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Vonovia SE: Vonovia Increases Its 2016 Guidance for the Second Time in a Row

DGAP-News: Vonovia SE / Key word(s): Half Year Results/Forecast

2016-08-02 / 07:03
The issuer is solely responsible for the content of this announcement.

Results as of June 30, 2016
Vonovia Increases Its 2016 Guidance for the Second Time in a Row

Significant Efficiency Improvements in the First Six Months

- FFO 1 up by 44.2 % to EUR 387.8 million; FFO 1 comes to EUR 0.83 per share (H1 2015: EUR 0.71).

- Higher rental income through moderate increase and property improvements over H1 2015.

- Profit from property-related services expanded to EUR 26.0 million
(+ 23 % year-over-year).

Sustainable and Successful Performance Leads to Second Guidance Increase for 2016

- FFO 1 of EUR 740 million - EUR 760 million (2015: EUR 608.0 million).

- FFO 1 per share of EUR 1.59 - EUR 1.63 (+ 24 % year-on-year).

- Considerable improvement in the portfolio thanks to investments, sales and acquisitions

Investments in Existing Properties, New Construction and Customer Service

- Customer service strengthened by concentrating services in Dresden and Duisburg.

- Record investments of up to EUR 840 million in modernization, new construction and maintenance planned for 2016.

- Vacancy rate of 2.5 % expected by the end of the year (H1 2016: 2.8 %).

Bochum, Germany, August 2, 2016 - Vonovia SE is once again increasing its guidance for the 2016 fiscal year. Vonovia is continuing on its successful trajectory in the first half of 2016, once again improving its key figures in the areas of property management, portfolio management, the Extension segment and financing.

"The improvements in efficiency and synergies resulting from the acquisitions are proving to be greater than originally anticipated. At the same time, we are improving the quality of our nationwide portfolio by means of investments, sales and acquisitions. On this basis, we are lifting our forecast for 2016 for the second time in succession," says CEO Rolf Buch. "We will continue to achieve growth on our own steam based on our tried-and-tested strategy and will systematically exploit the potential for additional value growth."

Management Board Increases 2016 Guidance Again

Vonovia is once again increasing its guidance for the current year. FFO 1 (funds from operations, profit from operations after current interest and taxes) is the key figure indicating the company's sustained earnings power. The company expects to achieve FFO 1 of between EUR 740 million and EUR 760 million (forecast in Q1 2016: EUR 720 million to EUR 740 million). FFO 1 came to EUR 608.0 million in 2015. This corresponds to a year-over-year increase in FFO 1 per share of 24 %, from EUR 1.59 to EUR 1.63 (forecast in Q1 2016: EUR 1.55 to EUR 1.59). The vacancy rate is expected to drop further to around 2.5 % by the end of the year.

By the end of the year, Vonovia is currently planning for its EPRA NAV (net asset value, real estate assets without liabilities) per share to have increased to as much as EUR 31 (2015: EUR 30.02). This figure does not yet include any yield compression from the expected positive effects of the ongoing increase in transaction prices in many locations in Germany, which is resulting in a higher valuation of the real estate portfolios.

For 2016, Vonovia is currently planning to propose a dividend of at least EUR 1.05 per share. This corresponds to another increase of around 12 % and a dividend yield of 3.2 % based on the closing price on
June 30, 2016.

Vonovia is making faster progress than planned on its investment program for modernization and new construction: In 2016 as a whole, the investment volume is to increase to between EUR 470 million and
EUR 500 million. Vonovia is planning to add extra stories to existing buildings and build multifamily residences using modular and conventional construction methods. The company is also planning to invest around EUR 340 million in maintenance.

Earnings Power Increased Again in First Half of 2016

Vonovia increased its FFO 1 by 44.2 % in the first half of 2016 to a total of EUR 387.8 million (H1 2015: EUR 269.0 million). FFO 1 per share rose to
EUR 0.83 (H1 2015: EUR 0.71). The EPRA NAV came to EUR 13,671.7 million as of June 30, 2016. The EPRA NAV per share amounted to EUR 29.34
(H1 2015: 26,77 EUR). In addition, a dividend of EUR 0.94 per share was distributed in May 2016.

At EUR 147.9 million, the profit for the first half of 2016 was up significantly on the value of EUR 84.9 million recorded in the first half of 2015. This substantial increase of 74.2 % is due primarily to the full integration of GAGFAH, Franconia and SÜDEWO.

Strong Growth in the Rental and Extension Segments

Rental income from property management increased by around 23.4 % to EUR 774.7 million (H1 2015: EUR 628.0 million). A moderate growth of
1.4 % in rents along property improvements increased the monthly in-place rent per square meter, based on the same housing stocks on the reporting dates of June 30, 2015, and June 30, 2016 (i.e., on a like-for-like basis), by 2.8 % to EUR 5.81 (H1 2015: EUR 5.65). The low vacancy rate of 2.8 % and the reletting of renovated apartments also had a positive impact on rental development.

During the reporting period, the company invested a total of
EUR 295.3 million (H1 2015: EUR 265.2 million) in its portfolio. The expenses for maintenance and capitalized maintenance came to EUR 148.3 million, up slightly on the prior-year value. The investments in modernization were increased by 24.6 % to EUR 147.0 million (H1 2015: EUR 118.0 million). These services have been performed or coordinated almost exclusively by the company's own craftsmen since the beginning of the year.

The Extension segment pools the various housing-related services that Vonovia offers. These include those performed by the company's own craftsmen's organization, the upkeep of the residential environment, the cable TV business, measuring the consumption of water and heating as well as property management for third parties. Adjusted EBITDA in this segment rose by 23.2 % to EUR 26.0 million in the first six months of the year (H1 2015: EUR 21.1 million).

Portfolio Strategy Successfully Continued

Vonovia continued with its value-enhancing portfolio strategy. As of the reporting date June 30, 2016, Vonovia managed a total of about 394,000 apartments in attractive cities and regions in Germany, around 340,000 of which it owned itself and approximately 54,000 of which it managed on behalf of third parties. The 340,000 or so apartments the company owns itself have a portfolio value of approximately EUR 24 billion. These include around 2,400 apartments, primarily in Baden-Württemberg and Bavaria, that Vonovia acquired with effect from January 1, 2016.

In the first half of the year, Vonovia sold a total of around 19,000 apartments. These include three portfolio deals comprising a total of around 2,900 apartments located primarily in northern Germany and North Rhine-Westphalia. Around 1,440 apartments were privatized through our condominium sales channel.

Adjusted EBITDA Sales increased by 138.5 % from EUR 19.5 million in the first half of 2015 to EUR 46.5 million in the first half of 2016.

Customer Service Expanded in Dresden and Duisburg

The company aims to boost customer satisfaction further. As a result, Vonovia has not only expanded the on-site support it offers, but has also increased the telephone availability offered by its central customer service team. This has been achieved by expanding the customer service team and hiring new employees in two central locations. In April, around 300 employees moved into the new customer service premises in Dresden. In the third quarter of the year, a further 650 employees currently working in various locations will move into the new offices in Duisburg. The total number of employees has increased again. Vonovia currently employs a workforce of around 6,900 in Germany.

Financing Strategy Successfully Continued

As part of its European bond program, the company issued two tranches of EUR 500 million each in June. In July, a bond of EUR 700 million was repaid on its maturity date. In August, a structured loan of EUR 1.8 billion on the GAGFAH portfolio will be repaid ahead of time. The company is thereby systematically continuing to optimize its financing structure.

So far, four of the bonds issued by Vonovia have been partially bought up as part of the ECB's purchase program.

Positive Share Price Performance

Vonovia's shares gained 15 % in the first six months of the year, trading at EUR 32.75 on June 30, 2016. The shares outperformed the DAX in particular due to the stable value development and the ongoing low interest rates.

With its long-term business model, the company is virtually independent of economic fluctuations. Although the outcome of the British referendum on the UK's membership of the EU is associated with economic and political uncertainty, it has not had any negative impact on the performance of Vonovia's shares. Vonovia is an attractive investment in the eurozone's equity and debt capital markets.

Its market capitalization of around EUR 15.3 billion puts Vonovia in 23rd place among the most valuable listed companies in Germany.

The 2016 H1 report:
Further information can be found in the press section.

2016/2017 Financial Calendar

November 3, 2016: Interim report for the first nine months of 2016

March 7, 2017 - Publication of 2016 Annual Report

in EUR million            
Key Financial Figures   H1 2016   H1 2015   Change
in %
Rental income from property management   774.7   628.0   23.4
Adjusted EBITDA Rental   535.6   406.0   31.9
Adjusted EBITDA Extension   26.0   21.1   23.2
Adjusted EBITDA Sales   46.5   19.5   138.5
Adjusted EBITDA   604.6   445.7   35.7
Modernization and maintenance services   295.3   265.2   11.3
thereof for maintenance and capitalized maintenance   148.3   147.2   0.7
thereof for modernization   147.0   118.0   24.6
FFO 1   387.8   269.0   44.2
FFO 2   409.3   283.8   44.2
FFO 1 per share in EUR*   0.83   0.71   16.6
Profit for the period   147.9   84.9   74.2
in EUR million            
Key Balance Sheet Figures   June 30, 2016   Dec. 31, 2015   Change
in %
Fair value of the real estate portfolio   23,794.1   24,157.7   -1.5    
EPRA NAV   13,671.7   13,988.2   -2.3    
EPRA NAV per share in EUR**   29.34   30.02   -2.3    
Adjusted EPRA NAV   10,952.8   11,273.5   -2.8    
Adjusted EPRA NAV per share in EUR**   23.50   24.19   -2.8    
LTV in %**   47.4   46.9   0.5 pp    
Key Non-Financial Figures   H1 2016   H1 2015   Change
in %
Number of units managed   394,285   389,950   1.1    
thereof own apartments   340,442   348,216   -2.2    
thereof apartments owned by others   53,843   41,734   29.0    
Number of units bought   2,440   148,709   -98.4    
Number of units sold   19,135   4,050   372.5    
thereof Privatize   1,441   1,221   18.0    
thereof Non-Core   17,694   2,829   525.5    
Vacancy rate in %   2.8   3.5   -0.7 pp    
Monthly in-place rent in EUR/m² (like for like)***   5.81   5.65   2.8    
Number of employees (as of June 30)   6,909   5,877   17.6    
*Based on the shares carrying dividend rights on the reporting date: June 30, 2016: 466,000,624; June 30, 2015: 358,462,018; prior-year value TERP-adjusted

**Based on the shares carrying dividend rights on the reporting date: Jun. 30, 2016: 466,000,624; Dec. 31, 2015: 466,000,624

***Incl. GAGFAH, Franconia/excl. SÜDEWO

About Vonovia

Vonovia SE is Germany's leading nationwide residential real estate company. Vonovia currently owns and manages around 340,000 residential units in all of Germany's attractive cities and regions. Its portfolio is worth approximately EUR 24 billion. An additional 54,000 or so third-party apartments are also managed by Vonovia. As a modern service company, Vonovia focuses on customer orientation and tenant satisfaction. Offering tenants affordable, attractive and livable homes is a prerequisite for the company's successful development. Accordingly, Vonovia makes long-term investments in the maintenance, modernization and senior-friendly conversion of its properties. The company will also be creating more and more new apartments by realizing infill developments and adding on to existing buildings.

The company, which is based in Bochum, has been listed on the stock exchange since 2013 and on the DAX 30 since September 2015. Vonovia SE is also listed on the international indices STOXX Europe 600, MSCI Germany, GPR 250 and EPRA/NAREIT Europe. Vonovia has a workforce of 6,900 employees.

Additional Information:
Approval: Regulated Market / Prime Standard, Frankfurt Stock Exchange
Common code: 094567408
Registered headquarters of Vonovia SE: Münsterstrasse 248, 40470 Düsseldorf, Germany
Business address of Vonovia SE: Philippstrasse 3, 44803 Bochum, Germany

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 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 appropriate 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.

2016-08-02 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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