Group FFO

The following key figures provide an overview of the development in Group FFO and other value drivers in the reporting period. The comparison with the previous year is hindered primarily by Deutsche Wohnen, which was consolidated for the first time as of September 30, 2021.

As of the end of 2021, our apartments were virtually fully occupied. The apartment vacancy rate of 2.2% was down slightly on the value of 2.4% seen at the end of 2020. Rental segment revenue increased by 3.3% from € 2,285.9 million in 2020 to € 2,361.6 million in 2021, mainly due to organic growth resulting from new construction and modernization. Of the rental income in the Rental segment in the amount of € 2,361.6 million (2020: € 2,285.9 million), € 1,894.0 million is attributable to rental income in Germany (2020: € 1,845.4 million), € 357.0 million to rental income in Sweden (2020: € 332.5 million) and € 110.6 million to rental income in Austria (2020: € 108.0 million).

The increase in rent in the Rental segment due to market-related factors came to 1.6% (2020: 0.6%). This includes one-off effects of 0.6% due to the Act Governing the Rent Cap for Residential Premises in Berlin (the “rent freeze”) becoming invalid. In addition, we were able to increase rent by 1.6% thanks to property value improvements made as part of our modernization program (2020: 1.9%). The corresponding like-for-like rent increase came to 3.2% in the reporting period (2020: 2.5%). If we include the increase in rent due to new construction measures and measures to add extra stories, then we arrive at an organic increase in rent totaling 3.8% (2020: 3.1%). The average monthly in-place rent in the Rental segment at the end of December 2021 came to € 7.38 per m² compared to € 7.16 per m² at the end of December 2020. At the end of 2021, the monthly in-place rent in the German portfolio (excl. Deutsche Wohnen) came to € 7.19 per m² (Dec. 31, 2020: € 6.95), with the figure for the Swedish portfolio coming to € 10.31 per m² (Dec. 31, 2020: € 10.31) and € 4.89 per m² for the Austrian portfolio (Dec. 31, 2020: € 4.79). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating, heating and water supply costs. The rental income from the Austrian property portfolio additionally includes maintenance and improvement contributions (EVB).

Despite the coronavirus pandemic, we were able to continue with our modernization, new construction and maintenance strategy in the 2021 fiscal year. Isolated modernization and new construction measures were affected by slight construction delays due to the pandemic. All in all, the total volume of our maintenance, modernization and new construction activity came to € 2,185.6 million in 2021, 12.9% higher than the previous year's figure of € 1,935.9 million. Deutsche Wohnen contributed a volume of € 234.0 million to this figure in the fourth quarter of 2021. Maintenance measures in the Rental segment came to € 666.4 million in 2021, up by 12.6% on the prior-year value of € 592.0 million. At € 758.6 million, modernization measures were down by 16.5% on the prior-year value of € 908.4 million. The decline in the volume of modernization measures is largely due to significantly lower investing activities in Berlin as a result of the rent freeze and isolated restrictions related to the coronavirus pandemic. At € 526.6 million, new construction in 2021 was up by 20.9% on the prior-year value of € 435.5 million.

In the 2021 fiscal year, operating expenses in the Rental segment were down by 7.2% on the prior-year value for 2020, from € 410.6 million to € 380.9 million. This was partially a result of fewer costs associated with the coronavirus pandemic. All in all, Adjusted EBITDA Rental rose by 6.0%, from € 1,554.2 million in 2020 to € 1,648.0 million in 2021.

The Value-add segment was slightly impacted by the coronavirus pandemic due to individual construction delays affecting modernization measures. Vonovia’s own craftsmen’s organization made a contribution to the segment’s stable development overall.

We continued to expand our business activities relating to the provision of cable television to our tenants, residential environment, insurance and metering services, and energy supply services. We supplied a total of around 36,400 households with energy directly as of the end of 2021 (2020: around 23,100).

External revenue from our Value-add activities with our end customers was € 58.8 million in 2021, 13.6% above the prior-year figure of € 51.6 million. Group revenue came to € 1,107.2 million in 2021, an increase of 5.1% as against the prior-year figure of € 1,053.0 million. Overall, this resulted in a 5.5% increase in revenue from the Value-add segment from € 1,104.6 million in 2020 to € 1,165.8 million in 2021. In the 2021 fiscal year, operating expenses in the Value-add segment were up by 6.8% on the figures for 2020, from € 952.3 million to € 1,017.0 million. This was due, in particular, to the use of more third-party services and higher costs associated with the coronavirus pandemic. The Adjusted EBITDA Value-add came to € 148.8 million in 2021, 2.3% below the prior-year figure of € 152.3 million.

We continued to pursue our selective sales strategy successfully in the 2021 fiscal year in spite of the pandemic. In the Recurring Sales segment, we report all business activities relating to the sale of single residential units (Privatize).

In the Recurring Sales segment, the income from disposal of properties came to € 477.0 million in the 2021 fiscal year, up by 24.7% on the value of € 382.4 million in 2020; € 367.9 million of this amount is attributed to sales in Germany (2020: € 264.2 million) and € 109.1 million to sales in Austria (2020: € 118.2 million). We privatized 2,747 apartments in the 2021 fiscal year (2020: 2,442), thereof 2,280 in Germany (2020: 1,870) and 467 in Austria (2020: 572). Adjusted EBITDA Recurring Sales came in at € 114.0 million in the 2021 fiscal year, up by 23.4% on the value of € 92.4 million seen in 2020. The fair value step-up for Recurring Sales came in at 38.8% in 2021, down slightly on the comparative value of 39.6% for 2020.

Outside of the Recurring Sales segment, we made 723 Non-core Disposals of residential units as part of our portfolio adjustment measures in the 2021 fiscal year (2020: 1,235) with total proceeds of € 76.4 million (2020: € 203.9 million). At 50.3%, the fair value step-up for Non-core Disposals was significantly higher than for the same period in the previous year (40.1%). The individual sales of land contributed to this increase.

In the 2021 fiscal year, the Development segment, with its Development to sell and Development to hold areas, made positive contributions to earnings in Germany, Austria and Sweden, allowing it to contribute to Vonovia’s successful growth. The segment revenue from Development (total of income from the sale of Development to sell properties, fair value from Development to hold and rental income in the Development segment) rose by 45.3% from € 597.1 million in 2020 to € 867.8 million in 2021. This was driven in particular by higher income from disposal of “Development to sell” properties. At € 503.7 million in 2021, it was up considerably on the prior-year value of € 297.7 million.

In the Development to sell area, a total of 827 units were completed in the 2021 fiscal year (2020: 646 units), thereof 678 units in Germany (2020: 646 units), 149 units in Austria (2020: 0 units). In 2021, income from the disposal of “Development to sell” properties amounted to € 503.7 million (2020: € 297.7 million), with € 241.1 million attributable to project development in Germany (2020: € 201.0 million) and € 262.6 million to project development in Austria (2020: € 96.7 million). The resulting gross profit for Development to sell came to € 136.5 million (2020: € 61.8 million).

In the Development to hold area, a total of 1,373 units (2020: 1,442 units), thereof 1,073 in Germany (2020: 862 units), 126 units in Austria (2020: 383 units) and 174 units in Sweden (2020: 197 units). In the Development to hold area, a fair value of € 362.3 million was achieved in 2021 (2021: € 298.2 million). € 296.6 million of this figure is attributable to project development in Germany (2020: € 157.1 million), € 44.3 million to project development in Austria (2020: € 127.9 million) and € 21.4 million to project development in Sweden (2020: € 13.2 million). The gross profit for Development to hold came to € 84.9 million (2020: € 62.8 million).

Operating expenses Development in 2021 came in at € 35.5 million, up considerably on the prior-year value of € 14.9 million. The increase is due to positive one-off effects in 2020 and higher direct project expenses in 2021. The Adjusted EBITDA for the Development segment amounted to € 187.7 million in the 2021 fiscal year (2021: € 110.9 million).

In the Deutsche Wohnen segment, segment revenue in the fourth quarter of 2021 came to € 307.7 million, with € 207.1 million attributable to rental income, € 68.8 million attributable to income from the Care segment and € 16.2 million to income from disposal of properties. Deutsche Wohnen’s adjusted EBITDA came to € 170.8 million in the fourth quarter of 2021.

The average monthly in-place rent in the Deutsche Wohnen portfolio came to € 7.20 m² at the end of December 2021. In the fourth quarter of 2021, 3,400 residential units were sold from the Deutsche Wohnen portfolio.

In the 2021 fiscal year, the primary key figure for the sustained earnings power of Group FFO increased by 24.0%, from € 1,348.2 million in 2020 to € 1,672.0 million. This was fueled primarily by the positive development in Adjusted EBITDA Total, which rose by 18.8 % in the reporting period from € 1,909.8 million in 2020 to € 2,269.3 million in 2021. Adjusted EBITDA in the Development segment rose from € 110.9 million in 2020 to € 187.7 million in 2021, primarily due to the global exit of a “Development to sell” project. Organic growth pushed the Adjusted EBITDA in the Rental segment up by 6.0%. Adjusted EBITDA in the Recurring Sales segment increased by 24.4%. In the fourth quarter of 2021, Deutsche Wohnen contributed a total of € 137.5 million to Group FFO.

In the 2021 fiscal year, the non-recurring items eliminated in the Adjusted EBITDA Total came to € 37.1 million, down 39.7% on the prior-year value of € 61.5 million. In fiscal year 2021, costs for transactions were offset by income resulting from the valuation of shares in Deutsche Wohnen amounting to € 87.5 million.

The following table gives a detailed list of the non-recurring items: