Vonovia Se · XETR:VNA
Vonovia — Vonovia Se Ord — 9M 2023 Earnings Presentation
56 slides from Vonovia's earnings presentation, Nov 3, 2023
Slide 1: 9M 2023 Earnings Call Presentation
9M 2023 Earnings Call Presentation November 3, 2023
Slide 2: Agenda
Agenda 1. Business Update & 9M 2023 Results pages 3-22 2. Appendix pages 23-56
Slide 3: Business Update & 9M 2023 Results
Business Update & 9M 2023 Results 4 Highlights 5 Disposals year to date 6 Second Joint Venture Transaction 7 Segment Overview 8-10 Rental 11 Value-add 12 Recurring Sales 13 Development 14 EPRA NTA 15 Investment Program 16-18 Debt KPIs, Bond Covenants & Financing Update 19 Final Guidance 2023 20 Init
Slide 4: Highlights
Highlights Business Update & Appendix 9M 2023 Results • €3.7bn total sales volume signed 2023 year to date, of which €1.7bn since H1 reporting in August. • 3.8% organic rent growth, 2.1% vacancy rate, and 99.9% rent collection. • Second JV signed: Apollo agreed to acquire ca. 30% equity stake in Von
Slide 5: Disposals Year to Date
Disposals Year to Date Continuous Progress across All Sales Channels; Initial €2bn Disposal Target Overachieved Business Update & Appendix 9M 2023 Results Highlights • €3.7bn total proceeds from disposals, of which €1.7bn are included in JV Südewo 9M 2023 accounts. €1,000m (common minority equity pa
Slide 6: Second Joint Venture Transaction
Second Joint Venture Transaction €1bn Additional Equity at Comparatively Low Cost of Equity Business Update & Appendix 9M 2023 Results • Following the successful Südewo partnership, Vonovia and Apollo have signed an agreement on the sale of a common minority equity participation in Vonovia’s holding
Slide 7: Segment Overview
Segment Overview Core Operating Business Continues to Grow. Headwinds in Other Segments Remain Business Update & Appendix 9M 2023 Results €m (unless indicated otherwise) 9M 2023 9M 20222 Delta • Rental business increased by 7%, driven by rent growth, continuously Total Segment Revenue 4,232.3 4,606.
Slide 8: Rental Segment
Rental Segment Business Update & Appendix 9M 2023 Results Rental revenue by geography • Increased revenue driven by rental growth on a marginally smaller Austria portfolio. Sweden 4% 11% • Reduction in operating expenses mainly driven by successful Germany 86% realization of Deutsche Wohnen synergie
Slide 9: Rental Segment
Rental Segment Business Update & Appendix 9M 2023 Results Organic rent growth (y-o-y, %) Fluctuation rate (%)2 • Accelerating market rent growth but 3.8 10.9 fluctuation remains low. 3.3 0.7 8.8 0.7 7.9 • Vacancy rate only a function of turnaround 1.1 time in case of fluctuation. 1.6 • Virtually ful
Slide 10: Additional Information on Mietspiegel/OVM Growth
Additional Information on Mietspiegel/OVM Growth Business Update & Appendix 9M 2023 Results In 2022, the acceleration in Mietspiegel/OVM1 growth started creating a bow wave of rent growth that comes with delayed implementation because the rules-based rental system does not always allow for the immed
Slide 11: Value-add Segment
Value-add Segment Business Update & Appendix 9M 2023 Results EBITDA reduction driven by challenges in craftsmen organization Value-add Segment (€m) 9M 2023 9M 20221 Delta • reduced investment volume weighed on profitability; Revenue Value-add 904.7 947.9 -4.6% • increased cost base; of which externa
Slide 12: Recurring Sales Segment
Recurring Sales Segment Business Update & Appendix 9M 2023 Results • Disposal volumes still below prior years. Recurring Sales Segment (€m) 9M 2023 9M 20221 Delta • Fair-value step-up remained very high with almost 43% in 9M 2023; Units sold 958 1,853 -48.3% partly driven by relatively high share of
Slide 13: Development Segment
Development Segment Business Update & Appendix 9M 2023 Results • Project-driven nature of development business and overall market Development Segment (€m) 9M 2023 9M 20221 Delta conditions resulted in substantially lower volume in 9M 2023, as prior- year period was also positively impacted by a larg
Slide 14: EPRA NTA
EPRA NTA Business Update & Appendix 9M 2023 Results EPRA NTA (€m) (unless indicated otherwise) Sep. 30, 2023 Dec. 31, 2022 Delta Total equity attributable to Vonovia shareholders 27,854.5 31,331.5 -11.1% Deferred tax in relation to FV gains of investment properties1 14,880.6 16,190.0 -8.1% FV of fin
Slide 15: Investment Program – Addressing the Megatrends
Investment Program – Addressing the Megatrends Business Update & Appendix 9M 2023 Results Investment Program Development to sell Optimize Apartment Upgrade Building Space Creation New construction to be sold to third parties Apartment renovation after Investments in decarbonization New construction
Slide 16: Debt Structure
Debt Structure Well-balanced and Long-term Maturity Profile with Diverse Funding Mix Business Update & Appendix 9M 2023 Results €bn Maturity Profile as of October 31, 20232 • Diverse funding mix with no more than 12% of debt maturing 5.0 annually. 4.5 4.0 • Combination of debt KPIs, fixed/hedged deb
Slide 17: Debt KPIs and Bond Covenants
Debt KPIs and Bond Covenants Business Update & Appendix 9M 2023 Results €m (unless indicated otherwise) Sep. 30, 2023 Dec. 31, 2022 Delta Bond covenant Required Current Headroom level level LTV (target: 40-45%) Adj. net debt 42,149.2 43,320.1 -2.7% Adj. fair value of real estate LTV 90,035.1 96,051.
Slide 18: Financing Update 2023 YTD
Financing Update 2023 YTD Business Update & Appendix 9M 2023 Results €0.8bn secured loans rolled over • General strategy of rolling over secured debt and repaying unsecured • 9 loans bonds with disposal proceeds to continue. • 10-year maturities • Weighted average interest rate of 4.03% (3.5% - 4.3%
Slide 19: Final 2023 Guidance
Final 2023 Guidance Business Update & Appendix 9M 2023 Results • Final outcome for 2023E organic rent growth largely dependent on fluctuation rate. • Revenue, EBITDA, and Group FFO impacted by headwinds from lower investment volumes and challenging market conditions for Recurring Sales and Developme
Slide 20: Initial 2024 Guidance
Initial 2024 Guidance Business Update & Appendix 9M 2023 Results We expect the general direction of our business along these lines: • Rental Revenue in line with 2023E in spite of the negative volume impact from asset disposals. • Adj. EBITDA Total in line with 2023E. • Moderate decline in Group FFO
Slide 21: Investigation Update
Investigation Update Business Update & Appendix 9M 2023 Results • In March 2023, investigators searched the company headquarters and another Vonovia site in Bochum; the authorities were acting on the suspicion of potentially problematic activities in the awarding of contracts to subcontractors in th
Slide 22: Wrap-up
Wrap-up Business Update & Appendix 9M 2023 Results Core rental business with continuously strong performance and sustainable growth. Transactions are possible in spite of the challenging market environment but they need time and careful preparation and execution. All unsecured maturities covered unt
Slide 23: Agenda
Agenda 1. Business Update & 9M 2023 Results pages 3-22 2. Appendix pages 23-56
Slide 24: Appendix
Appendix 25 Megatrends 26 Vonovia’s Growth Drivers 27-28 Regional Markets & Portfolio Clusters 29 Fluctuation 30 Vonovia’s PV Program 31-36 ESG 37-39 Lenders Outside Bond Market, Bond Overview & Covenants 40 LTV evolution in German Resi 41 Inflation & Rent Growth 42-51 Residential Market Data 52-53
Slide 25: 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 9M 2023 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 26: Vonovia's Growth Drivers
Vonovia’s Growth Drivers Business Update & Appendix 9M 2023 Results Vonovia is uniquely positioned as the best-in-class operator and sustainability leader in a structurally undersupplied asset class. Customer & employee satisfaction Best-in-class 1 2 Robust capital structure and operating platform c
Slide 27: Regional Markets
Regional Markets Balanced Exposure to Relevant Growth Regions Business Update & Appendix 9M 2023 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 28: Portfolio Clustering
Portfolio Clustering Business Update & Appendix 9M 2023 Results In-place In-place Vacancy Fair value Fair value Gross Sep. 30, 2023 Resi units rent rent rate (€bn) (€/sqm) yield (€m p.a.)3 (€/sqm) 3 Urban quarters & clusters 421,896 2,362 7.51 1.8 63.2 2,401 3.8% • German portfolio comprises of stra
Slide 29: Evolution of Tenant Fluctuation
Evolution of Tenant Fluctuation Business Update & Appendix 9M 2023 Results • The fluctuation rate has been steadily declining since the IPO and is currently <8%. • The fluctuation rate level impacts the overall rent growth as the contribution from new lettings is usually comparatively high (rent gro
Slide 30: Roll-out of PV Generation Capacity
Roll-out of PV Generation Capacity PV Generates an Attractive IRR of ~10% Business Update & Appendix 9M 2023 Results Photovoltaic installations Energy generation capacity (no. of roofs) (MWp) 30,000 280 2,000 33 Current 2030 Goal Current 2030 Goal Vonovia’s Portfolio Offers Substantial Potential for
Slide 31: 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 9M 2023 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 32: Megatrends
Megatrends Three Dominant Megatrends in Residential Real Estate Business Update & Appendix 9M 2023 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 33: Commitment to Sustainability
Commitment to Sustainability Science-based Decarbonization Roadmap with Measurable Interim Targets Business Update & Appendix 9M 2023 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 34: United Nations Sustainability Development Goals
United Nations Sustainability Development Goals Vonovia Has a Meaningful Impact on 8 SDGs Business Update & Appendix 9M 2023 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 35: Recognition of ESG Performance
Recognition of ESG Performance ESG Ratings and Indices Business Update & Appendix 9M 2023 Results ESG Ratings Slight increase by 0.8 in 2023, still negligible risk 19,2 7.6 ESG Risk Rating 7,7 6,7 6,7* 7.6 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 *rating results from 2021, remain valid for
Slide 36: Corporate Governance
Corporate Governance AGM, Supervisory Board, Management Board Business Update & Appendix 9M 2023 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 37: Who Are Vonovia's Lenders Outside the Bond Market?
Who Are Vonovia’s Lenders Outside the Bond Market? Business Update & Appendix 9M 2023 Results 6% 11% 2% 3% Top Five Lenders: • Berlin Hyp AG 30% • Bayerische Landesbank • Deutsche Pfandbriefbank AG 48% • HVB/UniCredit • Berliner Sparkasse Bonds Commercial banks Bank loans German lenders State and sa
Slide 38: Bonds & Ratings
Bonds & Ratings Business Update & Appendix 9M 2023 Results Name Tenor & Coupon ISIN Amount Issue price Price2 Yield2 Coupon Final Maturity Date Moodys Scope S&P Bond 010C (EMTN) 8 years 2.250% DE000A18V146 EUR 876,8m 99,085% 99,55% 4,51% 2,250% 15-Dez-2023 Baa1 A- BBB+ Bond 017A (EMTN) 6 years 0.750
Slide 39: Bond Covenants
Bond Covenants Substantial Headroom for All Covenants Business Update & Appendix 9M 2023 Results Required Current level Headroom Bond covenants level (Sep. 30, 2023) On the current total financial LTV 43.8bn debt level, fair values would have <60% ➔ 45.9% (Total financial debt / total assets) 95.6bn
Slide 40: LTV Development of Listed German Resi Peers
LTV Development of Listed German Resi Peers Business Update & Appendix 9M 2023 Results 50% 49% 48% 47% 46% 45% 44% 43% 42% 41% 40% 2021 2022 H1 2023 9M 2023 Vonovia Peer 1 Peer 2 Peer 3 Peer Group includes selected listed residential players in Germany. LTVs shown as reported by companies (eop and i
Slide 41: Rent Growth & Inflation
Rent Growth & Inflation Business Update & Appendix 9M 2023 Results • No direct connection between inflation & rent growth but historic 120 Inflation & rent growth (Germany) CPI data shows strong correlation & similar growth rates over time. 100 Rents • When inflation shows meaningful acceleration, r
Slide 42: House Prices & Construction Costs Correlation
House Prices & Construction Costs Correlation Resi Prices Have Been Moving Alongside Construction Prices for 50 Years Business Update & Appendix 9M 2023 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 43: Comps & Implied Building Values
Comps & Implied Building Values Market Comps and Implied Land Values Suggest Vonovia Valuation Is Conservative Business Update & Appendix 9M 2023 Results Vonovia’s implied building values based on reported fair values and current equity valuation (€/sqm) 7,000 6,000 5,000 ~€1,000 implied building va
Slide 44: 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 9M 2023 Results Price levels Rent levels Vonovia fair values versus prices for condos and new constructions Vonovia rental levels versus pric
Slide 45: 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 9M 2023 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 46: Relation between NIY and Financing Costs
Relation between NIY and Financing Costs Business Update & Appendix 9M 2023 Results 10% 8% 6% 4% 2% 0% '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 Selected German Cities(1) avg. EPRA NIY Eurozone 10+ Year Corp Bonds YTM Top 30 Markets Residential IRR (unlevered) (1) Simple av
Slide 47: Residential Market Fundamentals (Germany)
Residential Market Fundamentals (Germany) Household Sizes and Ownership Structure Business Update & Appendix 9M 2023 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 48: Supply/Demand Imbalance
Supply/Demand Imbalance Gap Will Become Even Larger Business Update & Appendix 9M 2023 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 improvem
Slide 49: Affordability
Affordability Average German Household Income and Average Cost of Vonovia Apartment Business Update & Appendix 9M 2023 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 50: Long-term Positive Fundamentals (Germany)
Long-term Positive Fundamentals (Germany) Positive Fundamentals Business Update & Appendix 9M 2023 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
Slide 51: Long-term Positive Fundamentals (Sweden)
Long-term Positive Fundamentals (Sweden) Positive Fundamentals Business Update & Appendix 9M 2023 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 • Hig
Slide 52: Share Price Performance since IPO
Share price (rebased to 100) 80 180 280 380 Jul-13 S-DAX Sep-13 Nov-13 Jan-14 Mar-14 May-14 Vonovia Jul-14 M-DAX Sep-14 Nov-14 Stoxx 600 Jan-15 Mar-15 2023-11-03 | 9M 2023 Earnings Call May-15 Jul-15 DAX DAX Total Performance since IPO Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Liquid Large-cap Stock
Slide 53: Vonovia Shares
Vonovia Shares Basic Data and NOSH Evolution Business Update & Appendix 9M 2023 Results Norges First day of trading July 11, 2013 No. of shares outstanding 814.6 million 14.6% Free float 85.4% BlackRock 6.8% ISIN DE000A1ML7J1 4.0% APG Ticker symbol VNA 3.0% DWS Investment Share class Registered shar
Slide 54: IR Contact & Financial Calendar
IR Contact & Financial Calendar https://investors.vonovia.de Business Update & Appendix 9M 2023 Results Contact Financial Calendar 2023 and 2024 Rene Hoffmann (Head of IR) Nov 6 Roadshow with Goldman Sachs (Frankfurt) Primary contact for Sell side, Buy side Nov 7-8 Roadshow with Goldman Sachs (Londo
Slide 55: 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 56: For Your Notes
For Your Notes 2023-11-03 | 9M 2023 Earnings Call 56