Roadshow Presentation - May / June 2021 24.7bn RE - Corestate Capital
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24.7bn RE Roadshow Presentation May / June 2021 René Parmantier, CEO / Dr. Kai Klinger, CMO
Disclaimer
This presentation contains forward-looking statements that are Glossary
subject to various risks and uncertainties. Such statements are € = Euro;
based on a number of assumptions, estimates, projections or
$ = (US)Dollar;
plans that are inherently subject to significant risks, as well as
uncertainties and contingencies that are subject to change. % = percentage;
a = actual;
Actual results can differ materially from those anticipated acc. = according;
in the forward-looking statements of CORESTATE Capital Holding adj. = adjusted;
S.A. (the “Company”) as a result of a variety of factors, many of
which are beyond the control of the Company, including those aggr. = aggregated;
set forth from time to time in the Company’s press releases and approx. = approximately;
reports and those set forth from time to time in the Company’s c(a) = circa;
analyst and investor calls and discussions. The company does not e = expected;
assume any obligation to update the forward-looking statements
(F)Y = (financial) year(s);
contained in this presentation.
H = half year(s);
This presentation does not constitute an offer to sell or a LTM = last twelve months;
solicitation or offer to buy any securities of the Company, and no M = month(s);
part of this presentation shall form the basis of or may be relied Q = quarter(s);
upon in connection with any offer or commitment whatsoever.
k = thousand(s);
This presentation is being presented solely for information
purposes and is subject to change without notice. m = million(s);
bn = billion(s)
2A Fully Integrated and Specialized Real Estate Investment Manager
€ c28bn >40% *
Assets under EBITDA
Management Margin
~800 FTEs | 45 Offices | 9 Countries
BB (negative) c € 6bn € c1.3bn
Corporate Credit Deal Pipeline in Fund Volume
Rating RE Debt & Equity in Real Estate
Mezzanine
* mid-point financial outlook 2021
3Strong Support from Macro Environment and Mega Trends
Real Estate Equity Real Estate Debt
▪ Increasing investment pressure (esp. on pension ▪ Constraints in bank credits on higher risk
Key Market Driver
schemes and insurers) driven by interest rate profiles (regulation even fostered by corona)
environment and demographic changes ▪ Thriving RE transaction market with broad
▪ Mega trends: urbanization, digitalization and demand for specialized financing solutions
sustainability ▪ Increasing allocation to private debt funds
▪ Scale matters on regulatory and client needs from institutional investors
▪ One-stop shop with > € 28bn AuMs and ▪ Leading RE financing platform in DACH
integrated offering of AM, Fund Mgt. and PM ▪ By far largest RE mezzanine fund at HFS
USP & Strengths
▪ Long-standing track record as IM through the ▪ Outstanding debt advisory and structuring
entire RE life cycle and over all risk profiles capabilities with focus on small/mid size
▪ Leading position in selected niche markets tickets at AFS
(student housing, city quarters, B-Cities)
▪ Commercialized ESG approach
Comprehensive cross-selling synergies on products, clients and investors
4Acquisition of Aggregate Financial Services (AFS)
as Core Component of Private Debt Strategy
Creating a Leading Real Estate Financing Platform
AFS with ▪ Financing advice with focus on small/mid size tickets
perfectly ▪ Structuring of private debt financings, mainly for real estate
complementary ▪ Placement with institutional clients
business ▪ Issuing, proprietary trading and placements of financial instruments
▪ Disrupted and constrained credit markets
Strong Strategic ▪ Perfectly complementary businesses
Rationale for ▪ Together deepening of real estate financing value chain
Acquisition ▪ Debt and equity cross-selling opportunities
▪ Transaction enables at least c € 10 m of annual run rate synergies1 and will be earnings accretive
▪ Purchase price of € 113m (considering € 17m cash)
▪ 8.5m new Corestate shares and € 5m in cash
− Implied 2021E FV/EBITDA multiple of 6.5x (based on mid-point of AFS 2021E EBITDA guidance
Key Terms of
and excluding synergies)
Transaction
▪ Up to 1.5m new shares in total could be issued over next three years as earn-out: 0.5 m shares in
21E, 0.5 m shares in 22E, and 0.5 m shares in 23E
▪ The new shares are subjected to a long-term lock-up
Envisaged ▪ Offer announcement: 14 January 2021
Timeline ▪ Closing of transaction: Q2-2021
1 Annual run rate synergies expected to be achieved within the next three years
5Enhanced Real Estate Debt Offering for our Clients to go with our Diversified
Product Line-up
Equity Product Range Debt Product Range
(*after Closing of AFS Acquisition)
Products \
Debt Advisory
Residential City Quarters Office Logistics Micro Living *Senior *Whole Mezzanine and
Loan Loan Structuring
Return1 3.5%-4.5% 3.5%–5% 3.5%–4% 4%-6% 5%–5.5% 3%–5% 5%–7% 10%–13% Fee Based
One-Stop-Shop
Asset & Property Management
Integrated
Platform
Fundraising, Reporting, Risk Management, Financing etc.
Clients / Semi Institutional Institutional Retail
Investors (>300) (>100) (>70.000)
Significant underallocation to (German) Real Estate: currently 9.8%, target between 11-13%2
Integration of AFS balances our equity range and helps expand our debt business
1 After costs. The returns are based on average performance from the past. All figures are preliminary and only represent forecasts that are not guaranteed;
2 Research as of 2019. 6Management Board Completed and Aligned
Members of the Management Board1
René Parmantier (CEO/CFO2)
Business Development & Corporate Strategy, M&A,
Corporate Communications, Equity Raising,
Sebastian Ernst (Chief Debt Investment Officer)
Private Debt & DCM
Nils Hübener (CIO)
Investment & Asset Management
Daniel Löhken (Chief Legal & HR Officer)
Legal, HR, Compliance, ESG & Risk Management
Johannes Märklin (Chief Debt Financing Officer)
Private Debt & Structuring
1) Further information and full CVs on our website
• Management currently owns nearly 10% of company´s shares
2) CFO role currently vacant; structured search-process initiated
7Highlights of Q1-2021
COVID-19 Third Wave Delays the Recovery of the RE Investment Market
▪ Pandemic-fostered seasonality impacts some pockets of operations in Q1
▪ Well-filled project pipeline with clear path to a prosperous further course of the year
▪ HFS with promising rate of new business
▪ Revaluations of commercial assets (retail) effects co-investments
▪ Transitorily deployment of liquidity in highly profitable bridge loans
▪ Net debt reduction in 2021 on schedule
Closing of AFS Acquisition in Q2-2021 as scheduled
▪ Regulatory approval on target
▪ Comprehensive integration program and measures prepared
Sharpened Strategic Approach
▪ Improvement of corporate set-up and bundling of sales with clear client focus
▪ Launch of new products (City Quarters, Whole Loan, …)
▪ Shaping into manager of entire real estate value chain
8Corestate’s Assets under Management on Record High
Assets under Management Sourcing Pipeline
▪ c +1% net organic growth in RE AuMs after ▪ RE Debt mezzanine pipeline c € 500m
revaluation effects (project volume > € 2bn)
▪ Planned decrease in non-RE AuMs (c € -100m) ▪ RE Equity sourcing pipeline in advanced
status of c € 1.5bn (62% LoI/38% exclusivity)
27.8bn 27.8bn
25bn 26bn
non Real Estate 3.2bn 3.1bn non-RE
Logistic/other +8% 7% Third-Party RE Equity
22bn +10% Property Mgt. AM 50%
Retail 12%
24%
Office +28%
29%
Micro Living 24.7bn RE € 24.6bn
24.6bn
22.8bn
Residential 20.7bn 21%
16.2bn RE Debt
+440%
3bn 31% 26%
FY-2016 FY-2017 FY-2018 FY-2019 FY-2020 Q1-2021
9RE Debt – Stable Mezzanine Fund Volume and Unchanged Focus
on Top Cities with Increasing Project Sizes
Uses of Mezzanine Funds at the End of Q1-2021
▪ Total committed fund volume: c € 1.3bn
▪ # of financed projects: 48
▪ Ø size of mezzanine financing: c € 27m
▪ c 70% in residential/city quarter projects (c 30% commercial)
Regional Break Down of Outstanding Financings (in m€)
Residential
288 > 70% of lending volume
goes to Top7 cities in Germany Commercial
154 152
133 116
49 63 54 50 51
33 14 29
19 17
10RE Debt – Successful Risk-Steering in Challenging Market
Active Risk Management Fund Exposure to Top 5 Borrowers
▪ Further improvement of investment focus to Client Share Project Profile
large cities (Germany’s Top 7) A c 18% Purely Resi & City Quarters in Top 7
▪ 28 different borrowers B c 18% Purely Resi in Top 7
(biggest counterpartyIncome Lines Temporarily Impacted by Pandemic’s Third Wave
Revenue Split-up for Q1-2021
in m€ (Q1-2020)
RE Equity ▪ Comparison with pre-lockdown Q1-2020
2 (2) Acquisition & Sales Fees1) ▪ Typical seasonality even strengthened
by the pandemic
17 (20) Asset and Property Mgt Fees ▪ Very stable in Core/Core+ assets
RE Debt
4 (6) Underwriting & Structuring Fees ▪ Solid business base
▪ Reduced CPF due to higher risk provisioning
12 (16) RE Debt Asset Mgt Fees & CPF 2)
▪ Temporary peak in bridge lending
6 (2) Income from Bridge Loans
▪ -5m valuation effects on co-investments
-3 (6) Income from Other Segments in opportunistic assets in one fund
37 (52) Aggr. Revenues
1) Incl. promote fees
2) Coupon Participation Fees (performance share from mezzanine funds)
12Expenses Show Adoption Costs
Key P&L Figures Q1-2021
in m€
Q1-2021 Q1-2020
Aggr. revenues 37.3 51.7 ▪ Higher OpEx ratio in H1 operational driven by
Expenses from RE Equity -22.3 -20.1
cautious transaction environment and
underlying fix cost base
Expenses from RE Debt -2.6 -1.8
▪ In addition, augmenting of strategic setup,
Expenses from other segments -2.9 -4.2 advance of product range, bundling of sales and
M&A related one-off cost lead temporarily to
G&A expenses -12.4 -7.1
higher expenses
Other Income 0.9 2.4 ▪ D&A for the first time without depreciation of
EBITDA -2.0 20.9 asset management contracts from HFS
acquisition
Adjusted EBITDA 0.7 20.9
▪ Adjustments
D&A -4.9 -8.4
− Expenses with € 2.7m from AFS
EBIT -6.9 12.5 acquisition
Financial result -3.7 -2.5 − D&A with € 3.1m on AM contracts
− DTA € -0.4m
Net profit -14.5 8.8
Adj. net profit -9.1 14.3
13Key Balance Sheet Figures
Debt Overview at the End of Q1-2021
in m€
612 63 ▪ Net debt reduction plan in time and on schedule
Bank &
other debt 120 − Significant reduction of short-term financial
(incl. € 55m in 549 instruments (bridge lending) in 2021
warehousing
debt)
118 short-term − Placements out of inventories, associates/
fin. instruments JVs and financial instruments (€ 80-120m)
on track (in H2-2021)
Senior
297 80-120 place-
bond ments in 2021 − Further > € 60m in 2022 from
co-investments
< 320 net debt ▪ Financial leverage Q1-2021 LTM3) burdened by
Convertible target in 2021 one-off effects
195
bond − Year end ambition ofRoad to Guidance
Main Drivers
▪ All in place for strong recovery of transaction markets and catch-up effects in the course of the year
▪ Positive impact from advanced product range, pipeline and new sales set-up
▪ HFS already showing substantial new business
▪ AFS closing in Q2 with impact of c € 16m revenues, c € 10m EBITDA and c € 7m net profit in 2021
Revenue Split-up for FY 2021
(in m€)
20-35
RE Equity
Acquisition & Sales Fees
Asset & Property Management Fees 80-90 1) Incl. HFS underwriting fees, future AFS
structuring fees and new issue profits
Underwriting & Structuring Fees 1) 30-40
RE Debt
2) Incl. HFS asset mgt. fees, Coupon
Participation Fees, mezzanine lending
and future AFS trading results
Asset Management Fees & CPF 2) 80-90
106
Income from other Segments 5-20
Aggr. Revenues 235-260
Financial Outlook 2021 Confirmed 3)
Aggr. Revenues adj. EBITDA adj. Net Profit
€ 235-260m € 90-115m € 50-75m
3) The outlook takes into account the currently foreseeable impact of the COVID-19 pandemic on the business activities and the economic environment of the company
15Appendix
Appendix: AFS – Growth Track Record with a Focus on Small to Mid-sized Tickets
Guidance FY21
€ 2.4m (Revenue 2018) € 20.8m (Revenue 2019)
€ 25 – 30m (Revenue 2021E)
€ 1.1m (EBITDA 2018) € 12.9m (EBITDA 2019)
€ 15 – 20m (EBITDA 2021E)
July 2018 May 2019 August 2020
Commencement of BaFin licence as financial BaFin licence as a securities
business as a company in services provider trading bank
accordance with Section
34c Gewerbeordnung
(loan broker)
Grew from 3
>€ 3.0bn financing
>40 transactions founders to 20+ 270 years of
volume in 18
since 2019 full time experience
months
employees
Placement, Investment and
Real Estate Structuring and
Banking License Acquisition Brokerage, Real Estate Underwriting
Consulting
Investment Advice
▪ BaFin regulated securities ▪ Arranged and structured real ▪ Brokered and placed ▪ Further increase of revenue
trading bank licensed (Section estate loans originated loans and secured through primary issuance and
32 of the German Banking Act) financings secondary trading of illiquid
to provide a range of banking securities
transactions and financial
services
17Appendix: Strong Synergies Unlocked Through AFS Acquisition
▪ Combination with AFS will accelerate fund raising for HFS mezzanine
funds and whole loan with new target fund size of € 2 bn+
1 HFS Fund Expansion
▪ The joined platform will significantly diversify the current debt value
chain from the mezzanine business of HFS on the product side
▪ Complementary investor bases with ability to cross sell products
▪ AFS substantially expand client base at Corestate (additional
2 Cross Sell Products corporate and RE clients) with wide range of synergies effects
▪ More than 80% of AFS clients will be new to Corestate
▪ AFS deals create additional asset management opportunities
3 Cost Rationalization ▪ Operational cost savings across combined business
Identified annual run rate synergies of at least € 10 m within the next three years
18Appendix: AFS – Fundamental Value in Excess of € 170 m
Shares 8.5 m + 1.5 m = 10 m Financial Rationale
Over the next
three years
✓ Expansion of Corestate debt product
€ +10 m
synergies
✓ Earnings accretive
> +50%1
AFS’s
EBITDA € 20 m
2021E ✓ € 10 m of annual run rate synergies2
€ 15 m
Guidance
✓ Supportive for deleveraging
2021E EBITDA Earnout EBITDA 2023E Pro forma
EBITDA post-synergies
1 From midpoint of 2021E EBITDA; 2 Annual run rate synergies expected to be achieved within the next three years.
19Appendix: Clear Focus on Investors, Reduction of Complexity and Bundeling of
Sales Forces as Clear Path for Sustainable Growth
Key Strategic Tools Initial Operative Steps (already taken)
▪ Bolt-on of full-service private debt range (AFS acquisition) ✓
Coherent Product Offer ▪ Focus on Core/Core+ ✓
across entire RE value chain
▪ Systematic product innovation (i.a. City Quarter, Whole-Loan) ✓
▪ New Head of Equity Raising ✓
Strengthened Equity Raising ▪ Clear DACH focus ✓
& strict Investor Focus ▪ Fully integrated sales team structure ✓
▪ Consistent x-sell betw. debt and equity (life cycle coverage) ✓
Leverage Group Synergies ▪ Full enhancement of ancillary RE services (i.a. Fund Mgt & PM)
▪ Agile business development and selective acquisitions/JVs
▪ Reduction of complexity and double function
Simplifying and Operational ▪ Realignment of senior management team and org structure ✓
Excellence ▪ Harmonized and improved quality standards (TOM) ✓
▪ Measuring of ecological footprint of all assets ✓
Authentic and comprehensive
▪ Converting German portfolio to green electricity ✓
ESG orientation
▪ Readiness for fully fledged ESG-themed products ✓
20Appendix: Breakdown RE AuM
AuM Distribution Completion/Status Risk Classes
(RE Equity AuM) (RE standing AuM)
3rd Party Under
Property Mgt construction Opportunistic
21% Real 10% 9%
Value- Core
Estate
equity add RE Equity 53%
Non AuM RE Equity AuM
44% 4%
Real-Estate € 27.8bn AuM Standing € 16.5bn
11% € 18.3bn assets (Standing Assets)
90%
Real Estate debt Core+
24% 34%
Countries (RE AuM) Clients (RE AuMs) Funds structures (RE AuM)
Other Other Separate
others 3% Alignment 5%
Germany 13% accounts
3%
65% Pension 50%
Austria & Retail 7% Funds 34%
Switzerland
3% Family
RE AuM Offices 11% RE AuM JVs 6% RE AuM
France
6% € 24.7bn € 24.7bn € 24.7bn
Private open ended
BeNeLux Equity 13% funds 10%
8% Other inst. Closed ended
Banks
UK 15% Investors 15% funds 21%
5% Insurance companies
7%
21Appendix: Maturity, Risk Segment, Asset Classes Profile
Asset Classes AuM Risk Cluster Asset Classes in Risk Segment
in Risk Segment Core/Core+ (Standing Assets) Value-Add/Opportunistic
Logistics et al 10%
Micro Living
Office
Residential Office 35%
Retail 46%
11%
15%
RE Equity Value-Add /
Retail AuM Core/Core+ AuM
87%
AuM Opportunistic
12% € 14,4 bn 13% € 2.1bn
€ 16.5bn
Logistics/
Micro Other
Living 32% 28%
RE Equity AuM (€ 18.3bn) Maturity Profile & Risk Segments (in €bn)
Core/Core+ Value-Add/Opportunistic
8,7
Relatively high portion of property management contracts
running out but being renewed regularly
4,1
3,5
2,6 2,6
1,8
2021 2022 2023 2024 2025-2029 2030 and beyond
22Appendix: Q1 2021 Profit & Loss Statement
(€ m) Q1 2021 Q1 2020 FY 2020
Revenue from Acquisition Related Fees 2.1 1.8 12.5
Revenue from Asset Management Fees 8.8 12.6 48.9
Revenue from Property Management Fees 7.9 7.5 32.4
Revenue from Sales and Promote Fees realised 0.0 0.0 4.6
Total Revenue from Real Estate Equity 18.8 21.9 98.3
Total Expenses from Real Estate Equity (22.3) (20.1) (108.6)
Total Earnings from Real Estate Equity (3.5) 1.8 (10.3)
Revenue from Underwriting and Structuring Fees 3.7 5.9 21.5
Revenue from Asset Management Fees 3.9 5.0 20.0
Revenue from Performance Fees 8.2 10.9 43.3
Income from Bridge Loans 5.5 1.6 10.3
Total Revenue from Real Estate Debt 21.3 23.5 95.0
Total Expenses from Real Estate Debt (2.6) (1.8) (9.1)
Total Earnings from Real Estate Debt 18.7 21.7 85.9
Income from Rental Income and Service Charges 1.7 2.2 6.3
Net Gain from Selling Warehousing Assets (0.1) (0.3) (0.8)
Share of Profit or Loss from Associates and Joint Ventures (1.0) 1.3 (9.3)
Dividends from other Alignment Capital 1.8 (2.3) 8.8
Gains/Losses from fair value measurement of financial instruments related
(5.3) 0.9 (6.8)
to Real Estate
Total Income from Other Segments (2.9) 6.3 (1.8)
Total Expenses from Other Segments (2.9) (4.2) (22.9)
Total Earnings from Other Segments (5.7) 2.1 (24.8)
Other Income 0.9 2.4 11.2
G&A (12.4) (7.1) (45.4)
EBITDA (2.0) 20.9 16.6
D&A (4.9) (8.4) (54.7)
Net Financial Result (3.7) (2.5) 23.8
Income Tax Expense (3.9) (1.2) (7.0)
Net Profit (14.5) 8.8 (68.9)
23Appendix: Balance Sheet as of 31 December 2020
(€ m) 31 Mar 2021 31 Dec 2020
Non-Current Assets
Goodwill 578.1 577.7
Other Financial Instruments 158.0 153.9
Intangible Assets 84.6 87.8
Investment in Associates and Joint Ventures 121.7 120.8
Other Non-Current Assets 113.4 116.3
Total Non-Current Assets 1.055,7 1.056.6
Current Assets
Inventories 75.8 73.8
Cash and Cash Equivalents 43.0 68.2
Other Current Assets 277.3 266.5
Total Current Assets 396.0 408.5
Total Assets 1,451.8 1,465.0
Total Equity 675.5 688.5
Long-term Financial Liabilities to Banks / Bonds 496.4 495.6
Other Long-term Financial Liabilities 29.2 29.3
Other Non-Current Liabilities
24.1 23.9
(sum, incl. other non-current Liability positions)
Total Non-Current Liabilities 549.7 548.8
Current Liabilities
Short-term Financial Liabilities to Banks 58.9 68.7
Other Short-term Provisions 8.9 10.1
Other current Financial Liabilities 54.9 42.0
Other Current Liabilities
103.9 106.9
(sum, incl. other current Liability positions)
Total Current Liabilities 226.6 227.7
Total Equity and Liabilities 1,451.8 1,465.0
24Appendix: Shareholder Structure and Research
Shareholder Structure (acc. to latest public filing)
Passiva Participations /
Aggregate Holdings 2 Free Float
19.7% Number of shares
34,166,025 80.3%
Average Target Price € 21.1
€ 38
€ 35
Buy/Add
€ 20
€ 17 € 15 € 15 Hold
€ 14.5 € 14
Sell
15 Jan 2021 13 May 2021 26 Mar 2021 10 Sept 2020 19 May 2021 20 May 2021 20 May 2021 02 Mar 2021
25IR Contact and Financial Calendar 2021
Investor Contact Financial Calendar 2021
Dr. Kai G. Klinger
24 February Publication preliminary results for FY 2020
Chief Markets Officer
Phone: +49 69 3535630-106 24 March Annual financial report 2020
ir@corestate-capital.com
19 May Publication results for Q1
28 June Annual General Meeting
11 August Publication results for H1
10 November Publication results for first nine months
Please note that these dates
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