Aroundtown Sa U/Adr

Dear ladies and gentlemen, welcome to the Around Town FA full year 2020 results presentation. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a lesson-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulty hearing the conference, please press star key followed by zero on your telephone for operator assistance. May I now hand you over to J.B. Nagy's head of sustainability, who will lead you to this conference. Please go ahead, madam.

Good morning, everybody. Thank you for joining us for Around Town's full year 2020 results call. You should have received our press release and can view this presentation on Around Town's website, either on the home section or on the financial reports of the investor relations section. I'm Sylvie Vargis, Around Town's head of sustainability. With me today will be co-CEO and COO, Arak Bahin, Chief Financial Officer, Eyal Ben-David, Chief Capital Markets Officer, Osri Massachi, and our Executive Board Member, Frank Rosen. For the duration of the call, all participants will be on a listen-only mode. Following our presentation, you will have the opportunity to ask questions. But please feel free to send us your questions via email, also during the presentation. The email address is info at aroundtown.de. With that, I'd like to pass you over to Oshin Masachi, who will start presenting our results.

Many thanks, Sylvie. Good morning, everyone, and welcome to our full year 2020 earnings call for Aroundtown. 2020 was a very challenging year, impacted by the outbreak of the COVID-19 pandemic and its implications. The year started with significant uncertainty but continued with improved optimism once several vaccinations were developed. We learned that over 75% of our portfolio is resilient to the effects of the pandemic and the main impacts are on our hotel portfolio, but more on this later. We continue to see a strong demand for real estate investments in our core markets and we are convinced that our existing business model of repositioning value-add assets in top locations remains the right strategy to create shareholder value in the long term. During the following presentation, we will highlight the key achievements of our business, financially and operationally, in light of the ongoing pandemic and how our committed portfolio management provides resilience in the face of the ongoing challenges during this pandemic. But before we start with our presentation, I would like to update you that this morning, our board of directors resolved to launch an additional share buyback program with a volume of up to 500 million euros. We are launching the program on the back of a strong equity base, which was further supported by positive portfolio revaluations. In addition, 2021, In 2021, we continue to dispose properties at a premium to book value, while our share price remains to be traded at a significant discount to NAV. We continue to see a competitive transaction market with increasing pricing and compressing yields, while our share is traded at an FFO yield of around 5% to our 2021 guidance. including the impact on our hotel portfolio. Once the restrictions will be lifted and hotels will be open for all travellers, we expect to see a significant steep increase in the FFO and accordingly in the yields. Therefore, we see the share buyback as an accretive reinvestment into our portfolio at a very attractive pricing, which is an alternative to acquisitions. The share buyback will create long-term accretive growth on all per-share KPIs and enables us to benefit from the mispricing of our share. Let's begin on slide 4, where we summarize our financial performance highlights for the full year 2020. Starting with our net rental income, this resulted in €1 billion for 2020, an increase of 31% year-over-year. Our FFO1 decreased to 358 million euros and was largely impacted by the extraordinary hotel rent provision we applied in 2020. Last year, this KPI was defined as FFO1 after perpetuals and coverage adjusted. Respectively, the FFO1 per share came in 29% lower year over year at 27 cents per share in line with our 2020 guidance. We will provide you a breakdown of the different FFO metrics later in the presentation. Please note, the dividend payout ratio in 2020 of 65% of FFO1 per share before perpetuals amounted to 22 cents, which reflects a yield of 3.5%. From 2021 onwards, The dividend payout ratio is set to 75% of FFO1 per share. For the first time, we also report on the new ACRA NAD metrics. The ACRA NTA for 2020 stood at €11.2 billion or €9.5 per share, a per share growth of 10% year-over-year. More details will follow later in the presentation. I will speak shortly also in more detail about our successful revaluations and capital gains. But you can see here already that we had another successful year with like-for-like revaluation gains of 3.9% year-over-year, amounting to 769 million euros. On slide 5, we present you a glance of the business highlights of 2020. excluding 830 million euros of assets held for sale, the group portfolio stood at 24.5 billion euros at the end of 2020. Two-thirds of that value is offices and residential assets alone. Both of these segments were very limited, impacted by the pandemic. We focused last year on strengthening our financial and liquidity position and increased our cash and liquid assets positions up to 3.3 billion euros. At the same time, we kept our loan-to-value low at 34% and further reduced our average cost of debt to currently 1.4% after we issued our 0% coupon bond. Whilst maintaining a long debt maturity of 6.1 years and 76% of investment properties by rent remains unencumbered. Our capital allocation last year was highlighted by our significant debt repayments and share buyback programs, funded through successful disposals and very favorable refinancing terms. We will go into more details of each KPI as we go through the presentation. Moving to slide 6, we see an overview of our successful disposal program in 2020. Even during the lockdown and challenging market environment in 2020, we managed to execute disposals of non-core and mature assets in an amount of over 2.7 billion euros, of which 2.3 billion euros has been completed during 2020. The disposals were done with a 3% margin over book value, a rent multiple of 19 times, and 33% margin over total costs, including capex. As you can see from the charts, The disposals were made up of 57% retail and wholesale, 35% office and the remaining 8% a mix of hotel and development drives. As we experienced during 2020, also in 2021, we expect to see attractive selling opportunities above book value for additional non-core and mature assets capitalizing on significant value creation and recycling the freed-up funds into the share buybacks at a steep discount to NAV, and support further debt repayments, strengthen our balance sheets, as well as accretive acquisitions. The disposal of non-core properties enhances our overall portfolio quality and maintains our focus on strong assets with asset types in top tier locations. Year-to-date, the total signed disposal stands at around 200 million euros. These assets were sold across several deals above book value and we are in further advanced negotiations for additional disposals. These successful disposals reiterate once again the sound valuations of our portfolio with even further upside potential to be unlocked in the future. The proceeds of our disposals have benefited several strategic decisions as can be seen on slide 7. One key element was the share buyback program from last year that amounted to €1 billion at an average purchase price of €4.9 per share. That's a discount to the year-end IPRA net tangible assets of nearly 50%. The accretive value creation of the share buyback amounted to 70 cents per share and together with the profits and other items, resulted in an APRA NTA per share of 9.5 euros for December 2020, in comparison to 8.6 euros per share in December 2019. Including dividends, the APRA NTA amounted to 9.6 euros per share, which is a shareholder return of 12%. Moreover, we used the proceeds from disposals to repay over 1.5 billion euros of debt during the period and the remaining proceeds further strengthen our liquidity profile for future acquisition opportunities. As mentioned earlier, we initiated today an additional share buyback program in the amount of 500 million euros in line with the former shareholders' approval. The buyback will further support our 2021 per share KPIs especially the ePro-NTA and FFO1 per share. The new share-by-back program is not included in the 2021 guidance. Some key ESG achievements of 2020 are summarized on slide 8. In an effort to emphasize the importance of ESG for Ransom, we made it a goal for our management, the board of directors, as well as each employee within the company to create a strong sensitivity towards our ESG position within the real estate universe. Our ambition is to continue relentlessly to be ranked amongst the top companies within our industry. We will spend later more time going into details of what our main targets are and how we want to achieve them. In the next section, Barak will give you an update of our stable operations and the portfolio development during 2020.