Corporate Governance, ESG, Financials, Leverageand Outlook - 19 November 2020
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CORESTATE – Capital Markets Day – Part II Corporate Governance, ESG, Financials, Leverage and Outlook 19 November 2020
Agenda
Enhanced Corporate Set-Up
(Daniel Löhken, Chief Legal and HR Officer) 3
Operating Environment
2 Business Overview and Strategy
Earnings Bridge to Guidance 2020 and Sneak
Preview on 2021(Dr. Kai Gregor Klinger, CMO) 8
3 Investment Management
Financials: Leverage, Cash Flow
4 Coverage and Liquidity
Placement Process of Balance Sheet Assets Corporate Governance, Risk
(Martin Bassermann, CFO) 5 and12
Compliance Update
- Appendix
Outlook (Lars Schnidrig, CEO)
18
Enhanced Corporate Set-up Daniel Löhken, Chief Legal and HR Officer
Structural Enhancement of Corporate Governance
New Supervisory Board Enlarged Management Board to Four Members
Diversity, Independence and Competences Clients, Operations and Corporate Functions
• > 80 years experience in real estate and asset • Strong real estate and transaction background
management • Legal, Compliance and Risk as key criteria for
• Competences in capital markets, governance, clients to invest
compliance, finance and accounting
• Strengthened holding and finance function
• New: Corporate Governance Committee • Clear responsibilities: two Board members for
• Focus on independence clients and two providing strong operational and
holding functional backbone
Augmented Corporate Management
• Improved clients´ reach • Strong focus on Core/Core+
• Further institutionalization of platform • Leading to next level in the
and transaction capabilities Company´s development
4
Strong Second Management Layer Ensures Smooth Operations
Compelling Execution Capabilities Backed by Effective Organizational Setup
Investment & Asset Management Corporate & Holding Functions
• Senior Mgt. with >100 years • Senior Mgt. with >100 years
of transaction experience and experience in corporate
asset management competences management (capital markets,
• > € 34bn of RE Equity AuM deals M&A, accounting, legal, HR …)
Management in combination with strong
real estate background
Board
• Strategic Set-up • Comprehensive regulatory
• Proven funds raising capabilities
• Key Initiatives framework and structures
> € 15bn equity raised
• Best-in-class client service team and for IT, Risk Management,
reporting standards Compliance
• Dedicated ESG-Office to implement a
profitable and consistent ESG strategy
Operations -
Equity Raising, ESG & Stakeholder Management Regulatory Backbone, Fund Management, IT
5
ESG Strategy – Road to 2025 and YoY Progress (2018-2019)
Reduction in Increase in Reduction in water Reduction in
Co2-emissions* by energy efficiency* by comsumption* by residual waste*
2% annually - 12 % 5% annually - 10 % 2% annually - 12 % 2% annually - 13 %
20% by 2025
20% by 2025 30% by 2025 20% by 2025
Increase in the proportion of Introduction of a Development of at least Support of
women in management Guideline for employee 5 ESG partnerships A CC Charity incl.
by 5% annually well-being with major tenants Soli-Employee Days
updated every 12 months on track by 2025 annually from 2020 1 charity
30% by 2025 on track on track supported
Implementation of a Ensure that every employee Implementation of Compliance with the
Compliance & has signed an 12 ESG Comittees highest standards in
Governance Training ethics declaration to ensure compliance with set investor transparency
of all employees, annually from 2020 targets, annually as of 2019 continued and continuous
annually as of 2019 done done done done
1 per m² in the year of the total portfolio; 2 Figure reflects the development from December 2018 to December 2019; since summer 2019 (publication of ESG targets) the
share has increased by 7%. More details on the next page; 3 Will address changes from the corona crisis by including new work topics; 4 Postponed until 2021 due to 6
corona crisis, not communicated as annual targetESG New Value Approach – Monetization
Modular Income Creation
ESG as a service
Additional mandates from new
• Mandated climate pathways for the next and existing clients based on ESG
30 years competence
• Institutional clients demand ESG
compliance of their portfolios Impact Funds in line with
• Corestate can offer ESG services from the Green Deal
basic risk management and reporting to Qualified sustainable real estate
full-fledged ESG impact-themed investments based on EU
Taxonomy
products
• We explore additional income from an ESG integration into
ESG fee based on Value at Risk for existing mandates
managed portfolios Added client value through ESG
due diligence and ESG Asset
• Delivering an optimum of sustainability
Management
whilst retaining a maximum level of
returns is at the core of our ESG New ESG Risk Management
Value Approach Physical and transitory ESG risk
management in existing and new
mandates
7Earnings Bridge to Guidance 2020 & Sneak Preview on 2021 Dr. Kai Gregor Klinger, CMO
Fully on Track to Revenue Guidance 2020
and a Promising Approach to 2021
Revenue Split-up for act9M-2020 vs. FY-2020e Prospects for FY-2021
(in m€)
Tendency Main Drivers
Acquisition Related Fees 23 25-35 • Pick-up in investment activities
• Transaction volumes € 2-3 bn
Asset & Property Mgt. Fees • Growing AuM base
106 135-155
(incl. CPF & Sales/Promote Fees) • Prospering RE debt business (CPF)
Mezzanine Loans 7 5-10 • Steady level of bridge loans
Warehousing / RE Operations 3 0-10 ? • Placement of inventories
Alignment Capital 0 5-10 ? • 2020 burdened by extraordinary
valuation effects
• Tangible upside potential
Aggr. Revenues 143 185-210 accelerated by a normalized
market environment
9Profitability Short-term Burdened
by COVID Effects and Cost Inelasticity
Alteration of Fix Cost Base The Significant Set-backs in 2020 Earnings
with Lagged P&L Impact Opens Parallel Room for a Strong Recovery
• Group wide efficiency program launched with • 9M-2020 earnings fully in-line with financial
€ 5-10m one-off expenses in 2020 outlook and budgets 2020
• Target of c € 10m cost savings from 2021 • 2021 profitability shows clear catch-up
onwards potential from extraordinary cost burdens of
2020, future impact of efficiency program
and recovered market environment
incl. € 5-10m c € 10m cost with corresponding revenue developments
neg. one-offs savings
Tendency
act. 2019 2020e 2021
Total expenses 151m 130-140m 2
Total exp. ratio 1 50% 65-70%
Target range 45-50%
1) Total expenses in relation to aggregated revenues and gains
2) Based on mid-point guidance of aggregated revenues and gains and of EBITDA 10Development of Net Debt and Financial Leverage
Net Debt (in €m) Consistent Net Debt
624 Reduction Plan
593
600 520 530
470 < 450
389 • Bolstered by € 75m capital
towards
400 300 increase in Q3-2020
• > € 200m from structured
200 placement of balance sheet assets
by 2022 (with first pickings
FY H1 FY H1 FY H1 FY FY already in 2020)
2017 2018 2018 2019 2019 2020 2020e 2021e
• Plus positive cash flow from
operations
Leverage Ratio (net financial debt / LTM EBITDA)
7.0x
Prospects
6.0x
5.0x 4.0x
Financial Leverage
4.2x (LTM)
4.0x 3.4x 3.5
2.7x Projection
3.0x x (on EBITDA
2.1x Guidance)
Target Range
2.0x 2.0-3.0x
FY H1 FY H1 FY H1 FY FY
201 2018 2018 2019 2019 2020 2020e 2021e
7
11Placement Process of Balance Sheet Assets Martin Bassermann, CFO
Overview of Balance Sheet Sources
Total assets transferable into Cash amount to € 414m
• A. Investment in Associates and Joint Ventures
− Minority Share (5%-30%) of CORESTATE in
existing semi-institutional Investment Structures
following
our Alignment Capital Approach.
• B. Other Financial Instruments (non-current)
− Investments in existing Investment Structures
that
do not qualify as Associates or Joint Ventures
• C. Inventories
− Real Estate Asset Warehousing for creating Seed
Portfolios for our investors.
• Other Financial Instruments (current)
− Short term Mezzanine Warehousing (€ 52m) as
the main part of this line item.
13A – Investment in Associates and Joint Ventures (€ 114m)
Split-up of Assets Classes in Associates and JVs
as of End of September 2020
• Predominantly value-add assets with
semi-institutional Investors and UHNWI´s
• Business Plan usually 3 to 5 years term
• Regular exit at the end of the term or if
targeted IRR is achieved
14B - Other Financial Instruments (€ 174m)
€ 58m Co-Investment in CORESTATE Opportunity Fund (~ 20%)
• Special AIF focusing on Commercial Assets with Value-Add AM Strategy
• GAV of the Fund amounts to > € 0.5bn (Q3-2020)
• BVI-Return since inception at 26.4%
• Development of fund share price since first placement
€ 40m Co-Investment in HFS Stratos Funds (~ 3%)
• Stratos II (€ 10m); Stratos IV (€ 5m); Stratos V (€ 25m)
€ 76m Other Instruments
• Private Invest (c € 9m)
• Other smaller co-investments < € 10m
15C - Inventories
Galerie Neustädter Tor, Giessen (€ 63m)
• Giessen, c 50km North of Frankfurt, c 90k inhabitants (growth rate +3.6% p.a.),
highest student density in Germany
• Inner city shopping centre (32k sqm) diversified and high quality tenant mix
(non-food, restaurants, supermarkets), re-positioning towards a near-field retail centre
• Net rental income € 6m p.a. (c 10x), refurbishment measures scheduled until end of 2021, c 75-80% led
• Comparable market multiple: 15-20x
16Indicative Timeline – Structured Cash Conversion Program
> € 200m Impact on Net Debt Reduction from Schedule of Main Levers
Placements until FY2022
(in m€) • In 2020 partly wind down of STATOS
alignment and regular placement of co-
c 30 investments (c € 30m)
• Warehousing Asset (Giessen) until the end of
20-40 2021 (> € 70m)
• In 2021 Co-Investments (JVs) in Micro Living
and Student Housing (> € 20m)
60-80
• Latest until 2022 sale of co-investments in
Office (>€ 30m)
• Until 2022 co-investment from Opportunity
Fund (> € 40m)
60-80
H2-2020 H1-2021 H2-2021 H1-2022
17Outlook Lars Schnidrig, CEO
The Next Promising Chapter in Our Company’s History
is Ready to Get Opened
What can you expect for 2021 onwards
• All long-term fundamental market drivers are intact and highly supportive for
organic growth prospects in our core disciplines RE equity and RE debt
• Well prepared to succeed in 2021 with significant catch-up in operations and
profitability
• Reliable progress on deleveraging path with a financial leverage
in FY2021 of clearly below 3.0x
• Restrained corporate M&A activities (for the time being)
… more to come in Q1
19IR Contact and Financial Calendar 2021
Investor Contact Financial Calendar 2021
Dr. Kai G. Klinger
Chief Markets Officer
24 February Publication preliminary results for FY 2020
Phone: +49 69 3535630-106 24 March Annual financial report 2020
ir@corestate-capital.com
28 April Annual General Meeting
19 May Publication results for Q1
11 August Publication results for H1
10 November Publication results for first nine months
Please note that these dates
may be subject to changeYou can also read
