Quarterly Report • May 24, 2017
Quarterly Report
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| Key Financial Figures in € million | 3M 2017 | 3M 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Rental income | 417.2 | 392.0 | 6.4 | 1,538.1 |
| Adjusted EBITDA Operations | 300.1 | 276.1 | 8.7 | 1,094.0 |
| Adjusted EBITDA Rental | 285.6 | 269.0 | 6.2 | 1,046.2 |
| Adjusted EBITDA Extension | 19.8 | 7.6 | 160.5 | 57.0 |
| Adjusted EBITDA Other | -5.3 | -0.5 | 960.0 | -9.2 |
| Income from disposal of properties | 492.2 | 690.5 | -28.7 | 1,227.9 |
| Adjusted EBITDA Sales | 19.1 | 35.0 | -45.4 | 92.5 |
| Adjusted EBITDA | 319.2 | 311.1 | 2.6 | 1,186.5 |
| EBITDA IFRS | 303.8 | 257.7 | 17.9 | 1,083.7 |
| FFO 1 | 218.2 | 186.3 | 17.1 | 760.8 |
| thereof attributable to Vonovia shareholders | 206.2 | 173.3 | 19.0 | 713.4 |
| thereof attributable to Vonovia hybrid capital investors | 10.0 | 10.0 | – | 40.0 |
| thereof attributable to non-controlling interests | 2.0 | 3.0 | -33.3 | 7.4 |
| FFO 2 | 226.3 | 195.1 | 16.0 | 823.8 |
| AFFO | 204.6 | 171.7 | 19.2 | 689.2 |
| FFO 1 per share in € | 0.47 | 0.40 | 17.5 | 1.63 |
| Income from fair value adjustments of investment properties | - | – | – | 3,236.1 |
| EBT | 213.7 | 122.0 | 75.2 | 3,859.8 |
| Profit for the period | 130.7 | 79.2 | 65.0 | 2,512.9 |
| Cash flow from operating activities | 241.9 | 227.5 | 6.3 | 828.9 |
| Cash flow from investing activities | -773.2 | 258.0 | – | 416.4 |
| Cash flow from financing activities | -1.6 | -447.2 | -99.6 | -2,812.4 |
| Maintenance and modernization | 191.4 | 125.4 | 52.6 | 792.4 |
| thereof for maintenance expenses and capitalized maintenance | 77.2 | 73.5 | 5.0 | 320.1 |
| thereof for modernization (incl. new construction) | 114.2 | 51.9 | 120.0 | 472.3 |
| Key Balance Sheet Figures in € million | Mar. 31, 2017 | Mar. 31, 2016 | Change in % | 2016 |
| Fair value of the real estate portfolio | 29,607.6 | 23,814.4 | 24.3 | 27,115.6 |
| Adjusted NAV | 14,616.8 | 11,331.6 | 29.0 | Dec. 31, 14,328.2 |
| Adjusted NAV per share in € | 31.18 | 24.32 | 28.2 | 30.75 |
| LTV in % | 44.4 | 45.8 | -1.4 pp | 41.6 |
| Non-Financial Key Figures | 3M 2017 | 3M 2016 | Change in % | 12M 2016 |
| Number of units managed | 421,199 | 398,331 | 5.7 | 392,350 |
| thereof own apartments | 355,525 | 343,967 | 3.4 | 333,381 |
| thereof apartments owned by others | 65,674 | 54,364 | 20.8 | 58,969 |
| Number of units bought | 23,745 | 2,417 | 882.4 | 2,815 |
| Number of units sold | 1,692 | 15,551 | -89.1 | 26,631 |
| thereof Privatize | 535 | 890 | -39.9 | 2,701 |
| thereof Non-Core | 1,157 | 14,661 | -92.1 | 23,930 |
| Vacancy rate in % | 2.7 | 2.8 | -0.1 pp | 2.4 |
| Monthly in-place rent in €/m² | 6.06 | 5.84 | 3.8 | 6.02 |
| Organic rent increase in % Number of employees (as at Mar. 31/Dec. 31) |
3.4 8,114 |
2.9 6,683 |
0.5 pp 21,4 |
3.3 7,437 |
| Dec. 31, | ||||
| EPRA Key Figures in € million EPRA NAV |
Mar. 31, 2017 17,548.6 |
Mar. 31, 2016 14,048.2 |
Change in % 24.9 |
2016 17,047.1 |
A very successful start to the 2017 fiscal year reaffirmed Vonovia's corporate strategy. The takeover and integration of conwert led to a further expansion of our real estate portfolio and a further rise in the value of the company. Strong organic rent growth of 3.4 % and the first-time inclusion of conwert enabled us to increase our operating result further. This performance is reflected in the year-over-year rise of 17.1 % in the FFO 1.
Our planned investment drive to modernize and expand our housing stock was successfully launched in the first quarter of 2017. This further substantiates our position of maintaining our own craftsmen's organization. The positive developments at the start of the year have enabled us to raise our FFO 1 forecast for 2017 to € 900–920 million.
Net Assets Increase due to Profit for the Period and Inclusion of conwert
in € million
Growth in Property Assets following Inclusion of conwert
in € million
The attractive risk/return profile offered by housing companies listed on the German stock market in general and the positive business development at Vonovia in particular resulted in sustained demand for shares in Vonovia in the first quarter of 2017. In the first three months of 2017, Vonovia's share price rose by 6.9 % as against the closing price seen on December 31, 2016,
to € 33.03. The DAX showed similarly strong development during the same period, climbing by 7.25 % to 12,312.87 points. By contrast, the EPRA Europe rose by only 0.5 % to 1,711.95 points.
Vonovia's market capitalization amounted to around € 15.5 billion as of March 31, 2017.
(as of March 31, 2017)
In order to provide information to interested members of the financial community, the Investor Relations team once again organized and carried out numerous property tours for interested investors and analysts on location with colleagues from the operational areas of the company.
We will continue to communicate openly with the capital market as this year progresses. Various roadshows and conferences, as well as our Capital Markets Day, have already been planned. Information can be found in the Financial Calendar on our Investor Relations website. http://investors.vonovia.de
Based on the German stock exchange's definition of free float, only the interest held by Norges Bank (Norwegian Ministry of Finance) does not count towards the free float. This means that 92.4 % of Vonovia's shares were in free float on March 31, 2017.
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 quarter of 2017, communication with investors focused on the following issues, in particular: property valuation, the investment program, innovative property management, the immunity of Vonovia SE's business model to macroeconomic fluctuations, the importance of acquisitions and organic growth, and the takeover of conwert.
As of March 31, 2017, 30 national and international analysts were publishing studies on Vonovia. The average target share price was € 36.10, with 55 % of analysts issuing a "buy" recommendation and 38 % issuing a "hold" recommendation. Only 7 % issued a "sell" recommendation for Vonovia's shares.
As part of the conwert takeover offer, 93.09 % of the shares were tendered for exchange. 87.57 % of conwert's shareholders accepted the cash exchange offer, with 5.52 % accepting the stock exchange offer.
According to the Kiel Institute for the World Economy (IfW), the German economy made another strong start to the year with a great deal of momentum in 2017. Based on the current data, the slowdown that had started to emerge in the middle of last year is no longer visible. According to the German Federal Ministry of Economic Affairs and Energy (BMWi), production in the manufacturing sector was increased considerably at the start of the year. The order situation also remains positive. Despite a slight dip in construction activity at the turn of the year, the overall conditions point towards a sustained dynamic construction sector. The upswing also continued in other areas of the economy, particularly in the majority of service sectors, meaning that economic output was up by 0.6 % in the first quarter of this year after expanding by 0.4 % in the closing quarter of last year. What is more, the ifo business climate index is currently showing the most positive value seen since July 2011. Nevertheless, the geopolitical risks remain relatively high. In particular, the conflicts in the Middle East and the associated tension within Europe in matters relating to refugee policy could have an impact on the economic climate. Aside from this, major eurozone economies are facing upcoming elections that could potentially have a significant impact on overall economic development. The monetary policy pursued by the European Central Bank (ECB) remains extremely expansive, with key interest rates still sitting at an alltime low of 0.0 %.
The labor market remains on a positive trajectory: according to the Federal Statistical Office (Statistisches Bundesamt), the number of people in work in February 2017 was up by 608,000 year-on-year. The German Federal Employment Agency (Bundesagentur für Arbeit) published an unemployment rate of 6.0 % for March 2017. This is down by 0.5 percentage points compared with the previous year.
Consumer price performance has been picking up again ever so slightly since the end of last year. In January 2017, the rate of inflation – based on the consumer price index – came to 1.9 %, with the trend continuously being shaped by price developments in the energy sector.
Quoted rents in Germany remained on an upward trend at the beginning of 2017. According to IMX, the price index of the real estate portal lmmobilien-Scout24, rents rose by 0.4 percentage points between December 2016 and January 2017 and by 0.5 percentage points between January 2017 and February 2017. The increase in the quoted prices for owner-occupied apartments was once again much more pronounced than the increase in rents. According to IMX, the prices for existing owner-occupied apartments increased by 1.8 percentage points month-on-month in January and 1.9 percentage points in February. The price index for newly built apartments rose by 1.6 percentage points and 1.1 percentage points during the same periods. This means that, looking at Germany as a whole, there are no signs of the market potentially settling down, as had been previously discussed.
According to ImmobilienScout24, price developments for newly built owner-occupied apartments slowed in the course of last year in certain major cities. This indicates that price growth is reaching its limits in some cases. According to Deutsche Bundesbank, the increasing supply growth in 2016 is not sufficient to restrict the price pressure created by the sustained high demand for living space. Deutsche Bundesbank believes that the price of residential property ownership in cities is likely to have moved even further away from the level based on economic and demographic factors. The experts believe that only part of the additional momentum can be explained by the further reduction in financing costs. F+B Forschung und Beratung für Wohnen, Immobilien und Umwelt GmbH reports that the prices of apartments offered on real estate portals have been developing in line with the increase in new contract rents for some time now.
In the first quarter of 2017, residential building bundles and residential developments of 50 units or more accounted for a total transaction volume of around € 3.2 billion on the German residential investment market, according to the real estate consultancy firm CBRE. This puts the transaction volume up by around 30 % on the same quarter of last year. The sustained high market activity on the German residential investment market is being driven by highly liquid fixed assets. The transaction volume is, however, limited by the sustained lack of supply. According to CBRE, investors are focusing increasingly on project developments. CBRE expects purchase prices and rents to continue to rise as the year progresses. This will be reflected in continued yield compression in top locations in Germany. A transaction volume of well in excess of € 10 billion may be realistic in 2017.
The demand for living space in Germany's major cities remains high. According to a recent expert opinion published by the Cologne Institute for Economic Research (IW), this is due to strong immigration from abroad and other parts of Germany. German cities are not, however, managing to create enough additional living space to meet the demand. Compared with the required construction level, only around 53 % of the apartments required were built between 2011 and 2015 looking at the nationwide average. The rate was often as low as 30 % in the country's major cities. According to the Cologne Institute for Economic Research, this has resulted in rising prices and rents and in a wave of migration to neighboring areas.
Vonovia got off to a very successful start to the 2017 fiscal year. The takeover of conwert Immobilien Invest SE allowed us to expand our own residential portfolio to 355,525 units at the end of the quarter. We also continued to pursue our corporate strategy in the course of the quarter. In the Rental segment, this relates, in particular, to the further expansion of our modernization measures and the ramping up of our
new construction measures. In the Extension segment, we continued to further expand our housing-related services while in the Sales segment, we forged ahead with our strategy of selective sales.
Our positive business development is reflected in the development of our key performance indicators.
The following key figures provide an overview of the development in FFO 1 and other value drivers in the first quarter of 2017:
| in € million | 3M 2017 | 3M 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Rental income | 417.2 | 392.0 | 6.4 | 1,538.1 |
| Maintenance expenses | -63.1 | -58.6 | 7.7 | -247.4 |
| Operating expenses | -68.5 | -64.4 | 6.4 | -244.5 |
| Adjusted EBITDA Rental | 285.6 | 269.0 | 6.2 | 1,046.2 |
| Extension income | 215.8 | 138.7 | 55.6 | 851.2 |
| thereof external income | 51.4 | 27.2 | 89.0 | 108.1 |
| thereof internal income | 164.4 | 111.5 | 47.4 | 743.1 |
| Operating expenses | -196.0 | -131.1 | 49.5 | -794.2 |
| Adjusted EBITDA Extension | 19.8 | 7.6 | 160.5 | 57.0 |
| Adjusted EBITDA Other | -5.3 | -0.5 | 960.0 | -9.2 |
| Adjusted EBITDA Operations | 300.1 | 276.1 | 8.7 | 1,094.0 |
| FFO interest expense | -76.8 | -86.0 | -10.7 | -322.7 |
| FFO 1 current income taxes | -5.1 | -3.8 | 34.2 | -10.5 |
| FFO 1 | 218.2 | 186.3 | 17.1 | 760.8 |
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 € 31.9 million or 17.1 % compared with the first quarter of 2016 to € 218.2 million. This trend was fueled primarily by the positive development in adjusted EBITDA Operations, which increased by 8.7 % from € 276.1 million in the first quarter of 2016 to € 300.1 million in the first quarter of 2017. Positive growth was witnessed in both the Rental and Extension segments.
In the Rental segment, our apartments had virtually full occupancy at the end of the first quarter of 2017. The apartment vacancy rate of 2.7 % was down slightly on the value of 2.8 % seen in the first quarter of 2016 and is now due predominantly to construction measures as part of our extensive investment program. Rental income increased by 6.4 % from € 392.0 million in the first quarter of 2016 to € 417.2 million due to acquisitions. At € 6.06/m², the average monthly in-place rent at the end of the first quarter of 2017 was up 3.8 % on the previous year's figure of € 5.84/ m² at the end of the first quarter of 2016. This increase comprises a market-based increase in rent of 1.6 %, a further increase in rent of 1.8 % resulting from property value improvements, new construction measures and the addition of extra stories and, finally, a rent increase of 0.4 % per square meter due to portfolio optimization measures as a result of sales. This means that organic rent growth, i.e. the increase in the like-forlike rent based on constant total square meters, plus increases in rent associated with the creation of new square meters in our properties, comes to 3.4 % on the whole.
In the first quarter of 2017, we increased our modernization and maintenance measures to a volume of € 191.4 million (3M 2016: € 125.4 million). Modernization efforts increased significantly from € 51.9 million in the first quarter of 2016 to € 114.2 million in the first quarter of 2017.
Operating expenses in the Rental segment were up by 6.4 % on the figures for the first quarter of 2016 to € 68.5 million due to acquisitions. All in all, adjusted EBITDA Rental increased by 6.2 % from € 269.0 million in the first quarter of 2016 to € 285.6 million in the first quarter of 2017.
We were able to further boost our earnings power and, in particular, significantly improve the output of our craftsmen's organization in the Extension segment, too. This will allow us to successfully implement our investment program in the 2017 fiscal year, helping us to continue to improve our portfolio considerably in the 2017 fiscal year. In addition, we 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 first quarter of 2017. Total income from our Extension activities increased by 55.6 % from € 138.7 million in the first quarter of 2016 to € 215.8 million in the first quarter of 2017. The adjusted EBITDA Extension improved considerably from € 7.6 million in the first quarter of 2016 to € 19.8 million in the first quarter of 2017.
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 reporting period. It increased from 70.3 % in the first quarter of 2016 to 71.8 % in the first quarter of 2017.
Due to refinancing and lower interest rates, FFO interest expense came to € 76.8 million in the first quarter of 2017, down by 10.7 % on the value for the first quarter of 2016 of € 86.0 million.
We successfully continued our selective sales strategy in the Sales segment. The segment covers all business activities relating to the sale of single residential units (Privatize) and the sale of entire buildings or land (Non-Core/Non-Strategic). A total of 1,692 apartments were sold in the first quarter of 2017 (3M 2016: 15,551). 535 of these apartments were attributable to privatization (3M 2016: 890) and 1,157 to Non-Core/ Non-Strategic (3M 2016: 14,661).
In the reporting period, adjusted EBITDA Sales came to € 19.1 million, down considerably on the value of € 35.0 million seen in the first three months of 2016. Sales in the previous year had been shaped considerably by the block sale of 13,570 units to LEG. The fair value step-up for privatization came to 31.1 % in the first quarter of 2017, up slightly on the value of 30.9 % seen in the first quarter of 2016 despite increases in value at the end of 2016. By contrast, the Non-Core/ Non-Strategic fair value step-up came to 2.3 % in the first quarter of 2017, which is slightly lower than the value of 3.8 % seen in the first quarter of 2016.
| in € million | 3M 2017 | 3M 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Income from disposal of properties | 492.2 | 690.5 | -28.7 | 1,227.9 |
| Fair value of properties sold adjusted to reflect effects not relating to the period from assets held for sale |
-465.8 | -650.7 | -28.4 | -1,107.7 |
| Adjusted profit from disposal of properties | 26.4 | 39.8 | -33.7 | 120.2 |
| thereof Privatize | 17.1 | 17.4 | -1.7 | 71.1 |
| thereof Non-Core/Non-Strategic | 9.3 | 22.4 | -58.5 | 49.1 |
| Selling costs | -7.3 | -4.8 | 52.1 | -27.7 |
| Adjusted EBITDA Sales | 19.1 | 35.0 | -45.4 | 92.5 |
The non-recurring items eliminated in the adjusted EBITDA as a whole came to € 13.9 million in the 2017 reporting period, much lower than the value of € 26.7 million seen in the first quarter of 2016, which is due primarily to lower acquisition and integration costs.
| in € million | 3M 2017 | 3M 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Business model optimization/development of new fields of business | 5.5 | 3.8 | 44.7 | 19.5 |
| Acquisition costs incl. integration costs* | 4.0 | 14.7 | -72.8 | 48.3 |
| Refinancing and equity measures | 0.9 | 0.7 | 28.6 | 3.2 |
| Severance payments/pre-retirement part-time work arrangements | 3.5 | 7.5 | -53.3 | 23.5 |
| Total non-recurring items | 13.9 | 26.7 | -47.9 | 94.5 |
* Including takeover costs and one-time expenses in connection with acquisitions, such as HR measures relating to the integration process. Figures for the previous year shown in line with the current reporting structure for 2017
The financial result in the first quarter of 2017 came to € -83.0 million, which is a considerable improvement on the comparable figure for the first quarter of 2016 of € -131.4 million. This is due primarily to the repayment of financing in 2016. In addition, the first quarter
of 2016 was hit by transaction costs and prepayment penalties in connection with the repayment of portfolio loans. FFO 1 interest expense is derived from the financial result as follows.
| in € million | 3M 2017 | 3M 2016 | Change in % | 12M 2016 |
|---|---|---|---|---|
| Income from non-current loans | 0.5 | 0.5 | - | 1.9 |
| Interest income | 0.5 | 8.9 | -94.4 | 14.1 |
| Interest expense | -84.0 | -140.8 | -40.3 | -449.0 |
| Financial result* | -83.0 | -131.4 | -36.8 | -433.0 |
| Adjustments: | ||||
| Transaction costs | 1.9 | 20.5 | -90.7 | 21.5 |
| Prepayment penalties and commitment interest | 1.9 | 9.8 | -80.6 | 64.4 |
| Effects from the valuation of non-derivative financial -instruments | -7.8 | -1.1 | 596.4 | -31.0 |
| Derivatives | 5.1 | 0.0 | – | 12.9 |
| Interest accretion to provisions | 2.4 | 2.6 | -7.7 | 11.2 |
| Accrued interest | 7.3 | 39.1 | -81.3 | -7.9 |
| Other effects | 2.2 | 4.0 | -45.0 | 0.6 |
| Net cash interest | -70.0 | -56.5 | 23.8 | -361.3 |
| Accrued interest adjustment | -7.3 | -39.1 | -81.3 | 7.9 |
| Adjustments EMTN interest | – | 9.6 | -100.0 | 21.1 |
| Adjustments Income from investments in other real estate companies | – | – | – | 9.6 |
| Interest payment adjustment due to taxes | 0.5 | – | – | – |
| FFO interest expense | -76.8 | -86.0 | -10.7 | -322.7 |
* Excluding income from other investments
The profit for the period came to € 130.7 million in the first quarter of 2017, up considerably on the value of € 79.2 million reported in the first quarter of 2016. This is mainly due to an increase in rental income and an improved financial result.
At the end of the first quarter of 2017, the adjusted NAV per share came to € 31.18, up by 28.2 % on the prior-year figure of € 24.32. This is mainly due to the revaluation performed at the end of 2016 and to the addition of conwert Immobilien Invest SE in 2017. The EPRA NAV per share climbed from € 30.15 at the end of the first quarter of 2016 to € 37.43 at the end of the first quarter of 2017. No NAV forecast will be provided from the 2017 fiscal year onwards.
| in € million | Mar. 31, 2017 | Mar. 31, 2016 | Change in % | Dec. 31, 2016 |
|---|---|---|---|---|
| Equity attributable to Vonovia shareholders | 12,706.5 | 10,628.4 | 19.6 | 12,467.8 |
| Deferred taxes on investment properties/asset held for sales | 4,827.4 | 3,217.8 | 50.0 | 4,550.3 |
| Fair value of derivative financial instruments* | 29.0 | 268.9 | -89.2 | 44.4 |
| Deferred taxes on derivative financial instruments | -14.3 | -66.9 | -78.6 | -15.4 |
| EPRA NAV | 17,548.6 | 14,048.2 | 24.9 | 17,047.1 |
| Goodwill | -2,931.8 | -2,716.6 | 7.9 | -2,718.9 |
| Adjusted NAV | 14,616.8 | 11,331.6 | 29.0 | 14,328.2 |
| EPRA NAV per share in €** | 37.43 | 30.15 | 24.1 | 36.58 |
| Adjusted NAV per share in €** | 31.18 | 24.32 | 28.2 | 30.75 |
* Adjusted for effects from cross currency swaps;
** Based on the number of shares on the reporting date (Mar. 31, 2017: 468,796,936; Mar. 31, 2016, and Dec. 31, 2016: 466,000,624)
| Mar. 31, 2017 | Dec. 31, 2016 | ||
|---|---|---|---|
| in € million | in % | in € million | in % |
| 33,208.8 | 95.3 | 30,459.8 | 93.7 |
| 1,639.3 | 4.7 | 2,062.3 | 6.3 |
| 34,848.1 | 100.0 | 32,522.1 | 100.0 |
| 14,270.6 | 41.0 | 13,888.4 | 42.7 |
| 16,828.0 | 48.3 | 16,229.1 | 49.9 |
| 3,749.5 | 10.7 | 2,404.6 | 7.4 |
| 34,848.1 | 100.0 | 32,522.1 | 100.0 |
The Group's total assets increased by € 2,326.0 million from € 32,522.1 million as of December 31, 2016, to € 34,848.1 million, mainly due to an increase in investment properties of € 2,482.7 million to € 29,463.0 million, with € 2,445.9 million resulting from the integration of the conwert Group, and due to an increase in goodwill of € 212.9 million due to the first-time consolidation of the conwert Group. Current assets fell by € 532.9 million to € 1,007.9 million, mainly as a result of the drop in cash resources due to the payment of the conwert cash component from the first tender phase and the repayment of the CMBS Taurus. The inflow from the January EMTN drawdown had the opposite effect.
The gross asset value (GAV) of Vonovia's property assets came to € 29,598.1 million as of March 31 2017, which corresponds to 84.9 % of total assets compared with € 27,106.4 million or 83.3 % at the end of 2016.
The € 382.2 million increase in equity to € 14,270.6 million is due, in the amount of € 130.7 million, to the positive profit for the first quarter, as well as to the non-cash capital increase and the increase in minorities due to the takeover of conwert.
This brings the equity ratio to 41.0 % compared with 42.7 % at the end of 2016.
The increase in current liabilities is dominated by the residual purchase price obligation of € 275.0 million for the conwert shares tendered during the second offer phase, which were paid in the second quarter of 2017.
The NAV amounts to € 17,548.6 million as of March 31, 2017.
The following table shows the Group cash flow:
| in € million | 3M 2017 | 3M 2016 |
|---|---|---|
| Cash flow from operating activities |
241.9 | 227.5 |
| Cash flow from investing activities | -773.2 | 258.0 |
| Cash flow from financing activities | -1.6 | -447.2 |
| Net changes in cash and cash equivalents |
-532.9 | 38.3 |
| Cash and cash equivalents at the beginning of the period |
1,540.8 | 3,107.9 |
| Cash and cash equivalents at the end of the period |
1,007.9 | 3,146.2 |
The cash flow from operating activities comes to € 241.9 million for the first three months of 2017 compared with € 227.5 million for the same period of 2016. The increase is mainly due to the improvement in the EBITDA IFRS operating result, in particular due to the integration of the acquired conwert portfolio. The change in net current assets, which is down by around € 10 million on the value for the same period of 2016, had the opposite effect.
The cash flow from investing activities shows a payout balance of € 773.2 million in total due to net payouts of € 1,133.3 million for the cash component of the conwert takeover. The proceeds from sales included in the figure came to € 513.2 million, down by € 207.1 million year-on-year. Investments in investment properties came to € 131.8 million (previous year: € 54.1 million), due in particular to payouts for modernization measures.
The cash flow from financing activities is characterized by the proceeds from the EMTN drawdown and by the fact that new mortgages were taken out (funds relating to the German government-owned development bank, KfW) in a total amount of € 1,041.8 million. On the other hand, payouts were made in connection with scheduled and unscheduled repayments (mainly CMBS Taurus) in the amount of € 1,172.0 million, as well as for transaction and financing costs and interest paid totaling € 112.7 million.
The net drop in cash and cash equivalents in the first quarter of 2017 comes to € 532.9 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 unsecured bonds is 'BBB+'. Vonovia placed a total bond volume of € 11.5 billion via its Dutch subsidiary Vonovia Finance B.V.
The debt maturity profile of Vonovia's financing was as follows as of March 31, 2017:
in € million Mar. 31, 2017 Mar. 31, 2016 Change in % Dec. 31, 2016 Non derivative financial liabilities 14,435.3 14,705.0 -1.8 13,371.0 Foreign exchange rate effects -194.8 -140.4 38.7 -209.9 Cash and cash equivalents -1,007.9 -3,146.2 -68.0 -1,540.8 Net debt 13,232.6 11,418.4 15.9 11,620.3 Sales receivables -144.4 -295.3 -51.1 -135.4 Additional loan amount for outstanding acquistions* 275.0 - 100.0 - Adjusted net debt* 13,363.2 11,123.1 20.1 11,484.9 Fair value of the real estate portfolio 29,607.6 23,814.4 24.3 27,115.6 Shares in other real estate companies 520.4 460.6 13.0 503.1 Adjusted fair value of the real estate portfolio 30,128.0 24,275.0 24.1 27,618.7 LTV 44.4 % 45.8 % -1.4 ppt 41.6 %
* 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, 2016 | Change in % | Dec. 31, 2016 |
|---|---|---|---|---|
| Non-derivative financial liabilities | 14,435.3 | 14,705.0 | -1.8 | 13,371.0 |
| Total assets | 34,848.1 | 30,971.8 | 12.5 | 32,522.1 |
| LTV bond covenants | 41.4 % | 47.5 % | -6.1 ppt | 41.1 % |
After the German economy picked up in the fourth quarter of 2016, reporting solid growth of 1.9 % at the end of the year, the economic indicators suggest that the growth trend is set to continue. The Kiel Institute for the World Economy (IfW) expects GDP to expand by 1.7 % in the course of 2017, with the slightly lower growth rate attributable exclusively to the lower number of working days. Private consumption will expand at a much slower pace due to the purchasing power losses resulting from the increase in oil prices. With no further increase in spending on refugee migration, the rate of public consumption growth is likely to slow. Instead, the IfW expects investments to be the main engine driving the sustained upswing, primarily due to the further expansion in construction investments. Equipment investments are also likely to pick up again after showing slightly slower development of late due to the uncertain international environment. Foreign trade also dropped due to the uncertainties on key sales markets such as the United States and the United Kingdom. As the global economy gradually recovers, however, the IfW predicts a return to strong export and import growth over the next two years, with the upswing, driven primarily by the domestic economy, expected to result in imports growing at a much faster rate than exports.
Looking ahead to 2018, the IfW expects to see a further acceleration in economic momentum, predicting GDP growth of 2.0 %. This forecast rests on the fact that the expansion forces in the domestic economy
are likely to remain strong, with the monetary environment expected to continue to provide considerable stimulus and the outlook for exports expected to improve further as the global economy recovers.
According to the IfW, the risks to the growth forecast lie in geopolitical tension resulting from conflicts in the Middle East, a sharp increase in crude oil prices, the uncertain development of the external value of the euro and the increasing susceptibility of the German economy to overheating and the negative developments that would come as a result.
Savills believes that the overall conditions on the German residential real estate market remain positive from an investor's perspective. The population is still growing and the short supply on the rental market will persist in many cities in the medium term. Given the high demand, rents will continue to rise this year unless the state steps in with clear regulatory measures to slam the brakes on rent development. Savills believes that Germany's major metropolitan areas offer positive long-term growth prospects. Investors should look not only at the country's core cities, but also at their surrounding areas.
In an environment of geopolitical uncertainty, the stability that Germany offers as a location is likely to create sustained investment pressure on the German residential real estate market. While FERI EuroRating Services AG (Feri) believes that the risk of overheating is mounting on the whole, it remains limited to major cities and regional hotspots. Although the empirica bubble index increased again in the fourth quarter of 2016, there is no conventional nationwide price bubble at the moment. Rents and purchase prices in 227 out of 402 administrative districts and self-governing cities are no longer developing in tandem, with the bubble index indicating a medium to high risk for 158 districts. Yields are low, but are justified by exceptionally low interest rates, and to some extent the low interest rates are the reason behind the low yields.
Savills does not believe that a significant increase in interest rates is on the horizon in Europe at the moment. Future value developments will depend not only on interest rates but also on the real economy and demographic trends. Experts at bulwiengesa believe that marked price corrections in Germany's major cities are unrealistic. ImmobilienScout24 believes that, in addition to rising quoted rents, the prices of existing and newly built apartments are likely to continue to rise looking at Germany on average. According to DB Research, residential property ownership remains affordable due to positive income momentum and low interest rates for construction. There are, however, pronounced differences from region to region.
Due to the significant increase in rents in many places, there are also calls for greater regulation of the residential property market in the run-up to the German Bundestag elections. The most significant new regulatory measure from a property owner's perspective, the rent ceiling, is already in place in more than 300 municipalities in twelve federal states. In Mecklenburg-West Pomerania, the federal state government has been tasked with introducing the regulations as soon as possible. It seems unlikely that a second package of tenancy legislation will be pushed through before the 2017 election.
Vonovia got off to a very successful start to the 2017 fiscal year on the whole. Bolstered by the acquisition of conwert and the further expansion of our Extension business, we were able to further expand our leading market position in the first quarter of 2017.
We expect the positive business developments to continue over the coming quarters and that we will achieve the forecast figures as published in our 2016 annual report. Given the dynamic development of the German real estate market, we expect to see a further increase in value in our investment properties in 2017 and with this a further boost to NAV.
We have updated our forecast for the following key figures:
| Actual 2016 | Forecast 2017* | Forecast for 2017 in the 2017 Q1 Report |
|
|---|---|---|---|
| FFO 1 | € 760.8 million | € 830–850 million | € 900–920 million |
| FFO 1/share | € 1.63 | € 1.78–1.82 | approx. € 1.88 |
| Rental income from property management | € 1,538 million | € 1,530–1,550 million | € 1,660–1,680 million |
| Organic rent increase | 3.3 % | Increase of 3.5–3.7 % |
Increase of 3.8–4.0 % |
| Maintenance incl. capitalized maintenance | € 320.1 million | approx. € 340 million | approx. € 340 million |
| Modernization | € 472.3 million | € 700–730 million | approx. € 730 million |
| Step-up Privatize | 36.2 % | approx. 35 % | approx. 30 % |
* In accordance with the Group management report 2016 excl. conwert
Düsseldorf, May 22, 2017
Management Board
| in € million | Jan. 1– Mar. 31, 2017 |
Jan. 1– Mar. 31, 2016 |
|---|---|---|
| Income from property letting | 586.7 | 556.6 |
| Other income from property management | 10.0 | 9.3 |
| Income from property management | 596.7 | 565.9 |
| Income from disposal of properties | 492.2 | 690.5 |
| Carrying amount of properties sold | -476.7 | -683.0 |
| Revaluation of assets held for sale | 9.4 | 5.6 |
| Profit on disposal of properties | 24.9 | 13.1 |
| Net income from fair value adjustments of investment properties | – | – |
| Capitalized internal expenses | 85.4 | 49.4 |
| Cost of materials | -274.3 | -244.1 |
| Personnel expenses | -102.0 | -92.9 |
| Depreciation and amortization | -7.1 | -4.4 |
| Other operating income | 26.5 | 23.6 |
| Other operating expenses | -59.7 | -57.3 |
| Financial income | 7.3 | 9.5 |
| Financial expenses | -84.0 | -140.8 |
| Earnings before tax | 213.7 | 122.0 |
| Income taxes | -83.0 | -42.8 |
| Profit for the period | 130.7 | 79.2 |
| Attributable to: | ||
| Vonovia's shareholders | 116.6 | 56.5 |
| Vonovia's hybrid capital investors | 7.4 | 7.4 |
| Non-controlling interests | 6.7 | 15.3 |
| Earnings per share (basic and diluted) in € | 0.25 | 0.12 |
| in € million | Jan. 1– Mar. 31, 2017 |
Jan. 1– Mar. 31, 2016 |
|---|---|---|
| Profit for the period | 130.7 | 79.2 |
| Cash flow hedges | ||
| Change in unrealized gains/losses | -0.5 | -126.9 |
| Taxes on the change in unrealized gains/losses | 1.0 | 32.0 |
| Net realized gains/losses | 17.7 | 41.0 |
| Taxes on the change in net realized gains/losses | -5.9 | -10.4 |
| Total | 12.3 | -64.3 |
| Available-for-sale-financial assets | ||
| Changes in the period | 17.3 | 53.4 |
| Taxes on changes in the period | -0.3 | -17.3 |
| Total | 17.0 | 36.1 |
| Items which will be recognized in profit or loss in the future | 29.3 | -28.2 |
| Actuarial gains and losses from pensions and similar obligations | ||
| Change in actuarial gains/losses, net | 4.0 | -31.0 |
| Tax effect | -1.3 | 10.3 |
| Items which will not be recognized in profit or loss in the future | 2.7 | -20.7 |
| Other comprehensive income | 32.0 | -48.9 |
| Total comprehensive income | 162.7 | 30.3 |
| Attributable to: | ||
| Vonovia's shareholders | 148.6 | 7.9 |
| Vonovia's hybrid capital investors | 7.4 | 7.4 |
| Non-controlling interests | 6.7 | 15.0 |
| in € million | Mar. 31, 2017 | Dec. 31, 2016 |
|---|---|---|
| Assets | ||
| Intangible assets | 2,958.8 | 2,743.1 |
| Property, plant and equipment | 129.2 | 115.7 |
| Investment properties | 29,463.0 | 26,980.3 |
| Financial assets | 618.0 | 585.9 |
| Other assets | 14.9 | 15.2 |
| Deferred tax assets | 24.9 | 19.6 |
| Total non-current assets | 33,208.8 | 30,459.8 |
| Inventories | 6.7 | 5.0 |
| Trade receivables | 183.3 | 164.4 |
| Financial assets | 166.5 | 153.2 |
| Other assets | 171.7 | 102.7 |
| Income tax receivables | 39.1 | 34.6 |
| Cash and cash equivalents | 1,007.9 | 1,540.8 |
| Assets held for sale | 64.1 | 61.6 |
| Total current assets | 1,639.3 | 2,062.3 |
Total assets 34,848.1 32,522.1
| in € million | Mar. 31, 2017 | Dec. 31, 2016 |
|---|---|---|
| Equity and liabilities | ||
| Subscribed capital | 468.8 | 466.0 |
| Capital reserves | 5,421.9 | 5,334.9 |
| Retained earnings | 6,784.8 | 6,665.4 |
| Other reserves | 31.0 | 1.5 |
| Total equity attributable to Vonovia's shareholders | 12,706.5 | 12,467.8 |
| Equity attributable to hybrid capital investors | 1,011.5 | 1,001.6 |
| Total equity attributable to Vonovia's shareholders and hybrid capital investors | 13,718.0 | 13,469.4 |
| Non-controlling interests | 552.6 | 419.0 |
| Total equity | 14,270.6 | 13,888.4 |
| Provisions | 612.1 | 607.9 |
| Trade payables | 0.6 | 1.3 |
| Non-derivative financial liabilities | 12,003.9 | 11,643.4 |
| Derivatives | 23.3 | 19.1 |
| Liabilities from finance leases | 94.6 | 94.7 |
| Liabilities to non-controlling interests | 10.0 | 9.9 |
| Other liabilities | 81.2 | 83.3 |
| Deferred tax liabilities | 4,002.3 | 3,769.5 |
| Total non-current liabilities | 16,828.0 | 16,229.1 |
| Provisions | 378.9 | 370.8 |
| Trade payables | 137.0 | 138.8 |
| Non-derivative financial liabilities | 2,431.4 | 1,727.6 |
| Derivatives | 69.3 | 57.5 |
| Liabilities from finance leases | 11.4 | 4.5 |
| Liabilities to non-controlling interests | 0.3 | 2.7 |
| Other liabilities | 721.2 | 102.7 |
| Total current liabilities | 3,749.5 | 2,404.6 |
| Total liabilities | 20,577.5 | 18,633.7 |
| Total equity and liabilities | 34,848.1 | 32,522.1 |
| in € million | Jan. 1– Mar. 31, 2017 |
Jan. 1– Mar. 31, 2016 |
|---|---|---|
| Profit for the period | 130.7 | 79.2 |
| Revaluation of assets held for sale | -9.4 | -5.6 |
| Depreciation and amortization | 7.1 | 4.4 |
| Interest expenses/income | 83.0 | 131.3 |
| Income taxes | 83.0 | 42.8 |
| Results from disposals of investment properties | -15.5 | -7.5 |
| Other expenses/income not affecting net income | 1.3 | 0.1 |
| Change in working capital | -23.9 | -13.8 |
| Income tax paid | -14.4 | -3.4 |
| Cash flow from operating activities | 241.9 | 227.5 |
| Proceeds from disposals of investment properties and assets held for sale | 513.2 | 720.3 |
| Proceeds from disposals of other assets | 0.5 | 0.5 |
| Payments for acquisition of investment properties | -131.8 | -54.1 |
| Payments for acquisition of other assets | -19.4 | -411.3 |
| Payments (last year: proceeds) for acquisition of shares in consolidated companies, in due considera tion of liquid funds |
-1,137.9 | 0.3 |
| Interest received | 2.2 | 2.3 |
| Cash flow from investing activities | -773.2 | 258.0 |
| in € million | Jan. 1– Mar. 31, 2017 |
Jan. 1– Mar. 31, 2016 |
|---|---|---|
| Cash paid to shareholders of non-controlling interests | -4.6 | -3.2 |
| Proceeds from issuing financial liabilities | 1,041.8 | 38.4 |
| Cash repayments of financial liabilities | -1,172.0 | -403.0 |
| Payments for transaction costs in relating to capital measures | -8.7 | -4.5 |
| Payments for other financing costs | -31.8 | -16.2 |
| Payments for the acquisition of shares in non-controlling interests | -3.9 | – |
| Proceeds for the sale of shares of consolidated companies | 249.8 | – |
| Interest paid | -72.2 | -58.7 |
| Cash flow from financing activities | -1.6 | -447.2 |
| Net changes in cash and cash equivalents | -532.9 | 38.3 |
| Cash and cash equivalents at the beginning of the period | 1,540.8 | 3,107.9 |
| Cash and cash equivalents at the end of the period 1) | 1,007.9 | 3,146.2 |
1) Thereof restricted cash € 52.7 million (Mar. 31, 2016: € 227.6 million)
Vonovia manages its own real estate portfolio with a fair value of € 29.6 billion as of March 31, 2017. The vast majority of our apartments are located in regions with positive economic and demographic development prospects.
| As at March 31, 2017 | Fair value* | ||||
|---|---|---|---|---|---|
| (in € million) | (in €/m²) | Residential units |
Vacancy rate (in %) |
In-place rent (in €/m²) |
|
| Strategic | 26,585.9 | 1,295 | 320,228 | 2.3 | 6.12 |
| Operate | 9,239.1 | 1,287 | 105,895 | 2.4 | 6.25 |
| Upgrade Buildings | 9,530.5 | 1,244 | 125,067 | 2.6 | 5.95 |
| Optimize Apartments | 7,816.2 | 1,374 | 89,266 | 1.9 | 6.18 |
| Privatize | 1,540.4 | 1,323 | 16,688 | 4.2 | 5.99 |
| Non-Strategic | 374.2 | 606 | 9,948 | 8.1 | 4.84 |
| Non-Core | 317.3 | 710 | 6,425 | 6.7 | 5.06 |
| Vonovia Germany | 28,817.8 | 1,266 | 353,289 | 2.7 | 6.06 |
| Vonovia Austria | 620.0 | 1,986 | 2,236 | 3.4 | 6.11 |
| Total | 29,437.8 | 1,276 | 355,525 | 2.7 | 6.06 |
| As at March 31, 2017 | Fair value* | ||||
|---|---|---|---|---|---|
| (in € million) | (in €/m²) | Residential units |
Vacancy rate (in %) |
In-place rent (in €/m²) |
|
| Regional market** | |||||
| Berlin | 4,286.9 | 1,686 | 38,609 | 1.7 | 6.16 |
| Rhine Main Area | 3,096.4 | 1,697 | 28,134 | 1.8 | 7.48 |
| Rhineland | 2,979.2 | 1,407 | 30,713 | 2.7 | 6.60 |
| Dresden | 2,506.1 | 1,070 | 38,606 | 2.3 | 5.52 |
| Southern Ruhr Area | 2,494.4 | 898 | 44,488 | 2.9 | 5.47 |
| Hamburg | 1,738.6 | 1,601 | 16,608 | 1.9 | 6.61 |
| Munich | 1,650.0 | 2,495 | 9,771 | 0.8 | 7.55 |
| Stuttgart | 1,580.0 | 1,701 | 14,261 | 1.9 | 7.38 |
| Northern Ruhr Area | 1,321.8 | 764 | 27,519 | 3.7 | 5.21 |
| Hanover | 1,042.2 | 1,170 | 13,846 | 2.6 | 5.94 |
| Kiel | 864.2 | 1,026 | 13,988 | 1.6 | 5.56 |
| Bremen | 788.8 | 1,059 | 11,923 | 3.2 | 5.30 |
| Leipzig | 647.3 | 1,042 | 9,185 | 3.6 | 5.60 |
| Westphalia | 594.0 | 937 | 9,650 | 2.5 | 5.42 |
| Freiburg | 494.1 | 1,763 | 4,060 | 1.5 | 6.80 |
| Other strategic locations | 1,930.1 | 1,239 | 23,994 | 2.6 | 6.17 |
| Total strategic locations | 28,014.2 | 1,298 | 335,355 | 2.4 | 6.11 |
* Fair value of the developed land excluding € 169.8 million for undeveloped land, inheritable building rights granted and 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]
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]
This quarterly report is published in German and English. The German version is always the authoritative text. The quarterly report can be found on the website at www.vonovia.de.
EPRA is a registered trademark of the European Public Real Estate Association.
This quarterly report 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 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 2016 Annual Report. We do not assume any obligation to update the forward-looking statements contained in this quarterly report. This quarterly report 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 Illustrations: Thomas Kappes (Hamburg) As of May 2017 © Vonovia SE, Bochum
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