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Results of Operations

Overview

The following key figures provide an overview of how Vonovia’s results of operations and their drivers developed in 2022. For information on the limited comparative value of the prior-year figures, we refer to the statements in the chapter on overall business development within the Group.

Key Figures on Results of Operations

in € million

2021

2022

Change in %

Total Segment Revenue

5,216.6

6,256.9

19.9

Revenue in the Rental segment

2,568.5

3,163.4

23.2

Revenue in the Value-add segment

1,176.3

1,272.0

8.1

Revenue in the Recurring Sales segment

491.2

543.4

10.6

Revenue in the Development segment

911.8

998.0

9.5

Revenue in the Nursing Business segment

68.8

280.1

>100

Adjusted EBITDA Total

2,254.4

2,763.1

22.6

Adjusted EBITDA Rental

1,778.5

2,233.5

25.6

Adjusted EBITDA Value-add

153.8

126.7

-17.6

Adjusted EBITDA Recurring Sales

113.2

135.1

19.3

Adjusted EBITDA Development

185.4

183.2

-1.2

Adjusted EBITDA Nursing Business

23.5

84.6

>100

Group FFO

1,694.4

2,035.6

20.1

Monthly in-place rent in €/m²

7.33

7.49

2.2

Average area of own apartments in the reporting period (in thou. m²)

28,784

34,525

19.9

Average number of own units (number of units)

452,868

550,342

21.5

Vacancy rate (in %)

2.2

2.0

-0.2 pp

Maintenance expenses and capitalized maintenance (€/m²)

26.17

24.80

-5.2

thereof expenses for maintenance (€/m²)

13.01

12.85

-1.2

thereof capitalized maintenance (€/m²)

13.16

11.95

-9.2

Number of units bought

155,145

969

-99.4

Number of units sold

6,965

19,760

>100

thereof Recurring Sales

2,803

2,710

-3.3

thereof Non Core/Other

4,162

17,050

>100

Number of new apartments completed

2,200

3,749

29.4

thereof own apartments

1,373

2,071

50.8

thereof apartments for sale

827

1,678

>100

Number of employees (as of December 31)

15,871

15,915

0.3

Total segment revenue rose by 19.9% from € 5,216.6 million in 2021 to € 6,256.9 million in 2022. This increase was due primarily to the additional rental income from Deutsche Wohnen and the income from the Care segment, which are included in 2022 with their full annual contribution, whereas in 2021 they were only included with their quarterly contribution for the fourth quarter.

Total Segment Revenue

Total Segment Revenue

in € million

2021*

2022

Change in %

Rental income

2,571.9

3,168.1

23.2

Other income from property management unless included in the operating expenses in the Rental segment

66.4

118.3

78.2

Other income from property management from the Nursing Business

68.8

280.1

>100

Income from disposals Recurring Sales

477.2

515.7

8.1

Internal revenue Value-add

1,108.6

1,152.4

4.0

Income from disposal of properties

519.6

588.4

13.2

Fair value Development to hold

404.1

433.9

7.4

Total Segment Revenue

5,216.6

6,256.9

19.9

  1. * Prior-year figures Deutsche Wohnen adjusted to new segment definition.

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

Group FFO

Group FFO

in € million

2021*

2022

Change in %

Revenue in the Rental segment

2,568.5

3,163.4

23.2

Expenses for maintenance

-377.7

-443.6

17.4

Operating expenses in the Rental segment

-412.3

-486.3

17.9

Adjusted EBITDA Rental

1,778.5

2,233.5

25.6

Revenue in the Value-add segment

1,176.3

1,272.0

8.1

thereof external revenue

67.7

119.6

76.7

thereof internal revenue

1,108.6

1,152.4

4.0

Operating expenses in the Value-add segment

-1,022.5

-1,145.3

12.0

Adjusted EBITDA Value-add

153.8

126.7

-17.6

Revenue in the Recurring Sales segment

491.2

543.4

10.6

Fair value of properties sold adjusted to reflect effects not relating to the period from assets held for sale in the Recurring Sales segment

-355.5

-391.6

10.2

Adjusted result Recurring Sales

135.7

151.8

11.9

Selling costs in the Recurring Sales segment

-22.5

-16.7

-25.8

Adjusted EBITDA Recurring Sales

113.2

135.1

19.3

Revenue from disposal of Development to sell properties

505.6

560.6

10.9

Cost of Development to sell

-370.1

-440.4

19.0

Gross profit Development to sell

135.5

120.2

-11.3

Fair value Development to hold

404.1

433.9

7.4

Cost of Development to hold**

-319.2

-340.6

6.7

Gross profit Development to hold

84.9

93.3

9.9

Rental revenue Development

2.1

3.5

66.7

Operating expenses in the Development segment

-37.1

-33.8

-8.9

Adjusted EBITDA Development

185.4

183.2

-1.2

Revenue in the Nursing Business segment

68.8

280.1

>100

Expenses for maintenance

-2.4

-7.0

>100

Operating expenses in the Nursing Business segment

-42.9

-188.5

>100

Adjusted EBITDA Nursing Business

23.5

84.6

>100

Adjusted EBITDA Total

2,254.4

2,763.1

22.6

FFO interest expense

-397.7

-493.8

24.2

Current income taxes FFO

-65.2

-145.0

>100

Consolidation***

-97.1

-88.7

-8.7

Group FFO

1,694.4

2,035.6

20.1

Group FFO after non-controlling interests

1,654.4

1,944.3

17.5

  1. * Prior-year figures adjusted to new adjusted EBITDA definition (excluding results from at-equity investments), adjustments for Adjusted EBITDA Total/Group FFO: € 14.9 million.
  2. ** Excluding capitalized interest on borrowed capital of € 2.5 million (2021 € 0.9 million).
  3. *** Based on the new 2022 definition, without elimination of IFRS 16 effect, thereof intragroup losses/results: € +4.7 million (2021: € -37.8 million), gross profit Development to hold: € -93.3 million (2021: € -84.9 million), (FFO-at-equity effect Deutsche Wohnen 2021: € 25.6 million).

At the end of 2022, Vonovia managed a portfolio comprising 548,524 of its own residential units (2021: 565,334), 164,330 garages and parking spaces (2021: 168,015) and 8,838 commercial units (2021: 9,289). 68,919 residential units (2021: 71,173) are also managed for other owners.

Details on Results of Operations by Segment

Rental segment

At the end of 2022, the portfolio in the Rental segment had a vacancy rate of 2.0% (2021: 2.2%), meaning that it was once again virtually fully occupied.

Rental segment revenue rose by 23.2% from € 2,568.5 million in 2021 to € 3,163.4 million in 2022. This increase was due primarily to the segment revenue from Deutsche Wohnen, which is included in segment revenue with its full annual contribution in 2022, whereas in 2021 it was only included with the quarterly contribution for the fourth quarter. Of the segment revenue in the Rental segment in the 2022 reporting period, € 2,694.6 million is attributable to rental income in Germany (2021: € 2,100.9 million), € 354.5 million to rental income in Sweden (2021: € 357.0 million) and € 114.3 million to rental income in Austria (2021: € 110.6 million).

Organic rent growth (twelve-month rolling) totaled 3.3% (3.8% as of December 31, 2021). The current rent increase due to market-related factors came to 1.0% (1.6% as of December 31, 2021, with 0.6% due to the Act Governing the Rent Cap for Residential Premises in Berlin (the “rent freeze”) becoming invalid) and the increase from property value improvements translated into a further 1.6% (1.6% as of December 31, 2021). All in all, this produces a like-for-like rent increase of 2.6% (3.2% as of December 31, 2021). New construction measures and measures to add extra stories also contributed 0.7% (0.6% as of December 31, 2021) to organic rent growth.

The average monthly in-place rent within the Rental segment at the end of 2022 came to € 7.49 per m² compared to € 7.33 per m² at the end of December 2021. The monthly in-place rent in the German portfolio at the end of December 2022 came to € 7.40 per m² (December 31, 2021: € 7.19 per m²), with a figure of € 9.73 per m² (December 31, 2021: € 10.31 per m²) for the Swedish portfolio and € 5.18 per m² for the Austrian portfolio (December 31, 2021: € 4.89 per m²). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating, heating and water supply costs.

We adapted our modernization, new construction and maintenance strategy to reflect the current overall conditions in the 2022 fiscal year. We put the brakes on our new construction investments in our own portfolio and postponed investments in “to sell” projects. The overview below provides details on maintenance, modernization and new construction in our own portfolio. It is important to bear in mind that, in 2022, Deutsche Wohnen is included with its contribution for the year as a whole, whereas in 2021 it was only included with the quarterly contribution for the fourth quarter.

Maintenance, Modernization and New Construction

Maintenance, Modernization and New Construction

in € million

2021

2022

Change in %

Expenses for maintenance

374.5

443.6

18.5

Capitalized maintenance

378.8

412.6

8.9

Maintenance measures

753.3

856.2

13.7

Modernization measures

792.4

837.4

5.7

New construction (to hold)

639.9

607.1

-5.1

Modernization and new construction measures

1,432.3

1,444.5

0.9

Total cost of maintenance, modernization and new construction

2,185.6

2,300.7

5.3

Operating expenses in the Rental segment in the 2022 fiscal year were up by 17.9% on the figures for the prior year, from € 412.3 million to € 486.3 million. This was due, in particular, to Deutsche Wohnen being included with its contribution for the year as a whole (2021: quarterly contribution for the fourth quarter) and to higher administrative expenses. All in all, the Adjusted EBITDA Rental came to € 2,233.5  million in the 2022 fiscal year, up by 25.6% on the prior-year value of € 1,778.5 million.

Value-add segment

Developments in the Value-add segment were dominated by the new overall conditions for our own craftsmen’s organization. General price increases for construction services and materials, as well as productivity losses due to the shortage of skilled labor and the coronavirus pandemic had a negative impact on economic development. In addition, short-term changes in the technology for heating modernization measures, coupled with investment activity that had already been reduced in the fourth quarter of 2022, resulted in lower service provision.

In the Value-add segment, income totaled € 1,272.0 million in 2022, up by 8.1% on the prior-year figure of € 1,176.3 million. € 119.6 million of this amount was attributable to external revenue from our Value-add activities with our end customers (2021: € 67.7 million), with € 1,152.4 million attributable to intra-Group income (2021: € 1,108.6 million).

In the 2022 fiscal year, operating expenses in the Value-add segment were up by 12.0% on the figures for the prior year, from € 1,022.5 million to € 1,145.3 million. This was due, in particular, to higher construction costs, the use of more third-party services and higher energy costs.

The Adjusted EBITDA Value-add came to € 126.7 million in the 2022 fiscal year, 17.6% below the prior-year figure of € 153.8 million.

Recurring Sales segment

In the Recurring Sales segment, the income from disposal of properties came to € 543.4 million in the 2022 fiscal year, up by 10.6% on the value of € 491.2 million reported in 2021. A total of 2,710 units were privatized (2021: 2,803), 2,293 in Germany (2021: 2,332) and 417 in Austria (2021: 471). Income of € 430.8 million is attributable to sales in Germany (2021: € 382.1 million) and € 112.6 million to sales in Austria (2021: € 109.1 million).

The fair value step-up came in at 38.8% in the 2022 fiscal year, up on the prior-year value of 38.2%.

Selling costs in the Recurring Sales segment came in at € 16.7 million in 2022, down by 25.8%on the value of € 22.5 million seen in the prior year. This is mainly due to a larger proportion of block sales and to a lower sales volume in 2022. Adjusted EBITDA Recurring Sales came in at € 135.1 million in the 2022 fiscal year, up by 19.3% on the value of € 113.2 million seen in the prior year.

In the 2022 fiscal year, 17,050 residential units from the Non Core/Other portfolio (2021: 4,162) were sold as part of our portfolio adjustment measures, with proceeds totaling € 2,726.8 million (2021: € 645.0 million). This also includes the block sale from Vonovia’s Berlin portfolio as part of the acquisition of Deutsche Wohnen SE. At 1.7% in 2022, the fair value step-up for Non Core/Other was lower than for the previous year (4.1%).

Development segment

In the Development to sell area, a total of 1,678 units were completed in the 2022 fiscal year (2021: 827 units), 484 in Germany (2021: 678 units) and 1,194 in Austria (2021: 149 units). Income from the disposal of development properties to sell came to € 560.6 million in the 2022 fiscal year (2021: € 505.6 million), with € 257.1 million attributable to project development in Germany (2021: € 243.0 million) and € 303.5 million attributable to project development in Austria (2021: € 262.6 million). The increase in proceeds in 2022 was primarily due to a global exit (Gäblerstrasse). The resulting gross profit for “Development to sell” was down from € 135.5 million in the previous year to € 120.2 million in the 2022 fiscal year, largely due to higher construction costs due to inflation.

In the Development to hold area, a total of 2,071 units were completed in the 2022 fiscal year (2021: 1,373 units), 1,338 in Germany (2021: 1,073 units), 592 in Austria (2021: 126 units) and 141 in Sweden (2021: 174 units). In the Development to hold area, a fair value of € 433.9 million was achieved in the 2022 fiscal year (2021: € 404.1 million). € 265.0 million of this amount was attributable to project development in Germany (2021: € 338.4 million), with € 160.5 million attributable to project development in Austria (2021: € 44.3 million) and € 8.4 million attributable to project development in Sweden (2021: € 21.4 million). The gross profit for Development to hold came to € 93.3 million in the 2022 fiscal year (2021: € 84.9 million).

Development operating expenses came to € 33.8 million in the 2022 fiscal year, down by 8.9% on the € 37.1 million reported in the prior year due to a smaller number of certified units. Adjusted EBITDA in the Development segment came in at € 183.2 million in 2022, almost on a par with the prior year (2021: € 185.4 million).

Care segment

The Care segment showed positive development in the 2022 fiscal year. It included 72 nursing care properties at the end of 2022 (2021: 72), with 71 owned by Vonovia (2021: 71). These properties offer a total of 9,540 nursing places (2021: 9,580). Segment revenue came to € 280.1 million in 2022 as against € 68.8 million in 2021 (fourth quarter of 2021). The expenses for maintenance amounted to € 7.0 million in the 2022 fiscal year compared with € 2.4 million in 2021 (fourth quarter of 2021). Operating expenses in the Care segment came to € 188.5 million in the 2022 fiscal year compared with € 42.9 million in 2021 (fourth quarter of 2021).

The Adjusted EBITDA Care amounted to € 84.6 million in the 2022 fiscal year as against € 23.5 million in 2021 (fourth quarter of 2021). Around 70% of Adjusted EBITDA in the Care segment is attributable to nursing care businesses and 30% to nursing care properties.