DGAP-News: Vonovia SE / Key word(s): Half Year Results/Real Estate
02.08.2019 / 07:01
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Results as of June 30, 2019
Vonovia Continues With Solid Business Development and Emphasizes Social Commitment
- Social responsibility emphasized with rent guarantee for tenants over 70 years of age.
- "1,000 roofs" climate protection project launched.
- Investment in maintenance and modernization increased to EUR 804.3 million (H1 2018: EUR 565.5 million).
- Investment in new construction increased sixfold to EUR 163.5 million.
- Group FFO of EUR 609.1 million achieved (H1 2018: EUR 539.4 million).
- New equity reduces level of debt.
- Confirmation of forecast for year as a whole demonstrates stability.
Bochum, Germany, August 2, 2019 - Vonovia SE ("Vonovia") continued its positive performance in the first half of 2019. At the same time, the residential real estate company underscores its responsibility for the environment and society at large.
"We are using our financial strength to continuously improve the appeal of the properties in our portfolio and to actively forge ahead with the construction of the sort of affordable, senior-friendly and environmentally sound apartments that are urgently required in Germany," said Rolf Buch, Chief Executive Officer of Vonovia. "For us, success is never focused exclusively on financial aspects, but always takes social factors into account as well. This is a general principle that we have incorporated into our business philosophy as a binding guideline for our actions, which is also how we like to be measured."
The number of building permits granted in Germany between January and May 2019 was down by 2.4 % on the same period of the previous year, with the number of apartments in multifamily residences falling by as much as 4.1 %. "The high demand for housing and the demographic change present us with huge challenges - even on a regulated housing market like Germany," said Buch. "We have stepped up our efforts to achieve more new construction considerably, increasing our investment volume sixfold."
Vonovia Rules out Termination because of own Needs
One common reason why tenants end up losing their apartments is because landlords terminate their contracts so they can use the apartments themselves. One approach involves splitting buildings containing rental apartments into individual condominiums, increasing the risk that, when the property is sold, the lease agreements will be terminated by landlords who want to use the apartment themselves. The systematic conversion of rental apartments into condominiums is increasing the pressure on the rental market. "This is exactly why we make sure, as a responsible landlord, that we do not convert any buildings containing rental apartments into condominiums. The termination of lease agreements to meet our own needs is something we categorically rule out."
Vonovia is committed to affordable rents. Individuals aged 70 or above enjoy particular protection: They do not have to worry about their livelihoods due to rising rent levels. Vonovia offers them a guarantee that their apartment will remain affordable even if the standard local comparative rents change. Hardship managers are on hand to provide support by proposing solutions. This is an aspect that Vonovia recently incorporated into its business philosophy. The company has also made a commitment to limiting the modernization allocation to a maximum of EUR 2 per square meter and refurbishing every third apartment that becomes vacant to make it senior-friendly.
Debt-Equity Ratio Reduced Further Thanks to new Equity and Increase in Value
Vonovia manages apartments in Germany, Austria and Sweden. As of June 30, 2019, Vonovia's portfolio contained 396,739 apartments owned by the company itself (H1 2018: 403,926), as well as 79,015 apartments that the company manages for third parties (H1 2018: 82,605). Vonovia increased its Group FFO (operating result after interest and taxes) to EUR 609.1 million in the first six months of the year (H1 2018: EUR 539.4 million). The result was boosted by the acquisitions of BUWOG and Victoria Park last year, as well as by the development business, new construction activity and further efficiency gains. The vacancy rate of 2.9 % (H1 2018: 2.8 %) was largely due to investments. Vonovia's portfolio is virtually fully occupied.
Rental income came to EUR 1,014.8 million in the first half of 2019 (incl. BUWOG and Victoria Park), as against EUR 890.7 million in the same period of 2018. The increase in rent due to market-related factors came to 1.2 %. The effects resulting from investment in new construction, vertical expansion and modernization came to 2.8 %. The average monthly net rent (excluding ancillary expenses) rose to EUR 6.64 per square meter (H1 2018: EUR 6.36).
Vonovia was able to further drive its level of debt down to 40.4 % in the reporting period, putting it at the lower end of the target corridor. The company raised equity of around EUR 1 billion in the first six months of the year. Around EUR 400 million was paid out as a cash dividend during the same period. "We have strengthened our balance sheet again and we are in an excellent financial position," said Buch. This development was also helped along by the EUR 2,258.7 million increase in the value of the portfolio. "This highlights the fact that our apartments are in the right locations."
Vonovia Rents to Cross-section of Society
Vonovia concluded around 32,000 lease agreements in 2018, collecting data on the age, marital status, occupation, income and nationality of its new tenants. The conclusion: Even when it comes to new rentals, Vonovia offers affordable and attractive homes to broad sections of the population. "We enjoy a position at the heart of society and are committed to neighborhoods in which diversity is respected and applied in practice," said Buch with regard to the tenant structure.
The data shows that more than 89 % of the tenants that signed agreements with Vonovia in 2018 are aged between 20 and 60. The largest group is the 20 to 29 age group, which accounts for a share of around 40 %. Just under 27 % of the company's new tenants are aged between 30 and 39. The over-60s age group makes up around 7 % of the company's tenants. Salaried employees make up the biggest occupational group among the new tenants (around 51 %), followed by manual laborers, the self-employed and civil servants. More than 79 % of the company's new customers have their own income, with 5 % receiving a pension and 16 % drawing social benefits. There is a wide range of incomes in all income categories. The biggest tenant group (44 %) has disposable income of between EUR 1,251 and EUR 2,500. "Anyone currently looking to move from Kiel to Konstanz or from Düsseldorf to Dresden will be able to find an affordable apartment in Vonovia's portfolio, even as an average earner," said Buch.
Investment Program Expanded
Vonovia invested EUR 163.5 million in new construction and densification in the first half of 2019 (H1 2018: EUR 26.4 million). Around 2,500 apartments in Germany, Austria and Sweden are to have been completed/be under construction by the end of the year, including apartments classified as social housing in Germany with rent of EUR 6.50 per square meter. "Expropriation and rent caps will not create a single new apartment. New construction is the only option. This will require everyone involved to pull together: policymakers, the housing industry and citizens. There are a large number of creative solutions but they can only be developed if we join forces instead of fighting each other. Our experience has been positive and we want to see a nationwide, pragmatic consensus for more contemporary and affordable homes," said Buch.
Investments in maintenance and modernization came to EUR 804.3 million in the first half of 2019, compared with EUR 565.5 million in the same period of 2018. When properties are modernized, Vonovia adds an average of EUR 1.30 per square meter and month to the rent, with the additional costs for tenants capped at EUR 2. "Around 70 % of our portfolio in Germany was built between 1945 and 1980. A further 15 % of our properties are even older. This means that energy-efficiency refurbishments will remain a key strategic item on our agenda," said Buch.
1,000 Roofs for Photovoltaic Facilities and Climate Protection
This is what motivated Vonovia to launch the "1,000 Roofs" program. The aim is to equip at least 1,000 suitable roofs with photovoltaic facilities. The plan is to expand the program across Germany in several stages. The Group is starting the initiative in Dresden and Munich, where photovoltaic modules with a total output of 2,200 kWp have been installed on around 210 buildings since June. This is enough to generate more than 2,100,000 kWh of green electricity a year (enough to supply 1,200 households). Vonovia has identified a further 182 buildings for the second stage of the "1,000 Roofs" program, with a third equally large stage planned for the period leading up to the end of the year. The roofs are selected based on solar radiation simulations using geodata on the buildings, a process that is supported by on-site inspections conducted by trained photovoltaic construction managers. Together with the existing photovoltaic portfolio, which boasts an installed total output of 5,700 kWp, the expansion volume planned for this year leaves Vonovia set to double the volume of solar electricity that it generates. The "1,000 Roofs" program spans a period of several years, the idea being to see it evolve into a long-term expansion program.
"Neighborhood solutions to promote climate protection require the decentralized generation of electricity. This is why we hope to see a marked reduction in the obstacles to landlord-to-tenant electricity models, which sadly remain manifold," said Buch with a view to the amendment to the German Landlord-to-Tenant Electricity Act that is expected to be adopted in the fall of this year. "The solar electricity generated on our roofs is not just to be fed into the grid, but is also designed to be used directly by our tenants, be it in their homes or at charging stations." Vonovia installed the first public charging station for electric cars in the Eltingviertel District in Essen in August 2018. The Group will be equipping 36 locations with charging stations in 2019.
Positive Outlook for 2019 as a Whole Confirmed
The positive trend is expected to continue over the coming months. Looking at the year as a whole, Vonovia predicts that its Group FFO will rise to between around EUR 1.17 billion and EUR 1.22 billion (2018 as a whole: EUR 1.13 billion). At the same time, the Group is planning to increase its investments further to between around EUR 1.30 billion and EUR 1.60 billion in 2019 as a whole.
The 2019 H1 report: http://reports.vonovia.de/2019/q2/en/index.html
Further information can be found in the Press Section.
2019/2020 Financial Calendar
November 5: Interim Statement for the Third Quarter of 2019
March 5, 2020: 2019 Annual Press Conference
May 5, 2020: Interim Statement for the First Quarter of 2020
* Includes correction of goodwill in the amount of EUR 1,901.0 million.
** Based on the shares carrying dividend rights on the reporting date June 30, 2018: 518,077,934, June 30, 2019: 542,273,611 and Dec. 31, 2018: 518,077,934.
Vonovia SE is Europe's leading private residential real estate company. Vonovia currently owns around 396,700 residential units in all attractive cities and regions in Germany, Austria and Sweden. It also manages around 79,000 apartments. Its portfolio is worth approximately EUR 47.4 billion. As a modern service provider, 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 is also creating more and more new apartments by realizing infill developments and adding 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, MSCI Germany, GPR 250 and EPRA/NAREIT Europe. Vonovia has a workforce of more than 10,000 employees.
Approval: Regulated Market/Prime Standard, Frankfurt Stock Exchange
Common code: 094567408
Registered headquarters of Vonovia SE: Bochum, Germany, Bochum Local Court, HRB 16879
Business address of Vonovia SE: Universitaetsstrasse 133, 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, 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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