Economic Development in the First Nine Months of 2022
Key Events During the Reporting Period
Rising interest and inflation rates, also triggered by the war in Ukraine, coupled with uncertainty in the commodity markets and supply chains that remain disrupted, create a highly complex environment for corporate management.
The operating business was stable as expected overall, with moderate effects resulting from the Ukraine war and the coronavirus pandemic in some areas. These effects related primarily to the procurement of raw materials and to energy costs.
With a vacancy rate of 2.1%, Vonovia’s portfolio was nearly fully occupied as of September 30, 2022. The Customer Satisfaction Index (CSI) increased in the third quarter of 2022 and was up by 0.5 percentage points on the previous quarter. The increase in a year-on-year comparison is 2.2 percentage points.
The high customer satisfaction values confirm our efforts in property management and, together with the low vacancy rate, provide a solid foundation for our business. At the same time, this also means stable cash flows and, as a result, a stable basis for the income from our residential properties.
We remain convinced that the challenges associated with megatrends have not changed and that, in the housing industry, these can best be solved by thinking and acting in terms of neighborhoods.
As a result, the lion’s share of the portfolio in Germany consists of neighborhoods that we have grouped together as urban quarters. The remaining existing buildings largely comprise smaller clusters of buildings and solitary properties that we have grouped together as urban clusters. Even though, unlike urban quarters, urban clusters do not relate to entire neighborhoods, they are also managed using the same long-term asset and property management strategies based on our operating platform.
The latest portfolio analysis led to the creation of a further sales portfolio alongside the sales portfolio for non-strategic holdings (Non-core Disposals) and Recurring Sales within the strategic cluster. It consists of multifamily properties, primarily for internal financing purposes.
As a result of the higher interest rates, there was a further increase in the cost of capital, meaning that impairment losses amounting to € 122.0 million (value incl. final PPA adjustments) were recognized on goodwill and the trademark rights in the nursing and assisted living sector in the second quarter of 2022. Impairment losses of € 330.7 million were also recognized on investments accounted for using the equity method as of September 30, 2022. On the other hand, the increase in the discount rate for the measurement of pension provisions translated into actuarial gains.
In the second quarter of 2022, two bonds worth € 500 million each were repaid, one before its maturity date. In addition, commercial papers in the amount of a further € 500 million were also repaid as planned.
The work on integrating Deutsche Wohnen was continued as scheduled in the third quarter of 2022. After ensuring that the measures were consistent with the company law requirements and planning the details of the actual integration work, the first few system integration tests and preparatory measures were conducted in the third quarter of 2022.
The Annual General Meeting held on April 29, 2022, resolved to pay a dividend for the 2021 fiscal year in the amount of € 1.66 per share. In a year-on-year comparison, this corresponds to an increase of € 0.08 – taking into account the increased number of shares due to the capital increase following the takeover of Deutsche Wohnen. As in previous years, shareholders were offered the option of choosing between being paid the dividend in cash or being granted new shares. During the subscription period, shareholders holding a total of 47.85% of the shares carrying dividend rights opted for the scrip dividend instead of the cash dividend. As a result, 19,252,608 new shares were issued using the company’s authorized capital for a total of € 616,815,055.10. The total amount of the dividend distributed in cash therefore came to € 672,336,610.64.