Details on results of operations by segment

Rental segment

At the end of the first half of 2022, the portfolio in the Rental segment had a vacancy rate of 2.4% (end of H1 2021: 2.7%), meaning that our apartments were once again virtually fully occupied.

The segment revenue in the Rental segment increased by 1.6% year-on-year in the first six months of 2022, mainly due to organic growth resulting from new construction and modernization, also taking into account the Berlin portfolio that was sold (H1 2021: 3.3%). Of the segment revenue in the Rental segment in the 2022 reporting period, € 956.2 million is attributable to rental income in Germany (H1 2021: € 939.4 million), € 178.5 million to rental income in Sweden (H1 2021: € 177.4 million) and € 54.0 million to rental income in Austria (H1 2021: € 53.7 million).

The organic increase in rent totaled 3.4%, as in the prior-year period. The current rent increase due to market-related factors came to 1.0% (H1 2021: 0.9%) and the increase from property value improvements translated into a further 1.7% (H1 2021: 2.0%). All in all, this produces a like-for-like rent increase of 2.7% (H1 2021: 2.9%). New construction measures and measures to add extra stories also contributed 0.7% (H1 2021: 0.5%) to the organic increase in rent.

The average monthly in-place rent within the Rental segment at the end of June 2022 came to € 7.44 per m² (excluding Deutsche Wohnen) compared to € 7.29 per m² at the end of June 2021. The monthly in-place rent in the German portfolio at the end of June 2022 came to € 7.28 per m² (June 30, 2021: € 7.09 per m²), with the figure for the Swedish portfolio coming to € 10.00 per m² (June 30, 2021: € 10.32 per m²) and the figure for the Austrian portfolio coming to € 5.01 per m² (June 30, 2021: € 4.82 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 overview below provides details on maintenance, modernization and new construction.

Operating expenses in the Rental segment in the first half of 2022 were up by 8.7% on the figures for the first half of 2021, from € 183.3 million to € 199.3 million. This was due, in particular, to higher administrative expenses. All in all, the Adjusted EBITDA Rental came to € 822.6 million in the first six months of 2022, down slightly on the prior-year value of € 823.8 million.

Value-add segment

The Value-add segment felt a slight impact of the coronavirus pandemic and cost increases sparked by the war in Ukraine. All in all, revenue from the Value-add segment came to € 618.6 million in the 2022 reporting period, up by 11.0% on the value of € 557.4 million seen in the first six months of 2021. External revenue from our Value-add activities with our end customers in the first six months of 2022 were up by 51.3% on the first six months of 2021, from € 27.9 million to € 42.2 million. Group revenue rose by 8.9% from € 529.5 million in the first six months of 2021 to € 576.4 million in the first six months of 2022.

Operating expenses in the Value-add segment in the first six months of 2022 were up by 12.9% on the figures for the first six months of 2021, from € 478.2 million to € 540.1 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 € 78.5 million in the first six months of 2022, slightly lower than the figure of € 79.2 million reported for the first six months of 2021.

Recurring Sales segment

In the Recurring Sales segment, income from the disposal of properties in the first six months of 2022 were down to € 268.6 million, 18.1% lower than the 2021 value of €327.8 million due to volume-related factors, with 1,253 units sold (H1 2021: 1,865), thereof 951 in Germany (H1 2021: 1,527) and 302 in Austria (H1 2021: 338). Income of € 190.0 million is attributable to sales in Germany (H1 2021: € 253.0 million) and € 78.6 million to sales in Austria (H1 2021: € 74.8 million).

In the first half of 2022, the fair value step-up in the portfolio came to 43.7%, up on the value of 38.7% seen in the first half of 2021. This was due primarily to much higher step-ups for sales in Austria.

Selling costs in the Recurring Sales segment came in at € 7.6 million in the first half of 2022, down by 3.8% on the value of € 7.9 million seen in the first half of 2021. Adjusted EBITDA Recurring Sales came in at € 74.1 million in the first half of 2022, down by 11.3% on the value of € 83.5 million seen in the first half of 2021 due to volume-related factors, despite an improved margin.

In addition, we made 4,540 Non-core Disposals of residential units as part of our portfolio adjustment measures in the first half of 2022 (H1 2021: 319) with total proceeds of € 901.1 million (H1 2021: € 29.2 million). This also includes the block sale from Vonovia’s Berlin portfolio. At 4.9%, 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 (38.2%, driven by the low margin in the Berlin portfolio that was sold).

Development segment

In the Development to sell area, a total of 592 units were completed in the first half of 2022 (H1 2021: 452), thereof 16 in Germany (H1 2021: 368 units), 576 units in Austria (H1 2021: 84 units). In the first half of 2022, income from the disposal of Development to sell properties amounted to € 358.4 million (H1 2021: € 191.7 million), with € 169.0 million attributable to project development in Germany (H1 2021: € 115.8 million) and € 189.4 million to project development in Austria (H1 2021: € 75.9 million). The increase in proceeds in 2022 was primarily due to a global exit (Gäblerstrasse). The resulting gross profit for Development to sell came to € 71.3 million in the first half of 2022 (H1 2021: € 31.5 million).

In the Development to hold area, a total of 496 units were completed in the first half of 2022 (H1 2021: 389), thereof 433 in Germany (H1 2021: 297 units) and 63 units in Sweden (H1 2021: 92 units). In the Development to hold area, a fair value of € 97.1 million was achieved in the 2022 reporting period (H1 2021: € 64.4 million), which was fully attributable to project development in Germany (H1 2021: € 54.1 million, Sweden H1 2021: € 10.3 million). The gross profit for Development to hold came to € 28.9 million in the first six months of 2022 (H1 2021: € 18.9 million).

Development operating expenses came to € 16.2 million in the first half of 2022 due to increased project expenses, up by 3.8% on the value of € 15.6 million seen in the first half of 2021. The Adjusted EBITDA for the Development segment amounted to € 85.4 million in the 2022 reporting period (H1 2021: € 35.3 million).

Deutsche Wohnen segment

At the end of the first half of 2022, Deutsche Wohnen’s portfolio was virtually fully occupied with a vacancy rate of 1.8%.

In the first half of 2022, the Deutsche Wohnen Group generated segment revenue of € 578.2 million, of which € 382.3 million was mainly attributable to rental income and € 136.8 million to income from the nursing and assisted living sector.

Adjusted EBITDA Deutsche Wohnen came to € 341.4 million in the first half of 2022.

At the end of June 2022, the average monthly in-place rent in the Deutsche Wohnen portfolio came to € 7.42 per m².

In the first half of 2022, a total of 11,758 residential units were sold from the Deutsche Wohnen portfolio.