H1 2020 Earnings Call
August 5, 2020
Rolf Buch, CEO
Helene von Roeder, CFO
Agenda
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Thomas Köhler, craftsman at Vonovia, installs a photovoltaic facility on the roof of one of our properties in Dresden. This is one of ca. 300 PV facilities currently up and running as part of our
"1,000 roofs program."
H1 2020 Results | Equity Story | Additional | ||||
& | Information | See | ||||
Business Overview | Page | |||||
Finder | ||||||
on page | ||||||
65 for | ||||||
pages 3-19 | pages 21-42 | pages 44-65 | detailed | |||
index | ||||||
H1 2020 Earnings Call | page 2 |
Agenda H1 Results
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Highlights | 4 |
Segments | 5-11 |
NAV & Valuation | 12-15 |
LTV & Financing | 16-17 |
Guidance 2020 | 18 |
Wrap-up | 19 |
H1 2020 Earnings Call | page 3 |
Highlights H1 2020
Continuously robust performance with no meaningful impact from COVID-19
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
3.9% organic rent growth y-o-y(H1 2019: 4.0%).
Performance Adj. EBITDA Total €942.2m (+8.0%).
Group FFO €676.3m (+11.0%) and €1.25 per share (+11.0%).
Adj. NAV p.s. €54.72 (+5.4% since YE2019).
€2.2bn (5.6%) value growth in H1 2020 (ca. 2/3 of the portfolio revalued)
NAV & | €1.8bn (4.7%) from performance and YC | |||
€0.3bn (0.9%) from investments | ||||
Valuation | ||||
Continued value growth across all regions except for Berlin (+0.9% from performance and YC). | ||||
First-timereporting of new EPRA NAV Metrics with EPRA NTA of €58.14 p.s. and EPRA NRV | ||||
of €71.81 p.s. | ||||
Capital | LTV 42.7% (-40bps ytd) pro forma for recent dividend payment (59%/41% cash/scrip ratio). | |||
Structure | Net debt/EBITDA multiple 12.0x (+50bps ytd). | |||
Guidance | Guidance 2020 fully confirmed with €1,875m - €1,925m for Adj. EBITDA Total and €1,275m - |
2020 | €1,325m Group FFO |
H1 2020 Earnings Call | page 4 |
Operating Performance Remains Strong
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
On the back of a ca. 5% larger portfolio and performance improvements, the Adj. EBITDA Total grew by 8.0% and the Group FFO by 11.0%.
€m (unless indicated otherwise) | H1 2020 | H1 2019 | ||
Adj. EBITDA Rental | 781.4 | 724.0 | ||
67.6 | 75.7 | |||
Adj. EBITDA Value-add | ||||
Adj. EBITDA Recurring Sales | 48.1 | 42.4 | ||
30.7 | ||||
Adj. EBITDA Development | 45.1 | |||
Adj. EBITDA Total | 942.2 | 872.8 | 8.0% | |
FFO interest expenses | -188.8 | -177.8 | ||
Current income taxes FFO | -19.8 | -30.6 | ||
Consolidation1 | ||||
-57.3 | -55.3 | |||
Group FFO | 676.3 | 609.1 | 11.0% | |
of which Vonovia shareholders | 648.2 | 582.6 | ||
of which hybrid investors | 20.0 | 20.0 | ||
of which non-controlling interests | 8.1 | 6.5 | ||
Number of shares (eop) | 542.3 | 542.3 | ||
Group FFO per share (eop NOSH) | 1.25 | 1.12 | ||
11.0% | ||||
Group FFO per share (avg. NOSH) | 1.25 | 1.16 | ||
Adj. EBITDA Total (€m)
+8%
942.2
872.8
415 | +5% |
396 |
H1 2020 | H1 2019 |
Development
Recurring Sales
Value-add
Rental
Residential units (`000)2
1 Consolidation in H1 2020 (H1 2019) comprised intragroup profits of €16.1m (€23.8m), gross profit of development to hold of €26.5m (€17.7m), and IFRS 16 effects of €14.7m (€13.8m). 2 Quarterly average.
H1 2020 Earnings Call | page 5 |
Rental Segment
Acquisitions and Organic Growth Drive Adj. EBITDA Rental
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Rental Segment (€m) | H1 2020 | H1 2019 | Delta |
Rental income | 1,132.9 | 1,014.8 | +11.6% |
Maintenance expenses | -154.7 | -147.0 | +5.2% |
Operating expenses | -196.8 | -143.8 | +36.9% |
Adj. EBITDA Rental | 781.4 | 724.0 | +7.9% |
Rental income growth in H1 2020 was driven by the
acquisition of Hembla (+€89m) plus organic rental
growth.
The increase in operating expenses was mainly attributable to two Hembla-related reasons:
more all-inclusive rents2 in Sweden compared to H1 2019;
double cost structure between Victoria Park and Hembla (synergies not yet realized).
Rental income by geography
14%
5%
Germany
Austria
Sweden
81%
EBITDA Operations margin Germany1
71.4% 73.6% 75.0% | 76.5% 77.5% | |||||||||||||||||||
830 | ||||||||||||||||||||
754 | 67.7% | |||||||||||||||||||
60.8% 63.8% | ||||||||||||||||||||
645 | ||||||||||||||||||||
570 | ||||||||||||||||||||
498 | ||||||||||||||||||||
445 | ||||||||||||||||||||
394 | ||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | H1 2020 | |||||||||||||
EBITDA Operations margin Germany | Cost per unit Germany (€) | |||||||||||||||||||
1 EBITDA Operations margin (Adj. EBITDA Rental + Adj. EBITDA Value-add - intragroup profits) / Rental Income. Margin 2019 and beyond includes positive impact from IFRS 16. Cost per unit is defined as (Rental Income
- EBITDA Operations + Maintenance) / average no. of units. 2 In Sweden, rental income includes ancillary costs. Rough estimate assuming 30% of rental income relates to ancillary expenses would reduce the Rental income and Operating expenses by ca. €50m in H1 2020 and ca. €20m in H1 2019.
H1 2020 Earnings Call | page 6 |
Rental Segment
Operating KPIs Rental Segment
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Organic rent growth of 3.9% year-on-year
Vacancy rate stable and largely the result of investments.
Expensed maintenance on prior-year level; capitalized maintenance elevated as a result of increased volume of targeted larger-scale measures planned for 2020.
Organic rent growth (y-o-y; %)
3.9 | 4.0 | |||||||
0.3 | ||||||||
0.6 | ||||||||
2.5 | ||||||||
2.3 | ||||||||
1.0 | 1.2 | |||||||
H1 2020 | H1 2019 | |||||||
Market | Modernization | New construction | ||||||
Vacancy rate (%) | Expensed and capitalized maintenance (€/sqm) | ||
2.8 | 2.9 | 9.3 | |
8.3 | |||
3.5 | 2.5 |
5.8 | 5.8 | ||||||
H1 2020 | H1 2019 | H1 2020 | H1 2019 | ||||
Expensed maintenance | Capitalized maintenance | ||||||
H1 2020 Earnings Call | page 7 |
Adj. EBITDA Value-add Initiatives Keep Moving in the Right Direction
Value-add
Segment
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing
Continued expansion and roll-out of different value-add initiatives in H1 2020 on track as planned Multimedia supply to 329k customers (+10% y-o-y)
65% of all residential environment services provided with own employees (+15pp y-o-y)
Smart metering supply to ca. 210k customers (+10% y-o-y)
Energy supply to 68,000 delivery points for electricity and gas in the portfolio (+27% y-o-y) H1 2020 Adj. EBITDA Value add impacted by
Temporary effect from COVID-19 related delays in our modernization program
Lower residential environment service volume due to mild winter temperatures
Value-add Segment (€m) | H1 2020 | H1 2019 | Delta |
Income | 760.4 | 760.9 | -0.1% |
of which external | 131.2 | 134.9 | -2.7% |
of which internal | 629.2 | 626.0 | +0.5% |
Operating expenses Value-add | -692.8 | -685.2 | +1.1% |
Adj. EBITDA Value-add | 67.6 | 75.7 | -10.7% |
Value-add EBITDA mostly from internal savings1
Craftsmen cost savings (VTS)
Multimedia
Residential environment
Smart metering
Energy
Other (e.g. 3rd party management, insurance)
1 Distribution based on 2020 Budget
H1 2020 Earnings Call | page 8 |
Recurring Sales
Segment
Demand for Individual Condos Remains Strong
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Sales volume, gross proceeds, and fair value base higher than in the previous year, reflecting the ongoing positive momentum.
Outside the Recurring Sales Segment we sold 604 non-core units in H1 2020 with a fair value step-up of 36.5%, partly driven by the disposal of a commercial property.
Recurring sales by geography1
Austria
29%
Germany
71%
Recurring Sales Segment (€m) | H1 2020 | H1 2019 | Delta |
Units sold | 1,327 | 1,234 | +7.5% |
Gross proceeds | 195.0 | 174.9 | +11.5% |
Fair value | -140.5 | -124.5 | +12.9% |
Adjusted result | 54.5 | 50.4 | +8.1% |
Fair-valuestep-up | 38.8% | 40.5% | -170bps |
Selling costs | -6.4 | -8.0 | -20.0% |
Adj. EBITDA Recurring Sales | 48.1 | 42.4 | +13.4% |
1 Based on sales proceeds.
H1 2020 Earnings Call | page 9 |
Development | ||||||
Segment | ||||||
Adj. EBITDA Development Ramp-up Continues | ||||||
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Development to sell (by income) | Development to hold (by fair value) |
Development segment broadly in line with our expectations.
Operating expenses in H1 2020 impacted by comparatively lower administrative and personnel costs and the reversal of provisions that are no longer required.
Sweden
2%
Austria
23%
Germany
44%
Austria
Germany54%
77%
Development Segment (€m) | H1 2020 | H1 2019 | Delta |
Income from disposal of "to sell" properties | 107.5 | 124.9 | -13.9% |
Cost of Development to sell | -83.7 | -95.2 | -12.1% |
Gross profit Development to sell | 23.8 | 29.7 | -19.9% |
Fair value Development to hold | 144.7 | 103.8 | 39.4% |
Cost of Development to hold | -118.2 | -86.1 | 37.3% |
Gross profit Development to hold | 26.5 | 17.7 | 49.7% |
Operating expenses Development segment | -5.2 | -16.7 | -68.9% |
Adj. EBITDA Development | 45.1 | 30.7 | 46.9% |
Note: This segment includes the contribution of to-sell and to-hold constructions of new buildings. Not included is the construction of new apartments by adding floors to existing buildings, as this happens in the context of, and is accounted for, under modernization.
H1 2020 Earnings Call | page 10 |
Development
Segment
Vonovia's Contribution towards Reducing the Housing Shortage
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
New rental apartments for our own portfolio ("to hold")
534 units completed in H1 2020 (including floor additions). Total pipeline of ca. 41,000 apartments, of which more than 70% in Germany and the remainder in Austria and Sweden. Average apartment size between 60-70 sqm and broadly in line with overall portfolio average.
The development to-hold investment volume is part of the overall investment program.
New apartments for retail disposal ("to sell")
83 units completed in H1 2020.
Total pipeline volume of ca. €3.2bn (ca. 9,000 apartments), of
7%
6%
Under construction
Short-term pipeline
Longer-term pipeline
87%
2020 target: ~1,300 completions
which ca. 70% in Germany and ca. 30% in Austria.
20%
Under construction
Investment capital for Development to sell is not part of investment program.
Average apartment size between 70-80 sqm.
Average investment volume of €4.5k - €5.0k per sqm.
Expected gross margin between 20-25% on average.
9% | Short-term pipeline | |||
71% | Longer-term pipeline | |||
2020 target: >300 completions
H1 2020 Earnings Call | page 11 |
H1 2020 with Strong Value Growth
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
H1 2020 fair value evolution (€bn)
53.3 | 53.4 | 2.3 | 55.7 | |||||
0.2 | 0.3 | 0.2 | -0.02 | |||||
Ca. 2/3 of portfolio | ||||||||
+5,6% | 41.2 | revaluedin H1 2019 | ||||||
39.0 | (26 largest German cities | |||||||
plus Vienna plus Sweden) | ||||||||
Rest of portfolio | ||||||||
14.4 | 14.5 | not revaluedin H1 2019 | ||||||
(only capitalization of | ||||||||
€142m investments) | ||||||||
12/2019 | Acquisitions | Sales | New | 12/2019 | Total value | Currency | 06/2020 | |
constructions | rebased | growth | impact |
Valuation KPIs | Vonovia | Germany | Sweden | Austria |
June 30, 2020 | Total | |||
In-place rent | 23,4x | 24.4x | 17.2x1 | 25.3x1 |
multiple | ||||
Fair value | 1,954 | 1,992 | 1,938 | 1,496 |
€/sqm | ||||
L-f-l value | 5.6% | 6.3% | 2.5% | 2.8% |
growth2 | ||||
Fair value | 55,73 | 46.6 | 5.9 | 3.2 |
€bn | ||||
Value growth drivers | H1 | 2020 | H1 | 2019 | ||||
Actual | Assuming Berlin | |||||||
= H1 2019 level | ||||||||
€m | % | €m | % | €m | % | |||
Performance & Yield | 1,822 | 4.7% | 2,446 | 6.3% | 2,234 | 7.1% | ||
compression | ||||||||
Investments4 | 347 | 0.9% | 347 | 0.9% | 279 | 0.9% | ||
Total4 | 2,169 | 5.6% | 2,794 | 7.2% | 2,513 | 7.9% | ||
1 In-place rents in Austria and Sweden are not fully comparable to Germany, as Sweden includes ancillary costs and Austria includes maintenance and property improvement contributions from tenants. The data above shows the rental level unadjusted to the German definition. 2 Local currency. 3 Including €1.9bn for undeveloped land, inheritable building rights granted (€0.6bn), assets under construction (€0.4bn), development (€0.6bn) and other (€0.3bn) and excluding €0.3bn IFRS16 use of rights. 4 Excl. €142m capitalized investments outside of revalued portfolio.
H1 2020 Earnings Call | page 12 |
Broad-based Value Growth across All German Regional Markets
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Fair | |
Regional Market | Value |
(€m) | |
Berlin | 7,593 |
Rhine Main Area | 4,657 |
Southern Ruhr Area | 4,181 |
Rhineland | 3,996 |
Dresden | 3,903 |
Hamburg | 2,910 |
Munich | 2,362 |
Stuttgart | 2,211 |
Kiel | 2,284 |
Hanover | 1,991 |
Northern Ruhr Area | 1,738 |
(Duisburg only) | |
Bremen | 1,279 |
Leipzig | 993 |
Westphalia | 959 |
Freiburg | 673 |
% share of | Perfor- | |
Regional Market | mance | Invest |
revalued in H1 | & | |
2020 | YC | |
0.9% | 0.4% | |
7.1% | 0.6% | |
7.7% | 1.7% | |
5.9% | 0.5% | |
8.0% | 0.9% | |
6.9% | 0.8% | |
4.9% | 0.4% | |
6.8% | 0.4% | |
8.4% | 0.6% | |
6.8% | 0.9% | |
7.8% | 2.4% | |
7.3% | 1.3% | |
5.9% | 0.3% | |
7.8% | 3.5% | |
2.5% | 0.5% |
Value uplift from performance, YC and investments (l-f-l)
Kiel 9.0% | |
Hamburg 7.7% | |
Bremen 8.6% | |
Hanover 7.6% | Berlin 1.4% |
Westphalia 11.4% | |
N. Ruhr Area 10.2% | |
S. Ruhr Area 9.3% | |
Leipzig 6.2% | |
Rhineland 6.4% | Dresden 8.9% |
Rhine Main 7.7%
Stuttgart 7.3%
Munich 5.2%
Freiburg 3.0%
H1 2020 Earnings Call | page 13 |
EPRA NAV and Adj. NAV
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix | |
& Financing | |||||||
€m | Jun. 30, 2020 | Dec. 31, 20191 | |||
(unless indicated otherwise) | |||||
Equity attributable to Vonovia's shareholders | 19,308.3 | ||||
19,985.8 | |||||
Deferred taxes on investment properties | 11,078.6 | 10,288.9 | |||
Fair value of derivative financial instruments2 | 22.5 | 1.6 | |||
Deferred taxes on derivative financial instruments | -8.7 | -6.3 | |||
EPRA NAV | 31,078.2 | 29,592.5 | |||
Goodwill | -1,405.0 | -1,430.6 | |||
Adj. NAV | 29,673.2 | 28,161.9 | +5.4% | ||
EPRA NAV €/share | 57.31 | 54.57 | |||
Adj. NAV €/share | 54.72 | 51.93 | +5.4% | ||
Number of shares (eop) | 542.3 | 542.3 | |||
In response to the profound evolution of property company's business models and in order to help capital markets better understand the dynamic of the underlying operations, EPRA has developed new EPRA NAV Metrics effective for reporting periods starting Jan 1, 2020. In the context of the portfolio valuation update as of June 30, 2020, Vonovia for the first time reports the following new EPRA NAV metrics:
Net Tangible Assets (NTA): Proxy for brick-and-mortar value of the long-termholding portfolio
Net Reinstatement Value (NRV): Beyond the bricks - aims to represent the value required to rebuild the company
For now, Vonovia will continue to also report the previous NAVs but expects to retire the three Performance Measures EPRA NAV, Adj. NAV and EPRA NNNAV in due course.
Note: The new EPRA NAV Metrics also include a Net Disposal Value (NDV), which is a proxy for a liquidation value assuming all assets are sold at fair value, therefore including the crystallization of deferred taxes. Vonovia intends to publish the NDV with the FY2020 results. 1 Dec. 31, 2019, numbers adjusted (cf. Note A2 of H1 2020 financial report). 2 Adjusted for effects from cross currency swaps.
H1 2020 Earnings Call | page 14 |
The Two New Leading NAV Metrics
Net Tangible Assets (NTA) and Net Replacement Value (NRV)
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Net Tangible Assets (NTA) - "brick and mortar"
Proxy for long-term holding portfolio value
Assumes the disposal of assets that do not form part of the long-term holding portfolio
Deferred taxes on assets and purchaser's costs, such as
RETT, relating to the disposal portfolio, are therefore excluded
Equity to EPRA NTA bridge (€m)
29,6061 | 3,438 | 31,527 | |||
14 | 1,405 | 3,959 | |||
125 | |||||
521 | |||||
Disposal portfolio | €58.14 | ||||
p.s. | |||||
IFRS share- | FV of financial | Goodwill | Intangibles | Real estate | NTA |
holders' | instruments | (IFRS balance | transfer tax | ||
equity (+ def. | sheet) | (and other | |||
taxes on | purchaser's | ||||
holding portf.) | costs) |
Net Reinstatement Value (NRV) - "beyond the bricks"
Proxy for company value
Represents the value required to rebuild the company
Reflects long-term nature of the business and is based on the assumption that assets are held in perpetuity
( deferred taxes on assets and purchaser's costs, such as RETT, are therefore added back)
Intangible values are included with the enterprise values of the Value-add and Development segments, net of the respective carrying amounts. The enterprise value is the result of a DCF valuation by an independent valuer and based on Vonovia's internal 5-year business plan
Equity to EPRA NRV bridge (€m)
38,941
3,959
31,065 | 3,903 | ||
14 | |||
€71.81
p.s.
IFRS share- | FV of financial FV of intangibles | Real estate | NRV |
holders' equity | instruments | transfer tax (and | |
(+ def. taxes | other purchaser's | ||
on inv. prop.) | costs) |
1 Excl. deferred taxes on disposal portfolio (€1,459m). Note: The new EPRA NAV Metrics also include a Net Disposal Value (NDV), which is a proxy for a liquidation value assuming all assets are sold at fair value, therefore including the crystallization of deferred taxes. Vonovia intends to publish the NDV with the FY2020 results.
H1 2020 Earnings Call | page 15 |
LTV well within Target Range
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Based on the stable cash flows and the strong long-termfundamentals in our portfolio locations,
largely driven by a structural supply/demand imbalance, we see continued upside potential for our
property values and do not see material long-term downside risks for our portfolio.
We remain committed to our LTV target range of 40-45%.
€m | Jun 30, 2020 | Dec 31, 2019 | |
(unless indicated otherwise) | |||
Non-derivative financial liabilities Foreign exchange rate effects Cash and cash equivalents
Net debt
Sales receivables/prepayments
Adj. net debt
Fair value of real estate portfolio
Shares in other real estate companies
Adj. fair value of real estate portfolio
LTV
LTV (incl. perpetual hybrid)
Net debt/EBITDA multiple1
24,404.3 | 23,574.9 | |
-38.5 | -37.8 | |
-949.2 | -500.7 | |
23,416.6 | 23,036.4 | |
-29.6 | 21.4 | |
23,387.0 | 23,057.8 | |
55,698.6 | 53,316.4 | |
309.9 | 149.5 | |
Adjusted for the 2019 | 56,008.5 | 53,465.9 |
dividend payment | ||
(€1.57 p.s. with 41% | 41.8% | 43.1% |
scrip ratio) the LTV is | ||
42.7% | 43.5% | 45.0% |
12.0x | 11.5x |
1 Adj. net debt quarterly average over Adj. EBITDA Total (LTM), adj. for IFRS 16 effect.
H1 2020 Earnings Call | page 16 |
Solid Capital Structure with Smooth Maturity Profile and Diverse Funding Mix
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
KPI / criteria | Jun. 30, 2020 | Dec. 31, 2019 |
Corporate rating (Scope) | A- | A- |
BBB+ | BBB+ | |
Corporate rating (S&P) | (BRP4: | (BRP4: |
"excellent") | "strong") | |
LTV2 (net debt / fair value) | 42.7%3 | 43.1% |
Net debt/EBITDA multiple1 | 12.0x | 11.5x |
Fixed/hedged debt ratio2 | 96% | 96% |
Average cost of debt2 | 1.5% | 1.5% |
Weighted average maturity (years)2 | 7.9 | 7.9 |
Most recent bond issuances (July 2020) | ||
€750m, 6 years | 0.625% | |
€750m, 10 years | 1.000% | |
Bond covenants | Required level | Current level |
(June 30, 2020) | ||
LTV | <60% | 41% |
(Total debt / total assets) | ||
Secured LTV | <45% | 14% |
(Secured debt / total assets) | ||
ICR | >1.8x | 5.0x |
(LTM EBITDA / LTM interest expense) | ||
Unencumbered assets | >125% | 201% |
(Unencumbered assets / unsecured debt) | ||
Evolution of LTV and Interest Cover Ratio
4.9 | 5.0 | |||||||||||||||||||||||||||||||||||
4.7 | ||||||||||||||||||||||||||||||||||||
49.0% | 49.7% | 4.6 | ||||||||||||||||||||||||||||||||||
47.3% | ||||||||||||||||||||||||||||||||||||
3.7 | 43.1% | |||||||||||||||||||||||||||||||||||
3.0 | 41.6% | 42.8% | 42.7% | 3 | target | |||||||||||||||||||||||||||||||
2.7 | ||||||||||||||||||||||||||||||||||||
39.8% | ||||||||||||||||||||||||||||||||||||
2.2 | range | |||||||||||||||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | H1 2020 | |||||||||||||||||||||||||||||
LTV (%) | Interest Cover Ratio | |||||||||||||||||||||||||||||||||||
Diverse funding mix with no more than 12% of debt maturing annually (as of end of July 2020)
€m | Corporate bond | |||||||||||||||||||||||||||||||||
3,000 | 8% | |||||||||||||||||||||||||||||||||
2,000 | 18% | Equity hybrid | ||||||||||||||||||||||||||||||||
1,000 | 9% | 61% | Structured loans | |||||||||||||||||||||||||||||||
0 | 4% | Mortgage loans | ||||||||||||||||||||||||||||||||
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 from | Subsidized modernization debt | |||||||||||||||||||||||||||||||||
2033 | & EIB loans |
1 Adj. net debt annual average over Total EBITDA. 2 Excl. equity hybrid. 3 Pro forma as of June 30, 2020, accounting for 2019 dividend (including the 41% scrip ratio). 4 BRP = business risk profile.
H1 2020 Earnings Call | page 17 |
2020 Guidance Fully Confirmed
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
2019 Actuals | 2020 Current Guidance | |
Rental Income | €2,075m | €~2.3bn |
Organic rent growth1 (eop) | 3.9% | ~3.3 - 3.8% |
Recurring Sales (# of units) | 2,607 | ~2,500 |
FV step-up Recurring Sales | 41.3% | ~30% |
Adj. EBITDA Total (€m) | 1,760 | 1,875 - 1,925 |
Group FFO (€m) | 1,219 | 1,275 - 1,325 |
Dividend (€/share) | 1.57 | 70% |
of Group FFO per share | ||
Investments (€m) | 1,489 | 1,300 - 1,600 |
1 If the one-off reduction of rents in Berlin to 120% of the rent ceiling is implemented in November, as currently planned, we expect to come out towards the lower end of the range; similarly, if it is not implemented we expect to come out towards the higher end of the range
H1 2020 Earnings Call | page 18 |
Wrap-up
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Our business continues to perform very stable and fully in line with our expectations.
We have proven the robustness of our business model and are only marginally impacted by COVID- 19.
The underlying market fundamentals are intact and the environment in which we operate remains very favorable.
We remain confident in our ability to deliver growth as per our 2020 guidance and beyond.
Vonovia is more than brick and mortar and the new EPRA metrics are good proxies to show the value of the portfolio vs. the value of the company.
H1 2020 Earnings Call | page 19 |
Agenda
"A Heart for Bees" says this sign in Leipzig. For the end of 2020 Vonovia targets having 100 insect habitats plus 100,000 sqm of wildflower meadows in cooperation with Germany's Nature and Biodiversity Conservation Union NABU.
H1 2020 Results | Equity Story | Additional | ||||
& | Information | See | ||||
Business Overview | Page | |||||
Finder | ||||||
on page | ||||||
65 for | ||||||
pages 3-19 | pages 21-42 | pages 44-65 | detailed | |||
index | ||||||
H1 2020 Earnings Call | page 20 |
Europe's Leading Owner and Operator of Residential Real Estate
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Long-term owner and full-scale
operator of Europe's largest listed
multifamily housing portfolio with
close to 415k apartments for small and medium incomes
>€56bn fair market value
~€30bn market capitalization
Geographic split (by no. of units)
9%
5%
85%
Germany Austria Sweden
Stockholm
38k Gothenburg
apartments Malmö
15 urban
354k growth apartments1 markets
Mainly
22k Vienna apartments
Growing recurring cash earnings per share and DPS | Two types of sustainable shareholder returns3 | ||||||||||||||||||||
Dividend policy: ~70% of recurring cash earnings are distributed as dividends | |||||||||||||||||||||
2.25 | 9.2% | 9.3% | 8.4% | 8.5% | |||||||||||||||||
1.90 | 2.06 | ||||||||||||||||||||
7.1% | |||||||||||||||||||||
1.63 | 1.57 | ||||||||||||||||||||
1.30 | 1.32 | 1.44 | 5.4% | 5.6% | 6.1% | 4.8% | 5.2% | ||||||||||||||
1.12 | 3.8% | ||||||||||||||||||||
0.95 | 1.00 | 0.94 | 2.6% | ||||||||||||||||||
0.67 | 0.74 | ||||||||||||||||||||
2.8% | 3.3% | 3.6% | 3.2% | 3.6% | 3.3% | ||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020E | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||
Recurring cash earnings ("FFO")2 | Dividend | Dividend yield | Organic asset value growth (excl. YC) | ||||||||||||||||||
1 Incl. 27k apartments in other strategic locations plus 5k in non-strategic locations that are not shown on the map. 2 2013-2018 FFO is "FFO1" and 2019+ FFO is "Group FFO." 3 Dividend yield plus l-f-l organic asset value growth from operating performance and investments (excluding yield compression).
H1 2020 Earnings Call | page 21 |
Fully Committed to the Long-term Nature of Our Business
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
MEGATRENDS | Urbanization | Energy | Demographic |
efficiency | change | ||
We give people a place they call home | We are a driving force in the housing industry |
Serving a basic need in a highly relevant market
Scalable B-to-C
business
beyond the
bricks
Our products & services give more than one million people an affordable home in their apartment and neighborhood.
Our actions are guided by a long-term view and a careful balance between all stakeholders.
We have the best-in class operating platform to serve our customers in regulated markets across the entire residential real estate value chain.
Our experience and knowhow enable us to scale our business in attractive European markets.
Long-term owner and full-scale operator of Europe's largest listed multifamily housing portfolio
We have the scale and the skills as well as the innovative and financial strength to help managing the megatrends.
We develop solutions for the housing market and are a reliable partner for municipalities & communities in our neighborhoods.
We offer sustainable per- share earnings and value growth with superior downside risk protection to our investors.
We have the necessary access to capital markets to finance the required investments.
We are
part
of the solution
Sustainable
earnings und value growth
License to | Contribution to climate | Operating in | Our business conduct is | ||
residential markets | |||||
operate | E | protection and CO2 | S brings with it a | G | built around trust, |
reduction | transparency & reliability | ||||
special responsibility | |||||
H1 2020 Earnings Call | page 22 |
Germany's Tried and Tested Social Security System Ensures That No One
Has to Lose A Roof Over Their Head In Case of Financial Distress
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
§ | "The Federal Republic of Germany is a democratic and social federal state." |
Article 20(1) of the German Basic Law. | |
! | German's social market economy is based on the principle of solidarity that underpins |
Germany's social security systems. Anyone who cannot participate in the labor market or | |
society because of misfortune, illness, disability, or old age is looked after by the community. | |
4 layers
of
protection
for
tenants
- Kurzarbeitergeld: Short-term labor allowance of 60% to 67% of net salary to keep employees in employment and avoid layoffs despite lack of work.
- ALG I: Unemployment benefit based on 60% to 67% of net salary.
- ALG II: Basic benefits to cover cost-of-living expense including "appropriate levels of expenditure for housing."
- Sozialhilfe: last safety net to protect people from poverty and exclusion, covering necessary living expenses including food, accommodation and clothing.
Paid out of the national | Housing benefits: |
Subsidy towards | |
unemployment fund to | |
housing costs for | |
which employees and | |
people with low | |
employers contribute | |
equally every month | incomes to enable |
people to live in | |
adequate, family- | |
friendly conditions. |
Anyone who can
Tax-funded | demonstrate that |
he or she is in need | |
is legally entitled. |
Additional
layers of
protection
during
COVID-19 pandemic
- No financial background check for a period of 6 months for assistance granted between March 1 and June 30.
- Simplified application process: informal applications can be made by phone, e-mail, online or personal visit to the local government office.
- Increased benefits: Kurzarbeitergeld increased from 60%-67% to up to 80%-87%.
Source: Social Security at a Glance 2019. Federal Ministry of Labour and Social Affairs. https://www.bmas.de/EN/Services/Publications/a998-social-security-at-a-glance.html
H1 2020 Earnings Call | page 23 |
Long-term Structural Support from Residential Market Trends
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix | |||
& Financing | |||||||||
Urbanization1 | Structural supply/demand imbalance2 |
Growing (above average)
Growing
No clear direction
Shrinking
Shrinking (above average)
-
of German population living in cities
84%
77%
20152050E
Germany's average annual residential completions of the last five years fall short of estimated required volumes
700 | Completions (`000) | |
600 | Government target rate ('000) | |
500
400
300 | ||||||||||||||||||||||||||||||
200 | ||||||||||||||||||||||||||||||
100 | ||||||||||||||||||||||||||||||
0 | ||||||||||||||||||||||||||||||
1991 | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
Large gap between in-place values and replacement costs3 | No correlation pattern between interest rates & asset yields4 |
Vonovia (Germany) - fair value/sqm (€; total lettable area) vs. construction costs | Other factors such as supply/demand imbalance, rental regulation, market rent growth, | |||||||||||||||||||||||||||||||||
location of assets etc. seem to outweigh the impact of interest rates when it comes to | ||||||||||||||||||||||||||||||||||
Factor | pricing residential real estate. | |||||||||||||||||||||||||||||||||
building | 2.5x - 3.0x | |||||||||||||||||||||||||||||||||
1 | ||||||||||||||||||||||||||||||||||
land | ||||||||||||||||||||||||||||||||||
0.8 | ||||||||||||||||||||||||||||||||||
0.6 | ||||||||||||||||||||||||||||||||||
1,677 | 1,865 | 0.4 | ||||||||||||||||||||||||||||||||
1,475 | 0.2 | |||||||||||||||||||||||||||||||||
1,264 | ||||||||||||||||||||||||||||||||||
1,054 | 0 | |||||||||||||||||||||||||||||||||
901 | 964 | -0.2 | ||||||||||||||||||||||||||||||||
-0.4 | ||||||||||||||||||||||||||||||||||
-0.6 | ||||||||||||||||||||||||||||||||||
-0.8 | ||||||||||||||||||||||||||||||||||
-1 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | ||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Market costs | 1992 | ||||||||||||||||||||||||||
for new | ||||||||||||||||||||||||||||||||||
constructions | Correlation | |||||||||||||||||||||||||||||||||
1 Source: BBSR (https://gis.uba.de/maps/resources/apps/bbsr/index.html?lang=de) 2 Sources: Federal Statistics Office, German government (1.5m completions during current legislative period). 3 Note: VNA 2010 - 2014 refers to Deutsche Annington Portfolio at the time; construction costs excluding land. The land value refers to the share of total fair value allocated to land. 4 Yearly asset yields vs. rolling 200d average of 10y interest rates. Sources: Thomson Reuters, bulwiengesa.
H1 2020 Earnings Call | page 24 |
Stable Market Rent Growth Leveraged with Investments
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Vonovia has three different organic rent growth drivers
Investment Program drives performance, value and quality
New construction
Modernization
Market
Additional rent from new sqm
Incremental rent from modernization
-
energy efficiency improvements
("Upgrade Building") and - senior-friendlyapartment conversion
("Optimize Apartment")
Incremental rent from market rent adjustments (Mietspiegel) and re- lettings without investments
€m | 1,300 | |||||||||
New construction | ||||||||||
Target | - | |||||||||
Upgrade Building | ||||||||||
IRR of | 1,489 | 1,600 | ||||||||
Optimize Apartment | 9-10% | |||||||||
1,139 | ||||||||||
356 | 472 | 779 | ||||||||
71 | 172 | |||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020E |
Regulated environment provides stable market rent growth1
Regulated rents (Germany) | Unregulated rents (USA) |
% | ||||||||||||||||||||||||||||||||||||||||
6 | ||||||||||||||||||||||||||||||||||||||||
4 | ||||||||||||||||||||||||||||||||||||||||
2 | ||||||||||||||||||||||||||||||||||||||||
0 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
-2 | ||||||||||||||||||||||||||||||||||||||||
-4 | ||||||||||||||||||||||||||||||||||||||||
-6 | ||||||||||||||||||||||||||||||||||||||||
-8 | ||||||||||||||||||||||||||||||||||||||||
-10 | ||||||||||||||||||||||||||||||||||||||||
-12 | ||||||||||||||||||||||||||||||||||||||||
GDP, quarterly development y-o-y | Rent growth; quarterly development y-o-y |
No direct connection between Vonovia market rent growth and inflation but over time broadly in line
3.0% | |||||||||||||
2.5% | |||||||||||||
2.0% | |||||||||||||
1.5% | Ø1.4% | ||||||||||||
1.0% | Ø1.4% | ||||||||||||
0.5% | |||||||||||||
0.0% | |||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Inflation Germany | VNA market rent growth |
1 Sources: Federal Statistics Office, GdW (German Association of Professional Homeowners), REIS, BofA Merrill Lynch Global Research, OECD, Note: Due to lack of q-o-q rent growth data for the US, the annual rent growth for a year is assumed to also be the q-o-q rent growth of that year. US rent growth 2020 is full-year estimate. US GDP Q2 2020 is the Advanced Estimate of the US Bureau of Economic Analysis as of July 30, 2020 (32.9% annualized), converted to a y-o-y comparison.
H1 2020 Earnings Call | page 25 |
Scalable B-to-C Business Beyond the Bricks
Business Segments across Entire Life Cycle of the Assets
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Rental | Value-add | Development | Recurring Sales | |||
Ancillary service | Construction of | |||||
Efficient | apartments for | Disposal of | ||||
business | ||||||
management of | (i) own portfolio | individual apartments | ||||
for internal savings | ||||||
own portfolio | (ii) disposal to third | to retail buyers | ||||
and external income | ||||||
parties | ||||||
Average duration of our | Leveraging long-term | Vonovia is one of the |
rental contracts is 13 | customer relations to | largest builders of new |
years | generate additional cash | homes in Germany |
flows from internal | ||
No cluster risk because of | savings and external | Size, efficiencies and |
B-to-C business | income | innovation lead to building |
granularity | costs below fair market | |
Customer benefit through | values | |
High degree of insourcing | better service and/or | |
and standardization along | lower cost | |
our value chain |
Steady sales volume of ca. 2.5k apartments p.a.
Sales prices of ~30% above fair market value capture the spread between book value and retail value
H1 2020 Earnings Call | page 26 |
Scalable B-to-C Business Beyond the Bricks
Full-scale Operating Platform Enables Insourcing Strategy
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Residential real estate is a granular operating business. Vonovia has built a scalable platform to efficiently manage large portfolios and to provide the full range of services largely in-house.
Property Management
~1,500
Lettings agents & caretakers
Face to the customer and eyes and ears on the ground in our local markets
Technical Service
~5,000
Craftsmen
Wholly owned craftsmen subsidiary ("VTS") for large share of maintenance and modernization plus pooling of entire purchasing power
Residential EnvironmentService Center
~1,000 | ~1,000 |
Landscape gardeners | Service Agents |
Maintenance of gray and green areas and snow/ice | Centralized property management including inbound calls |
removal in the winter | and e-mails, ancillary cost billing, contract management, |
maintenance dispatch and rent growth management |
Best-in-class | Fully SAP | High degree of | Efficient process | Superior cost | ||||||
service levels | based | standardization | management | control | ||||||
H1 2020 Earnings Call | page 27 |
Long-term Track Record of Sustainable Growth
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
FFO (€/share)1 | Dividend (€/share) | ||||||
+15% CAGR | +15% CAGR | ||||||
2.25 | 1.57 | ||||||
1.90 | 2.06 | 1.44 | |||||
1.32 | |||||||
1.63 | 1.12 | ||||||
1.30 | 0.94 | ||||||
0.95 | 1.00 | 0.67 | 0.74 | ||||
2013 2014 2015 2016 2017 2018 20192013 2014 2015 2016 2017 2018 2019
Adj. NAV (€/share) | LTV and Interest Cover Ratio | |||||||||||||||||||||||||
+16% CAGR | ||||||||||||||||||||||||||
4.9 | ||||||||||||||||||||||||||
4.7 | ||||||||||||||||||||||||||
51.9 | 49.0% | 49.7% | 4.6 | |||||||||||||||||||||||
44.9 | 47.3% | |||||||||||||||||||||||||
3.7 | ||||||||||||||||||||||||||
38.5 | ||||||||||||||||||||||||||
3.0 | 42.8% | 43.1% | ||||||||||||||||||||||||
30.8 | ||||||||||||||||||||||||||
2.7 | 41.6% | |||||||||||||||||||||||||
target | ||||||||||||||||||||||||||
39.8% | range | |||||||||||||||||||||||||
22.7 | 24.2 | 2.2 | ||||||||||||||||||||||||
21.7 | ||||||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
LTV (%) | Interest Cover Ratio | ||||||||||||
1 Based on prevailing internal management KPI, which was FFO1 from 2013-2018 and Group FFO in 2019.
H1 2020 Earnings Call | page 28 |
Scalable B-to-C Business Beyond the Bricks
Increasing Profitability via Scale and Efficiencies
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Our strategy is to own for generations and create scale effects and efficiencies (buy & hold), and
Portfolio size (eop, '000)
therefore different from a financial investor with
a limited investment horizon (buy & sell)
>8m | >2.5m | >0.7m | >0.6m | |
… | ||||
Invoices to | Inbound | Ancillary | Maintenance | |
expenses | & repair jobs | |||
process p.a. | calls p.a. | |||
bills p.a. | p.a. | |||
175
396 416
357 333 347
203
Granular Operating Business
Unique scalable platform to efficiently manage a large residential real estate portfolio driven by industrialization, standardization and optimization with best-in-class service
Digitalization still in early stage with cost-reduction potential in the medium- and long-term
Impact of scale to continue with acquisitions -
incremental Cost per unit (Germany) is around €250
2013 2014 2015 2016 2017 2018 2019
Proof of scalability1
73.6% | 75.0% | 76.5% | |||||||||||||||||||||
830 | 71.4% | ||||||||||||||||||||||
754 | 67.7% | ||||||||||||||||||||||
63.8% | |||||||||||||||||||||||
60.8% | 645 | ||||||||||||||||||||||
570 | |||||||||||||||||||||||
498 | |||||||||||||||||||||||
445 | |||||||||||||||||||||||
394 | |||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |||||||||||||||||
EBITDA Operations margin Germany | Cost per unit Germany (€) | ||||||||||||||||||||||
1 EBITDA Operations margin (Adj. EBITDA Rental + Adj. EBITDA Value-add - intragroup profits). 2019 margin includes positive impact from IFRS 16. Cost per unit is defined as (Rental Income - EBITDA Operations + Maintenance) / average no. of units.
H1 2020 Earnings Call | page 29 |
Scalable B-to-C Business Beyond the Bricks
Leveraging the B-to-C Nature of Our Business
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Value-add: lower cost & higher income
Savings from | Additional |
insourcing of services | revenues from |
to ensure maximum | walking back the |
process management | value chain and |
and cost control | offering services at |
market prices but on | |
a lower cost basis | |
due to scale and | |
efficiencies |
Customer benefit is in lower cost
and/or better service quality
Evolution of Value-add segment (Adj. EBITDA, €m)
146.3
121.2
102.1
57
37.6
23.6
10.5
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
EBITDA contribution from different Value-add initiatives1
Craftsmen cost savings (VTS)
Multimedia
Residential environment
Smart metering
Energy
Other (e.g. 3rd party management, insurance)
1 Distribution based on 2020 Budget
H1 2020 Earnings Call | page 30 |
Scalable B-to-C Business Beyond the Bricks
Opportunistic Increase of Scalability via Mergers & Acquisitions
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix | |||||
& Financing | |||||||||||
Portfolio evolution by number of apartments ('000) | Major transactions since IPO | ||||||||||
4 | 414 | 04/2014 | |||
~11k units | |||||
180 | 316 | 10/2014 | |||
~30k units | |||||
86 | 03/2015 | ||||
~145k units | |||||
IPO | Sales | Acq. | New | H1 2020 | 07/2015 |
construction | |||||
~19k units |
Portfolio acquisition criteria
Strategic Rationale | Financial Discipline | 01/2017 |
~23k units | ||
Long-term view of the | At least neutral to | |
investment grade | ||
portfolio with a focus | 03/2018 | |
rating | ||
on urban growth | ||
(assuming 50% equity/ | ~48k units | |
regions | ||
50% debt financing) | ||
Earnings Accretion | Value Accretion | 06/2018 |
At least neutral to | ~14k units | |
Accretive to EBITDA | ||
Adj. NAV per share | ||
Rental yield | 12/2019 | |
or similar1 | ||
~21k units
First sizeable portfolio
acquisition
First sizeable corporate
acquisition
Mixed cash/stock public
takeover
Sizeable all equity financed
portfolio acquisition
Public takeover and first
acquisition outside Germany
Public takeover and acquisition
of critical mass in Austria
Public takeover and acquisition
of "nucleus" in Sweden
Acquisition of critical mass in
Sweden
1 EPRA has published new Best Practice Recommendations to replace EPRA NAV with a revised but broadly similar metric. We expect the NTA to be the most adequate replacement of the Adj. NAV.
H1 2020 Earnings Call | page 31 |
Scalable B-to-C Business Beyond the Bricks
Implementation of Vonovia Business Model in Comparable Markets
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Vonovia has developed an operating platform and a unique business model for the efficient management of large residential portfolios in regulated environments.
We are convinced that this business model can be implemented outside of Germany in comparable markets: large urban rental markets with a supply- demand imbalance and a regulated rental environment.
No specific target rate or ratios in terms of German vs. non-German exposure disciplined but highly opportunistic approach.
M&A activities in European target markets are subject to the same criteria as in Germany.
15 Urban | ||||
Growth | Stockholm | |||
Regions | Gothenburg | |||
Malmö | ||||
Randstad
(greater
Amsterdam)
Île-de-France (greater Paris)
Mainly
Vienna
Germany | Austria | Sweden | France | Netherlands | ||||||
10% stake in portfolio | 2.6% stake in portfolio | |||||||||
355k residential units | 22k residential units | 38k residential units | with 4k residential | with 27k residential | ||||||
units | units | |||||||||
• | Primary home market and | • | Run scalable operating | • | Prove that Vonovia | • | Largest long-term | • | Continue market | |
expected to remain dominant in | business (Austrian SAP | business model works | potential | research | ||||||
the foreseeable future. | client successfully | outside Germany | • | Active engagement and | • | Active engagement and | ||||
• | Home of Vonovia business | implemented) | • | Market consolidation on | networking to safeguard | networking with | ||||
model that we are seeking to | • | "Austrian model" along | the basis of Victoria | pole position for when | opportunistic approach | |||||
repeat in similar markets | build-hold-sell value | Park and Hembla | opportunity arises | |||||||
chain | combination | |||||||||
H1 2020 Earnings Call | page 32 |
Megatrends - Challenge & Opportunity
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
% of population living in cities
87%
84%
77% | 79% | |
Urbanization | Germany | W. Europe |
2015 | 2050E | |
% of modernized housing units
~4% | |||
~3% | |||
~1% | |||
Energy | Avg. Germany | Required run | Vonovia 2019 |
efficiency | |||
rate Germany | |||
% of population above/below 65 years
21% | 31% | 20% | 29% | |||||
79% | 69% | 80% | 71% | |||||
Demographic | ||||||||
2015 Germany 2050E | 2015 W. Europe 2050E | |||||||
change | 65 or older | younger than 65 | ||||||
The dominant megatrends represent a challenge and
an opportunity at the same time
The key to solving the residential markets' problems lies in finding workable solutions for these megatrends in the
interest of all stakeholders
The investments required to meet these challenges are enormous. The German Housing Association GdW estimates the investment volume required until 2030 to be around €800bn
Large residential players with sustainable business models and access to capital market funding play an important role in finding and implementing solutions
Sources: United Nations, Prognos AG
H1 2020 Earnings Call | page 33 |
Long-term Support from Megatrends
Focus on Urban Areas with Long-term Supply/Demand Imbalance
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Portfolio evolution
Vonovia
~70k non-core apartments sold since IPO in 2013 | |||
Vonovia Portfolio March 2015 | Vonovia Strategic Portfolio | ||
~99% of current portfolio located in urban | 347k apartments in 818 locations | 350k apartments in ~400 locations | |
growth regions for long-term ownership and subject | |||
to structural supply-demand imbalance | |||
Aggregate total value growth 2017-2019 (%)1 | |||
40.8% |
6.0%
Strategic Portfolio | Non-core locations |
Market view of growing and shrinking regions2
The German Federal Office for Construction and Urban Development (BBSR) has analyzed all cities and counties in Germany on the basis of the average development in terms of population growth, net migration, working population (age 20- 64), unemployment rate and trade tax revenue.
The results fully confirm our portfolio
management decisions
Germany (market) | Strategic Portfolio (Vonovia) |
Shrinking (above average) | Shrinking | No clear direction | Growing | Growing (above average) |
Vonovia location High-influx cities ("Schwarmstädte"). For more information: http://investoren.vonovia.de/websites/vonovia/English/4050/financial-reports-_-presentations.html1 Simple addition of 2017-2019 valuation results excluding compound interest effects. 2 Source: BBSR (https://gis.uba.de/maps/resources/apps/bbsr/index.html?lang=de) 2
H1 2020 Earnings Call | page 34 |
The Most Efficient Solution to the Consequences of Germany's Housing
Shortage in Urban Areas is New Construction.
Vonovia Leads by Example
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Largest homebuilders in Germany1
Vonovia/Buwog
Bonava
Consus
Instone
ABG Frankfurt
BPD
Pandion
GEWOFAG
Project Imm. W.
Otto Wulff
0 | 200 | 400 | 600 |
'000 sqm living area
Majority of newly built apartments is to hold, substantially de-risking
the business compared to "typical" developers who build to sell. Three forms of new constructions:
On top of existing buildings by adding an additional floor ("roof extension")
On open spaces in between buildings in our neighborhoods ("densification")
On land that we acquire and develop ("project development") Depending on the specific circumstances of the construction project we
use conventional and modular construction methods.
1 Top 7 cities, includes projects completed between 2017 and 2024 (expected), Data source: bulwiengesa, company data.
H1 2020 Earnings Call | page 35 |
Long-term Support from Megatrends
Investments into Existing Portfolio and New Construction
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
New construction: Construction of apartments for our own portfolio through entirely new buildings or floor additions to existing buildings applying modular and conventional construction methods.
Upgrade Building: Energy efficient building modernization usually including new facades, roofs, windows and heating systems.
Upgrade | Optimize | New |
Building | Apartment | construction |
Optimize Apartment: Primarily senior-friendly apartment renovation usually | Neighborhood Development | |||
including new bathrooms, modern electrical installations, new flooring, etc. | ||||
€m | 2020E Investment Program (€m) | ||
New construction | |||
1,300 | 1,300 | ||
Upgrade Building | |||
- | - | ||
Optimize Apartment | |||
1,600 | 1,600 | ||
1,489 | |||||||||||
Target | range | range | range | ||||||||
IRR of | 1,139 | ||||||||||
9-10% | |||||||||||
779 | |||||||||||
611 | |||||||||||
356 | 472 | ||||||||||
71 | 172 | ||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020E | H1 2020 | Kicked-off | Pipeline | 2020E |
H1 2020 Earnings Call | page 36 |
Long-term Support from Megatrends
More than €550m Neighborhood Development Investments
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
While each project is different depending on specific local requirements and opportunities, neighborhood development projects usually include energy efficient modernization, construction of new apartments, apartment modernization and general upgrade of the neighborhood environment.
Bielefeld (2017)
Sennestadt
302 apartments
3 years construction time
€16m investment
Dortmund (2017) Westerfilde Nord + Süd 639 apartments
3 years construction time €28m investment
Essen (2016)
Eltingviertel
420 apartments
5 years construction time €27m investment
Aachen (2016)
Preuswald
397 apartments
3 years construction time €10m investment
Bochum (2019)
Weitmar
1,558 apartments
4 years construction time €81m investment
Duisburg (2019)
Hüttenheim
228 apartments
3 years construction time €27m investment
Frankfurt (2017)
Knorrquartier
150 apartments
2 years construction time €14m investment
Note: Year refers to year of initial investment. Pie chart refers to estimated degree of project completion.
Kiel (2018) Gaarden (Förde)
682 apartments
5 years construction time €30m investment
Hamburg (2018)
Wilhelmsburg
1,451 apartments
4 years construction time €90m investment
Berlin (2017)
Lettekiez
919 apartments
3 years construction time
€36m investment
Berlin (2017)
Tegel- Ziekowstraße 1,470 apartments
6 years construction time €111m investment
Berlin (2016) Afrikanisches Viertel 422 apartments
5 years construction time €43m investment
Wustermark (2020)
Elstal
70 apartments
4 years construction time €8m investment
Kornwestheim (2019)
Südkorn
277 apartments
4 years construction time €34m investment
H1 2020 Earnings Call | page 37 |
Serving a Fundamental Need in a Highly Relevant Market
Main Focus Points of Our Sustainability and ESG Dimensions
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
ENVIRONMENTAL
-
Largest and most meaningful positive impact is through increasing
energy efficiency and CO2 reduction of the >50,000 buildings in our portfolio - Ca. one million tCO2e emissions per year
- Committed to Germany's ambitious target of achieving a virtually climate neutral building stock by 2050 energy efficient modernization of our portfolio at rate of >3% p.a.
- Researching innovative ways to
reduce CO2 emissions and increase the use of renewable energy
SOCIAL
- Deeply rooted in the middle of society with products & services that impact the lives of more than one million people
- One's home is not a product like any other it serves a basic need alongside food and oxygen
- As a partner in the local markets in which we operate we provide answers to the challenges of the housing sector
- Most important solution lies in the construction of new and affordable apartments; as one of Germany's largest homebuilders we lead by example
- Responsibility for ~10,000 employees from 74 countries
G• We bear responsibility for offering
OVERNANCE
our employees a working environment in which they are
• Business conduct is built around happy, heathy and able to
trust, transparency and reliability advance in line with their own
• Inexpeverythctationsng we do we play by the
• Vonovia academy
rules and are compliant with all
• Comprehensive health relevant laws, directives, social
management
- normsGenerousand agreementshome office regulation
and part-time models
• Continuous and open dialogue with
• Ausbildung
• allWeiterbildungstakeholders
• We will only be successful if our stakeholders feel that they can rely on us
As Europe's largest listed landlord we provide a home to around 1 million people from ca. 170 nations. All of
our actions have more than just an economic dimension.
H1 2020 Earnings Call | page 38 |
ESG - High Run-rate in Energy-efficient Modernization & Innovative Research in the Field of CO2 Reduction
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
We support the German government's ambitious target of establishing
a virtually climate-neutral building stock in Germany by 2050
% of modernized housing units | ||||
~5% | ~5% | 5 | ||
~4% | 7 | 6 | ||
Required | 1 | |||
run rate in | ||||
Germany | ||||
~1% | 8 | |||
2 | ||||
Avg. Germany | Vonovia 2019 Vonovia 2018 Vonovia 2017 | 3 |
Climate Protection Through Innovation ->Bochum-Weitmar District
In partnership with renowned Fraunhofer institutes, Vonovia is implementing a three-yearhands-on innovation project as part of Open District Hub e. V. in our neighborhood in Bochum-Weitmar to develop and test new technologies in ongoing operations.
The aim of the project is to supply the neighborhood with electricity and heating that is as carbon-neutral as possible. We aim to achieve this by linking the energy sectors via a central platform.
A smart, self-learning energy management system then ensures that the right energy is distributed to tenants when they need it - at electric charging stations, in the form of electricity for tenants' own households or in the form of heating.
4
9
Measures at apartment level:
011 Implementation of measures that do not involve any structural intervention, e.g., optimized heating system settings
022 Digitalization of buildings and apartments, e.g., to feature smart meters
Measures at building level:
033 Energy-efficient refurbishment, e.g., measures relating to the building shells and heating systems
044 Infrastructure for e-mobility, e.g., charging stations and e-wall sockets
055 Sustainable energy supply, e.g., photovoltaic systems for tenant electricity
Measures at neighborhood level:
066 Building digitalization and networking
077 Sector coupling (heat, electricity, mobility, etc.) in the neighborhood via digital platform
088 Storage and distribution of energy generated in a decentralized structure enables on-site consumption
099 Promotion of biodiversity
H1 2020 Earnings Call | page 39 |
ESG - Deeply rooted in the middle of society with products & services that impact the lives of more than one million people
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
CUSTOMERS
- Business philosophy above and beyond what is legally required
- Self-imposedobligation to limit ourselves to maximum rent increase of €2/sqm after invest
- Guarantee to customers 70+ years that rents will remain affordable irrespective of legal rent increase opportunities
- In-housecraftsmen organization to ensure swift response time to repair & maintenance needs
- Multilingual service center for customer enquiries with 24/7 emergency service and tenant app to access all relevant data and for state-of-the-artcustomer-landlord communication
SOCIETY
- Availability and affordability of housing is one of key social questions of our time. The most effective answer to address this challenge is new construction. With almost 2,000 apartments per year we are part of the solution
- Several hundred million of investments in neighborhood development to make sure that people feel at home not only within their apartments but also within their local neighborhood
- Various foundations, donations and different initiatives (e.g. photo award) support our commitment to society
EMPLOYEES
• We bear responsibility for offering
• We bear responsibility for offering our employees a working
our employees a working environmentininwhichwhichtheytheyareare
happpy,healthyheathyandabletoto advance in line with their own
advance in line with their expectations
expectations
• Vonovia academy
• OurComprehensiveVonovia academyhealthcontinuously offersmanagementrange of training and
• Generous home office regulation coaching opportunities
and part-time models
• ComprehensiveAusbildung health
• managementWeiterbildung
• Generous home office regulation and part-time models to enable employees to balance career and family
• Signatory of Diversity Charter and committed to appreciation, tolerance and respect
H1 2020 Earnings Call | page 40 |
ESG- Highly Robust Corporate Governance
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
The duties and authorities of the three governing bodies derive from the SE Regulation, the German Stock Corporation Act and the Articles of Association. In addition, Vonovia is fully in compliance with the German Corporate Governance Code.
In the two-tiergovernance system, the management and monitoring of the business are strictly separated from each other.
Annual General Meeting (AGM)
•
•
Shareholders can exercise their voting rights.
Decision making includes the appropriation of profit, discharge of members of the SVB and MB, and capital authorization.
Two-tier Governance System
Supervisory Board (SVB)
- Appoints, supervises and advises MB
- Examines and adopts the annual financial statements
- Forms Supervisory Board Committees
- Fully independent
- Board profile with all required skills and experience
Jürgen | Prof. Dr. | Burkhard Ulrich | Vitus | Dr. Florian | Dr. Ute |
Fitschen | Edgar Ernst | Drescher | Eckert | Funck | Geipel-Faber |
(Chairman) |
Daniel | Hildegard | Prof. Dr. | Dr. Ariane | Clara-Christina | Christian |
Just | Müller | Klaus Rauscher | Reinhart | Streit | Ulbrich |
Management Board (MB)
- Jointly accountable for independently managing the business in the best interest of the company and its stakeholders
- Informs the SVB regularly and comprehensively
-
Develops the company's strategy, coordinates it with the
SVB and executes that strategy
CEO | CFO |
Rolf | Helene |
Buch | von Roeder |
CRO | CDO |
Arnd | Daniel |
Fittkau | Riedl |
H1 2020 Earnings Call | page 41 |
Why Vonovia?
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Granular B-to-C business with high degree of stability. Business model is resilient, predictable and provides downside protection.
Long-term owner and full-scale operator with proven track record of scale and efficiencies in regulated residential real estate markets.
The megatrends urbanization, energy efficiency and demographic change provide structural support and long-term tailwind for the business.
Uniquely positioned in Germany with ability and ambition to implement Vonovia's business model in selected European metropolitan areas.
Fully committed to long-term nature of the business and the importance of sustainability.
H1 2020 Earnings Call | page 42 |
Agenda
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Kevin Drexler is one of almost 500 trainees across more than a dozen professions Vonovia-wide. Kevin and his ca. 900 colleagues in our residential environment business, are responsible for 14m sqm of green spaces, 300km of hedges, 220,000 trees and much more to ensure that our tenants live in a neighborhood they gladly call home.
H1 2020 Results | Equity Story | Additional | ||||
& | Information | See | ||||
Business Overview | Page | |||||
Finder | ||||||
on page | ||||||
65 for | ||||||
pages 3-19 | pages 21-42 | pages 44-65 | detailed | |||
index | ||||||
H1 2020 Earnings Call | page 43 |
Portfolio Cluster
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
55% of German portfolio earmarked for
investment strategy, safeguarding long-term sustainability of our Optimize Apartment and Upgrade
Building investment strategy
604 non-core units sold in H1 2020 with a fair value step-up of ca. 36.5%, partly driven by the
disposal of a commercial property
Sweden 11%
Austria 5%
Non-core 1%
Recurring
Sales 7%
Invest 55%
Operate 22%
Jun 30, 2020 | Fair value1 | Residential | In-place rent | ||
(€bn) | % of total | (€/sqm) | units | (€/sqm/month) | |
Operate | 11,578 | 22% | 1,993 | 85,450 | 7.26 |
Invest | 29,351 | 55% | 1,986 | 238,189 | 6.73 |
Strategic | 40,929 | 76% | 1,988 | 323,639 | 6.87 |
Recurring Sales | 3,919 | 7% | 2,111 | 27,167 | 6.99 |
Non-core | 433 | 1% | 1,513 | 3,581 | 6.52 |
Vonovia Germany | 45,282 | 84% | 1,992 | 354,387 | 6.88 |
Vonovia Sweden | 5,762 | 11% | 1,938 | 38,130 | 9.65 |
Vonovia Austria | 2,726 | 5% | 1,496 | 22,362 | 4.73 |
Vonovia Total | 53,770 | 100% | 1,954 | 414,879 | 7.03 |
Note: In-place rents in Austria and Sweden are not fully comparable to Germany, as Sweden includes ancillary costs and Austria includes maintenance and property improvement contributions from tenants. The table above shows the rental level unadjusted to the German definition. 1 Fair value of the developed land excluding €1,928.1m, of which €582.3m for undeveloped land and inheritable building rights granted, €400.0m for assets under construction, €599.1m for development, and €346.7m other.
H1 2020 Earnings Call | page 44 |
Regional Cluster
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Regional Market
Fair value1 | ||||
(€m) | (€/sqm) | Residential | Vacancy | |
units | (%) | |||
In-place rent | Market rent | Average rent | |||||||
Purchase | |||||||||
Residential | Organic rent | Multiple | increase | growth (LTM, | |||||
Total | Residential | power index | |||||||
(€/sqm/ | growth | (in-place | forecast | %) from | |||||
(p.a., €m) | (p.a., €m) | (market | |||||||
month) | (y-o-y, %) | rent) | Valuation (% | Optimize | |||||
data)2 | |||||||||
p.a.) | Apartment |
Berlin
Rhine Main Area (Frankfurt,
Darmstadt, Wiesbaden)
Southern Ruhr Area (Dortmund,
Essen, Bochum)
Rhineland (Cologne, Düsseldorf,
Bonn)
Dresden
Hamburg
Munich
Stuttgart
Kiel
Hanover
Northern Ruhr Area (Duisburg,
Gelsenkirchen)
Bremen
Leipzig
Westphalia (Münster, Osnabrück)
Freiburg
Other Strategic Locations
Total Strategic Locations
Non-Strategic Locations
7,593 | 2,720 | 42,365 | 1.2 | 232 | 220 | 6.90 | 3.4 | 32.7 | 81.3 | 1.6 | 45.1 |
4,657 | 2,615 | 27,421 | 1.8 | 179 | 173 | 8.42 | 3.3 | 26.0 | 105.9 | 1.8 | 26.9 |
4,181 | 1,543 | 43,445 | 3.3 | 200 | 195 | 6.30 | 5.1 | 20.9 | 89.1 | 1.5 | 26.7 |
3,996 | 2,059 | 28,495 | 2.2 | 171 | 163 | 7.34 | 3.0 | 23.4 | 100.8 | 1.7 | 26.8 |
3,903 | 1,701 | 38,516 | 3.7 | 169 | 160 | 6.20 | 3.6 | 23.1 | 82.6 | 1.7 | 22.9 |
2,910 | 2,271 | 19,750 | 1.6 | 112 | 108 | 7.30 | 3.9 | 25.9 | 98.9 | 1.6 | 39.0 |
2,362 | 3,618 | 9,663 | 1.5 | 66 | 62 | 8.33 | 3.1 | 35.6 | 123.7 | 1.9 | 36.9 |
2,211 | 2,488 | 13,753 | 1.7 | 86 | 82 | 8.08 | 2.7 | 25.8 | 105.7 | 1.8 | 32.3 |
2,284 | 1,655 | 23,219 | 2.4 | 106 | 102 | 6.48 | 3.9 | 21.5 | 74.8 | 1.7 | 31.8 |
1,991 | 1,903 | 16,252 | 2.8 | 85 | 82 | 6.82 | 3.7 | 23.5 | 90.3 | 1.7 | 30.9 |
1,738 | 1,093 | 25,454 | 3.5 | 111 | 108 | 5.90 | 3.6 | 15.6 | 81.4 | 1.2 | 31.2 |
1,279 | 1,728 | 11,852 | 3.4 | 52 | 50 | 6.01 | 5.0 | 24.5 | 84.3 | 1.8 | 20.9 |
993 | 1,619 | 9,052 | 3.7 | 44 | 41 | 6.15 | 2.4 | 22.6 | 76.3 | 1.8 | 22.7 |
959 | 1,534 | 9,479 | 3.3 | 47 | 45 | 6.35 | 5.6 | 20.6 | 90.9 | 1.5 | 33.7 |
673 | 2,414 | 4,040 | 2.1 | 25 | 25 | 7.61 | 3.5 | 26.4 | 86.9 | 1.7 | 41.6 |
2,950 | 1,703 | 26,762 | 3.5 | 139 | 134 | 6.85 | 3.4 | 21.2 | 1.6 | 31.5 | |
44,683 | 2,000 | 349,518 | 2.6 | 1,825 | 1,750 | 6.88 | 3.7 | 24.5 | 1.6 | 30.8 | |
599 | 1,566 | 4,869 | 5.1 | 29 | 26 | 6.57 | 2.0 | 20.9 | 1.6 | 26.1 |
Total Germany | 45,282 | 1,992 | 354,387 | 2.7 | 1,854 | 1,776 | 6.88 | 3.6 | 24.4 | 1.6 | 30.7 |
Vonovia Sweden | 5,762 | 1,938 | 38,130 | 2.6 | 335 | 308 | 9.65 | 4.8 | 17.2 | 1.7 | - |
Vonovia Austria | 2,726 | 1,496 | 22,362 | 4.7 | 108 | 90 | 4.73 | 4.2 | 25.3 | 1.4 | - |
Total | 53,770 | 1,954 | 414,879 | 2.8 | 2,297 | 2,174 | 7.03 | 3.9 | 23.4 | 1.7 | - |
Note: In-place rents in Austria and Sweden are not fully comparable to Germany, as Sweden includes ancillary costs and Austria includes maintenance and property improvement contributions from tenants. The table above shows the rental level unadjusted to the German definition. 1 Fair value of the developed land excluding €1,928.1m, of which €582.3m for undeveloped land and inheritable building rights granted, €400.0m for assets under construction, €599.1m for development, and €346.7m other. 2 Source: GfK (2020). Data refers to the specific cities indicated in the tables, weighted by the number of households where applicable.
H1 2020 Earnings Call | page 45 |
Substantial Rent Growth Pipeline
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Increasingly comprehensive investment projects incl. neighborhood developments and new
construction result in more extended periods between investment and full rent growth realization.
From the investment programs 2017 to 2020 an aggregate incremental rental income of ~ €96m p.a.
is still in the pipeline as investments are underway but not fully completed.
Year-by-year rent growth materialization from investment programs
1% | 3% | |||||||||||||
4% | ||||||||||||||
12% | 19% | Rent growth from investment | ||||||||||||
19% | program 3 years earlier | |||||||||||||
39% | 38% | 41% | ||||||||||||
37% | 31% | Rent growth from investment | ||||||||||||
program 2 years earlier | ||||||||||||||
38% | ||||||||||||||
100% | ||||||||||||||
22% | Rent growth from investment | |||||||||||||
program 1 year earlier | ||||||||||||||
61% | 60% | 56% | 50% | |||||||||||
38% | ||||||||||||||
28% | Rent growth from same-year | |||||||||||||
investment program | ||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | 2020E | 2021E |
Year of rent increase execution
Explanatory note: Of the investment-driven rent growth in 2020, for example, 38% come from the investment program 2020, 38% from investment program 2019, 19% from the investment program 2018 and the remaining 4% from the investment program 2017.
H1 2020 Earnings Call | page 46 |
Distribution of Construction Year Clusters
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
<1919 | 4% | ||||
1919-1948 | 11% | ||||
1949-1959 | 30% | Typical post WWII | |||
constructions with mostly | |||||
up to 5 floors in larger | |||||
clusters; key focus for | |||||
1960-1969 | 21% | neighborhood development | |||
investment activities | |||||
1970-1979 | 18% | Mostly dense high rise | |||
constructions; particularly | |||||
1980-1989 | 8% | efficient to manage | |||
1990-1999 | 7% | ||||
2000+ | 1% | ||||
Note: German portfolio only. Construction year indicates year of initial construction and disregards comprehensive modernization work.
H1 2020 Earnings Call | page 47 |
New EPRA NAV Metrics
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Net Tangible Assets (NTA) - "holding portfolio value" Net Reinstatement Value (NRV) - "beyond the bricks"
Proxy for brick-and-mortar value of the long-term | Aims to represent the value required to rebuild the | ||||
holding portfolio | company | ||||
€m | €m | 4.4% | |||
37,306
5.3%
38,941
29,932
31,527
€71.81
€68.79
p.s.
€58.14
p.s.
€55.20
p.s.
p.s.
Dec 31, 2019 | Jun 30, 2020 | Dec 31, 2019 | Jun 30, 2020 |
Note: The new EPRA NAV Metrics also include a Net Disposal Value (NDV), which is a proxy for a liquidation value assuming all assets are sold at fair value, therefore including the crystallization of deferred taxes. Vonovia intends to publish the NDV with the FY2020 results.
H1 2020 Earnings Call | page 48 |
Reconciliation from Old to New EPRA NAV Metrics
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Net Tangible Assets (NTA) - "holding portfolio value" Net Reinstatement Value (NRV) - "beyond the bricks"
Proxy for brick-and-mortar value of the long-term | Aims to represent the value required to rebuild the | |||
holding portfolio | company | |||
EPRA NAV to EPRA NTA bridge (€m) | EPRA NAV to EPRA NRV bridge (€m) | |||
38,941 | ||||
3,959 |
31,078 | 31,527 | 31,078 | 3,903 | ||
1,405 | 1,459 | 3,438 | |||
125 | |||||
€71.81 | |||||
p.s. | |||||
€57.31 | €58.14 | €57.31 | |||
p.s. | |||||
p.s. | p.s. | ||||
EPRA NAV Goodwill Deferred | Intangibles Real estate | NTA | EPRA NAV | FV of intangibles Real estate | NRV |
taxes on | (IFRS) transfer tax | transfer tax | |||
disposal | (and other | (and other | |||
portfolio | purchaser's | purchaser's | |||
costs)1 | costs) |
1 Long-term Holding portfolio only. Note: The new EPRA NAV Metrics also include a Net Disposal Value (NDV), which is a proxy for a liquidation value assuming all assets are sold at fair value, therefore including the crystallization of deferred taxes. Vonovia intends to publish the NDV with the FY2020 results.
H1 2020 Earnings Call | page 49 |
Detailed Overview of Old and New EPRA NAV Metrics
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix | |||||
& Financing | |||||||||||
OldEPRA NAV Metrics (€m) | NewEPRA NAV Metrics (€m) | ||||||||||
31,065 | 31,078 | ||||||||||||||||||||||
14 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
€57.31
p.s.
IFRS | FV of | Goodwill | Intangibles | FV of fixed | FV of | Real estate | NAV |
shareholders' | financial | (IFRS | interest | intangibles | transfer tax | ||
equity (+ | instruments | balance | rate debt | (and other | |||
def. taxes on | sheet) | purchaser's | |||||
inv. prop.) | costs) |
31,065 | 14 | 29,673 | |||||
0 | 0 | 0 | 0 | ||||
1,405 | |||||||
€54.72 | |||||||
p.s. | |||||||
IFRS | FV of | Goodwill | Intangibles | FV of fixed | FV of | Real estate | Adj. NAV |
shareholders' | financial | (IFRS | interest | intangibles | transfer tax | ||
equity (+ | instruments | balance | rate debt | (and other | |||
def. taxes on | sheet) | purchaser's | |||||
inv. prop.) | costs) |
38,941 | |||||||
3,959 | |||||||
31,065 | 14 | 0 | 0 | 0 | 3,903 | €71.81 | |
p.s. | |||||||
IFRS | FV of | Goodwill | Intangibles | FV of fixed | FV of | Real estate | NRV |
shareholders' | financial | (IFRS | interest | intangibles | transfer tax | ||
equity (+ | instruments | balance | rate debt | (and other | |||
def. taxes on | sheet) | purchaser's | |||||
inv. prop.) | costs) | ||||||
29,6061 | 31,527 | ||||||
14 | 3,438 | ||||||
125 | 0 | 0 | |||||
1,405 | |||||||
€58.14 | |||||||
p.s. | |||||||
IFRS | FV of | Goodwill | Intangibles | FV of fixed | FV of | Real estate | NTA |
shareholders' | financial | (IFRS | interest | intangibles | transfer tax | ||
equity (+ | instruments | balance | rate debt | (and other | |||
def. taxes on | sheet) | purchaser's | |||||
holding | costs)2 | ||||||
portfolio) |
1 Excl. deferred taxes on disposal portfolio (€1,459m). 2 Long-termHolding portfolio only. Note: The new EPRA NAV Metrics also include a Net Disposal Value (NDV), which is a proxy for a liquidation value, not dissimilar to the EPRA NNNAV, assuming all assets are sold at fair value, therefore including the crystallization of deferred taxes. Vonovia intends to publish an the NDV with the FY2020 results.
H1 2020 Earnings Call | page 50 |
Illustrative Overview of Investment Program Funding
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Rental Income
- Maintenance expenses
- Operating expenses
- EBITDA Value-add
- EBITDA Recurring Sales
- EBITDA Development
- Total EBITDA
- Interest expenses
- Current income taxes
- Consolidation/non-cashitems
- Group FFO
Comprehensive investment program to drive organic growth and portfolio improvements
Size of investment program is calibrated to remain within LTV target range
Funded with retained cash, proceeds from recurring sales plus (often subsidized) loans
€1.3bn - €1.6bn
~70% for dividend1 | ~30% | |
cash | scrip | retained earnings |
- Capitalized maintenance
- Hybrid coupon & minorities
- One-offs
- Earnings available for investment program
Incremental
debt
Sales
proceeds
Earnings
contribution
Including funding from KfW and
EIB
~2,500 units @30% est. gross margin
1 Average historic cash/scrip ratio has been 56%/44% since inception in 2016
Investment Program
H1 2020 Earnings Call | page 51 |
Stable Track Record in Recurring Sales Segment
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
The Recurring Sales Segment comprises of single-unit sales from a defined subportfolio of ca. 27k units1. All apartments have an individual land register entry and are eligible for disposal from a legal point of view. The cash proceeds from Recurring Sales are used as an equity contribution for the investment program.
Historical disposal volumes and FV step-up2
3,000 | 50% | ||||||
2,500 | 40% | ||||||
2,000 | H2 | ||||||
30% | |||||||
est. | |||||||
1,500 | |||||||
20% | |||||||
1,000 | |||||||
500 | H1 | 10% | |||||
0 | 0% | ||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | H1 2020 |
Sold units | FV step-up | Current guidance |
Note: FV step-up dependent on level of fair values in relation to sales prices. 1 German portfolio only; recurring sales are also made from the Austrian portfolio. 2 2018 onwards also including recurring sales in Austria.
H1 2020 Earnings Call | page 52 |
Acquisitions - Opportunistic but Disciplined
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Acquisition pipeline ('000 units)
340
2013: Dewag+ Vitus (~41 k)1 | |||||||||||||||||||||||||||||||||||
2015: Gagfah (~145 k) 1 | |||||||||||||||||||||||||||||||||||
2015: Südewo (~19 k) 1 | |||||||||||||||||||||||||||||||||||
2016: conwert (~23 k) 1 | |||||||||||||||||||||||||||||||||||
252 | 2017: Buwog (~48 k) 1 | ||||||||||||||||||||||||||||||||||
2018: Victoria Park (~14 k) 1 | |||||||||||||||||||||||||||||||||||
240 | |||||||||||||||||||||||||||||||||||
224 | 2019: Hembla (~21 k) 1 | ||||||||||||||||||||||||||||||||||
219 | |||||||||||||||||||||||||||||||||||
206 | |||||||||||||||||||||||||||||||||||
175 | |||||||||||||||||||||||||||||||||||
158 | 163 | ||||||||||||||||||||||||||||||||||
140 | 136 | ||||||||||||||||||||||||||||||||||
121 | 114 | ||||||||||||||||||||||||||||||||||
105 | |||||||||||||||||||||||||||||||||||
97 | |||||||||||||||||||||||||||||||||||
87 | 83 | 83 | |||||||||||||||||||||||||||||||||
77 | |||||||||||||||||||||||||||||||||||
71 | |||||||||||||||||||||||||||||||||||
69 | 66 | 67 | |||||||||||||||||||||||||||||||||
61 | |||||||||||||||||||||||||||||||||||
54 | 52 | ||||||||||||||||||||||||||||||||||
44 | 37 | 37 | 41.5 | ||||||||||||||||||||||||||||||||
35 | |||||||||||||||||||||||||||||||||||
18 | 26 | 25 | 22 | ||||||||||||||||||||||||||||||||
17 | |||||||||||||||||||||||||||||||||||
7 | 7 | 5 | 3 | ||||||||||||||||||||||||||||||||
Examined | Analyzed in more detail | Due Diligence, partly ongoing | Bids | Signed | |||||||||||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | H1 2020 | ||||||||||||||||||||||||||||
1Acquisitions are shown for all categories in the year the acquisition process started.
H1 2020 Earnings Call | page 53 |
Acquisition Track Record
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix | |||||||
& Financing | |||||||||||||
Larger acquisitions | Fair Value per sqm | ||||||||||||
Year | Deal | Residential units | TOP Locations | @ Acquisition | Jun 30, 2020 | ∆ | |||||||
# | |||||||||||||
DEWAG | 11,300 | Berlin, Hamburg, Cologne, | € 1,344 | € 2,570 | 91% | ||||||||
Frankfurt | |||||||||||||
2014 | |||||||||||||
VITUS1 | 20,500 | Bremen, Kiel | € 807 | € 1,664 | 106% | ||||||||
GAGFAH | 144,600 | Dresden, Berlin, Hamburg | € 889 | € 1,934 | 118% | ||||||||
2015 | FRANCONIA | 4,100 | Berlin, Dresden | € 1,044 | € 2,174 | 108% | |||||||
SÜDEWO | 19,400 | Stuttgart, Karlsruhe, Mannheim, | € 1,380 | € 2,265 | 64% | ||||||||
Ulm | |||||||||||||
2016 | GRAINGER | 2,400 | Munich, Mannheim | € 1,501 | € 2,588 | 72% | |||||||
CONWERT | 23,400 | Berlin, Leipzig, Potsdam, Vienna | € 1,353 | € 2,130 | 57% | ||||||||
(Germany & Austria) | |||||||||||||
thereof Germany | 21,200 | Berlin, Leipzig, Potsdam | € 1,218 | € 2,036 | 67% | ||||||||
2017 | thereof Austria | 2,200 | Vienna | € 1,986 | € 2,614 | 32% | |||||||
PROIMMO | 1,000 | Hanover | € 1,617 | € 1,976 | 22% | ||||||||
BUWOG | 48,300 | Berlin, Lübeck, Vienna, Villach | € 1,244 | € 1,574 | 27% | ||||||||
(Germany & Austria) | |||||||||||||
thereof Germany | 27,000 | Berlin, Lübeck, Kiel | € 1,330 | € 1,821 | 37% | ||||||||
2018 | thereof Austria | 21,300 | Vienna, Villach, Graz | € 1,157 | € 1,335 | 15% | |||||||
VICTORIA PARK | 14,000 | Stockholm, Malmö, Gothenburg | SEK 15,286 | SEK 18,670 | 22% | ||||||||
(Sweden) | |||||||||||||
AKELIUS | 2,300 | Stockholm, Gothenburg | SEK 25,933 | SEK 27,484 | 6% | ||||||||
(Sweden) | |||||||||||||
2019 | |||||||||||||
HEMBLA | 21,400 | Stockholm | SEK 20,157 | SEK 20,640 | 2% | ||||||||
(Sweden) | |||||||||||||
Total | 312,700 | ||||||||||||
Note: Excluding smaller tactical acquisitions. 1 Net of subportfolio sold right after the acquisition
H1 2020 Earnings Call | page 54 |
Bonds / Rating
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Corporate Investment grade rating | as of 2018-08-02 | |||||||
Rating agency | Rating | Outlook | Last Update | July 22: S&P's updated Vonovia's business risk | ||||
Scope | A- | Stable | 13 Dec 2019 | |||||
profile from "strong" to "excellent" | ||||||||
Standard & Poor's | BBB+ | Stable | 22 Jul 2020 | |||||
Bond ratings | as of 2018-08-02 | |||||||
Name | Tenor & Coupon | ISIN | Amount | Issue price | Coupon | Final Maturity Date | Rating | |
Scope | S&P | |||||||
Bond 024B (EMTN) | 10 years 1.000% | DE000A28ZQQ5 | € 750m | 99.189% | 1.000% | 09 Jul 2030 | A- | BBB+ |
Bond 024A (EMTN) | 6 years 0.625% | DE000A28ZQP7 | € 750m | 99.684% | 0.625% | 09 Jul 2026 | A- | BBB+ |
Bond 023B (EMTN) | 10 years 2.250% | DE000A28VQD2 | € 500m | 98.908% | 2.250% | 07 Apr 2030 | A- | BBB+ |
Bond 023A (EMTN) | 4 years 1.625% | DE000A28VQC4 | € 500m | 99.831% | 1.625% | 07 Apr 2024 | A- | BBB+ |
Bond 022C (EMTN) | 20 years 1.625% | DE000A2R8NE1 | € 500m | 98.105% | 1.625% | 07 Oct 2039 | A- | BBB+ |
Bond 022B (EMTN) | 8 years 0.625% | DE000A2R8ND3 | € 500m | 98.941% | 0.625% | 07 Oct 2027 | A- | BBB+ |
Bond 022A (EMTN) | 3.5 years 0.125% | DE000A2R8NC5 | € 500m | 99.882% | 0.125% | 06 Apr 2023 | A- | BBB+ |
Bond 021B (EMTN) | 15 years 1.125% | DE000A2R7JE1 | € 500m | 99.822% | 1.125% | 14 Sep 2034 | A- | BBB+ |
Bond 021A (EMTN) | 10 years 0.500% | DE000A2R7JD3 | € 500m | 98.965% | 0.500% | 14 Sep 2029 | A- | BBB+ |
Bond 020 (EMTN) | 6.5 years 1.800% | DE000A2RWZZ6 | € 500m | 99.836% | 1.800% | 29 Jun 2025 | A- | BBB+ |
Bond 019 (EMTN) | 5 years 0.875% | DE000A192ZH7 | € 500m | 99.437% | 0.875% | 03 Jul 2023 | A- | BBB+ |
Bond 018D (EMTN) | 20 years 2.750% | DE000A19X8C0 | € 500m | 97.896% | 2.750% | 22 Mar 2038 | A- | BBB+ |
Bond 018C (EMTN) | 12 years 2.125% | DE000A19X8B2 | € 500m | 98.967% | 2.125% | 22 Mar 2030 | A- | BBB+ |
Bond 018B (EMTN) | 8 years 1.500% | DE000A19X8A4 | € 700m(1) | 101.119% | 1.500% | 22 Mar 2026 | A- | BBB+ |
Bond 018A (EMTN) | 4.75 years 3M EURIBOR+0.450% | DE000A19X793 | € 600m | 100.000% | 0.793% hedged | 22 Dec 2022 | A- | BBB+ |
Bond 017B (EMTN) | 10 years 1.500% | DE000A19UR79 | € 500m | 99.439% | 1.500% | 14 Jan 2028 | A- | BBB+ |
Bond 017A (EMTN) | 6 years 0.750% | DE000A19UR61 | € 500m | 99.330% | 0.750% | 15 Jan 2024 | A- | BBB+ |
Bond 015 (EMTN) | 8 years 1.125% | DE000A19NS93 | € 500m | 99.386% | 1.125% | 08 Sep 2025 | A- | BBB+ |
Bond 014B (EMTN) | 10 years 1.750% | DE000A19B8E2 | € 500m | 99.266% | 1.750% | 25 Jan 2027 | A- | BBB+ |
Bond 014A (EMTN) | 5 years 0.750% | DE000A19B8D4 | € 500m | 99.863% | 0.750% | 25 Jan 2022 | A- | BBB+ |
Bond 013 (EMTN) | 8 years 1.250% | DE000A189ZX0 | € 1,000m | 99.037% | 1.250% | 06 Dec 2024 | A- | BBB+ |
Bond 011B (EMTN) | 10 years 1.500% | DE000A182VT2 | € 500m | 99.165% | 1.500% | 10 Jun 2026 | A- | BBB+ |
Bond 011A (EMTN) | 6 years 0.875% | DE000A182VS4 | € 500m | 99.530% | 0.875% | 10 Jun 2022 | A- | BBB+ |
Bond 010C (EMTN) | 8 years 2.250% | DE000A18V146 | € 1,000m | 99.085% | 2.250% | 15 Dec 2023 | A- | BBB+ |
Bond 010B (EMTN) | 5 years 1.625% | DE000A18V138 | € 752m(2) | 99.852% | 1.625% | 15 Dec 2020 | A- | BBB+ |
Bond 009B (EMTN) | 10 years 1.500% | DE000A1ZY989 | € 500m | 98.455% | 1.500% | 31 Mar 2025 | A- | BBB+ |
Bond 008 (Hybrid) | perpetual 4% | XS1117300837 | € 1,000m | 100.000% | 4.000% | perpetual | BBB | BBB- |
Bond 007 (EMTN) | 8 years 2.125% | DE000A1ZLUN1 | € 500m | 99.412% | 2.125% | 09 Jul 2022 | A- | BBB+ |
Bond 005 (EMTN) | 8 years 3.625% | DE000A1HRVD5 | € 500m | 99.843% | 3.625% | 08 Oct 2021 | A- | BBB+ |
Bond 004 (USD-Bond) | 10 years 5.000% | US25155FAB22 | USD 250m | 98.993% | 4.580%(3) | 02 Oct 2023 | A- | BBB+ |
- incl. Tap Bond €200m, Issue date 06 Feb 2020
- Nominal amount outstanding after Liability Management in Sep 2019
- EUR-equivalentCoupon
H1 2020 Earnings Call | page 55 |
History of Vonovia
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Late 19th century
until
1980s
Social housing in not-for-profit regime
The commercialization
of Germany's housing
market came in the wake of the "Neue Heimat" scandal in the
~2000
until 2013
Private equity domination
Predominantly Anglo- Saxon private equity funds bought hundreds of thousands of apartments from public and corporate owners.
2013 | |
until | |
2018 | |
IPO | Beginning of |
in 2013 | |
consolidation in the | |
German residential | |
Professionalization | market |
of the business |
Proactive Portfolio management: €3bn invested in portfolio modernization.
Acquisition and integration of more than 290k apartments.
Disposal of 77k non-core apartments.
Scalability & industrialization: EBITDA Operations margin of 75% (+15 percentage points since IPO).
2018
onwards
Opportunistic expansion into selected European metropolitan areas
While Germany is expected to remain the dominant market in our portfolio also for the foreseeable future we want to build on our knowledge and track record by bringing our strategy and expertise to comparable residential markets outside of Germany.
1980s (bankruptcy of more than 250k union-owned apartments).
Push towards more professionalization but also short-term orientation.
We built the German leader with
the potential and ambition
to become
a unique European champion
H1 2020 Earnings Call | page 56 |
Residential Market Fundamentals (Germany)
Household Sizes and Ownership Structure
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Growing number of smaller households
While the overall population in Germany is expected to slightly decline, the number of households is forecast to grow until at least 2035 with a clear trend towards smaller households.
The household growth is driven by various demographic and social trends including divorce rates, employment mobility etc.
Fragmented ownership structure
Germany is the largest housing market in Europe with ~42m housing units, of which ~23m are rental units. Ownership structure is highly fragmented and majority of owners are non-professional landlords.
Listed sector represents ~4% of total rental market.
Distribution of household sizes (million)
41.4 | 43.2 | ||||||||||
40.1 | 1.1 | ||||||||||
1.4 | |||||||||||
3.3 | |||||||||||
1.4 | |||||||||||
3.8 | |||||||||||
4.0 | 4.4 | ||||||||||
5.2 | 4.9 | ||||||||||
15.4 | 5 or more persons | ||||||||||
14.0 | 4 persons | ||||||||||
13.6 | 3 persons | ||||||||||
2 persons | |||||||||||
15.8 | 17.3 | 19.0 | 1 person | ||||||||
2008 | 2018 | 2035E |
Ownership structure (million units)
Amateur landlords | 15.0 | |
Professional, not listed | 2.3 | |
Government owned | 2.3 | |
Cooperatives | 2.1 | |
Listed property companies | 0.9 | |
Churches and other | 0.6 | |
Sources: German Federal Statistics Office, GdW (German Association of Professional Homeowners). 2035E household numbers are based on trend scenario of the German Federal Statistics Office.
H1 2020 Earnings Call | page 57 |
Liquid Large-cap Stock
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix | |
& Financing | |||||||
Blackrock | |||||||
First day of trading | July 11, 2013 | ||||||
7.6% Norges | No. of shares outstanding (incl. 08/2020 | 548.9 million | |||||
6.5% | capital increase for scrip dividend) | ||||||
FMR | Free float | 93.5% | |||||
3.4% | |||||||
DWS | |||||||
ISIN | DE000A1ML7J1 | ||||||
3.1% | |||||||
APG | Ticker symbol | VNA | |||||
3.1% | |||||||
Share class | Registered shares with no par value | ||||||
Main listing | Frankfurt Stock Exchange | ||||||
Other | |||||||
Market segment | Regulated Market, Prime Standard | ||||||
76.3% | Major indices | DAX, Stoxx Europe 600, MSCI, GPR 250 World, | |||||
FTSE EPRA/NAREIT Europe, GPTMS150
According to German law the lowest threshold for voting rights notifications is at 3%
Share price (rebased to 100)
Hembla | ||||||||||||||||||||||||||||||||
Beginning | (21k) | |||||||||||||||||||||||||||||||
Stoxx 600 | Victoria | |||||||||||||||||||||||||||||||
European | ||||||||||||||||||||||||||||||||
inclusion | Park (14k) | |||||||||||||||||||||||||||||||
expansion; | ||||||||||||||||||||||||||||||||
400 | conwert | cooperation | 30 | |||||||||||||||||||||||||||||
MSCI | ||||||||||||||||||||||||||||||||
Südewo | (23k) | with CDC | Buwog | |||||||||||||||||||||||||||||
inclusion | Habitat | (48k) | ||||||||||||||||||||||||||||||
350 | (19k) | 25 bn) | ||||||||||||||||||||||||||||||
DeWag & | M-DAX | Gagfah | DAX | (€ | ||||||||||||||||||||||||||||
inclusion | (145k) | |||||||||||||||||||||||||||||||
300 | Vitus (41k) | inclusion | 20 | cap | ||||||||||||||||||||||||||||
market | ||||||||||||||||||||||||||||||||
S-DAX | ||||||||||||||||||||||||||||||||
+51% | ||||||||||||||||||||||||||||||||
250 | inclusion | +277% | 15 | |||||||||||||||||||||||||||||
200 | +25% | 10 | Vonovia | |||||||||||||||||||||||||||||
150 | 5 | |||||||||||||||||||||||||||||||
100 | 0 | |||||||||||||||||||||||||||||||
Sep-13Nov-13Jan-14Mar-14May-14Jul-14Sep-14Nov-14Jan-15Mar-15May-15 | Jul-15Sep-15Nov-15Jan-16Mar-16May-16 | Jul-16Sep-16Nov-16Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18 | Jul-18Sep-18Nov-18Jan-19Mar-19May-19Jul-19Sep-19Nov-19Jan-20Mar-20May-20Jul-20 | |||||||||||||||||||||||||||||
Jul-13 |
Vonovia | DAX | EPRA Europe | Total market cap Vonovia (€bn; weighted avg.) | Index inclusion | Acquisition | |||
Source: Factset, company data; VNA performance is total shareholder return (share price plus dividends reinvested)
H1 2020 Earnings Call | page 58 |
Long-term Structural Support from Fundamental Residential Market Trends (Sweden)
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
The market fundamentals in Sweden are very comparable to Germany.
High degree of similarities in terms of urbanization, rental regulation, supply/demand imbalance and gap between in-place values and replacement values.
Large gap between in-place values and replacement costs2
Victoria Park3 - fair value/sqm (SEK; total lettable area) vs. construction costs
Robust rent growth in regulated environments1
Rent growth in regulated markets follows a sustainable upward trajectory and is largely independent from GDP developments; rents in unregulated markets go up and down broadly in line with the GDP development
Regulated (Sweden)
6
4 | ||||||||||||||||||||||||||||||||||||||||
2 | ||||||||||||||||||||||||||||||||||||||||
0 | ||||||||||||||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | ||
-2 | ||||||||||||||||||||||||||||||||||||||||
-4 | ||||||||||||||||||||||||||||||||||||||||
-6 | ||||||||||||||||||||||||||||||||||||||||
GDP, quarterly development y-o-y | Rent growth; quarterly development y-o-y | |||||||||||||||||||||||||||||||||||||||
Structural supply/demand imbalance
Sweden's average annual residential completions of the last five years fall short of estimated required volumes
building
land
Factor
2.5x - 3.0x
100 Completions (`000)
90Est. required volume (`000)
80
70
19,434 | |||||||||
14,319 | 15,793 | ||||||||
12,108 | |||||||||
10,375 | |||||||||
8,662 | |||||||||
6,580 | |||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Market costs | ||
for new |
constructions
60
50
40
30
20
10
0
1991 | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
1 Sources: REIS, BofA Merrill Lynch Global Research, OECD, Statistics Sweden. Note: Due to lack of q-o-q rent growth data for the US and Sweden, the annual rent growth for a year is assumed to also be the q-o-q rent growth of that year. US rent growth 2020 is full-year estimate. US GDP Q2 2020 is the Advanced Estimate of the US Bureau of Economic Analysis as of July 30, 2020 (32.9% annualized), converted to a y-o-y comparison. 2 Note: The land value refers to the share of total fair value allocated to land. Allocation between building and land in Sweden assumed to be similar to Germany. Sources: Swedish National Board of Housing, Building and Planning, Statistics Sweden. 3 2019 includes portfolio acquired from Akelius.
H1 2020 Earnings Call | page 59 |
Sweden's Social Security and Welfare System Ensures That Citizens in Need can Rely on Comprehensive Public Support
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
"The personal, economic and cultural welfare of the individual shall be fundamental aims of public activity. In particular, the public institutions shall secure the right to
- employment, housing and education, and shall promote social care and social security, as well as favorable conditions for good health."
Chapter 1, Article 2(2), The Instrument of Government, The Constitution of Sweden
Similar to Germany, Sweden's social market economy is based on the principle of solidarity
- and citizens can rely on a comprehensive social security and welfare system. People who cannot participate in the labor market or society because of misfortune, illness, disability, or old age is looked after by the community.
Protection
and
support
for
tenants
- Arbetslöshetsersättning: Unemployment benefits of up to 80% of previous salary. Based on previous income (at most SEK 20,000 p.m. before tax), or basic benefit of about SEK 8,000 p.m. if previously a full-time employee. The benefit is limited in time.
- Försörjningsstöd: Benefits for anyone who otherwise can't get a reasonable standard of living (includes housing, food, clothing and telephone). Given on a need-basis and handled by municipality's social service.
- Sickness benefits for employees and job seekers
- Disability allowance/Merkostnadsersättning: Benefits for extra costs incurred by disability.
Housing benefits "Bostadsbidrag" and "Bostadstillägg":
Housing allowances aimed to people in certain groups that can't afford housing.
- Housing allowance for families with children
- Housing allowance for young people without children (below 29 years)
- Housing supplement for the elderly Receiving other types of support can include an opportunity to apply for additional benefits to cover housing costs.
Source: Försäkringskassan https://www.forsakringskassan.se/
H1 2020 Earnings Call | page 60 |
IR Contact & Financial Calendar
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
Contact
Rene Hoffmann (Head of IR)
Primary contact for Sell side, Buy side +49 234 314 1629 rene.hoffmann@vonovia.de
Stefan Heinz
Primary contact for Sell side, Buy side +49 234 314 2384 stefan.heinz@vonovia.de
Oliver Larmann
Primary contact for private investors, AGM +49 234 314 1609 oliver.larmann@vonovia.de
General inquiries investorrelations@vonovia.de
App & Website
Financial Calendar 2020
Aug 5 | Interim results H1 2020 |
Aug 13 | Roadshow Geneva and Milano (Berenberg) 1 VIRTUAL |
Aug 19 | Bankhaus Lampe Conference, Baden Baden (Bankhaus Lampe)1 VIRTUAL |
Aug 20 | HSBC European Real Estate Conference, Frankfurt (HSBC)1 VIRTUAL |
Aug 24-28 | Roadshow Asia (Bank of America)1 VIRTUAL |
Sep 1 | GS European Real Estate Conference 2020 (Goldman Sachs) VIRTUAL |
Sep 3 | Corporate Conference 2020, Frankfurt (Commerzbank)1 VIRTUAL |
Sep 7 | Jefferies Jefferies German / European Property Virtual Conference VIRTUAL1 |
Sep 15-16 | BofAML Global Real Estate Conference 2020 NYC (BofAML) VIRTUAL |
Sep 21 | German Corporate Conf. 2020, Munich (Berenberg & Goldman Sachs) VIRTUAL |
Sep 24 | Investment Conference 2020, Munich (Baader)1 VIRTUAL |
Oct 1 | Commerzbank Real Estate Forum, London (Commerzbank) 1 |
Nov 4 | Interim results 9M 2020 |
Nov 24 | Kempen's 17th London Conference (Kempen) VIRTUAL |
Dec 1 | UBS Global Real Estate Conference 2020 London (UBS) |
Dec 2 | SocGen Flagship Conference Paris (Societe Generale) VIRTUAL |
https://investors.vonovia.de
1 IR only
The most up-to-date financial calendar is always available online.
H1 2020 Earnings Call | page 61 |
Disclaimer
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
This presentation has been specifically prepared by Vonovia SE and/or its affiliates (together, "Vonovia") for internal use. Consequently, it may not be sufficient or appropriate for the purpose for which a third party might use it.
This presentation has been provided for information purposes only and is being circulated on a confidential basis. This presentation shall be used only in accordance with applicable law, e.g. regarding national and international insider dealing rules, and must not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by the recipient to any other person. Receipt of this presentation constitutes an express agreement to be bound by such confidentiality and the other terms set out herein.
This presentation includes statements, estimates, opinions and projections with respect to anticipated future performance of Vonovia ("forward-looking statements") which reflect various assumptions concerning anticipated results taken from Vonovia's current business plan or from public sources which have not been independently verified or assessed by Vonovia and which may or may not prove to be correct. Any forward-looking statements reflect current expectations based on the current business plan and various other assumptions and involve significant risks and uncertainties and should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Any forward-looking statements only speak as at the date the presentation is provided to the recipient. It is up to the recipient of this presentation to make its own assessment of the validity of any forward-looking statements and assumptions and no liability is accepted by Vonovia in respect of the achievement of such forward-looking statements and assumptions.
Vonovia accepts no liability whatsoever to the extent permitted by applicable law for any direct, indirect or consequential loss or penalty arising from any use of this presentation, its contents or preparation or otherwise in connection with it.
No representation or warranty (whether express or implied) is given in respect of any information in this presentation or that this presentation is suitable for the recipient's purposes. The delivery of this presentation does not imply that the information herein is correct as at any time subsequent to the date hereof.
Vonovia has no obligation whatsoever to update or revise any of the information, forward-looking statements or the conclusions contained herein or to reflect new events or circumstances or to correct any inaccuracies which may become apparent subsequent to the date hereof.
This presentation does not, and is not intended to, constitute or form part of, and should not be construed as, an offer to sell, or a solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities of the Company nor shall it or any part of it form the basis of or be relied upon in connection with or act as any inducement to enter into any contract or commitment or investment decision whatsoever.
This presentation is neither an advertisement nor a prospectus and is made available on the express understanding that it does not contain all information that may be required to evaluate, and will not be used by the attendees/recipients in connection with, the purchase of or investment in any securities of the Company. This presentation is selective in nature and does not purport to contain all information that may be required to evaluate the Company and/or its securities. No reliance may or should be placed for any purpose whatsoever on the information contained in this presentation, or on its completeness, accuracy or fairness.
This presentation is not directed to or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.
Neither this presentation nor the information contained in it may be taken, transmitted or distributed directly or indirectly into or within the United States, its territories or possessions. This presentation is not an offer of securities for sale in the United States. The securities of the Company have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States. Consequently, the securities of the Company may not be offered, sold, resold, transferred, delivered or distributed, directly or indirectly, into or within in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States unless registered under the Securities Act.
Tables and diagrams may include rounding effects. Per-share numbers for 2013 and 2014 are TERP-adjusted.
H1 2020 Earnings Call | page 62 |
For Your Notes
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
H1 2020 Earnings Call | page 63 |
For Your Notes
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
H1 2020 Earnings Call | page 64 |
Highlights | Segments | NAV & Valuation | LTV | Guidance | Wrap-up | Appendix |
& Financing | ||||||
H1 2020 Results | Equity Story and Business Overview | Additional Information | |||||
3 | Agenda H1 Results | 21 | Vonovia at a Glance | 44 | Portfolio Cluster | ||
4 | Highlights Q1 | 22 | Strategy | 45 | Regional Cluster | ||
5 | Segment Overview | 23 | Social Welfare System Germany | 46 | Construction Year Clusters | ||
6 | Adj. EBITDA Rental | 24 | Strong Residential Market Fundamentals | 47 | Rent Growth Pipeline | ||
7 | Operating KPIs | 25 | Rent Growth | 48 | New EPRA NAV Metrics (I) | ||
8 | Adj. EBITDA Value-add | 26 | Business Segments | 49 | New EPRA NAV Metrics (II) | ||
9 | Adj. EBITDA Recurring Sales | 27 | Full-scale Operating Platform | 50 | New EPRA NAV Metrics (III) | ||
10 | Adj. EBITDA Development | 28 | KPI Track Record | 51 | Investment Program Funding | ||
11 | Development Pipeline | 29 | Scale & Efficiencies | 52 | Recurring Sales | ||
12 | H1 valuation | 30 | Value-add | 53 | Historic M&A Pipeline | ||
13 | H1 valuation - Regional Markets | 31 | M&A History and Criteria | 54 | Acquisition Track Record | ||
14 | NAV | 32 | European Activities | 55 | Overview of Corporate Bonds | ||
15 | New NAV Metrics | 33 | Megatrends | 56 | History of Vonovia | ||
16 | LTV | 34 | Exposure to the Right Markets | 57 | Market Data Germany | ||
17 | Financing Overview & Covenants | 35 | Homebuilder Market | 58 | Share Information | ||
18 | Guidance | 36 | Investment Program | 59 | Market Data Sweden | ||
19 | Wrap-up | 37 | Neighborhood Development | 60 | Social Welfare System Sweden | ||
38 | ESG | 61 | IR Contact & Financial Calendar | ||||
39 | E | 62 | Disclaimer | ||||
40 | S | ||||||
41 | G | ||||||
42 Why Vonovia?
H1 2020 Earnings Call | page 65 |
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Vonovia SE published this content on 05 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 August 2020 08:26:06 UTC