Vonovia Se · XETR:VNA
Vonovia — H1 2022 Earnings Presentation
59 slides from Vonovia's earnings presentation, Aug 3, 2022
Slide 1: H1 2022 Earnings Call
H1 2022 Earnings Call. August 3, 2022
Slide 2: H1 2022 Highlights
H1 2022 Highlights Another Quarter with Steady Delivery on Operational and Financial Performance; Further Progress on Capital Allocation • Operational and financial performance fully in • Leverage targets line with expectations • LTV: towards lower end of 40-45% range • 3.4% organic rent growth • Ne
Slide 3: Agenda
Agenda 1. H1 2022 Results pages 4-17 2. Business Update pages 19-30 3. Appendix pages 32-59
Slide 4: Segment Overview
Segment Overview Absolute Growth Driven by DWNI Contribution and Development 1. 2. 3. H1 2022 Results Business Update Appendix €m (unless indicated otherwise) H1 2022 H1 2021 Delta Absolute growth largely driven by DWNI contribution. Vonovia stand- Total Segment Revenue 3,111.0 2,312.3 +34.5% alone
Slide 5: Rental Segment
Rental Segment Stable Rental Performance with Slightly Smaller Portfolio 1. 2. 3. H1 2022 Results Business Update Appendix excl. DWNI Rental revenue by geography • Portfolio ca. 6k units smaller in H1 2022 compared to prior year. Austria • Organic growth supported by new construction and moderniza
Slide 6: Rental Segment
Rental Segment Operating KPIs Fully In Line with Expectations 1. 2. 3. H1 2022 Results Business Update Appendix excl. DWNI Organic rent growth (y-o-y, %) • Stable organic rent growth. 3.4 3.4 0,7 0,5 • Very low vacancy levels as a result of unbroken and growing high demand. 1,7 2,0 • Remaining vac
Slide 7: Positive Mietspiegel Updates Continue
Positive Mietspiegel Updates Continue Lower Volume in Q2 2022 1. 2. 3. H1 2022 Results Business Update Appendix Positive Mietspiegel updates in Q2 2022 Mietspiegel eligibility in the portfolio • Following positive Mietspiegel revisions in Q1, the second • The average growth of a Mietspiegel must be
Slide 8: Value-add Segment
Value-add Segment Higher Expenses Continued to Absorb Revenue Growth 1. 2. 3. H1 2022 Results Business Update Appendix excl. DWNI Value-add Segment (€m) H1 2022 H1 2021 Delta Revenue growth continues to be absorbed by additional costs resulting from a challenging environment: Revenue Value-add 618
Slide 9: Recurring Sales Segment
Recurring Sales Segment Lower Volumes But Strong Fair Value Step-up 1. 2. 3. H1 2022 Results Business Update Appendix excl. DWNI • High fair value step-up demonstrates sustainability of pricing. Recurring Sales Segment (€m) H1 2022 H1 2021 Delta • Recurring Sales portfolio substantially increased
Slide 10: Development Segment
Development Segment Increased Volume and Gross Margins 1. 2. 3. H1 2022 Results Business Update Appendix excl. DWNI • Development less linear than other segments due to project nature of Development Segment (€m) H1 2022 H1 2021 Delta the business. • Gross margins increased compared to prior year b
Slide 11: Valuation
Valuation H1 2022 Valuation Result 1. 2. 3. H1 2022 Results Business Update Appendix Valuation KPIs June 30, 2022 (Standing Portfolio3) • Total Value Growth of €3.8bn for H1 2022 (revalued +5.2% l-f-l) Germany Sweden Austria Total €3.2bn from performance & yield compression (revalued +4.8% l-f-l) In
Slide 12: Valuation
Valuation H1 Value Growth Across All Markets 1. 2. 3. H1 2022 Results Business Update Appendix H1 2022 Fair Value growth from performance, YC and investments (l-f-l) Fair Value1 Fair Value1 Value Regional Market (€m) (€/sqm) % Revalued Growth (l-f-l)2 Berlin 8,668 3,163 5.5% Rhine Main Area 5,671 3,
Slide 13: Comps & Implied Building Values
Comps & Implied Building Values Market Comps and Implied Land Values Suggest Vonovia Valuation Is Conservative 1. 2. 3. H1 2022 Results Business Update Appendix Vonovia fair values versus market prices for condos and new constructions Vonovia’s implied building values based on reported fair values a
Slide 14: German Residential Market Views
German Residential Market Views Values Are Holding Up In Challenging Macro Environment 1. 2. 3. H1 2022 Results Business Update Appendix German resi market transactions April – July 20221 • Lower transaction volume but stable pricing. • Continued interest especially from investors with high equity f
Slide 15: EPRA NTA
EPRA NTA 3.4% NTA p.s. Growth Before New Portfolio Clustering 1. 2. 3. H1 2022 Results Business Update Appendix €m June 30, Dec. 31, • H1 valuation gain partly offset by dividend and write-offs in light of (unless indicated otherwise) 2022 2021 Delta changed cost of capital. Total### equity attribut
Slide 16: Debt Structure
Debt Structure Well-balanced and Long-term Maturity Profile with Diverse Funding Mix 1. 2. 3. H1 2022 Results Business Update Appendix €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 maturity prof
Slide 17: Net Debt/EBITDA Multiple, LTV & ICR
Net Debt/EBITDA Multiple, LTV & ICR 1. 2. 3. H1 2022 Results Business Update Appendix LTV Jun. 30, Dec. 31, • LTV target: towards lower end of 40-45% range. €m (unless indicated otherwise) 2022 2021 Delta • Net debt/EBITDA target: ca. 14-15x. Non-derivative financial liabilities 45,709.2 47,229.5 -3
Slide 18: Agenda
Agenda 1. H1 2022 Results pages 4-17 2. Business Update pages 19-30 3. Appendix pages 32-59 18
Slide 19: Background to Increasing Energy Prices
Background to Increasing Energy Prices Wider Social Challenge But Not A Material Corporate Financial Risk 1. 2. 3. H1 2022 Results Business Update Appendix • Higher energy prices are not a problem limited to tenants who pay for energy via their ancillary expenses. Increasing energy costs impact owne
Slide 20: Higher Cost of Capital Has Triggered Immediate & Near-term Actions
Higher Cost of Capital Has Triggered Immediate & Near-term Actions Various Actions Underway or In Preparation 1. 2. 3. H1 2022 Results Business Update Appendix Immediate actions Near-term actions No incremental debt or equity funding; all Define specific parameters for most Capital Funding financing
Slide 21: Financial Framework
Financial Framework Leverage Policy Defines Boundaries for Maximizing Financial Performance 1. 2. 3. H1 2022 Results Business Update Appendix Among the most important responsibilities vis-a- vis our shareholders are (A) Longevity of the company and In order not to jeopardize (A) in the pursuit of (B
Slide 22: Five Layers to Consider for Efficient Capital Allocation
Five Layers to Consider for Efficient Capital Allocation 1. 2. 3. H1 2022 Results Business Update Appendix Leverage Policy 1 Defines boundaries for maximizing LTV, Net debt/EBITDA financial performance Funding Sources Free cash flow Asset disposals 2 Optimization of funding sources New equity New de
Slide 23: Overview of Funding Sources
Overview of Funding Sources Purely Organic Funding In New Environment 1. 2. 3. H1 2022 Results Business Update Appendix FCF after dividend Asset disposals New equity New debt (no change in dividend policy) Currently not a viable option All business financing needs including the investment program
Slide 24: Investment Options
Investment Options 1. 2. 3. H1 2022 Results Business Update Appendix Rental Value-add Space creation Equity Debt Investments in the • Building-/rent- Space of Construction Share Bond Rental Value-add Share buyback, Debt redemption, megatrends via related creation apartments for our buyback buyback d
Slide 25: Discretionary Investment Program in Existing Portfolio
Discretionary Investment Program in Existing Portfolio Varying NIYs due to Different Payback Periods but High-single to Double-digit IRRs 1. 2. 3. H1 2022 Results Business Update Appendix • Historic cost of capital rendered all investments attractive, both on Net initial yield (static) = NIY and on
Slide 26: More Active Asset Rotation: ca. €13bn in Dedicated Sales Clusters
More Active Asset Rotation: ca. €13bn in Dedicated Sales Clusters New Portfolio Cluster: Recurring Sales (MFH) as Additional Long-term Sales Potential 1. 2. 3. H1 2022 Results Business Update Appendix Established In-place rent In-place rent Fair value Fair value June 30, 2022 Resi units Vacancy rate
Slide 27: Update JV Structures
Update JV Structures 1. 2. 3. H1 2022 Results Business Update Appendix • We are considering different alternatives to access and recycle capital. • These efforts include an analysis of the feasibility of JV partnerships with institutional investors to benefit from ongoing strong demand for our produ
Slide 28: Capital Allocation
Capital Allocation Dynamic Value Creation within A Familiar Framework 1. 2. 3. H1 2022 Results Business Update Appendix Yield and growth matrix has been a helpful guide in the The same underlying principle now supports capital allocation decision-making process for non-core disposals and decisions i
Slide 29: Perception Study
Perception Study Alignment with Expectations of Investment Community 1. 2. 3. H1 2022 Results Business Update Appendix The Study Capital Allocation Preferences • Perception Study conducted by Rivel on behalf of Vonovia 0% 20% 40% 60% 80% between FY and Q1 reporting. 65% Reinvest in the business • In
Slide 30: Guidance 2022 Confirmed
Guidance 2022 Confirmed Operating Business and Financial Performance Fully in Line with Expectations 1. 2. 3. H1 2022 Results Business Update Appendix Guidance Mid-Term Outlook2 Total Segment Revenue €6.2bn - €6.4bn growing Rental Revenue €3.1bn - €3.2bn growing upward trend with inflation Organic r
Slide 31: Agenda
Agenda 1. H1 2022 Results pages 4-17 2. Business Update pages 19-30 3. Appendix pages 32-59 31
Slide 32: Agenda Appendix
Agenda Appendix 33 Regional Markets 34-35 Mietspiegel 36 Evolution of Fluctuation 37 Investment Program 38 H1 Valuation 39 Disposal Track Record 40-44 ESG 45-46 Bond Overview & Covenants 47-54 Residential Market Data 55-56 Vonovia Shares 57 IR Contact & Financial Calendar 58 Disclaimer 2022-08-03 |
Slide 33: Regional Markets
Regional Markets Balanced Exposure to Relevant Growth Regions 1. 2. 3. H1 2022 Results Business Update Appendix 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 (i
Slide 34: Estimated Mietspiegel Update Schedule
Estimated Mietspiegel Update Schedule 1. 2. 3. H1 2022 Results Business Update Appendix • Define the benchmark for the local comparable rental levels. As of July 1, 2022, Mietspiegel legislation requires all cities and towns with >50k inhabitants to publish a Mietspiegel. • Are calculated on the bas
Slide 35: Illustrative Mietspiegel Mechanics (Simplified)
Illustrative Mietspiegel Mechanics (Simplified)1 Mietspiegel Growth Follows Market Rent Growth With A Delay 1. 2. 3. H1 2022 Results Business Update Appendix 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.
Slide 36: Evolution of Fluctuation
Evolution of Fluctuation 1. 2. 3. H1 2022 Results Business Update Appendix • The fluctuation rate has been steadily declining since the IPO and is currently around 9%. • A lower fluctuation rate negatively impacts the overall rent growth as the contribution from new lettings is usually comparatively
Slide 37: Investment Program for Organic Growth
Investment Program for Organic Growth Investments Address Three Megatrends and Safeguard Long-term Organic Growth 1. 2. 3. H1 2022 Results Business Update Appendix Investment program evolution (€m) 1,489 1,400 1,398 (midpoint) 1,344 1,139 779 472 356 Optimize New construction Upgrade Building Apartm
Slide 38: H1 2022 Valuation
H1 2022 Valuation Internal Valuation with Plausibility Checks from Independent External Appraisers 1. 2. 3. H1 2022 Results Business Update Appendix • Vonovia determines its portfolio value on the basis of a discounted cash flow method, by which the expected future income and costs of each property
Slide 39: Strong Disposal Track Record
Strong Disposal Track Record Vonovia Has Sold >110k apartments since the IPO 1. 2. 3. H1 2022 Results Business Update Appendix • Mostly non-core assets in challenging locations. • Total disposal volume in a magnitude of ca. two-thirds of portfolio size at the IPO. 30,000 60 26,631 25,000 50 Fair val
Slide 40: 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 1. 2. 3. H1 2022 Results Business Update Appendix All of our actions have more than just an economic dimension and require adequate stakeholder reconciliation. • We provide a home to more than 1 million peopl
Slide 41: Megatrends
Megatrends Three Dominant Megatrends in Residential Real Estate 1. 2. 3. H1 2022 Results Business Update Appendix 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% 2
Slide 42: United Nations Sustainability Development Goals
United Nations Sustainability Development Goals Vonovia Has a Meaningful Impact on 8 SDGs 1. 2. 3. H1 2022 Results Business Update Appendix We consider 8 of the 17 United Nations Sustainability Development Goals (SDG) to be material to our business activities and aligned with our sustainability stra
Slide 43: Recognition of ESG Performance
Recognition of ESG Performance ESG Ratings and Indices 1. 2. 3. H1 2022 Results Business Update Appendix ESG Ratings • Upgraded in both ratings in 2021 • Risk rating within 1st percentile of global rating universe • Ranked 27 out of universe of 14,749 companies globally • Ranked 3 out of 1,045 compa
Slide 44: Corporate Governance
Corporate Governance AGM, Supervisory Board, Management Board 1. 2. 3. H1 2022 Results Business Update Appendix • 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
Slide 45: Bond Covenants
Bond Covenants Substantial Headroom for All Covenants 1. 2. 3. H1 2022 Results Business Update Appendix Current level Headroom Bond covenants Required level (June 30, 2022) On the current total financial LTV debt level, fair values would <60% 43.1% (Total financial debt / total assets) have to drop
Slide 46: Bonds & Ratings
Bonds & Ratings 1. 2. 3. H1 2022 Results Business Update Appendix Name Tenor & Coupon ISIN Amount Issue Price Coupon Final Maturity Date Rating Moodys Scope S&P Bond 030B (EMTN) 5 years 3mS+140bps XS2368364449 SEK 750m 100.000% 3mS+140bps 08 Apr 2027 A3 A- BBB+ Bond 030A (EMTN) 2 years 3mS+95bps XS2
Slide 47: Long-term Support from Megatrends
Long-term Support from Megatrends Urban Areas with Long-term Supply/Demand Imbalance 1. 2. 3. H1 2022 Results Business Update Appendix Vonovia – Portfolio evolution (Germany)3 Market view – Growing and shrinking regions2 • ~70k non-core apartments sold % • The German Federal Office for Construction
Slide 48: House Prices & Construction Costs Correlation
House Prices & Construction Costs Correlation Resi Prices Have Been Moving Alongside Construction Prices for 50 Years 1. 2. 3. H1 2022 Results Business Update Appendix House price and construction price indices (2015=100) 180 160 140 120 100 80 60 40 20 0 1970 1971 1972 1973 1974 1975 1976 1977 1978
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 1. 2. 3. H1 2022 Results Business Update Appendix Price levels Rent levels Vonovia fair values versus prices for condos and new constructions Vonovia rental levels vers
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 1. 2. 3. H1 2022 Results Business Update Appendix 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 follo
Slide 51: Residential Market Fundamentals (Germany)
Residential Market Fundamentals (Germany) Household Sizes and Ownership Structure 1. 2. 3. H1 2022 Results Business Update Appendix Growing number of smaller households Fragmented ownership structure • While the overall population in Germany is expected to slightly decline, • Germany is the largest
Slide 52: Supply/Demand Imbalance
Supply/Demand Imbalance Gap May Become Even Larger 1. 2. 3. H1 2022 Results Business Update Appendix • Vonovia considers the structural supply/demand imbalance in urban Age group distribution in Germany2 areas to be the most relevant driver of residential property values. million • A meaningful impr
Slide 53: Long-term Structural Support (Germany)
Long-term Structural Support (Germany) Positive Fundamentals 1. 2. 3. H1 2022 Results Business Update Appendix 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 6
Slide 54: Long-term Structural Support (Sweden)
Long-term Structural Support (Sweden) Positive Fundamentals 1. 2. 3. H1 2022 Results Business Update Appendix 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 • H
Slide 55: Liquid Large-cap Stock
Liquid Large-cap Stock Total Performance since IPO 1. 2. 3. H1 2022 Results Business Update Appendix EuroStoxx 50 35 Stoxx 600 M-DAX S-DAX DAX 30 380 25 Share price (rebased to 100) +175% Vonovia market cap (€bn) +65% 20 280 +38% 15 +28% 10 180 5 80 0 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19
Slide 56: Vonovia Shares
Vonovia Shares Basic Data and NOSH Evolution 1. 2. 3. H1 2022 Results Business Update Appendix Norges First day of trading July 11, 2013 11,1% No. of shares outstanding 795.8 million BlackRock Free float 88.9% 7,7% ISIN DE000A1ML7J1 APG 4.0% Ticker symbol VNA Share class Registered shares with no pa
Slide 57: IR Contact & Financial Calendar
IR Contact & Financial Calendar https://investors.vonovia.de 1. 2. 3. H1 2022 Results Business Update Appendix Contact Financial Calendar 2022 Rene Hoffmann (Head of IR) Aug 24 Berenberg Copenhagen Top Picks Seminar (IR only) Primary contact for Sell side, Buy side Sep 8 Commerzbank/ODDO BHF Corpora
Slide 58: 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 59: For Your Notes
For Your Notes 2022-08-03 | H1 2022 Earnings Call 59