Implenia AG (IMPN) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Capital Market Day of Ina Invest via webcast and conference call. My name is Silvan Merki, Chief Communications Officer of Implenia. We invited analysts, investors, banks and media alike to this Capital Market Day, and we are happy to have you here. We will hold our presentation in English. However, after the presentation, you are kindly invited to ask your questions either in English or in German via conference call, where we please you to dial in already now. Before we start with our presentation, I would like to first draw your attention to our disclaimer that you find presented here. I would like to highlight the passage where it says that during this conference, forward-looking statements may be made. Such statements involve certain risks that could not be predicted with reasonable assurance. Ina Invest assumes no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise. And one second remark, you will find the slides shown today already published on our new website ina-invest.com. And now let me hand over to Implenia's CEO, André Wyss, for a brief introduction for this afternoon. André?

Thank you, Silvan. Also a very warm welcome from my side. Before handing over to the designated Chairman of Ina Invest, I would like to share a few words on Implenia and the rationale to create Ina Invest for those of you that could not participate this morning in the Implenia Capital Market Day presentation. Implenia is Switzerland's leading integrated multinational construction services provider. It has significant building construction and civil engineering operations in Switzerland, Germany and Austria, as well as strong positions in the infrastructure sectors in its additional home markets, France, Sweden and Norway. In addition, Implenia is also a successful real estate developer in Switzerland and Germany, with a strong track record in delivering innovative integrated real estate development and owns a large and attractive development portfolio. Implenia can look back on around 150 years of construction experience, and it brings its expertise in consulting, planning and execution together under a single roof of an integrated multinational construction services provider, and focuses on realizing large and complex projects with a leading position in sustainability. In February, we announced the launch and spin-off of Ina Invest to accelerate Implenia's overall real estate business. To do so, Implenia will transfer half of its development portfolio with a current market value of approximately CHF 300 million to Ina Invest. Ina Invest will then act as a new real estate investment company, covering the entire value chain from initiation until realization, as well as management and letting. At the same time, Implenia is expanding along the value chain to offer project, portfolio and real estate asset management services, while offering its development and realization capabilities at arm's length to Ina Invest. Access to new equity and debt financing will accelerate the growth of Ina Invest, and in turn, will create increasing recurring earnings for Implenia as a compensation for its services. This spin-off of Ina Invest and the underlying strategic partnership with Implenia will unlock significant incremental value for all stakeholders. First of all, new value will be created through the additional financing capacity of Ina Invest to acquire new development plots and projects. Hereby, Implenia's network and market presence may be utilized even more than today to identify new market opportunities for both companies. Second, there will be accelerated value realization of Implenia's development portfolio and construction business. At the same time, Ina Invest will benefit from Implenia's real estate services and thereby creating new recurring earnings for Implenia in addition to its shareholder participation as a significant minority shareholder. Last but not least, both firms will benefit from maximized efficiency gains and value delivery through integrated project collaboration and Implenia's expertise in construction services. I'm very pleased that with Stefan Mächler as the designated Chairman; and Marc Pointet as the designated CEO of Ina Invest, we were able to bring 2 experienced and very successful real estate experts on board well before the upcoming launch. Furthermore, we were able to complete the board and Stefan Mächler will announce all members later in the presentation. Let me congratulate all designated members of the Board, as well as the designated CEO, and wish all of them satisfaction and success. I personally look forward to a great collaboration on the journey to make Ina Invest a success for all key stakeholders. Let me now hand over to Stefan Mächler for an introduction and to guide you through today's Ina Invest Capital Market Day. Stefan?

Thank you, Andre. Ladies and gentlemen, thank you for joining the very first Capital Market Day of Ina Invest, a newly created real estate investment company heading soon for the Swiss Stock Exchange. As much as the format of today's Capital Market Day is special due to the current environment, in the form of a webcast, as equally special is Ina Invest as its unique proposition. I'll come back on this in a few seconds. My name is Stefan Mächler, I'm the designated Chairman of the Board of Directors. As Chief Investment Officer of Swiss Life, equally to Swiss Life I do share a passion for real estate for quite some time. And among others, I'm also known as 1 of the 2 founders of Swiss Prime Site some 20 years ago. Please let me now introduce my fellow presenters of today. On the one side is the designated Chief Executive Officer, Marc Pointet. On the other hand, it's Andrea Wyss, member of the Executive Board of Implenia as well as Head of the Division Development and Head of Implenia Services. In the latter role, he is the main business partner of Ina Invest. Marc, would you please introduce yourself?

Ladies and gentlemen, mesdames et monsieurs [Foreign Language], it is a great pleasure to be part of the team, and to lead a new generation of real estate company. First of all, I want to thank André Wyss and Adrian Wyss from Implenia for your partnership and introduction to Ina Invest. Also, I want to thank you, Stefan, for your confidence in Ina Invest and in my person. After a few years of work in a total contractor company, I joined Mobimo and worked for several years in the development department in Zurich. The last 7 years, I had the opportunity to be the Director and Head of Mobimo Suisse Romande and had 45% of Mobimo's assets under management. I'm 46 years old, father of 4 kids, and we live actually in Lausanne, at the lake of Geneva, and we will -- we'll move this summer back to Zurich.

Okay. Thank you. Adrian, would you please introduce yourself too?

My name is Adrian Wyss, I'm the Head of the Development Division at Implenia and have been a member of the Executive Committee since 2015. At the same time, you mentioned before, I'm also here today as Head of Implenia Real Estate Services, which represents the interface to Ina Invest, and will therefore be its most important partner. I'm an architect with additional qualification in business administration and have been with Implenia for almost 14 years in many different operational roles in real estate development and execution. I'm delighted to be here today and to support the implementation.

Thank you, Adrian. Today, what are we going to present? After the investment highlights, Marc Pointet will briefly touch the market, followed in depth by the business model and the strategy. He also will go through the financials and our business outlook. Adrian Wyss will walk you through all the investment projects. Thereafter, I will have a spot on the governance topics before Crédit Suisse explains the envisaged transaction. Let me now go into the investment highlights. Ina Invest will be, from the start, a stock-listed leader in Swiss real estate development. One, with Ina Invest, you will get access to a very attractive mature development project portfolio carved out from the business partner Implenia. A top-notch, well-diversified real estate [ start ] portfolio, diversified by location, roughly half derives from the Zurich area, followed by Western, Central and Northwestern Switzerland. Diversified by usage, more than 40% derives from residential usage, followed by office, and to a lesser extent, hotel and other usage. And virtually the whole portfolio has been placed in the upper right quadrant by Wüest Partner, our independent evaluator. Two, Ina Invest benefits from the proven development and execution expertise of Implenia, our long-term partner. Implenia is known for its high-quality construction and development. And so Ina has access to the latest construction evolution, for example, in timber constructions. Three, growth expectations are solid due to the leveraging -- due to leveraging the local expertise and wide-reaching network of Implenia's unique land acquisition capabilities, a mature development portfolio to start with, and an envisaged land acquisition of approximately CHF 50 million per annum. Value will also be created by Implenia's capabilities such as excellent construction expertise. For example, as shown in the upper right side of this page, how to deal with the contaminated Sulzer plot in Winterthur, or development expertise, for example that identified underutilization in Zurich. This is the second example on this page. Or its pragmatic approach to create win-win situations, for example, in Onex, Geneva, the third example on this page. This all is supported by a solid financial profile for the next few years, or as we call it, the growth space, until 2024. This would allow us, according to plan, to grow out our portfolio to approximately 1 billion by 2024 and 2 billion by 2027. Four, Ina Invest strives for the highest sustainability standards, both for development but also for operation. We want to operate one of Switzerland's most sustainable real estate portfolio. Of course, this goes along with proper certification for the properties, but also on a company level. This is not just a marketing story. No, it creates tangible results as evidenced in the Lokstadt case, more of that later by Adrian. And last but not least, five. Ina has a solid financial profile, which allows us to profitably grow to roughly CHF 1 billion in 2024 and CHF 2 billion in 2027. At the same time, to keep the financial risk limited while achieving decent ROEs, and thus pay attractive dividends. Now I would like to hand over to our designated CEO, Marc Pointet. Marc, please?

Thank you, Stefan. Now let me give you a snapshot on the Swiss real estate market and its relevant drivers the company will invest in. Overall, the Swiss real estate development market is highly favorable. Real estate is a stable anchor during the actual crisis because of its stable cash flows compared to other types of assets. Especially the housing market stands out. Negative effects of COVID-19 are expected primarily on the retail and the tourist hotel segment. The spread of a risk-free rate is at all-time high and the COVID-19 crisis will likely further extend the negative interest rate period, and therefore, keep mortgage costs still very low. On the diagram in the middle, one can see that the Swiss Real Estate Index performed much better during this actual corona crisis compared to the SMI. Let's have a closer look now to the different segments of the real estate market. Several factors support high price level of the Swiss condominium segment. First, demand for owner-occupied housing remains high, while low interest rates push mortgage costs further down. Secondly, the project pipeline for condominiums is rather weak due to the shift of investors towards rental apartments in the last years, creating favorable market conditions as demand is high, but small supply. You can see the trend over the last years in both diagrams on this chart. And the third point, important, I want to point out for you, the homeownership rate in Switzerland is still one of the lowest in Europe with around 40%. However, tight regulation of financial sustainability of borrowers remain a big hurdle for purchasing a home, especially for first-time buyers. For the rental apartment segment, we see an increasing divergence between the regions. At the top locations and in urban areas, the vacancy rates are 1% and under, stable on a very low level. In the peripheral areas, vacancy rates increased 1% in the last 5 years. Oversupply likely in peripheral areas; however supply is still scarce in top locations and urban agglomerations. We expect rents to perform best in central locations like Zurich, Lausanne, Geneva and Basel, where scarcity of supply is still apparent. There was a falling transaction yields during the last years and room for lower yields in the long-term perspective. Overall, location quality near public transport, as well as well-structured floor plans, mitigate vacancy risk significantly. In the office space segment, there is also a gap between the center and the periphery. We saw growing price and lower vacancy rate in the centers due to the moderately planned office space in the last years, and the overall recovery due to a concentration of demand in the city centers. There is a short supply in the city centers and a rising supply of space in peripheral office property markets. We think COVID-19 will increase these trends. The co-working providers will be most affected this year by COVID-19. Now let me introduce you to the business model and the strategy of Ina Invest in the next minutes. Some insights into Ina Invest's mission and values, which we believe in. The mission statement is: Ina Invest is convinced that real estate can only be profitable in the long-term if its development and operation are consistently tailored to the needs of present and future generations, and follow high ecological principles. Therefore, our core values are: Environmentally aware. We want to be one of the most sustainable real estate portfolio in Switzerland. Transparent. An open and trustworthy communication with all of Ina Invest stakeholders. Excellent. High-quality standards over the entire property life cycle and towards its shareholders. Collaborative. Being a trusted partner which generates win-win situations. Visionary. Being a pioneer in development, implementation and operation. Ina Invest's strategy is unique in the Swiss real estate market. The company focuses on residential properties in attractive urban and suburban areas with commuter-friendly transport links in Switzerland. Sustainability as a key topic, with vision to operate of Switzerland's most sustainable real estate portfolio. Continued diversification of the portfolio refers to diversification by geography and of the portfolio. Business expansion by leveraging local expertise and wide-reaching network of Implenia. Ina Invest covers the entire value chain of the real estate business. This ranges from project initiation to project realization and the use of the property. Across this value chain, Ina Invest profits from Implenia's expertise. However, responsibilities are clearly assigned and the company always has the decisive power. I will point this out in the following slide. The lighter arrow across the entire chart is supposed to show that marketing and sales is a continuous process which ranges across the entire lifespan of a project. As I pointed out before, Implenia remains a reliable partner for Ina Invest in the future, but the company controls the process. The collaboration with Implenia yields many benefits, such as the development expertise as well as the network. The close cooperation and outsourcing with a customary fee structure to Implenia allows Ina Invest to have a very lean organization. Nevertheless, independent external parties provide accounting and reporting services as well as the valuation of the properties. We are convinced that the continued partnership with Implenia creates a win-win situation for both parties and its shareholders. Ina Invest benefits from Implenia's network, give access to off-market acquisition and its expertise in development and construction. The collaboration allows Ina Invest to have a lean setup and a scalable business model. Overall, the efficiency gains and the value delivery are maximized. Ina Invest's goal to have one of Switzerland's most sustainable real estate portfolio is not just empty words. Sustainability is, as we heard before, part of the company's mission and values. Therefore, sustainability targets are included in the performance-related remuneration of the CEO, of myself. Ina Invest will use Implenia's internal tool to assess the sustainability of its projects, and will procure ratings from the established providers like GRESB and Sustainalytics. In addition, each project will, of course, also follow applicable Swiss standards, such as Minergie. Let me give you an example to underline the sustainability leadership, based on Ina Invest's largest project, the Lokstadt. Lokstadt will not only have lower emissions during the construction phase, but more importantly, during the operation over the lifetime of the real estate. Lokstadt is one of only 22 certified 2,000-watt sites in Switzerland. Future tenants will directly benefit from the high sustainability standards as they will benefit from lower operating costs. Ina Invest is a unique proposition and very rare investment opportunity for investors, the only full real estate portfolio through which investors can get access to value growth from scratch in the development phase. Ina Invest has a higher percentage of residential properties compared to other Swiss real estate companies, providing investors an opportunity to invest in a stable and robust segment of the market. All properties are newly built according to the state of the art standards and very strict sustainable standards. Last but not least, the portfolio is diversified through regions and type of use. I have now the pleasure to hand over to my colleague, Adrian Wyss, heads Development, Implenia, who will now give you detailed information on Ina Invest's starting portfolio.

Thank you, Marc, for these explanations. I will now give you an overview on the interesting portfolio, and detailed insights into the individual projects. The market value of the portfolio is CHF 282 million and over CHF 1.1 billion after completion, based on valuation from Wuest Partner from March 31. The extended floor space will be approximately 140,000 square meters at completion. The portfolio will consist only of high-quality real estate projects, which is confirmed by the rating of Wüest Partner. The portfolio is well diversified across the urban centers Zurich/Winterthur, Basel and the Lake Geneva region. I would like to highlight, in particular, also the well-balanced mix of uses with strong focus on residential property. The portfolio gross yield of the starting portfolio is 4.0%. This overview shows you that all projects from the initial portfolio will be completed by 2027. Three development projects: Lokstadt Tender, [ whole ] house; Lokstadt Elefant; and Allschwil, Baselink are ready for execution or have partially started. You can also see that the green-colored projects become part of the portfolio after realization. The gray-colored projects have condominium ownership, and the others have included both types. With the Lokstadt area, a contemporary urban, dense and residential development with commercial ground floor uses is to be realized. The industrial past of the area will be staged as far as possible, whereby the sustainable use of resources and the reduction of emissions are in the focus. Situated to the north of Zurich, Winterthur, a former industrial city, is just a 20-minute train ride away from Zurich main station or 30 minutes from the Zurich airport. The starting portfolio includes 4 projects from the newly emerging Lokstadt area. Initially, we plan to take you to Winterthur, and you would have been able to experience this unique project with a view of the entire area and the historically impressive industrial halls. Instead, we will show you a short video. [Presentation]

Now I will go deeper in details. The Project Tender in Winterthur is part of the Lokstadt area and envisages the construction of a new high-rise building with 39 residential units for condominium use. The process for the sale of the condominium units has just started. The building permit for the construction project, we have received today. Construction is scheduled to start in July 2020, and completion is expected in June 2023. As mentioned earlier, the Lokstadt area has a 2,000-watt certification and will follow Minergie standards. The 2,000-watt site certification is awarded to residential areas that can demonstrate sustainable use of resources and emissions over the entire life cycle of the site's development. During the construction phase, the Lokstadt should emit approximately 11% and maintain approximately 90% less greenhouse gases than the Swiss average. The Elefant project is the next project in the Lokstadt and involves the construction of a new office building. This project emphasizes one of our core competencies. The building is characterized by a modern timber construction over the 6 upper floors, divisible areas, 2 rooftop terraces and a large inner courtyard. Building permit was received, construction is scheduled to start in October 2020, and completion is expected in December 2022. SWICA has rented 100% of the space under a multiyear lease. The Project Bestandeshallen in Winterthur is the heart of the Lokstadt area and envisages the conversion of the Bestandeshallen into commercial and hotel space as well as market hall, restaurants and a public kindergarten. The Bestandeshallen are historical halls that offer contemporary urban usability and give the whole Lokstadt area a historical touch and identity. Major international hotel operators have submitted concrete offers and negotiations have started. Currently, 2 projects from the competitive process are being revised because of the challenging situation in the protected halls. It seems that the process can be successfully completed in the summer. Construction is scheduled for the beginning of 2022. The last out of 4 Lokstadt project is a real landmark. The Rocket & Tigerli project envisages the construction of a new high-rise building with residential space, including approximately 70 condominiums and approximately 110 rental apartments on one hand; and commercial space, student apartments, hotel space on the other hand. The high-rise is the visible landmark on the Lokstadt. The spectacular view will be publicly available from the top floor. The strategic planning, design and study contract will be completed by 2021. Construction is scheduled to start in quarter 1 2023 and is expected to be completed in quarter 4 2025. Like the projects in the Lokstadt area, Project KIM is located in Winterthur with a close proximity to Zurich. It envisages the construction of 2 new business properties and is located between 2 public transport stations. With the vision of a modern working world, the project offers a very good price-performance ratio due to its size. The start of construction is planned depending on the rental, possibly in phases. Located in Zurich, the Schaffhauserstrasse project is characterized by an excellent city access and proximity to the district, Oerlikon. The project demonstrates another strength, to develop projects on brownfields, and will be one of our focus area for the future. We envisage the demolition of the existing building and the construction of a replacement building with around 60 rental apartments. Strategic planning and feasibility studies are currently progress with construction scheduled to begin in July 2022 and completion expected in June 2024. The next 2 projects are located in Baar near Zug, a highly attractive location known for competitive tax rates and its great public links to Zurich, which can be reached in 20 minutes via public transport. Zug is also a home of many international companies and communities. The project [ in the ] newly emerging Baar area envisages the construction of a high-rise residential building with a wide view over the lake of Zug and surrounding mountains. The building and zoning regulations are currently awaiting approval. Construction is scheduled to begin in quarter 2 2025 and completion is expected in quarter 4 2027. Brownfield 3 in Baar envisages the construction of a commercial use/office space. The second project is located right next to the public transportation and is of a great urban importance for the cities Baar and Zug. Construction is scheduled to begin in 2023 and completion is expected in 2025. From the Zug area, we move northwest into the Greater Basel area. Project Baselink is located in Allschwil, near Basel. The Baselink project envisages the construction of a new long and short-term stay hotel. It is located on a new developing office and research area with a floor space of over 75,000 square meters. The planned hotel will be the only hotel in the Baselink area. The lease agreement short stay is signed with Tristar. Final negotiations for long-stay lease contracts are expected in the near future. The building permit for the construction project is ready. Construction is scheduled to start in July 2020 and is expected to be completed by the end of 2022. Also located close to Basel, the Project Schwinbach in Arlesheim envisages the construction of residential properties for condominium use. A total of 52 high-quality apartments are built, which are distributed over 4 buildings. The object stands out through its special architecture in timber, design and atmosphere as well as its sustainable construction base on the Minergie standard and proximity to nature. The building application has been submitted. Now heading west into French-speaking territory. The following 2 projects are located in the city of Neuchâtel, which is situated between lakes and majestic mountains with good road and public transport links to Geneva. The Tivoli Brownfield 2 project in Neuchâtel, on the former chocolate plant Suchard, envisages the construction of office and residential space. The object stands out through its spectacular 180-degree view on the lake, with a train station and a car highway just nearby. The development of the district plan is in effect, construction is scheduled to begin in quarter 4 2022. The Brownfield 4 is another project in the same area development, Tivoli, and envisages residential space. The status of the project and characteristics are the same as for the Brownfield 2. The project Grand Record is located in Préverenges, a highly popular living region in proximity to Lake Geneva and close to Lausanne. The project envisages the construction of 4 new buildings with residential and commercial uses. Totally, the creation of about 80 apartments are planned. The condominium share represents 77% of the total floor space. The development of the neighborhood plan is currently in the approval process. Construction is scheduled to begin in September 2022 and is expected to be completed in September 2024. The last 2 projects are located in Onex, Geneva, an area known for its proximity to the Alps and the city of Geneva. Onex is a highly government-regulated market and thus has very low vacancy rates. The project are very -- the projects are very attractively located directly next to their own nature reserve and with a good public infrastructure. The project l'Echo envisages the construction of 110 residential apartments with controlled rent. The development of the neighborhood plan is currently in progress. Construction is scheduled to begin in January 2022 and is expected to be completed in September 2023. The second project in Onex involves the construction of several new buildings with mainly residential uses. A total of 215 apartments are planned, all under the regulatory provisions of the state of Geneva. The development of the neighborhood plan is currently in process similar to the Chemin de l'Echo construction, is scheduled to begin in October 2023, and completion is expected in September 2026. Now I would hand over back to Marc for some thoughts about the acquisition strategy.

Thank you, Adrian. Ina Invest will have growth through the development of this wonderful real estate portfolio transferred with the spin-off, and through additional acquisition of about CHF 50 million land per year. The focus is on residential properties as well as mixed-use buildings, including high-quality office buildings as a secondary priority, all this in attractive urban and suburban areas with commuter-friendly transport links across Switzerland. As sustainability pioneer, whereby every new acquisition must be in line with the vision to operate Switzerland's most sustainable real estate portfolio. Every new investment will be cleared with the ESG evaluation tool to comply with the highest sustainability standards. Ladies and gentlemen, some words now to the financials and our financial outlook. Of course, more information will follow with the prospectus. On this chart, you can see the NAV bridge to the opening balance sheet, which you can also find in the appendix. The market value of the portfolio is CHF 282 million based on the third-party valuation reports of Wüest Partner. To arrive at the NAV, deferred taxes, debt and outstanding purchase rights payments are deducted. An intercompany loan will be transferred as part of the spin-off. The loan will be offset by the first capital increase. Outstanding purchase rights payments of CHF 25 million, of which CHF 16 million are related to the project in Schaffhauserstrasse in Zurich, payable this year, and CHF 3 million Tivoli Neuchâtel payable also in 2020, as well as the CHF 5 million Grand Record, Préverenges near Lausanne payable in 2021. Net asset value of Ina Invest of CHF 165 million. Implenia's final hold after the initial capital raise is expected to remain above 40%. We come to the financial outlook for the next years. The current market value of the portfolio is CHF 282 million. And through additional land acquisition of approximately 50 million per year, the portfolio value is expected to grow to CHF 2 billion by 2027. During the project growth phase till the end of 2022, we will have around 18,000 square meters of development completions per year and about 45,000 square meter from 2023 onwards. Thereof, around 15% of projects will be sold as condominiums new lease. The overall project development gross margin is expected to range between 10% and 20%. The expected return of equity will range between 6% and 8% in the development phase 2023 onwards. Fairly self-sustaining portfolio during growth phase, project financing will be drawn once the initial equity capital raised is used up. The maximum of project financing is determined by an LTV ratio of 55% to 65%. Nominal dividend yield during growth phase and in line dividend policy with the broader Swiss real estate market from 2023 onwards. Let's move on with the cash outlook for 2020. The capital increase of approximately CHF 100 million, which will primarily be used for the development of the starting portfolio and the acquisition of additional land. Operating cash flow in the development phase mainly comes from proceeds from condo unit sales. Outstanding purchase price payments will be exercised 2020, and are considered paid in the market value of the portfolio. Dividend yield will be nominal during the growth phase. Fairly self-sustaining business model as financing comes mainly from the initial equity capital raise and proceeds from sale of condo units. This leads us to our financing policy and strategy. LTV financing, project financing will be drawn once the initial equity capital raise is used up. The maximum of project financing is determined by an LTV ratio of 55% to 65%. Our dividend policy, nominal dividend yield during growth phase and from 2023 onwards, in line with the broader Swiss real estate market. Acquisition budget, additional acquisition of CHF 50 million per year. The acquisition is focused on residential properties, rental apartments and condominiums, in order to continuously decrease the risk profile of Ina Invest. I would now hand over to Stefan Mächler for the corporate governance policy of the company.

Thank you, Marc. We now proceed to the governance aspect. As you can see, there is a double layer structure with Ina Invest Holding and its sole subsidiary, Ina Invest. The ownership structure is as such that Ina Invest Holding will hold approximately 60% of Ina Invest, and Implenia will hold some 40% of Ina Invest. Swiss Life, on the other hand, has committed to participate in the planned capital raise by acquiring a significant stake, up to 15% in Ina Invest Holding. In order to fully align interests between the various stakeholders, we have implemented a strong governance, comprising, on the one hand, clear shareholders agreement between Ina Invest Holding and Implenia. And service level agreements between Ina Invest as a service provider -- a service recipient, and Implenia as a service provider. The economics of this agreement [ are ] the fee table you will find in the appendix. On the other hand, the majority of the Board of Directors are independent from Implenia, as well as the CEO is independent and fully aligned with the interest of the Ina shareholders. The boards of the holding and its subsidiary are identical. This ensures the functioning as one unit. We are also convinced that we have found a strong group of professionals with a decent track record for the key functions at Ina. To start with, and most importantly, our CEO, Marc Pointet, who you got to know today. Equally, with the Board of Directors, the Vice Chairman and the Head of the Investment Committee will be Christoph Caviezel, who was, among others, the former CEO of Mobimo. Marie-Noëlle Zen-Ruffinen will chair the nomination and compensation committee. She is of counsel of a law firm, part-time professor at the University of Geneva, and Board member, among others, of Baloise Holding. Hans Ulrich Meister will chair the Audit committee. He's, among others, the Chairman of Implenia. André Wyss will be a member of the Board of Directors and a member of the Investment Committee. He is the CEO of Implenia. Myself as Chairman, I will not be part of the investment committee. This, although remote, for reasons of potential conflict of interest. Please note that with this setup, we could kill 2 birds with 1 stone, meaning we have embedded the key representatives of Implenia in the setup as a main service provider and important shareholder. But at the same time, have a strong set of independent professionals [ and ] the independent members have a majority in the Board of Directors. Wüest Partner and KPMG will have respective roles and tasks to support the strong set of governance. To sum up, we have found the right measures to bring this company with its unique business setup ready to fly sustainably. Let me now move ahead to the Chapter 7, the envisaged transaction. Please let me gratefully mention our project partners, meaning our financial and transaction advisers, which are on the one hand Alantra, represented, among others, by Kurt Rüegg; on the other hand, Crédit Suisse, represented among others by Martin Frischknecht. Since Crédit Suisse is acting as the sole book-runner, I kindly ask Martin Frischknecht to walk you through the details of transaction. Please, Martin.

Good afternoon, ladies and gentlemen. I'd like to walk you through the envisaged transaction on Slide 59. The transaction will happen in 2 steps. Step #1 is the spin-off. In the spin-off transaction, Implenia has transferred half of its land bank with the associated development projects into Ina Invest Limited. 50.1% of Ina Invest Limited shares will be held by Ina Invest Holding Limited, which in turn will be distributed to Implenia shareholders as a dividend in kind. Each Implenia shareholder will thus receive 1 Ina Invest Holding Limited share for 5 Implenia shares. As a result, 100% of Ina Invest shares will be held by Implenia shareholders and will be listed on the Swiss Stock Exchange, SIX. Implenia will hold 49.9% in the subsidiary, Ina Invest. Then let's move to the right-hand of this chart, the capital increase. Ina Invest Holding Limited will raise approximately CHF 100 million new equity in a rights issue. The issue price will be determined in a bookbuilding of the shares not subscribed by existing shareholders. Swiss Life, as an anchor shareholder, has already committed to taking up to 15% of the capital of Ina Invest Holding, which could represent as much as CHF 30 million. Ina Invest will effect the same capital increase symmetrically, and Implenia will participate by offsetting claims in order to continue to hold at least a 40% stake in Ina Invest Limited. Let's look at the timetable on Slide 60 Ina Invest Limited. On 28th of May 2020, the announcement of the rights issue terms will happen. On the 2nd of June, the publication of the prospectus will take place, followed by the rights exercise period from June 3 to June 10. In parallel, the roadshow and bookbuilding will take place, with the capital increase being effected on the 11th of June, which means the distribution of the dividend in kind and the listing will happen the day thereafter on the 12th of June, at the same time as the trading of the new shares on SIX will begin. On the 16th of June, the closing of the rights issue will take place. Let's summarize the transaction. We have a spinoff, combined with a rights offering. Each shareholder of Implenia will receive 1 Ina share for 5 Implenia shares. The expected NAV, net asset value, will be approximately CHF 22.50. So each Implenia share will get a share of that NAV of CHF 4.50. The listing of the Ina Holding Limited shares on the SIX will be in the standard for real estate companies. Crédit Suisse will act as sole book-runner. The capital increase will be a public offering in Switzerland, with private placements outside Switzerland and the U.S. under Reg S. There will be no offering into the United States. With that, I'd like to hand back to our Chairman for the closing remarks.

Thank you, Martin. We are now coming to the end of the presentation. Please let me sum up. With Ina Invest, you will get access to a top-notch mature development portfolio in the amount of CHF 282 million to start with, well spread over the key regions of Switzerland with a high degree of residential and office usage. You will get access to a strong growth proposition with a solid financial profile. This will enable Ina to lever the local expertise and the wide-reach network of Implenia's unique land acquisition capabilities, and provide attractive investor returns. And the initial offering will be placed at a price up to net asset value. This means that, different from the majority of the market, you will get access to a portfolio without any premium over the NAV. Ina Invest strives for the highest sustainability standards, both for development, but also for operation, and thus will operate one of Switzerland's most sustainable real estate portfolio. Now we are at the end of our presentation. Thank you for your interest, and we are now able to take questions.

Thank you, Stefan. So I can open the conference call for your questions. We do so via the [ designated ] conference call where you have to be dialed in. So if not yet done, you can still do with the credentials you got via e-mail. Feel free to ask your question. [Operator Instructions] Please introduce yourself quickly and then ask your questions, which will be answered by 1 person here in the room. So we are happy to answer the first question. Please, do we have a first one already in the line? Yes, I see we have one. Mic is open.

Yes. This is Pascal Boll from MainFirst. I have a question -- I have actually 2 questions. So first of all, you said your portfolio will mainly focus on residential. Now you seem to be very optimistic. But when we look at the markets, we see that in Switzerland, there is, in some areas, a large oversupply of rental apartments. And for example, migration has been on the decreasing part for years. So where comes your optimistic view on that? Might be from the very good locations, your development projects are located. And second question, you said you're planning to buy new land of CHF 50 million per year until 2027. Now my question is, how about CapEx spending until then?

Okay. Thank you. Before I hand over the question to Marc, just with regard to the residential part. This question is raised in many -- virtually any investors presentation across the Swiss globe. Fact is that the increasing vacancies you only see in, let's say, peripheral, the best or least remote areas, which also happen to be in Switzerland. If you look at the starting portfolio, being in Zurich, Winterthur in Basel and in the lake of Geneva, I'm not concerned that this will have any adverse impact on the company. Contrary, actually, it's a strong point for Ina to do so. But please, Marc, for also how do we do the CapEx, if I understood correctly, yes?

I think you said CHF 50 million for acquisition until '27, but it's CHF 50 million per year for land acquisition. Am I right with you with the understanding?

So what's your planned CapEx spending per year additionally to this -- like for construction, not only for land purchases?

Well, I mean, maybe -- we are not giving the details at this point in time, but you can actually see the difference between what the value will be of the construction when finished. Then you deduct a certain profit margin. And then you have the CapEx basically when you get it. But it's not in detail so far.

Thank you very much. Do we have more questions in line? [Operator Instructions] Do we have more questions currently? We have 1 question in the line. The mic is open.

My name is [ Mathias Tike ] from [ Dortrom Partners ] in Geneva. I'd like to ask about the conflict of interest between Implenia and Ina Invest. Since you only transferred part of the development portfolio, it seems that Implenia will remain active itself in development. And you could potentially compete for land acquisitions and so on. How are you going to handle that?

Well, first of all, if you look at the portfolio of Implenia, you actually can divide it into 2 parts. One is the mature part, which is up for construction and development within the next few years. That one has been transferred to Ina. And the one, the land bank, which takes longer, has stayed at Implenia. So in that sense, it has been a conscious decision by Implenia to spin off that part into Ina. The second thing is, if there is a conflict of interest, and there might be, we have clear governance structures in place, and this will -- Marc will explain how that works.

But it is the intention to continue with development in Implenia on its own for the long term. This is not phased out now and...

Sorry, that's the USP. The close link between Implenia's capabilities to acquire land in the market and in Ina, having the capital to do so. And there are clear structures behind it, which you can see also, we have shown that in the presentation, but there is virtually no real conflict. Should take that place in sense of both Implenia and Ina would like to invest in such a plot, and it cannot be divided, then the allocation would be in a -- like clockwise, one time it's Ina, one time it's Implenia. This is standard in the real estate market for any provider.

I maybe can go into the details for this relationship, the partnership between Ina Invest and Implenia is based on transparent contractual relationship at arm's length for customary management and general contractor contracts and fees and sourcing of construction services and real estate services. Specifically, that means target project costs and margins will be defined based on third-party evaluations, agreed by all stakeholders: Ina Invest, Implenia Development and Implenia Buildings. Implenia Buildings can enter into the project as a total contractor with costs ceiling, open calculation, symmetric profit sharing. All individual construction services will be up for tender. If Implenia Buildings is not willing to enter the project under the terms defined by the target costs, the total contractor mandate will be up for tender. So this is an example of a rule we gave us.

Thank you, Marc. Is the answer so far, okay for you?

Okay. I mean, my question first was really on the competition for new land acquisitions and development projects between Ina Invest and Implenia, and now you already touched on the other side, where Ina Invest potentially is free to use other construction companies. But yes, I mean, let's leave it at that, but thank you.

Okay. Thank you. So far, more questions in the line? [Operator Instructions] Okay. We have 1 more. The mic is open, please introduce yourself quickly. The mic is open, may we have your question?

Yes. Sorry, Martin Hüsler, Zürcher Kantonalbank. Two questions, the dividend, you were mentioning for 2020, zero. And then afterwards, a nominal dividend, what would this mean? And I expect that in 2021 and '22, we will probably have a negative free cash flow. So this will be paid out of substance, I guess? That's the first question.

The second one?

And the second one would be the time line of your condominium sales, and you showed this on page -- with the arrows. I was just wondering at what point of time will condominiums be sold? Is this like a year? Or half a year before completion? Or when does the project start usually?

You mean the sale processes? When does it start?

Yes.

Normally, when -- after the permit is on the table, a few months later, normally, we start with that.

I mean we have a good case in, as Adrian explained in the Lokstadt, the Tender. There, we received the building permit today. And this is already now up for marketing, and we do expect that a large part of that will be sold before completion. This helps us also in the cash flow generation of Ina Invest. Maybe this is going to hand over -- or to lead over to the dividend policy. I'm not sure whether we really will have a negative cash flow by next year. Just to make sure, that we are not paying out a dividend in 2020, but we are planning to have a small dividend in 2021 based on the success of 2020 and so forth. But the dividend will be rather small in the growth period until fiscal year 2022. And thereafter, it will be more or less in line with what the real estate market is. I mean, the stock-listed real estate companies are paying off. Does that answer your question?

Yes.

Thank you, Stefan. We're open for more questions. [Operator Instructions] So if no more questions, last chance to do one. So then, we close our question-and-answer session, and I hand back to Stefan.

Okay. Thank you. You will have ample opportunities to ask questions during the roadshow, which will happen later on. We are looking forward to the stock listing soon. And I'm -- I would like to thank you very much that you have joined the first Capital Market Day of Ina Invest, which is still not at the market, but soon to come, and we are looking forward to meet you again. Stay healthy and fit, and goodbye.