Deutsche Industrie REIT-AG (DIR) Q1 2017/2018 Results 22 th February 2018
Content Investment Highlights Portfolio Share Financials Q1-2017/2018 Appendix 2
Investment Highlights
Deutsche Industrie REIT-AG at a glance Real estate investment company focussed on light industrial Pure play light industrial strategy set up as a REIT unique in Germany Listed since 7 th December 2017 REIT since January 2018 Tax-exemption at company level (Corporate tax and trade tax) Company shares as flexible instrument to invest in German light industrial properties Generating attractive and robust yields which will be distributed as dividends Portfolio overview 1 No. of properties 12 Total Rental space 379,131 sqm thereof commercial rental space 351,132 sqm 92.6% GAV 101.62 m Net rental income 2 11.16 m thereof commercial units 10.76 m 96.4% thereof other (parking, antennas, open spaces) 0.40 m 3.6% Net initial yield 3 11.9% IPR commercial units 3.24 Vacancy commercial units 21.2% WALT (weighted average lease term) in years 4 3.5 1 proforma = including notarised properties with transfer of ownership approx. in Q2&Q3-2017/2018 2 contractual rent as of 31/12/2017 annualised 3 based on purchase price 4 for contracts with fixed expiration 4
Strategy & Business Model Combining cash flow properties with lean admin structure and REIT Focus on light industrial properties (business parks, logistic centers, production facilities etc.) Well established properties with good infrastructural connections and regional relevancy Occupying a niche which is situated below the investment criteria of institutional investors and above the requests of private investors. Simple company structures and low admin expenses Valuation potential due to low purchase prices, vacancy reduction, extension of rental contracts Further growth of the portfolio mitigates single asset risks and stabilizes the whole portfolio REIT combines our asset strategy with flat admin structures, tax exemption on company level and provides attractive dividends for shareholders Strong cash flow generating portfolio Stable and efficient financial structure Value creation by active asset management + Lean company structure + + Attractive and stable dividends = + Advantages from REIT structure 5
Strategy & Business Model Value add approach Risk/Chance analysis before purchase We try to get a vision of the asset, location and useful future uses on the basis of current market demand Pro-active asset management Our asset management consists of experienced and motivated full-time asset managers Tenant relationship We want to be a reliable and long term partner and are in steady discussions to understand tenants needs with the aim to generate win-wins Creativity and flexibility We try to think inconventionally and to find new concepts to recover a property Tenant network With the growth of the portfolio also our network of potential tenants grows which can be advantegeous 6
Portfolio
Portfolio Overview Regional spread & local relevance 7 8 3 2 1 # Location Category Rental space sqm. Annualised WALT rent 2 3 Occupancy rate Market value 1 Neubrandenburg Production & Logistics 56,144 729 k 8.1 98% 5,050 k 14.4% Yield 2 Stralsund Production & Logistics 3,235 44 k 3.6 31% 552 k 7.9% 6 5 3 Güstrow Production & Logistics 6,130 90 k 13.3 100% 620 k 14.5% 4 Jena Production & Logistics 8,839 46 k n.a. 13% 800 k 5.8% 9 11 12 10 4 5 Bad Salzdetfurth Industrial Park 51,083 1,565 k 2.9 73% 10,900 k 14.4% 6 Löhne Logistics 47,518 1,949 k 4.0 100% 17,000 k 11.5% 7 Schortens Industrial Park 96,943 3,497 k 2.6 57% 36,200 k 9.7% 8 Rostock Logistics 39,353 857 k 3.2 77% 9,500 k 9.0% 9 Bornheim Logistics 9,057 302 k 3.0 95% 3,700 k 8.2% 10 Drei Gleichen 1 Logistics 24,004 600 k 1.5 100% 3,600 k 16.7% 11 Wuppertal 1 Industrial Park 10,157 579 k 2.5 99% 5,500 k 10.5% 12 Remscheid 1 Industrial park 26,668 898 k 2.2 97% 8,200 k 10.9% Total 379,131 11,158 k 3.5 79% 101,622 k 11.0% 1 proforma = including notarised properties with transfer of ownership approx. in Q2&Q3-2017/2018 2 contractual rent as of 31/12/2017 annualised 3 based on contracts with fixed expiration 8
Portfolio Overview Solvent major tenants Tenant Sector % of rent Rents split by remaining lease duration* Otto Group / Hermes Logistics 13.0% BImA /Bundeswehr German Navy 9.7% Nordex Wind power plants 6.8% Tegut Super market chain 5.4% Fuba Automotive Electronics Automotive supplier 5.3% Paul Hettich Furniture hardware 4.4% WEKA Holzbau GmbH Wood-working 4.2% Alexanderwerk AG Mechanical engineering 3.6% Arvato direct services Multi-service provider 3.3% Etimex Technical Components Automotive supplier 2.6% Top Ten Tenants* 58.5% 2.500 k 2.250 k 2.000 k 1.750 k 1.500 k 1.250 k 1.000 k 750 k 500 k 250 k 0 k WALT: 3.5 years up to 1 year up to 2 years up to 3 years up to 4 years up to 5 years >5 years no fixed expiration * Proforma portfolio = including notarised properties with transfer of ownership approx. in Q2&Q3-2017/2018 9
Portfolio Overview Well diversified mix of uses Category rental space IPR p. sqm vacancy WALT annualised rent % of rent Industrial park 184,850 4.21 30.0% 2.6 6,539,285 58.6% Logistics 119,932 2.80 7.8% 3.3 3,708,906 33.2% Production & logistics 74,349 1.18 13.6% 8.6 909,333 8.1% Total* 379,131 3.06 19.8% 3.5 11,157,525 100.0% Types of use by annualised rent* Types of use by rental space* Office 28.6 Storage 32.0 Σ Other 6.7 Storage 28.6 Σ Other 9.7 Office 21.0 Logistics 17.4 Production 18.7 Logistics 18.3 Production 19.0 * Proforma portfolio = including notarised properties with transfer of ownership approx. in Q2&Q3-2017/2018 10
Portfolio Recent acquisitions Adress Wuppertal, Am Brögel 1A-23 Type Industrial park Branches specialist traders, security equipment, education institution Rental space 10,157 sqm Property area 13,438 sqm In-Place Rent 579 k IPR/sqm. 4.84 p. sqm. WALT 2.5 years Vacancy 0.8% Purchase price 5,500 k Net initial yield 10.5% Wuppertal is a major citiy in the southern part of North Rhine-Westfalia With a long industrial history it is still an important industrial centre The acquired property is a well refurbished building complex in an established city location It contains storage halls, specialist shops, garages, workshops and different office areas and also a Kindergarten Although in the center of the city, the object is well connected to the motorway A46 and therefore to the major roads in western Germany 11
Portfolio Recent acquisitions Adress Remscheid, Kippdorfstr. 6-24 Type Industrial park Branches mechanical engineering, specialist traders, logistics Rental space 26,668 sqm Property area 42,648 sqm In-Place Rent 898 k IPR/sqm. 3.19 p. sqm. WALT 2.2 years Vacancy 2.6% Purchase price 8,200 k Net initial yield 10.9% Remscheid is a traditional industrial town in southern North Rhine-Westfalia It is famous for mechanical engineering and toolmaking industry The major tenants are Alexanderwerk and Brüder Mannesmann plus further companies from the German Mittelstand Today the modernised and refurbished industrial park contains a diversified tenant mix with workshops, garages, storages and also offices It is located within 10 minute distance to motorway A1 12
Financials Q1-2017/2018
Financials Q1-2017/2018 Condensed IFRS balance sheet keur 31/12/2017 30/09/2017 keur 31/12/2017 30/09/2017 Pro forma portfolio of meur 102 including the latest notarised acquisitions Elimination of deferred tax positions due to REIT status in the FY 2017/2018 Assets Equity and liabilities Investment properties 84,990.2 35,593.7 Subscribed capital 15,000.0 81.5 Other non-current assets 340.1 17,564.9 Capital reserves 8,933.0 23,852.4 Deferred tax assets 0.0 0.0 Other reserves 50.0 50.0 Total non-current assets 85,330.2 53,158.6 Retained earnings 12,119.0 8,069.9 Other current assets 31,790.2 46,433.1 Total equity 36,102.0 32,053.8 Cash position 61.7 23.4 Total current assets 31,851.9 46,456.5 Bank liabilities 2,013.1 2,083..6 Other liabilities 69,309.7 60,693.3 Deferred tax liabilities 0.0 1,499.4 Total long-term liabilities 71,325.9 64,276.3 Bank liabilities 307.8 305.1 Other financial liabilities 0.0 0.0 Other short-term liabilities 9,446.6 2,979.9 Total short-term liabilities 9,754.2 3,285.0 Total assets 117,182.1 99,615.1 Total equity and liabilities 117,182.1 99,615.1 Capital increase in preparation for the listing of the shares according to REIT requirements Comprises the secured real estate bond with meur 68 14
Financials Q1-2017/2018 Condensed IFRS income statement Uplift due to various acquisitions in 2017 Thereof 208 keur for the listing project keur 01/10/2017-31/12/2017 01/10/2016-31/12/2016 Rental income 1,772.3 216.7 Operating expenses -649.2-73.1 Gain/loss from fair value measurement of investment properties Net rental income 1,123.1 143.6 1,636.8 126.3 Other operating income 57.2 0.9 Personnel expenses -29.8 0.0 Depreciation of assets -0.8 0.0 Impairment of receivables 0.0-25.5 Other operating expenses -316.6-18.5 EBIT 2,469.8 226.8 Interest income 854.5 0.0 Interest expenses -682.6-255.6 EBT 2,641.7-28.8 Income taxes 1,407.4-18.1 Other taxes 0.0-0.5 Total period income 4,049.1-47.4 Valuation gain based on the property portfolio as at 31 December 2017 (9 properties) according to external appraiser Income tax gains due to reimbursement of deferred taxes after obtaining REIT status 15
Financials Q1-2017/2018 FFO, EPRA NAV and LTV reconciliation FFO/aFFO: keur 01/10/2017-31/12/2017 01/10/2016-31/12/2016 Total period income 4,049.1-47.4 +/- Income taxes -1,407.4 18.1 + Depreciation of assets 0.8 0.0 +/- Unrealised gain/loss from fair value measurement of investment properties Other non-current / non-cash expenses/income -1,636.8-126.3 114.4 43.4 FFO 1,120.1-112.2 - Capex 0.0 0.0 affo 1,120.1-112.2 FFO per share (EUR)* 0.07 - affo per share (EUR)* 0.07 - EPRA NAV: keur 31/12/2017 Total equity 36,102.0 Conversion of convertible bonds 0.0 NAV 36,102.0 Deferred taxes 0.0 EPRA NAV 36,102.0 Number of shares 15,000,048 EPRA NAV per share (EUR)* 2.41 LTV: keur 31/12/2017 Bank loans 2,013.1 Secured real estate bond 68,631.6 Other current liabilities 6,407.6 *the shares of DIR are listed since 7 Dec. 2017 Other current assets & cash -30,544.4 Net debt 46,507.8 Investment properties incl. advanced payments 85,296.1 Net LTV 54.5% 16
Financials Q1-2017/2018 FFO-Guidance for the Fiscal Year 2017/2018 FFO-Guidance for FY 2017/2018: FFO guidance is mainly driven by prospective acquisitions DIR plans to invest between 75 and 100 meur in the FY 2017/2018 Based on current projections DIR expects FFO between 4 and 5 meur FFO run rate between 9 and 10 meur by the end of FY 2017/2018 17
DIR Share
Share Basic data & shareholder structure Shareholder structure (21 Feb. 2018) : Other Free Float 22.52% Obotritia Capital KGaA 9.99% Obotritia Alpha Invest GmbH 9.99% Obotritia Capital 38.10% Basic data 21 Feb. 2018 ISIN WKN Ticker Symbol A2G9LL DE000A2G9LL1 JB7 Elisabeth Anna Auersperg- Breunner 3.17% Astrid Purkert 4.21% Obotritia Beta Invest GmbH 9.99% Number of shares 15,000,048 Nominal capital Share class 15,000,048 EUR Bearer shares Gert Purkert 9.99% Babelsberger Beteiligungs GmbH 8.12% Stock exchanges Designated Sponsor Berlin (regulated market) Frankfurt, XETRA (Open Market) Oddo Seydler Bank AG Free Float 59.88% Lotus AG 9.99% ALPHA 4 S.A., SICAV-SIF 10.00% Management 2.02% Initial share price (XETRA) 07/12/2017 Current share price 4.85 EUR 7.72 EUR 19
IR contact Get in touch with us IR contact: René Bergmann August-Bebel-Str. 68 14482 Potsdam E-Mail: rb@deutsche-industrie-reit.de Tel: +49 (0) 331 / 740 076 535 Fax: +49 (0) 331 / 740 076 520 20
Disclaimer The material in this presentation has been prepared by Deutsche Industrie REIT-AG (Deutsche Industrie) and is general background information about Deutsche Industrie s activities current as at the date of this presentation. This information is given in summary form and does not purport to be complete. Information in this presentation, including forecast financial information, should not be considered as advice or a recommendation to investors or potential investors in relation to holding, purchasing or selling securities or other financial products or instruments and does not take into account your particular investment objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to these matters. any relevant offer document and in particular, you should seek independent financial advice. All securities and financial product or instrument transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk. This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations with respect to Deutsche Industrie s businesses and operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions and risk management practices. Readers are cautioned not to place undue reliance on these forward looking statements. Deutsche Industrie does not undertake any obligation to publicly release the result of any revisions to these forward looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside Deutsche Industrie s control. Past performance is not a reliable indication of future performance. Unless otherwise specified all information are for the financial quarter ended31 Dec 2017. 21
Appendix
Management Experienced and committed management team Rolf Elgeti (CEO) Rolf has been the founder of Deutsche Industrie REIT-AG, which is a spin-off of his investment company Obotritia Capital. Before he was the CEO of TAG Immobilien AG, Hamburg, which experienced an enormous growth under his leadership and stepped into German Mid-Cap Index (MDAX). Rolf worked many years as an equity strategist at ABN Amro, Commerzbank and UBS in London. He has excellent banking and real estate knowledge. Rolf is personally and financially committed to Deutsche Industrie REIT-AG. Sonja Paffendorf (CIO) Sonja has been part of Obotritia Capital since 2015. She started as a Head of project development and became the Chief Investment Officer of Obotritia Capital in January 2017. In this position she has been responsible for the strategic growth of the commercial real estate portfolio. She was appointed CIO of Deutsche Industrie REIT-AG on 18 th of October 2017. Sonja has worked many years in the real estate industry, especially in project development in Germany and Australia. She is personally and financially committed to Deutsche Industrie REIT-AG. 23
DIR s current portfolio #1 - Neubrandenburg Adress Neubrandenburg, Augustastraße 30 Type Production & Logistics Branches Wood-working, car services, parcel service, Rental space 56,144 sqm Property area 82,315 sqm In-Place Rent 729 k IPR/sqm. 1.66 p. sqm. WALT 8.1 years Vacancy 1.7% Purchase price 4,350 k Net initial yield 16.7% Neubrandenburg is a conurbation in northeastern Germany Regional well established light industrial area Main tenant is a wood-working company with a lease duration of more than 10 years The other tenants are equally reputable companies of the region with a long-term interest in this location 24
DIR s current portfolio #2 - Stralsund Adress Stralsund, Platz des Friedens 17-23 / 31-47 Type Production & Logistics Branches car services, handcrafter, building companies Rental space 3,235 sqm Property area 41,569 sqm In-Place Rent 44 k IPR/sqm. 2.25 p. sqm. WALT 3.6 years Vacancy 68.8% Purchase price 180 k Net initial yield 26.5% Stralsund is a mid size town and port at the Baltic sea Commercial property in a industrial site near city centre Mostly smaller rental areas Large property with development potential 25
DIR s current portfolio #3 - Güstrow Adress Güstrow, Glasewitzer Chausee 31 Type Production & Logistics Branches Metalworking Rental space 6,130 sqm Property area 15,274 sqm In-Place Rent 90 k IPR/sqm. 1.22 p. sqm. WALT 13.3 years Vacancy 0.0% Purchase price 540 k Net initial yield 16.7% Güstrow is a district town near Rostock The property is let to the former owner of the property (sale & lease back deal) Therefore the current tenant is strongly tied to the location The location is part of a commercial development area 26
DIR s current portfolio #4 - Jena Adress Type Jena, Göschwitzer Str. 20 u.a. Production & Logistics Branches Entertainment, storage Rental space 8,839 sqm Property area 9,958 sqm In-Place Rent 46 k IPR/sqm. 3.16 p. sqm. WALT n/a Vacancy 86.5% Purchase price 720 k Net initial yield 7.7% Jena is one of the important industrial centres in east Germany Object was acquired in a compulsory auction Buildings are situated in an excellent industry location in Jena Very close to the company areas of Carl Zeiss an Jenoptik High development potential due to low occupancy rate Production- and logistics buildings are seperatly lettable 27
DIR s current portfolio #5 - Bad Salzdetfurth Adress Bad Salzdetfurth,TecCenter 1 Type Industrial Park Branches Automotive, IT-Services, Logistics Rental space 51,083 sqm Property area 116,371 sqm In-Place Rent 1,565 k IPR/sqm. 3.59 p. sqm. WALT 2.9 years Vacancy 27.0% Purchase price 10,000 k Net initial yield 15.2% Bad Salzdetfurth is very close to important automotive cities Hanover, Brunswick and Wolfsburg Internationally operating companies like DELPHI, ETIMEX and COMSYS are major tenants Locally important business park with very less competition Well balanced user mix of production, office, logistics and storage There is a leasehold of approx. 20 % (22,745 m²) of the total property 28
DIR s current portfolio #6 - Löhne Adress Löhne, Dieselstr. 7-9 Type Logistics Branches Mail order, Furniture hardware Rental space 47,518 sqm Property area 98,702 sqm In-Place Rent 1,949 k IPR/sqm. 3.42 p. sqm. WALT 4.0 years Vacancy 0.0% Purchase price 13,880 k Net initial yield 14.0% Löhne is located at one of the major European east-west transit routes Logistics building with development potential Main user is Hermes (OTTO group) which uses the location in Löhne as a strategic distribution center The lease contract of the other tenant Hettich GmbH & Co. KG expires in 2026 There is a leasehold of approx. 45 % (44,159 sqm) of the total property 29
DIR s current portfolio #7 - Schortens Adress Schortens, Olympiastraße 1 Type Industrial Park Branches Federal authority, multiservice providers, several trading companies Rental space 96,943 sqm Property area 178,973 sqm In-Place Rent 3,497 k IPR/sqm. 4.96 p. sqm. WALT 2.6 years Vacancy 43.1% Purchase price 33,000 k Net initial yield 10.1% The business park is situated very close to the A29 (Wilhelmshavener Kreuz) and in 11 km distance to Germany s only deepwater port JadeWeserPort TCN is an established trademark in this region and one of the largest of the few residing business parks The office- and logistics buildings have divisible rental areas and therefore it is possible to rent out smaller units 30
DIR s current portfolio #8 - Rostock Adress Rostock, Handelsstraße 3 Type Logistics Branches Wind power plant producer, logistics Rental space 39,353 sqm Property area 84,673 sqm In-Place Rent 857 k IPR/sqm. 2.34 p. sqm. WALT 3.2 years Vacancy 22.8% Purchase price 8,800 k Net initial yield 9.5% Rostock is the biggest city in the German northeast and has also an important harbor Property is very close to the motorway and well connected to the port Main tenant (72% of Rental space) is Nordex a wind power plants company Curently Nordex has continually expanded its rental areas The other tenants are smaller companies with a long-term commitment to this location 31
DIR s current portfolio #9 - Bornheim Adress Bornheim, Ottostraße 91 Type Logistics Branches Logistics, health care Rental space 9,057 sqm Property area 13,608 sqm In-Place Rent 302 k IPR/sqm. 2.87 p. sqm. WALT 3.0 years Vacancy 4.7% Purchase price 3,100 k Net initial yield 9.7% Situated in the growing metropolitan area of Köln/Bonn Excellent transport link to major roads Part of the local well established business park Bornheim-Sechtem Two tenants, the logistics area is fully let. Main tenant is Dachser SE, a world leading logistics company 32
DIR s current portfolio #10 - Drei Gleichen* Adress Drei Gleichen, Dr.-Bube-Straße 6 Type Logistics Branches Supermarket chain Rental space 24,004 sqm Property area 107,625 sqm In-Place Rent 600 k IPR/sqm. 2.08 p. sqm. WALT 1.5 years Vacancy 0.0% Purchase price 3,600 k Net initial yield 16.7% Perfect connection to important motorway A4 in the heart of Germany Very close to the major cities in Thuringia (Erfurt, Jena, Weimar, Gotha, Eisenach) on the axis Frankfurt am Main-Dresden Single-tenant asset One of two distribution centres for the supermarket chain Tegut *Notarised property with transfer of ownership approx. in Q2-2017/2018 33
DIR s current portfolio #11 Wuppertal* Adress Wuppertal, Am Brögel 1A-23 Type Industrial park Branches specialist traders, security equipment, education institution Rental space 10,157 sqm Property area 13,438 sqm In-Place Rent 579 k IPR/sqm. 4.84 p. sqm. WALT 2.5 years Vacancy 0.8% Purchase price 5,500 k Net initial yield 10.5% Wuppertal is a major citiy in the southern part of North Rhine-Westfalia With a long industrial history it is still an important industrial centre The city is one of the greenest towns in Germany The acquired property is a well refurbished building complex close to the river Wupper and the famous suspension railway It contains storage halls, specialist shops, garages, workshops and different office areas and also a Kindergarten Although in the center of the city, the object is well connected to the motorway A46 and therefore to the major roads in western Germany *Notarised property with transfer of ownership approx. in Q3-2017/2018 34
DIR s current portfolio #12 Remscheid* Adress Remscheid, Kippdorfstr. 6-24 Type Industrial park Branches mechanical engineering, specialist traders, logistics Rental space 26,668 sqm Property area 42,648 sqm In-Place Rent 898 k IPR/sqm. 3.19 p. sqm. WALT 2.2 years Vacancy 2.6% Purchase price 8,200 k Net initial yield 10.9% Remscheid is a traditional industrial town in southern North Rhine-Westfalia It is famous for mechanical engineering and toolmaking industry The acquired asset is the headquarters of Alexanderwerk AG (in 1899 was the first company to be listed on the German Stock exchange) Today the modernised and refurbished industrial park contains a diversified tenant mix with workshops, garages, storages and also offices It is located within 10 minute distance to motorway A1 *Notarised property with transfer of ownership approx. in Q3-2017/2018 35