Vonovia Se · XETR:VNA
Vonovia — FY2022 Earnings Presentation
60 slides from Vonovia's earnings presentation, Mar 16, 2023
Slide 1: FY 2022 Earnings Call Presentation
FY 2022 Earnings Call Presentation. March 16, 2023
Slide 2: Agenda
Agenda 1. Business Update & FY 2022 Results pages 3-27 2. Appendix pages 29-60
Slide 3: Business Update & FY 2022 Results
Business Update & FY 2022 Results 4 Megatrends 5 Strategy 6 Dividend 7 Free Cash Flow 8 Financing 9 Stress Test Analysis 10-17 Segment Reporting (incl. Mietspiegel detail pages 13-14) 18-19 Valuation & EPRA NTA 20-21 Debt Structure, Debt KPIs, Maturity Schedule 22 Investment Program 23 Energy Effici
Slide 4: Our Business Is Supported by Two Dominant Megatrends
Our Business Is Supported by Two Dominant Megatrends… …But the Current Environment is a Short-term Challenge Business Update & Appendix FY 2022 Results • In addressing the consequences of the Russian war on Ukraine, central banks around the world have been increasing interest rates at an unprecedent
Slide 5: Established 4+2 Strategy Still Relevant
Established 4+2 Strategy Still Relevant But Focus and Priorities Have Shifted Business Update & Appendix FY 2022 Results Reputation & Customer Satisfaction • Rent growth momentum accelerating Mergers & • Vacancy rate at record low Acquisitions Property Management • Collection rate at all-time high •
Slide 6: Capital Discipline Is Key In This Environment
Capital Discipline Is Key In This Environment Continuous Adjustments to A Changing Environment Business Update & Appendix FY 2022 Results What measures have we taken in response? ✓ No incremental debt Q1 ✓ Tightened leverage targets Q2 • Vonovia’s stable business model in a regulated market reacts o
Slide 7: Free Cash Flow
Free Cash Flow Significant Cash Generation Expected for 2023 Business Update & Appendix FY 2022 Results JV structures Ongoing negotiations but current investigation not helpful • Business expected to be clearly cash flow positive in 2023. Municipalities Clear interest from social democrat gov’ts wit
Slide 8: Financing
Financing Refinancing Needs for 2023 Largely Addressed Business Update & Appendix FY 2022 Results • Unsecured maturities of €2.2bn in 2023 vs. ~€4.0bn estimated free cash expected for 2023. Secured bank Unsecured financing1 corporate bonds • General strategy for 2023 is to roll over secured financin
Slide 9: Stress Test Analysis to Test Bond KPI Headroom
Stress Test Analysis to Test Bond KPI Headroom All Bond Covenants Screen Safe Even in Highly Adverse Scenario Business Update & Appendix FY 2022 Results Stress Test Scenario with purposefully bearish assumptions: Rating • 6% interest cost p.a. • Under the stress test scenario, Vonovia’s financial •
Slide 10: Segment Overview
Segment Overview Group FFO p.s. up 17.3% Business Update & Appendix FY 2022 Results €m (unless indicated otherwise) FY 2022 FY 20212 Delta • Absolute growth predominantly driven by larger portfolio volume Total Segment Revenue 6,256.9 5,216.6 +19.9% (DWNI fully included in 2022 and for Q4 only in 20
Slide 11: Rental Segment
Rental Segment Increasing Performance in Core Operations Business Update & Appendix FY 2022 Results Rental revenue by geography • Revenue growth in relative terms exceeds expense growth already Austria before material synergy realization. Sweden 4% 11% • 2022 includes €20m synergies from Deutsche Wo
Slide 12: Rental Segment
Rental Segment Positive Momentum Business Update & Appendix FY 2022 Results Organic rent growth (y-o-y, %) Vacancy rate (eop, %) 3.2 3.3 3.1 0.6 0.6 0.7 2.4 2.2 1.6 1.6 2.0 1.9 Mietspiegel 2022 not impacted by inflation 1.01 1.0 0.6 2020 2021 2022 2020 2021 2022 New construction Modernization Market
Slide 13: Accelerating Mietspiegel Growth in 2022
Accelerating Mietspiegel Growth in 2022 Majority of Mietspiegel Turned Out Higher than Previous Versions Business Update & Appendix FY 2022 Results Mietspiegel (MSP) are a market-based instrument Accelerating Mietspiegel growth in 2022 • A Mietspiegel defines the benchmark for the local comparable r
Slide 14: Mietspiegel Expectations 2023 & 2024
Mietspiegel Expectations 2023 & 2024 Business Update & Appendix FY 2022 Results Est. timing for update1 1. MSP full bottom-up Munich ✓ Q1 2023. 21% headline growth2 • Special case Berlin: • Based on local market data and calculated on Dortmund • Q1 2023 Leipzig • Q2 2023 • Following 2021 MSP, which
Slide 15: Value-add Segment
Value-add Segment Higher Expenses Continued to Absorb Revenue Growth Business Update & Appendix FY 2022 Results • Continued revenue growth, both externally and internally. Value-add Segment (€m) FY 2022 FY 20211 Delta • Contribution of craftsmen organization was negatively impacted by Revenue Value-
Slide 16: Recurring Sales Segment
Recurring Sales Segment Robust Volumes and Fair Value Step-up But Market Was Difficult in Q4 and Remains Difficult in Q1 2023 Business Update & Appendix FY 2022 Results Historical Recurring Sales volumes and FV step-up4 • Challenging market conditions kept FY2022 volumes short of guidance 3,000 50%
Slide 17: Development Segment
Development Segment Profitable Business But Market Is Getting More Difficult Business Update & Appendix FY 2022 Results • Development continues to be an attractive business with healthy Development Segment (€m) FY 2022 FY 20211 Delta gross margins in a supply-constrained market. • 3,749 units comple
Slide 18: Valuation
Valuation Full Year Largely Flat – H1 Valuation Essentially Reversed by Value Decline in H2 Business Update & Appendix FY 2022 Results Valuation KPIs Dec. 31, 2022 (Standing Portfolio3) • P&L impact 2022 of -€1,270m • -€686m standing portfolio Germany Sweden Austria VNA Total • -€452m development pr
Slide 19: EPRA NTA
EPRA NTA Business Update & Appendix FY 2022 Results EPRA NTA -8.2% y-o-y, driven by deferred tax adjustments in the context of new portfolio clustering and asset revaluation. EPRA NTA (€m) (unless indicated otherwise) Dec. 31, 2022 Dec. 31, 20211 Delta Total equity attributable to Vonovia shareholde
Slide 20: Debt Structure
Debt Structure Well-balanced and Long-term Maturity Profile with Diverse Funding Mix Business Update & Appendix FY 2022 Results €m • Diverse funding mix with no more than 11% of debt maturing 5,000 annually. 4,000 • Combination of LTV, ND/EBITDA, ICR, fixed/hedged debt ratio and 3,000 maturity profi
Slide 21: Net Debt/EBITDA Multiple, LTV & ICR
Net Debt/EBITDA Multiple, LTV & ICR Business Update & Appendix FY 2022 Results LTV Dec. 31, Dec. 31, • LTV target: towards lower end of 40-45% range. €m (unless indicated otherwise) 2022 20211 Delta • Net debt/EBITDA target: ca. 14-15x. Non-derivative financial liabilities 45,059.7 47,229.5 -4.6% •
Slide 22: Investments
Investments Elevated Cost of Capital Lead to Slowdown in 2022 and Even More in 2023E Business Update & Appendix FY 2022 Results Investment Program Development to Sell • Investment program includes Apartment Modernization (Optimize • €3.7bn (3.6% of balance sheet) committed. Apartment), Energy-effici
Slide 23: Energy Efficiency Classes
Energy Efficiency Classes Vonovia Is Ahead of the Market Thanks to an Early Start and Comprehensive Investments Business Update & Appendix FY 2022 Results Key measures to achieve climate neutrality 2.0% 1.1% 0.1% 4.0% 12.1% 12.0% Heating system powered by renewable energy A+ 17.0% 25.0% A B C 19.0%
Slide 24: Sustainability Performance Index (SPI)
Sustainability Performance Index (SPI) Measurable Targets for Non-financial KPIs Business Update & Appendix FY 2022 Results • The SPI is the leading quantitative, non- SPI 2021 2022 2023 Actuals Actuals Targets financial metric to measure sustainability performance in the most 38.4 33.0 CO2 intensit
Slide 25: Update on Investigation
Update on Investigation Accusations Made Against (Former) Employees Business Update & Appendix FY 2022 Results On March 7, 2023, authorities searched two of Vonovia’s offices in connection with allegations against (former) What are the employees and external parties accused of fraud, embezzlement, c
Slide 26: 2023 Guidance Update
2023 Guidance Update Business Update & Appendix FY 2022 Results • Update reflects higher uncertainty around volumes and profitability for disposals. • Expectations for operating business remain unchanged. Initial Guidance 2023 Updated Guidance 2023 Actuals 2022 (Nov. 2022) (Mar. 2023) Total Segment
Slide 27: Wrap-up
Wrap-up Business Update & Appendix FY 2022 Results Financing terms and the transaction market are still challenging, requiring us to navigate cautiously through this period of uncertainty. However, the operating business remains on track and the environment in our rental markets remains highly favor
Slide 28: Agenda
Agenda 1. Business Update & FY 2022 Results pages 3-27 2. Appendix pages 29-60
Slide 29: Appendix
Appendix 30 FY2022 Dividend 31-33 Regional Markets & Portfolio Clustering 34 Illustrative Mietspiegel Mechanics 35 Evolution of Fluctuation 36 Vonovia SE statutory accounts 37-42 ESG 43-44 Bond Overview & Covenants 45-55 Residential Market Data 56-57 Vonovia Shares 58 IR Contact & Financial Calendar
Slide 30: FY2022 Dividend
FY2022 Dividend €0.85 per Share Incl. Scrip Option to be Proposed to the AGM Business Update & Appendix FY 2022 Results In addressing the consequences of the Russian war on Ukraine, central banks around the world have been increasing interest rates at an unprecedented speed. The drawback of Vonovia’
Slide 31: Regional Markets
Regional Markets Balanced Exposure to Relevant Growth Regions Business Update & Appendix FY 2022 Results Fair value1 In-place rent Average rent Regional Markets Residential Organic rent Multiple Purchase power Market rent growth (LTM, %) Residential Vacancy Total Residential (€/sqm/ growth (in-place
Slide 32: Valuation
Valuation Value Changes Across the Different Markets Business Update & Appendix FY 2022 Results 2022 Total Fair Fair Value1 Fair Value1 Value growth from performance, YC and investments (l-f-l) Regional Market Value (€m) (€/sqm) Growth (l-f-l) Berlin 27,794 3,123 0.1% Rhine Main Area 7,545 3,164 -1.
Slide 33: Portfolio Clustering
Portfolio Clustering Multiple Sales Channels - Proceeds Used for Organic Funding and Capital Reallocation Business Update & Appendix FY 2022 Results In-place rent In-place rent Vacancy Fair value Fair value Recurring Sales: Proceeds used Dec. 31, 2022 Resi units Gross yield (€m p.a.) (€/sqm) rate (€
Slide 34: Illustrative Mietspiegel Mechanics (Simplified)
Illustrative Mietspiegel Mechanics (Simplified)1 Mietspiegel Growth Follows Market Rent Growth With A Delay Business Update & Appendix FY 2022 Results Period -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Delta Market rent level 6.50 6.57 6.63 6.70 6.76 6.83 6.90 6.97 7.04
Slide 35: Evolution of Tenant Fluctuation
Evolution of Tenant Fluctuation Business Update & Appendix FY 2022 Results • The fluctuation rate has been steadily declining since the IPO and is currently <9%. • The fluctuation rate level impacts the overall rent growth as the contribution from new lettings is usually comparatively high (rent gro
Slide 36: Technical Impairment Loss Under German GAAP
Technical Impairment Loss Under German GAAP Business Update & Appendix FY 2022 Results • Unlike IAS 40 fair-market-value accounting under IFRS, German GAAP accounting resulted in a technical impairment loss on shares in affiliated companies, driven by the sharp rise in interest rates and the subsequ
Slide 37: Serving a Fundamental Need in a Highly Relevant Market
Serving a Fundamental Need in a Highly Relevant Market Our Business Is Deeply Rooted in ESG Business Update & Appendix FY 2022 Results All of our actions have more than just an economic dimension and require adequate stakeholder reconciliation. • We provide a home to almost 1.5 million people from c
Slide 38: Megatrends
Megatrends Three Dominant Megatrends in Residential Real Estate Business Update & Appendix FY 2022 Results Urbanization Climate Change Demographic Change % of population living in cities % of modernized housing units % of population above/below 65 years 87% Germany W. Europe 84% 77% 79% 21% 20% 31%
Slide 39: Commitment to Sustainability
Commitment to Sustainability Science-based Decarbonization Roadmap with Measurable Interim Targets Business Update & Appendix FY 2022 Results • Accelerated decarbonization with near CO2 neutrality by 2045. • Following CRREM MFH 1.5 degree pathway. • Including Scope 1, 2 and 3.3. CO2 intensity in kg
Slide 40: United Nations Sustainability Development Goals
United Nations Sustainability Development Goals Vonovia Has a Meaningful Impact on 8 SDGs Business Update & Appendix FY 2022 Results We consider 8 of the 17 United Nations Sustainability Development Goals (SDG) to be material to our business activities and aligned with our sustainability strategy. W
Slide 41: Recognition of ESG Performance
Recognition of ESG Performance ESG Ratings and Indices Business Update & Appendix FY 2022 Results ESG Ratings Same rating in 2022 19,2 6.7 ESG Risk Rating 7,7 6,7 6,7* 2019 2020 2021 2022 2018 2019 2020 2021 2022 *rating results from 2021, remain valid for 2022 Rating improved in 2022 Remained Manag
Slide 42: Corporate Governance
Corporate Governance AGM, Supervisory Board, Management Board Business Update & Appendix FY 2022 Results • The duties and authorities of the three governing bodies derive from the SE Regulation, Annual General Meeting (AGM) the German Stock Corporation Act and the Articles of Association. In additio
Slide 43: Bonds & Ratings
Bonds & Ratings Business Update & Appendix FY 2022 Results N ame T e no r & C o upo n IS IN A m o unt Is s ue pric e C urre nt P ric e 3 Y ie ld 3 C o upo n F ina l M a t urit y D a t e M o o dys S c o pe S &P B o nd 022A (EM TN) 3.5 years 0.125% DE000A 2R8NC5 EUR 403.4m 99.882% 99,688 3,39% 0.125%
Slide 44: Bond Covenants
Bond Covenants Substantial Headroom for All Covenants Business Update & Appendix FY 2022 Results Current level Headroom1 Bond covenants Required level (Dec. 31, 2022) On the current total financial LTV debt level, fair values would <60% 44.4% (Total financial debt / total assets) have to drop >28% f
Slide 45: Long-term Support from Megatrends
Long-term Support from Megatrends Urban Areas with Long-term Supply/Demand Imbalance Business Update & Appendix FY 2022 Results Market view – growing and shrinking regions1 • The German Federal Office for Construction and Urban Development (BBSR) has analyzed all cities and counties in Germany on th
Slide 46: Expectations on Value Changes
Expectations on Value Changes Market Views Business Update & Appendix FY 2022 Results Market expectations for the residential asset class vary, and the broader consensus seems to be around a value loss of ca. 10%. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% CBRE survey1: Residential expected price S
Slide 47: House Prices & Construction Costs Correlation
House Prices & Construction Costs Correlation Resi Prices Have Been Moving Alongside Construction Prices for 50 Years Business Update & Appendix FY 2022 Results House price and construction price indices (2015=100) 200 180 160 140 120 100 80 60 40 20 0 1979 1983 1987 1970 1971 1972 1973 1974 1975 19
Slide 48: Comps & Implied Building Values
Comps & Implied Building Values Market Comps and Implied Land Values Suggest Vonovia Valuation Is Conservative Business Update & Appendix FY 2022 Results Vonovia’s implied building values based on reported fair values and current equity valuation (€/sqm) 7,000 6,000 ~€1,500 implied ~€400 implied bui
Slide 49: Vonovia's Fair Values and Rents Are Substantially Below Market
Vonovia’s Fair Values and Rents Are Substantially Below Market Data Points on Prices for Condos & New Constructions and Rent Levels Business Update & Appendix FY 2022 Results Price levels Rent levels Vonovia fair values versus prices for condos and new constructions Vonovia rental levels versus pric
Slide 50: Resi Prices Have Shown No Real Weakness in 50 Years
Resi Prices Have Shown No Real Weakness in 50 Years Only Period of Slight Decline Came During High Vacancy Phase Business Update & Appendix FY 2022 Results OECD House Price Index Germany (2015=100) and vacancy rate 180 9% 160 8% 140 7% 120 6% 100 5% 80 4% 60 3% 40 Period of high vacancy following Pe
Slide 51: Residential Market Fundamentals (Germany)
Residential Market Fundamentals (Germany) Household Sizes and Ownership Structure Business Update & Appendix FY 2022 Results Growing number of smaller households Fragmented ownership structure • While the overall population in Germany is expected to slightly decline, • Germany is the largest housing
Slide 52: Supply/Demand Imbalance
Supply/Demand Imbalance Gap May Become Even Larger Business Update & Appendix FY 2022 Results • Vonovia considers the structural supply/demand imbalance in urban areas to Age group distribution in Germany (million)2 be the most relevant driver of residential property values. • A meaningful improveme
Slide 53: Affordability
Affordability Average German Household Income and Average Cost of Vonovia Apartment Business Update & Appendix FY 2022 Results Average disposable income per household in Germany in 2021 was In an effort to mitigate the financial burden from increased cost of living, €3,813/month (€45,756/year).1 the
Slide 54: Long-term Structural Support (Germany)
Long-term Structural Support (Germany) Positive Fundamentals Business Update & Appendix FY 2022 Results Urbanization1 • Long-term structural support from 100 80 84 75 • Insufficient levels of new construction 80 75 78 68 70 65 • Urbanization driving supply/demand imbalance in urban areas 60 60 40 55
Slide 55: Long-term Structural Support (Sweden)
Long-term Structural Support (Sweden) Positive Fundamentals Business Update & Appendix FY 2022 Results Urbanization1 • Long-term structural support from 100 93 88 84 12 • Insufficient levels of new construction 80 66 10 • Urbanization driving supply/demand imbalance in urban areas 60 8 40 • High rep
Slide 56: Liquid Large-cap Stock
Liquid Large-cap Stock Total Performance since IPO Business Update & Appendix FY 2022 Results EuroStoxx 50 35 Stoxx 600 M-DAX S-DAX DAX 30 380 25 Share price (rebased to 100) +98% Vonovia market cap (€bn) +89% 20 280 +58% 15 -3% 10 180 5 80 0 Sep-13 Mar-14 May-14 Sep-14 Mar-15 May-15 Sep-15 Mar-16 M
Slide 57: Vonovia Shares
Vonovia Shares Basic Data and NOSH Evolution Business Update & Appendix FY 2022 Results Norges First day of trading July 11, 2013 No. of shares outstanding 795.8 million 14.6% Free float 88.9% BlackRock 7.4% ISIN DE000A1ML7J1 Ticker symbol VNA 4.0% APG 3.1% DWS Investment Share class Registered shar
Slide 58: IR Contact & Financial Calendar
IR Contact & Financial Calendar https://investors.vonovia.de Business Update & Appendix FY 2022 Results Contact Financial Calendar 2023 Rene Hoffmann (Head of IR) Mar 21 Vonovia Full Year Roadshow, virtual with BofA Primary contact for Sell side, Buy side Mar 22 Vonovia Full Year Roadshow, Amsterdam
Slide 59: Disclaimer
Disclaimer 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 purp
Slide 60: For Your Notes
For Your Notes 2023-03-16 | FY 2022 Earnings Call 60