality and growth
34
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Foncière des Régions – Capital Markets Day – 20th November 2014
Capital Markets
Day
20th November 2014
Sofitel - Lyon
A leader in Hotel
investments
B&B Potsdamerstr. - Berlin
Sofitel - Marseille
4 – A leader in Hotel investments
- A conviction since 2005
- Hotel industry market: strong fundamentals
- Case studies: B&B partnership
- Foncière des Régions Hotel strategy
Sofitel - Marseille
Foncière des Régions Hotels portfolio
Offices
65%
€9.5 bn
Group
Share
German Residential 17%1
Non strategic
9%1
Hotels/Service
sector 9%
Hotels
Service
Sector
Total
Portfolio under management
3.1
0.8
3.9
Consolidated portfolio + Portfolio of JVs
Consolidated portfolio
2.1
0.8
2.9
Consolidated portfolio
Foncière des Régions Group Share
0.6
0.2
0.8
Economic exposure with 28.3% ownership, alongside
€ billion
long-term investment partners
A €2.1 billion Hotels portfolio and €3.1 billion under management
3
90
Foncière des Régions – Capital Markets Day – 20th November 2014
1Post
operations signed in Q3
Hotels: a conviction since 2005
Foncière des Régions convictions in 2005
• A new market with large potential
• Lack of institutional investors
• Changes in the strategy of Hotel operators: fits our partnership skills
• Triple net leases and high motivation of operators to invest in their Hotels
A pioneer in Hotel investments
2005-2006: first sale & leaseback with Accor, Pierre & Vacances and Club Med
€1.7 billion under management at end-2006
2010: New deal with Accor
2011: Expand alongside Accor in Belgium. New partnership with Louvre Hotel Group
€2.4 billion under management at end-2011
2012: New partnership with B&B
H1 2014: New partnership with NH Hotels Group in Amsterdam
€3.1 billion under management at june-2014
Sofitel - Lyon
4
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Foncière des Régions – Capital Markets Day – 20th November 2014
Hotels: a long-standing partner
Foncière des Régions partnership strategy applied to Hotels
• 1st lessor of large Hotels operators
• Triple net asset by asset leases (no master lease), adapted to our partners needs (fixed or variable)
• Ability to support our partners on their CAPEX needs: asset and property management, developments …
A stable and experienced management
• Dominique Ozanne, 36: CEO of FDM, 7 years in Hotel investments, 11 years at Foncière des Régions
• Gaël Le Lay, 42: Deputy CEO, 20 years in Hotel investments, 1.5 years at Foncière des Régions
• Cécile Boyer, 37: COO, 3 years in Hotel investments, 8 years at Foncière des Régions
• Elsa Tobelem, 33: CIO, 8 years in Hotel investments, 8 years at Foncière des Régions
B&B - Lens
5
92
Foncière des Régions – Capital Markets Day – 20th November 2014
A leader of Hotel investments in Europe
404 Hotels managed (42,871 rooms)
€3.1 billion of Hotels under management, 6.3% average yield
100% occupancy rate since acquisition, 6.3 years average firm lease term
41% of the portfolio in Paris Region
8%
A key partner of Accor
2%
6%
16%
2%
5%
Paris
Ile-de-France
Province
Asset value
by area
Accor
23%
B&B
Asset value
by operator
Germany
Belgium
Louvre Hotels
Netherlands
44%
NH
25%
69%
Focus on Economic and Midscale
5%
Economic
Budget
34%
Midscale
Asset value
by category
Upscale
61%
Sofitel - Marseille
6
93
Foncière des Régions – Capital Markets Day –
20th
November 2014
A solid track record
Total share
Strong operating performances
• High operating margin of 94.2%1
• Strong resilience in rents and appraisal values
Like-for-like change for Accor portfolios bought in 2005/2006
(€1.4 billion and 67% of Hotels value owned by FDM)
140
130
117,7
116,3
120
110,6
111,9
110
100,0
100
116,1
104,8
122,4
116,5
118,5
2012
2013
123,5
CAGR in values: +2.9%
112,7
113,9
106,3
121,8
CAGR in rents: +2.0%
115,9
107,1
100,0
90
2006
2007
2008
2009
Rent
2010
2011
Appraisal value
S1 2014
• 9 month 2014: stability of our rents on like-for-like basis
H1 2014: Negative impact of the economic environment and of the increase of the VAT rate in France
Slight improvement since August
Rental growth has outperformed GDP and inflation since 2005
7
94
Foncière des Régions – Capital Markets Day – 20th November 2014
1
FDM margin based on Epra cost ratio
4 – A leader in Hotel investments
- A conviction since 2005
- Hotel industry market: strong fundamentals
- Case studies: B&B partnership
- Foncière des Régions Hotel strategy
Mercure Boulogne
European Hotels market: a sustained demand
Strong structural fundamentals
• Europe: most popular tourist destination with consistent growth
560 million international tourist arrivals in 2013 in Europe (PwC)
6 European cities among the world’s 15 top destinations
• Constant and sustained growth of business trips
• RevPar in France and Germany: long-standing positive growth
€, TTC
2005
2013
2015e
CAGR
2000/2013
France
49
60
64
2,6%
Germany
50
64
70
3,1%
• Divergent performances among the largest European cities offers arbitrage
opportunities
Best performances in Paris, Berlin, Frankfurt and Barcelona
Mercure - Boulogne
Potential growth in the coming years
9
96
Foncière des Régions – Capital Markets Day – 20th November 2014
Source: MKG Hospitality database – October 2014
European Hotels market: a constantly changing supply
France: follow leaders and new innovative chains
• France: no oversupply
Since 2005 in economic: +16% in room supply vs +25% in room prices
• Dominated by large Hotel chains
Less independent operators
Larger Hotel chains (Accor, Louvre Hotels Group, B&B, Best Western, IHG, etc.)
Sofitel - Lyon
However, the sector is gradually being transformed by new innovative chains and brands
Germany: potential for growth
• Germany is behind in terms of Hotel chains penetration
Growth potential in the budget hotel segment
Example of Berlin: Hotel supply CAGR of 5.8% (in beds) vs +7.9% in overnights (between 2002 and 2012)
Potential of catch up effect in the penetration rate of Hotel chains
Penetration rate of Hotel chains
France
budget & economic
Germany
budget & economic
10
97
Foncière des Régions – Capital Markets Day – 20th November 2014
2005
40%
35%
25%
4%
2014
46%
44%
30%
9%
Source: MKG Hospitality database – October 2014
Hotels investment market: institutionalization
An asset class in its own right
• €9.9 billion in investments in Europe in 2013
• France: €2.4 billion (+35% YoY) ; 23% of market share in Europe
• Germany: €1.7 billion (+20% YoY) ; 17% of market share in Europe
Diverse investors base
• France: 47% foreign investors, 38% French institutional, 12% French private investors
• Germany: 61% foreign investors, 16% German institutional, 20% German Private investors
Increasing competition
EMEA Cap Rate (initial yields) requirements, 2000 to 2014
12%
11%
10%
9%
8%
7%
dec-00
june-01
dec-01
june-02
dec-02
june-03
dec-03
june-04
dec-04
june-05
dec-05
june-06
Nov-06
june-07
Oct-07
june-08
Oct-08
apr-09
Oct-09
apr-10
Oct-10
apr-11
Oct-11
apr-12
Oct-12
apr-13
Nov-13
apr-14
6%
11
98
Foncière des Régions – Capital Markets Day – 20th November 2014
Sources: JLL’s Hotel Investor Sentiment Survey, CBRE, Real Capital Analytics
4 – A leader in Hotel investments
- A conviction since 2005
- Hotel industry market: strong fundamentals
- Case studies: B&B partnership
- Foncière des Régions Hotel strategy
B&B Porte des Lilas - Paris
Case studies: B&B partnership
Total share
A partnership initiated in 2011
• B&B: successful Economic Hotels operator with 315 Hotels
• Partnership with Foncière des Régions through acquisitions, sale & leaseback and developments
• Presence in France and Germany
2014: Paris-Porte des Lilas development
• Largest B&B Hotel with 265 rooms
• Open since June 2014
• 12-year triple net lease
• €21 million of investments ; €1.5 million of rents (7.1% yield)
• Value at end-june 2014: €26 million (5.8% yield)
• +24% value creation
A longstanding relationship
13
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Foncière des Régions – Capital Markets Day – 20th November 2014
Case studies: B&B partnership
Total share
2011: Acquisition of 18 Hotels in Germany
• 1,716 rooms (95 per Hotel), mainly in West-Germany
• 20-year lease
Evolution in appraisal value and cap rate
75
• €63 million of investments ; 7.4% average yield
70
• Value creation since acquisition:
65
• +21% like-for-like increase in apraisal value
• +7.3% like-for-like growth in rents
8,0%
7,40%
60
55
7,0%
6,70%
63
67
6,50%
70
74 6,30% 76 6,19%
6,0%
50
5,0%
Acquisition
More to come
• 2014 : new development program of 9 Hotels in Germany with 7.1% average yield
14
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Foncière des Régions – Capital Markets Day – 20th November 2014
2011
2012
2013
2014
4 – A leader in Hotel investments
- A conviction since 2005
- Hotel industry market: strong fundamentals
- Case studies: B&B partnership
- Foncière des Régions Hotel strategy
B&B Porte des Lilas - Paris
A new tool for our Hotel asset management skills
Adapting to Hotel operators demand
• Hotel operators moving from asset light to asset free
need for more management contracts than lease contracts
• Creating new opportunities: adapting ourselves to operators strategies
• Leveraging our Hotel skills
Hotel chains supply per management mode
46%
76%
63%
84%
Franchise + Management contracts
54%
37%
24%
Other
16%
2014
2000
World
2000
2014
France
Management contracts: a balanced risk-return strategy
• Dedicated structure with third-party equity
• The new structure will operate as a Brand Partner; revenues based on Ebitda
• Attract new operations and new partners
• Reinforce our negotiation power against Hotels operators
• In addition to sales & leaseback, premises acquisitions and developments
• Higher return (8%-10% Ebitda yield) with controlled risk
16
103
Foncière des Régions – Capital Markets Day – 20th November 2014
Source: MKG Hospitality database – October 2014
Reinforce our leadership position in Europe
Total share
1
Invest in Europe
• Consolidate the critical size and the European exposition with a focus on Midscale and Economic
• €200 million capital increase of Foncière des Murs: €350-400 million of investments capacity
• Acquisitions : target yield of 6.0%-7.0%
• Developments : €80 million pipeline for B&B in France and Germany, target yield of 7.0%-8.0%
• Continue to sell non strategic assets: since 2010, €602 million in disposals with an average margin of 2.6%
2
Pursue the diversification
• In terms of operators:
Constant discussions with our partners: Accor, B&B, Louvre Hotel Group, NH
New discussions with some new partners
• In terms of European exposure
France, Germany and selective European capital cities
Sofitel - Marseilles
The major partner of Hotel operators in Europe
17
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Foncière des Régions – Capital Markets Day – 20th November 2014
Disclaimer
This document contains forward-looking reflections and information. By their nature, these reflections and information include financial
forecasts and estimates as well as the assumptions on which they are based, statements related to projects, objectives and expectations
concerning future operations, products and services or future performance.
Although Foncière des Régions management believes that these forward-looking reflections and information are reasonable,
Foncière des Régions cannot guarantee their accuracy or completeness and investors in Foncière des Régions are hereby advised that
these forward-looking reflections and information are subject to numerous risks and uncertainties that are difficult to foresee and
generally beyond Foncière des Régions control, so that the actual results and developments may differ significantly from those
expressed, induced or forecasted in the forward-looking reflections and information. These risks include those developed or identified in
the public documents filed by Foncière des Régions with the AMF, including those listed in the “Risk Factors” section of the Reference
Document registered with the AMF on 24 March, 2014.
Le Patio – Lyon Villeurbanne
Contact:
Paul Arkwright
Tel: + (33) 1 58 97 51 85
Mob: + (33) 6 77 33 93 58
paul.arkwright@fdr.fr
B&B Porte des Lilas
30, Avenue Kléber
75116 Paris
France