Vonovia SE: Focus on climate strategy and social responsibility - Vonovia off to a good start in 2021
/ Key word(s): Quarter Results
Results as of March 31, 2021
- Sustainability performance index at 104.8 %. Progress through CO2 reduction, senior-friendly building upgrades and customer satisfaction.
- Integration of Hembla completed; Sweden portfolio shows efficiency of management platform.
- Moving towards climate neutrality for existing buildings: Energy Center of the Future opened in Bochum.
- Social responsibility: right to claw back foregone rents up to € 10 million waived in Berlin after ruling of the German Federal Constitutional Court.
- Corporate vaccination campaign fully planned.
- Forecast for 2021 confirmed.
"Our business model," says CEO Rolf Buch, "continues to be crisis-proof and resilient. This makes it all the more important for us to support our customers as much as we can, especially during Covid. We continue to be committed to the protection of our tenants, without reservations. At the same time, we are careful not to lose sight of our other responsibilities: There is a shortage of new homes. Our ageing society needs senior-friendly housing. And climate change needs viable solutions."
Vonovia pursues ambitious climate protection targets
Vonovia already committed itself to a binding climate roadmap last year, defining specific annual milestones. "We are already very ambitious in this respect," says Buch. The aim is to ensure climate neutrality for all its current buildings by 2050, while also achieving energy efficiency for an average of around 3% of its property portfolio each year. On average, the cost allocation will be between € 1.24 and € 2.00 per square meter.
Overall, the company's sustainability performance index (SPI), a non-financial indicator that tracks Vonovia's sustainability strategy, stood at 104.8% in the first quarter. The positive result was mainly due to carbon savings, increased customer satisfaction and a large number of senior-friendly building upgrades. Consequently, Vonovia converted more than 2,650 residential units between January and March 2021 so that they are suitable for senior citizens.
Vonovia only opened its Energy Center of the Future (EZZ) in the Bochum suburb of Weitmar at the end of April. At least 60% of all locally required energy is now being generated here, using a carbon-neutral method. In addition, Vonovia is working with various Fraunhofer Institutes on the creation of an innovative neighborhood with sector coupling and reduced energy consumption. The aim is to make the energy supply environmentally and economically efficient and to apply the resulting insights throughout Germany.
Energy upgrades and existing technology alone are not enough to reduce the share of carbon dioxide in current buildings and thus to move towards climate neutrality, nor would this be economically viable.
This is why Vonovia is focusing on closing this gap through in-depth research and technical innovation.
"Neighborhoods must be understood as central to any transformation in terms of transport, energy and climate protection. Hence, electricity produced locally by solar panels should be tax-free," states Buch.
Where carbon pricing is concerned, Vonovia is continuing to advocate a split between tenants and landlords, based on energy efficiency classes (A+ to H) for buildings: The lower the class, the higher the landlord's share. "This would create the necessary investment incentives to make buildings more energy-efficient," says Buch.
Continued financial stability - strong result in Sweden
In financial terms, Vonovia got off to a robust start in the 2021 financial year. The Adjusted EBITDA Total rose to € 506.1 million between January and March 2021, an increase which was 11.0% higher than during the same period last year (January to March 2020: € 456.1 million). The Adjusted EBITDA Rental was € 403.1 million (January to March 2020: € 381.1 million).
The results were particularly supported by positive contributions from Vonovia's residential portfolio in Sweden. Rolf Buch: "Following the successful integration of the Hembla portfolio in Sweden, it is now obvious for the first time that Vonovia's scalable model also works in comparable markets internationally." By applying a standardized platform, it is possible to further reduce the management costs of each residential unit while also ensuring a sustainable increase in synergy effects. Vonovia confirms the announced financial and operational synergies of ca. € 30 million for 2021 and expects a run rate of € 36 million starting in 2022.
Another growth segment was that of Housing-Related Services (Value-add), with an earnings contribution of € 45.8 million (January to March 2020: € 37.2 million). Vonovia expanded not only its repair services, but especially also its cable TV, residential environment, insurance and metering services, as well as energy supplies.
As demand continues to be high, the residential property portfolio was almost fully let by the end of the first quarter of 2021. The vacancy rate at the end of March 2021 was 2.8 % - exactly the same as 12 months earlier. Vonovia has widened its digital services for tenants entering into new rental agreements, so that tenants can now conclude them entirely online, using the Vonovia customer app. Due to current market conditions, rents increased by 0.7 % from January to March 2021 (same period in 2020: 1.0 %). Investments in housing (modernization) led to a 1.7% rent increase (January to March 2020: 2.3 %), while investments in construction and adding extra floors created an additional 0.6% (same period in 2020: 0.6%).
Investments at a high level
In this context, Vonovia continues to apply two central instruments to shield tenants from excessive financial pressure: a hardship management policy and a policy of exempting tenants over 70 from unaffordable rent increases. At the end of March 2021, Vonovia's average monthly rent (excluding utilities) was € 6.98 per square meter.
Covid tests and corporate vaccination campaign
Furthermore, Vonovia has taken all the necessary steps to convert the test center into a vaccination center at short notice. "As soon as the vaccines announced by the German government arrive in June this year, our company doctors can start vaccinating our workforce. It will be voluntary, of course," says Buch, "and anyone living in the same households will also be offered vaccination."
Particular focus on social responsibility
Vonovia is continuing to press ahead with its construction activity. In the first quarter of 2021 Vonovia built 379 residential units - three times more than during the same quarter last year. It is also building some urgently needed residential units that are publicly funded. One type of raw material that is increasingly being used is wood, which is both sustainable and suitable for modular construction.
Highly flexible financing strategy
At the end of the first quarter of 2021, the EPRA NTA, the key performance indicator for the net asset value, was € 35,772.9 million - 0.8% higher than the value at the end of 2020, € 35,488.6 million. The EPRA NTA has been mirroring the increase in equity. The EPRA NTA per share increased from € 62.71 at the end of 2020 to € 63.22 at the end of the first quarter of 2021.
Given the strong start to Vonovia's new financial year and its resilient business model, the company has confirmed the forecast for 2021.
In 2021, Vonovia is planning to invest between € 1,300 million and € 1,600 million in modernization and construction. Total Segment Revenue is expected to be within a range of approximately € 4,900 million to € 5,100 million, and the Adjusted EBITDA Total between € 1,975 million and € 2,025 million. As a result, Vonovia is expecting its Group FFO to rise between € 1,415 million and € 1,465 million. At the same time, Vonovia reckons that its Sustainability Performance Index will be around 100 % in relation to various indicators such as carbon savings from existing buildings and customer satisfaction.
2021 Financial Calendar:
* Based on the shares carrying dividend rights on the reporting date: Mar. 31, 2020: 542,273,611; Mar. 31, 2021: 565,887,299; Dec. 31, 2020: 565,887,299.
The company, which is based in Bochum, has been listed on the stock exchange since 2013. Since September 2015 Vonovia has been a constituent in the DAX 30 and since September 2020 in the EURO STOXX 50. Vonovia SE is also a constituent of additional national and international indices, including DAX 50 ESG, Dow Jones Sustainability Index Europe, STOXX Global ESG Leaders, EURO STOXX ESG Leaders 50, STOXX Europe ESG Leaders 50, FTSE EPRA/NAREIT Developed Europe, and GPR 250 World. Vonovia has a workforce of more than 10,000 employees.
This press release has been issued by Vonovia SE and/or its subsidiaries solely for information purposes. This press release may contain statements, assumptions, opinions and predictions about the anticipated future development of Vonovia ("forward-looking statements") that reproduce various assumptions regarding, e.g., results derived from Vonovia's current business or from publicly available sources that have not been subject to an independent audit or in-depth evaluation by Vonovia and that may turn out to be incorrect at a later stage. All forward-looking statements express current expectations based on the current business plan and various other assumptions and therefore come with risks and uncertainties that are not insignificant. All forward-looking statements should not therefore be taken as a guarantee for future performance or results and, furthermore, do not necessarily constitute exact indicators that the forecast results will be achieved. All forward-looking statements relate solely to the day on which this press release was issued to its recipients. It is the responsibility of the recipients of this press release to conduct a more detailed analysis of the validity of forward-looking statements and the underlying assumptions. Vonovia accepts no responsibility for any direct or indirect damages or losses or subsequent damages or losses, as well as penalties that the recipients may incur by using the press release, its contents and, in particular, all forward-looking statements or in any other way, as far as this is legally permissible. Vonovia does not provide any guarantees or assurances (either explicitly or implicitly) in respect of the information contained in this press release. Vonovia is not obliged to update or correct the information, forward-looking statements or conclusions drawn in this press release or to include subsequent events or circumstances or to report inaccuracies that become known after the date of this press release.
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04.05.2021 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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