Annexes
INVESTOR PRESENTATION March 2010
Agenda
Annexes A guide to better understand our numbers
3
Details by country
8
Economic results details by country
20
Additional Information
29
MARCH 2010
2
A Guide to better understand our P&L
MARCH 2010
3
A guide to better understand our numbers INDICATORS
DIRVERS Sales of consolidated assets Offer of specialised services (listed below)
Revenues
Asset & Fund Mgmt.: Active Management. Blended average fee 0.5 % on Book Value. Additional fees in case of Success fees in case of performances exceeding targets Agency: Blended avg. fees 1.5-2% on Assets rotations. Expected ROS 20-25% Property: Various Service related to the portfolio. ~ 2%of total rents collected . ROS approx. 15% Credit Servicing: 5% Gross Fees on credit collections
Ebit from services platform
Ebit from consolidated investment activities
Disposal of consolidated assets/activities
Pro Quota net income from sales of minority investments (funds/ Income from equity participations
vehicles) Capital gain on participation disposals
MARCH 2010
4
Business Model Contribution to Profitability Recurring income SERVICE PLATFORM
G&A
(€20.5mln)
EBIT* €7.8mln
SERVICES
CO-INVESTMENTS
NPLs
€28.2mln
REAL ESTATE
(€9.5mln)
FUNDS and ASSETS MGMT €28.2mln
FUND MGMT (SGR)
AGENCY (€1.4mln)
PROPERTY €5.4mln
FACILITY
CREDIT SERVICING
€0mln
(€4.0mln)
OTHER ASSET MGMT
(€14.4mln)
(€4.9mln)
2008
2009
365.1 (31.9) 1.6
271.7 (5.7) 13.5
A) EBIT* Services
(30.3)
7.8
B) EBIT consolidated inv. activities C) IEP investments Interest income from participations
14.2 (43.6) 23.0
1.2 (35.1) 19.5
(6.4)
(14.4)
EBIT*
(36.7)
(6.6)
EBIT incl. IEP (A+B+C)
(59.7)
(26.1)
Revenues EBIT consolidated services IEP services
EBIT* Investments * EBIT including income from equity participations before restructuring costs, writedowns/revaluations and including interest income from participations
MARCH 2010
5
A distinctive and refocused Business Model A lower risk profile approach - based on increasing recurring income from the service platform - for more predictable results
Trend: growth
EXPECTED CONTRIBUTION TO P&L
Trend: reduction
Income from equity participations
Recurring income
TRENDS CO-INVESTED PORTFOLIO
SERVICE PLATFORM *
(CAPTIVE)
management Agency Property Management Development Management Credit Servicing (NPLs) * Facility Mgm only in Germany & Poland
MARCH 2010
6
SERVICES
Funds and assets
Real Estate Funds Real Estate SPVs NPLs THIRD PARTIES PORTFOLIO (NON CAPTIVE)
Pirelli RE Services: Overview TECHNICAL SERVICES
ACTIVITIES
PROPERTY
Valuations Due Diligence Lease contract administration Document Management
ITALY
COMMERCIAL SERVICES
DEVELOPMENT MANAGEMENT
Integrated valuation: From feasibility study to completion From technical, economical, financial to environmental aspects ITALY, POLAND, GERMANY
MARCH 2010
7
AGENCY
Acquisitions Sales Leasing Financial Services
ITALY, POLAND, GERMANY
CREDIT SERVICING
NPL Management Loan Portfolio Enhancement Monitoring of legal actions Property auctions
ITALY
Details by country
MARCH 2010
8
Italy: Real Estate Portfolio Key Data as of Dec. 2009 (EUR MM)
Mkt.Value 100% 1)
Mkt. Value PRE 28% avera ge
BV Quota PRE
UCG Quota PRE
Net Debt Quota PRE
LTV
NAV Quota PRE 2)
NIC Quota PRE
COMMERCIAL YIELDING & CORE
TRADING & SOHO
DEVELOPMENT
4,317
1,087
1,043
44
627
58%
460
416
1,007
351
298
53
204
58%
147
71
1,429
455
416
39
259
57%
196
126
Italy
1) 2)
€ 6.8 Bn Partecipated € 0.4 Bn Not Partecipated
AUM participated NOTE: The differences between NAV and UCG + NIC (equal to 54 €/mln) is due to other assets and liabilities not included into calculation of real estate NAV.
€ 7.2 Bn AUM
MARCH 2010
9
Development 21% Residential & trading 15%
Commercial Yielding & Core 64%
Pirelli RE SGR: leader in the Italian fund management industry Italian leader with 18% market share Strategic partnership with Intesa San Paolo bank to exploit market opportunities
Track record in the performance of the funds under management and in product innovation
Fully integrated offer: From Fund Mgmt to specialised services (agency, property)
Fund Mgm market only segment in the real estate market expected to growth
1) Source: Semestral Report Fondi Immobiliari Italiani - Assogestioni, June 2009
MARCH 2010
10
Pirelli RE’s Service Platform will capture organic and consolidation growth opportunities ‘Structural room for growth’… (NAV of RE funds and REITs / Value of the existing RE stock)*
…and short-medium term growth possibilities (€bn, AuM)
37.3%
result in a consolidation opportunity 120%
48-64%
46 - 51
15 - 20
39%
100%
23 smaller SGRs
Total
100% 80%
31 19.1%
60%
12.3%
40%
61%
42%
20% 19% 0%
France
Germany
Italy
AuM 31-Dec-08
*All data exclude residential assets (2007 data) Source: Scenari Immobiliari, Cushman Wakefield
Expected AuM increase propelled by the launch of new products
AuM 31-Dec-11
(PRE)
Top 5 SGRs
42% includes: Investire Immobiliare SGR BNP REIM SGR Fimit SGR First Atlantic SGR Source: Assogestioni
Capture third party AuM without additional equity investment through leveraging on leading market
position and the development of new investment products Consolidation opportunities offered by highly fragmented Italian SGR market Source: analysis and estimations of Value Partners based on data from Prometeia, Scenari Immobiliari, Inrev, AIFI, Pirelli RE
MARCH 2010
11
Organic growth – new business from existing funds and development of new products Funds
Description
Funds for Public Entities and Pension Funds
Casse and Enti di Previdenza Other Public Entities (INAIL, INPS, etc.) First Generation Pension Funds New Generation Pension Funds
Development of new Funds (through contribution of assets and blind pools of equity) in order to rationalize and efficiently manage the real estate assets of Public Entities and Savings Associations (so called Casse). Funds which can invest up to 20% of the total assets in RE. The other real estate assets in these funds can be transferred to specialized real estate funds through contribution. The 2006 pension fund reform gives the possibility to allocate to investment funds the Severance Indemnity Fund (TFR); the reform has unlocked the potential for significant flows into real estate funds.
Government Programs
Sales programs from public entities Social housing
Funds targeting disposals by national and local / public entities. Funds targeting social housing developments with high standards and energy saving in urban areas with a high population density.
Distressed Portfolios
Transfer to Funds of distressed assets Equity restructuring in distressed Funds through issue of new privileged units
Funds which target distressed assets: use of speculative reserved real estate fund as a tool for executing debt restructurings among: i) debtor, owner of a real estate portfolio with high debt level; ii) banks, owners of real estate financing mortgages; iii) SGR with mandate for management and creation of the fund.
Specialized Funds
International Investors Family officers
Funds created through contribution of existing assets and/or blind pools of equity targeting value added and opportunistic investments
Core Funds and Foreign Investors
Foreign Investors Sovereign Wealth Funds German Open-Ended Funds
Funds investing in core assets with a “hold” strategy (i.e. Trophy Fund), in primary locations and leased to tenants of high credit standing on long-term contracts.
Funds which gain real estate exposure through investments in mezzanine financing. Funds which target opportunities dedicated to the senior/retired people (over 65) through direct acquisition of residential real estate and conversion or development of senior housing facilities which is later leased to the target market generating an yield.
New Products
Fund of funds Alternative funds (distressed debt) Mezzanine funds Alternative energy funds (i.e. photovoltaic) Senior housing
MARCH 2010
12
Pirelli RE Non Performing portfolio: snapshot Breakdown by Geography(*)
Breakdown by typology(*)
Total porfolio AUM 1.6 €/bln Net Book Value Strategy
PRE Credit Servicing (PRECS)
received from Standard & Poor’s an evaluation of “strong” reaching the top of the ranking Leading Company with approx. 200 employees and 6 branches across Italy
Improving the performance of the existing Investments
PRE as been selected by Calyon as a preferred partner in Italy Pirelli Re investments are done thought minority stake (****) Major Partner: Calyon Other partners: Morgan Stanley / General Electric Total invested capital 104 €mln in 12 portfolios Net Book Value(****) € 1.6bln, Gross Book Value € 9.5bln
Services
Services
Investments
Key Information
portfolios to maximize the return on invested capital
No further co-investments in new portfolios Targeting yearly 350-400 €/mln collections Efficiently managing the existing portfolio Acquiring third parties mandates thanks to: Strong partners Unique skills in managing the entire
(*) Based on Gross Book Value corresponding to the nominal face value of the loans (**) In June 2009 Calyon signed a partnership with PRE acquiring 20% stake in credit Servicing (PCRS) (***) CFT portfolio is the only investment done at 100% by PRE (****) Net Book Value is the residual purchase price of the loans
MARCH 2010
13
process (from acquisition to financial and operating structuring)
Pirelli RE in Germany : snapshot
Germany AUM 7.0 €/Bln
(*)
Portfolio Main Characteristics
Limited net invested capital in real estate € 233m ( total € 866m) Exposure in residential and retail sectors Approx. 75.000 units managed (3.130.000 m²) o/w approx. 50.00 owned (in joint venture) and 25.000 of third parties
Commercial Portfolio: Assets with 3.3 mln m² Gross Leasable Area 6 Commercial development projects: 90.000 m² (Hamburg & Dresden) Shopping center management: Property Management of 6 centers in Hamburg, Konstanz, Mülheim and Krefeld
(*) Development areas are areas where a buyer has already being identified and signed a preliminary contract
MARCH 2010
14
Germany : Real Estate Portfolio Key Data as of Dec. 2009
(€ mln)
DGAG (Residential)
BAUBECON (Residential)
HIGHSTREET (Commercial)
Other
1) 2)
Mkt.Value 100% 1)
Mkt. Value PRE 25% average
BV Quota PRE
UCG Quota PRE
Net Debt Quota PRE
LTV
NAV Quota PRE 2)
NIC Quota PRE
928
380
372
8
264
69%
116
87
1,566
626
619
7
529
84%
97
42
3,992
483
476
7
423
87%
60
35
550
234
226
8
153
65%
81
68
AUM participated NOTE: The differences between NAV and UCG + NIC (equal to 100 €/mln) is due to other assets and liabilities not included into calculation of real estate NAV.
MARCH 2010
15
Residential Portfolio: a snapshot
Total Asset Under Management at Market Value € 2.8 bln The portfolio in JV focused in North (59%) followed by Middle (19%) and East (18%) Units under management 49.000 Overall Vacancy rate 4% Annual estimated Net Contracted Rent € 185 mln Yield on MV approx. 6.7% Hannover 14%
Kiel 24%
Sudwest 4% Magdeburg 5%
Berlin 18%
Hamburg 20% Lubeck 15% The figures are estimated at December 31, 2009
MARCH 2010
16
Residential Portfolio key data BauBecon Starting date: 2007 Numbers of units: 25.900 (of which 3.400 resricted) Rented SQM: 1.6 mln
Main cities: Berlin, Hannover Magdeburg NCR Monthly: € 8.3 mln Vacancy (units): 5.0% Yield on MV app. 6.4%
DGAG Starting date: 2007 Numbers of units: 18.600 (of which 7.600 restricted) Rented SQM: 1.1 mln
Vacancy - DGAG 4.0%
Main cities (Kiel, Lubeck) NCR Monthly: € 5.5 mln Vacancy (units): 2.4% Yield on MV app. 7.3%
3.5%
3.3%
2.9%
3.0%
3.0%
2.5%
2.4%
2.0% Dec-07
SMALL DEALS Starting date: 2006 Numbers of units: 4.500 (of which 400 restricted) Rented SQM: 0.3 mln
3.6%
Main cities Berlin, Rostock, Dresden, Dusseldorf NCR Monthly: € 1.6 mln Vacancy (units): 4.9% Yield on MV app: 6.4%
MARCH 2010
17
Dec-08
Jun-09
Dec-09
Vacancy - SMALL DEAL 9.0% 8.0%
8.3%
8.2% 7.0%
7.2%
7.0% 6.0% 5.0%
4.9%
4.0% Dec-07
The figures are estimated at December 31, 2009
Jun-08
Jun-08
Dec-08
Jun-09
Dec-09
Commercial Portfolio: Key data Total Asset Under Management at Market Value € 4.1 bln Total annual passing rent ca € 277 mln Highstreet n.157 assets almost fully let to Karstadt and passing rent € 271 mln Mistral: 6 trading assets and 4 development projects to be completed in 2010 MISTRAL Development
HIGHSTREET Sale and lease back 16.50 year lease
N. 4 Development project in Hamburg
Starting date: 2008
Starting date: 2007
Assets:ca 157 throughout Germany
Surface: 41.000 SQM
Lettable area SQM 2.1 mln Main assets: KaDeWe Berlin, Munchen Oberpollinger Portfolio almost fully let to Karstadt
Breakdown of total area by use Office 2,5%
Passing rent (estimated): € 6.7 mln Vacancy Rate: 16.0%
Gross yearly rents ca € 269 mil
Sporting goods stores 2,5% Logistics 3,4%
Potential rent: € 8.1 mln
Other 2,2%
MISTRAL Trading N. 6 Trading assets Starting date: 2007 Surface: 58.000 SQM
Department Stores 83,7%
Parking 5,7%
Potential rent: € 7.3 Passing rent 6.6 mln Vacancy Rate: 11.5%
The figures are estimated at December 31, 2009
MARCH 2010
18
Pirelli RE in Poland: snapshot Poland AUM 0.2 €/Bln
Residential 100%
Portfolio Main Characteristics
Leading operator in the residential development Exposure only in major cities like Warsaw and Gdansk Working on obtaining the building permit for a large scheme in Warsaw (1mln sqm /GLA)
(€ mln)
Development (Poland)
Mkt. Value 00% 1)
Mkt. Value PRE 25% average
BV Quota PRE
UCG Quota PRE
Net Debt Quota PRE
LTV
NAV Quota PRE 2)
NIC Quota PRE
190
72
57
15
28
39%
44
20
MARCH 2010
19
Economic Results by country
MARCH 2010
20
Economic Results Total Pirelli RE (€/mln)
DECEMBER 2009
SEPTEMBER 2009
DECEMBER 2008
187,3 13,4 200,7
137,4 7,9 145,3
224,3 1,6 225,9
7,8
(0,5)
(30,3)
Result from vehicles & funds Shareholders’ loans interests
(33,9) 19,5
(29,7) 21,3
(29,4) 23,0
Vehicles & Funds Result (**)
(14,4)
(8,4)
(6,4)
TOTAL RESULT (**)
(6,6)
(8,9)
(36,7)
Service Platform/G&A Consolidated revenues Other (*) Total revenues Service Platform/G&A Result (**) Vehicles & Funds
(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest
MARCH 2010
21
Economic Results Italy (€/mln)
DECEMBER 2009
SEPTEMBER 2009
DECEMBER 2008
Consolidated revenues Other (*) Total revenues
99,7 11,7 111,3
73,9 6,1 80,0
113,6 17,0 130,6
Service Platform Result (**)
32,0
19,5
11,3
Result from vehicles & funds Shareholders’ loans interests
(10,8) 7,5
(21,0) 5,9
(30,4) 11,6
Vehicles & Funds Result (**)
(3,3)
(15,1)
(18,8)
Total Italy (**)
28,7
4,3
(7,6)
Service Platform
Vehicles & Funds
(**)
(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest
MARCH 2010
22
Economic Results Service Platform Italy DECEMBER 2009
SEPTEMBER 2009
DECEMBER 2008
Consolidated revenues Other (*) Total revenues
43.5 11.7 55.2
32.1 6.1 38.2
48.5 17.0 65.5
Result Fund & AM Fee(**)
26.1
16.4
17.4
Consolidated revenues Other (*) Total revenues
27.4
17.9
24.0
27.4
17.9
24.0
Result Agency(**)
(1.8)
(3.7)
(13.6)
Consolidated revenues Other (*) Total revenues
28.8
23.9
41.1
28.8
23.9
41.1
Result Property(**)
7.7
6.8
7.5
Consolidated revenues Other (*) Total revenues
99.7 11.7 111.3
73.9 6.1 80.0
113.6 17.0 130.6
Result (**)
32.0
19.5
11.3
(€/mln)
Fund & AM Fee
Agency
Property
Service platform
(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest
MARCH 2010
23
Economic Results Germany (€/mln)
DECEMBER 2009
SEPTEMBER 2009
DECEMBER 2008
Consolidated revenues Other (*) Total revenues
58,6 0,0 58,6
44,4 0,0 44,4
61,1 1,4 62,5
Result (**)
1,3
2,2
(9,7)
Result from vehicles & funds Shareholders’ loans interests
(18,6) 15,8
(14,9) 12,3
(25,5) 11,1
Result (**)
(2,8)
(2,6)
(14,5)
Total Germany (**)
(1,4)
(0,4)
(24,2)
Service Platform
Vehicles & funds
(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest
MARCH 2010
24
Economic Results Service Platform Germany DECEMBER 2009
(€/mln) Fund & AM Fee Consolidated revenues Other (*) Total revenues
SEPTEMBER 2009
DECEMBER 2008
14,2
10,3
15,0
14,2
10,3
15,0
3,2
3,1
(5,0)
3,9
3,4
3,9
3,4
4,4 (0,1) 4,4
0,4
0,2
(1,1)
Consolidated revenues Other (*) Total revenues
26,8
20,2
26,8
20,2
26,2 1,4 27,6
Result Property (**)
(2,3)
(1,2)
(1,2)
Consolidated revenues Other (*) Total revenues
13,6
10,6
13,6
10,6
15,6 0,0 15,6
0,1
0,1
(2,5)
Service platform Consolidated revenues Other (*) Total revenues
58,6 0,0 58,6
44,4 0,0 44,4
61,1 1,4 62,5
Result (**)
1,3
2,2
(9,7)
Result Fund & AM Fee (**) Agency Consolidated revenues Other (*) Total revenues Result Agency (**) Property
Facility
Result Facility (**)
(9,7) (*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest
MARCH 2010
25
Economic Results Poland (€/mln)
DECEMBER 2009
SEPTEMBER 2009
5,3 0,0 5,3
4,0 0,0 4,0
6,8 0,0 6,8
Result (**)
(1,1)
(1,1)
(2,0)
Result from vehicles & funds Shareholders’ loans interests
(1,1) 2,2
0,3 1,7
20,1 1,6
Result (**)
1,2
2,0
21,8 (***)
Total Poland (**)
0,1
0,9
19,8
Service Platform Consolidated revenues Other (*) Total revenues
DECEMBER 2008
Vehicles & funds
(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) 'Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interests (***) Including result from Lucchini sale
MARCH 2010
26
Economic Results Service Platform Poland DECEMBER 2009
SEPTEMBER 2009
1,8
1,6
2,8
1,8
1,6
2,8
(1,1)
(0,9)
(1,9)
Consolidated revenues Other (*) Total revenues
1,2
0,7
1,3
1,2
0,7
1,3
Result (**)
0,1
(0,4)
(0,2)
Consolidated revenues Other (*) Total revenues
2,3
1,7
2,7
2,3
1,7
2,7
(0,1)
0,2
0,1
5,3 0,0 5,3
4,0 0,0 4,0
6,8 0,0 6,8
(1,1)
(1,1)
(2,0)
(€/mln)
DECEMBER 2008
Fund & AM Fee Consolidated revenues Other (*) Total revenues Result (**) Agency
Facility
Result (**)
Service platform Consolidated revenues Other (*) Total revenues Result (**)
(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest
MARCH 2010
27
Economic Results NPLs (€/mln)
DECEMBER 2009
SEPTEMBER 2009
DECEMBER 2008
Consolidated revenues Other (*) Total revenues
18,8 1,8 20,6
12,1 1,8 14,0
34,8 0,0 34,8
Result (**)
(4,0)
(5,2)
3,7
Result from vehicles & funds Shareholders’ loans interests
(3,5) (6,0)
6,0 1,3
6,4 (2,1)
Result (**)
(9,5)
7,3
4,3
Total NPL (**)
(13,5)
2,1
8,0
Service platform
Vehicles & funds
(**)
(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest
MARCH 2010
28
Additional Information
MARCH 2010
29
Consolidated income statement 100% YoY trend €/mln
Total Real Estate Dec.2009
Total Italy
Total Germany
Total Poland
Total Real Estate Dec.2008
Total Italy
Total Germany
Total Poland
Sales
1,031.4
613.5
380.1
37.8
860.9(*)
566.5
184.6
109.9
Rents capital gain sales fees other costs Capitalized Financial Charges Other Capitalized Costs EBITDA Depreciations Revaluations/Writedown EBIT Interest expenses/revenues bank loans Interest expenses/revenues SHL Derivatives PBT Income taxes Net Income 100%
782.8 143.0 (16.0) (477.4) 29.0 172.6 634.0 (1.9) (316.0) 316.3 (522.6) (78.5) (28.0) (312.8) 29.9 (283.0)
294.7 66.7 (10.7) (273.9) 23.2 122.9 223.0 (1.7) (45.2) 176.1 (171.0) (20.6) (12.3) (27.8) 2.8 (24.9)
487.6 68.3 (3.9) (185.2) 0.0 36.3 403.2 (0.1) (268.9) 134.2 (345.2) (52.4) (15.8) (279.2) 27.0 (252.2)
0.4 8.0 (1.5) (18.3) 5.8 13.4 7.8 (0.1) (2.0) 5.9 (6.3) (5.6) 0.1 (5.9) 0.1 (5.8)
669.2 171.2 (11.5) (415.4) 41.0 139.5 593.9 (50.5) (598.6) (55.2) (525.9) (83.6) (58.2) (722.9) (27.5) (750.4)
336.9 108.3 (8.2) (213.5) 29.0 48.8 301.1 (49.3) (198.6) 53.2 (262.9) (40.7) (26.1) (276.7) (11.6) (288.3)
331.8 28.8 (1.5) (161.6) 2.2 55.8 255.6 (1.1) (396.4) (142.0) (256.7) (36.8) (31.2) (466.7) (14.5) (481.2)
0.5 34.2 (1.8) (40.3) 9.8 34.8 37.2 (0.1) (3.5) 33.6 (6.2) (6.1) (0.9) 20.4 (1.3) 19.1
Operating result incl. income from equity part. and writedown/revaluations
(61.7)
(27.1)
(32.8)
(1.9)
(171.6)
(96.4)
(94.0)
18.7
Writedown/Revaluations
(31.4)
(16.4)
(14.2)
(0.8)
(135.8)
(65.9)
(68.5)
(1.4)
Operating result incl. income from equity part. before writedown/revaluations
(30.4)
(10.8)
(18.6)
(1.1)
(35.8)
(30.4)
(25.6)
20.1
interest income from shareholders’ loans
25.6
7.5
15.8
2.2
24.3
11.6
11.1
1.6
Operating result incl. income from equity part. and Shareholders’ loans
(4.9)
(3.3)
(2.8)
1.2
(11.6)
(18.8)
(14.5)
21.8
(*) 2008 figure don’t include the sale of REOCO (NPLs) for approx. 4 €/mln
MARCH 2010
30
Consolidated income statement 100% - December 2009 €/mln
Total Real Estate Dec.2009
Total Italy
Sales
1,031.4
Rents capital gain
Italy
Total Poland
Yielding residential
Development
380.1
196.9
105.7
77.5
37.8
5.5 19.4 (0.2) (87.9) 13.0 61.4 11.2 (0.9) (35.0) (24.8) (26.1) (8.3) 0.0 (59.2) 0.7 (58.5)
487.6 68.3 (3.9) (185.2) 0.0 36.3 403.2 (0.1) (268.9) 134.2 (345.2) (52.4) (15.8) (279.2) 27.0 (252.2)
287.6 32.7 (1.0) (74.1) 0.0 0.1 245.4 0.0 (339.5) (94.1) (207.2) (35.2) (5.7) (342.2) 46.7 (295.5)
188.3 14.5 (2.8) (80.5) 0.0 10.7 130.2 (0.1) 74.6 204.7 (131.3) (15.7) (10.1) 47.6 (11.6) 35.9
11.7 21..1 0.0 (30.6) 0.0 25.5 27.6 0.0 (4.0) 23.6 (6.7) (1.5) 0.0 15.4 (8.1) 7.3
0.4 8.0 (1.5) (18.3) 5.8 13.4 7.8 (0.1) (2.0) 5.9 (6.3) (5.6) 0.1 (5.9) 0.1 (5.8)
(40.0)
(20.6)
(32.8)
(44.2)
11.0
0.5
(1.9)
23.8
(22.0)
(18.2)
(14.2)
(45.2)
30.0
(2.6)
(0.8)
(10.8)
9.8
(18.0)
(2.4)
(18.6)
1.0
(19.0)
3.1
(1.1)
25.6
7.5
1.9
2.6
2.9
15.8
9.5
6.3
0.0
2.2
(4.9)
(3.3)
11.7
(15.4)
0.5
(2.8)
10.5
(12.7)
3.1
1.2
Yeilding
Development
613.5
288.5
249.0
75.9
782.8 143.0 (16.0) (477.4) 29.0 172.6 634.0 (1.9) (316.0) 316.3 (522.6) (78.5) (28.0) (312.8) 29.9 (283.0)
294.7 66.7 (10.7) (273.9) 23.2 122.9 223.0 (1.7) (45.2) 176.1 (171.0) (20.6) (12.3) (27.8) 2.8 (24.9)
268.0 25.8 (5.0) (155.5) 5.9 59.8 199.0 0.0 61.1 260.1 (109.8) (5.0) (12.1) 133.2 3.4 136.5
21.2 21.7 (5.5) (30.5) 4.3 1.7 12.9 (0.8) (71.2) (59.1) (35.1) (7.2) (0.2) (101.7) (1.2) (102.9)
Operating result incl. income from equity part. and writedown/revaluations
(61.7)
(27.1)
33.6
Writedown/Revaluations
(31.4)
(16.4)
Operating result incl. income from equity part. before writedown/revaluations
(30.4)
interest income from shareholders’ loans Operating result incl. income from equity part. and Shareholders’ loans
Other Capitalized Costs EBITDA Depreciations Revaluations/Writedown EBIT Interest expenses/revenues bank loans Interest expenses/revenues SHL Derivatives PBT Income taxes Net Income 100%
Germany Yeilding commercial
Trading & SOHO
sales fees other costs Capitalized Financial Charges
Total Germany
MARCH 2010
31
Consolidated income statement 100% - December 2008 €/mln
Total Real Estate
Total Italy
Sales
860.9(*)
Rents capital gain
Italy
Total Germany
Yeilding
Trading & SOHO
Development
566.5
234.0
189.3
143.1
0.0
184.6
669.2
336.9
294.4
26.1
3.4
12.9
171.2
108.3
30.9
48.8
28.5
0.0
Non strategic
Germany Yeilding commercial
Poland
Yielding residential
Development
48.9
34.5
101.2
331.8
136.4
189.0
6.4
0.5
28.8
9.3
5.2
14.2
34.2
109.9
sales fees
(11.5)
(8.2)
(3.7)
(3.1)
(1.4)
0.0
(1.5)
(0.2)
(1.3)
(0.1)
(1.8)
other costs
(415.4)
(213.5)
(116.4)
(40.3)
(83.3)
26.5
(161.6)
(16.4)
(117.7)
(27.5)
(40.3)
Capitalized Financial Charges
41.0
29.0
0.6
5.5
22.8
0.0
2.2
0.0
0.0
2.2
9.8
Other Capitalized Costs
139.5
48.8
0.0
(0.9)
49.8
0.0
55.8
0.2
35.1
20.6
34.8
EBITDA
593.9
301.1
205.9
36.0
19.8
39.4
255.6
129.3
110.4
15.9
37.2
Depreciations
(50.5)
(49.3)
0.0
(0.5)
0.0
(48.8)
(1.1)
0.0
(1.1)
0.0
(0.1)
Revaluations/Writedown
(598.6)
(198.6)
(78.1)
(74.6)
(35.9)
(10.0)
(396.4)
(316.8)
(79.6)
0.0
(3.5)
EBIT
(55.2)
53.2
127.8
(39.1)
(16.1)
(19.4)
(142.0)
(187.5)
29.7
15.9
33.6
Interest expenses/revenues bank loans
(525.9)
(262.9)
(155.4)
(53.3)
(36.1)
(18.1)
(256.7)
(113.1)
(136.3)
(7.4)
(6.2)
Interest expenses/revenues SHL
(83.6)
(40.7)
(7.1)
(22.8)
(10.8)
0.0
(36.8)
(13.3)
(23.5)
0.0
(6.1)
Derivatives
(58.2)
(26.1)
(20.2)
(1.6)
(4.3)
0.0
(31.2)
(18.7)
(12.6)
0.0
(0.9)
PBT
(722.9)
(276.7)
(55.0)
(116.9)
(67.3)
(37.5)
(466.7)
(332.5)
(142.7)
8.5
20.4
Income taxes
(27.5)
(11.6)
(1.4)
(6.9)
(3.4)
0.1
(14.5)
(9.0)
(5.5)
0.0
(1.3)
Net Income 100%
(750.4)
(288.3)
(56.4)
(123.8)
(70.7)
(37.4)
(481.2)
(341.5)
(148.2)
8.5
19.1
Operating result incl. Income from equity part. and writedown/revaluation
(171.6)
(96.4)
(19.6)
(40.7)
(29.1)
(6.9)
(94.0)
(43.0)
(53.1)
2.0
18.7
Writedown/Revaluation
(135.8)
(65.9)
(22.4)
(27.1)
(15.5)
(1.0)
(68.5)
(38.8)
(29.7)
0.0
(1.4)
Operating result incl. Income from equity part. before writedown/revaluation
(35.8)
(30.4)
2.8
(13.6)
(13.7)
(5.9)
(25.6)
(4.2)
(23.4)
2.0
20.1
24.3
11.6
3.2
4.3
4.0
0.0
11.1
3.7
7.4
0.0
1.6
(11.6)
(18.8)
5.9
(9.3)
(9.6)
(5.9)
(14.5)
(0.5)
(16.0)
2.0
21.8
interest income from shareholders’ loans
Operating result incl. income from equity part. and Shareholders’ loans
(*) 2008 figure don’t include the sale of REOCO (NPLs) for approx. 4 €/mln
MARCH 2010
32
Consolidated Net Cash Flow
(€/mln)
Dec-09
Dec-08
(26.1)
(59.7)
7.4
9.5
(101.2)
2.6
Change in other fixed assets
(9.9)
(16.8)
Change in NWC, funds and other
41.7
(2.5)
(88.1)
(67.0)
Ebit + IEP before restructuring costs, reval. / deval. Depreciation Change in investments 1)
Free cash flow Impact from Facility Mgmt disposal Restructuring costs Interest income /expenses and taxes Cash flow before dividends
171.2 (40.4) (22.7)
(12.4) (6.5)
(151.1)
85.3 (85.1)
Dividend paid (151.1)
Net cash flow Capital increase
0.2
399.3
Treasury shares purchase/sales Total net cash flow
1)
Change in investment is impacted by 114.8 of Shareholders’ Loans (SHL) / participation reclassification
MARCH 2010
33
248.2
0.2
Real Estate Portfolio: Sales, Rents and Acquitions by Country €/mln
SALES
RENTS
ACQUISITIONS
1,031.4
4,968.7
37.8
782.8
34.4
0.4
207.7
864.9(*) 380.1
669.2 0.5
109.9
4.635.0
487.6
184.5
331.8 527.6
613.5 336.9
570.5 294.7
December 2009 Italy
December 2008 Germany
December 2009 Poland
(*) 2008 figure includes the sale of REOCO (NPLs) for approx. 4 €/mln
MARCH 2010
34
294.9 3.0 291.9
December 2008
527.6
299.3
December December 2009 2008
AUM Real Estate Evolution “like for like” (Market Value) €/bln
Capex Acquisitions & other
Sales
Devaluations
+ 0.4 - 1.0 - 0.4 15.0 14.0
2008
2009
The valuation of the Real Estate portfolio assessed by experts shows a 2.8% decrease on a “like for like” basis vs. the previous year The Italian, German and Polish portfolios mask a -1.9%, -3.3% and -8.7%, respectively.
MARCH 2010
35
Real Estate Writedowns and Revaluations P&L Impact Italy
(€/mln)
Revaluations
Total
Revaluations Regione Sicilia Fund
8.6
Trophy assets Fund R&E
27.2
(52.3)
(16.5)
Various investment
67.4 Writedowns
(31.4) Germany and Poland
Revaluations Small Deal DGAG
1)
6.6
25.7
(14.9) Writedowns (46.6)
Highstreet for (40.8)
Writedowns 1)
Includes -0.2 €/mln related to Baubecon Investment as the difference between revaluations and writedowns (IAS 40/IAS2)
MARCH 2010
36
Real Estate Sales and NPL Recoveries (€/mln)
NPL RECOVERIES
REAL ESTATE SALES 100%
Pro quota
100%
Pro quota
1,031.4 864.9(*) 514.2 372.3
361.8
160.7
322.7 98.8
December 2009
December 2008
December 2009
December 2008
December 2009
Gross Margin on sales is about 14% as of December 2009 Sales price for full year 2009 in line with market value Achieved total sales target communicated to the market (1 € bln) (*) 2008 figure includes the sale of REOCO (NPLs) for approx. 4 €/mln
MARCH 2010
37
December 2008
December 2009
December 2008
Participated Real Estate Assets under Management 100% Passing Yield
Vacancy
Book Value
Market Value
90,431.6
5.6%
10.2%
1,620,665.3
1,745,250
1,092,581.6
38,838.1 29,657.9 21,935.6
5.5% 6.7% 4.7%
9.4% 10.7% 13.1%
708,290.0 442,053.4 470,321.9
708,290 546,080 490,880
481,846.1 262,341.4 348,394.1
171,376.9
7.0%
6.7%
2,452,688.5
2,572,163
1,215,297.8
21,290.0 13,943.0 22,216.9 35,064.1 1,426.0 1,586.6 16,878.3 39,963.5 9,010.5 9,998.0
7.1% 7.4% 6.8% 6.8% 10.4% 4.8% 7.5% 7.2% 8.3% 5.4%
298,789.0 189,574.0 329,089.2 517,197.0 13,675.4 32,986.8 224,970.0 553,888.0 108,956.7 183,562.5
303,920 215,820 334,000 568,160 19,930 33,900 237,900 562,290 112,680 183,563
193,834.8 115,573.6 136,135.7 226,931.3 10,163.4
261,808.5
6.4%
7.4%
4,073,353.8
4,317,413
2,307,879.4
277,772.4
6.9%
1.1%
4,039,089.9
4,099,275
3,474,364.3
6,606.2 271,166.1
6.3% 6.9%
11.5% 0.8%
104,982.0 3,934,107.9
106,910 3,992,365
60,185.4 3,414,178.9
186,919.0
6.8%
4.7%
2,741,124.5
2,784,114
2,186,245.4
66,385.5 101,851.0 18,682.6
7.3% 6.6% 6.5%
2.4% 4.9% 5.0%
908,185.8 1,547,445.2 285,493.6
928,058 1,566,097 289,959
661,152.0 1,322,865.0 202,228.4
TOTAL Germany
464,691.4
6.9%
3.2%
6,780,214.4
6,883,389
5,660,609.7
TOTAL YIELDING PORTFOLIO
726,499.9
6.7%
4.7%
10,853,568.2
11,200,802
7,968,489.2
Quota PRE
Passing Rent
€/mln Commercial Core Italy Fondo TECLA Fondo Cloe FONDO RETAIL & ENTERTAINMENT
44.8% 18.1% 31.6%
Commercial Yieding Italy Fondo FIRPS TIGLIO 1 Fondo Raissa Fondo Olinda Dolcetto Tre S.r.l. PROGETTO PERUGIAsrl Fondo Armilla FONDO SPAZIO INDUSTRIALE FONDO HOSPITALITY & LEASURE ITALIA TURISMO S.p.a.
22.0% 12.9% 35.0% 11.3% 33.0% 100.0% 2.3% 22.1% 35.0% 16.3%
TOTAL Italy Commercial Germany Mistral Properties Highstreet
35.0% 12.1%
Residential Yielding Germany DGAG - Residential+Special Properties BIB Small Deal
40.0% 40.0% 49.9%
37.3% 3.1% 1.7% 2.8%
Net Debt
134,078.6 266,101.0 79,027.4 53,452.2
16,659.8
n.m.
n.m.
864,876.8
1,006,546
614,335.7
Development ITA
2,401.0
n.m.
n.m.
1,323,401.9
1,429,446
915,634.3
Development Germany
6,751.0
n.m.
n.m.
140,881.5
152,740
87,007.7
404.4
n.m.
n.m.
148,439.2
189,557
68,922.5
26,216.2
2,477,599.4
2,778,289
1,685,900.2
752,716.0
13,331,167.6
13,979,090
9,654,389.4
Residential Small Office House Office ITA
Development Poland
OTHER PORTFOLIO
GRAND TOTAL REAL ESTATE 1)
Vacancy calculated on units
MARCH 2010
38
Pro-quota Real Estate Assets under Management Quota PRE €/mln
29,699.2
Commercial Core Italy Fondo TECLA Fondo Cloe FONDO RETAIL & ENTERTAINMENT
44.8% 18.1% 31.6%
Commercial Yieding Italy Fondo FIRPS TIGLIO 1 Fondo Raissa Fondo Olinda Dolcetto Tre S.r.l. PROGETTO PERUGIAsrl Fondo Armilla FONDO SPAZIO INDUSTRIALE FONDO HOSPITALITY & LEASURE ITALIA TURISMO S.p.a.
TOTAL Italy 35.0% 12.1%
Residential Yielding Germany DGAG - Residential+Special Properties BIB Small Deal
17,399.4 5,368.1 6,931.6
34,280.3 22.0% 12.9% 35.0% 11.3% 33.0% 100.0% 2.3% 22.1% 35.0% 16.3%
Commercial Germany Mistral Properties Highstreet
Passing Rent Pro-quota
5.4% 5.5% 6.7% 4.7%
6.9%
4,675.3 1,797.3 7,775.9 3,962.2 470.6 1,586.6
7.1% 7.4% 6.8% 6.8% 10.4% 4.8%
388.2 8,839.9 3,153.7 1,630.7
7.5% 7.2% 8.3% 5.4%
63,979.5
6.1%
35,541.8
6.8%
2,730.7 32,811.1
75,559.1 40.0% 40.0% 49.9%
Passing Yield
26,554.2 40,740.4 8,264.5
6.1% 6.9%
6.8% 7.1% 6.6% 6.5%
Vacancy
Book Value Pro-quota
Market Value Pro-quota
9.9%
545,947.3
571,272.5
380,221.5
9.4% 10.7% 13.1%
317,313.9 80,011.7 148,621.7
317,313.9 98,840.5 155,118.1
222,679.6 47,475.9 110,066.0
4.5%
496,942.5
515,366.3
246,921.6
65,614.1 24,436.1 115,181.2 58,443.3 4,512.9 32,986.8
66,740.8 27,819.2 116,900.0 64,202.1 6,576.9 33,900.0
50,334.3 15,148.4 47,647.5 25,647.8 3,353.9
5,174.3 122,520.0 38,134.8 29,939.0
5,471.7 124,378.5 39,438.0 29,939.0
3,030.2 58,759.3 27,659.6 15,340.6
37.3% 3.1% 1.7% 2.8%
6.0%
Net Debt Pro-quota
1,042,889.8
1,086,638.8
627,143.1
1.7%
520,653.1
528,376.1
448,136.8
11.5% 0.8%
44,626.0 476,027.1
45,300.0 483,076.1
25,597.7 422,539.1
4.7%
1,117,486.6
2.4% 4.9% 5.0%
372,265.1 618,978.1 126,243.4
380,213.8 626,439.0 128,285.0
264,460.8 529,146.0 90,282.8
883,889.6
TOTAL Germany
111,100.9
6.8%
4.2%
1,638,139.6
1,663,313.9
1,332,026.4
TOTAL YIELDING PORTFOLIO
175,080.4
6.5%
4.8%
2,681,029.5
2,749,952.7
1,959,169.5
n.m
5,634.9
Residential Small Office House Office ITA Development ITA Development Germany Development Poland
OTHER PORTFOLIO
GRAND TOTAL REAL ESTATE 1)
Vacancy calculated on units
MARCH 2010
39
297,982.7
350,973.3
204,466.5
600.3
n.m
416,461.7
455,492.2
258,824.5
2,163.4
55,198.9
60,107.9
37,005.6
149.3
56,962.3
71,747.7
27,620.4
8,547.9
826,605.5
938,321.1
527,917.0
183,628.3
3,507,635.0
3,688,273.8
2,487,086.5
Structural growth in Pirelli RE ’s recurring margin (€m)
2004A(c)
2005A
2006A
2007A
2008A
233.3 59.5 68.2 105.6
245.5 73.4 56.2 115.9
249.9 74.7 60.2 115.0
216.1 73.5 67.3 29.7 27.3 18.3 17.3
2011 Target
Revenues Total recurring revenues - Asset & Fund Mgmt. - Property - Agency - Credit servicing - Facility (Germany & Poland) Promote / Success fees Other income Total revenues Total Costs Op. result service platform(a) Investment Results(b)
13.5
22.7
17.7
238.3 81.5 50.8 66.9 35.0 4.1 24.5
6.1
4.1
2.0
11.4(e)
1.6
252.9
272.3
269.6
274.2
235.0(*)
254
(201.2)
(192.3)
(213.3)
(244.8)
(265.2)
(204)
51.7
80.1
56.3
29.4
(30.2)
50
110.9
105.7
164.6
99.8
(6.4)
60
67.5
(135.8)
Revaluation/devaluation Total core activity
254
162.7
185.9
221.0
196.7
(172.4)
110
NFP (adjusted) 245.2 AuM Real Estate (market value) €bn 9.5 NPL (Book Value) €bn 1.3 Pro-quota NAV Real Estate Adj. €bn(f) 1.3
292.5 11.7 1.3 1.2
430.5 11.2(d) 1.9 1.0
816.1 12.6 2.4 1.3
861.8 15.4 1.9 1.2
Stable Stable
(a) (b) (c) (d) (e) (f) Note: (*)
Operating result from service platform includes recurring results from Asset & Fund Management, Property, Agency, Credit Servicing, Facility (Germany & Poland), Holding & others Investment Results is the total of Operating Result from Investments and Interest from Shareholders’ Loans. In 2011 the expected interest on shareholders’ loans amounts to €10m Italian GAAP Includes DGAG portfolio valuation; signing in December 2006 / closing January 2007 Includes €11.2m capital gain on German platform’s minority disposal Pro-quota NAV Real Estate Adjusted is calculated as Real Estate Market Value less net bank debt Pro-forma results excluding Italian Facility Management platform sold in 2008. 2008 figures are presented before lay off expenses Not including revenues from G&A
MARCH 2010
40
Pirelli RE shareholders’ structure Market capitalization as of 10 March 2010 approx. 380 €/mln
BEFORE CAP INCREASE
AFTER CAP INCREASE Retail 12%
Retail Tresury shares 6.0% 2.8%
Institutional 30% Pirelli & C SpA 56.5%
Institutional 34.7%
Pirelli & C SpA 58%
International institutional investors (Italy 40%, USA 30%, Switzerland 20%, UK 5%) Growing presence of investors with a long term approach Retail investors reached approx 12% of the free float
MARCH 2010
41