CORESTATE Capital Company Presentation - February/ March 2019
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CORESTATE Capital Company Presentation February / March 2019
Disclaimer
This presentation contains forward-looking statements that are subject to various risks and uncertainties.
Such statements are based on a number of assumptions, estimates, projections or plans that are inherently subject to significant risks,
as well as uncertainties and contingencies that are subject to change.
Actual results can differ materially from those anticipated in the forward-looking statements of CORESTATE Capital Holding S.A. (the
“Company”) as a result of a variety of factors, many of which are beyond the control of the Company, including those set forth from
time to time in the Company’s press releases and reports and those set forth from time to time in the Company’s analyst calls and
discussions. The company does not assume any obligation to update the forward-looking statements contained in this presentation.
This presentation does not constitute an offer to sell or a solicitation or offer to buy any securities of the Company, and no part of this
presentation shall form the basis of or may be relied upon in connection with any offer or commitment whatsoever. This presentation is
being presented solely for information purposes and is subject to change without notice.
Glossary: € = Euro; $ = (US)Dollar; % = percentage; a = actual; acc. = according; adj. = adjusted; aggr. = aggregated; approx. = approximately;
c(a) = circa; e = expected; (F)Y = (financial) year(s); H = half year(s); LTM = last twelve months; M = month(s); Q = quarter(s);
k = thousand(s); m = million(s); bn = billion(s)
2
Agenda
1. Business model and investment highlights
2. Preliminary Results of FY 2018
3A Fully Integrated and Specialized Real Estate Investment Manager
> € 25bn > € 1.2bn
Assets under Fund Volume
Management in Real Estate
Mezzanine
~700 FTEs | 42 Offices | 7 Countries
> 70% > € 5.5bn > 60%
Real Estate Deal Pipeline in Adj. EBITDA
AuM in Germany selected countries Margin
4Attractive Offerings for our Clients in Various Asset Classes
Key product range
Products
Office Residential Micro Living Retail Mezzanine
Return* 3.5% - 4% 4% - 4.5% 5% - 5.5% 5% - 6% 11% - 13%
One-Stop-Shop
Asset & Property Management
integrated
Platform
Fundraising, Reporting, Risk Management, Financing etc.
Clients / Semi
Investors Institutional Retail
institutional
Still underinvested asset allocation to (German) Real Estate (Δ c 35%)
* after costs
5Ample Room for External Growth
Strict set of acquisition criteria drives approach to
external growth
new
geography
Sector consolidation driven by trend to new new asset
bigger asset managers and increasing investors class
regulatory costs (AIFMD)
Real
estate & cross-
complemen- selling
European Real estate AM market is
tary AuMs opportunities
fragmented: >90 asset managers with
AuM below € 10bn
Comprehensive and integrated multi- high % of
boutique platform enables an efficient and recurring EPS accretion
flexible dock process of new asset manager revenues
6HFS: Profiting from Regulation and Supply/Demand Gap
Closing the funding gap for RE developments Helping to cope with large supply/demand gap
>1.4m missing homes in Germany by 2021
Post 2007
(acc. to Federal Government)
c 15%
Equity Buffer >800k missing homes in Top7 cities
LTV
Numerous initiatives from the government to build new homes
c 20% Structural
LTV Funding Gap HFS Annual need for c 380k new homes, but only c 250k built (2017)
max 65% Senior Debt
LTV
HFS focusses in Germany on the big 7 cities (c 60%) and selected
on prospering location in other metropolitan areas
After financial crisis of 2007 banking regulation led to
insufficient financing for RE devopement of max. 65%
LTV (before up to 95%)
7Management Team Realignment after Departure of Michael Bütter
Key Responsibilities Experience
Investor Relations >17 years of CFO experience on
Communications board/senior management level
Accounting and controlling Selected experience: Vonovia
Finance B.V, Vonovia SE,
Corporate Finance HypoVereinsbank AG
HR, Legal, Risk & Compliance
Lars Schnidrig
CFO and interim CEO * Business Development & M&A
Deal sourcing >27 years of executing Real estate
Acquisition structuring transactions
Transaction execution Selected experience: Cerberus
Capital Management LP, UniCredit
Asset management
Equity raising
Thomas Landschreiber
CIO & Co-Founder Client relations
* Corestate terminated the employment of CEO Michael Bütter and revoked the employment contract by the end of 2018. Until further notice, CEO´s responsibilities will be
assumed by Lars Schnidrig and Thomas Landschreiber. Lars Schnidrig temporarily assumes the function of the Chairman of the Management Board.
8Agenda
1. Business model and investment highlights
2. Preliminary Results of FY 2018
9Highlights of FY 2018
Q4-2018 with strong operations
Sound organic growth in RE AuMs of >9%
Guidance FY 2018 outperformed on all levels
Hannover Leasing and HFS with record year
De-leveraging into target range and balance sheet clean-up accomplished
CRM acquisition and integration completed
Increase of distribution reiterated: EUR 2.50 per share
10Boost in Assets under Management Driven by Compelling Deal
Pipeline and External Growth in Q4-2018
Assets under Management Sourcing Pipeline
+9.3% organic growth in Real Estate AuMs in 2018 Pipeline remains strong and tangible
Planned decrease in non-Real Estate AuMs of € -1bn
Micro Living incl € 3.0bn AuMs from CRM acquisition
in exclusivity / DD in LOI
13% 12%
+15.1%
€ 25.3bn
€ 21.9bn 19% € 4.7bn
26% € 5.7bn 6% € 5.6bn
non Real
Estate 18%
8%
Other
23% 25% € 20.7bn
Retail
29% 23%*
under review / identified
Office € 16.2bn 22% incl. ~ €3.0bn
75%
from CRM
8%
Micro Living
32% 29%
Residential
FY-2017 FY-2018
11Real Estate Debt – Highly Diversified with Focus on Favourable Locations
Profile of HFS Mezzanine Funds end of 2018
Total committed fund volume: >€ 1,2bn
Retail
# of financed projects: 55 15%
Ø size of mezzanine financing: c € 23m
Residential Office
Predominantly German residential 75% 10%
Regional Break Down of Current Outstanding Financings (in m€)
c 70% of lending volume goes to Top7 Cities* in Germany
195
160 155 135 123
55 44 75
40 30 28 25
* Germany´s Top7 cities: Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart, Duesseldorf
12Key figures FY 2018: Beating Guidance on all Levels
Aggr. Revenues Adj. EBITDA
292*
+50% 184*
Guidance: 270-280
(increased in Nov) +49%
195 Guidance 160-170
123 (increased in Nov)
(in € Mio.)
(in € Mio.)
2017 2018
2017 2018
Reported EBITDA € 174m*
(2017: € 105m)
* All figures are not audited and preliminary, final figures to be published on 21 March 2019
13Key figures FY 2018: EPS +50%, Leverage halved
Adj. Net Profit
135*
+46%
Guidance 125-135
93 (increased in Nov) Reported Net Profit € 104m*
EPS (post minorities) € 4,93*
Distribution per share € 2,50 (indication)
(in € Mio.) pay out ratio c 50%
2017 2018
Gross financial debt: c € 586m*
Financial Leverage Ratio
(Net Debt/adj. EBITDA**) Cash: c € 197m*
Leverage massively reduced
4.2x
3.9x
4.0x
3.3x 3.4x
3.0x Mid term
2.3x 2.1*x target
2.0x range
Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018 Q4-2018
* all figures are not audited and preliminary, final figures to be published on 21 March 2019
** adj. EBITDA based on last twelve months
14Outlook 2019
Financial Guidance 2019
Aggr. Revenues* € 285 – 295m
EBITDA € 165 – 175m
Adj. Net Profit € 130 – 140m
Assumptions & key levers
Dynamic organic growth in core business, Real Estate investment management, by >30%
FY 2019 includes CRM Students (acquired in Q4-2018)
Guidance FY 2019 does not reflect any impact from further M&A
* Aggregate Revenues include Revenues and Gains from Real Estate Investment Management, Share of Profit and Loss from Associates and Joint Ventures, and Total Income from Real Estate
Operations/Warehousing
CORESTATE Capital – Management Presentation - Preliminary Results FY 2018 15Key Investment Proposition
1 Fully integrated Real estate investment manager with > € 25bn AuM and diversified product offering
2 Strong recurring fee income streams provide stability
3 Unique sourcing capabilities with € 5.6bn pipeline drive superior organic AuM growth
4 Diversified investor base with growing allocation to real estate provides sustainable fundraising base
5 Accretive external growth opportunities from sector consolidation based on a scalable platform
6 Strong profitability, efficient balance sheet structures and attractive dividend capacity
16Appendix: Long-dated Fund Maturity Profile
Maturities by type of funds (1)
46%
HFS funds
are in
evergreen
structure
12% 13%
6% 6%
5%
2% 3% 2% 2%
1% 1% 1%
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2030+
Real Estate Equity Funds Real Estate Debt Funds Aviation Non Real Estate
Notes:
(1) Maturities are defined as the contractual end of the AM contract. It is expected that most of the contracts are renewed or a transfer of the assets into another CORESTATE vehicle takes place..
17 .Appendix: Strong Recurring Fee Income Streams Providing Stability
Types of fees Recognition of fee income Duration
Potential repackaging in Real Estate investment lifecycle
Recurring fee income recognised as percentage
Acquisition of AuM
0-6 months
Sourcing /
Profit distribution upon transfer of asset into
acquisition Warehousing main fund or sale
Asset and property Recurring fee income recognised as percentage
management of AuM
Coupon Recurring return participation by HFS above
Investment / 3-15+ years
Participation pre-defined return hurdle rate of 7%
property
management Recurring fee income from Alignment Capital
Alignment Capital Investments
Profit distribution upon successful sale of
Sales fees fund assets
0-6 months
Exit / Capital gain and Income recognised upon successful exit of
Realisation Promote CORESTATE’s alignment investments
Recurring
Success based
18Appendix: Q3 / 2018 Aggregated Revenues Ahead of Targets
9m-2018 Revenue Stream (in m€ )
31.7 Ongoing fee floor
Acquisition related fees
Year-end transaction rally ahead
41.7 1) 99.1 Stable revenue stream with
Asset & property mgt. some extra tailwind from HFS in Q4
72.3 Warehousing/
Boost in Q3 from € 51m warehousing gains
RE operations
21.1 Main proceeds of 2018 already earned
Alignment capital
Incl. gains from asset disposal in aviation
0.2 Promote & sales fee Typically in Q4
224.3 Aggregated revenues >95% of original 2018 guidance made
after 9m trigger for uplift
1) Coupon participation fee (pro rata temporis)
19Appendix: CRM-Acquisition: Next Step in Building Europe´s
Leading Micro-Living Provider
CRM UK´s largest independent operator of student houses
with >10Y track record
23k beds in 145 locations
~ € 3.2bn AuMs
FY2018(e): Sales ~ € 13m; EBITDA ~ € 2m
Rationale Building Europe´s leading micro-living provider (demand grow by 20% by 2020)
Further international diversification of our asset base
Synergies from expertise in international student accommodation
Predictable recurring income stream and benefits from solid growth case
(2017: 6-7% market growth in UK student accommodation*)
Price ~ € 14m (plus € 3m net cash)
Our 28k micro-living apartments already in operation and another 2k
Approach
Time Line in development
Nearly 160 locations, five countries
Structural european-wide screening for new locations
*) Cushman Wakefield Student Tracker
20Appendix – Q3-2018 Profit & Loss Statement
(€ m) Q3/2018 Q3/2017
Revenue from Acquisition Related Fees 31.7 13.7
Revenue from Asset and Property Management 99.1 31.9
Revenue from Promote and Sales Fees realized 0.2 14.1
Revenue from Real Estate Investment Management 131 59.8
Management expenses (51.7) (32.3)
Earnings from Real Estate Investment Management 79.3 27.5
Net Rental Income 13.8 4.8
Revenue from Service Charges 0.3 0.8
Net Gain from Selling Property Holding Companies 51.8 7.4
Income from other Warehousing activities 6.3 -
Total Income from Real Estate Operations / Warehousing 72.3 13
Expenses from Real Estate Operations / Warehousing (18.3) (2.6)
Earnings from Real Estate Operations / Warehousing 54 10.4
Earnings from Alignment Capital 13.3 10
General, Administrative (20.9) (21.2)
Other Income 2.8 0.7
EBITDA 128.4 27.3
Depreciation and Amortisation (19.3) (3.1)
EBIT 109.1 24.2
Net Financial Expenses (17.5) (9.1)
EBT 91.7 15.1
Income Tax expenses (11.2) 1.6
Net Profit for the Period 80.4 16.6
of which attributable to equity holders 80.6 16.2
21Appendix – Balance Sheet as of 30 September 2018
(€ m) 30.09.2018 31.12.2017
Non-Current Assets
Goodwill 556.9 556.9
Intangible Assets 123.8 141.0
Investment in Associates and Joint Ventures 77.3 59.9
Total Non-Current Assets 951.1 915.8
Current Assets
Inventories 118.4 268.3
Receivables 58.5 52.8
Cash and Cash Equivalents 267.8 108.8
Total Current Assets 545.8 511.2
Total Assets 1.497 1.427.0
Equity
Total Equity 610.1 551.4
Long-term Financial Liabilities to Banks 77.4 238.3
Other Long-term Financial Liabilities 511.5 243
Other Non-Current Liabilities 59.1 30.5
Total Non-Current Liabilities 682.2 541.6
Current Liabilities
Short-term Financial Liabilities to Banks 68.6 132.3
Other Short-term Provisions 42.9 42.9
Other Short-term Financial Liabilities 0 15.5
Other Current Liabilities 33.4 75.9
Total Current Liabilities 204.7 334.0
Total Equity and Liabilities 1.497 1.427.0
22Appendix – Research and Shareholder Information
Average target price c. € 65 (100% Buy)
€ 77
€ 68 € 65 € 66 € 66
€ 58 € 57 € 62 Buy
Hold
Sell
14 Nov 2018 31 Dec 2018 14 Nov 2018 14 Nov2018 14 Nov 2018 14 Nov 2018 26 Nov 2018 02 Jan 2019
Shareholder structure & important share events
Sandra Ketterer (incl. 4.7%
8.9% Management) 4 Oct 2016 First Day of Trading
23 Feb 2017 c. € 23m Capital Increase
Norbert Ketterer
9.6% 20 Sept 2017 Share Placement (c. € 157m) by Flygon
21,329,417*
shares 21 Nov 2017 Placement of Convertible Bond (€ 200m)
Ralph Winter 27 Feb 2018 Share Placement (c. 20%) by R. Winter
17.8% Free Float… and M. Hoensbruch
19 March 2018 Inclusion in SDAX
* As of 30 September 2018
23Financial Calendar 2019
14 Feb 2019 Preliminary result of FY 2018
21 Mar 2019 Publication annual financial report 2018
26 Apr 2019 Annual General Meeting
14 May 2019 Publication Q1 financial report
Investor Contact
13 Aug 2019 Publication H1 financial report
Dr. Kai G. Klinger
Head of Investor Relations & Capital Markets
05 Sep 2019 Capital Markets Day
Phone: +49 69 3535630-106 12 Nov 2019 Publication Q3 financial report
ir@corestate-capital.com
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