Group FFO

The following key figures provide an overview of the development in Group FFO and other value drivers in the reporting period.

As of March 31, 2022, our apartments were once again virtually fully occupied. The apartment vacancy rate of 2.4% was down on the value of 2.8% seen at the end of March 2021. Rental income in the Rental segment rose by 1.5% in total from € 581.7 million in the first three months of 2021 to € 590.4 million in the first three months of 2022, largely due to organic growth resulting from new construction and modernization measures and also taking into account the Berlin portfolio that was disposed of. Of the segment revenue in the Rental segment in the 2022 reporting period, € 475.5 million is attributable to rental income in Germany (3M 2021: € 467.0 million), € 88.2 million to rental income in Sweden (3M 2021: € 88.2 million) and € 26.7 million to rental income in Austria (3M 2021: € 26.5 million).

The current increase in rent due to market-related factors came to 1.6% (3M 2021: 0.7%). We were also able to achieve an increase in rent of 1.6% thanks to property value improvements achieved as part of our modernization program (3M 2021: 1.7%). 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. The corresponding like-for-like rent increase came to 3.2% (3M 2021: 2.4%). If we also include the increase in rent due to new construction measures and measures to add extra stories of 0.7% (3M 2021: 0.6%), then we arrive at an organic increase in rent totaling 3.9% (3M 2021: 3.0%). The average monthly in-place rent within the Rental segment at the end of March 2022 came to € 7.42 per m² compared to € 7.18 per m² at the end of March 2021. At the end of March 2022, the monthly in-place rent in the German portfolio (excl. Deutsche Wohnen) came to € 7.23 per m² (March 31, 2021: € 6.98 per m²), with the figure for the Swedish portfolio coming to € 10.28 per m² (March 31, 2021: € 10.18 per m²) and the figure for the Austrian portfolio coming to € 4.90 per m² (March 31, 2021: € 4.79 per m²). 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).

We have continued with our modernization, new construction and maintenance strategy in the 2022 fiscal year. The total volume of maintenance, modernization and new construction activity increased by 36.7 %, from € 379.9 million in the first three months of 2021 to € 519.3 million in the first three months of 2022. Deutsche Wohnen contributed a volume of € 114.3 million to this figure in the first quarter of 2022. Maintenance measures in the Rental segment came to € 137.4 million in the first three months of 2022, up by 1.3 % on the prior-year value of € 135.7 million. At € 158.6 million, modernization measures were down by 3.9% on the prior-year value of € 165.1 million. At € 109.0 million, new construction in the first three months of 2022 was up by 37.8% on the prior-year value of € 79.1 million.

In the first three months of 2022, operating expenses in the Rental segment were up by 2.2% on the figures for the first three months of 2021, from € 98.3 million to € 100.5 million. All in all, Adjusted EBITDA Rental rose by 0.9% from € 403.1 million in the first three months of 2021 to € 406.8 million in the first three months of 2022.

The Value-add segment felt a slight impact of the coronavirus pandemic and cost increases sparked by the war in Ukraine. External revenue from our Value-add activities with our end customers in the first three months of 2022 were up by 27.0% on the first three months of 2021, from € 14.1 million to € 17.9 million. Group revenue rose by 13.8% from € 259.7 million in the first three months of 2021 to € 295.6 million in the first three months of 2022. All in all, revenue from the Value-add segment came to € 313.5 million in the 2022 reporting period, up by 14.5% on the value of € 273.8 million seen in the first three months of 2021. Operating expenses in the Value-add segment in the first three months of 2022 were up by 16.4% on the figures for the first three months of 2021, from € 228.0 million to € 265.5 million. This was due, in particular, to higher energy and construction costs and the use of more third-party services. Adjusted EBITDA Value-add came to € 48.0 million in the first three months of 2022, 4.8% higher than the figure of € 45.8 million reported for the first three months of 2021.

We continued to pursue our selective sales strategy in the first quarter of 2022. 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 € 138.4 million in the first three months of 2022, down by 28.2% on the value of € 192.7 million in the first three months of 2021; € 89.1 million of this amount is attributed to sales in Germany (3M 2021: € 149.7 million) and € 49.3 million to sales in Austria (3M 2021: € 43.0 million). We privatized 661 apartments in the first quarter of 2022 (3M 2021: 1,182), thereof 465 in Germany (3M 2021: 982) and 196 in Austria (3M 2021: 200). Adjusted EBITDA Recurring Sales came in at € 41.0 million in the first quarter of 2022, down by 13.0% on the value of € 47.1 million seen in the first quarter of 2021. The fair value step-up for Recurring Sales came in at 47.2% in the first quarter of 2022, up on the comparative value of 35.8% for the first three months of 2021. This was largely the result of sales in Austria.

Outside of the Recurring Sales segment, we made 4,502 Non-core Disposals of residential units as part of our portfolio adjustment measures in the first three months of 2022 (3M 2021: 70) with total proceeds of € 2,526.7 million (3M 2021: € 9.0 million). This also includes the block sale from Vonovia’s Berlin portfolio. At 1.4 %, the fair value step-up for Non-core Disposals in the 2022 reporting period was lower than for the same period in the previous year (64.1%). Sales of land had contributed to the high step-up in the previous year. The sale of the Berlin portfolio reduced the step-up in the first quarter of 2022.

In the first quarter of 2022, the Development segment, with its Development to sell and Development to hold areas, made positive contributions to earnings in Germany, Austria and Sweden, once again 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 from € 97.3 million in the first quarter of 2021 to € 304.8 million in the first quarter of 2022. This was driven in particular by higher income from disposal of Development to sell properties. At € 241.8 million, it was up considerably on the prior-year value of € 84.2 million.

In the Development to sell area, a total of 511 units were completed in the first quarter of 2022 (3M 2021: 230), thereof 0 in Germany (3M 2021: 230) and 511 units in Austria (3M 2021: 0 units). In the first quarter of 2022, income from the disposal of Development to sell properties amounted to € 241.8 million (3M 2021: € 84.2 million), with € 131.5 million attributable to project development in Germany (3M 2021: € 54.4 million) and € 110.3 million to project development in Austria (3M 2021: € 29.8 million). The increase in proceeds was primarily due to the global exit of a Development to sell project. The resulting gross profit for Development to sell came to € 48.4 million (3M 2021: € 12.8 million).

In the Development to hold area, a total of 266 units were completed in the first three months of 2022 (3M 2021: 149 units), thereof 244 in Germany (3M 2021: 68 units) and 22 units in Sweden (3M 2021: 81 units). In the Development to hold area, a fair value of € 62.0 million was achieved in the 2022 reporting period (3M 2021: € 12.8 million), which was fully attributable to project development in Germany (3M 2021: € 2.5 million; project development in Sweden 3M 2021: € 10.3 million). The gross profit for Development to hold came to € 18.7 million in the first three months of 2022 (3M 2021: € 2.4 million). Development operating expenses came to € 6.5 million in the first quarter of 2022, up by 20.4% on the value of € 5.4 million seen in the first quarter of 2021. The increase is due to higher direct project expenses in 2022. The Adjusted EBITDA for the Development segment amounted to € 61.6 million in the 2022 reporting period (3M 2021: € 10.1 million).

In the Deutsche Wohnen segment, segment revenue in the first quarter of 2022 came to € 286.3 million, with € 190.1 million mainly attributable to rental income, € 68.1 million attributable to income from the nursing and assisted living sector and € 15.0 million to income from disposal of properties. Adjusted EBITDA Deutsche Wohnen came to € 172.3 million in the first quarter of 2022. The average monthly in-place rent in the Deutsche Wohnen portfolio came to € 7.34 m² at the end of March 2022. In the first quarter of 2022, 10,844 residential units were sold from the Deutsche Wohnen portfolio. The vacancy rate in the Deutsche Wohnen portfolio came to 1.9 % at the end of March 2022.

In the first three months of the year, the primary key figure for the sustained earnings power, Group FFO rose by 44.4 % from € 390.6 million (based on the new 2022 definition without the elimination of IFRS 16 effects) in 2021 to € 564.0 million in 2022. This was mainly fueled by the positive development in Adjusted EBITDA Total, which increased by 44.2% from € 506.1 million in the first quarter of 2021 to € 729.7 million in the first quarter of 2022. In the first quarter of 2022, Deutsche Wohnen contributed a total of € 143.5 million to Group FFO.

In the 2022 reporting period, the non-recurring items eliminated in the Adjusted EBITDA Total came to € -2.3 million compared to € 4.4 million in the first quarter of 2021. This was largely due to special effects resulting from the debt recovery action in connection with the loan granted to the Adler Group. The following table gives a detailed list of the non-recurring items: