Vonovia Se · XETR:VNA
Vonovia — Vonovia Se Ord — 9M 2024 Earnings Presentation
51 slides from Vonovia's earnings presentation, Nov 6, 2024
Slide 1: 9M 2024 Earnings Call Presentation & Organic Growth Initiatives
9M 2024 Earnings Call Presentation & Organic Growth Initiatives November 6, 2024
Slide 2: Agenda
Agenda 1. 9M 2024 Update pages 3-8 2. Organic Growth Initiatives pages 10-19 3. Appendix pages 21-51
Slide 3: Key Highlights
Key Highlights Stabilization Phase Completed - Return to Growth 9M 2024 Update Organic Growth Appendix Initiatives Leverage- • 2024 disposal target of €3bn achieved. • Strong addressable market opportunity. driven Next phase • Going forward, disposal pricing decisions • Vonovia platform well-positio
Slide 4: €3bn Target Completed
€3bn Target Completed Disposals 2024 YTD 9M 2024 Update Organic Growth Appendix Initiatives Prioritized disposals going forward After ~€1.5bn disposal proceeds reported with H1 results, Vonovia has made further progress and achieved its 2024 disposal target of €3bn. Non-core Development Recurring (i
Slide 5: Earnings & Cash Flow Summary
Earnings & Cash Flow Summary Organic Growth 9M 2024 Update Appendix Initiatives €m (unless indicated otherwise) 9M 2024 9M 20231 Delta (%) Adj. EBITDA Rental 1,801.9 1,818.6 -0.9% • Underlying operations remain highly favorable with Adj. EBITDA Value-add 145.9 73.3 +99.0% growing rents and virtually
Slide 6: Rental Segment
Rental Segment Rental KPIs Remain Highly Robust 9M 2024 Update Organic Growth Appendix Initiatives Organic rent growth (y-o-y, %) Fluctuation rate (%)1,2 • Accelerating market rent growth but 3.8 3.8 7.9 8.2 fluctuation remains low. 0.7 0.3 1.3 • Vacancy rate only a function of turnaround 1.1 time i
Slide 7: Financial KPIs
Financial KPIs Still Slightly above Internal Target Ranges But Well under Control 9M 2024 Update Organic Growth Appendix Initiatives Maturity profile for the next 24 months (€m) • Pro forma cash position of €4.6bn1 covers all near-term maturities. 1,990 • Debt KPIs well under control to safeguard go
Slide 8: Guidance 2024 Confirmed
Guidance 2024 Confirmed Organic Growth 9M 2024 Update Appendix Initiatives Guidance 2024 Final Guidance 2024 Actuals 2023 (6M 2024 reporting) (9M 2024 reporting) Rental Revenue €3,253m ~€3.3bn ~€3.3bn Organic rent growth: Organic rent growth: Organic rent growth: 3.8% Rent growth Additional irrevoca
Slide 9: Agenda
Agenda 1. 9M 2024 Update pages 3-8 2. Organic Growth Initiatives pages 10-19 3. Appendix pages 21-51
Slide 10: Strong Structural Market Drivers for Vonovia…
Strong Structural Market Drivers for Vonovia… Organic Growth 9M 2024 Update Appendix Initiatives Structural Market Drivers Vonovia’s Right to Win Supply/Demand Imbalance Focus on Urban Growth Areas Cumulative housing shortage up to 830k Pro-active geographic focus on urban areas by 2027E, government
Slide 11: Vonovia’s Strategic Evolution
Vonovia’s Strategic Evolution Organic Growth 9M 2024 Update Appendix Initiatives 4 Integrated Offering 3 Provides Long-Term Deploying the Upside (“2nd Vonovia”) 2 Platform Enhancing returns Enhancing the Deploying existing 2028+ 1 Platform capabilities at scale to o Greater quality characteristics:
Slide 12: Vonovia’s Evolving Value Proposition
Vonovia’s Evolving Value Proposition Developing and Growing the Building Blocks of Value Creation 9M 2024 Update Organic Growth Appendix Initiatives 4 Capture of value chain “2nd Vonovia” 3 Increased return on Deploying the non-rental businesses, Platform including 3rd party market 2 Return on non-r
Slide 13: Overview of Organic Growth Drivers
Please see Appendix pages 22 - 29 for more details Overview of Organic Growth Drivers on the different organic growth drivers Organic Growth 9M 2024 Update Appendix Initiatives 2028E Objective: €3.2bn-€3.5bn Adj. EBITDA Total (€2.7bn-2.8bn rental1 and €0.5bn-€0.7bn non-rental) Rental Value-add Recur
Slide 14: Evolution of Value-Add
Please see Appendix pages 22 - 29 for more details Evolution of Value-Add on the different organic growth drivers Organic Growth 9M 2024 Update Appendix Initiatives 8% 4% 9-12% Key Growth Drivers Total Total Total Adj. EBITDA Adj. EBITDA Adj. EBITDA Growing market segment, both Focus will internally
Slide 15: Evolution of Recurring Sales
Please see Appendix pages 22 - 29 for more details Evolution of Recurring Sales on the different organic growth drivers Will Include Contribution from Stranded Assets 9M 2024 Update Organic Growth Appendix Initiatives 5% 2% 5-8% Key Growth Drivers Total Total Total Adj. EBITDA Adj. EBITDA Adj. EBITD
Slide 16: Evolution of Development
Please see Appendix pages 22 - 29 for more details Evolution of Development on the different organic growth drivers Growth Reflects Capital Investment Target of 3-4% of Total Asset Value 9M 2024 Update Organic Growth Appendix Initiatives 3% 1% 4-5% Key Growth Drivers Total Total Total Adj. EBITDA Ad
Slide 17: Evolving the Capital Allocation Focus – Key Priorities for Vonovia
Evolving the Capital Allocation Focus – Key Priorities for Vonovia Organic Growth 9M 2024 Update Appendix Initiatives Financial Strength Growth Strategic Ratings, Covenants & Liquidity Rental & Non-Rental Growth Priorities Preserving a robust Acceleration through organic growth capital structure ini
Slide 18: 2025 Guidance & 2028 Objective
2025 Guidance & 2028 Objective Organic Growth 9M 2024 Update Appendix Initiatives Actuals 2023 Final Guidance 2024 Initial Guidance 2025 Objective 2028 Rental Revenue €3.253bn ~€3.3bn €3.3bn - €3.4bn €3.7bn - €3.8bn Upper end of Organic rent growth1 3.8% ~4% ~4% 3.8 – 4.1% range Upper end of Adj. EB
Slide 19: Wrap-up
Wrap-up Organic Growth 9M 2024 Update Appendix Initiatives • Successfully navigated through a challenging period and delivered on promise to put cash generation and financial strength first. • Pro-active balance sheet repair now over. • Refocus on earnings growth. • Organic growth initiatives reflec
Slide 20: Agenda
Agenda 1. 9M 2024 Update pages 3-8 2. Organic Growth Initiatives pages 10-19 3. Appendix pages 21-51
Slide 21: Appendix
Appendix 22-29 Organic Growth Initiatives 30-39 Additional Material 9M 2024 40-46 Portfolio data 47-48 ESG 49 Domination Agreement between Vonovia and Deutsche Wohnen 50 IR Contacts & Financial Calendar 51 Disclaimer 2024-11-06 | 9M 2024 Earnings Call 21
Slide 22: Return To Performance: VTS Craftsmen Organization
EBITDA reported in Return To Performance: VTS Craftsmen Organization Value-add segment Organic Growth 9M 2024 Update Appendix Initiatives Expectations & Assumptions • EBITDA growth determined by • Yielding portfolio investment and maintenance volume • VTS margin (ambition level of up to 10% EBITDA m
Slide 23: Return to Performance: Recurring Sales
EBITDA reported in Return to Performance: Recurring Sales Recurring Sales segment Organic Growth 9M 2024 Update Appendix Initiatives Condo Portfolio Expectations & Assumptions • ~47k condo units with individual title safeguard long-term pipeline. • EBITDA growth determined by • Flexibility to add to
Slide 24: Return To Performance: Development
EBITDA reported in Return To Performance: Development Development segment Disciplined Capital Commitment & Increased Profitability Organic Growth 9M 2024 Update Appendix through Reducing Development Costs Initiatives Urbanization & Supply/Demand Imbalance1 Expectations & Assumptions Expected demand,
Slide 25: Accelerated Tech-Supported Investments: Serial Modernization
EBITDA reported in Accelerated Tech-Supported Investments: Serial Modernization Rental and Value-add segments Organic Growth 9M 2024 Update Appendix Initiatives • Significant scaling effects as prefabricated elements are Roof Expectations & Assumptions PV produced in large numbers. • Increased tech-
Slide 26: Expanded Business Areas: Energy Operation
EBITDA reported in Expanded Business Areas: Energy Operation Value-add segment Organic Growth 9M 2024 Update Appendix Initiatives Tenant electricity and heat pumps as key products for Energy Operations Expected IRR of >10%1 Expectations & Assumptions • EBITDA growth determined by Increasing margin &
Slide 27: Expanded Business Areas: Undeveloped (“Stranded”) Assets
EBITDA reported in Expanded Business Areas: Undeveloped (“Stranded”) Assets Recurring Sales segment Organic Growth 9M 2024 Update Appendix Initiatives Substantial Progress since IPO Puts Vonovia Ahead of the Market Expectations & Assumptions • EBITDA growth determined by • acquisition of (potentiall
Slide 28: Expanded Business Areas: Occupancy Rights
EBITDA reported in Expanded Business Areas: Occupancy Rights Rental segment Organic Growth 9M 2024 Update Appendix Initiatives Can Corporate Housing Help With Germany‘s Skilled Labor Shortage? Expectations & Assumptions “The tight rental market is becoming an increasing burden on the economy. Compan
Slide 29: Expanded Business Areas: 3rd Party Market
EBITDA reported in Expanded Business Areas: 3rd Party Market Value-add segment Organic Growth 9M 2024 Update Appendix Initiatives Vonovia has built the best-in-class platform Expectations & Assumptions • EBITDA growth determined by • Scalable • Integrated systems • Number of units under management •
Slide 30: Rental Segment
Rental Segment Organic Growth 9M 2024 Update Appendix Initiatives Rental revenue by geography • Increased revenue driven by rental growth on a smaller portfolio. Austria Sweden 4% • Maintenance and operating expenses higher y-o-y as a result of more 11% stringent cash focus in 2023 and inflationary
Slide 31: Rent Growth
Rent Growth Organic Rent Growth Expected at ~4% Going Forward for Longer Term 9M 2024 Update Organic Growth Appendix Initiatives Organic rent growth (y-o-y, %) Regulation update Upper end of 3.8 – 4.1 • Mietpreisbremse extended, as initially agreed in coalition agreement. range 3.8 3.8 • Association
Slide 32: Value-add Segment
Value-add Segment Organic Growth 9M 2024 Update Appendix Initiatives • Internal revenues up, largely driven by craftsmen organization. Value-add Segment (€m) 9M 2024 9M 20232 Delta • Includes €62m from lease agreement on coax network.1 Revenue Value-add 1,009.7 904.7 +11.6% • Expansion of solar ener
Slide 33: Recurring Sales Segment
Recurring Sales Segment Organic Growth 9M 2024 Update Appendix Initiatives • Volumes largely back to pre-crisis level but with lower margin. Recurring Sales Segment (€m) 9M 2024 9M 20234 Delta • High demand in the context of housing shortage and interest rate Units sold 1,516 958 +58.2% stability. •
Slide 34: Development Segment
Development Segment Organic Growth 9M 2024 Update Appendix Initiatives • Gross margin of close to 14% in a challenging market. Development Segment (€m) 9M 2024 9M 20231 Delta • YTD focus has been on liquidity generation over price optimization. • 2024 investments volume of ~€700m to finish ongoing d
Slide 35: EPRA NTA
EPRA NTA Organic Growth 9M 2024 Update Appendix Initiatives EPRA NTA (€m) Sep. 30, Dec. 31, (unless indicated otherwise) 2024 2023 Delta Total equity attributable to Vonovia 24,445.4 25,682.6 -4.8% • Deferred tax liabilities are the calculated tax expenses on the shareholders delta between (IFRS) fa
Slide 36: Debt Structure
Debt Structure Well-balanced and Long-term Maturity Profile with Diverse Funding Mix 9M 2024 Update Organic Growth Appendix Initiatives €bn Maturity Profile as of October 31, 2024 • Diverse funding mix with no more than 12% of debt maturing 5.5 annually. 5.0 4.5 • Combination of debt KPIs, fixed/hed
Slide 37: Bond Covenants
Bond Covenants Organic Growth 9M 2024 Update Appendix Initiatives Required Current level Bond covenants level (Sep. 30, 2024) LTV 43.1bn <60% ➔ 47.3% (Total financial debt / total assets) 91.0bn Secured LTV 12.9bn <45% ➔ 14.2% (Secured debt / total assets) 91.0bn ICR 2,561m >1.8x ➔ 3.7x (LTM Adj. EB
Slide 38: EBT, OFCF, and Dividend Expectations
EBT, OFCF, and Dividend Expectations Organic Growth 9M 2024 Update Appendix Initiatives EBT, OFCF, and dividend funding excluding any disposal proceeds outside Recurring Sales & Development to Sell segments. €m 50% paid as 2024E 2023 2022 Adj. Earnings before Taxes (EBT) base dividend ~1,800 1,866 1
Slide 39: Yield Dispersion between Reported and Implied Numbers
Yield Dispersion between Reported and Implied Numbers Organic Growth 9M 2024 Update Appendix Initiatives Based on P&L and balance sheet (9M 2024) Based on share price (Sep 30, 2024) Gross rental yield 4.2% 4.9% Rental income1 / FV Rental income1 / implied EV2 Net rental yield 3.4% 3.9% Gross yield *
Slide 40: Robust Long-term Upward Trajectory for Vonovia’s Rent Levels
Robust Long-term Upward Trajectory for Vonovia’s Rent Levels Increasing Real Market Levels As Supply/Demand Imbalance Trumps Regulation 9M 2024 Update Organic Growth Appendix Initiatives • Average reversionary potential for Vonovia’s current in-place rent of up to 38% vs. Vonovia reletting rent and
Slide 41: Robust Long-term Upward Trajectory for Vonovia’s Rent Levels
Robust Long-term Upward Trajectory for Vonovia’s Rent Levels Increasing Real Market Levels As Supply/Demand Imbalance Trumps Regulation 9M 2024 Update Organic Growth Appendix Initiatives Vonovia Real market4 Delta between real market and Vonovia in-place rent % of total In-place Regional Market Rele
Slide 42: Investment Program
Investment Program Average Net Initial Yield of 6-7% 9M 2024 Update Organic Growth Appendix Initiatives Investment program has three pillars ~€900m New construction • roof extension €762m Space for our own • infill Creation portfolio • green-/brown-field Typically includes Investments in Upgrade dec
Slide 43: Population Growth In Germany In Urban Areas
Population Growth In Germany In Urban Areas Vonovia Has Actively Managed Its Geographic Exposure to Urban Areas 9M 2024 Update Organic Growth Appendix Initiatives • Current demographic forecasts estimate an Germany’s rental market4 and Vonovia’s exposure overall population growth of as much as 6% by
Slide 44: Regional Markets
Regional Markets Balanced Exposure to Relevant Growth Regions 9M 2024 Update Organic Growth Appendix Initiatives Fair value1 In-place rent Regional Markets Residential Organic rent Multiple Market rent Average rent Purchase power increase forecast growth (LTM, %) (Sep. 30, 2024) (€bn) (€/sqm) Reside
Slide 45: Portfolio Clustering
Portfolio Clustering Organic Growth 9M 2024 Update Appendix Initiatives In-place In-place rent Vacancy Fair value Fair value Gross Sep. 30, 2024 Resi units (€m, rent rate (€bn) (€/sqm) yield 1 1 (€/sqm) p.a.) Urban quarters • German portfolio comprises of strategic assets in 15 urban growth & cluste
Slide 46: Three Dominant Megatrends in Residential Real Estate
Megatrends Three Dominant Megatrends in Residential Real Estate 9M 2024 Update Organic Growth Appendix Initiatives Support from megatrends while other real Supply-/ €100bn investment volume every year to complete estate sectors fight disruptive changes Demand Imbalance 400k apartments per year.1 Up
Slide 47: Commitment to Sustainability
Commitment to Sustainability Science-based Decarbonization Roadmap with Measurable Interim Targets 9M 2024 Update Organic Growth Appendix Initiatives • Accelerated decarbonization with near CO2 neutrality by 2045. • Following CRREM MFH 1.5 degree pathway. • Including Scope 1, 2 and 3.3. CO2 intensit
Slide 48: Energy Efficiency Classes
Energy Efficiency Classes Substantial Progress since IPO Puts Vonovia Ahead of the Market 9M 2024 Update Organic Growth Appendix Initiatives 0.3% 0.2% 1.1% 0.1% 2.0% Energy 4.0% Heating system Heating system 4.0% Performance (to be) powered by 12.9% (to be) powered by Certificate 11.6% renewable ene
Slide 49: Domination Agreement between VNA and DW
Domination Agreement between VNA and DW Reduction of Complexity, Governance Clean-up 9M 2024 Update Organic Growth Appendix Initiatives • DW fully integrated operationally, €130m synergies realized. • Next logical step now: reduction of complexity in governance structure and the day-to-day interacti
Slide 50: IR Contact & Financial Calendar
IR Contact & Financial Calendar https://www.vonovia.com/en/investors 9M 2024 Update Organic Growth Appendix Initiatives Contact Financial Calendar Rene Hoffmann (Head of IR) 2024 Primary contact for Sell side, Buy side Nov 7 Deutsche Bank Roadshow, Frankfurt am Main +49 234 314 1629 Nov 11 Kempen Ro
Slide 51: 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