Quarterly Report • May 3, 2018
Quarterly Report
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| Financial Key Figures in € million | 3M 2017 | 3M 2018 | Change in % | 12M 2017 |
|---|---|---|---|---|
| Rental income | 417.2 | 418.3 | 0.3 | 1,667.9 |
| Adjusted EBITDA Operations | 300.1 | 315.7 | 5.2 | 1,224.2 |
| Adjusted EBITDA Rental | 285.6 | 303.2 | 6.2 | 1,150.0 |
| Adjusted EBITDA Value-add Business | 19.8 | 17.8 | -10.1 | 102.1 |
| Adjusted EBITDA Other | -5.3 | -5.3 | – | -27.9 |
| Income from disposal of properties | 492.2 | 114.0 | -76.8 | 1,206.4 |
| Adjusted EBITDA Sales | 19.1 | 15.7 | -17.8 | 110.8 |
| Adjusted EBITDA | 319.2 | 331.4 | 3.8 | 1,335.0 |
| EBITDA IFRS | 303.8 | 299.4 | -1.4 | 1,271.8 |
| FFO 1 | 218.2 | 243.6 | 11.6 | 920.8 |
| thereof attributable to Vonovia shareholders | 206.2 | 230.8 | 11.9 | 866.2 |
| thereof attributable to Vonovia hybrid capital investors | 10.0 | 10.0 | – | 40.0 |
| thereof attributable to non-controlling interests | 2.0 | 2.8 | 40.0 | 14.6 |
| FFO 2 | 226.3 | 251.9 | 11.3 | 1,012.4 |
| AFFO | 204.6 | 222.0 | 8.5 | 835.1 |
| FFO 1 per share in €* | 0.47 | 0.50 | 7.9 | 1.90 |
| Income from fair value adjustments of investment properties | – | – | – | 3,434.1 |
| EBT | 213.7 | 207.4 | -2.9 | 4,007.4 |
| Profit for the period | 130.7 | 129.2 | -1.1 | 2,566.9 |
| Cash flow from operating activities | 241.9 | 262.7 | 8.6 | 946.0 |
| Cash flow from investing activities | -773.2 | -2.500.3 | 223.4 | -1,350.1 |
| Cash flow from financing activities | -1.6 | 2.800.7 | – | -870.5 |
| Maintenance and modernization | 191.4 | 221.1 | 15.5 | 1,124.8 |
| thereof for maintenance expenses and capitalized maintenance | 77.2 | 83.4 | 8.0 | 346.2 |
| thereof for modernization (incl. new construction) | 114.2 | 137.7 | 20.6 | 778.6 |
| Key Balance Sheet Figures in € million | Mar. 31, 2017 | Mar. 31, 2018 | Change in % | Dec. 31, 2017 |
| Fair value of the real estate portfolio | 29,607.6 | 38,485.6 | 30.0 | 33,436.3 |
| Adjusted NAV | 14,616.8 | 18,467.3 | 26.3 | 18,671.1 |
| Adjusted NAV per share in €* | 31.18 | 38.07 | 22.1 | 38.49 |
| LTV in % | 44.4 | 45.5 | 1.1 pp | 39.8 |
| Non-Financial Key Figures | 3M 2017 | 3M 2018 | Change in % | 12M 2017 |
| Number of units managed | 421,199 | 452,136 | 7.3 | 409,275 |
| thereof own apartments | 355,525 | 393,639 | 10.7 | 346,644 |
| thereof apartments owned by others | 65,674 | 58,497 | -10.9 | 62,631 |
| Number of units bought | 23,745 | 48,690 | 105.1 | 24,847 |
| Number of units sold | 1,692 | 1,743 | 3.0 | 11,780 |
| thereof Privatize | 535 | 594 | 11.0 | 2,608 |
| thereof Sell portfolio Vacancy rate in % |
1,157 2.7 |
1,149 2.8 |
-0.7 0.1 pp |
9,172 2,5 |
| Monthly in-place rent in €/m² | 6.06 | 6.18 | 2.0 | 6,27 |
| Organic rent increase in % Number of employees (as of Mar. 31/Dec. 31) |
3.4 8,114 |
4.2 9,544 |
0.8 pp 17.6 |
4,2 8,448 |
| EPRA Key Figures in € million | Mar. 31, 2017 | Mar. 31, 2018 | Change in % | Dec. 31, 2017 |
| EPRA NAV EPRA NAV per share in €* |
17,548.6 37.43 |
21,916.0 45.18 |
24.9 20.7 |
21,284.6 43.88 |
* Based on the shares carrying dividend rights on the reporting date: Mar. 31, 2018: 485,100,826, Mar. 31, 2017: 468,796,936, Dec. 31, 2017: 485,100,826
| 002 | Overview |
|---|---|
| 004 | Vonovia SE in the Capital Market |
| 006 | Development of the Economic Environment |
| 009 | Economic Development in the First Three Months of 2018 |
| 019 | Expected Development in the Remainder of the Fiscal Year |
Portfolio Information
| 002 | Overview |
|---|---|
| 004 | Vonovia SE in the Capital Market |
| 006 | Development of the Economic Environment |
| 009 | Economic Development in the First Three Months of 2018 |
| 019 | Expected Development in the Remainder of the Fiscal Year |
Vonovia got off to a very successful start to the 2018 fiscal year. With over € 137.7 million invested in modernizing our properties as well as in new construction projects, the investment program is once again the driver of our organic growth. Our FFO 1 rose by 11.6% in 2018 as against the prior-year quarter. BUWOG is only included with the opening balance sheet.
The first few weeks of 2018 brought increasing headwind in the stock markets. Mainly driven by higher yields on government bonds, the expectation of rising interest rates and individual political crises and conflicts, the stock markets experienced a market correction that also affected European and German real estate shares.
Even though Vonovia's share price performance was slightly negative in the first three months of 2018, the company's shares outperformed both the DAX and the EPRA Europe indices: Vonovia's stock lost 2.8% as against the closing price on December 31, 2017, dropping to € 40.25, whereas the DAX fell by 6.4% to 12,096.73 points during the same period. The EPRA Europe Index also showed weaker development than Vonovia's shares, and closed the first quarter of 2018 down by 4.5% to 2,275.65 points.
Vonovia's market capitalization amounted to around € 19.5 billion as of March 31, 2018.
Based on the German stock exchange's definition of free float, only the interest held by Norges Bank (Ministry of Finance on behalf of Norway) does not count towards the free float. This means that 92.7% of Vonovia's shares were in free float on March 31, 2018.
In line with Vonovia's long-term strategic focus, the majority of its investors have a similarly long-term focus. The company's investors include pension funds, sovereign wealth funds and international asset managers in particular. There is also a large number of individual shareholders, although they only represent a small proportion of the total capital.
In the first three months of 2018, Vonovia participated in a total of five investors' conferences and organized six roadshows in the most important European and North American financial centers. In addition, our company representatives held numerous one-on-one meetings and teleconferences with investors and analysts to keep them informed of current developments and special issues. Active participation in various shareholder association forums is also a key component of our IR work.
In order to provide information, the Investor Relations team and their colleagues from the operational areas once again gave numerous property tours to interested members of the financial community.
We will continue to communicate openly with the capital market as this year progresses. Various roadshows and conferences have already been planned. Information can be found in the Financial Calendar on our Investor Relations website.
At the end of the first quarter of 2018, 31 national and international analysts were covering Vonovia. Four of these brokers have currently suspended their coverage of Vonovia due to the ongoing BUWOG takeover. The average target share price was € 43.80, with 63% of analysts issuing a "buy" recommendation, 33% issuing a "hold" recommendation and 4% issuing a "sell" recommendation.
In connection with the BUWOG takeover offer, 73.8% of all shares in BUWOG have been tendered in the course of the first phase of takeover. The mandatory grace period in accordance with the Austrian Takeover Act (Übernahmegesetz – ÜbG) began on March 16, 2018, and will end on June 18, 2018.
http://investoren.vonovia.de
| First day of trading | July 11, 2013 |
|---|---|
| Subscription price | € 16.50 |
| Total number of shares |
485,100,826 |
| Share capital in € | € 485,100,826 |
| ISIN: | DE000A1ML7J1 |
| WKN: | A1ML7J |
| Ticker symbol | VNA |
| Common code | 94567408 |
| Share class | Registered shares with no par value |
| Stock exchange | Frankfurt Stock Exchange |
| Market segment | Regulated market |
| Indices & weight Mar. 31, 2018 |
DAX (1.8%) Stoxx Europe 600 (0.2%) MSCI Germany (1.6%) |
GPR 250 (1.7%) FTSE EPRA/NAREIT Europe Index (9.1%)
According to data released by the German Federal Statistical Office (Destatis), the German economy continued to make substantial gains in 2017, with gross domestic product (GDP) demonstrating a strong annual result of 2.2% growth. The marked upturn in the German economy is likely to have continued in the first quarter of 2018, according to statements published by experts from Deutsche Bundesbank in their monthly report for March 2018. The industrial sector remains the driving force behind the economic development, bolstered by an extremely high level of orders received by companies in the second half of last year. German industrial production rose considerably in January 2018, namely by 1.5% in seasonally adjusted terms, compared with the final quarter of 2017, although the order intake was down on the very high level seen in the previous month and January's industrial revenues and exports were subdued. According to the ifo institute, companies in the manufacturing sector still consider their business situation to be very good on the whole, and the significant damper on the expectation component is only expected to materialize over the course of the coming quarter. Although production in the construction industry was down significantly in January 2018, in seasonally adjusted terms and compared with the previous month, due to significantly lower construction activity in the finishing trade, production increased sharply again in the main construction industry. Relevant indicators suggest that the brisk construction activity is likely to continue in spite of the damper in January. The order situation is excellent as well. Nevertheless, the rapid expansion of construction activity is facing considerable capacity bottlenecks, according to Deutsche Bundesbank. As
a result, the contribution made by the construction sector to macroeconomic expansion in the first quarter of 2018 is expected to be rather modest. The continued strong momentum on the labor market is still propping up private consumption. According to experts at the Kiel Institute for the World Economy (IfW), Germany is moving into the final stage of a prolonged upswing and is progressing towards a boom. Further increases in economic output are being increasingly limited by capacity bottlenecks. Rising corporate investment is unable to remedy the increasing shortage of production capacities. Emerging trade conflicts, among other things, could give rise to risks and burdens on further economic development on an international level and in Germany.
The situation on the labor market improved further: According to information supplied by the German Federal Statistical Office (Statistisches Bundesamt), the number of employed people rose by 62,000 in January 2018 and by 45,000 in February when adjusted for seasonal work. Based on the information provided by the German Federal Employment Agency (Bundesagentur für Arbeit), the unemployment rate based on the total civilian labor force came to 5.5% in March 2018, down by 0.5 percentage points compared with the previous year. Consumer price performance was moderate over the past few months. In January 2018, the rate of inflation based on the consumer price index (CPI) came to 1.6% as against the same month of the previous year, coming to 1.4% in February and an estimated 1.6% again in March.
Although some signs are emerging that the European Central Bank (ECB) is intending to make a gradual break with its ultra-expansive monetary policy, it is still keeping key rates at the record low levels of 0.0% from March 2016.
Based on information provided by Deutsche Bundesbank, the broad-based price increase for residential real estate in Germany continued in 2017, but the price increase rate, which has been fairly high for some time now, did not increase any further. In urban areas, living space became more expensive at an almost undiminished pace, although the price increase slowed slightly in Germany as a whole. Cities appear to have gained appeal in comparison with rural areas. The increase in supply in 2017 is expected to have accelerated significantly, with no additional surge in demand in the absence of a further drop in interest rates. According to the estimates of Deutsche Bundesbank, prices of housing in cities are likely to exceed the level justified by longer-term economic and demographic factors. According to the F+B housing index of the independent research institute F+B Forschung und Beratung für Wohnen, Immobilien und Umwelt GmbH (F+B), the price development for individual multifamily residences in 2017 (+2.0%) was slightly below the level of the increase seen in new contract rents. At the beginning of 2018, quoted rents continued to rise in Germany: the IMX, the quoted price index of the real estate portal lmmobilienScout24, rose nationwide by 0.4 percentage points in January compared with the previous month and by 0.5 percentage points in February. The quoted prices for condominiums also increased further across Germany in 2018. Compared with the increase in rents, these prices have again been increasing at a much faster pace. The IMX for prices for existing condominiums increased by 2.1 percentage points in January and 1.9 percentage points in February in a month-on-month comparison. The IMX for newly built condominiums rose by 1.7 and 1.3 percentage points respectively during the same period.
In the first quarter of 2018, residential building bundles and residential developments of 50 units or more accounted for a total transaction volume of around € 6.8 billion on the German residential investment market, according to the global real estate service provider CBRE. Compared with the prior-year period, the transaction volume doubled, driven by Vonovia's takeover of BUWOG. The continued high demand for residential portfolios among major real estate companies and institutional investors cannot be met to an adequate degree due to the short supply of existing portfolios. Interest in investments in project developments is increasing continuously as a result. In the first quarter of 2018, for example, new construction projects worth around € 1.8 billion were traded as part of forward purchases and forward fundings. The competition for existing portfolios and moves among investors to divert their attention towards new construction developments were reflected overall in a further price increase yearon-year. The increased investment interest in smallscale residential solutions – e.g., student residences and microapartments – brought with it a transaction volume of over € 1.4 billion. As far as 2018 as a whole is concerned, CBRE believes that a transaction volume of at least € 15 billion on the German residential real estate market is very likely.
The increase in the number of inhabitants over the last few years (by approximately 1.6 million from 2014–2017, according to estimates made by Destatis) has further aggravated the shortage of supply on the real estate market, according to Deutsche Bank Research. The housing deficit is currently tipped to come to more than one million apartments nationwide, with the country's metropolitan areas being hit particularly hard. Experts from Helaba Landesbank Hessen-Thüringen predict that, all in all, Germany will need around 400,000 apartments a year in the medium term. Given an estimated apartment construction activity of at least 300,000 units in 2017 and 320,000 in 2018, the annual demand for new construction would not be covered.
In Austria, the economy showed strong growth in the fourth quarter of 2017, as reported by the Austrian Institute of Economic Research (WIFO) in March 2018. GDP showed a quarter-on-quarter increase of 0.9% in seasonally adjusted terms (2017 as a whole: 2.9%). Growth was driven, in particular, by exports and gross fixed asset investment, and the economy was also boosted by the robust growth in private consumption. The WIFO experts expect that the Austrian economy will maintain this momentum over the coming months. According to the WIFO Economic Test (Konjunkturtest), for example, companies consider their current position and future business situation to be extremely positive. The Austrian labor market is also showing favorable development. The number of non-self-employed people in active employment was 3% higher than in the previous year in January. Unemployment fell again in February 2018 as against the previous year, even though the seasonally adjusted unemployment rate based on the national definition is still significantly higher than before the financial market and economic crisis, at 7.9%. The rate of inflation based on the consumer price index came to 1.8% in both January and February, according to the Austrian statistical office (Statistik Austria).
The values of the DSS OeNB residential real estate price index – the price index of the Austrian central bank (OeNB) on the basis of new and used condominiums and single-family residences – show an increase of 3.8% in Austria in 2017. Whereas prices stabilized in Vienna with an increase of 1.5% year on year, the price development accelerated in the rest of the country. This means that, excluding Vienna, prices in Austria increased by 4.9% in 2017. According to the CPI, apartment rents (excluding ancillary costs) rose by 4.1% in Austria in 2017.
The volume of investment in residential real estate rose in a year-on-year comparison to € 550 million in 2017. Approximately 48% of this amount is attributable to special real estate forms, such as student residences and microapartments. According to CBRE, this is closely linked to the simultaneous increase in new construction activity relating to student residences and microliving concepts; also in response to the growing number of students, single-person households and geographically mobile and flexible single people in Austria. According to the OeNB, the residential construction segment overcame a prolonged period of weakness in 2017. Both residential construction investment as well construction output and hours worked in building construction increased significantly, and the strong momentum in granting building permits points toward a further acceleration. In the face of rising population figures and an increasing shortage of land, CBRE reports that (residential) high-rise buildings are becoming more of a focal point among developers and investors.
On December 18, 2017, Vonovia published notice of its intention to make a voluntary public takeover offer, in accordance with the Austrian Takeover Act (ÜbG), to all the shareholders and holders of convertible bonds in BUWOG AG (subsequently: BUWOG), Vienna/Austria. BUWOG's shares are listed under ISIN AT00BUWOG001 in the official trading segment (Prime Market) of Wiener Börse AG, on the regulated market (Prime Standard) of the Frankfurt Stock Exchange and on the Main Market of the Warsaw Stock Exchange.
The corresponding offer document was submitted to the Austrian Financial Market Authority on January 18, 2018, and was published on February 5, 2018.
The stated goal of the BUWOG takeover is to consolidate the complementary real estate portfolios of both companies and merge Vonovia's housing stock (around 350,000 apartments) with that of BUWOG (around 48,300 apartments). The integration of BUWOG is expected to allow synergy potential to be exploited, in particular by way of the joint administration and management of the German and Austrian housing units, the further modernization of the portfolio, the expansion of the value chain and the optimization of cost structures. The Vonovia and BUWOG portfolios are a good geographical fit for each other and also complement each other strategically. The successful takeover of conwert in March 2017 allowed Vonovia not only to expand its real estate portfolio in Germany, but also to add properties in Austria to what had, until then, been a purely German portfolio for the first time. The takeover of BUWOG therefore allowed Vonovia to acquire not only a complementary real estate portfolio in Germany, but also an attractive real estate portfolio in Austria in order to merge these portfolios. The joint German and Austrian real estate portfolio of Vonovia and BUWOG
was strengthened considerably as a result of this takeover.
At the end of the first tender phase on March 12, 2018, the majority of the shares in BUWOG, namely 82,844,967 shares or 73.8%, had been tendered to Vonovia. In addition, the offer for 2,988 BUWOG convertible bonds was accepted. The takeover of the shares and convertible bonds from the first tender phase in return for payment of € 2,752.5 million and, as a result, the assumption of control were completed on March 26, 2018.
On March 16, 2018, the second obligatory tender phase started, in accordance with the Austrian Takeover Act, which will end at 5 p.m. CET on June 18, 2018.
Due to the assumption of control on March 26, 2018, BUWOG will be included in Vonovia's consolidated financial statements and, as a result, is also included in the interim statement as of March 31, 2018, for the first time with an initial provisional purchase price allocation. This means that BUWOG is included in the portfoliobased figures, e.g., balance sheet items, whereas the earnings contribution made by BUWOG will only be visible from the second quarter of 2018.
In addition to the BUWOG takeover, Vonovia made a successful start to the first three months of 2018, meaning that it continued to pursue its corporate strategy unchanged. In the Rental segment, we continued our modernization activities and our new construction measures. In the Value-add Business segment, we successfully continued with the expansion of our housingrelated services. In the Sales segment, we continued to pursue our strategy of selective sales.
As of March 31, 2018, Vonovia had a real estate portfolio comprising 393,639 residential units, 113,448 garages and parking spaces and 4,806 commercial units. We also manage 58,497 residential units for other owners.
The following key figures provide an overview of the development in FFO 1 and other value drivers in the reporting period (excluding BUWOG):
| FFO 1 | ||||
|---|---|---|---|---|
| in € million | 3M 2017 | 3M 2018 | Change in % | 12M 2017 |
| Rental income | 417.2 | 418.3 | 0.3 | 1,667.9 |
| Maintenance expenses | -63.1 | -61.2 | -3.0 | -258.0 |
| Operating expenses | -68.5 | -53.9 | -21.3 | -259.9 |
| Adjusted EBITDA Rental | 285.6 | 303.2 | 6.2 | 1,150.0 |
| Income Value-add Business | 215.8 | 265.9 | 23.2 | 1,170.5 |
| thereof external income | 51.4 | 52.0 | 1.2 | 161.6 |
| thereof internal income | 164.4 | 213.9 | 30.1 | 1,008.9 |
| Operating expenses | -196.0 | -248.1 | 26.6 | -1,068.4 |
| Adjusted EBITDA Value-add Business | 19.8 | 17.8 | -10.1 | 102.1 |
| Adjusted EBITDA Other | -5.3 | -5.3 | – | -27.9 |
| Adjusted EBITDA Operations | 300.1 | 315.7 | 5.2 | 1,224.2 |
| Interest expense FFO | -76.8 | -67.7 | -11.8 | -287.5 |
| Current income taxes FFO 1 | -5.1 | -4.4 | -13.7 | -15.9 |
| FFO 1 | 218.2 | 243.6 | 11.6 | 920.8 |
In the reporting period, we were able to increase our primary key figure for the sustained earnings power of our core business, FFO 1, by € 25.4 million or 11.6% compared with the first three months of 2017, from € 218.2 million to € 243.6 million. This trend was once again fueled primarily by the positive development in adjusted EBITDA Operations, which increased by 5.2% from € 300.1 million to € 315.7 million in the first quarter of 2018.
As of the end of March 2018, our apartments were virtually fully occupied. The apartment vacancy rate came to 2.8%, up slightly on the value at the end of the first quarter of 2017 of 2.7%, with around 1 percentage point attributable to construction-related vacancies, due to our extensive investment program. Rental income in the Rental segment rose by 0.3% from € 417.2 million in the first three months of 2017 to € 418.3 million in the same period of 2018, meaning that rent increases more than compensated for the disposals due to portfolio adjustments. The increase in rent due to market-related factors came to 1.6%. We were also able to achieve an increase in rent of 2.5% thanks to property value improvements achieved as part of our modernization program. If we also include the increase in rent due to new construction measures and measures to add extra stories, we arrive at an organic increase in rent of 4.2% in total. The corresponding like-for-like increase in rent came to 4.1% in the first three months of 2018.
If BUWOG is also included, the average monthly inplace rent comes to € 6.18/m² at the end of March 2018.
In the 2018 reporting period, we successfully implemented our modernization and maintenance strategy and expanded the volume from € 191.4 million in the first three months of 2017 to € 221.1 million in the first three months of 2018. This was driven by an increase in the modernization volume, bringing it up from € 114.2 million in the first three months of 2017 to € 137.7 million in the first three months of 2018 (an increase of € 23.5 million).
| in € million | 3M 2017 | 3M 2018 | Change in % | 12M 2017 |
|---|---|---|---|---|
| Maintenance expenses | 63.1 | 61.2 | -3.0 | 258.0 |
| Capitalized maintenance | 14.1 | 22.2 | 57.4 | 88.2 |
| Modernization work* | 114.2 | 137.7 | 20.6 | 778.6 |
| Total cost of modernization and maintenance** | 191.4 | 221.1 | 15.5 | 1,124.8 |
* Incl. new construction in 3M 2017: € 7.2 million; new construction in 3M 2018: € 7.2 million
** Incl. intra-Group profits for 3M 2017: € 9.4 million (thereof € 0.5 million capitalized maintenance and € 4.3 million modernization); 3M 2018: € 4.5 million (thereof € 0.6 million capitalized maintenance and € 5.9 million modernization)
In relation to the average number of apartments managed, this corresponds to spending on modernization and maintenance of € 10.22 per m² in the first three months of 2018 (3M 2017: € 8.59 per m²).
Operating expenses in the Rental segment in the 2018 reporting period were down by 21.3% on the figures for the first three months of 2017, from € 68.5 million to € 53.9 million. This development is largely due to the realization of synergies from the takeover of conwert. All in all, adjusted EBITDA Rental increased by 6.2% from € 285.6 million in the 2017 reporting period to € 303.2 million in the first three months of 2018.
We once again boosted our business further in the Value-add Business segment. The increase in the output of our craftsmen's organization, in particular, contributed to this trend and allowed us to continue our investments in improving our portfolio. In addition, we also continued to expand our business activities in the areas of condominium administration, the provision of cable television to our tenants, metering services, and insurance and residential environment services in the 2018 reporting period. As a leading real estate service provider, Vonovia Immobilien Treuhand now provides services to a total of around 100,000 units across Germany, 58,497 of which are apartments owned by third parties.
External income from our Value-add Business activities with our end customers in the first three months of 2018 rose by 1.2% as against the same period of 2017, from € 51.4 million to € 52.0 million. Group income rose by 30.1%, from € 164.4 million to € 213.9 million in the same period. Overall, this results in a 23.2% increase in the income from the Value-add Business from € 215.8 million in the 2017 reporting period to € 265.9 million in 2018. The adjusted EBITDA Value-add Business was down by 10.1% year on year to € 17.8 million in the first three months of 2018. This development is mainly due to a one-off effect, which also results in limited comparability with the previous year's figures.
The EBITDA margin of the core business, calculated based on the adjusted EBITDA Operations in relation to rental income within the Group, once again showed positive development in the current reporting period. It increased from 71.8% in the first three months of 2017 to 75.3% in the first three months of 2018.
We continued our selective sales strategy in the Sales segment in the first quarter of 2018. The segment covers all business activities relating to the sale of single residential units (Privatize) and the sale of entire buildings or land and commercial units (Sell portfolio cluster).
In the first three months of 2018, income from the disposal of properties came to € 114.0 million, down by 76.8% on the value for the first three months of 2017 (€ 492.2 million). This development is primarily due to the sale of a large commercial real estate package by conwert in the first quarter of 2017. We sold a total of 1,743 apartments in the first three months of 2018 (3M 2017: 1,692). 594 of these apartments were attributable to the Privatize portfolio (3M 2017: 535) and 1,149 were attributable to the Sell portfolio cluster (3M 2017: 1,157).
Adjusted EBITDA Sales came in at € 15.7 million in the first three months of 2018, down by 17.8% on the value of € 19.1 million seen in the same period of 2017. In the first three months of 2018, the fair value step-up in the Privatize portfolio came to 27.6%, down on the value of 31.1% seen in the first three months of 2017. This was due to the higher property values in the 2017 fiscal year. In addition, 153 privatizations were achieved as part of block sales. If these sales are left out of the equation, then the fair value step-up in the Privatize portfolio comes to 32.8%.
At 15.9%, the fair value step-up in the Sell portfolio cluster was higher than for the same period in the previous year (by 2.3%).
| in € million | 3M 2017 | 3M 2018 | Change in % | 12M 2017 |
|---|---|---|---|---|
| Income from disposal of properties | 492.2 | 114.0 | -76.8 | 1,206.4 |
| Fair value of properties sold adjusted to reflect effects not relating to the period from assets held for sale |
-465.8 | -93.1 | -80.0 | -1,065.5 |
| Adjusted profit from disposal of properties | 26.4 | 20.9 | -20.8 | 140.9 |
| thereof Privatize | 17.1 | 14.5 | -15.2 | 75.3 |
| thereof Sell portfolio | 9.3 | 6.4 | -31.2 | 65.6 |
| Selling costs | -7.3 | -5.2 | -28.8 | -30.1 |
| Adjusted EBITDA Sales | 19.1 | 15.7 | -17.8 | 110.8 |
In the 2018 reporting period, the non-recurring items eliminated in the adjusted EBITDA as a whole came to € 27.9 million, up considerably on the prior-year value
of € 13.9 million in the first three months of 2017. This is mainly due to higher costs for acquisition and integration due to the conwert and BUWOG takeovers.
| in € million | 3M 2017 | 3M 2018 | Change in % | 12M 2017 |
|---|---|---|---|---|
| Business model optimization/development of new fields of business | 5.5 | 1.0 | -81.8 | 23.3 |
| Acquisition costs incl. integration costs* | 4.0 | 18.0 | 350.0 | 48.1 |
| Refinancing and equity measures | 0.9 | 0.0 | -100.0 | 1.6 |
| Severance payments/pre-retirement part-time work arrangements | 3.5 | 8.9 | 154.3 | 13.9 |
| Total non-recurring items | 13.9 | 27.9 | 100.7 | 86.9 |
* Including takeover costs and one-time expenses in connection with acquisitions, such as HR measures relating to the integration process
The financial result amounted to € -83.0 million in the first three months of 2018, on par with the level seen in the first three months of 2017. FFO interest expense is derived from the financial result as follows:
| in € million | 3M 2017 | 3M 2018 | Change in % | 12M 2017 |
|---|---|---|---|---|
| Income from loans | 0.5 | 0.8 | 60.0 | 1.6 |
| Interest income | 0.5 | 1.2 | 140.0 | 25.1 |
| Interest expense | -84.0 | -85.0 | 1.2 | -353.0 |
| Financial result* | -83.0 | -83.0 | – | -326.3 |
| Adjustments: | ||||
| Transaction costs | 1.9 | 2.3 | 21.1 | 7.9 |
| Prepayment penalties and commitment interest | 1.9 | 1.7 | -10.5 | 16.4 |
| Effects from the valuation of non-derivative financial instruments | -7.8 | 2.3 | – | -8.8 |
| Derivatives | 5.1 | 4.1 | -19.6 | -3.9 |
| Interest accretion to provisions | 2.4 | 2.1 | -12.5 | 9.0 |
| Accrued interest | 7.3 | 29.2 | 300.0 | 3.1 |
| Other effects | 2.2 | 2.5 | 13.6 | 2.6 |
| Net cash interest | -70.0 | -38.8 | -44.6 | -300.0 |
| Accrued interest adjustment | -7.3 | -29.2 | 300.0 | -3.1 |
| Adjustments Income from investments in other real estate companies | – | – | – | 13.0 |
| Interest payment adjustment due to taxes | 0.5 | 0.3 | -40.0 | 2.6 |
| Interest expense FFO | -76.8 | -67.7 | -11.8 | -287.5 |
* Excluding income from other investments
Due to refinancing and lower interest rates, FFO interest expense came to € -67.7 million in the first three months of 2018, down by 11.8% on the value for the prior-year period of € -76.8 million.
In the 2018 reporting period, the profit for the period amounted to € 129.2 million and was thus on the same level as in the previous year.
| in € million | 3M 2017 | 3M 2018 | Change in % | 12M 2017 |
|---|---|---|---|---|
| Profit for the period | 130.7 | 129.2 | -1.1 | 2,566.9 |
| Financial result* | 83.0 | 83.0 | – | 326.3 |
| Income taxes | 83.0 | 78.2 | -5.8 | 1,440.5 |
| Depreciation and amortization | 7.1 | 9.0 | 26.8 | 372.2 |
| Net income from fair value adjustments of investment properties | – | – | – | -3,434.1 |
| = EBITDA IFRS | 303.8 | 299.4 | -1.4 | 1,271.8 |
| Non-recurring items | 13.9 | 27.9 | 100.7 | 86.9 |
| Total period adjustments from assets held for sale | 1.5 | 4.1 | 173.3 | -10.7 |
| Financial income from investments in other real estate companies | – | – | – | -13.0 |
| = Adjusted EBITDA | 319.2 | 331.4 | 3.8 | 1,335.0 |
| Adjusted EBITDA Sales | -19.1 | -15.7 | -17.8 | -110.8 |
| = Adjusted EBITDA operations | 300.1 | 315.7 | 5.2 | 1,224.2 |
| Interest expense FFO** | -76.8 | -67.7 | -11.8 | -287.5 |
| Current income taxes FFO 1 | -5.1 | -4.4 | -13.7 | -15.9 |
| = FFO 1 | 218.2 | 243.6 | 11.6 | 920.8 |
| Capitalized maintenance | -13.6 | -21.6 | 58.8 | -85.7 |
| = AFFO | 204.6 | 222.0 | 8.5 | 835.1 |
| Current income taxes Sales | -11.0 | -7.4 | -32.7 | -19.2 |
| FFO 2 (FFO 1 incl. adjusted EBITDA Sales/current income taxes Sales) | 226.3 | 251.9 | 11.3 | 1,012.4 |
| FFO 1 per share in €*** | 0.47 | 0.50 | 7.9 | 1.90 |
| AFFO per share in €*** | 0.44 | 0.46 | 4.9 | 1.72 |
* Excluding income from investments
** Incl. financial income from investments in other real estate companies
*** Based on the shares carrying dividend rights on the reporting date Mar. 31, 2017: 468,796,936, Mar. 31, 2018: 485,100,826 and Dec. 31, 2017: 485,100,826
At the end of the first quarter of 2018, the adjusted NAV per share came to € 38.07, up by 22.1% on the value for the first three months of 2017 (€ 31.18) and down by around 1% on the value of € 38.49 seen at the end of
| in € million | Mar. 31, 2017 | Mar. 31, 2018 | Change in % | Dec. 31, 2017 |
|---|---|---|---|---|
| Equity attributable to Vonovia shareholders | 12,706.5 | 15,221.6 | 19.8 | 15,080.8 |
| Deferred taxes on investment properties/assets held for sale | 4,827.4 | 6,643.5 | 37.6 | 6,185.7 |
| Fair value of derivative financial instruments* | 29.0 | 72.5 | 150.0 | 26.9 |
| Deferred taxes on derivative financial instruments | -14.3 | -21.6 | 51.0 | -8.8 |
| EPRA NAV | 17,548.6 | 21,916.0 | 24.9 | 21,284.6 |
| Goodwill | -2,931.8 | -3,448.7 | 17.6 | -2,613.5 |
| Adjusted NAV | 14,616.8 | 18,467.3 | 26.3 | 18,671.1 |
| EPRA NAV per share in €** | 37.43 | 45.18 | 20.7 | 43.88 |
| Adjusted NAV per share in €** | 31.18 | 38.07 | 22.1 | 38.49 |
* Adjusted for effects from cross currency swaps
** Based on the number of shares on the reporting date Mar. 31, 2017: 468,796,936 and Mar. 31, 2018: 485,100,826 on Dec. 31, 2017: 485,100,826
| Dec. 31, 2017 | Mar. 31, 2018 | ||||
|---|---|---|---|---|---|
| in € million | in % | in € million | in % | ||
| Non-current assets | 36,719.6 | 97.9 | 42,316.5 | 95.8 | |
| Current assets | 796.7 | 2.1 | 1,859.7 | 4.2 | |
| Assets | 37,516.3 | 100.0 | 44,176.2 | 100.0 | |
| Equity | 16,691.2 | 44.5 | 16,870.1 | 38.2 | |
| Non-current liabilities | 18,585.2 | 49.5 | 24,144.3 | 54.6 | |
| Current liabilities | 2,239.9 | 6.0 | 3,161.8 | 7.2 | |
| Equity and liabilities | 37,516.3 | 100.0 | 44,176.2 | 100.0 |
The Group's total assets increased by € 6,659.9 million from € 37,516.3 million as of December 31, 2017, to € 44,176.2 million, mainly due to an increase in investment properties of € 4,678.0 million to € 37,860.8 million, with € 4,555.2 million resulting from the integration of the BUWOG Group. In addition, assets rose on the back of an increase in goodwill of € 835.2 million due to the first-time consolidation of the BUWOG Group.
Current assets increased mainly due to an increase in cash and cash equivalents in the amount of € 563.1 million (of which € 327.6 million was attributable to the firsttime consolidation of the BUWOG Group). In addition, € 486.1 million in other current assets of the BUWOG Group have been included for the first time.
The gross asset value (GAV) of Vonovia's property assets came to € 38,474.3 million as of March 31, 2018, which corresponds to 87.1% of total assets compared with € 33,424.9 million or 89.1% at the end of 2017.
The € 178.9 million increase in equity to € 16,870.1 million is mainly due to the results for the first three months in an amount of € 129.2 million as well as the inclusion of € 24.8 million in minority interests from the BUWOG Group.
This brings the equity ratio to 38.2% compared with 44.5% at the end of 2017.
Non-current liabilities increased overall compared with the end of 2017 to € 5,559.1 million, mainly as a result of the increase in the non-derivative financial liabilities by € 5,111.6 million. Of this total, € 3.1 billion was attributable to new borrowing under the EMTN program and € 1.8 billion was due to the first-time inclusion of the BUWOG Group.
The increase in current liabilities by March 31, 2018, was significantly influenced by the inclusion of the tender rights of the outstanding BUWOG shareholders/holders of convertible bonds in an amount of € 831.4 million, which are included in the consideration transferred as a put option.
The following table shows the Group cash flow:
| in € million | 3M 2017 | 3M 2018 |
|---|---|---|
| Cash flow from operating activities |
241.9 | 262.7 |
| Cash flow from investing activities |
-773.2 | -2,500.3 |
| Cash flow from financing activities |
-1.6 | 2,800.7 |
| Net changes in cash and cash equivalents |
-532.9 | 563.1 |
| Cash and cash equivalents at the beginning of the period |
1,540.8 | 266.2 |
| Cash and cash equivalents at the end of the period |
1,007.9 | 829.3 |
The cash flow from operating activities comes to € 262.7 million for the previous three months, compared with € 241.9 million for the same period in 2017. The increase is mainly due to the improvement in the adjusted EBITDA Operations.
The cash flow from investing activities shows a payout balance of € 2,500.3 million for the first quarter of 2018, mainly due to net payments as part of the takeover of the BUWOG Group in the amount of € 2,447.4 million. The payouts for acquisitions and modernization of the real estate portfolio came to € 156.7 million, whereas income from portfolio sales in the amount of € 119.6 million was collected.
The cash flow from financing activities is characterized by the financing measures taken in the first three months of 2018. The proceeds result primarily from EMTN drawdowns in connection with the takeover of the BUWOG Group in a total amount of € 3,100.0 million. On the other hand, payouts were made through scheduled and unscheduled repayments in the amount of € -278.0 million. The total amount also includes transaction and financing costs of € 39.2 million and interest payments of € 42.0 million.
The net increase in cash and cash equivalents in the first quarter of 2018 came to € 563.1 million.
Vonovia's credit rating as awarded by the agency Standard & Poor's is unchanged at BBB+ with a stable outlook for the long-term corporate credit rating and
A-2 for the short-term corporate credit rating. At the same time, the credit rating for the issued and unsecured bonds is BBB+.
The debt maturity profile of Vonovia's financing was as follows as of March 31, 2018:
as of March 31, 2018, in € million
The LTV (loan to value) is as follows as of the end of the quarter:
| in € million | Mar. 31, 2017 | Mar. 31, 2018 | Change in % | Dec. 31, 2017 |
|---|---|---|---|---|
| Non-derivative financial liabilities | 14,435.3 | 18,887.0 | 30.8 | 14,060.5 |
| Foreign exchange rate effects | -194.8 | -17.8 | -90.9 | -23.5 |
| Cash and cash equivalents | -1.007.9 | -829.3 | -17.7 | -266.2 |
| Net debt | 13,232.6 | 18,039.9 | 36.3 | 13,770.8 |
| Sales receivables/advance payments from sales | -144.4 | -232.4 | 60.9 | -201.2 |
| Additional purchase price for outstanding acquisitions* | 275.0 | – | 100.0 | – |
| Adjusted net debt | 13,363.2 | 17,807.5 | 33.3 | 13,569.6 |
| Fair value of the real estate portfolio | 29,607.6 | 38,485.6 | 30.0 | 33,436.3 |
| Shares in other real estate companies | 520.4 | 666.6 | 28.1 | 642.2 |
| Adjusted fair value of the real estate portfolio | 30,128.0 | 39,152.2 | 30.0 | 34,078.5 |
| LTV | 44.4% | 45.5% | 1.1 pp | 39.8% |
* Funds held for the payment of cash component by second conwert acceptance deadline
The financial covenants have been fulfilled as of the reporting date.
| in € million | Mar. 31, 2017 | Mar. 31, 2018 | Change in % | Dec. 31, 2017 |
|---|---|---|---|---|
| Non-derivative financial liabilities | 14,435.3 | 18,887.0 | 30.8 | 14,060.5 |
| Total assets | 34,848.1 | 44,176.2 | 26.8 | 37,516.3 |
| LTV bond covenants | 41.4% | 42.8% | 1.3 pp | 37.5% |
After a marked increase in gross domestic product (GDP) of 2.2% in 2017, macroeconomic production is expected to accelerate further, according to the Kiel Institute for the World Economy (IfW). In 2018, GDP is expected to grow by 2.5%, with growth of 2.3% predicted for 2019. The German federal government forecast an increase in GDP (price adjusted) of 2.3% in 2018 and 2.1% in 2019 in their spring projection. As reported by IfW, the German economy is drifting into a boom phase, with capacities already noticeably above normal utilization levels. Bottlenecks are starting to become evident in the construction industry in particular, where companies would appear to be virtually unable to process their incoming orders. As a result, economic researchers at the IfW expect construction activity only to increase at a subdued rate in the first instance given the extremely stimulating overall conditions and the marked increase in construction prices. Corporate investment is expected to pick up considerably, because more and more companies see themselves obliged to increase their capacities due to the increasing production capacity utilization rate. Foreign trade will expand at a brisk rate, albeit at a slightly slower pace. While employment is expected to continue to increase considerably for the time being, companies are finding it increasingly difficult to find suitable staff, which will result in an accelerated increase in actual earnings. As a result, the IfW predicts strong growth in gross wages and salaries, which will stimulate private consumption. Private consumption will be stimulated further by tax cuts and benefit increases implemented by the new German federal government. Unemployment will continue to drop. The unemployment rate is expected to drop back from 5.7% in 2017 to 5.2% in 2018 and 4.8% in 2019. The IfW in Kiel also expects to see an upward trend in consumer price inflation, with inflation rates of 1.7% in 2018 and 2.0% in 2019,
as well as substantial public-sector budget surpluses due to the economic situation. The IfW's monetary policy outlook remains unchanged. With only a gradual increase in interest rates, the financing environment is barely likely to become overcast, and fiscal policy will remain slightly expansionary in 2018.
The possible escalation of trade conflicts, for example, could pose a risk to the forecast. The protectionist measures taken by the United States could put a strain on the global economy and, as a result, on the German economy as well. There is also uncertainty surrounding the increasingly difficult monetary policy balancing act in the eurozone. Turbulence in the financial markets in connection with the imminent monetary policy normalization poses a significant risk to the forecast for the global economy. The difficulties involved in interpreting the current cyclical pattern create uncertainty as far as the forecast for the domestic economy is concerned. The current boom phase got off to an unusually slow start, with only a gradual increase in capacity utilization. In addition, it is not certain, from the IfW's perspective, that the construction industry will manage to overcome the capacity bottlenecks.
The upward trend on the real estate market has reached a "mature" phase, according to experts at Helaba Landesbank Hessen-Thüringen. The overall conditions will remain positive in 2018 and the prices for German residential real estate will continue to rise in 2018, since the factors driving the upswing are unlikely to change to any considerable degree. The real estate market will be characterized by ongoing high demand. The population will continue to grow, albeit at a slower pace than in the exceptional year of 2015, and domestic migration to the country's major metropolitan areas is tipped to continue. The supply of property available will grow at a moderate rate at best and, despite a slight increase
in mortgage rates, the financing conditions will remain very favorable, according to the Helaba experts. In CBRE's opinion, the housing markets in the metropolitan regions and prosperous university cities will remain tense in spite of the recent rise in construction activity. Given that there are hardly any vacancies in marketable multi-story residential buildings, this is pushing up rents and purchase prices in the influx regions. In view of the strong growth in house and apartment prices in 2017, Deutsche Bank Research expects to see slightly lower purchase price and rent momentum at best in 2018. In its view, demand will be curbed by the high prices, which are likely to force some potential buyers out of the market, as well as by higher capital market interest rates and, as a result, slightly higher mortgage rates. According to Deutsche Bank Research, residential property ownership remains affordable, although nationwide affordability fell slightly in 2017 and is expected to drop slightly in 2018 as well. There are also pronounced regional differences as far as affordability is concerned.
The empirica bubble index surpassed the "zero threshold" for the first time in 13 years in the third quarter of 2017, as against the "bubble-free" reference year of 2004. As of the fourth quarter of 2017, the overall index is stagnating in growth regions and is increasing slightly in shrinking regions. Rents and purchase prices in 247 out of 402 administrative districts and self-governing cities are no longer developing in tandem. According to empirica, too many apartments are being built in 17 districts. The bubble index indicates a medium to high risk for 199 districts. Nearly half of the economists surveyed for the economics barometer of the "€uro am Sonntag" newspaper and the news channel n-tv believe that real estate prices in Germany will increase by at least 5% over the next five years, with 13% even expecting an increase of more than 15%. The situation is particularly expected to escalate in metropolitan areas. The majority of the experts surveyed, however, believe that there is clear evidence of excessively high prices for residential real estate in Germany. Only one in every eight respondents expect prices in the top 7 cities to fall. They believe that the solution to the difficult housing situation lies in moves to increase the amount of land approved for construction and simplifying building regulations.
The overarching housing policy objective of the new German federal government is the construction of 1.5 million homes or an annual average of 375,000 units. The rent ceiling is to have been evaluated in terms of its suitability and effectiveness by the end of the year, and experts from Helaba have not ruled out more stringent regulations, e.g., an obligation to disclose the previous rent level. The rent ceiling, which was only introduced a few years ago, is in place in more than 300 municipalities in twelve federal states.
Driven by the widespread global economic upswing, the economy in Austria is likely to continue to report strong growth, according to the Institute for Advanced Studies (IHS). After the Austrian economy expanded by 2.9% in the previous year, experts from the IHS expect to see growth of 2.8% and 1.9% for 2018 and 2019 respectively. As part of its 2018 winter forecast, the European Commission expects to see robust growth for Austria's economy of 2.9% and 2.3% for 2018 and 2019 respectively. According to the IHS, the upswing is being supported by exports and private consumption, while investment activity has slowed down markedly. The vibrant economy still offers good conditions for a sustainable budget strategy and urgently needed structural reforms. The strong economic upswing has fueled the demand for employment, meaning that the unemployment rate fell last year – for the first time since 2011. Based on the national definition, the unemployment rate is expected to drop from 8.5% in 2017 to 7.8% in 2018 and 7.7% in 2019. The IHS expects to see an inflation rate of 2.1% in 2018, on par with the previous year. It also expects a virtually unchanged inflation rate of 2.2% for 2019.
According to the OeNB, the residential construction segment overcame a prolonged period of weakness in 2017, and the strong momentum in granting building permits points toward a further acceleration. According to CBRE, the dynamic population growth in Austria's metropolitan areas and the diminishing availability of land approved for construction will reinforce the trend towards more concentrated residential construction in the form of residential high-rise buildings. According to the RE/MAX Real Estate Future Index – which consolidates the expert opinions of around 560 real estate professionals throughout Austria – demand on the real estate market is expected to increase at a much faster rate than the supply in 2018. The prices for residential real estate are expected to continue to increase slightly in 2018. Purchase prices for apartments will show a more pronounced increase than rents. According to the real estate service provider EHL, the marked increase in new construction activity in Vienna is helping to stabilize the price level, which is therefore expected to remain consistently stable over the next few years. In 2018, rent in Vienna is expected to increase by around 1.5%, with purchase prices for properties in average locations expected to rise by between around 2.75% and 3%. The fundamental price indicator of the OeNB for residential real estate shows a slight reduction in a possible overvaluation for Vienna in the fourth quarter of 2017 compared with the previous quarter. For Austria as a whole, the value in the fourth quarter was also down on the level seen in the previous quarter – albeit only slightly.
The first three months of the 2018 fiscal year were very successful for Vonovia on the whole. We were systematic in the implementation of our corporate strategy: the expansion of our investment program, the further improvements to efficiency when managing our properties and the expansion of the Value-add Business. Bolstered by the acquisition of BUWOG, we have further expanded our leading market position.
We expect these positive business developments to continue in the 2018 fiscal year and that we will achieve our forecast figures. Given the dynamic development of the German real estate market, we expect to see a further increase in value in our investment properties and with this a further boost to NAV.
Our current forecast is based on the outlook for the entire Vonovia Group (excluding BUWOG), which includes the original overall plans for the 2018 fiscal year, as well as current business developments and possible opportunities and risks.
Beyond this, the Group's further development remains exposed to general opportunities and risks. These have been described in detail in the chapter on opportunities and risks in the Group management report of the 2017 Annual Report. The forecast was based on the accounting principles used in the annual financial statements, with the adjustments described elsewhere in the management report being made.
We update our forecast of the main performance indicators for the 2018 fiscal year without BUWOG as follows:
| Actual 2017 | Forecast for 2018* | Current Forecast for 2018 Interim Statement Q1 2018 |
|
|---|---|---|---|
| Adjusted EPRA NAV/share | € 38.49 | suspended | suspended |
| EPRA NAV/share | € 43.88 | suspended | suspended |
| FFO 1 | € 920.8 million | € 960–980 million | € 1,000–1,020 million |
| FFO 1/share** | € 1.90 | € 1.98–2.02 | € 2.06–2.10 |
| CSI | Increase of 1.6% | Similar CSI as 2017 | Similar CSI as 2017 |
| Rental income | € 1,667.9 million | € 1,660–1,680 million | € 1,670–1,690 million |
| Organic rent increase | 4.2% | Increase of 4.6–4.8% | Increase of 4.6–4.8% |
| Vacancy rate | 2.5% | < 2.5% | < 2.5% |
| Maintenance incl.capitalized maintenance | € 346.2 million | approx. € 360 million | approx. € 360 million |
| Modernization and new construction | € 778.6 million | approx. € 1,000 million | approx. € 1,000 million |
| Number of units sold Privatize | 2,608 | approx. 2,300 | approx. 2,300 |
| Step-up Privatize | 32.6% | approx. 30% | approx. 30% |
| Number of units sold Sell portfolio | 9,172 | Continue opportunistic sales |
Continue opportunistic sales |
| Step-up Sell portfolio | 7.9% | > 0% | approx. 5% |
* According to the Group management report 2017, excl. BUWOG
** Based on the current number of shares of 485,100,826
Bochum, Germany, April 24, 2018
Management Board
| 024 | Consolidated Income Statement |
|---|---|
| 025 | Consolidated Statement of Comprehensive Income |
| 026 | Consolidated Balance Sheet |
| 028 | Consolidated Statement of Cash Flows |
| in € million | Jan. 1 – Mar. 31, 2017 |
Jan. 1 – Mar. 31, 2018 |
|---|---|---|
| Income from property letting | 586.7 | 589.3 |
| Other income from property management | 10.0 | 10.7 |
| Income from property management | 596.7 | 600.0 |
| Income from disposal of properties | 492.2 | 114.0 |
| Carrying amount of properties sold | -476.7 | -105.8 |
| Revaluation of assets held for sale | 9.4 | 8.7 |
| Profit on disposal of properties | 24.9 | 16.9 |
| Net income from fair value adjustments of investment properties | – | – |
| Capitalized internal expenses | 85.4 | 105.6 |
| Cost of materials | -274.3 | -280.2 |
| Personnel expenses | -102.0 | -111.8 |
| Depreciation and amortization | -7.1 | -9.0 |
| Other operating income | 26.5 | 24.3 |
| Other operating expenses | -59.7 | -63.0 |
| Financial income | 7.3 | 9.6 |
| Financial expenses | -84.0 | -85.0 |
| Earnings before tax | 213.7 | 207.4 |
| Income taxes | -83.0 | -78.2 |
| Profit for the period | 130.7 | 129.2 |
| Attributable to: | ||
| Vonovia's shareholders | 116.6 | 116.2 |
| Vonovia's hybrid capital investors | 7.4 | 7.4 |
| Non-controlling interests | 6.7 | 5.6 |
| Earnings per share (basic and diluted) in € | 0.25 | 0.24 |
| in € million | Jan. 1 – Mar. 31, 2017 |
Jan. 1 – Mar. 31, 2018 |
|---|---|---|
| Profit for the period | 130.7 | 129.2 |
| Cash flow hedges | ||
| Change in unrealized gains/losses | -0.5 | -9.1 |
| Taxes on the change in unrealized gains/losses | 1.0 | 3.7 |
| Net realized gains/losses | 17.7 | 8.6 |
| Taxes on the change in net realized gains/losses | -5.9 | -2.8 |
| Total | 12.3 | 0.4 |
| Equity instruments at fair value in other comprehensive income | ||
| Changes in the period | 17.3 | – |
| Taxes on changes in the period | -0.3 | – |
| Total | 17.0 | – |
| Items which will be recognized in profit or loss in the future | 29.3 | 0.4 |
| Equity instruments at fair value in other comprehensive income | ||
| Changes in the period | – | 24.3 |
| Taxes on changes in the period | – | -0.2 |
| Total | – | 24.1 |
| Actuarial gains and losses from pensions and similar obligations | ||
| Change in actuarial gains/losses, net | 4.0 | – |
| Tax effect | -1.3 | – |
| Total | 2.7 | – |
| Items which will not be recognized in profit or loss in the future | 2.7 | 24.1 |
| Other comprehensive income | 32.0 | 24.5 |
| Total comprehensive income | 162.7 | 153.7 |
| Attributable to: | ||
| Vonovia's shareholders | 148.6 | 140.7 |
| Vonovia's hybrid capital investors | 7.4 | 7.4 |
| Non-controlling interests | 6.7 | 5.6 |
| in € million | Dec. 31, 2017 | Mar. 31, 2018 | |
|---|---|---|---|
| Intangible assets | 2,637.1 | 3,479.9 | |
| Property, plant and equipment | 177.6 | 209.7 | |
| Investment properties | 33,182.8 | 37,860.8 | |
| Financial assets | 698.0 | 733.9 | |
| Other assets | 13.8 | 21.9 | |
| Deferred tax assets | 10.3 | 10.3 | |
| Total non-current assets | 36,719.6 | 42,316.5 | |
| Inventories | 6.2 | 6.5 | |
| Trade receivables | 234.9 | 377.8 | |
| Financial assets | 0.5 | 12.7 | |
| Other assets | 98.4 | 210.6 | |
| Income tax receivables | 47.9 | 41.9 | |
| Cash and cash equivalents | 266.2 | 829.3 | |
| Real estate inventories | – | 300.2 | |
| Assets held for sale | 142.6 | 80.7 | |
| Total current assets | 796.7 | 1,859.7 |
Total assets 37,516.3 44,176.2
| in € million | Dec. 31, 2017 | Mar. 31, 2018 |
|---|---|---|
| Subscribed capital | 485.1 | 485.1 |
| Capital reserves | 5,966.3 | 5,966.3 |
| Retained earnings | 8,471.6 | 8,587.9 |
| Other reserves | 157.8 | 182.3 |
| Total equity attributable to Vonovia's shareholders | 15,080.8 | 15,221.6 |
| Equity attributable to hybrid capital investors | 1,001.6 | 1,011.5 |
| Total equity attributable to Vonovia's shareholders and hybrid capital investors | 16,082.4 | 16,233.1 |
| Non-controlling interests | 608.8 | 637.0 |
| Total equity | 16,691.2 | 16,870.1 |
| Provisions | 607.2 | 612.4 |
| Trade payables | 2.4 | 0.8 |
| Non-derivative financial liabilities | 12,459.4 | 17,571.0 |
| Derivatives | 8.7 | 59.2 |
| Liabilities from finance leases | 94.7 | 94.6 |
| Liabilities to non-controlling interests | 24.9 | 31.5 |
| Financial liabilities from tenant financing | – | 35.3 |
| Other liabilities | 65.3 | 49.9 |
| Deferred tax liabilities | 5,322.6 | 5,689.6 |
| Total non-current liabilities | 18,585.2 | 24,144.3 |
| Provisions | 376.5 | 408.8 |
| Trade payables | 130.7 | 176.1 |
| Non-derivative financial liabilities | 1,601.1 | 1,316.0 |
| Derivatives | 4.4 | 865.6 |
| Liabilities from finance leases | 4.6 | 4.7 |
| Liabilities to non-controlling interests | 9.0 | 7.0 |
| Financial liabilities from tenant financing | 7.7 | 116.9 |
| Other liabilities | 105.9 | 266.7 |
| Total current liabilities | 2,239.9 | 3,161.8 |
| Total liabilities | 20,825.1 | 27,306.1 |
| Total equity and liabilities | 37,516.3 | 44,176.2 |
| in € million | Jan. 1 – Mar. 31, 2017 |
Jan. 1 – Mar. 31, 2018 |
|---|---|---|
| Profit for the period | 130.7 | 129.2 |
| Revaluation of assets held for sale | -9.4 | -8.7 |
| Depreciation and amortization | 7.1 | 9.0 |
| Interest expenses/income | 83.0 | 83.0 |
| Income taxes | 83.0 | 78.2 |
| Results from disposals of investment properties | -15.5 | -8.2 |
| Results from disposals of other non-current assets | – | 0.1 |
| Other expenses/income not affecting net income | 1.3 | -0.4 |
| Change in working capital | -23.9 | -11.3 |
| Income tax paid | -14.4 | -8.2 |
| Cash flow from operating activities | 241.9 | 262.7 |
| Proceeds from disposals of investment properties and assets held for sale | 513.2 | 119.6 |
| Proceeds from disposals of other assets | 0.5 | 2.7 |
| Payments for acquisition of investment properties | -131.8 | -156.7 |
| Payments for acquisition of other assets | -19.4 | -21.7 |
| Payments for acquisition of shares in consolidated companies, in due consideration of liquid funds |
-1,137.9 | -2,447.4 |
| Interest received | 2.2 | 3.2 |
| Cash flow from investing activities | -773.2 | -2,500.3 |
| Cash paid to non-controlling interests | -4.6 | -4.2 |
| Proceeds from issuing financial liabilities | 1,041.8 | 3,167.8 |
| Cash repayments of financial liabilities | -1,172.0 | -278.0 |
| Payments for transaction costs in relating to capital measures | -8.7 | -37.5 |
| Payments for other financing costs | -31.8 | -1.7 |
| Payments for the acquisition of shares in non-controlling interests | -3.9 | -3.7 |
| Proceeds for the sale of shares of consolidated companies | 249.8 | – |
| Interest paid | -72.2 | -42.0 |
| Cash flow from financing activities | -1.6 | 2,800.7 |
| Net changes in cash and cash equivalents | -532.9 | 563.1 |
| Cash and cash equivalents at the beginning of the period | 1,540.8 | 266.2 |
| Cash and cash equivalents at the end of the period1) | 1,007.9 | 829.3 |
1) Thereof restricted cash € 98.8 million (Mar. 31, 2017: € 52.7 million)
Vonovia manages its own real estate portfolio with a fair value of € 38.5 billion as of March 31, 2018. The vast majority of our apartments are located in regions with positive economic and demographic development prospects.
| Portfolio Structure | |||||
|---|---|---|---|---|---|
| Fair value* | In-place rent | ||||
| Mar. 31, 2018 | (in € million) | (in €/m²) | Residential units | Vacancy (in %) | (in €/m²) |
| Strategic | 32.988.6 | 1,488 | 346,410 | 2.5 | 6.36 |
| Operate | 12.642.0 | 1,472 | 129,129 | 2.5 | 6.47 |
| Invest | 20.346.6 | 1,499 | 217,281 | 2.5 | 6.29 |
| Privatize | 1.464.5 | 1,532 | 13,590 | 4.0 | 6.18 |
| Sell | 488.3 | 712 | 10,260 | 9.0 | 4.97 |
| Vonovia Germany | 34.941.4 | 1,468 | 370,260 | 2.7 | 6.31 |
| Vonovia Austria | 2.471.4 | 1,292 | 23,379 | 4.5 | 4.40 |
| Total | 37.412.8 | 1,455 | 393,639 | 2.8 | 6.18 |
| Fair value* | In-place rent | ||||
|---|---|---|---|---|---|
| Mar. 31, 2018 | (in € million) | (in €/m²) | Residential units | Vacancy (in %) | (in €/m²) |
| Regional market** | |||||
| Berlin | 5,938.8 | 2,046 | 43,997 | 1.9 | 6.40 |
| Rhine Main Area | 3,534.3 | 1,953 | 27,900 | 1.5 | 7.76 |
| Rhineland | 3,250.3 | 1,587 | 29,727 | 2.8 | 6.87 |
| Southern Ruhr Area | 2,911.5 | 1,062 | 43,881 | 3.3 | 5.71 |
| Dresden | 2,892.2 | 1,237 | 38,568 | 2.7 | 5.84 |
| Hamburg | 2,222.0 | 1,713 | 19,823 | 1.6 | 6.75 |
| Munich | 1,819.3 | 2,774 | 9,695 | 1.2 | 7.80 |
| Stuttgart | 1,742.3 | 1,896 | 14,128 | 1.7 | 7.59 |
| Kiel | 1,740.7 | 1,239 | 23,391 | 2.1 | 5.94 |
| Northern Ruhr Area | 1,425.8 | 862 | 26,449 | 3.6 | 5.44 |
| Hanover | 1,423.9 | 1,375 | 16,129 | 2.7 | 6.25 |
| Bremen | 918.9 | 1,237 | 11,905 | 3.2 | 5.47 |
| Leipzig | 765.1 | 1,233 | 9,168 | 4.5 | 5.79 |
| Westphalia | 673.3 | 1,085 | 9,471 | 2.4 | 5.72 |
| Freiburg | 546.4 | 1,955 | 4,046 | 1.4 | 7.07 |
| Other strategic locations | 2,493.1 | 1,294 | 29,857 | 2.9 | 6.24 |
| Total strategic locations Germany | 34,298.0 | 1,491 | 358,135 | 2.5 | 6.35 |
| Austria | 2,471.4 | 1,292 | 23,379 | 4.5 | 4.40 |
* Fair value of the developed land excluding € 1,072.8 million, of which € 391.4 million for undeveloped land and inheritable building rights granted, € 203.9 million for assets under
construction, € 404.6 million for development and € 72.9 million for other.
** With regard to the residential real estate market, regional markets are largely similar metropolitan areas based on the definition of the German Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR). In addition to the strategic housing stock, they also include stocks for privatization in strategic locations.
Philippstrasse 3 44803 Bochum Phone +49 234 314-0 Fax +49 234 314-1314 [email protected] www.vonovia.de
Klaus Markus Head of Corporate Communications Phone +49 234 314-1149 Fax +49 234 314-1309 Email: [email protected]
Rene Hoffmann Head of Investor Relations Phone +49 234 314-1629 Fax +49 234 314-2995 Email: [email protected]
May 3, 2018 Publication of Interim Statement January–March 2018
May 9, 2018 Annual General Meeting
August 31, 2018 Publication of Interim Report January–June 2018
December 6, 2018 Publication of Interim Statement January–September 2018
This interim statement is published in German and English. The German version is always the authoritative text. The interim statement can be found on the website at www.vonovia.de.
EPRA is a registered trademark of the European Public Real Estate Association.
This interim statement contains forward-looking statements. These statements are based on current experience, assumptions and forecasts of the Management Board as well as information currently available to the Management Board. The forward-looking statements are not guarantees of the future developments and results mentioned therein. The future developments and results depend on a large number of factors. They involve certain risks and uncertainties and are based on assumptions that may prove to be inaccurate. These risk factors include but are not limited to those discussed in the risk report of the 2017 Annual Report. We do not assume any obligation to update the forward-looking statements contained in this interim statement. This interim statement does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any securities of Vonovia SE.
Published by: The Management Board of Vonovia SE
Concept and Realization: Berichtsmanufaktur GmbH, Hamburg
Translation: EnglishBusiness AG, Hamburg
As of: May 2018 © Vonovia SE, Bochum
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