Company presentation February 2020 - Consus Real Estate
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Company
presentation
February 2020
Agenda
I ADO / Adler transaction with Consus 3
II Development business overview 7
III Q3 19 Financial Update 21
IV Appendix 28
Consus Real Estate AG 2
Titel
I. ADO / Adler transaction
Consus Real Estate AG
ÜBerlin condominium project in Berlin with a GDV of €210m
I. ADO / Adler transaction with Consus
1 Acquisition of 22% stake in Consus in cash
Aggregate
Holdings
ADO Others
■ Planning to acquire 22% in total from Consus minorities
51% ~25% 24%
■ Strategic cooperation agreement with Consus, providing the right to ADO to allow it to
match any offer from a third party on residential development projects worked on
together Consus
2 Call option for acquisition of an additional 51% stake in Consus from majority shareholder
Aggregate Holdings ADO + ADLER
■ Exchange ratio of 0.2390 ADO shares per Consus share
■ ADO may exercise option in next 18 months
■ Aggregate Holdings holds a put option which can be exercised in the event of a change of Consus
control at ADO
■ ADO has committed to a voluntary takeover offer for minorities on the same financial terms as the call option
Consus Real Estate AG 4
I. ADO / Adler strategic rationale for transactions
I Transformational transaction creating a roadmap to Top-3 listed residential real estate company in Germany, with enhanced liquidity
and likely MDAX candidate in the near-term
II Balanced portfolios with exposure to strong locations and new cities, diversifying outside of Berlin and across Germany
Build-to-hold strategy to deliver +15k new units of housing in Top-9 cities, where the ongoing housing shortage is
III
perceived to be strongest
IV Access to a highly experienced development platform securing value-creating growth path for future NAV accretion
V €180-210m of operating and financial synergies largely due to reduced refinancing costs (drill-down on next page)
Ultimate combination delivers significantly increased scale and profitability, potential for future growth and investment grade profile
Consus Real Estate AG 5
I. ADO announced target synergies
Unsecured bonds - €2.0bn €5m - €10m Mezzanine debt >10% - €0.6bn €83m - €85m 2020
Senior/Junior debt >5-10% - €0.4bn €15m - €17m 2020
Bank loan - €1.6bn €4m - €8m
Financing Medium Senior/Junior debt >3.5-5% - €0.5bn €5m - €8m 2020
synergies ADO Group bonds - €0.3bn €1m - €1m term Unsecured bond - €0.5bn €38m - €40m 2021
Other bank debt - €0.2bn €1m - €3m Medium term
Total financing synergies €10m - €19m
Total financing synergies €142m - €153m
■ Scale and efficiency driving ■ Reduction in marketing
reduction in opex expenses in relation to build to
sell business
Operating ■ Savings from duplicate 12-24
12-24 ■ Platform savings €13m - €18m
public company functions, €15m - €20m months
synergies months
IT, audit and other ■ IT, audit, professional service
professionals service fees and other general administrative
■ Platform savings savings
Upon acquiring
Total
Total synergies €25m - €39m Total synergies €155m - €171m control of
synergies Consus
€180m - €210m p.a. pre-tax FFO improvements through run-rate synergies
Consus Real Estate AG 6
Titel
II. Development business overview
Consus Real Estate AG
VAI Campus in Stuttgart with a GDV of €1,127m the largest development project of Consus
II. Consus - the leading real estate developer in Germany
Unique business model Key financials + KPIs
The leading German residential developer, with focus on top 9 German cities € 10.3 billion GDV(1)
development € 2.8 billion € 450 million
Strong market share in undersupplied German residential real estate market with portfolio across GDV in forward sales volume Targeted Adjusted EBITDA(4)
focus on affordability 67 projects contracted + LOI(2) 2020
Forward sale-oriented business model de-risks development, financing and exit
Fully integrated real estate platform covering the entire value chain ~20% 3.0x
€ 3.39 billion
Headquartered in Berlin with approximately 895 employees currently focused on Targeted Medium-term Targeted Medium-term Net
Market GAV(5)
Adjusted EBITDA margin Debt / Adjusted EBITDA
construction and sales
Pro-forma Q3 2019 LTM Adjusted EBITDA(7) of € 438 million
Consus continues to acquire attractive development projects… Breakdown of the development portfolio by city (3)
€ billion
10.3 (1) Dresden
10 3.5 1.4 Munich 3%
9 5% Hamburg
Dusseldorf
8 - - 0.9 10%
19%
7
0.9
6
0.7
Cologne 67 projects
4.6 11%
5
in total(6) Stuttgart
4 Leipzig
21%
3 5%
2
Frankfurt
1 13% Berlin
0 13%
GDV as of Dec Organic Organic SSN Closing upfront New GDV
2017 acquisitions acquisitions acquisition sale Q3 acquisitions
H1 2018 H2 2018 YTD
(1) As of September 30, 2019, including acquisition signed but not yet closed. On a 100% basis; (2) Incl. Forward sales in negotiation and LOI signed of €820m and pre-sold condominiums of €210m; (3) Including yielding assets, which will be sold over time; (4) EBITDA pre Purchase Price Allocation
(PPA) and pre one-off costs; (5) Based on Market GAV of the Consus property assets on 100% basis as estimated by management as of September 30 2019 (6) Dortmund is included in Düsseldorf, Erfurt is included in Leipzig; Böblingen, Karlsruhe and Mannheim are included in Stuttgart, Bayreuth
and Passau are included in Munich, Offenbach is included in Frankfurt am Main (7) EBITDA adjusted for Purchase Price Allocation (“pre-PPA”) and one-off expenses
Consus Real Estate AG 8
II. Consus investment highlights
Exposure to Germany’s Attractive development Largest German real estate
1. favorable macro conditions 2. portfolio 3. developer
in highly attractive locations
• above 80% in city center • Successful upfront sales • Scale provides competitive
locations highlight existing value advantage
Strong operational Unique and flexible forward Solid cash flow generation
4. capabilities and track record 5. sales business model 6. model and performance
visibility
• Ability to develop complex • allows for single sales of large • Forward sale model allows early
mixed-use sites volume mixed-use projects stage repayment of investment
Consus Real Estate AG 9
II. Q3 2019 Portfolio Highlights – Consus delivering on its strategy
Portfolio Highlights and recent developments
Continued portfolio growth: GDV(1) increases from € 10.0 billion to € 10.3 billion, with further project acquisitions in progress
Market Gross Asset Value of € 3.39 billion as at 30 September (H1 2019: € 3.28 billion)
Forward Sales volume at € 2.8 billion (H1 2019: € 2.8 billion) with three new Forward sale LOIs signed post September 30, 2019 bringing the total of
both forward sales signed and LOI’s signed to €419 million for the year to date.
Six projects, with a total GDV of c. € 650 million, currently in negotiation for a forward sale
Successful closure in July of upfront sale in Leipzig, with c. € 160 million of net debt repaid and significant profit
– Further upfront sale expected to sign in Q1 2020
Berlin (13% of portfolio) market update: no material impact expected on Consus business model due to focus on new built residential
Target €450 million Adjusted EBITDA in 2020
Outlook
Target Net Debt / Adjusted EBITDA of c.3x in the medium term
confirmed
Target Adjusted EBITDA margin of 20%
(1) As of September 30, 2019, Includes one projects signed but not yet closed. On a 100% basis
Consus Real Estate AG 10II. Exposure to Germany’s favourable macro conditions
Excellent business opportunity for residential developers
„We want to build 1.5 million new apartments and homes in the next 4 years.
This is absolutely necessary“
German Chancellor Source: German Chancellor Angela Merkel, Die Bundesregierung, May 26, 2018
Angela Merkel
Demand of 3.2m units with c. € 1 trillion GDV(1) until 2030
Demand of 3.2m new apartments until 2030 Strong and consistent rental price growth Rent affordability remains healthy
Rental-price index GDP growth New unit (70 sqm) price as a multiple of gross annual salary
110 6.0%
4.0% Belgium 3.7
100 Denmark 4.3
2.0%
Germany 5
0.0% Spain 5.4
90
-2.0% Austria 5.6
No decline in rental prices in Netherlands 5.8
-4.0%
80 over 20 years across the Italy 6.3
economic cycle
-6.0% Hungary 7.1
70 -8.0% Poland 7.5
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
France 8
2018
9.8
UK
(1)
Source: Institut der deutschen Wirtschaft, July 2019 Source: Destatis, EIU Source: Deloitte Property Index 2018, Morgan Stanley Research
(1) Based on estimated average price of €325k per unit
Consus Real Estate AG 11II. Attractive housing sector fundamentals
By far largest population and number of households Favourable household development in Germany (m)
Forecast of total population per country in 2020 (mm)
3 and more-person households #Total
Average household size
Forecast of total households per country in 2020 (mm)
2.00
2.00 1.97
1.97 1.95
1.95 1.93
1.93
82.8
67.9 65.3
42.2 42.6 42.9
42.2
46.8 40.8
30.2 (1) 9.9 9.5 9.1
28.4 9.9
19.0 18.3
11.0
30.8 33.1 33.8
32.3
Germany UK France Spain EU 2015A 2020E 2025E 2030E
Source: EIU, BMI Research Source: Destatis
Increased urbanisation / low home ownership Strong disposable income growth and low financing cost
Urban population in % of total (%) 2015 2035 x.x% Home ownership in % of total 2014 2017 2020 2019 government bond yield (%)
Index 100(2)
51.5% 65.1% 65.1% 76.3% 69.3%
(0.2)
(0.2) 0.8
0.8 0.1
0.1 0.7 0.7
+4% +5% +5% +3.2% 129.5
+3% +5% +3.1% 124.6 +3.2% 125.0
87%
85% 85%
+3.1%
83% 118.4 120.7
80% 80% 80% 78% +2.3% 115.4
77% 113.6 113.1
73% 109.6
107.5 106.3
104.0 103.8
100.9 99.9
(1)
Germany UK France Spain EU Germany UK France Spain EU
Source: United Nations Source: ECB, EUI, 2014-2020 CAGR
(1) Based 28 EU member countries
Consus Real Estate AG 12II. Attractive development portfolio
Strong footprint in Germany’s top economic regions
67 projects with GDV of € 10.3 billion(1) and thereof 33% under construction
Stuttgart/Karlsruhe Berlin Munich
GDV in €m: 2,139 GDV in €m: 1,355 GDV in €m: 483
Area in k m²: 545 Area in k m²: 207 Area in k m²: 67
19% Hamburg
Avg. Sales Price: 3.923 Avg. Sales Price: 6.534 Avg. Sales Price: 7.233
% of total GDV: 21% % of total GDV: 13% % of total GDV: 5%
Projects: 9 Projects: 9 Projects: 3
13% Berlin
Hamburg Cologne Leipzig/Erfurt
GDV in €m: 1,960 GDV in €m: 1,081 GDV in €m: 531
Area in k m²: 359 Area in k m²: 240 Area in k m²: 321
Avg. Sales Price: 5.464 Avg. Sales Price: 4.500 Avg. Sales Price: 3.139 (2)
10% Dusseldorf Leipzig 5% Dresden
% of total GDV: 19% % of total GDV: 11% % of total GDV: 5%
3% Projects: 6 Projects: 7 Projects: 16
11% Cologne
Frankfurt/Offenbach Duesseldorf Dresden
GDV in €m: 1,365 GDV in €m: 1002 GDV in €m: 345
Area in k m²: 182 Area in k m²: 218 Area in k m²: 72
13% Frankfurt Avg. Sales Price: 7.493 Avg. Sales Price: 4.590 Avg. Sales Price: 4.815
% of total GDV: 13% % of total GDV: 10% % of total GDV: 3%
Projects: 7 Projects: 5 Projects: 5
21% Stuttgart
Munich Main focus on residential and “quartier” developments
5%
Approach to develop large projects in phases
All “quartier” developments include commercial properties
Consus has a flexible portfolio extending until 2026 under the current business plan
(1) As of September 30, 2019, including one acquisition signed, but not closed. On a 100% basis; (2) Adjusted for dilution from Leipzig 416 upfront sale
Note: Dortmund is included in Düsseldorf, Erfurt is included in Leipzig; Böblingen, Karlsruhe and Mannheim are included in Stuttgart, Bayreuth and Passau are included in Munich, Offenbach is included in Frankfurt am Main
Consus Real Estate AG 13II. Top 20 development projects
Balanced distribution of properties to be developed in the short and medium term
Significant portion of Top 20 projects are forward sold and under construction
# Project name City Status GDV in k€ % of total Net floor area in Construction % Residential % Commercial
GDV sqm period
1 VAI Campus Stuttgart 1,127,400 € 11% 185,415 2021 - 2026 65% 35%
2 Holsten Quartiere Hamburg 883,787 € 9% 133,517 2021 - 2026 66% 34%
3 Benrather Gärten Duesseldorf 661,786 € 6% 158,989 2025 - 2029 52% 11%
4 The Wilhelm Berlin 439,530 € 4% 15,912 2019 - 2023 95% 5%
5 Quartier C Karlsruhe 370,649 € 4% 111,249 2021 - 2026 64% 29%
6 2stay Frankfurt 359,311 € 4% 27,600 2021 - 2023 0% 100%
7 Neuländer Quarree Hamburg 356,917 € 3% 81,315 2020 - 2024 37% 29%
8 Cologneo II Cologne 350,779 € 3% 71,583 2022 - 2025 64% 36%
9 Covent Garden Munich 313,005 € 3% 29,273 2021 - 2023 92% 8%
10 Ostend Frankfurt 300,790 € 3% 42,700 2023 - 2025 66% 34%
11 Otto Quartier Stuttgart area 275,195 € 3% 73,360 2021 - 2025 25% 71%
12 Cologneo I Part 1 Cologne Forward sold 241,415 € 2% 54,321 2017 - 2022 62% 36%
13 Billwerder Neuer Deich Hamburg 231,457 € 2% 44,475 2021 - 2024 67% 33%
14 Forum Pankow Berlin Forward sale in neg. 219,124 € 2% 36,205 2020 - 2025 59% 22%
15 New Yorker Hamburg 219,066 € 2% 45,374 2021 - 2024 85% 15%
16 New Frankfurt Towers VauVau Frankfurt Forward sold 218,102 € 2% 37,745 2017 - 2021 84% 6%
17 Steglitzer Kreisel Tower Berlin Condominium sales 209,631 € 2% 27,284 2017 - 2021 88% 12%
18 Westend Ensemble - Upper West Frankfurt Condominium sales 207,601 € 2% 19,843 2020 - 2022 75% 20%
19 UpperNord Tower VauVau Duesseldorf Forward sold 175,000 € 2% 25,066 2019 - 2022 96% 4%
20 Bundesallee Project Berlin Forward sold 164,437 € 2% 28,668 2016 - 2020 25% 75%
Please note: Figures as of Sep 30, 2019
Consus Real Estate AG 14II. Overview of total Forward sales/LOI year-to-date
The forward sales and condominium business models allow for strong cash flow visibility, while minimising development risk
» Letter of intent in negotiation with institutional purchasers 30/09/2019
» Expected to be converted to signed letter of intent within 3-6 months and in signed
Forward sale in
6 ~€650m
negotiation forward sale agreements within 6-12 months
projects GDV
» Reduction of number of projects reflects LOIs being signed ∆ -3
institutional purchasers
» Existing development projects being prepared for negotiations to start
Projects sold to
Letter of intent » Signed letter of intent with institutional purchasers, expected to be converted into 3 169m
signed signed forward sale agreements within 3-6 months projects GDV
» LOIs signed for projects in Hamburg and Passau (part of development) ∆ +2
» Signed binding agreements between Consus and institutional purchasers
Forward Sales » Q4 forward sale in Leipzig with GDV of €51m 2 projects with GDV of
18 ~€1,770m
€ 106m handed-over to
Signed » Reduction of one due to hand-over of projects institutional purchasers projects GDV
in 2019 ∆ -1
Units sold
» Condominiums sold to retail purchasers rather than institutional purchasers
to retail
Condo Sales 7 ~€210m
» Sales started successfully on the “Auers” condominium project in Passau projects GDV
Started
∆ +1
€2.8 billion GDV forward sold or under LOI allows for strong visibility on future performance ~ €2.8 billion
Consus Real Estate AG 15II. New development project acquisitions
Acquisitions agreed YTD demonstrate ongoing ability to source attractive projects
Development /
City / Project KPIs Pictures Acquisition Construction Delivery
Forward sale
GDV €148m
Cologne area,
Completion 2024 » Development of a new city quartier in Bergisch Gladbach. Planning comprises 7
Bergisch Gladbach
Wachendorff Quartier residential complexes, a nursing home and boarding house, assisted living, a
Asset type Mixed-use Kindergarten, a district center and a parking garage with about 450 parking spaces.
Signed: Q2 | Closed: Q3 Area (k sqm) 31
GDV €661m
Duesseldorf,
Completion tbd » Large quartier development in Duesseldorf-South on a 148k sqm plot of land with
Benrather Gärten
Asset type Mixed-use excellent connections to the city center, airport and surrounding area.
Signed: Q2 | Closed: Q3 Area (k sqm) 124
GDV €82m
Erfurt,
Completion 2023 » Residential quartier development in an old brewery location with close proximity to one
Braugold Quartier
Asset type Residential of Germany´s most important high-speed train terminals
Signed: Q2 | Closed: Q3 Area (k sqm) 17
GDV €275m
Stuttgart Area, » Development of a mixed-use "Zero Energy District" with a combination of flexible forms
Completion 2023-2025
Otto Quartier of living and work, primarily focused on creativity, technology, production, crafts, trade
Asset type Mixed-use and culture.
Signed: Q3 | Not closed Area (k sqm) 70
Total GDV: € 1.2 billion
Two further acquisitions signed in Q4 19, with potential GDV of c. € 1 billion
Acquisitions continually being evaluated to replace projects sold/developed
Consus Real Estate AG 16II. Unique and flexible business model
Core business model consists of forward sales to institutional purchasers
Post building permit,
Buy Plan Sell Build construction phase
takes
Plots Project Forward & Deliver ~24-36months
Finalize the project and obtain Construction begins after completion
Prior to starting construction,
Consus acquires land plots and lays building permits for residential of the forward-sale and is paid on the
projects are forward-sold to basis of pre-agreed milestones over
out overall project structure developments with commercial
institutional purchasers the construction period
potential
Business model focused on Forward Sales – existing project portfolio enables dynamic portfolio management
Development portfolio
Forward sales model targeting a cash flow positive profile as soon as the first payment is
78% with forward received
sales approach
Flexibility to optimise development pipeline based on local demand
GDV:
GDV:
€10.3
€9.6bn(2) Reduced requirement for capital due to early capital recycling
Minimize “lock-in” period of equity investment given forward sale business model
Approach for condominium sales is similar under Germany´s highly regulated sales structure. Most significant difference is sales of apartments over time, versus 100%
upfront, and financing structure
(1) As of September 30, 2019, including one acquisition signed, but not yet closed.. On a 100% basis;
Consus Real Estate AG 17II. Solid cash flow generation model and performance visibility
Consus developments target to become cash flow positive prior to construction start
Illustrative forward sales business model cash flow profile
Development /
Acquisition Construction Delivery Cash flow First cash inflow as forward sale is entered
Forward sale
positive as into
construction Target to become cash flow positive prior
starts to construction start
20% 90% of the cash inflows are received
Balanced during the construction phase including
11% payments payment for the land
5% profile
Small remaining payment at delivery
Project cash flow breakeven
60% Regular payments from buyers to cover
54% Limited working construction costs
capital
-20% consumption Minimal working capital needs throughout
30% the life of the project
20%
10%
5% Targeted Adjusted EBITDA margin of 20%
1%
High at delivery, with upside potential based on
Land Acquisition Development / Construction Delivery (1) profitability outperforming occupancy and rent levels
achieved, and downside floor
Forward Sale
Project Cash Collection Project Cash Costs Cumulated Project Cash Flow Margin
(1) Delivery includes finalization of construction and tenancy
Consus Real Estate AG 18II. Competitive advantage through digitalisation
Digital-oriented construction process with potential to drive substantial cost and time savings
I
» Building Information Modelling (BIM): 6 dimensional approach to construction
processes Save up to 6 months in the
Introduction of development timeline(1)
new building » 2D = Architectural planning; 3D = architectural modelling/ attribution; 4D = Time;
standards 5D = Cost; 6D = Lifecycle
» Reduced procurement costs via direct supply chain management
Monthly reporting through BIM-
II » Digitalized offering includes all components underneath by the Proptech company Management by DIPLAN as BIM
DIPLAN Score
Digital planning
and
» DIPLANNER (Design tool for conceptual studies using AI technology)
construction
» Flexhouse (Building system using „apartment design templates“ for cost-efficient
platform Savings potential up to 30% due to
planning and construction)
» Supply chain management with configurator and procurement platform integrated planning and prefab-
based construction process
III
» Setting up a highly automated pre-fabrication plant in Erfurt in partnership with EMC
Pre-fabrication European Modular Constructions GmbH
operations with Ability to pre-fabricate wall and
» Plant will be one of Europe’s largest for prefabricated concrete building elements ceiling units for ~1,950 residential
partner
units per year(1)
» Targeted to start pilot production at the end of 2020
Full digitalization (BIM) is expected to be implemented by the end of 2020 within all new projects, 18 development projects are already using BIM
(1) Based on management internal estimates
Consus Real Estate AG 19Titel
III. Q3 19 Financial Update
Consus Real Estate AG
Cologneo I Corpus in Cologne forward sold to institutional investor with a GDV of €241mIII. Q3 2019 Highlights – Consus delivering on its strategy
Financial Highlights – continued growth trajectory
Total revenue of € 525.0 million (Q3 2018 : € 170.6 million), overall performance of € 608.6 million (Q3 2018 : € 327.5 million)
– Growth of 209%
Adjusted EBITDA of € 285.2 million (Q3 2018 : € 93.4 million) reflecting upfront sale of Leipzig plus income from property development
– Adjusted EBITDA margin of 54%
Pro Forma Adjusted LTM EBITDA (“PF LTM EBITDA”) of € 438 million (FY 2018: € 246 million)
– Reflecting income from property development, plus Leipzig upfront sale and benefit of upfront sale in Q4 2018
Pro Forma LTM Adjusted Net Income of € 127 million, and reported Net Income of € 29 million, reflecting increasing profitability as business
grows
Continued strong growth in the business
Consus Real Estate AG 21III. Q3 2019 Highlights – Consus delivering on its strategy
Financial Highlights – deleveraging in progress
Significant reduction in leverage : Net debt / PF LTM EBITDA reduced to 5.7x (Q2 2019: 7.8x)
– Reflects strong upfront sales and strength of portfolio
– Includes benefit of Q3 2019 and Q4 2018 upfront sales
Net debt reduced marginally to € 2,480 million (H1 2019: € 2,503 million)
Average run-rate interest rate at 7.9%, down 60 basis points sequentially
– Q2 2019 : 8.5% reflecting impact of bond issuance
High cost mezzanine debt reduced by over € 125 million in the third quarter 2019 to further reduce interest rate
– Amount of high cost mezzanine targeted to be no longer be material by end H1 2020
– Consus medium term target to reduce financing costs by 200 basis points to c. 6%
‘Tap’ of € 50 million senior secured notes in October to further reduce average interest rate going forward
Deleveraging and reduction in interest rate demonstrating improved financing efficiency and repayment of expensive debt
Consus Real Estate AG 22III. LTM Q3 2019 – Adjusted Key Group Metrics
FY 2018 H1 2019 Q3 2019
Pro-forma • Strong growth of LTM adjusted EBITDA,
LTM Adjusted €246m €319m €438m with significant impact from Leipzig sale
EBITDA(1) • Upfront Leipzig sale combined with Q4
2018 upfront sale drive strong growth
• full year 2019 without benefit from
Q4 2018 upfront sale
Net debt €2,104m €2,503m €2,480m
• Deleveraging demonstrates strength of
business and portfolio
• driven by EBITDA growth
Net debt / PF LTM 8.6x 7.8x 5.7x • Pro forma LTM adjusted net income
Adjusted EBITDA(1) of € 127 m for Q3 2019
• Significant progress made and more
potential for interest rate reduction
Average run-rate • recent refinancings demonstrate
8.1% 8.5% 7.9% strong reduction
interest rate
(1) EBITDA adjusted for Purchase Price Allocation (“pre-PPA”) and one-off expenses
Consus Real Estate AG 23III. Q3 2019 Key Group Metrics
Key Income Statement Figures Key Balance Sheet & Cash Flow Figures
Adjusted Q3 2018 Q3 2019 as of 30/09/2019
Total Net Debt €2,480m
€247.7m €590.2m
Income
Market
€3,390m
Gross Asset Value
Overall Performance €464,0m €671.3m
Operating
€123.3m
Cash Flow
Adjusted
€93.4 €285.2m
EBITDA(1)
Prepayments
€750.5m
Received
Financial Result €(114.1)m €(173.1)m
Net Debt /
5.7x
PF Adjusted EBITDA(1)
Consolidated Net
€(8.4)m €29.3m
Income Net Debt /
73%
Market GAV
(1) EBITDA adjusted for Purchase Price Allocation (“pre-PPA”) and one-off expenses
Consus Real Estate AG 24III. Development in 2019 as expected - Guidance for 2020 confirmed
Overview of Key Financials Comments
» Total amount of projects of 67 with a development timeline
until 2026
Gross Development Value
» €10 billion in total
(GDV)(1) » GDV going forward influenced by timings of
acquisitions and disposals
» Strong growth in Adjusted EBITDA expected in 2019
Target 2020
» €450 million » 2020 Adjusted EBITDA target increased from €300m to
Adjusted EBITDA
€450m post SSN acquisition
» Deleveraging planned following acquisitions and upfront sales
Target Medium-term Net Debt /
» ~ 3x
Adjusted EBITDA
» Expected tax rate ~30%
Target Adjusted
» c. 20%
EBITDA margin
(1) As of September 30, 2019, Includes one projects signed but not yet closed. On a 100% basis
Consus Real Estate AG 25III. Shareholder structure
Consus Share Share price development and shareholder structure incl. recent contribution in kind
ISIN DE000A2DA414
WKN A2DA41
Number of 136.581.507
Shares
Market Deutsche Börse Scale
Segment m:access
Stock
Xetra, München, Frankfurt
Exchanges
Indices E&G-DIMAX
Market cap.(2) €971m
SRC Research: €10.0 BUY
» Aggregate Group ~51% Financial Calendar
Baader Bank: €10.0 BUY
» ADO/Adler ~25%
Hauck & A.: €8.80 Updated to
Analysts BUY 23 Apr 2020 Publication of Consus FY19 Statement
» Christoph Gröner ~6% (CEO CG Gruppe)
Deutsche Bank: €7.0 BUY
» Free Float ~18% 24 Jun 2020 Consus Annual General Meeting
UBS: €7.30 HOLD
(1) Bloomberg, Factset
(2) As of January 24, 2020
Consus Real Estate AG 26
26Titel
IV. Appendix
Consus Real Estate AG
Vitopia Kampus Kaiserlei in Frankfurt/Offenbach forward sold to institutional investor with a GDV of €60mIV. Excellent opportunity for residential developers
Consus is the leading developer in Germany’s top 9 cities Real Estate Development sector highly fragmented in Germany
(1)
Consus Consus developments in Top 9 German cities Market cap of all listed real Market cap of Top 10 listed
estate developers real estate developers
Zech Group
Instone
10x
opportunity
Bonava
BPD
Groß & Partner < € 3 billion(2) € 34 billion(2)
Pandion
PROJECT PI Consus as Germany´s largest real estate developer
in top 9 cities best positioned to benefit from
Büschl substantial sector growth opportunity
Development area (‘000 0 500 1,000 1,500 2,000
sqm)
Source: Bulwiengesa Projektentwicklerstudie Top 9 Cities in Germany as of 21 Mar 2019
in k sqm
(1) Bulwiengesa study based on projects until 2023; Consus’ long-term projects that will be completed after 2023 such as Hamburg Holsten and Stuttgart VAI Campus are not fully reflected in study;
Current Consus total net floor area under development of 2.2m m2
(2) Analysis as of September 2019
Consus Real Estate AG 28IV. Reduction of average interest rate
Reduction in average interest rate Key Highlights
1.• Amount of mezzanine debt will decline significantly through the year and H1 2020
Reduction of mezzanine debt from 40% to 28% of total project debt
• Expensive mezzanine reduced by over € 125 million in Q3 2019 with
further reductions in progress
€1.7bn €1.9bn €2.0bn
• By end of Q1, mezzanine debt expected to be reduced by over 50% from
10% € 500 million level at June 30
Other 13% 12%
Mezzanine • By end H1 2020, expensive mezzanine debt targeted
debt to no longer be material
18%
27% 27% 2.• Reduction in mezzanine debt driving significant reduction in average interest rate
Expensive
Mezzanine 12% 3.• Reduction through combination of refinancing and sales, including
11% 11%
• Refinancing of Wilhelmstraße, 2stay and Holsten project will reduce
average interest rate from c. 13% to c. 7% on c. € 420 million of debt
Junior debt
• Leipzig 416 upfront sale was used to significantly reduce high cost
mezzanine and junior debt
59%
49% 50%
• € 110 million acquisition financing of large-scale Benrather Gärten project
Senior debt development in Duesseldorf in Q4 with ‘Schuldscheindarlehen’ at 5.1%
average interest rate
4.• Reduction of average interest rate to c. 6% targeted over medium term
30/03/19 30/06/19 30/09/19
Average
8.1% 8.5% (1) 7.9% Over time, project-level debt will be reduced through repayment and refinancing
interest rate
(1) Increase impacted by issuance of €400m senior secured notes
Consus Real Estate AG 29IV. Consolidated Q3 2019 Financials – Income Statement
Income Statement
in k € Adjusted Q3 2018 Q3 2019 Comments
Income from letting activities 19,864 13,702
Income from real estate inventory disposed of 19,334 1. 186,535
Income from property development 131,421 2. 313,725 1.• Reflect upfront sale project in Leipzig
Income from service, maintenance and management activities - 11,079
Total income 170,619 525,040 2.• Strong growth reflects growth of business
Change in project related inventory 156,928 83,613
3.• Net financial expense of € 172m reflects
Overall performance 327,546 608,653
Expenses from letting activities (9,393) (6,756) increase in debt, with average interest rate
Cost of materials (218,491) (304,340)
Net income from the remeasurement of investment properties
now falling
(5,000) 7,620
Other operating income 5,473 13,318
Personnel expenses (23,477) (49,534)
4.• Positive net income as business grows.
Other operating expenses (48,977) (48,774)
EBITDA 37,681 220,187
Depreciation and amortization (1,418) (6,053)
EBIT 36,263 214,135
Financial income 9,064 22,393
Financial expenses (72,174) 3. (194,559)
EBT (26,847) 41,969
Income tax expenses 8,098 (12,643)
Consolidated Net income (18,749) 4. 29,326
Adjusted EBITDA Bridge Q-o-Q / LTM
LTM LTM
in k € Q3 2018 Q3 2019
FY 2018 Q3 2019
EBITDA 148,884 280,581 88,490 220,187
PPA Adjustments 81,936 144,681 (7) 62,677
One-off expenses 15,458 12,767 5,019 2,328
Adjusted EBITDA(1) 246,278 438,029 93,441 285,192
(1) EBITDA adjusted for Purchase Price Allocation (“pre-PPA”) and one-off expenses
Consus Real Estate AG 30IV. Consolidated Q3 2019 Financials – Balance sheet: Assets
Current & Non-current Assets Comments
Adjusted
in k € Q3 2019 •1. Growth reflecting forward sales and
FY 2018
related construction activities.
Investment property 328,027 390,101
Property, plant and equipment 8,771 10,270 •2. Project additions and development offset
by forward sales
Right of use asset 12,955
Goodwill 1,032,480 1,093,381 •3. Cash increased from forward sales and
project financing
Other intangible assets 6,158 6,379
Investments accounted for using the equity method 21,590 20,891 •4. Investment property being disposed as
part of programme of reducing investment
Financial assets 10,037 61,601 properties not supporting development
Contract assets 23,096 1. 109,930 projects
Total non-current assets 1,430,158 1,705,508
Work-in-progress incl. acquired land and buildings 2,139,761 2. 2,284,056
• Contract assets: land revenue now only
Trade and other receivables 53,933 52,514 recognised at the end of the contract,
Receivables from related parties 62,853 38,731 offset by the prepayments received in
Tax receivables 8,644 9,804 relation to land being separately disclosed
38,439 31,123 in liabilities
Financial assets
Other assets 15,499 16,784 • Work-in-progress : land assets remaining
198,505 197,913
in inventory until revenue recognised at
Contract assets
the end of the contract, and PPA is
Cash and cash equivalents 91,603 3 158,365
expensed over time for development work
Assets held for sale 1,329 4. 28,330
performed and not expensed at the start
Total current assets 2,610,565 2,817,620 of the contract.
Total assets 4,040,723 4,523,128
Consus Real Estate AG 31IV. Consolidated Q3 2019 Financials – Balance sheet: Equity & Liabilities
Equity and liabilities Comments
Adjusted
in k € Q3 2019
FY 2018 1.• Total equity of 1,137 million
Subscribed capital 134,040 136,582
Capital reserves 904,233 863,619 2.• Net debt of 2,480 million
Other reserves (33,008) (19,114)
Non-controlling interest 148,705 155,617 3.• Trade payables increased as work volume
Total equity 1,153,970 1,136,702 increases
1.
Financing liabilities 1,049,150 1,748,430
2.
Provisions 1,712 1,902
Other liabilities 15,017 10,987
• Prepayments received: prepayments
Deferred tax liabilities 111,475 128,825 related to land are recognised directly on
Total non-current liabilities 1,177,355 1,890,143 the balance sheet, as not offset against
Financing liabilities 1,146,374 2. 889,757 contract asset as the income has not
been recognised
Provisions 4,735 9,811
Trade payables 41,913 78,398 • Contract liabilities: related to
3.
prepayments in excess of contract assets
Liabilities to related parties 43,196 23,923
for specific projects
Tax payables 44,389 44,512
Prepayments received 323,986 328,807
Other liabilities 72,647 72,982
Contract liabilities 32,158 33,093
Liabilities included in a disposal group classified as held for sale - 15,000
Total current liabilities 1,709,399 1,496,284
Total liabilities 2,886,753 3,386,427
Total equity & liabilities 4,040,723 4,523,128
Consus Real Estate AG 32IV. Consolidated Q3 2019 Cash Flow Statement
Cash flow
in k € Adjusted Q3 2018 Q3 2019
Profit (loss) before tax (24,933) 41,969
Less profit from discontinued operations (1,894) -
Depreciation and amortisation 1,418 6,053
Depreciation and impairment of property, plant and equipment 1,418 3,346
Amortisation and impairment of intangible assets - 93
Depreciation on right-of-use asset - 2,613
Valuation gains on investment property (5,000) (7,620)
Financial expenses (income) 63,110 172,166
Financial income (9,064)) (22,393)
Financial expenses 72,174 194,559
Transition Adjustments IFRS 15 11,746 0
Other non cash adjustments 10,426 2,296
Other working capital adjustments (53,468) (91,510)
Decrease / (increase) in rent and other receivables 34,689 14,110
Decrease / (increase) prepayments, accrued income and other assets (14,786) (1,055)
Decrease/ (increase) in inventories and contractual assets (224,751) (285,733)
(Decrease) / increase in prepayments 130,882 193,303
Decrease in inventory property - (34,377)
(Decrease) / increase in trade, other payables and accruals, contractual liabilities and other liabilities 20,498 19,546
Income tax paid (3,470) 2,695
Net cash flow from operating activities of discontinued operations 1,395 -
Net cash flow from operating activities (669) 123,354
Net cash flow from investing activities 14,330 (196,010)
Net cash flow financing activities (38,944) 139,419
Consus Real Estate AG 33IV. Solid cash flow generation model and performance visibility
Illustrative cash flow profile towards run-rate
Revenue Profitability visibility Limited maintenance investment Decreasing interest Strong FCF
visibility required expense generation
Inventory release in ramp-
up phase
Revenue Operating Adjusted Capex ∆ in working Interest Taxes Free Cash Flow
costs EBITDA capital expense
I II III IV V VI VII VIII
I II
Run-rate revenue level as total portfolio GDV spread over the average life Operating ~80% of the forward sale price
Revenue
of the projects costs Turnkey agreements with contractors minimize cost overrun risk
III IV
Adjusted No Capex required as land acquisition, development, and construction
Target 20% margin in the medium-term Capex
EBITDA costs run through operating costs and working capital
V VI
Limited working capital consumption at run-rate as development Decreasing over time (targeting up to 200bps average interest rate
portfolio replenishment is funded through existing projects sale reduction in the medium term)
Working Interest
capital Release of working capital in ramp-up phase as increasing percentage of expense
Progressive rebalancing of senior/junior split at SPVs through corporate
projects is forward sold with related pre-payments
level refinancing and deleveraging via cash flows
VII VIII
Strong cash generation
Taxes Indicative 30% corporate tax rate Free Cash Flow
Used also to deleverage SPVs level debt
Strong cash flow generation as the run-rate is achieved
Consus Real Estate AG 34IV. Illustrative Example of the PPA adjustment mechanism
» According to IFRS 3, an acquirer must record the net assets of the target on its balance sheet at fair value as at the date of the acquisition
» The process is known as purchase price allocation (PPA)
» All future additions to inventory post-acquisition are recorded at cost, with no further value adjustment
» Therefore, Consus accounts for its inventories (both for CG and SSN) at fair value as at the time of their acquisition
» The PPA impact is a one time activity and for all construction post acquisition of CG Gruppe and SSN, there would be no PPA adjustments
» At revenue recognition, the increased value of inventory due to the fair value process (PPA) reduces the reported EBITDA
» In order to provide the underlying profitability, Consus reverses the PPA adjustment to reflect underlying cost excluding the fair value impact, to provide EBITDA pre-PPA
» This would be the EBITDA recorded if the assets had not been included at fair value and the purchase price allocated
» This adjustment is done only once a forward sale is entered into, ensuring clear allocation of the PPA adjustment and matching the cash flow profile
» For forward sales to institutions, land and development work are separately accounted for, reflecting their separate performance obligations
Illustration: Consus accounting for inventories acquired at CG Gruppe acquisition
» Margin for CG Gruppe: 10 + 10 = 20
Key elements of PPA adjustment
» Cash inflow for CG Gruppe / Consus: 20
» Effective margin for Consus: 20 – 10 = 10
10
120
EBITDA reportable:
50 10
EBITDA pre-PPA
(adjusted): 20
10
60
50
Construction cost till Developer margin till Fair value / Price paid by Construction cost post acq. Margin on construction cost Sale value
Consus acq. Consus acq. Consus post acq.
Consus Real Estate AG 35IV. Consus’ focus on stakeholders
Consus Group has a long history of “green” buildings
Environment Social
» Construction with sustainable energy concepts, such as geothermal and » Creating affordable housing for every income by transforming unused
photovoltaic, CO2-neutral heating systems and ecological construction standards offices into high-rise residential buildings
» Planning and development of socially mixed city districts for housing,
Largest roof photovoltaic schools, kindergartens, work, co-working, boarding, community areas,
system in Leipzig installed green and leisure areas as well as optimized infrastructure
with 1.6 megawatt peak
power production » Financial support for Fly & Help foundation building schools in Africa
750 tons of CO2 reduction p.a.
» Support for children in need via foundation Laughing Hearts e.V and Off-
Road Kids e.V.
» Emission-free production of electricity through wind turbines for operation of
elevator installations as well as for charging stations for e-vehicles
Support of “Laughing Hearts
» Future development of Zero Energy Quartiers through decentralized energy, e.V.” foundation for children in
water and mobility infrastructure care with refurbishment of their
Berlin headquarters
» Highly sustainable eco-building certification “LEED Gold” for forward sold project
Franklinhaus in Berlin » Substantial sports sponsoring with additional focus on youth talent
development
Consus is a socially responsible and sustainability focused corporate citizen
actively engaging with its stakeholder communities
Consus Real Estate AG 36Titel
Disclaimer
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JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL.
This presentation (“Presentation”) was prepared exclusively by Consus Real Estate AG (“Consus”) solely for informational purposes and has not been independently verified and no representation or warranty, express or implied, is made or given by or
on behalf of Consus. Nothing in this Presentation is, or should be relied upon as, a promise or representation as to the future.
This Presentation does not constitute or form part of, and should not be construed as, an offer or invitation or inducement to subscribe for, underwrite or otherwise acquire, any securities of Consus, nor should it or any part of it form the basis of, or
be relied on in connection with, any contract to purchase or subscribe for any securities of Consus, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This Presentation is not an
advertisement and not a prospectus for the purposes of the Prospectus Directive (as defined below). Any offer of securities of Consus will be made by means of a prospectus or offering memorandum that will contain detailed information about
Consus and its management as well as risk factors and financial statements. Any person considering the purchase of any securities of Consus must inform itself independently based solely on such prospectus or offering memorandum (including any
supplement thereto). This Presentation is being made available to you solely for your information and background and is not to be used as a basis for an investment decision in securities of Consus.
Certain statements in this Presentation are forward-looking statements. These statements may be identified by words such as "expectation", "belief', "estimate", "plan", "target“ or "forecast" and similar expressions, or by their context. By their
nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties
and assumptions could adversely affect the outcome and financial consequences of the plans and events described herein. Actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, but
not limited to, future global economic conditions, changed market conditions affecting the industry, intense competition in the markets in which Consus operates, costs of compliance with applicable laws, regulations and standards, diverse political,
legal, economic and other conditions affecting Consus’ markets, and other factors beyond the control of Consus). Neither Consus nor any of its respective directors, officers, employees, advisors, or any other person is under any obligation to update
or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak of the date of this Presentation. Statements contained in
this Presentation regarding past trends or events should not be taken as a representation that such trends or events will continue in the future. No obligation is assumed to update any forward-looking statements.
This document contains certain financial measures (including forward-looking measures) that are not calculated in accordance with IFRS and are therefore considered "non-IFRS financial measures". Such non-IFRS financial measures used by the
Consus are presented to enhance an understanding of the Consus's results of operations, financial position or cash flows calculated in accordance with IFRS, but not to replace such financial information. A number of these non-IFRS financial measures
are also commonly used by securities analysts, credit rating agencies and investors to evaluate and compare the periodic and future operating performance and value of other companies with which the Consus competes. These non-IFRS financial
measures should not be considered in isolation as a measure of the Consus’s profitability or liquidity, and should be considered in addition to, rather than as a substitute for, net income and the other income or cash flow data prepared in accordance
with IFRS. In particular, there are material limitations associated with the use of non-IFRS financial measures, including the limitations inherent in determination of each of the relevant adjustments. The non-IFRS financial measures used by the Consus
may differ from, and not be comparable to, similarly-titled measures used by other companies. Certain numerical data, financial information and market data (including percentages) in this Presentation have been rounded according to established
commercial standards. Furthermore, in tables and charts, these rounded figures may not add up exactly to the totals contained in the respective tables and charts.
Accordingly, neither Consus nor any of its directors, officers, employees or advisors, nor any other person makes any representation or warranty, express or implied, as to, and accordingly no reliance should be placed on, the fairness, accuracy or
completeness of the information contained in the Presentation or of the views given or implied. Neither Consus nor any of its respective directors, officers, employees or advisors nor any other person shall have any liability whatsoever for any errors
or omissions or any loss howsoever arising, directly or indirectly, from any use of this information or its contents or otherwise arising in connection there-with. It should be noted that certain financial information relating to Consus contained in this
document has not been audited and in some cases is based on management information and estimates.
This Presentation is intended to provide a general overview of Consus’ business and does not purport to include all aspects and details regarding Consus. This Presentation is furnished solely for your information, should not be treated as giving
investment advice and may not be printed or otherwise copied or distributed. Subject to limited exceptions described below, the information contained in this Presentation is not to be viewed from nor for publication or distribution in nor taken or
transmitted into the United States of America (“United States”), Australia, Canada or Japan and does not constitute an offer of securities for sale in any of these jurisdictions. Any securities offered by Consus have not been, and will not be, registered
under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state or other jurisdiction of the United States and such securities may not be offered or sold within the United States, except pursuant to an
exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state or local securities laws. This Presentation does not contain or constitute an offer of, or the solicitation of an offer to buy or
subscribe for, securities to any person or in any jurisdiction to whom or in which such offer or solicitation is unlawful.
By receiving this Presentation, you agree to be bound by the foregoing limitations. Any failure to comply with these restrictions may constitute a violation of applicable securities laws. This Presentation does not constitute investment, legal,
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