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Unternehmenszentrale Vonovia
Results as of 30 September 2022

Vonovia’s development remains stable and confirms forecast for year as a whole

  • Robust economic growth: segment revenues up 31.4%, EBITDA up 37%, Group FFO up 35%.
  • Vacancy rate at an all-time low; customer satisfaction at highest level since survey began.
  • Synergies from merger with Deutsche Wohnen higher than expected.
  • Forecast for full year 2022 confirmed; stable outlook for 2023.
  • Redimensioning of investments for new builds and energy modernisation.
  • Rising energy prices: Vonovia supports tenants.

Bochum, 4 November 2022 – Vonovia SE (“Vonovia”) continued its stable development during the first nine months of 2022. Despite a challenging market environment, the relevant key figures show an improvement compared with last year. On this basis, the company has confirmed its forecast for the full financial year 2022 and is anticipating a stable development for 2023.

“The effects of Russia’s war of aggression on Ukraine, rising interest rates, high costs of construction and a shortage of skilled labour present immense challenges to the housing sector. We are seeing a growing deficit of affordable housing, especially in large urban conglomerations. At the same time, climate change will require decisive action,” says Rolf Buch, CEO of Vonovia. “This year we have again succeeded in building affordable flats, in continuing to upgrade our portfolio in terms of energy efficiency and in improving customer satisfaction. However, we must also realise that it will take a joint effort to ensure we can continue at this level of investment in Germany. Otherwise, the housing issue will become social dynamite over the next decade. These are challenges that cannot be solved by the property sector alone.”

Economic development

In economic terms, Vonovia has continued the positive development it saw during the first half of the year. The total segment revenues – like its sales revenue – rose by 31.4% to around €4.6 billion in the first nine months of 2022.

As a result, the EBITDA increased by an overall 37% to around €2.1 billion during the same period. The rise in EBITDA was largely due to the development business, alongside the merger with Deutsche Wohnen. Due to sales with a good increase in value, the Recurring Sales segment’s revenue is at the same level as in the same period last year.

The Group FFO, the leading indicator for sustainable profitability, grew by 35% to around €1.6 billion.

The Business combination with Deutsche Wohnen has been moving forward extremely smoothly, with the result that Vonovia is anticipating to leverage just under €90 million in synergies as early as 2023. From 2024, the company is expecting synergy effects of around €105 million per year. In subsequent years, the additional contribution should be €30 million per year, creating total synergies of around €135 million per year.

As at the reporting date (30 September 2022), Vonovia owned a total of around 550,000 flats. The market value of its entire portfolio was around €100 billion. At the end of the third quarter of 2022, the EPRA NTA (Net Asset Value) was around €50 billion and thus higher than the year-end-value for 2021.

At 43.4%, the loan-to-value (LTV) ratio fell again and remains within the target range of 40-45%.

Vonovia’s balanced, long-term financing profile is ensuring stability. Also, Moody’s recent decision to change Vonovia’s rating, due to higher interest rates, has had no impact on refinancing costs. The rise in interest rates has affected the entire property sector. With Baa1 instead of A3, Moody’s has changed its rating to the level of Standard & Poor's, which is BBB+. Both rating agencies have confirmed a stable and indeed positive outlook for Vonovia, thus underlining its good creditworthiness. Moody’s recognises Vonovia’s adequate liquidity and scope for covenants, as well as a balanced maturity profile and highly diversified funding sources. The Scope rating agency already confirmed Vonovia’s positive rating in the first half of the year.

Customer satisfaction at the highest level since the beginning of the survey

At the end of September 2022, Vonovia’s housing stock recorded a vacancy rate of 2.1%, once again below the equivalent figure of the previous year. “Our rental flats are nearly all taken. At the locations where we have flats, the demand far outstrips the supply – and this will continue. Migration into Germany is continuing, while rising interest rates are making it more difficult to own property or to build new homes,” says Rolf Buch.

Tenant satisfaction has risen to its highest level since the survey was started by an independent, external institute: In the third quarter, Vonovia’s Customer Satisfaction Index (CSI) was 2.2 percentage points higher than in the same quarter of the previous year. “We give our customers security during times of uncertainty. We are continuing to advocate a time-limited moratorium on tenancy terminations and are committed to ensuring that no tenants will need to worry about their homes if, for instance, things get financially tight due to rising energy prices. It’s important that we talk to each other at an early stage so that we can find a solution together,” says Buch.

The market-driven increase in rents was 1% (on a 12-month rolling basis). Investments in energy-efficient modernisation led to a 1.6% increase, while investments in new builds and additional floors produced a 0.7% increase in rental income. The average monthly rent across the Group portfolio in Germany was €7.36 per square metre as at 30 September 2022.

High speed for more renewable energies

Vonovia remains committed to working on its green energy transition and has further specified its own climate strategy. The company has developed software that digitally maps its entire portfolio and uses algorithms to determine the current and future greenhouse gas emissions of each building. Based on these calculations, the software produces climate-specific, energy-related and economic indicators which are then factored into Vonovia’s upgrade strategy and into its full-scale neighbourhood developments. The decarbonisation tool digitally benchmarks the emission reduction of each building against the Paris target of 1.5°C, thus determining the ideal moment for modernisation.

In total, Vonovia invested around €1.8 million in its existing building stock and new builds in the first nine months of 2022. Vonovia completed 1,500 new flats during the first nine months of the year – about 13% more than during the same period in 2021.

“Given the housing shortage, we need to build yet more and even faster. However, this requires faster approval procedures and online processes on the part of the authorities. Between January and August 2022, Germany’s construction authorities issued 3% fewer planning permits than during the same period last year. It’s sending the wrong signal,” says Buch. Vonovia is already giving a lead in its cooperation with Bochum City Council and is submitting online planning applications that involve online checks with all 16 state building regulations. It is an important tool that helps to accelerate the approval procedure for planning permits.

To address the shortage of skilled workers, Vonovia has recruited electricians and gardeners in Colombia. Since September, they have been deployed by the company’s technical service department and in its residential environment, covering four cities: Hanover, Kiel, Lübeck and Berlin.

Forecast for 2022 confirmed; outlook for 2023 stable

Faced with persistently high demand for residential space, Vonovia has confirmed its forecast for 2022 as a whole, thus underlining the robustness of its business strategy and its sustainability even during turbulent times.

For 2023, Vonovia is forecasting an increase in total segment revenue between €6.8 billion and €7.4 billion. The EBITDA total is expected to be slightly above this year’s level, while the Group FFO will be slightly below the level of 2022 due to developments in interest rates and taxes. Investments in modernisation are projected to be around €500 million, while Vonovia is expecting to invest around €350 million in new builds.

For the first time, investments in modernisation and new construction have thus declined compared with previous years. “At times like these, we need to keep rents particularly affordable for our customers. Developments in construction prices and interest rates do not currently allow us to carry out much modernisation or to conduct many new construction projects on reasonable terms. It means we need to make decisions in the best interest of the community and focus on measures that have a particularly positive effect on the overall price that our tenants pay every month (i.e. rent plus utilities),” says Buch. “We’ve built up a good head start in redevelopment over the last few years. Our rate was three times higher than the national average – and in fact continually, year on year. Vonovia’s existing buildings already have an excellent level of energy efficiency, and we’ve even exceeded our targets on the Sustainability Performance Index (SPI),” Buch adds.

By the end of September 2022, only 4% of Vonovia’s existing properties were in the worst energy class, H.

The forecast for the 2023 investment programme does not signal a turnaround. “We are expressly sticking to our long-term climate roadmap, as we always have done,” underlines Buch.

“The government needs to provide far more support for tenants and landlords to resolve this dilemma between them. In the face of significantly higher costs for materials and energy, the housing industry is expected to invest around €150 billion in new builds and modernisation each year, while at the same time keeping rents affordable. It’s a contradiction in terms. Instead, we need mandatory parameters and reliable funding that will reduce the current uncertainty among tenants and landlords,” Buch emphasises.


The full quarterly report can be found at the following web ad-dresses:
DE: https://report.vonovia.de/2022/q3/de
EN: https://report.vonovia.de/2022/q3/en

Further details, photographic material and video footage can be found in the Press section and the Media Library

Nina Henckel
Head of Corporate Media