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Vonovia SE: Continuous Stable Business Development is Basis for Binding Climate Course (news with additional features)

DGAP-News: Vonovia SE / Key word(s): 9 Month figures/Sustainability
04.11.2020 / 07:02
The issuer is solely responsible for the content of this announcement.

Results as of September 30, 2020
Vonovia SE: Continuous Stable Business Development is Basis for Binding Climate Course

- Vonovia adopts binding climate course with almost climate-neutral housing stock by 2050; annual savings targets transparent in new Sustainability Performance Index.

- Promotion to DAX 50 ESG and EURO STOXX 50 indices; top placement in Sustainalytics sustainability rating.

- Continued support for tenants in the event of financial difficulties resulting from the corona pandemic.

- Over 1,000 employees hired since March; more trainees than ever in the new training year.

- Guidance confirmed for 2020; positive business development also expected for 2021.

Bochum, Germany, November 4, 2020 - Vonovia SE ("Vonovia") formalized its path toward climate-neutral housing stock in the first nine months of the year. Its central approach is to facilitate an interaction between energetic modernization and carbon neutral heat generation. Alongside Fraunhofer institutes and the German Energy Agency, the Bochum-based residential real estate company developed goals for carbon-reduced living and invested heavily in energy-efficient modernization as well as the development and expansion of renewable energies.

"Aside from overcoming the coronavirus crisis, climate change is the greatest challenge of our time. Through increased energy efficiency in housing, we can make a significant contribution toward the Paris climate protection goals," says CEO Rolf Buch. "We are in a position to assume social and ecological responsibility since our company remains financially robust."

Vonovia takes responsibility for tenants - especially in view of the coronavirus pandemic, which has taken a turn for the worse. "The coronavirus will have an intense effect on our society for a long time to come. The promise we made in spring is still valid: No one who is experiencing financial difficulties because of the coronavirus will lose their home," says Rolf Buch. "It is important to us to provide our tenants with this kind of security in these uncertain times."

At the climate conference at the beginning of October, Vonovia also demonstrated how its ecological responsibility looks in real terms. Together with their research partners Fraunhofer Institute and the German Energy Agency, Vonovia presented central areas of action that can help manage the energy turnaround in the building sector and what changes are necessary to make it happen. At the core of the strategy are neighborhoods, where decentralized energy supplies will be built. The electricity, heating and mobility sectors will be linked so that energy can be generated, stored and used locally. The decentralized energy supply is also a priority at the innovation center in Bochum-Weitmar, which is expected to begin operating in the coming year. Vonovia has set itself the binding goal of achieving a climate-neutral building stock by 2050 through efficiency gains.

New Performance Index for Sustainability

Vonovia's active contribution to the great social challenges of climate protection, demographic change and affordable housing is also demonstrated by its improved externally validated key figures based on environmental, social and governance criteria (ESG). The Sustainalytics rating agency rates Vonovia sixth out of 940 rated real estate companies in a sustainability ranking (20th place in the overall ranking of more than 12,000 companies). In addition, Vonovia was included to the German DAX 50 ESG index and the European blue chip EURO STOXX 50 stock index. This makes Vonovia the only real estate company currently in Europe's leading index EURO STOXX 50, as well as the first residential real estate company overall.

Moreover, Vonovia is currently creating a Sustainability Performance Index which will be included in the company's most important non-financial key figures and which integrates sustainability goals into the management system. Indicators in the new index are the carbon savings achieved annually in housing stock, the respective share of energy-efficient new constructions and senior-friendly apartment conversions, customer and employee satisfaction and diversity in the company's management. "The new Sustainability Performance Index will stand on an equal footing with the financial performance indicators. We want to set a good example in the industry," explains Rolf Buch.

Continued Economic Stability

Business development in the first nine months of 2020 was likewise positive compared to the first nine months of 2019. The residential real estate company's Adjusted EBITDA Total increased by 7.6% to € 1,432.5 million. Meanwhile, the Adjusted EBITDA Rental increased by 8.9% to
€ 1,178.7 million. With a joint total of € 253.8 million, the Recurring Sales, Development and Housing-Related Services (Value-add) business areas were responsible for the increased Adjusted EBITDA Total. This represents an increase of 2.1%. The coronavirus led to a few delays in modernizations. As a result, the Adjusted EBITDA Value-add fell by 6.3% to € 110.1 million.

Group FFO also increased from January to September 2020 compared to the first nine months of 2019. The operating earnings power improved by 8.9% to € 1,015.9 million. In particular, the acquisition of Hembla in Sweden and organic growth through modernization and new construction contributed to this.

Furthermore, Vonovia issued new shares with an issue volume of
€ 1 billion in September. The proceeds from the capital increase will be primarily used to repay debt due in the fourth quarter. As a result of the capital increase, Vonovia will be able to replace the hybrid bond with debt financing in the fourth quarter of 2021. As of the reporting date, Vonovia's LTV (loan-to-value) ratio was at 40.6%; this was within the target corridor (40% to 45%) and 2.5 percentage points below the level of December 31, 2019.

Provider of Affordable Housing

As of September 30, 2020, the portfolio contained 414,570 rental apartments owned by the company. The approximately 354,000 apartments in Germany represent a market share of around 1.5%. The Adjusted NAV (the value of the company without liabilities) increased to € 31,356.2 million and was therefore up 11.3% compared to the end of 2019. The fair value of the real estate portfolio rose to € 56,047.0 million. This increase of 17.3% can be attributed to the great demand for housing - which persisted during the coronavirus pandemic - and to the high investment volume. At the end of the third quarter of 2020, the portfolio was almost fully occupied, with a slightly lower vacancy rate of 2.6%. Increased income through the Hembla portfolio as well as organic growth also had an impact on rental income. In the first nine months of 2020, rental income amounted to € 1,706.9 million compared with € 1,527.0 million in the first nine months of 2019.

The lower fluctuation rate, the extension of the previous year period to six years for determination of the rent index and Berlin's rent freeze led to lower rental growth. The increase in rent due to market-related factors came to 0.8%. There was a 2.2% rent increase due to investments in modernization and a 0.6 % increase due to new construction and vertical expansion. For 2020 as a whole, Vonovia also expects restrained rental development. Vonovia's monthly net rent in Germany was € 6.91/m² on average at the end of September 2020.

Vonovia uses active hardship management to find solutions for tenants experiencing financial difficulties. Since the introduction of hardship management and the regulation for over-70s, Vonovia has helped tenants in more than 2,800 cases by deciding in their favor. Additional petitions are currently being processed.

Energy-Efficient Modernization of More Than 10,000 Apartments

Vonovia has invested comprehensively in modernization, new construction and maintenance, thus continuing its strategy from the previous year. However, the impact of the coronavirus pandemic slowed construction activities slightly in the third quarter of 2020. In the first nine months of the year, Vonovia completed a total of 1,437 apartments in Germany, Austria and Sweden (9M 2019: 1,366). Of these, 1,056 (9M 2019: 851) are for its own portfolio and 381 (9M 2019: 515) are for sale. In addition, the company has carried out senior-friendly and energy-efficient modernization measures on more than 10,000 apartments in Germany. Senior-friendly modernization can range from a new bathroom to modernization of the entire apartment.

Investments in maintenance, modernization and new construction (for the company's own portfolio) from January to September 2020 amounted to € 1,360 million in modernization measures and were therefore 4.5% more than the previous year's period. Expenses for maintenance came to € 399.1 million. Vonovia invested € 659.7 million in modernization and € 301.2 million in new construction (for the company's own portfolio), which is an increase of almost 20%.

1,000 New Employees Hired

Vonovia's continued economic stability is solidifying its position as a safe employer, especially during the coronavirus pandemic. "Thanks to our employees, we have come through the crisis largely unscathed up to now. This means our company can offer long-term prospects to current and future employees, and especially to our trainees. We in the Management Board are very proud of our team," says Rolf Buch. Since March 1, Vonovia has hired more than 1,000 new employees while increasingly digitalizing the application process. Added to this are approximately 200 aspiring specialists who have started training at Vonovia since August - more than ever before. Vonovia continues to offer young people from insolvent companies the opportunity to complete their training programs.

Forecast for 2020 as a Whole Confirmed

The stable economic development of our business in the first nine months also means that the forecast for 2020 as a whole remains positive. Vonovia expects that the coronavirus pandemic will continue to have no significant impact on the four business areas. This means that the Adjusted EBITDA Total will likely be within the most recently published range of € 1,875 million to € 1,925 million. The forecast for Group FFO is even expected to be in the upper end of the range of € 1,275 million to € 1,325 million. Vonovia expects a further increase in value from valuations and investments of € 2,300 million to € 2,900 million in the second half of 2020.

The company plans to propose a dividend of € 1.69 per share to the shareholders at the Annual General Meeting in May 2021. This corresponds to an increase of € 0.12 and a dividend yield of 3.1% based on the closing price on October 30, 2020.

Positive Outlook for 2021

In 2021, Vonovia will continue to address the great social challenges of climate protection, demographic change and affordable housing. The company plans to once again make comprehensive investments in modernization and new construction, in a range likely between € 1,300 million and € 1,600 million. Adjusted EBITDA Total is expected to be between € 1,975 million and € 2,025 million. Assuming a stable legal position, Vonovia expects a Group FFO between € 1,415 million and € 1,465 million.
 

Report on the First Nine Months of 2020:
https://reports.vonovia.de/2020/q3/de
https://reports.vonovia.de/2020/q3/en


Information regarding Climate Conference "Perspektiven klimaneutralen Wohnens"

Media Center: https://presse.vonovia.de/de-de/mediathek

Further information can be found in the Press Section

Financial Calender 2021:

March 4, 2021:
2020 Annual Press Conference
May 4, 2021: Interim Statement for the First Three Months of 2021
May 12, 2021: Annual General Meeting
August 6, 2021: Interim Statement for the First Half of 2021
November 4, 2021: Interim Statement for the First Nine Months of 2021

 

Financial Key Figures in € million   9M 2019   9M 2020   Change
in %
 
               
Rental income in the Rental segment   1,527.0   1,706.9   11.8  
Adjusted EBITDA Total   1,331.1   1,432.5   7.6  
Adjusted EBITDA Rental   1,082.5   1,178.7   8.9  
Adjusted EBITDA Value-add   117.5   110.1   -6.3  
Adjusted EBITDA Recurring Sales   69.1   74.9   8.4  
Adjusted EBITDA Development   62.0   68.8   11.0  
EBITDA IFRS   1,234.2   1,380.6   1.9  
Group FFO   932.8   1,015.9   8.9  
Profit for the period   63.4   1,891.6   >100  
Maintenance, modernization and
new construction (to hold)
  1,301.3   1,360.0   4.5  
thereof maintenance   337.4   399.1   18.3  
thereof modernization   712.3   659.7   -7.4  
thereof new construction (to hold)   251.6   301.2   19.7  
 
Key Balance Sheet Figures in € million   Sep. 30, 2019   Sep. 30, 2020   Change
in %
 
Fair value of the real estate portfolio   47,763.9   56,047.0   17.3  
Adjusted NAV   26,525.8   31,356.2   18.2  
Adjusted NAV per share in €*   48.92   55.41   13.3  
LTV in %   40.3   40.6   0.3 pp  
 
Non-financial Key Figures   9M 2019   9M 2020   Change
in %
Number of units managed   473,966   488,400   3.0
thereof own apartments   395,615   414,570   4.8
thereof apartments owned by others   78,351   73,830   -5.8
Number of newly constructed apartments   1,366   1,437   5.2
thereof for own portfolio   851   1,056   24.1
thereof for sale to third parties   515   381   -26.0
Vacancy rate in %   2.9   2.6   -0.3 pp
Monthly in-place rent in €/m²   6.69   7.07   5.7
Employees, number
(reporting date: September 30)
  10,003   10,564   5.6
 
EPRA Key Figures in € million   Sep. 30, 2019   Sep. 30, 2020   Change
in %
EPRA NAV   27,256.4   32,766.8   20.2
EPRA NAV per share in €*   50.26   57.90   15.2

* Based on the shares carrying dividend rights on the reporting date in question: Sep. 30, 2019: 542,273,611, Sep. 30, 2020: 565,887,299.

About Vonovia

Vonovia SE is Europe's leading private residential real estate company. Vonovia currently owns around 415,000 residential units in all attractive cities and regions in Germany, Sweden and Austria. It also manages around 73,000 apartments. Its portfolio is worth approximately € 56.0 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. Therefore, 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. 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, 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.

Additional Information:
Approval: Regulated Market/Prime Standard, Frankfurt Stock Exchange
ISIN: DE000A1ML7J1
WKN: A1ML7J
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.


Additional features:

File: Vonovia_Continuous Stable Business Development is Basis for Binding Climate Course_PI_20201104


04.11.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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