Vonovia Commits to 2050 Climate Roadmap, Continues Positive Business Development
- Sustainability Performance Index includes ecological and social aspects; non-financial and financial control parameters equally relevant.
- Binding climate roadmap for climate-neutral housing stock; research on climate-neutral heat generation.
- Social responsibility toward tenants; assurance that no one experiencing financial difficulties due to coronavirus will lose their home.
- Continued stable economic development; positive business development also expected for 2021.
Bochum, March 4, 2021 – In the fiscal year under review, Vonovia SE (“Vonovia”) has committed to a binding climate roadmap for a virtually climate-neutral building stock by 2050 and continued its positive business development. The Bochum-based residential real estate company aims to achieve climate-neutral housing by combining energy-efficient modernization with carbon neutral heat generation. Vonovia also uses social and sustainable neighborhood development projects to promote living and functioning neighborhoods. Vonovia’s own ecological and social responsibility has been established in its business philosophy since 2019. The new Sustainability Performance Index (in short: SPI), which was developed in 2020, will allow Vonovia’s sustainability performance to be measured and includes specific sustainability targets.
“Stable companies such as ours are being called upon to take responsibility,” says CEO Rolf Buch. “For us, acting in an environmentally and socially sustainable manner is an obligation that we are happy to be measured against. Our new Sustainability Performance Index is on equal terms with our key financial figures.”
The SPI is Vonovia’s main non-financial key figure. It thus underlines the importance of environmental, social and governance aspects (in short: ESG), for Vonovia and is also relevant for remuneration purposes. The SPI considers the carbon savings achieved annually in housing stock, the energy efficiency of new constructions, the ratio of senior-friendly apartment refurbishments, customer and employee satisfaction, and gender diversity in the company’s upper management levels.
Neighborhoods at the Center of the Climate Revolution
Vonovia sees neighborhoods as central components of the mobility, energy and climate revolution. The focus is on decentralized energy supply concepts that allow neighborhoods to be as independent as possible with regard to the generation, storage and use of energy on-site. Vonovia is currently developing 14 integrated neighborhoods comprising around 8,000 apartments. These projects incorporate modernization, new construction, the residential environment, collaboration with social institutions, and energy concepts.
The neighborhood in Bochum-Weitmar plays a special role as a research site; Vonovia is working with renowned Fraunhofer Institutes to research the use of green hydrogen for electricity and heating. The resulting “Energy Center of the Future” will generate at least 60% of the energy that is needed locally using carbon-neutral techniques. “The most important thing is that climate-neutral housing remains affordable for our tenants,” says Rolf Buch. “We as a company are just as responsible for this as are the policymakers. We need to see changes in overall political conditions, such as the exemption of landlord-to-tenant electricity from grid fees and taxes.”
Vonovia Expands Use of Photovoltaics
In the 2020 fiscal year, Vonovia forged ahead with the expansion of renewable energies. Following cities such as Dresden and Munich, Vonovia neighborhoods including Leverkusen and Gelsenkirchen now also have their own photovoltaic facilities. Vonovia’s portfolio includes around 400 facilities. The company generates around 14.5 million kWh of solar energy annually, which saves around 7,000 metric tons of CO2. The volume saved is roughly equivalent to the carbon emissions that 1,500 cars driving once around the world would generate. In addition, Vonovia has saved a cumulative total of more than 370,000 metric tons of CO2 since 2015 through energy-efficient modernization measures. The CO2 intensity of the existing German portfolio fell from 47.2 kg CO2e/sqm in 2019 to 43.9 kg CO2e/sqm, also thanks to the purchase of certified green electricity for buildings. Furthermore, Vonovia sold 27 GWh of green electricity to private customers in 2020.
Improvements in externally validated key figures are testimony to Vonovia’s active contribution to ESG-related solutions. For instance, Vonovia was admitted to the renowned Dow Jones Sustainability Index Europe and earned a top spot in the sustainability ranking of the rating agency Sustainalytics. In addition, Vonovia has been listed in the European blue chip EURO STOXX 50 index since September 2020. It is currently the only real estate company in this leading index, and the first residential real estate company overall.
Business Philosophy: Support for Tenants
Vonovia also helps find solutions for social challenges. “We have a huge responsibility for the approximately one million people who are at home in our properties,” says Rolf Buch. “They rely on us. This responsibility is both a challenge and a source of motivation for us, not only during the coronavirus pandemic.” The company already published its business philosophy in 2019, setting out general conditions that tenants can rely on.
Vonovia uses active hardship management to support tenants experiencing financial difficulties. The company has used its hardship management system and the regulation for tenants over 70 to decide in favor of more than 3,000 cases since 2018. In other cases, the company continually strives to seek a solution. During the coronavirus pandemic, Vonovia temporarily stopped rent increases and the termination of leases. The company also supported charitable organizations such as AWO and various food banks in 2020.
Vonovia is expanding the digital channels to maintain dialogue with its tenants. One key component is the “Mein Vonovia” tenant app. The app allows customers to manage bills or lease agreements digitally, and to commission repairs. It will soon also be possible to use the app to conclude lease agreements completely digitally. Available in the usual app stores since early 2020, the app has been downloaded more than 135,000 times and has more than 45,000 active users per day. The Customer Satisfaction Index (CSI) confirms that tenants respond positively to the company’s measures and social welfare. The index grew by 8.6 % over the previous year.
Vonovia concluded more than 33,600 new lease agreements in the 2020 fiscal year. Like its employees, the company’s tenants have diverse backgrounds. They come from more than 150 different countries, and their ages and income structures reflect society at large. In addition, more than 12,000 people from Syria and Afghanistan have found a home at Vonovia since 2015.
Vonovia’s monthly net rent in Germany was € 6.95 per m² on average at the end of December 2020. If only conurbations are considered, Vonovia’s quoted rents are an average of around 7% below the market level.
More than 90% of Office Employees Working From Home
More than 90% of Vonovia’s office employees are currently working from home under mobile working arrangements. The company’s on-site employees – craftsmen, rental service staff, and caretakers – are maintaining business operations with the appropriate protection. “We are grateful that so far, we have mastered the crisis as a company well, thanks to our employees. Their performance has been outstanding,” says Rolf Buch. As a sign of how much their efforts are valued, Vonovia has paid all employees the highest possible coronavirus bonus of
€ 1,500 for 2020.
Positive Economic Development Continues in 2020
In economic terms, the residential real estate company can look back on a positive fiscal year. This is reflected in its key financial figures. Hem-bla’s earnings are included in full for the first time, while the earnings contribution made by Bien-Ries is pro rata.
Vonovia is reporting the total revenue generated by its four segments, total segment revenue, in this year’s annual financial statements. This value corresponds more or less to the total revenue achieved by the Group. It increased by 6.3% year-on-year to € 4,370.0 million. The Adjusted EBITDA Total rose by 8.5% to € 1,909.8 million, mainly due to acquisitions and organic growth. The Adjusted EBITDA Rental increased by 8.1%, rising from € 1,437.4 million to € 1,554.2 million. With a joint total of € 355.6 million, the Recurring Sales, Development and Housing-Related Services (Value-add) business areas were responsible for the increased Adjusted EBITDA Total. This corresponds to an increase of more than 10% compared to the prior-year period.
Group FFO also improved in the last fiscal year. The key figure for Vonovia’s operating earnings power improved by 10.6% to
€ 1,348.2 million. Again, the positive result was due primarily to the acquisitions in Sweden.
Criteria Published for First Green Bond
Vonovia was active on the bond market again in 2020, raising capital totaling € 3.8 billion. As of the reporting date, the LTV (loan-to-value) ratio came to 39.4%, slightly below the target corridor (40% to 45%).
Vonovia also issued its first fully digital bond at the beginning of 2021, thus taking another step in its digitalization drive. In addition, Vonovia has published the criteria for its first green bond, which it plans to issue this year. The criteria are based on the standardized EU-wide taxonomy and the funds raised will be used to finance sustainable projects in a targeted manner.
Increase in the Value of the Portfolio
As of December 31, 2020, the portfolio of the residential real estate company consisted of around 416,000 of its own rental apartments. Vonovia’s German portfolio of 355,000 apartments represents a market share of around 1.5% in Germany.
Asset value disclosure is made according to the best practice recommen-dations of the European Public Real Estate Association (EPRA). Going forward, the control parameter for the net asset value will be the EPRA NTA (Net Tangible Assets), which will replace the Adjusted NAV (Net Asset Value) reported to date. It provides more significant data regarding the value of the real estate portfolio that Vonovia holds in the long term. The EPRA NTA increased by 19.2% year-on-year to € 35,488.6 million.
The EPRA NRV (Net Reinstatement Value), which represents the value that would be required to rebuild the company (including the Develop-ment and Value-add segments), is also being reported. This came to € 43,677.3 million (2019: € 37,065.9 million).The fair value of the portfolio increased in the reporting period to € 58.9 billion. This includes the increase in the value of Vonovia’s properties of around € 4.9 billion, in particular thanks to investments in modernization and new construction and to the increased demand for residential property in major cities. Due to a lower turnover, the vacancy rate fell by a further 0.2 percentage points to a very low level of 2.4%.
The increase in rent due to market-related factors within a year came to 0.6% (2019: 1.1%). Modernization investments resulted in a 1.9% increase in rents (2019: 2.3%), while investments in new construction and vertical expansion resulted in a rent increase of 0.6% (2019: 0.5%).
High Investment Level in Portfolio and New Construction
Despite the coronavirus pandemic, Vonovia successfully continued to pursue its strategy and its established approach of investing in modernization, maintenance and new construction in the 2020 fiscal year. In some cases, however, the coronavirus pandemic caused the delay of individual construction projects. All in all, Vonovia completed 2,088 (2019: 2,092) apartments in Germany, Austria and Sweden in the 2020 fiscal year. Of these, 1,442 (2019: 1,301) are for its own portfolio and 646 (2019: 791) are for sale. Vonovia is also contributing to climate protection by carrying out energy-efficient modernization measures on more than 10,500 apartments, increasing the appeal of these apartments at the same time.
Vonovia has committed to renovating every third existing apartment that is newly rented to make it senior-friendly. Around 13,000 apartments were modernized in 2020 to allow older people to live long lives in their own homes. These modernization measures range from a new bathroom to modernization of the entire apartment.
Vonovia invested a total of € 1,935.9 million (2019: € 1,971.1 million) in maintenance, modernization and new construction (for its own portfolio) between January and December 2020. Due to isolated delays caused by the coronavirus pandemic, this figure is down slightly by 1.8% compared with the previous year. The volume of maintenance measures rose considerably by 22.9% to € 592.0 million (2019: € 481.6 million). Investments in modernization came to € 908.4 million (2019: € 996.5 million), with € 435.5 million (€ 493.0 million) for new construction (for the com-pany’s own portfolio).
New Employees, More Trainees Than Ever Before
Vonovia continued to recruit new employees even during the coronavirus pandemic. The number of employees was up year-on-year to 10,622 (+2.7%). Vonovia offers long-term prospects to its trainees in particular. 510 (+7.8%) aspiring specialists are currently completing their training at Vonovia – more than ever before. Vonovia continues to offer young people from insolvent companies the opportunity to complete their training programs. “In times like these, we need well-trained colleagues in all areas of the company more than ever, so we can rise to social challenges and take responsibility. As a result, we are always looking for more staff,” says Rolf Buch.
Forecast for Financial and Non-Financial Key Figures
Based on the stable business performance, the Management Board and the Supervisory Board will be proposing a dividend of € 1.69 per share to shareholders at the Annual General Meeting in April 2021. This corresponds to an increase of € 0.12 and a dividend yield of 3.2% based on the closing price on March 01, 2021.
In 2021, Vonovia plans to once again make comprehensive investments in modernization and new construction, in an expected range between € 1,300 million and € 1,600 million. Total segment revenue is expected to range from around € 4,900 million to € 5,100 million, while the forecast for Adjusted EBITDA Total is between € 1,975 million and € 2.025 million. Based on these figures, Vonovia expects its Group FFO to increase further, to between € 1,415 million and € 1,465 million. Vonovia expects its Sustainability Performance Index to achieve around 100% target achievement for individual indicators, such as carbon savings in the portfolio and customer satisfaction.
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2021 Financial Calendar:
April 16, 2021: Annual General Meeting
May 4, 2021: Interim Statement for the first quarter of 2021
August 6, 2021: Interim Financial Report for 2021
November 4, 2021: Interim Statement for the first nine months of 2021