Vonovia Se · XETR:VNA
Vonovia — Vonovia Se Ord — Q1 2023 Earnings Presentation
54 slides from Vonovia's earnings presentation, May 4, 2023
Slide 1: Q1 2023 Earnings Call Presentation
Q1 2023 Earnings Call Presentation. May 4, 2023
Slide 2: Agenda
Agenda 1. Business Update & Q1 2023 Results pages 3-21 2. Appendix pages 22-54
Slide 3: Business Update & Q1 2023 Results
Business Update & Q1 2023 Results 4 Highlights 5 Südewo JV Transaction 6 Disposal to CBRE Investment Management 7-12 Segment Reporting 13 Q1 Valuation Update 14 EPRA NTA 15-16 Debt Structure, Debt KPIs, Maturity Schedule 17 Cash Flow Bridge 18 Financing 19 2023 Guidance 20 Changes in Vonovia’s Manag
Slide 4: Highlights
Highlights Business Update & Appendix Q1 2023 Results Significant Progress Rental business remains highly robust 2. • €1.0bn minority common equity participation in • 3.4% organic rent growth and accelerating. Rental “Südewo” portfolio to be sold to long-term insurance perfor- • 2.2% vacancy rate. m
Slide 5: Südewo JV Transaction
Südewo JV Transaction Business Update & Appendix Q1 2023 Results Orderly process including thorough analysis and diligent organization… Q1 2022 Q2 2022 Q3 2022 Q4 2022 – Q1 2023 Initial idea to tap Feasibility study in light Identification of suitable Continued market approach and negotiations with
Slide 6: Disposal to CBRE Investment Management
Disposal to CBRE Investment Management Business Update & Appendix Q1 2023 Results • Vonovia and CBRE Investment Management have reached an agreement on the disposal of five assets with 1,350 apartments located in Berlin, Munich, and Frankfurt.1 • Three of these assets are recently completed new cons
Slide 7: Segment Overview
Segment Overview Core Rental Business Remains Highly Robust Business Update & Appendix Q1 2023 Results €m (unless indicated otherwise) Q1 2023 Q1 20222 Delta • Rental: increase driven by rental growth, continuously high Total Segment Revenue 1,430.7 1,629.0 -12.2% occupancy and full rent collection.
Slide 8: Rental Segment
Rental Segment Business Update & Appendix Q1 2023 Results Rental revenue by geography • Increased revenue driven by rental growth on a marginally smaller Austria portfolio. Sweden 4% 11% • Lower operating expenses resulting largely from Deutsche Wohnen Germany 86% synergies. • Adj. EBITDA up 5.2% as
Slide 9: Rental Segment
Rental Segment Business Update & Appendix Q1 2023 Results Organic rent growth (y-o-y, %) Vacancy rate (eop, %) 3.3 3.4 0.7 0.7 2.4 2.2 1.6 1.5 1.01 1.2 Q1 2022 Q1 2023 Q1 2022 Q1 2023 New construction Modernization Market Collection rate for rental income and all ancillary expenses (%) Expensed and
Slide 10: Value-add Segment
Value-add Segment Business Update & Appendix Q1 2023 Results • Value-add: EBITDA reduction predominantly driven by reduced Value-add Segment (€m) Q1 2023 Q1 20221 Delta investment volume. Revenue Value-add 345.4 322.1 +7.2% of which external 35.7 24.9 +43.4% of which internal 309.7 297.2 +4.2% Opera
Slide 11: Recurring Sales Segment
Recurring Sales Segment Business Update & Appendix Q1 2023 Results • Lower volume than anticipated as FY2023 got off to a slow start. Recurring Sales Segment (€m) Q1 2023 Q1 20221 Delta • Fair-value step-up remains above expectations with +56% in Q1 2023 Units sold 282 700 -59.7% as demand for vacan
Slide 12: Development Segment
Development Segment Business Update & Appendix Q1 2023 Results • Project-driven nature of development business resulted in Development Segment (€m) Q1 2023 Q1 20221 Delta substantially lower volume in Q1 2023, as prior-year period was positively impacted by a large global exit. Revenue from disposal
Slide 13: Valuation Update
Valuation Update Business Update & Appendix Q1 2023 Results Valuation KPIs Mar. 31, 2023 (Standing Portfolio3) • Model update based on available market price data and mindful of the agreed prices for the Südewo JV and CBRE disposal; Germany Sweden Austria VNA Total • Updated portfolio and market dat
Slide 14: EPRA NTA
EPRA NTA Business Update & Appendix Q1 2023 Results EPRA NTA (€m) (unless indicated otherwise) Mar. 31, 2023 Dec. 31, 2022 Delta Total equity attributable to Vonovia shareholders 29,272.5 31,331.5 -6.6% Deferred tax in relation to FV gains of investment properties1 15,253.6 16,190.0 -5.8% FV of fina
Slide 15: Debt Structure
Debt Structure Well-balanced and Long-term Maturity Profile with Diverse Funding Mix Business Update & Appendix Q1 2023 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 16: Net Debt/EBITDA Multiple, LTV & ICR
Net Debt/EBITDA Multiple, LTV & ICR Business Update & Appendix Q1 2023 Results LTV Mar. 31, Dec. 31, • Pro forma LTV adjusted for Südewo JV transaction and CBRE €m (unless indicated otherwise) 2023 2022 Delta portfolio: 45.4%. Non-derivative financial liabilities 44,732.1 45,059.7 -0.7% • Pro forma
Slide 17: Free Cash Flow
Free Cash Flow Significant Cash Generation Expected for 2023 Business Update & Appendix Q1 2023 Results JV structures Südewo portfolio and portfolio in Sweden • With the proceeds from the Südewo JV transaction and the CBRE Municipalities Clear interest from local gov’ts with tight markets disposals,
Slide 18: Financing
Financing All of 2023 and Two Thirds of 2024 Refinancing Needs Already Addressed Business Update & Appendix Q1 2023 Results • Secured debt to be rolled over. Continued appetite in the banking market at comparatively attractive terms. • Additional liquidity to be used for delevering and liability man
Slide 19: 2023 Guidance Unchanged
2023 Guidance Unchanged Unchanged from FY2022 Reporting in March 2023 Business Update & Appendix Q1 2023 Results • Lower predictability around volumes and profitability for Development Sales and Recurring Sales are reflected in the wider EBITDA and Group FFO ranges that had already been included in
Slide 20: Changes in Vonovia's Management Board
Changes in Vonovia’s Management Board Business Update & Appendix Q1 2023 Results • Helene von Roeder will resign from her position on the Vonovia Management Board at the end of June 2023 to take on a new professional role. • The change comes at Ms. von Roeder’s own request, by mutual agreement, and
Slide 21: Wrap-up
Wrap-up Business Update & Appendix Q1 2023 Results Core rental business remains rock solid with accelerating rent growth, low vacancy, and full rent collection. Progress on disposals demonstrates that larger transactions are possible, but they need time, proper preparation, and careful execution. 20
Slide 22: Agenda
Agenda 1. Business Update & Q1 2023 Results pages 3-21 2. Appendix pages 22-54
Slide 23: Appendix
Appendix 24 Megatrends 25 Strategy 26 Regional Market 27 Portfolio Cluster 28 Investments 29 Fluctuation 30-35 ESG 36-39 Debt 40-49 Residential Market Data 50-51 Vonovia Shares 52 IR Contact & Financial Calendar 53 Disclaimer 2023-05-04 | Q1 2023 Earnings Call 23
Slide 24: 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 Q1 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 25: Established 4+2 Strategy Still Relevant
Established 4+2 Strategy Still Relevant But Focus and Priorities Have Shifted Business Update & Appendix Q1 2023 Results Reputation & Customer Satisfaction • Rent growth momentum accelerating Mergers & • Vacancy rate at record low Acquisitions Property Management • Collection rate at all-time high •
Slide 26: Regional Markets
Regional Markets Balanced Exposure to Relevant Growth Regions Business Update & Appendix Q1 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 27: Portfolio Clustering
Portfolio Clustering Business Update & Appendix Q1 2023 Results In-place In-place Fair Fair Resi Vacancy Gross Mar. 31, 2023 units rent (€m rent rate value value yield p.a.) (€/sqm) (€bn) (€/sqm) Urban (Includes ~€9bn fair value for further potential JV structures) quarters & 421,396 2,319 7.38 1.8%
Slide 28: Investments
Investments Elevated Cost of Capital Lead to Slowdown in 2022 and Even More in 2023E Business Update & Appendix Q1 2023 Results Investment Program Development to Sell • Investment program includes Apartment Modernization (Optimize • €3.7bn (3.6% of balance sheet) committed. Apartment), Energy-effici
Slide 29: Evolution of Tenant Fluctuation
Evolution of Tenant Fluctuation Business Update & Appendix Q1 2023 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 30: 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 Q1 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 31: Megatrends
Megatrends Three Dominant Megatrends in Residential Real Estate Business Update & Appendix Q1 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 32: Commitment to Sustainability
Commitment to Sustainability Science-based Decarbonization Roadmap with Measurable Interim Targets Business Update & Appendix Q1 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 33: United Nations Sustainability Development Goals
United Nations Sustainability Development Goals Vonovia Has a Meaningful Impact on 8 SDGs Business Update & Appendix Q1 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 34: Recognition of ESG Performance
Recognition of ESG Performance ESG Ratings and Indices Business Update & Appendix Q1 2023 Results ESG Ratings Current rating 19,2 7.1 ESG Risk Rating 7,7 6,7 7.1 6,7* 2019 2020 2021 2022 Q1 23 2018 2019 2020 2021 2022 *rating results from 2021, remain valid for 2022 Rating improved in 2022 Remained
Slide 35: Corporate Governance
Corporate Governance AGM, Supervisory Board, Management Board Business Update & Appendix Q1 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 36: Financing
Financing Business Update & Appendix Q1 2023 Results • General strategy for 2023 is to roll over secured financing and buy Unsecured back/repay unsecured bonds with excess cash to delever and meet Bank financing1 corporate bonds2 internal debt KPI targets. • All of 2023 and ca. one third of 2024 uns
Slide 37: Who Are Vonovia's Lenders Outside the Bond Market?
Who Are Vonovia’s Lenders Outside the Bond Market? Business Update & Appendix Q1 2023 Results 0% 12% 2% Top Five Lenders: 3% • Berlin Hyp AG 51% • Deutsche Pfandbriefbank AG • HVB/UniCredit 33% • Bayerische Landesbank • Berliner Sparkasse Bonds1 Commercial banks Bank loans German lenders State and s
Slide 38: Bonds & Ratings
Bonds & Ratings Business Update & Appendix Q1 2023 Results Name Tenor & Coupon ISIN Amount Issue price Current Price3 Yield3 Coupon Final Maturity Date Moodys Scope S&P Bond 019 (EMTN) 5 years 0.875% DE000A192ZH7 EUR 391.6m 99.437% 98.92% 5.31% 0.875% 03-Jul-2023 Baa1 A- BBB+ Bond 028A (EMTN) 2 year
Slide 39: Bond Covenants
Bond Covenants Substantial Headroom for All Covenants Business Update & Appendix Q1 2023 Results Current level Headroom1 Bond covenants Required level (Mar. 31, 2023) On the current total financial LTV debt level, fair values would <60% 45.8% (Total financial debt / total assets) have to drop >26% f
Slide 40: Long-term Support from Megatrends
Long-term Support from Megatrends Urban Areas with Long-term Supply/Demand Imbalance Business Update & Appendix Q1 2023 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 41: House Prices & Construction Costs Correlation
House Prices & Construction Costs Correlation Resi Prices Have Been Moving Alongside Construction Prices for 50 Years Business Update & Appendix Q1 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 42: Comps & Implied Building Values
Comps & Implied Building Values Market Comps and Implied Land Values Suggest Vonovia Valuation Is Conservative Business Update & Appendix Q1 2023 Results Vonovia’s implied building values based on reported fair values and current equity valuation (€/sqm) 7,000 6,000 ~€1,300 implied ~€400 implied bui
Slide 43: 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 Q1 2023 Results Price levels Rent levels Vonovia fair values versus prices for condos and new constructions Vonovia rental levels versus pric
Slide 44: 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 Q1 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 45: Residential Market Fundamentals (Germany)
Residential Market Fundamentals (Germany) Household Sizes and Ownership Structure Business Update & Appendix Q1 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 46: Supply/Demand Imbalance
Supply/Demand Imbalance Gap May Become Even Larger Business Update & Appendix Q1 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 improveme
Slide 47: Affordability
Affordability Average German Household Income and Average Cost of Vonovia Apartment Business Update & Appendix Q1 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 48: Long-term Structural Support (Germany)
Long-term Structural Support (Germany) Positive Fundamentals Business Update & Appendix Q1 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 40 55
Slide 49: Long-term Structural Support (Sweden)
Long-term Structural Support (Sweden) Positive Fundamentals Business Update & Appendix Q1 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 • High rep
Slide 50: Liquid Large-cap Stock
Liquid Large-cap Stock Total Performance since IPO Business Update & Appendix Q1 2023 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 Mar-18 Sep-13 Mar-14 May-14 Sep-14 Mar-15 May-15 Sep-15 M
Slide 51: Vonovia Shares
Vonovia Shares Basic Data and NOSH Evolution Business Update & Appendix Q1 2023 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 52: IR Contact & Financial Calendar
IR Contact & Financial Calendar https://investors.vonovia.de Business Update & Appendix Q1 2023 Results Contact Financial Calendar 2023 Rene Hoffmann (Head of IR) May 5 Roadshow with JP Morgan (virtual) Primary contact for Sell side, Buy side +49 234 314 1629 May 10-11 Roadshow with JP Morgan (Londo
Slide 53: 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 54: For Your Notes
For Your Notes 2023-05-04 | Q1 2023 Earnings Call 54