Vonovia Se · XETR:VNA
Vonovia — H1 2023 Earnings Presentation
57 slides from Vonovia's earnings presentation, Aug 4, 2023
Slide 1: H1 2023 Earnings Call Presentation
H1 2023 Earnings Call Presentation. August 4, 2023 This presentation has been updated on pages 15 & 17 to clarify what loans are (not) included
Slide 2: Agenda
Agenda 1. Business Update & H1 2023 Results pages 3-22 2. Appendix pages 24-56
Slide 3: Business Update & H1 2023 Results
Business Update & H1 2023 Results 4 Highlights 5 Segment Overview 6-7 Rental 8 Value-add 9 Recurring Sales 10 Development 11 Valuation 12 EPRA NTA 13-14 Debt Structure & KPIs 15-16 Financing Update year to date & Liability Management 17 Cash Generation 18 Selected Market Views on Direction of Values
Slide 4: Highlights
Highlights Business Update & Appendix H1 2023 Results Cash Flow • Rental EBITDA with solid growth (+7.8%) • 2023 financial maturities fully covered. • accelerating rent growth; • 2024 financial maturities almost fully covered (€100m to 2. • continuously high occupancy; go). Operating • unchanged, al
Slide 5: Segment Overview
Segment Overview Core Rental Business with Solid Growth Business Update & Appendix H1 2023 Results €m (unless indicated otherwise) H1 2023 H1 20222 Delta • Rental: Increase driven by rental growth, continuously high Total Segment Revenue 2,925.7 3,102.0 -5.7% occupancy and almost full rent collectio
Slide 6: Rental Segment
Rental Segment Business Update & Appendix H1 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 7.8% as
Slide 7: Rental Segment
Rental Segment Business Update & Appendix H1 2023 Results Organic rent growth (y-o-y, %) Fluctuation rate (%) • Accelerating rent growth but fluctuation 3.4 3.5 10.9 rate at historic low. 0.8 0.7 8.8 • Vacancy rate remains low and is almost 7.7 1.2 purely the result of investments. 1.7 • Continuousl
Slide 8: Value-add Segment
Value-add Segment Business Update & Appendix H1 2023 Results Value-add: EBITDA reduction predominantly driven by Value-add Segment (€m) H1 2023 H1 20221 Delta • reduced investment volume; Revenue Value-add 619.8 637.4 -2.8% • increased costs for material and energy; of which external 66.4 57.6 +15.3
Slide 9: Recurring Sales Segment
Recurring Sales Segment Business Update & Appendix H1 2023 Results • Q2 with slightly better momentum but still low volumes overall in H1. Recurring Sales Segment (€m) H1 2023 H1 20221 Delta • Fair-value step-up remains above expectations with +46% in H1 2023; Units sold 628 1,349 -53.4% partly driv
Slide 10: Development Segment
Development Segment Business Update & Appendix H1 2023 Results • Project-driven nature of development business and overall market Development Segment (€m) H1 2023 H1 20221 Delta conditions resulted in substantially lower volume in H1 2023, as prior- year period was positively impacted by a large glo
Slide 11: Valuation Update
Valuation Update Business Update & Appendix H1 2023 Results • Full portfolio valuation as of June 30, 2023. Valuation KPIs Jun. 30, 2023 (Standing Portfolio3) • Following the -€3.4bn value decline in Q1, the Q2 valuation resulted in Germany Sweden Austria VNA Total a further value decline of -€2.7bn
Slide 12: EPRA NTA
EPRA NTA Business Update & Appendix H1 2023 Results EPRA NTA (€m) (unless indicated otherwise) Jun. 30, 2023 Dec. 31, 2022 Delta Total equity attributable to Vonovia shareholders 27,324.2 31,331.5 -12.8% Deferred tax in relation to FV gains of investment properties1 14,709.8 16,190.0 -9.1% FV of fin
Slide 13: Debt Structure
Debt Structure Well-balanced and Long-term Maturity Profile with Diverse Funding Mix Business Update & Appendix H1 2023 Results €bn Maturity profile as of early August 20232 • Diverse funding mix with no more than 12% of debt maturing 5.0 4.5 annually. 4.0 • Combination of LTV, ND/EBITDA, ICR, fixed
Slide 14: Net Debt/EBITDA Multiple, LTV & ICR
Net Debt/EBITDA Multiple, LTV & ICR Business Update & Appendix H1 2023 Results LTV Jun. 30, Dec. 31, • Pro forma debt KPIs adjusted for proceeds from CBRE €m (unless indicated otherwise) 2023 2022 Delta transaction and bond buyback: Non-derivative financial liabilities 44,436.5 45,059.7 -1.4% • LTV:
Slide 15: Financing Update 2023 YTD
Financing Update 2023 YTD This page has been slightly amended to clarify what loans are (not) included €0.8bn rolled over. €1.4bn new loans secured. Substantial Covenant Headroom Business Update & Appendix H1 2023 Results €0.8bn secured loans rolled over Context for the Unencumbered Asset Ratio • 9
Slide 16: Liability Management
Liability Management Successful Completion of €1.0bn Bond Buyback Business Update & Appendix H1 2023 Results Key Results 2024-2026 bonds 2028-2032 bonds • €1.25bn nominal volume offered by investors (11% of the €11.1bn • Fixed price/spread • Modified Dutch auction nominal bond volume included in the
Slide 17: Focus on Cash Generation to Delever
Focus on Cash Generation to Delever This page has been slightly amended to clarify what loans are (not) included 2023 Fully Covered. ~€100m Remaining for 2024 (as of June 30) Business Update & Appendix H1 2023 Results Non-core Residential assets with no strategic relevance. Commercial Granular asset
Slide 18: Selected Market Views on Direction of Values
Selected Market Views on Direction of Values First Signs of Stabilization? Business Update & Appendix H1 2023 Results Value Data Insights (formerly empirica-systeme)1 Savills3 • End of price decline and new stability in sight. Offer prices continued to decline in • Window for an attractive entry poi
Slide 19: Carefully Navigating through the Crisis
Carefully Navigating through the Crisis Business Update & Appendix H1 2023 Results FY2022 Stress Test H1 2023 Update ~10% value decline in the books since H1 2022. The stress test published with our FY2022 Transaction market still soft and uncertainty around values remains in spite of first indicati
Slide 20: 2023 Guidance
2023 Guidance Organic Rent Growth 3.6% - 3.9%. Recurring Sales Guidance Suspended Business Update & Appendix H1 2023 Results • Organic rent growth 2023E now quantified with 3.6% - 3.9%; final outcome also dependent on fluctuation rate. • Guidance confirmed with the exception of Recurring Sales, wher
Slide 21: Investigation Update
Investigation Update Forensic Analysis Far Advanced Business Update & Appendix H1 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 co
Slide 22: Wrap-up
Wrap-up Business Update & Appendix H1 2023 Results Core rental business remains rock solid with accelerating rent growth, low vacancy, and full rent collection. All financial maturities covered until 12/2024 from successful roll- over of secured debt, new secured and unsecured bank debt, and cash ge
Slide 23: Agenda
Agenda 1. Business Update & H1 2023 Results pages 3-22 2. Appendix pages 24-56
Slide 24: Appendix
Appendix 25 Megatrends 26 Strategy 27-28 Regional Markets & Portfolio Clusters 29-30 Apollo JV 31 Investments 32 Fluctuation 33-38 ESG 39-41 Debt & Bond Covenants 42-52 Residential Market Data 53-54 Vonovia Shares 55 IR Contact & Financial Calendar 56 Disclaimer 2023-08-04 | H1 2023 Earnings Call 24
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 H1 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: Established 4+2 Strategy Still Relevant
Established 4+2 Strategy Still Relevant But Focus and Priorities Have Shifted Business Update & Appendix H1 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 27: Regional Markets
Regional Markets Balanced Exposure to Relevant Growth Regions Business Update & Appendix H1 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 H1 2023 Results In-place In-place Vacancy Fair value Fair value Gross Jun. 30, 2023 Resi units rent rent rate (€bn) (€/sqm) yield (€m p.a.) (€/sqm) Urban quarters (Includes >€10bn fair value for further potential JV structures) & clusters 421,631 2,338
Slide 29: Joint Venture Transaction with Apollo (Südewo)
Joint Venture Transaction with Apollo (Südewo) Business Update & Appendix H1 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 approa
Slide 30: Balance Sheet
Balance Sheet Impact of Südewo Transaction on Equity Business Update & Appendix H1 2023 Results €m Dec. 31, 2022 Jun. 30, 2023 Dec. 31, 2022 Jun. 30, 2023 Intangible Assets 1,660 1,450 Total equity 34,439 30,953 thereof Südewo portion in other reserves - 240 Investment Properties 92,300 85,618 there
Slide 31: Investments
Investments Elevated Cost of Capital Has Led to Temporary Slowdown of Investment Volumes Business Update & Appendix H1 2023 Results Investment Program Development to Sell • Investment program includes Apartment Modernization (Optimize • €3.6bn (3.8% of balance sheet) committed. Apartment), Energy-ef
Slide 32: Evolution of Tenant Fluctuation
Evolution of Tenant Fluctuation Business Update & Appendix H1 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 33: 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 H1 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 34: Megatrends
Megatrends Three Dominant Megatrends in Residential Real Estate Business Update & Appendix H1 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 35: Commitment to Sustainability
Commitment to Sustainability Science-based Decarbonization Roadmap with Measurable Interim Targets Business Update & Appendix H1 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 36: United Nations Sustainability Development Goals
United Nations Sustainability Development Goals Vonovia Has a Meaningful Impact on 8 SDGs Business Update & Appendix H1 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 37: Recognition of ESG Performance
Recognition of ESG Performance ESG Ratings and Indices Business Update & Appendix H1 2023 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 A-Rating since 2019 Remained Managemen
Slide 38: Corporate Governance
Corporate Governance AGM, Supervisory Board, Management Board Business Update & Appendix H1 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 39: Who Are Vonovia's Lenders Outside the Bond Market?
Who Are Vonovia’s Lenders Outside the Bond Market? Business Update & Appendix H1 2023 Results 6% 12% 2% 3% Top Five Lenders: • Berlin Hyp AG 27% • Deutsche Pfandbriefbank AG • HVB/UniCredit 50% • Bayerische Landesbank • Berliner Sparkasse Bonds1 Commercial banks Bank loans German lenders State and s
Slide 40: Bonds & Ratings
Bonds & Ratings Business Update & Appendix H1 2023 Results Name Tenor & Coupon ISIN Amount Issue price Current Price 3 Yield3 Coupon Final Maturity Date Moodys Scope S&P Bond 028A (EMTN) 2 years 0.000% DE000A3MP4S3 EUR 351,9m 100,484% 99,19% 5,16% 0,000% 01-Sep-2023 Baa1 A- BBB+ Bond 004 (USD-Bond)
Slide 41: Bond Covenants
Bond Covenants Substantial Headroom for All Covenants Business Update & Appendix H1 2023 Results Required Current level Headroom1 Bond covenants level (Jun. 30, 2023) On the current total financial LTV 44.4bn debt level, fair values would have <60% ➔ 46.6% (Total financial debt / total assets) 95.4b
Slide 42: Long-term Support from Megatrends
Long-term Support from Megatrends Urban Areas with Long-term Supply/Demand Imbalance Business Update & Appendix H1 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 43: House Prices & Construction Costs Correlation
House Prices & Construction Costs Correlation Resi Prices Have Been Moving Alongside Construction Prices for 50 Years Business Update & Appendix H1 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 44: Comps & Implied Building Values
Comps & Implied Building Values Market Comps and Implied Land Values Suggest Vonovia Valuation Is Conservative Business Update & Appendix H1 2023 Results Vonovia’s implied building values based on reported fair values and current equity valuation (€/sqm) 7,000 6,000 ~€1,000 implied ~€250 implied bui
Slide 45: 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 H1 2023 Results Price levels Rent levels Vonovia fair values versus prices for condos and new constructions Vonovia rental levels versus pric
Slide 46: 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 H1 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 47: Relation between NIY and Financing Costs
Relation between NIY and Financing Costs Business Update & Appendix H1 2023 Results 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% '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) (
Slide 48: Residential Market Fundamentals (Germany)
Residential Market Fundamentals (Germany) Household Sizes and Ownership Structure Business Update & Appendix H1 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 49: Supply/Demand Imbalance
Supply/Demand Imbalance Gap May Become Even Larger Business Update & Appendix H1 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 50: Affordability
Affordability Average German Household Income and Average Cost of Vonovia Apartment Business Update & Appendix H1 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 51: Long-term Structural Support (Germany)
Long-term Structural Support (Germany) Positive Fundamentals Business Update & Appendix H1 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 52: Long-term Structural Support (Sweden)
Long-term Structural Support (Sweden) Positive Fundamentals Business Update & Appendix H1 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 53: Liquid Large-cap Stock
Liquid Large-cap Stock Total Performance since IPO Business Update & Appendix H1 2023 Results EuroStoxx 50 35 Stoxx 600 M-DAX S-DAX DAX 30 380 25 Share price (rebased to 100) +103% Vonovia market cap (€bn) +96% 20 280 +62% -6% 15 10 180 5 80 0 Sep-13 Mar-14 May-14 Sep-14 Mar-15 May-15 Sep-15 Mar-16
Slide 54: Vonovia Shares
Vonovia Shares Basic Data and NOSH Evolution Business Update & Appendix H1 2023 Results Norges First day of trading July 11, 2013 No. of shares outstanding 814.6 million 14.6% Free float 85.4% BlackRock 6.9% ISIN DE000A1ML7J1 Ticker symbol VNA 4.0% APG 3.0% DWS Investment Share class Registered shar
Slide 55: IR Contact & Financial Calendar
IR Contact & Financial Calendar https://investors.vonovia.de Business Update & Appendix H1 2023 Results Contact Financial Calendar 2023 Rene Hoffmann (Head of IR) Sep 6 Commerzbank and ODDO BHF Conference, Frankfurt (IR only) Primary contact for Sell side, Buy side +49 234 314 1629 Sep 12-13 BofA Co
Slide 56: 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 57: For Your Notes
For Your Notes 2023-08-04 | H1 2023 Earnings Call 57