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Vonovia SE
Quarterly Report • Nov 4, 2022
477_10-q_2022-11-04_4c179d47-8d68-457c-8897-b92f807a3aaa.pdf
Quarterly Report
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VONOVIA SE INTERIM STATEMENT FOR THE THIRD QUARTER OF 2022
Interim Statement Q3
January – September
Key Figures
| Financial Key Figures in € million | 9M 2021* | 9M 2022 | Change in % | 12M 2021* |
|---|---|---|---|---|
| Total Segment Revenue | 3,517.0 | 4,619.7 | 31.4 | 5,179.9 |
| Adjusted EBITDA Total | 1,540.5 | 2,110.1 | 37.0 | 2,254.4 |
| Adjusted EBITDA Rental | 1,239.6 | 1,247.2 | 0.6 | 1,639.4 |
| Adjusted EBITDA Value-add | 115.6 | 115.9 | 0.3 | 148.8 |
| Adjusted EBITDA Recurring Sales | 105.5 | 104.3 | -1.1 | 114.0 |
| Adjusted EBITDA Development | 79.8 | 112.8 | 41.4 | 187.7 |
| Adjusted EBITDA Deutsche Wohnen | – | 529.9 | – | 164.5 |
| Group FFO** | 1,168.9 | 1,577.8 | 35.0 | 1,694.4 |
| thereof attributable to Vonovia shareholders | 1,123.1 | 1,515.8 | 35.0 | 1,616.0 |
| thereof attributable to Vonovia hybrid capital investors | 30.0 | – | -100.0 | 38.4 |
| thereof attributable to non-controlling interests | 15.8 | 62.0 | >100 | 40.0 |
| Group FFO after non-controlling interests | 1,153.1 | 1,515.8 | 31.5 | 1,654.4 |
| Group FFO per share in €** | 1.90 | 1.98 | 4.2 | 2.18 |
| Income from fair value adjustments of investment properties |
5,073.0 | 3,137.6 | -38.2 | 7,393.8 |
| EBT**** | 5,833.2 | 3,379.7 | -42.1 | 5,092.0 |
| Profit for the period**** | 3,869.1 | 2,211.7 | -42.8 | 2,440.5 |
| Cash flow from operating activities | 1,026.3 | 1,488.9 | 45.1 | 1,823.9 |
| Cash flow from investing activities | -8,625.1 | 923.2 | – | -19,115.8 |
| Cash flow from financing activities | 9,161.5 | -2,483.0 | – | 18,125.0 |
| Total cost of maintenance, modernization and new construction |
1,355.1 | 1,755.3 | 29.5 | 2,185.6 |
| thereof for maintenance expenses and capitalized maintenance |
453.5 | 467.1 | 3.0 | 666.4 |
| thereof for modernization | 547.8 | 518.8 | -5.3 | 758.6 |
| thereof for new construction | 353.8 | 345.1 | -2.5 | 526.6 |
| thereof Deutsche Wohnen | – | 424.3 | – | 234.0 |
| Key Balance Sheet Figures in € million | Dec. 31, 2021 | Sep. 30, 2022 | Change in % | |
|---|---|---|---|---|
| Fair value of the real estate portfolio | 97,845.3 | 99,238.9 | 1.4 | |
| EPRA NTA*** | 48,640.8 | 49,771.2 | 2.3 | |
| EPRA NTA per share in €*** | 62.63 | 62.54 | -0.2 | |
| LTV (%)**** | 45.4 | 43.4 | -2.0 pp |
| Non-financial Key Figures | 9M 2021 | 9M 2022 | Change in % | 12M 2021 |
|---|---|---|---|---|
| Number of units managed | 639,878 | 621,396 | -2.9 | 636,507 |
| thereof own apartments | 568,451 | 549,010 | -3.4 | 565,334 |
| thereof apartments owned by others | 71,427 | 72,386 | 1.3 | 71,173 |
| Number of units bought | 154,918 | 910 | -99.4 | 155,145 |
| Number of apartments sold | 2,987 | 18,368 | >100 | 6,870 |
| thereof Recurring Sales | 2,367 | 1,711 | -27.7 | 2,747 |
| thereof Non-core Disposals | 620 | 4,871 | >100 | 723 |
| thereof Deutsche Wohnen | – | 11,786 | – | 3,400 |
| Number of new apartments completed | 1,366 | 1,543 | 13.0 | 2,200 |
| thereof own apartments | 786 | 816 | 3.8 | 1,373 |
| thereof apartments for sale | 580 | 636 | 9.7 | 827 |
| thereof Deutsche Wohnen | – | 91 | – | – |
| Vacancy rate (in %) | 2.7 | 2.1 | -0.6 pp | 2.2 |
| Monthly in-place rent in €/m² | 7.34 | 7.47 | 1.8 | 7.33 |
| Organic rent increase (in %) | 3.5 | 3.3 | -0.2 pp | 3.8 |
| Number of employees (as of Sep. 30/Dec. 31) | 16,051 | 15,851 | -1.2 | 15,871 |
* Prior-year figures adjusted to new adjusted EBITDA definition (excluding results from at-equity investments).
** Based on the new 2022 definition, therefore without elimination of IFRS 16 effect, line "thereof attributable to non-controlling interests" includes non-controlling interests of Deutsche Wohnen, Group FFO per share based on the shares carrying dividend rights on the reporting date, 9M 2021 prior-year values TERP-adjusted (1,067).
*** Based on the new 2022 definition, therefore excluding real estate transfer tax, EPRA NTA per share based on the shares carrying dividend rights on the reporting date. 2021 adjusted after closing of Deutsche Wohnen PPA.
**** 2021 adjusted after closing of Deutsche Wohnen PPA.
Contents
Business Development in the First Nine Months of 2022
- 2 Overview
- 4 Vonovia SE on the Capital Market
- 6 Economic Development in the First Nine Months of 2022
- 19 Business Outlook
Condensed Interim Consolidated Financial Statements
- 22 Consolidated Income Statement
- 23 Consolidated Statement of Comprehensive Income
- 24 Consolidated Balance Sheet
- 26 Consolidated Statement of Cash Flows
Information
Business Development in the First Nine Months of 2022
Overview
-
Virtually full occupancy with vacancy rate of 2.1%; this means stable cash flows as a basis for business.
-
Internal financing of planned investments with no further refinancing needs.
-
Customer satisfaction values remain high.
-
Overview 2
- Vonovia SE on the Capital Market 4
- Economic Development in the First Nine Months of 2022 6
- Business Outlook 19
Sustained Earnings
Group FFO per share (€) 2021 TERP adjusted in € million 9M 2021 9M 2022 1,500 1,250 1,000 750 500 250 0 +4.2% 1.98 1.90 1,168.9 +35.0% 1,577.8 Group FFO* Investments
* Based on the new 2022 definition without elimitation IFRS 16 eect and results of assets accounted for using the equity method.
Organic Rent Growth Vacancy
Organic Rent Increase Vacancy Rate
Maintenance, Modernization and New Construction
EPRA NTA* Fair Value
2021 adjusted after closing of Deutsche Wohnen PPA.
Net Assets Fair Value of the Real Estate Portfolio
Vonovia SE on the Capital Market
Shares in Vonovia
Since the outbreak of the war in Ukraine in February 2022, the international capital markets have been dominated by ongoing investor concern regarding high inflation rates, rising interest rates, a slowdown in economic growth and the risk of a recession. In this environment, it came as little surprise to see a negative performance in almost all sectors: DAX -24%; EURO STOXX 50 -23%; EPRA Europe -41%.
In this exceptionally difficult overall market, shares in Vonovia reported above-average losses, trading at € 22.21 at the end of the third quarter. The negative trend seen in the second quarter continued in the third, which was dominated by an ongoing close negative correlation with government bond yields. Similarly, higher interest rates and the resulting capital market fears of a knock-on effect on earnings and property values likely played a decisive role in the drop in performance.
We are observing an ever-wider gap between capital market expectations on the one hand, and ongoing stable development on the residential real estate market on the other. While the capital market appears to be pricing in a massive correction, the residential property markets in which we operate remain robust.
As a result, we remain confident that the fundamental conditions in our markets will ensure positive development in the long run. These include, in particular, the favorable relationship, from an owner's point of view, between supply and demand in urban regions as well as the structural momentum on the revenue side.
The company's market capitalization amounted to around € 17.7 billion as of September 30, 2022.
Shareholder Structure
The chart displayed below shows the voting rights pursuant to Sections 33 and 34 of the German Securities Trading Act (WpHG) as notified by the shareholders in relation to the current share capital. It is important to note that the number of voting rights reported could have changed within the respective thresholds without triggering an obligation to notify the company.
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 toward the free float. This means that 88.9% of Vonovia's shares were in free float on September 30, 2022. The underlying voting rights notifications and corresponding financial instruments reported by shareholders or other instruments pursuant to Sections 38, 39 WpHG can be found online.
In line with Vonovia's long-term strategic focus, we believe that the majority of its investors also have a long-term focus. The company's investors include pension funds, sovereign wealth funds and international asset managers in particular. There are also a large number of individual shareholders, although they only represent a small proportion of the total capital.
Major Shareholders (as of September 30, 2022)
Share Price Development
Capital Markets Day
After a two-year pause due to the coronavirus pandemic, Vonovia's seventh Capital Markets Day was held in Bochum on September 27, 2022. We took the event, which focused on the ecological aspect of the megatrend of sustainability, as an opportunity to delve deeper into various topics including, in particular, the "Internet of Things," decarbonization tools and the Energy Center of the Future with around 50 investors and analysts. We concluded the Capital Markets Day with a property tour in Bochum. The presentations held at the Capital Markets Day can be downloaded online.
Investor Relations Activities
Vonovia SE is committed to transparent, ongoing dialogue with its shareholders and potential investors. We have continued with our road shows and meetings in 2022, both as virtual and face-to-face events. In the first nine months of 2022, Vonovia participated in a total of 24 investors' conference days and conducted 14 roadshow days.
In addition, numerous one-on-one meetings, video conferences and conference calls were held with investors and analysts to keep them informed of current developments and special issues. The following topics in particular dominated the meetings held in the first nine months of 2022: inflation, energy prices, interest rates, the capital structure and sustainability.
We will continue to communicate openly with the capital market. Various road shows, conferences and participation in investor forums have already been planned. Information can be found in the Financial Calendar on our Investor Relations website.
Analyst Assessments
As of September 30, 2022, 24 international analysts were publishing research studies on Vonovia. The average target share price was € 42.70. Of these analysts, 75% issued a "buy" recommendation, with 21% issuing a "hold" recommendation and 4% a "sell" recommendation.
Share Information (as of September 30, 2022)
| July 11, 2013 |
|---|
| € 16.50 € 14.71* |
| Total number of shares 795,849,997 |
| € 795,849,997 |
| DE000A1ML7J1 |
| A1ML7J |
| VNA |
| 94567408 |
| Registered shares with no par value |
| Frankfurt Stock Exchange |
| Regulated market |
| DAX 40, EURO STOXX 50, DAX 50 ESG, Dow Jones Sustainability Index Europe, STOXX Global ESG Leaders, EURO STOXX ESG Leaders 50, FTSE EPRA/NAREIT Developed Europe and GPR 250 World |
Economic Development in the First Nine Months of 2022
Key Events During the Reporting Period
Rising interest and inflation rates, also triggered by the war in Ukraine, coupled with uncertainty in the commodity markets and supply chains that remain disrupted, create a highly complex environment for corporate management.
The operating business was stable as expected overall, with moderate effects resulting from the Ukraine war and the coronavirus pandemic in some areas. These effects related primarily to the procurement of raw materials and to energy costs.
With a vacancy rate of 2.1%, Vonovia's portfolio was nearly fully occupied as of September 30, 2022. The Customer Satisfaction Index (CSI) increased in the third quarter of 2022 and was up by 0.5 percentage points on the previous quarter. The increase in a year-on-year comparison is 2.2 percentage points.
The high customer satisfaction values confirm our efforts in property management and, together with the low vacancy rate, provide a solid foundation for our business. At the same time, this also means stable cash flows and, as a result, a stable basis for the income from our residential properties.
We remain convinced that the challenges associated with megatrends have not changed and that, in the housing industry, these can best be solved by thinking and acting in terms of neighborhoods.
As a result, the lion's share of the portfolio in Germany consists of neighborhoods that we have grouped together as urban quarters. The remaining existing buildings largely comprise smaller clusters of buildings and solitary properties that we have grouped together as urban clusters. Even though, unlike urban quarters, urban clusters do not relate to entire neighborhoods, they are also managed using the same long-term asset and property management strategies based on our operating platform.
The latest portfolio analysis led to the creation of a further sales portfolio alongside the sales portfolio for non-strategic holdings (Non-core Disposals) and Recurring Sales within the strategic cluster. It consists of multifamily properties, primarily for internal financing purposes.
As a result of the higher interest rates, there was a further increase in the cost of capital, meaning that impairment losses amounting to € 122.0 million (value incl. final PPA adjustments) were recognized on goodwill and the trademark rights in the nursing and assisted living sector in the second quarter of 2022. Impairment losses of € 330.7 million were also recognized on investments accounted for using the equity method as of September 30, 2022. On the other hand, the increase in the discount rate for the measurement of pension provisions translated into actuarial gains.
In the second quarter of 2022, two bonds worth € 500 million each were repaid, one before its maturity date. In addition, commercial papers in the amount of a further € 500 million were also repaid as planned.
The work on integrating Deutsche Wohnen was continued as scheduled in the third quarter of 2022. After ensuring that the measures were consistent with the company law requirements and planning the details of the actual integration work, the first few system integration tests and preparatory measures were conducted in the third quarter of 2022.
The Annual General Meeting held on April 29, 2022, resolved to pay a dividend for the 2021 fiscal year in the amount of € 1.66 per share. In a year-on-year comparison, this corresponds to an increase of € 0.08 – taking into account the increased number of shares due to the capital increase
following the takeover of Deutsche Wohnen. As in previous years, shareholders were offered the option of choosing between being paid the dividend in cash or being granted new shares. During the subscription period, shareholders holding a total of 47.85% of the shares carrying dividend rights opted for the scrip dividend instead of the cash dividend. As a result, 19,252,608 new shares were issued using the company's authorized capital for a total of € 616,815,055.10. The total amount of the dividend distributed in cash therefore came to € 672,336,610.64.
Results of Operations
Overview
When analyzing the figures for the first nine months of 2022, it is important to remember that these only allow a comparison with the previous year to a limited extent, as Deutsche Wohnen's figures were not included in Vonovia's consolidated financial statements until September 30, 2021. Due to Vonovia's limited control influence on the operating results of companies accounted for using the equity method, the
earnings components of these companies will no longer be included in the performance-relevant figures Adjusted EBITDA Total and Group FFO for the September 30, 2022 reporting period. The corresponding prior-year figures have been adjusted.
In the first nine months of 2022, moderate effects of the war in Ukraine were reflected in the interim financial statements, particularly in energy and construction costs. The ongoing coronavirus pandemic also had a minor impact, especially in the Value-add segment.
All in all, Vonovia reported stable business development in the first nine months of 2022.
As of September 30, 2022, Vonovia employed 15,851 people (September 30, 2021: 16,051).
Total segment revenue in the Vonovia Group increased by 31.4% from € 3,517.0 million in the first nine months of 2021 to € 4,619.7 million in the first nine months of 2022. Deutsche Wohnen was the main contributor to this increase, with a volume of € 906.9 million in 2022.
Total Segment Revenue
| in € million | 9M 2021 | 9M 2022 | Change in % | 12M 2021 |
|---|---|---|---|---|
| Rental income | 1,764.7 | 2,367.2 | 34.1 | 2,571.9 |
| Other income from property management unless included in the operating expenses in the Rental segment |
40.8 | 316.8 | >100 | 141.7 |
| Income from disposals Recurring Sales (incl. Deutsche Wohnen) |
422.2 | 392.6 | -7.0 | 477.2 |
| Internal revenue Value-add | 798.3 | 851.5 | 6.7 | 1,107.2 |
| Income from disposal of properties | 328.8 | 486.9 | 48.1 | 519.6 |
| Fair value Development to hold (incl. Deutsche Wohnen) | 162.2 | 204.7 | 26.2 | 362.3 |
| Total Segment Revenue | 3,517.0 | 4,619.7 | 31.4 | 5,179.9 |
The overview below shows the other key figures for the company's results of operations, as well as their reconciliation to the performance indicator Group FFO:
Group FFO
| in € million | 9M 2021* | 9M 2022 | Change in % | 12M 2021* |
|---|---|---|---|---|
| Revenue in the Rental segment | 1,762.7 | 1,789.0 | 1.5 | 2,361.6 |
| Expenses for maintenance | -245.3 | -250.5 | 2.1 | -332.7 |
| Operating expenses in the Rental segment | -277.8 | -291.3 | 4.9 | -389.5 |
| Adjusted EBITDA Rental | 1,239.6 | 1,247.2 | 0.6 | 1,639.4 |
| Revenue in the Value-add segment | 840.1 | 916.5 | 9.1 | 1,165.8 |
| thereof external revenue | 41.8 | 65.0 | 55.5 | 58.6 |
| thereof internal revenue | 798.3 | 851.5 | 6.7 | 1,107.2 |
| Operating expenses in the Value-add segment | -724.5 | -800.6 | 10.5 | -1,017.0 |
| Adjusted EBITDA Value-add | 115.6 | 115.9 | 0.3 | 148.8 |
| Revenue in the Recurring Sales segment | 422.2 | 378.6 | -10.3 | 477.0 |
| Fair value of properties sold adjusted to reflect effects not relating to the period from assets held for sale in the Recurring Sales segment |
-302.7 | -263.1 | -13.1 | -343.7 |
| Adjusted result Recurring Sales | 119.5 | 115.5 | -3.3 | 133.3 |
| Selling costs in the Recurring Sales segment | -14.0 | -11.2 | -20.0 | -19.3 |
| Adjusted EBITDA Recurring Sales | 105.5 | 104.3 | -1.1 | 114.0 |
| Revenue from disposal of Development to sell properties | 328.8 | 456.7 | 38.9 | 503.7 |
| Cost of Development to sell | -270.3 | -362.9 | 34.3 | -367.2 |
| Gross profit Development to sell | 58.5 | 93.8 | 60.3 | 136.5 |
| Fair value Development to hold | 162.2 | 170.3 | 5.0 | 362.3 |
| Cost of Development to hold** | -117.9 | -129.3 | 9.7 | -277.4 |
| Gross profit Development to hold | 44.3 | 41.0 | -7.4 | 84.9 |
| Rental revenue Development | 1.0 | 1.7 | 70.0 | 1.8 |
| Operating expenses in the Development segment | -24.0 | -23.7 | -1.3 | -35.5 |
| Adjusted EBITDA Development | 79.8 | 112.8 | 41.4 | 187.7 |
| Adjusted EBITDA Deutsche Wohnen | – | 529.9 | – | 164.5 |
| Adjusted EBITDA Total | 1,540.5 | 2,110.1 | 37.0 | 2,254.4 |
| FFO interest expense | -267.5 | -361.9 | 35.3 | -397.7 |
| Current income taxes FFO | -58.2 | -97.3 | 67.2 | -65.2 |
| Consolidation*** | -45.9 | -73.1 | 59.3 | -97.1 |
| Group FFO | 1,168.9 | 1,577.8 | 35.0 | 1,694.4 |
| Group FFO after non-controlling interests | 1,153.1 | 1,515.8 | 31.5 | 1,654.4 |
* Prior-year figures adjusted to new adjusted EBITDA definition (excluding results from at-equity investments), adjustments Adjusted EBITDA Total/Group FFO 9M 2021: € 0.4 million, 12M 2021: € 14.9 million.
** Excluding capitalized interest on borrowed capital in 9M 2022 of € 0.0 million (9M 2021 € 0.9 million), 12M 2021: € 0.9 million.
*** Based on the new 2022 definition, without elimination of IFRS 16 effect, thereof intragroup profits in 9M 2022: € -22.4 million (9M 2021: € -27.2 million), 12M 2021: € -37.8 million, gross profit Development to hold in 9M 2022: € -41.0 million (9M 2021: € -44.3 million), 12M 2021: € -84.9 million, 9M and 12M 2021: FFO-at-equity effect Deutsche Wohnen: € 25.6 million.
At the end of September 2022, Vonovia (including Deutsche Wohnen) managed a portfolio comprising 549,010 of its own residential units (September 30, 2021: 568,451), 163,727 garages and parking spaces (September 30, 2021: 170,147) and 8,858 commercial units (September 30, 2021: 9,365). 72,386 residential units (September 30, 2021: 71,427) are also managed for other owners.
Details on results of operations by segment
Rental segment
At the end of September 2022, the portfolio in the Rental segment had a vacancy rate of 2.2% (end of Q3 2021: 2.7%), meaning that our apartments were once again virtually fully occupied.
The segment revenue in the Rental segment increased by 1.5% year-on-year in the first nine months of 2022, mainly due to organic growth resulting from new construction and modernization and also taking into account the Berlin portfolio that was sold at the start of 2022 (9M 2021: 3.3%), to total € 1,789.0 million. Of the segment revenue in the Rental segment in the 2022 reporting period, € 1,439.4 million is attributable to rental income in Germany (9M 2021: € 1,414.7 million), € 267.6 million to rental income in Sweden (9M 2021: € 266.6 million) and € 82.0 million to rental income in Austria (9M 2021: € 81.4 million).
Organic rent growth (twelve-month rolling) totaled 3.3% (3.5% as of September 30, 2021). The current rent increase due to market-related factors came to 1.0% (1.1% as of September 30, 2021) and the increase from property value improvements translated into a further 1.6% (1.8% as of September 30, 2021). All in all, this produces a like-for-like rent increase of 2.6% (2.9% as of September 30, 2021). New construction measures and measures to add extra stories also contributed 0.7% (0.6% as of September 30, 2021) to organic rent growth.
The average monthly in-place rent within the Rental segment at the end of September 2022 came to € 7.47 per m² (excluding Deutsche Wohnen) compared to € 7.34 per m² at the end of September 2021. The monthly in-place rent in the German portfolio at the end of September 2022 came to € 7.33 per m² (September 30, 2021: € 7.14 per m²), with the figure for the Swedish portfolio coming to € 9.93 per m² (September 30, 2021: € 10.34 per m²) and the figure for the Austrian portfolio coming to € 5.05 per m² (September 30, 2021: € 4.87 per m²). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating, heating and water supply costs. The rental income from the Austrian real estate portfolio additionally includes maintenance and improvement contributions (EVB).
We have continued with our modernization, new construction and maintenance strategy in the 2022 fiscal year. The overview below provides details on maintenance, modernization and new construction.
| in € million | 9M 2021 | 9M 2022 | Change in % | 12M 2021 |
|---|---|---|---|---|
| Expenses for maintenance | 245.3 | 250.5 | 2.1 | 332.7 |
| Capitalized maintenance | 208.2 | 216.6 | 4.0 | 333.7 |
| Maintenance measures | 453.5 | 467.1 | 3.0 | 666.4 |
| Modernization measures | 547.8 | 518.8 | -5.3 | 758.6 |
| New construction (to hold) | 353.8 | 345.1 | -2.5 | 526.6 |
| Modernization and new construction measures | 901.6 | 863.9 | -4.2 | 1,285.2 |
| Cost of maintenance, modernization and new construction Deutsche Wohnen |
– | 424.3 | – | 234.0 |
| Total cost of maintenance, modernization and new construction |
1,355.1 | 1,755.3 | 29.5 | 2,185.6 |
Maintenance, Modernization and New Construction
Operating expenses in the Rental segment in the first nine months of 2022 were up by 4.9% on the figures for the first nine months of 2021, from € 277.8 million to € 291.3 million. This was due, in particular, to higher administrative expenses. All in all, the Adjusted EBITDA Rental came to € 1,247.2 million in the first nine months of 2022, up by 0.6% on the prior-year value of € 1,239.6 million.
Value-add segment
The Value-add segment continued to feel a slight impact of the coronavirus pandemic and cost increases sparked by the war in Ukraine. All in all, revenue from the Value-add segment came to € 916.5 million in the 2022 reporting period, up by 9.1% on the value of € 840.1 million seen in the first nine months of 2021. External revenue from our Value-add activities with our end customers in the first nine months of 2022 were up by 55.5% on the first nine months of 2021, from € 41.8 million to € 65.0 million, mainly due to energy distribution. Group revenue rose by 6.7% from € 798.3 million in the first nine months of 2021 to € 851.5 million in the first nine months of 2022.
Operating expenses in the Value-add segment in the first nine months of 2022 were up by 10.5% on the figures for the first nine months of 2021, from € 724.5 million to € 800.6 million. This was due, in particular, to higher energy and construction costs and the use of more third-party services.
Adjusted EBITDA Value-add came to € 115.9 million in the first nine months of 2022, 0.3% higher than the figure of € 115.6 million reported for the first nine months of 2021.
Recurring Sales segment
In the Recurring Sales segment, income from the disposal of properties in the first nine months of 2022 were down to € 378.6 million, 10.3% lower than the 2021 value of €422.2 million due to volume-related factors, with 1,711 units sold (9M 2021: 2,367), thereof 1,314 in Germany (9M 2021: 1,928) and 397 in Austria (9M 2021: 439). Income of € 272.9 million is attributable to sales in Germany (9M 2021: € 321.6 million) and € 105.5 million to sales in Austria (9M 2021: € 100.6 million).
In the first nine months of 2022, the fair value step-up in the portfolio came to 43.9%, up on the value of 39.5% seen in the first nine months of 2021. This was due primarily to much higher step-ups for sales in Austria.
Selling costs in the Recurring Sales segment came in at € 11.2 million in the first nine months of 2022, down by 20.0% on the value of € 14.0 million seen in the first nine months of 2021. Adjusted EBITDA Recurring Sales came in at € 104.3 million in the first nine months of 2022, down by 1.1% on the value of € 105.5 million seen in the first nine months of 2021 due to volume-related factors, despite an improved margin.
In addition, we made 4,871 Non-core Disposals of residential units as part of our portfolio adjustment measures in the first nine months of 2022 (9M 2021: 620) with total proceeds of € 978.0 million (9M 2021: € 49.5 million). This also includes the block sale from Vonovia's Berlin portfolio. At 5.1%, the fair value step-up for Non-core Disposals in the 2022 reporting period was lower than for the same period in the previous year (50.7%).
Development segment
In the "Development to sell" area, a total of 636 units were completed in the first nine months of 2022 (9M 2021: 580), thereof 60 in Germany (9M 2021: 496) and 576 units in Austria (9M 2021: 84 units). In the first nine months of 2022, income from the disposal of "Development to sell" properties amounted to € 456.7 million (9M 2021: € 328.8 million), with € 213.4 million attributable to project development in Germany (9M 2021: € 174.3 million) and € 243.3 million to project development in Austria (9M 2021: € 154.5 million). The increase in proceeds in 2022 was primarily due to a global exit (Gäblerstrasse). The resulting gross profit for "Development to sell" came to € 93.8 million in the first nine months of 2022 (9M 2021: € 58.5 million).
In the "Development to hold" area, a total of 816 units were completed in the first nine months of 2022 (9M 2021: 786 units), thereof 716 in Germany (9M 2021: 506 units) and 100 in Sweden (9M 2021: 154; in Austria 9M 2021: 126 units). In the Development to hold area, a fair value of € 170.3 million was achieved in the 2022 reporting period (9M 2021: € 162.2 million), which was fully attributable to project development in Germany (9M 2021: € 96.5 million, Sweden 9M 2021: € 21.4 million, Austria 9M 2021: € 44.3 million). The gross profit for "Development to hold" came to € 41.0 million in the first nine months of 2022 (9M 2021: € 44.3 million).
Development operating expenses came to € 23.7 million in the first nine months of 2022, down by 1.3% on the value of € 24.0 million seen in the first nine months of 2021. The Adjusted EBITDA for the Development segment amounted to € 112.8 million in the 2022 reporting period (9M 2021: € 79.8 million).
Deutsche Wohnen segment
At the end of the third quarter of 2022, Deutsche Wohnen's portfolio comprised 140,079 residential units. It continued to be virtually fully occupied with a vacancy rate of 1.8%.
In the first nine months of 2022, the Deutsche Wohnen Group generated segment revenue of € 906.9 million, of which € 575.5 million was mainly attributable to rental income and € 207.9 million to income from the nursing and assisted living sector.
Adjusted EBITDA Deutsche Wohnen came to € 529.9 million in the first nine months of 2022.
At the end of September 2022, the average monthly in-place rent in the Deutsche Wohnen portfolio came to € 7.45 per m².
In the first nine months of 2022, a total of 11,786 units were sold from the Deutsche Wohnen portfolio.
Group FFO
In the first nine months of the year, Group FFO rose by 35.0% from € 1,169.3 million (based on the new 2022 definition, without eliminating IFRS 16 effects) in the first nine months of 2021 to € 1,577.8 million. In the first nine months of 2022, Deutsche Wohnen contributed a total of € 439.5 million to Group FFO (2021: at-equity effect of € 25.6 million).
Adjusted EBITDA Total rose by 37.0% from € 1,540.5 million in the first nine months of 2021 to € 2,110.1 million in the first nine months of 2022.
In the 2022 reporting period, the non-recurring items eliminated in the Adjusted EBITDA Total came to € 26.0 million (9M 2021: € 26.0 million). This was largely due to special effects resulting from the debt recovery action in connection with the loan granted to the Adler Group, as well as the elimination of an earn-out clause that had a positive earnings effect.
The following table gives a detailed list of the non-recurring items:
Non-recurring Items
| in € million | 9M 2021 | 9M 2022 | Change in % | 12M 2021 |
|---|---|---|---|---|
| Transactions* | 21.5 | 18.0 | -16.3 | 14.1 |
| Personnel matters | 0.3 | -6.8 | – | 1.6 |
| Business model optimization | 7.8 | 11.2 | 43.6 | 24.2 |
| Research & development | 2.8 | 2.6 | -7.1 | 3.6 |
| Refinancing and equity measures | -6.4 | 1.0 | – | -6.4 |
| Total non-recurring items | 26.0 | 26.0 | – | 37.1 |
* Including one-time expenses in connection with acquisitions, such as HR measures relating to the integration process and other follow-up costs.
Reconciliations
The financial result changed from € -410.9 million in the first nine months of 2021 to € -204.2 million in the first nine months of 2022. FFO interest expense is derived from the financial result as follows:
Reconciliation of Financial Result/FFO Interest Expense
| in € million | 9M 2021 | 9M 2022 | Change in % | 12M 2021 |
|---|---|---|---|---|
| Interest income | 4.9 | 50.6 | >100 | 21.5 |
| Interest expense | -280.5 | -234.3 | -16.5 | -411.6 |
| Other financial result excluding income from investments | -135.3 | -20.5 | -84.8 | -164.8 |
| Financial result* | -410.9 | -204.2 | -50.3 | -554.9 |
| Adjustments: | ||||
| Other financial result excluding income from investments | 135.3 | 20.5 | -84.8 | 164.8 |
| Effects from the valuation of interest rate and currency derivatives |
-8.9 | -137.7 | >100 | -20.4 |
| Prepayment penalties and commitment interest | 2.8 | 10.2 | >100 | 22.7 |
| Effects from the valuation of non-derivative financial instruments |
-16.3 | -54.7 | >100 | -43.3 |
| Interest accretion to provisions | 3.0 | 7.7 | >100 | 9.8 |
| Accrued interest/other effects | 33.4 | -49.6 | – | 30.9 |
| Net cash interest | -261.6 | -407.8 | 55.9 | -390.4 |
| Adjustment for IFRS 16 Leases | 7.3 | 8.4 | 15.1 | 10.3 |
| Adjustment of income from investments in other real estate companies |
15.1 | 6.6 | -56.3 | 15.7 |
| Adjustment of interest paid due to taxes | -1.2 | -0.6 | -50.0 | -1.8 |
| Adjustment of accrued interest | -27.1 | 31.5 | – | -31.5 |
| Interest expense FFO | -267.5 | -361.9 | 35.3 | -397.7 |
* Excluding income from other investments.
In the first nine months of 2022, profit for the period came to € 2,211.7 million (9M 2021: € 3,869.1 million). In the first nine months of 2022, the Deutsche Wohnen Group is included in profit for the period in full. Profit for the period is, however, also influenced to a considerable degree by valuation effects, also due to rising interest rates and inflation, as well as the sideways movement in the value of investment properties in the third quarter of 2022. In the first nine months of 2022, impairment losses due to the increased cost of capital were attributable to goodwill and trademark rights in the nursing and assisted living sector, as well as to investments accounted for using the equity method.
The reconciliation of profit for the period to Group FFO is shown below:
Reconciliation of Profit for the Period/Group FFO
| in € million | 9M 2021* | 9M 2022 | Change in % | 12M 2021* |
|---|---|---|---|---|
| Profit for the period | 3,869.1 | 2,211.7 | -42.8 | 2,440.5 |
| Financial result** | 410.9 | 204.2 | -50.3 | 554.9 |
| Income taxes | 1,964.1 | 1,168.0 | -40.5 | 2,651.5 |
| Depreciation and amortization (incl. depreciation on finan cial assets) |
255.8 | 1,140.1 | >100 | 3,888.6 |
| Impairments and result of assets accounted for using the equity method |
-1.2 | 425.0 | – | -14.9 |
| Net income from fair value adjustments of investment properties |
-5,073.0 | -3,137.6 | -38.2 | -7,393.8 |
| Non-recurring items | 26.0 | 26.0 | – | 37.1 |
| Total period adjustments from assets held for sale | 46.1 | 38.4 | -16.7 | -6.0 |
| Income from investments in other real estate companies |
-15.0 | -6.6 | -56.0 | -15.7 |
| Other | -13.8 | -32.0 | >100 | -10.5 |
| Intragroup profits | 27.2 | 22.4 | -17.6 | 37.8 |
| Gross profit Development to hold (incl. DW) | 44.3 | 50.5 | 14.0 | 84.9 |
| Adjusted EBITDA Total | 1,540.5 | 2,110.1 | 37.0 | 2,254.4 |
| Interest expense FFO*** | -267.5 | -361.9 | 35.3 | -397.7 |
| Current income taxes FFO | -58.2 | -97.3 | 67.2 | -65.2 |
| Consolidation | -45.9 | -73.1 | 59.3 | -97.1 |
| Group FFO**** | 1,168.9 | 1,577.8 | 35.0 | 1,694.4 |
| Group FFO after non-controlling interests | 1,153.1 | 1,515.8 | 31.5 | 1,654.4 |
| Group FFO per share in €**** | 1.90 | 1.98 | 4.2 | 2.18 |
* Prior-year figures adjusted to new adjusted EBITDA definition (excluding results from at-equity investments), adjustments Adjusted EBITDA Total/Group FFO 9M 2021: € 0.4 million, 12M 2021: € 14.9 million.
** Excluding income from other investments.
*** Incl. financial income from investments in other real estate companies.
**** Based on the new 2022 definition without elimitation of IFRS 16 effect, Group FFO per share based on the shares carrying dividend rights on the reporting date, prior-year values TERP-adjusted (1,067).
Assets
Consolidated Balance Sheet Structure
| Dec. 31, 2021* | Sep. 30, 2022 | ||||
|---|---|---|---|---|---|
| in € million | in % | in € million | in % | ||
| Non-current assets | 99,138.5 | 93.6 | 101,452.3 | 95.6 | |
| Current assets | 6,775.8 | 6.4 | 4,621.1 | 4.4 | |
| Total assets | 105,914.3 | 100.0 | 106,073.4 | 100.0 | |
| Equity | 36,139.1 | 34.1 | 37,424.6 | 35.3 | |
| Non-current liabilities | 60,713.2 | 57.3 | 63,448.1 | 59.8 | |
| Current liabilities | 9,062.0 | 8.6 | 5,200.7 | 4.9 | |
| Total equity and liabilities | 105,914.3 | 100.0 | 106,073.4 | 100.0 |
* Adjusted after closing of Deutsche Wohnen PPA.
The Group's total assets increased by € 159.1 million as against December 31, 2021, up from € 105,914.3 million to € 106,073.4 million. The development in non-current assets is dominated by the impairment of goodwill of € 954.2 million. By contrast, investment properties rose by € 3,984.7 million, primarily as a result of the revaluation in the first six months. The value of financial assets accounted for using the equity method fell in the course of the year due to impairment losses and earnings adjustments.
The development in current assets is characterized first of all by the disposal of assets held for sale in the amount of € 2,578.8 million. This relates largely to the parts of the portfolio that were sold to Berlin public housing companies. Second, cash and cash equivalents fell by € 76.3 million from € 1,432.8 million to € 1,356.5 million.
Goodwill and trademark rights comprised 1.5% of the total assets.
As of September 30, 2022, the gross asset value (GAV) of Vonovia's property assets came to € 99,599.9 million. This corresponds to 93.9% of total assets, as against € 98,225.3 million or 92.4% at the end of 2021.
Total equity rose by € 1,285.5 million from € 36,139.1 million to € 37,424.6 million, due in particular to the profit for the period of € 2,211.7 million and the cash dividend distribution of € 672.3 million, which had the opposite effect. Equity was reduced by € 85.0 million not affecting net income, largely due to the disposal of non-controlling interests via purchases of shares in GSW Immobilien AG, the sale of companies in the context of the Berlin Deal and actuarial gains from provisions for pensions.
This brings the equity ratio to 35.3%, compared with 34.1% at the end of 2021.
Liabilities fell by € 1,124.8 million from € 69,775.2 million to € 68,650.4 million. The amount of non-current nonderivative financial liabilities increased by € 1,876.4 million, in particular due to a promissory note transaction and the issue of social bonds and green bonds, whereas current non-derivative financial liabilities fell by € 3,261.2 million at the same time.
Deferred tax liabilities increased by € 1,195.0 million, mostly due to the revaluation of investment properties.
After the reporting date of September 30, 2022, the Management Board decided to reassign the first tranche of around 20 development projects from to-hold to to-sell in order to bolster the internal financing.
Net Assets
Vonovia's net asset value figures are based on the best practice recommendations of the EPRA (European Public Real Estate Association).
At the end of the third quarter of 2022, the EPRA NTA came to € 49,771.2 million, up by 2.3% on the value of € 48,640.8 million seen at the end of 2021 (based on the new 2022 definition; following the conclusion of the PPA for Deutsche Wohnen). EPRA NTA per share increased from € 62.63 at the end of 2021 to € 62.54 at the end of the third quarter of 2022.
EPRA Net Tangible Assets (EPRA NTA)
| in € million | Dec. 31, 2021 | Sep. 30, 2022 | Change in % |
|---|---|---|---|
| Total equity attributable to Vonovia shareholders | 32,896.7 | 34,076.6 | 3.6 |
| Deferred tax in relation to fair value gains of investment properties* | 18,438.4 | 17,449.3 | -5.4 |
| Fair value of financial instruments** | 28.6 | -86.8 | – |
| Goodwill as per the IFRS balance sheet*** | -2,484.1 | -1,529.9 | -38.4 |
| Intangibles as per the IFRS balance sheet*** | -238.8 | -138.0 | -42.2 |
| EPRA NTA**** | 48,640.8 | 49,771.2 | 2.3 |
| EPRA NTA per share in €**** | 62.63 | 62.54 | -0.2 |
* Proportion of hold portfolio.
** Adjusted for effects from cross currency swaps.
*** Adjusted after closing of Deutsche Wohnen PPA.
**** Based on the new 2022 definition excluding real estate transfer tax. EPRA NTA per share based on the shares carrying dividend rights on the reporting date.
Fair Values
Major market developments and valuation parameters that have an impact on the fair values of Vonovia are assessed on an ongoing basis.
The evaluation of the market trend with a view to September 30, 2022, showed a general sideways trend in fair values for Vonovia's real estate portfolios in the third quarter. The fair values recalculated at the end of the first half of the year have been adjusted to reflect the investments made up to September 30, 2022.
In addition, buildings under construction (new construction/ development to hold) were completed during the ninemonth period. A fair value measurement is performed for the first time when the properties are completed. This resulted in a valuation effect of € 50.5 million for the period from January 1 to September 30, 2022 (9M 2021: € 44.3 million).
A complete remeasurement of the entire portfolio, taking into account the updated portfolio data, market developments and in particular the discounting and capitalized interest rates, will be performed again for the annual financial statements.
The recognition and valuation of investment properties are explained in detail in the consolidated financial statements for 2021.
Financial Position
Cash Flow
The Group cash flow is as follows:
Key Data from the Statement of Cash Flows
| in € million | 9M 2021 | 9M 2022 |
|---|---|---|
| Cash flow from operating activities | 1,026.3 | 1,488.9 |
| Cash flow from investing activities | -8,625.1 | 923.2 |
| Cash flow from financing activities | 9,161.5 | -2,483.0 |
| Influence of changes in foreign exchange rates |
-1.6 | -5.4 |
| Change in cash and cash equiva lents related to assets held for sale |
-1.1 | – |
| Net changes in cash and cash equivalents |
1,560.0 | -76.3 |
| Cash and cash equivalents at the beginning of the period |
613.3 | 1,432.8 |
| Cash and cash equivalents at the end of the period |
2,173.3 | 1,356.5 |
The cash flow from operating activities came to € 1,488.9 million for the first nine months of 2022 compared with € 1,026.3 million for the first nine months of 2021. In particular, this reflects the higher operating result due to the inclusion of Deutsche Wohnen, measured in the Adjusted EBITDA key figures.
The cash flow from investing activities shows net proceeds of € 923.2 million for the first nine months of 2022. This figure is characterized primarily by the sale of residential and commercial units to public housing companies in Berlin based on the agreement reached with the Berlin State Government in 2021. Payments for the acquisition of investment properties came to € 1,749.2 million in the first nine months of 2022 (9M 2021: € 1,148.9 million). On the other hand, income from portfolio sales in the amount of € 2,900.9 million was collected (9M 2021: € 481.3 million). Payments for investments in other assets amounted to € 152.9 million in the first nine months of 2022 (9M 2021: € 473.2 million).
The cash flow from financing activities includes payments for regular and unscheduled repayments in the amount of € 6,444.3 million (9M 2021: € 2,165.7 million) and, on the other hand, proceeds from issuing financial liabilities in the amount of € 5,208.2 million (9M 2021: € 12,314.3 million). Payouts for transaction and financing costs amounted to € 47.3 million (9M 2021: € 203.8 million). Interest paid in the first nine months of 2022 amounted to € 424.7 million (9M 2021: € 267.0 million).
Net changes in cash and cash equivalents came to € -76.3 million.
Financing
According to the publication dated August 26, 2022, Vonovia's credit rating as awarded by the agency Standard & Poor's is unchanged at BBB+ with a positive outlook for the long-term issuer credit rating and A-2 for the short-term issuer credit rating. At the same time, the credit rating for the issued and unsecured bonds is BBB+.
Vonovia received an A- investment grade rating from the rating agency Scope, which was most recently confirmed in a publication dated July 8, 2022.
In addition, Vonovia was awarded an A3 long-term issuer rating with a stable outlook by the rating agency Moody's for the first time on May 31, 2021. As per the announcement dated November 1, 2022, this rating was changed to Baa1 with a stable outlook after the reporting date of September 30.
Vonovia SE has launched an EMTN program (European medium-term notes program). This program, which was originally launched via Vonovia Finance B.V., allows funds to be raised quickly at any time, without any major administrative outlay, using bond issues. The prospectus for the € 40 billion program, which was published on March 18, 2022, is to be updated annually and approved by the financial supervisory authority of the Grand Duchy of Luxembourg (CSSF).
As of the reporting date of September 30, 2022, Vonovia had placed a total bond volume of € 26.2 billion, € 26.0 billion of which relates to the EMTN program. Deutsche Wohnen bonds worth a further € 1.7 billion were also assumed.
On January 18, 2022, Vonovia SE took out a commercial paper of € 500.0 million with a maturity of three months. This was repaid in full on April 21, 2022.
A bond in the amount of € 500.0 million issued in 2017 was repaid as scheduled in January 2022.
Deutsche Wohnen repaid registered bonds worth € 150.0 million and a bearer bond in the amount of € 100.0 million as scheduled in January 2022.
In addition, an unscheduled repayment was made on a registered bond in the amount of € 76.3 million in February 2022.
On February 16, 2022, Vonovia SE issued promissory note loans of € 1,010.0 million with terms of between 5 and 30 years and an average interest rate of 1.13%.
On February 25, 2022, Vonovia took out secured financing with Landesbank Baden-Württemberg in the amount of € 175.0 million with a maturity of ten years.
On February 25, 2022, Vonovia SE took out an unsecured loan with Caixabank S.A. in the amount of € 142.0 million with a maturity of five years.
On February 25, 2022, Vonovia SE took out an unsecured loan with DZ Bank AG in the amount of € 250.0 million with a maturity of seven years.
The bridge facility taken out in connection with the acquisition of Deutsche Wohnen was repaid in full as of March 1, 2022.
On March 21, 2022, Vonovia SE placed two social bonds in a total amount of € 1,650.0 million with maturities of 3.85 and 6.25 years, as well as a green bond worth € 850.0 million with a maturity of ten years. The bonds, which have a total amount of € 2,500.0 million, bear interest at a rate of 1.375%, 1.875% and 2.375%.
On March 30, 2022, Vonovia issued two variable-rate SEK bonds worth SEK 1,250.0 million with maturities of 2 and 5 years that were disbursed on April 8, 2022.
On April 1, 2022, Vonovia took out secured financing with Berlin Hyp in the amount of € 175.0 million with a maturity of ten years.
On April 12, 2022, Vonovia took out secured financing with Bayern LB in the amount of € 150.0 million with a maturity of ten years.
May 2022 saw the early repayment of a € 500.0 million bond from 2014 that was set to mature in July 2022.
In June 2022, a € 500.0 million bond from 2016 was repaid as scheduled.
The debt maturity profile of Vonovia's financing was as follows as of September 30, 2022:
Debt Maturity Profile on September 30, 2022 (face values)
In connection with the issue of unsecured bonds, Vonovia has undertaken to comply with the following standard market covenants:
The existing structured and secured financing arrangements also require adherence to certain standard market covenants. Any failure to meet the agreed financial covenants could have a negative effect on the liquidity status.
-
Limitations on incurrence of financial indebtedness
-
Maintenance of consolidated coverage ratio
-
Maintenance of total unencumbered assets
The LTV (loan to value) is as follows as of the reporting date:
| in € million | Dec. 31, 2021* | Sep. 30, 2022 | Change in % |
|---|---|---|---|
| Non-derivative financial liabilities | 47,229.5 | 45,644.2 | -3.4 |
| Foreign exchange rate effects | -36.1 | -71.3 -1,956.5 43,616.4 |
97.5 1.2 -3.6 |
| Cash and cash equivalents** | -1,932.4 45,261.0 |
||
| Net debt | |||
| Sales receivables | -69.9 | 74.7 | – |
| Adjusted net debt | 45,191.1 | 43,691.1 | -3.3 |
| Fair value of the real estate portfolio | 97,845.3 | 99,238.9 | 1.4 |
| Loans to companies holding immovable property and land | 1,042.1 | 889.1 | -14.7 |
| Shares in other real estate companies | 752.4 | 523.4 | -30.4 |
| Adjusted fair value of the real estate portfolio | 99,639.8 | 100,651.4 | 1.0 |
| LTV | 45.4% | 43.4% | -2.0 pp |
* Adjusted after closing of Deutsche Wohnen PPA.
** Incl. term deposits not classified as cash equivalents.
The financial covenants have been fulfilled as of the reporting date.
| 45,644.2 | |
|---|---|
| -3.4 | |
| 106,073.4 | 0.2 |
| 43.0% | -1.3 pp |
* Adjusted after closing of Deutsche Wohnen PPA.
Business Outlook
The forecast for the 2022 fiscal year was based on the accounting principles used in the consolidated financial statements. The current forecast does not take account of any larger acquisitions of real estate portfolios.
Our forecast for the 2022 fiscal year is based on determined and updated corporate planning for the Vonovia Group as a whole, and considers current business developments, possible opportunities and risks, the potential impact of the coronavirus pandemic and, to the extent that it can be forecast, potential effects of the war in Ukraine. The forecast also includes the key overall macroeconomic developments and the economic factors that are relevant to the real estate industry and our corporate strategy. Further information is provided in the sections of the 2021 Group management report entitled "Fundamental Information About the Group" and "Development of the Economy and the Industry."
We expect price increases triggered by the Ukraine crisis, particularly on the energy markets, to have a substantial impact on Vonovia and our customers. While these will have a direct impact on ancillary expenses, they will also have an indirect effect on all areas of the economy due to general price increases. We also expect to see further price increases on the construction materials markets, with a knock-on effect on our construction projects, too. To the extent that the statutory provisions allow, we plan to pass these price increases in the context of our modernization measures on to our tenants as well.
We expect segment revenue to increase further in 2022. We are also currently observing stable demand for rental apartments and a sideways movement in the fair values of our properties.
We also expect to see a considerable increase in Adjusted EBITDA Total and Group FFO, in particular due to the acquisition of Deutsche Wohnen.
In 2022, we expect EPRA NTA per share to be at the previous year's level, leaving any further market-related changes in value out of the equation.
The current forecast yet again confirms the positive development in the Sustainability Performance Index (SPI). We expect the high level of customer satisfaction to continue. The reduction of carbon emissions is working better than expected.
Rising interest rates and inflation are currently resulting in increased volatility on the equity and debt capital markets, also due to, or exacerbated by, the war in Ukraine. We therefore assess the overall economic situation and developments on an ongoing basis, in particular with regard to the return requirements for investment and divestment decisions. This means that the classification of development projects as "to hold" or "to sell", decisions on the start of construction, the implementation of portfolio investments and decisions on the sale of property portfolios are currently being reassessed. Consequently, we are anticipating a decline in modernization/portfolio investments and construction/densification in 2023.
The table below, which shows material and selected key indicators, provides a forecast overview for 2022 and an outlook for 2023.
| Actual 2021 | Forecast for 2022 | Forecast for 2022 in the 2022 H1 Report |
Forecast for 2022 in the 2022 Q3 Report Outlook 2023 |
||
|---|---|---|---|---|---|
| Total Segment Revenue | € 5.2 billion | € 6.2–6.4 billion | € 6.2–6.4 billion | € 6.2–6.4 billion | € 6.8–7.4 billion |
| Adjusted EBITDA Total* | €2,254.4 million |
€ 2.75–2.85 billion | € 2.75–2.85 billion | € 2.75–2.85 billion | € 2.8–2.9 billion |
| Group FFO** | € 1,694.4 million |
€ 2.0–2.1 billion | € 2.0–2.1 billion | € 2.0–2.1 billion | slightly below previ ous year |
| Group FFO per share** | € 2.18 | suspended | suspended | suspended | suspended |
| EPRA NTA per share*** | € 62.63 | suspended | suspended | suspended | suspended |
| Sustainability Performance Index (SPI)**** |
109% | ~100% | ~100% | >100% | ~100% |
| Rental income Rental segment/ Deutsche Wohnen |
€ 2,568,7 million |
€ 3.1–3.2 billion | € 3.1–3.2 billion | € 3.1–3.2 billion | € 3.15–3.25 billion |
| Organic rent growth (eop) | 3.8% | Increase of ~3.3% |
Increase of at least 3.3% |
3.4% | above previous year |
| Modernization/portfolio invest ments* |
€ 758.6 million |
€ 1.1–1.3 billion | € 1.0–1.1 billion | € 0.8–0.9 billion | ~€ 0.5 billion |
| New construction/space cre ation* |
€ 639.7 million |
€ 1.0–1.2 billion | € 0.3–0.4 billion | ~€ 0.5 billion | ~€ 0.35 billion |
| Number of units sold Recurring Sales/Deutsche Wohnen core |
2.748 | ~3,000 | ~3,300 | ~3,000 | 3,000–3,500 |
| Fair value step-up Recurring Sales/Deutsche Wohnen core |
38.8% | ~30% | ~30% | >35% | ~25% |
* Figures 2021 adjusted to new adjusted EBITDA definition (excluding results from at-equity investments).
** Based on the new 2022 definition without eliminating IFRS 16 effects, Group FFO per share based on the shares carrying dividend rights on the reporting date.
*** Based on the new 2022 definition, therefore excluding real estate transfer tax, EPRA NTA per share based on the shares carrying dividend rights on the reporting date.2021 adjusted after closing of Deutsche Wohnen PPA.
**** Excl. Deutsche Wohnen.
***** Previously shown as modernization and new construction.
Bochum, November 1, 2022
The Management Board
Condensed Interim Consolidated Financial Statements
- Consolidated Income Statement 22
- Consolidated Statement of Comprehensive Income 23
- Consolidated Balance Sheet 24
- Consolidated Statement of Cash Flows 26
Consolidated Income Statement
| in € million | Jan. 1-Sep. 30, 2021 |
Jan. 1-Sep. 30, 2022 |
Jul. 1– Sep. 30, 2021 |
Jul. 1– Sep. 30, 2022* |
|---|---|---|---|---|
| Income from property letting | 2,359.8 | 3,440.4 | 789.9 | 1,268.7 |
| Other income from property management | 57.0 | 318.5 | 19.1 | 111.0 |
| Income from property management | 2,416.8 | 3,758.9 | 809.0 | 1,379.7 |
| Income from disposal of properties | 471.7 | 3,096.6 | 114.8 | 191.5 |
| Carrying amount of properties sold | -403.4 | -3,039.7 | -92.6 | -176.5 24.9 |
| Revaluation of assets held for sale | 21.8 | 63.2 | -9.7 | |
| Profit from disposal of properties | 90.1 | 120.1 | 12.5 | 39.9 |
| Income from disposal of real estate inventories | 328.8 | 486.9 | 137.1 | 106.4 |
| Cost of sold real estate inventories | -270.3 | -388.1 | -110.1 | -82.8 |
| Profit from disposal of real estate inventories | 58.5 | 98.8 | 27.0 | 23.6 |
| Net income from fair value adjustments of investment properties | 5,073.0 | 3,137.6 | 1,374.4 | 21.7 |
| Capitalized internal expenses | 483.5 | 490.1 | 171.3 | 174.7 |
| Cost of materials | -1,099.8 | -1,752.5 | -378.0 | -718.7 |
| Personnel expenses | -446.8 | -620.6 | -141.8 | -197.4 |
| Depreciation and amortization** | -255.8 | -1,136.1 | -21.5 | -31.2 |
| Other operating income | 186.6 | 156.4 | 121.0 | 51.5 |
| Impairment losses on financial assets | -15.2 | -22.6 | -7.0 | -5.1 |
| Net income from the derecognition of financial assets measured at amortized cost |
-1.5 | 2.5 | -0.6 | 0.4 |
| Other operating expenses | -272.1 | -242.1 | -82.6 | -91.5 |
| Net income from investments accounted for using the equity method | 1.2 | -425.0 | 1.0 | -90.4 |
| Interest income | 4.9 | 50.6 | 1.0 | 14.8 |
| Interest expenses | -280.5 | -234.3 | -100.7 | -81.8 |
| Other financial result | -109.7 | -2.1 | -43.1 | 2.3 |
| Earnings before tax | 5,833.2 | 3,379.7 | 1,741.9 | 492.5 |
| Income taxes | -1,964.1 | -1,168.0 | -552.9 | -151.2 |
| Profit for the period | 3,869.1 | 2,211.7 | 1,189.0 | 341.3 |
| Attributable to: | ||||
| Vonovia's shareholders | 3,782.9 | 2,044.9 | 1,176.2 | 329.1 |
| Vonovia's hybrid capital investors | 22.4 | – | 7.6 | – |
| Non-controlling interests | 63.8 | 166.8 | 5.2 | 12.2 |
| Earnings per share (basic and diluted) in € | 6.22 | 2.60 | 1.92 | 0.42 |
* The conclusion of the purchase price allocation for the Deutsche Wohnen Group resulted in an adjustment of the estimated measurement of the acquired joint ventures and associates retroactive to September 30, 2021, in the amount of € 123.6 million; € 15.6 million thereof were attributable to non-controlling interests and this increased goodwill. Likewise, the final allocation to the respective cash-generating unit was also completed retroactively, which increased the impairment loss to be recognized by € 390.4 million as of December 31, 2021. ** Without impairment losses on real estate holdings recognized as investment properties.
Consolidated Statement of Comprehensive Income
| in € million | Jan. 1-Sep. 30, 2021 |
Jan. 1-Sep. 30, 2022 |
Jul. 1– Sep. 30, 2021 |
Jul. 1– Sep. 30, 2022* |
|---|---|---|---|---|
| Profit for the period | 3,869.1 | 2,211.7 | 1,189.0 | 341.3 |
| Change in unrealized gains/losses | 20.6 | 75.8 | 7.5 | 31.5 |
| Taxes on the change in unrealized gains/losses | -6.3 | -23.4 | -2.4 | -9.9 |
| Net realized gains/losses | -0.1 | -25.9 | -1.9 | -13.4 |
| Taxes due to net realized gains/losses | 2.4 | 10.3 | 1.4 | 4.8 |
| Profit on cash flow hedges | 16.6 | 36.8 | 4.6 | 13.0 |
| Changes in the period | -70.2 | -322.5 | -32.2 | -79.8 |
| Tax effect | 8.6 | 16.1 | 3.6 | – |
| Profit on currency translation differences | -61.6 | -306.4 | -28.6 | -79.8 |
| Items which will be recognized in profit or loss in the future | -45.0 | -269.6 | -24.0 | -66.8 |
| Changes in the period | 65.9 | -55.9 | 4.0 | -53.7 |
| Taxes on changes in the period | -0.9 | 1.9 | – | 1.5 |
| Profit on equity instruments at fair value in other comprehensive income | 65.0 | -54.0 | 4.0 | -52.2 |
| Change in actuarial gains/losses, net | 48.5 | 230.2 | 9.2 | 32.5 |
| Tax effect | -16.1 | -74.7 | -3.1 | -10.6 |
| Profit on actuarial gains and losses from pensions and similar obligations | 32.4 | 155.5 | 6.1 | 21.9 |
| Items which will not be recognized in profit or loss in the future | 97.4 | 101.5 | 10.1 | -30.3 |
| Other comprehensive income | 52.4 | -168.1 | -13.9 | -97.1 |
| Total comprehensive income | 3,921.5 | 2,043.6 | 1,175.1 | 244.2 |
| Attributable to: | ||||
| Vonovia's shareholders | 3,834.9 | 1,871.0 | 1,162.2 | 231.2 |
| Vonovia's hybrid capital investors | 22.4 | – | 7.6 | – |
| Non-controlling interests | 64.2 | 172.6 | 5.3 | 13.0 |
* The conclusion of the purchase price allocation for the Deutsche Wohnen Group resulted in an adjustment of the estimated measurement of the acquired joint ventures and associates retroactive to September 30, 2021, in the amount of € 123.6 million; € 15.6 million thereof were attributable to non-controlling interests and this increased goodwill. Likewise, the final allocation to the respective cash-generating unit was also completed retroactively, which increased the impairment loss to be recognized by € 390.4 million as of December 31, 2021.
Consolidated Balance Sheet
Assets
| in € million | Dec. 31, 2021* | Sep. 30, 2022 |
|---|---|---|
| Intangible assets | 2,722.9 | 1,668.0 |
| Property, plant and equipment | 654.1 | 624.2 |
| Investment properties | 94,100.1 | 98,084.8 |
| Financial assets | 1,016.7 | 608.5 |
| Investments accounted for using the equity method | 425.3 | 251.9 |
| Other assets | 199.6 | 195.1 |
| Deferred tax assets | 19.8 | 19.8 |
| Total non-current assets | 99,138.5 | 101,452.3 |
| Inventories | 16.4 | 136.1 |
| Trade receivables | 449.9 | 387.7 |
| Financial assets | 1,063.3 | 1,497.7 |
| Other assets | 220.9 | 263.1 |
| Income tax receivables | 201.9 | 260.5 |
| Cash and cash equivalents | 1,432.8 | 1,356.5 |
| Real estate inventories | 671.2 | 578.9 |
| Assets held for sale | 2,719.4 | 140.6 |
| Total current assets | 6,775.8 | 4,621.1 |
| Total assets | 105,914.3 | 106,073.4 |
* The conclusion of the purchase price allocation for the Deutsche Wohnen Group resulted in an adjustment of the estimated measurement of the acquired joint ventures and associates retroactive to September 30, 2021, in the amount of € 123.6 million; € 15.6 million thereof were attributable to non-controlling interests and this increased goodwill. Likewise, the final allocation to the respective cash-generating unit was also completed retroactively, which increased the impairment loss to be recognized by € 390.4 million as of December 31, 2021.
Equity and Liabilities
| in € million | Dec. 31, 2021* | Sep. 30, 2022 |
|---|---|---|
| Subscribed capital | 776.6 | 795.8 |
| Capital reserves | 15,458.4 | 16,053.1 |
| Retained earnings | 16,535.5 | 17,425.1 |
| Other reserves | 126.2 | -197.4 |
| Total equity attributable to Vonovia shareholders | 32,896.7 | 34,076.6 |
| Non-controlling interests | 3,242.4 | 3,348.0 |
| Total equity | 36,139.1 | 37,424.6 |
| Provisions | 866.3 | 607.7 |
| Trade payables | 5.4 | 0.2 |
| Non-derivative financial liabilities | 40,171.9 | 42,048.3 |
| Derivatives | 66.2 | 0.2 |
| Lease liabilities | 634.9 | 612.8 |
| Liabilities to non-controlling interests | 224.5 | 223.4 |
| Financial liabilities from tenant financing | 44.9 | 46.3 |
| Other liabilities | 5.2 | 20.3 |
| Deferred tax liabilities | 18,693.9 | 19,888.9 |
| Total non-current liabilities | 60,713.2 | 63,448.1 |
| Provisions | 727.2 | 714.5 |
| Trade payables | 444.4 | 306.5 |
| Non-derivative financial liabilities | 6,857.1 | 3,595.9 |
| Derivatives | 266.0 | 287.4 |
| Lease liabilities | 44.2 | 43.4 |
| Liabilities to non-controlling interests | 16.0 | 15.5 |
| Financial liabilities from tenant financing | 112.6 | 108.6 |
| Other liabilities | 228.8 | 128.9 |
| Liabilities associated with assets classified as held for sale | 365.7 | – |
| Total current liabilities | 9,062.0 | 5,200.7 |
| Total liabilities | 69,775.2 | 68,648.8 |
| Total equity and liabilities | 105,914.3 | 106,073.4 |
* The conclusion of the purchase price allocation for the Deutsche Wohnen Group resulted in an adjustment of the estimated measurement of the acquired joint ventures and associates retroactive to September 30, 2021, in the amount of € 123.6 million; € 15.6 million thereof were attributable to non-controlling interests and this increased goodwill. Likewise, the final allocation to the respective cash-generating unit was also completed retroactively, which increased the impairment loss to be recognized by € 390.4 million as of December 31, 2021.
Consolidated Statement of Cash Flows
| in € million | Jan. 1-Sep. 30, 2021 |
Jan. 1-Sep. 30, 2022 |
|---|---|---|
| Profit for the period | 3,869.1 | 2,211.7 |
| Net income from fair value adjustments of investment properties | -5,073.0 | -3,137.6 |
| Revaluation of assets held for sale | -21.8 | -63.2 |
| Depreciation and amortization | 255.8 | 1,136.1 |
| Interest expenses/income and other financial result | 410.9 | 204.3 |
| Income taxes | 1,964.1 | 1,168.0 |
| Profit on disposal of investment properties | -68.3 | -56.9 |
| Results from disposals of other non-current assets | 0.5 | -0.1 |
| Other expenses/income not affecting cash | -95.4 | 410.9 |
| Change in working capital | -133.2 | -226.0 |
| Income tax paid | -82.4 | -158.3 |
| Cash flow from operating activities | 1,026.3 | 1,488.9 |
| Proceeds from disposals of investment properties and assets held for sale | 481.3 | 2,900.9 |
| Proceeds from disposals of other assets | 0.7 | 13.2 |
| Proceeds from disposal of other financial assets | – | 1,399.6 |
| Payments for investments in investment properties | -1,148.9 | -1,749.2 |
| Payments for investments in other assets | -473.2 | -152.9 |
| Payments for acquisition of shares in consolidated companies, in due consideration of liquid funds |
-6,490.9 | – |
| Payments for acquisition of other financial assets | -999.9 | -1,500.0 |
| Interest received | 5.8 | 11.6 |
| Cash flow from investing activities | -8,625.1 | 923.2 |
| in € million | Jan. 1-Sep. 30, 2021 |
Jan. 1-Sep. 30, 2022 |
|---|---|---|
| Cash paid to shareholders of Vonovia SE and non-controlling interests | -493.0 | -691.2 |
| Proceeds from issuing financial liabilities | 12,314.3 | 5,208.2 |
| Cash repayments of financial liabilities | -2,165.7 | -6,444.3 |
| Cash repayments of lease liabilities | -15.7 | -31.5 |
| Payments for transaction costs in connection with capital measures | -197.3 | -35.7 |
| Payments for other financing costs | -6.5 | -11.6 |
| Payments in connection with the disposal of shares in non-controlling interests | -7.6 | -52.2 |
| Interest paid | -267.0 | -424.7 |
| Cash flow from financing activities | 9,161.5 | -2,483.0 |
| Influence of changes in foreign exchange rates on cash and cash equivalents | -1.6 | -5.4 |
| Change in cash and cash equivalents related to assets held for sale | -1.1 | – |
| Net changes in cash and cash equivalents | 1,560.0 | -76.3 |
| Cash and cash equivalents at the beginning of the period | 613.3 | 1,432.8 |
| Cash and cash equivalents at the end of the period* | 2,173.3 | 1,356.5 |
* Includes € 0.0 million (Sep. 30, 2021: € 898.5 million) in current securities classified as cash equivalents and total restricted cash of € 111.2 million (Sep. 30, 2021: € 75.7 million).
Portfolio Information
Vonovia manages its own real estate portfolio with a market value of € 99.2 billion as of September 30, 2022. The vast majority of our apartments are located in regions with positive economic and demographic development prospects.
Portfolio Structure
| Fair value* | |||||
|---|---|---|---|---|---|
| Sep. 30, 2022 | (in € million) | (in €/m²) | Residential units | Vacancy (in %) | In-place rent (in €/m²)** |
| Strategic | 70,395.3 | 2,645 | 423,710 | 1.8 | 7.29 |
| Urban Quarters | 57,842.3 | 2,737 | 341,901 | 1.7 | 7.29 |
| Urban Clusters | 12,553.1 | 2,292 | 81,809 | 2.2 | 7.29 |
| Recurring Sales | 5,478.3 | 2,665 | 29,389 | 2.7 | 7.25 |
| MFH Sales | 6,307.5 | 4,060 | 23,315 | 1.4 | 9.19 |
| Non Core | 1,174.8 | 1,555 | 12,058 | 3.8 | 6.30 |
| Germany total | 83,355.9 | 2,691 | 488,472 | 1.9 | 7.36 |
| Sweden | 7,280.1 | 2,380 | 39,411 | 3.1 | 9.93 |
| Austria | 2,950.0 | 1,714 | 21,127 | 5.3 | 5.05 |
In order to boost transparency in portfolio presentation, we also break our portfolio down into 15 regional markets. These markets are core towns/cities and their surroundings, mainly urban areas. Our decision to focus on the regional markets
that are particularly relevant to Vonovia is our way of looking ahead to the future and provides an overview of our strategic core portfolio in Germany.
Breakdown of Strategic Housing Stock by Regional Market***
| Fair value* | |||||
|---|---|---|---|---|---|
| Sep. 30, 2022 | (in € million) | (in €/m²) | Residential units | Vacancy (in %) | In-place rent (in €/m²)** |
| Regional market | |||||
| Berlin | 8,620.0 | 3,170 | 41,701 | 1.0 | 7.31 |
| Rhine Main Area | 5,695.5 | 3,245 | 26,996 | 1.9 | 8.96 |
| Southern Ruhr Area | 5,686.4 | 2,110 | 42,995 | 2.5 | 6.80 |
| Rhineland | 4,974.0 | 2,598 | 28,053 | 1.8 | 7.78 |
| Dresden | 4,824.0 | 2,096 | 38,599 | 2.4 | 6.55 |
| Hamburg | 3,912.9 | 3,060 | 19,700 | 1.1 | 7.83 |
| Kiel | 3,349.7 | 2,329 | 24,401 | 1.8 | 7.04 |
| Munich | 2,850.5 | 4,378 | 9,652 | 1.3 | 8.86 |
| Stuttgart | 2,597.9 | 2,989 | 13,590 | 1.7 | 8.56 |
| Hanover | 2,523.5 | 2,427 | 16,120 | 2.0 | 7.27 |
| Northern Ruhr Area | 2,209.6 | 1,427 | 24,849 | 2.3 | 6.24 |
| Bremen | 1,624.1 | 2,219 | 11,738 | 2.2 | 6.46 |
| Leipzig | 1,304.8 | 2,163 | 8,859 | 3.2 | 6.47 |
| Westphalia | 1,297.0 | 2,078 | 9,444 | 1.7 | 6.87 |
| Freiburg | 793.2 | 2,852 | 4,029 | 1.2 | 8.15 |
| Other Strategic Locations | 3,656.5 | 2,137 | 26,489 | 2.3 | 7.40 |
| Total strategic locations Germany | 55,919.7 | 2,524 | 347,215 | 1.9 | 7.33 |
* Fair value of the developed land excluding € 5,652.8 million, of which € 647.7 million for undeveloped land and inheritable building rights granted, € 1,175.3 million for assets under construction, € 1,131.1 million for development, € 1,187.2 million for nursing portfolio and € 1,511.5 million for other.
** Based on the country-specific definition.
*** Excluding Deutsche Wohnen portfolio.
Financial Calendar Contact
November 4, 2022
Publication of the interim statement for the first nine months of 2022
For information on all of the reporting dates that are already set, please also refer to our financial calendar.
Vonovia SE
Universitätsstrasse 133 44803 Bochum Phone +49 234 314-0 Fax +49 234 314-1314 [email protected] www.vonovia.de
Your Contacts
Investor Relations
Rene Hoffmann Head of Investor Relations Phone +49 234 314-1629 Fax +49 234 314-2995 Email: [email protected]
Corporate Communications
Klaus Markus Head of Corporate Communications Phone +49 234 314-1149 Fax +49 234 314-1309 Email: [email protected]
Note
This interim financial report is published in German and English. The German version is always the authoritative text. The interim financial report can be found on the website at www.vonovia.de.
EPRA is a registered trademark of the European Public Real Estate Association.
Disclaimer
This interim financial report contains forward-looking statements. These statements are based on the current experiences, 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 2021 Annual Report. We do not assume any obligation to update the forward-looking statements contained in this interim report. This interim report does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any securities of Vonovia SE.
Imprint
Published by The Management Board of Vonovia SE
Concept and Realization: Berichtsmanufaktur GmbH, Hamburg
Translation: EnglishBusiness AG, Hamburg
As of November 2022 © Vonovia SE, Bochum