Interim Results Half Year 2017 July 2017
A new strategy “NSI will be the leading specialist in the Dutch office market, with a strong and efficient platform that will drive returns through pro-active asset management, value- add initiatives and active capital recycling. NSI will be the partner of choice for investors looking to team up with a best-in-class operator” NSI Full Year results 2016 I 2
Half Year 2017 Revenue and Earnings H1 2017 2017 H1 2016 1 Change % Operating margin 79.9% 74.1% +5.8pp EPRA Vacancy 22.2% 22.9% -0.7pp Net rents like-for-like 1.8% - - EPRA Earnings per share (€) 1.35 1.11 21.4% Dividend per share (€) 1.04 1.04 0.0% Balance sheet 30 Jun 1 17 31 Dec 1 16 1 Change % Portfolio revaluation 0.6% -4.5% 2 EPRA NAV per share (€) 35.10 34.61 1.4% EPRA NNNAV per share (€) 34.55 33.56 2.9% Average cost of debt 2.8% 2.8% 0.0pp LTV 38.1% 44.1% -6.0pp 1 2016 numbers restated for 8:1 share consolidation 2 12 month period to 31 Dec 16 NSI interim results 2017 I 3
Progress
A new strategy – firmly on track In transfo sforma mation tion since ce 2013 Corporate orate Highligh lights ts Refinancing of Merger with Succesful Security release €550m with Vastned O/I €300m and refinancing group of banks re-capitalisation results in 73% and institutions unencumbered NSI founded NSI Listed Dutch REIT assets status St Stron ong g start rt of of executi ecution on 1992 1992 1998 1998 2000 2000 2011 2011 2015 2015 YTD 17 2013 2013 2016 2016 new Exit from Partial exit Final exit Sale portfolio of strategy ategy Switzerland Belgian IOW IOW stake 16 retail assets Inve vestme stment nt High ghligh lights ts stake (Total €151m) Acquisition of 8 Divesting Sale portfolio of high-quality Industrials 6 Large Scale office assets portfolio Retail assets (Total €169m) (Total €74m) Acquisition of Acquisition of 4 Glass House, office assets in Amsterdam, Amsterdam, subsequent Leiden and lease extension Utrecht. in December (Total €117m) Start rt asset rotatio ation NSI interim results 2017 I 5
Executing the new strategy Successf cessful ul start rt asse sset t rotati ation on Disposals 1 YTD 2017 (€m) # Book Sales Sales Net sales Book Assets value result Cost proceeds profit/(loss) GIY 219.8 229.0 -2.3 226.7 6.8 8.3% Total Retail 23 9.4 9.6 -0.1 9.5 0.1 5.2% Total Offices 5 Total 28 229.3 238.6 -2.4 236.2 6.9 8.2% Acquisitions 2 YTD 2017 (€m) Book Total # value Purchase Purchase Purchase Book Assets Jun 17 Price cost cost profit/(loss) GIY 124.0 116.8 7.9 124.7 -0.8 7.9% Offices 4 Delta - 24 -105.3 -121.8 10.3 -111.5 6.2 -0.3% 1 Includes Keizerslanden in Deventer which transfers in 2018 and Maarsen sold post-close 2 Includes Leiden bought post-close NSI interim results 2017 I 6
Execution Sector split Sector split Year End 2016 ( portfolio value €1.2bn) Sector split June 2017 ( portfolio value €1.1bn) Retail Offices Retail Offices 16% 69% 33% 53% LSR Retail 6% Amsterdam 16% 21% Amsterdam 31% Retail 27% HNK 14% Other G4 10% Other Randstad Other G4 Other NL 8% HNK 13% 15% 13% Other Other NL HNK Randstad HNK 15% 11% 14% 13% NSI interim results 2017 I 7
Portfolio update
Executing the new strategy Retail portfolio end of June 2017 57% of f retail l assets sets sold ld • 23 assets sold in two portfolio deals and Sold one single asset transaction • Disposal proceeds retail ca. €225m • On average ca. 3% above book value • 2/3 of retail value in 4 assets (Rotterdam Zuidplein, Rijswijk, Heerlen and Ridderkerk) • Retail 16% of total portfolio NSI interim results 2017 I 9
Execution – reinvesting proceeds Unic icefl flaan an 1, Utre recht cht ▪ Area: 12,079 sqm ▪ Tenant: Government ▪ GIY: 10.3% ▪ WAULT: 4.1 years ▪ Energy Label: C ▪ Acquisition price: € 20.5m NSI interim results 2017 I 10
Execution – reinvesting proceeds Pa Parnass ssusw usweg 101, 1, Amste terda rdam ▪ Area: 11,700 sqm ▪ Tenant: Government ▪ GIY: 7.2% ▪ WAULT: 4.3 years ▪ Energy Label: B ▪ Acquisition price: € 45.0m NSI interim results 2017 I 11
Execution – reinvesting proceeds Bij ijlm lmerd rdree reef 100, 0, Amsterd erdam am ▪ Area: 13,300 sqm ▪ Tenant: ING ▪ GIY: 7.6% ▪ WAULT: 3.8 years ▪ Energy Label: C ▪ Acquisition price: € 33.8m NSI interim results 2017 I 12
Execution – reinvesting proceeds Archim imede desw sweg eg 6, Leid iden ▪ Area: 7,239 sqm ▪ Tenant: Janssen Vaccines ▪ GIY: 8.9% ▪ WAULT: 5.0 years ▪ Energy Label: C ▪ Acquisition price: €17.5m (€2.417 /sqm) Bio Train Science station Park City Centre NSI interim results 2017 I 13
Netherlands property market overview Prime rental al growth th Investment volumes Offices Netherlands (€ bn bn) 8% 3.0 6% 2.5 4% 2.0 2% 1.5 0% 2009 2011 2013 2015 2Q17* 1.0 -2% 0.5 -4% -6% 0.0 2009 Q1 2009 Q3 2010 Q1 2010 Q3 2011 Q1 2011 Q3 2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1 2015 Q3 2016 Q1 2016 Q3 2017 Q1 -8% Amsterdam Eindhoven Rotterdam The Hague Utrecht Vacancy rate Offices Netherlands Prime office yields Netherl rlands 15% 6.5% 14% 6.0% 13% 12% 5.5% 11% 5.0% 10% 9% 4.5% 8% 7% 4.0% 6% 3.5% 5% 2009 2010 2011 2012 2013 2014 2015 2016 2Q17 2006 2008 2010 2012 2014 2016 Amsterdam Rotterdam The Hague Utrecht NSI interim results 2017 I 14
Operational performance Rental growth th (pote tenti tial al) Net rent growth th ERV growth th Reversion Reversion €m like-for-like like-for-like Dec 1 16 Jun 1 17 Offices -1.9% 1.3% -8.3% -3.2% HNK 20.9% 2.1% 0.3% 2.4% Retail 3.2% -0.6% -6.3% -9.2% Other 4.8% 1.6% -17.3% -13.9% Tota tal 1.8% 1.8% 1.2% 1.2% -6.7% 6.7% -3.5% 3.5% Offices + HNK 1.3% 1.5% -6.0% -2.1% EPRA vacancy Disposals als/ Dec 1 16 Like-for-like Acquisiti tions Jun 1 17 Offices 21.3% 2.1% -2.9% 20.5% HNK 37.1% -3.8% 0.0% 33.3% Retail 12.5% 2.5% 1.1% 16.1% Other 16.5% -2.7% 0.0% 13.8% Tota tal 21.4% 4% -0.8% 0.8% 0.0% 0.0% 22.2% 2% Offices + HNK 25.3% 0.6% -2.5% 23.4% • Net rent growth like-for-like 1.8% • ERV growth 1.2% • Negative reversion tapering off NSI interim results 2017 I 15
Revaluation result Half Year 2017 (€m) At end of June all investment properties in operation have been externa nally appraised 40 30 Big differe rences s betwee een segments nts • Total revaluation €6.9m 20 • Amsterdam offices up €18m 10 0.6% 3.1% 3.1% • Retail small negative €1m 0.6% 0.6% 0 -2.9% Retail valuations s caused by : -0.8% 0.8% -10 • Lower ERV ‘s : -0.6% -20 HNK remarks ks • Amsterdam and Utrecht up -30 • Decline mostly related to Rotterdam and Den Bosch -40 Total Office HNK Retail Others Office market t remains polarise sed Positive revaluation Negative revaluation • G4 like-for-like +5.2% • Other Netherlands like-for-like -8.8% NSI interim results 2017 I 16
ESG En Energy gy score ores Bette ter r reportin rting 100% • NSI will start with regular updates on sustainability 90% • All office buildings must have an energy label of C or better 87% 86% 80% • There is more to ESG than energy scores, so NSI will become a 78% member of GRESB 70% 63% 60% Already y strong ng focus on ESG 50% • Energy consumption CO 2 Neutral 40% • NSI installing 3,500 solar panels 30% 20% Energy scores C label o or better ter 10% • 78% Offices portfolio • 87% HNK portfolio 0% G4 Other Total office HNK • 79% of Offices and HNK portfolio • Estimated €5m to upgrade remaining Offices and HNK assets A B C D E F G Cum A-C to C label or better NSI interim results 2017 I 17
Financials
EPRA Earnings EPRA Earnings bridge per share (€) 1.50 1.45 1.40 0.12 12 1.35 -0.03 03 1.30 0.01 01 0.09 09 1.25 1.20 0.06 06 1.35 35 1.15 1.10 -0.01 01 1.05 1.11 11 1.00 EPRA EPS Gross rental not recharged Operating Administrative Net financing Other EPRA EPS Service costs H1 2016 H1 2017 costs income result costs • EPRA Earnings per share up 21.4% • Growth driven by cost reduction NSI interim results 2017 I 19
EPRA Earnings € '000 H1 2017 2017 H1 2016 2016 Change % Gross rental income 45,640 45,787 -0.3% Service costs not recharged -1,237 -2,277 -45.7% Operating costs -7,958 -9,601 -17.1% Net rental income 36,446 446 33,910 910 7.5% 7.5% Administrative costs -4,425 -4,588 -3.6% Direct investment result from participations (IOW) 565 -100.0% Earnings before re interest t and taxes 32,021 021 29,887 887 7.1% 7.1% Net financing result -7,834 -10,040 -22.0% Direct investment nt result t before re tax 24,187 187 19,847 847 21.9% 9% Corporate income tax -12 -5 133.3% EPRA Earnings 24,175 175 19,842 842 21.8% 8% NSI interim results 2017 I 20
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