q1 2018 earnings presentation - haya real estate · haya real estate 99 9 2 bankia / bmn contract...
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Haya Real Estate 1Presentación Corporativa 1
Q1 2018
Earnings
Presentation
24 May 2018
Haya Real Estate 222
Disclaimer
The purpose of this presentation is purely informative. The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including,
where relevant any fuller disclosure document published by Haya Real Estate, S.L. (together with any of its subsidiaries, “Haya Real Estate”). Any person at any time acquiring securities must do so only on the
basis of such person’s own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such profession
or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in this presentation. No investment activity should be undertaken on the basis of
the information contained in this presentation. In making the presentation available, Haya Real Estate gives no advice and makes no recommendation to buy, sell or otherwise deal in any securities or
investments whatsoever.
Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities.
This presentation contains forward-looking statements regarding Haya Real Estate’s financial position and plans for future operations. All statements other than statements of historical facts may be forward-
looking statements. These forward-looking statements speak only as of the date of the notice and are subject to a number of factors that could cause actual results to differ materially from any expected
results in such forward-looking statements. Haya Real Estate expressly disclaims any obligation or undertaking to update or revise any forward-looking statement (except to the extent legally required).
Haya Real Estate uses certain alternative performance measures (APMs), which have not been audited, Adjusted EBITDA and Free Cash Flow, to benchmark and compare performance, both between its own
operations and as against other companies for a better understanding of Haya Real Estate financial performance. These measures are used, together with measures of performance under the International
Financial Reporting Standards (IFRS), to compare the relative performance of operations in planning, budgeting and reviewing the performance of its business. Haya Real Estate believes that EBITDA-based
and other measures are useful and commonly used measures of financial performance in addition to net profit, operating profit and other profitability measures under IFRS because they facilitate operating
performance comparison from period to period and company to company. By eliminating potential differences in results of operations between periods or companies caused by factors such as depreciation
and amortization methods, historic cost and age of assets, financing and capital structures and taxation positions or regimes, Haya Real Estate believes that EBITDA-based and other measures can provide a
useful additional basis for comparing the current performance of the underlying operations being evaluated. For these reasons, Haya Real Estate believes that EBITDA-based and other measures are regularly
used by the investment community as a means of comparison of companies in the industry. However, these measures are considered additional disclosures and in no case replace the financial information
prepared under IFRS. Moreover, the way Haya Real Estate defines and calculates these measures may differ to the way similar measures are calculated by other companies. Accordingly, they may not be
comparable.
Regarding any data which may have been provided by third parties, neither Haya Real Estate, nor any of its administrators, directors or employees, either explicitly or implicitly, guarantees that these
contents are exact, accurate, comprehensive or complete, nor are they obliged to keep them updated, nor to correct them in the case that any deficiency, error or omission were to be detected. Moreover, in
reproducing these contents in by any means, Haya Real Estate may introduce any changes it deems suitable, may omit partially or completely any of the elements of this document, and in case of any
deviation between such a version and this one, Haya Real Estate assumes no liability for any discrepancy.
Haya Real Estate 333
Today´s Presenters
Carlos Abad Rico
CEO & Director of the
Board
Bárbara Zubiría Furest
CFO
Haya Real Estate 444
Agenda
Business Review
01
02
03 Financial Review
Annex 04
Key Highlights
Haya Real Estate 5Haya Real Estate
1. Key Highlights
Haya Real Estate 666
Key Highlights1
✓ In Q1 ´18, our transaction volumes increased by +40% (€895MM), allowing 12% growth in revenues
(€55.9MM) and 6% growth in Adjusted EBITDA (€24.4MM)
✓ Strong free cash flow generation in Q1 ´18 (€20.2MM, +59% YoY) driven by lower capex and an
improvement of in working capital, resulting in a cash conversion above 80% in the quarter
✓ Leverage ratio below 3.0x
✓ In April, we have been awarded the new Bankia contract with a tenor of 10 years, including the
REOs of Bankia’s recently merged entity Banco Mare Nostrum (BMN). Bankia REDs to be managed
by Bankia directly
✓ Assets under management at €39.8BN with new contract wins in the quarter. We continue to
develop our institutional asset management business
Haya Real Estate 7Haya Real Estate
2. Business Review
Haya Real Estate 888
Strategic Update2
1 2 5 6 7
Future of
Sareb contract
Haya has been
awarded two new
servicing contracts
with institutional
investors. Continued
focus to capture new
business in the
market
Continuing
preparatory works
for a potential IPO.
Specific timetable
will depend on
market conditions
and visibility over
Sareb and BBVA
Bankia /
BMN
Institutional
Investors and
New Servicing
Business
BBVA Capital
Markets
2018
Haya awarded
the new
servicing
contract with
Bankia/BMN in a
very competitive
process in April
2018
Strong performance
in Q1 ´18 across all
business lines. Sareb
is exploring
alternative scenarios
which include the
potential sale of our
portfolio
Initiating joint
planning activities
for the servicing of
BBVA´s future REO
flows. Set up of
Cerberus/BBVA JV
Co yet to be
completed
Cajamar
Excellent
operational
performance in
Q1 ´18 across all
business lines
3 4
Liberbank
Integration
Integration
plans on
schedule. Focus
on improving
commercial
activity
Haya Real Estate 999
Bankia / BMN Contract2The novation of the Bankia contract proves our capacity to renew our existing contracts with our core clients
• As a result of the Spanish government’s plan to add value to the bank, Bankia bought BMN (savings bank located in the
Mediterranean region), effective Jan 1st 2018
• Bankia has entrusted in Haya Real Estate the management of all its real estate assets, including the BMN´s REOs portfolio
✓ Key contract for the company’s long-term strategy
✓ 10 years contract (expires April, 2028) for the management and commercialization on a exclusive basis of Bankia´s REO stock
and future flow with €5.7BN of assets under management at the beginning of the contract
✓ Bankia´s prohibition to lend to real estate developers has been lifted
✓ HRE has been awarded the contract in a very competitive process demonstrating our capacity to retain core clients
✓ Pre-eminent position to capture new business due to our long-term relationship and our excellent service
✓ Upfront payment of €108MM to be financed through operating cash flows
Contract
Highlights
Haya Real Estate 101010
BBVA/Cerberus transaction2BBVA/Cerberus transaction extends HRE´s success in securing new contracts
Servicing contract for future REOs inflows
JV Co
80% 20%
REOs stock in
Spain @ cut-off
date
Servicing contract for the JV Co stock
• Agreed form subject to the closing of the
Cerberus/BBVA JV transaction
• 8 yr. with a potential extension of two additional
years
• No upfront payment will be required
• Preparatory activities with BBVA / Anida have begun
• Cerberus/BBVA JV transaction has been approved by
Anti-trust/Competition Authorities
• JVCo management bodies are pending to entrust
servicing of acquired stock
• Haya is well positioned to participate in the servicing
of the JV Co due to demonstrated experience, track
record and relationship with Cerberus/BBVA
~€11,000MM – €13,000MM1
(1) Depends on final perimeter agreed between BBVA & Cerberus
Servicing contract: BBVA & Haya
Potential servicing contract: JV Co & Haya
TBD
Haya Real Estate 111111
Migration period
Potential new servicing contract
Other
funds
Sareb – Potential Scenarios2
Leverage ratio under any scenario not to exceed 3.5x in 2020
May ´18 Dec ´19
Sareb cancels
the contract
Early termination make whole payment: value of the
contract for the remaining life
Jun ‘19
or before
Negotiations
HRE & Sareb
Potential new contract with new terms
May ´18
Jun ´19
We continue
working with Sareb
May ´18 Dec ´19
Notice of
termination
We continue
working with Sareb
Migration period
Migration period
May ´18 Significant
portfolio Sale
Portfolio Sale
Commission
CerberusPotential new servicing contract
✓ No upfront payment expected
× Potential reduction in fees
Sareb decides to
sell a significant
portfolio
Sareb decides to
cancel the contract
before Dec. 2019
Sareb decides not
to renew the
contract at its
maturity
Sareb decides to
renew the contract
with new terms
1
3
2
4
✓ Protection mechanisms:
• Portfolio sales above the
threshold agreed in the
contract will increase the
avg. portfolio sale
commission
✓ Make whole payment:
• The indemnity will be
calculated by an
independent expert, with
a penalty factor to be
applied
✓ Absolute focus on operational
excellence to Sareb to maximize
our renewal options
BuyersRetain Haya as servicer
Dec ´19
Does not retain Haya as servicer
Haya Real Estate 121212
1
2
3
4
New servicing
agreements with
institutional
investors
New business update2
Insurance
companies
Developers
Other
opportunities
• Two new servicing agreements
awarded by two different institutional
investors
• In both cases, we continue to service
portfolios sold by our clients
• Our knowledge of the NPAs allows us to
offer our services to potential buyers
• 3 potential portfolio sales in
Non Binding Offer or Binding
Offer phases
• 1 strong HPM lead (250
assets with potential to grow
up to 5,000)
• Rental management business
• New contract awarded with an insurance company
• Identifying new opportunities in the market with other insurance companies
• Negotiations in place to offer:
• Land identification
• Due diligence and administration
• REOs commercialization for their non core portfolio
Potential
Opportunities
• Ancillary services with current clients: tax, residential mortgage debt and property management
• Managing ad-hoc REO commercialization
• Land development: 50 new land plots analysed in Q1 ´18; potential purchases: family offices, private bankers
New
servicing
agreements
Haya Real Estate 13Haya Real Estate
3. Financial Review
Haya Real Estate 141414
€39,807 MM+0.9% YoY
Q1 2018 Key Financial Highlights
Assets Under
Management
3
€895.2 MM+40% YoY
Transaction
Volumes
€272.0 MM+2% YoY
RED Volumes
Revenues Free Cash Flow Net Debt
REO Co. Volumes
REO Volumes
€296.8 MM+104 YoY
€326.4 MM+46% YoY
€55.9 MM+12% YoY
€20.2 MM+59% YoY
€414 MM
Avg. Volume serv. fee 3.59%
Avg. Mangmt. fee 0.20%
Cash conversion 83%
Adjusted EBITDA
€24.4 MM+6% YoY
EBITDA margin 44% Leverage ratio 2.8x
Haya Real Estate 151515
Assets Under Management3
Total 40,159Total 39,807
AuMs decreased by €352MM compared to December 2017 mainly due to natural evolution of the Sareb portfolio (closed perimeter)partially offset by the inflows from the existing contracts during the fist quarter of 2018
Asset under Management evolution (GBV) (€ MM)
RED REO
28,241
11,918
435
82
(251) 227
27,754
12,053
(392)
(631)
AuMs EoP 2017 Inflows from
new contract
wins
Inflows in
existing
contracts
Outflow REO Co Inflow REO Co Outflows from
recoveries
AuMs 1Q ´18
Increase Decrease
104
74
Haya Real Estate 161616
1,941
1,941
3,685
2,054
5,739
Bankia Q1 ´18 Bankia REDs BMN Future inflows Bankia Q1 ´18
proforma
Terms of New Bankia Contract3
+ 17,376 assets
+ 600 bank branches
Very low remaining
actionable perimeter
< 2% revenues
contribution in 2017
REOs
10 years
• Current stock
• Indefinite tenor with a period of
exclusivity due to April, 2028
(€ MM)
Main Terms
Portfolio
AuMs
Tenor
Upfront
payment
€5.7BN
+€3.7BN from Bankia
+€2.0BN from BMN
+ Future flow
€108MM
• Financed through operating cash flows
• Deferred payment
• €40.8MM paid in April
• €20.0MM expect to pay in July
• €46.8MM expect to pay In October
AuMs evolution proforma
• Future inflow
Total 39,807
27,754
12,053
AuMs
Q1 ´18
Bankia
25,813
14,107
Bankia
Total 39,920
AuMs
Q1 ´18 Proforma
Haya Real Estate 171717
267.8 272.0
145.8
296.8
223.6
326.4637.2
895.2
Q1 2017 Q1 2018
RED REO Co REO
Transaction volumes comparison
Transaction volumes 3
• REO volumes increased by 46% due to:
• Overall strong performance in the contracts and the inclusion of €75MM coming from the Liberbank
contract
• Portfolio sales in Bankia and Cajamar with no corresponding impact in 2017
+40%
(€ MM)
REO
• REO Conversion volumes increased by 104% impacted by:
• Strong activity in Sareb resulting in a sharp increase in number of claims filed during the period
• Large deeds in lieu and foreclosures in Cajamar
REO Co.
• RED volumes increased by 2% impacted by:
• Lower recoveries in Sareb, offset by stronger performance in Bankia and in other clients
RED
Transaction volumes increased by 40% compared to Q1 ´17 due to the overall strong performance in all of our contracts
Q1 ´17 Q1 ´18
Haya Real Estate 181818
26.732.1
19.1
20.5
3.9
3.349.7
55.9
Q1 2017 Q1 2018
3
• Volume fee increased by 20% mainly due to:
• strong performance in REOs due to the Liberbank contribution
• improvement in REO Co due to high transaction volumes in Sareb and Cajamar
• The average volume servicing fee as % of volumes was 3.59% due to the product mix and the portfolio sales
which have contractually lower commissions
Volume fee Management fee Other revenues
Revenues Comparison
Revenues
+12%
(€MM) Volume fee
Q1 ´18:
€32.1MM
Q1 ´17:
€26.7MM
Management fee
• The management fee increased by 7% due to the
Liberbank and other clients contribution, which
have offset the decline in Sareb due to the closed
nature of the perimeter under management
Breakdown
by product
Other Revenues
• The other revenues decreased by 16%
(€0.6MM) impacted by lower activity in
Advisory and Securitization business lines
Revenues increased by 12% due to the increase in volume and management fees mainly impacted by the strong performance in REOs, REO
Conversion and the Liberbank contribution during Q1 ´18
(38%)
(37%)
(57%)(54%)
(8%)
(6%)
• In the context of the CNMV review of our 2017 Financial Statements due to the IPO preparatory works, we have
changed the accounting policy applied to Sareb´s upfront payment, treating it in 2017 as an intangible asset, and
amortized over the contract term, in consistency with the accounting treatment given to other contracts.
Therefore, no adjustment to revenues is required and prior periods have been restated for comparative purposes
Revenues from
Sareb contract
RED
41%
REO Co
17%
REO
42%RED
53%REO Co
11%
REO
36%
(%) of total
3.59%4.19%
% average volume servicing fee
Q1 ´17 Q1 ´18
Haya Real Estate 191919
23.0
5.4
1.4(0.6)
(4.2)
(0.6)
24.4
1Q 2017 Volumen fee Management fee Other revenues Operating costs Personnel costs 1Q 2018
Adjusted EBITDA increased by 6% compared to Q1 ´17 explained by a strong performance in REO Co, REOs and the Liberbankcontribution
Adjusted EBITDA bridge3Adjusted1 EBITDA Bridge (€ MM)
(1) Adjusted EBTIDA is the sum of GAAP operating profit plus D&A, adding back €2.1MM costs estimated to have been incurred in
connection with the IPO exploratory activities
43.7%46.4%
1
• New costs associated to the Liberbank
contract
• Higher related direct costs (litigation) due
to REO Conversion transaction volumes
increase
• Higher opex due to temporary external
workforce and professional services and
new commercial campaigns
% Adjusted EBITDA margin
1 Operating costs impacted by:
2
2
• Liberbank contract acquisition, partially
offset by lower severance costs.
Personnel costs impacted by:
LTM 60.2%LTM 50.8%
Q1 ´17 Q1 ´18
Haya Real Estate 202020
12.8
1.41.0
5.1
20.2
1Q 2017 EBITDA Capital expenditures Change in working
capital
1Q 2018
Free Cash Flow and Net Debt Position3Free cash flow increased by 59% (€20.2MM) and the leverage ratio is 2.8x as of March 2018
(1) Free Cash Flow is defined as Adjusted EBITDA less capital expenditures and change in working capital. (2) Adjusted EBTIDA is the sum of GAAP operating profit
plus D&A, adding back €2.1MM costs estimated to have been incurred in connection with the IPO exploratory activities
Free Cash
Flow1
Comparison
Improvement in
working capital due to
the higher collections
partially offset by higher
payments
Q1 ´17 Q1 ´18
Adjusted EBITDA2 23.0 24.4
Capital expenditures paid -5.9 -4.9
Change in working capital -4.4 0.7
Free Cash Flow 12.7 20.2
(€ MM)
(€ MM)
Free Cash Flow Net Debt
443.1
414.1
2017 1Q 2018
3.0x
Leverage ratio: Net debt / Adjusted EBTDA2
2.8x
(€ MM)
• Repayment of €18MM of Liberbank´s VAT facility
• Leverage ratio in Q1´18 below 3.0x
• The Bankia´s upfront payment of €108MM will be
financed through the operating cash flows:
Main
Highlights
Q1 ´17 Q1 ´18 Q1 ´18
55% 83%
% Cash Conversion: FCF / Adjusted EBITDA2
Adjusted
EBITDA
Haya Real Estate 21Haya Real Estate
4. Annex
Haya Real Estate 222222
Q1 ´17 Q1 ´18 (%)
Total transaction volumes 637.2 895.2 40.5%
Revenues 49.7 55.9 12.4%
Volume fee 26.7 32.1 20.3%
Management fee 19.1 20.5 7.2%
Other revenues 3.9 3.3 -16.1%
Operating expenses 26.6 31.4 18.0%
Other operating expenses1 14.3 18.5 29.4%
Personnel Cost 12.4 13.0 4.8%
Adjusted EBITDA2 23.0 24.4 6.0%
Adjusted EBITDA margin 46.4% 43.7% -5.7%
Adjusted EBIT1 5.5 2.0 -64.0%
Adjusted EBIT margin 11.2% 3.6% -68.0%
Assets under management 40,159 39,807 -0.9%
Average volume servicing fee 4.19% 3.59% -14.4%
Average management servicing fee 0.20% 0.20% 0.3%
Free cash flow 12.7 20.2 58.8%
Net debt position 443.1 414.1 -6.5%
Leverage ratio 3.0x 2.8x -7.9%
Q1 ´18 Key Metrics4
P&L
Other
Key
Metrics
(€ MM)
(1) Other operating expenses adjusted by €2.1MM costs estimated to have been incurred in connection with the IPO exploratory
activities (2) Adjusted EBTIDA is the sum of GAAP operating profit plus D&A, adding back €2.1MM costs estimated to have been
incurred in connection with the IPO exploratory activities (3) Figures as of December, 2017
3
3
3
Haya Real Estate 23
Calle Vía de los Poblados nº3. Parque Empresarial Cristalia, Edificio nº9, CP 28033, Madrid
901 11 77 88 | www.haya.es
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