Vonovia SE: Continuous Stable Business Development is Basis for Binding Climate Course
- Vonovia SE: Continuous Stable Business Development is Basis for Binding Climate Course
- Promotion to DAX 50 ESG and EURO STOXX 50 indices; top place-ment 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 energe-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 coro-navirus 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 apart-ments 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 mil-lion. 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 fac-tors 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 man-agement 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 construc-tion and maintenance, thus continuing its strategy from the previous year. However, the impact of the coronavirus pandemic slowed construc-tion 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 amount-ed 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 in-creasingly 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 mil-lion.
Report on the First Nine Months of 2020:
Information regarding Climate Conference „Perspektiven klimaneutralen Wohnens“
Media Center: https://presse.vonovia.de/de-de/mediathek
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