Results of Operations
Overview
When analyzing the figures for the first nine months of 2022, it is important to remember that these only allow a comparison with the previous year to a limited extent, as Deutsche Wohnen’s figures were not included in Vonovia’s consolidated financial statements until September 30, 2021. Due to Vonovia’s limited control influence on the operating results of companies accounted for using the equity method, the earnings components of these companies will no longer be included in the performance-relevant figures Adjusted EBITDA Total and Group FFO for the September 30, 2022 reporting period. The corresponding prior-year figures have been adjusted.
In the first nine months of 2022, moderate effects of the war in Ukraine were reflected in the interim financial statements, particularly in energy and construction costs. The ongoing coronavirus pandemic also had a minor impact, especially in the Value-add segment.
All in all, Vonovia reported stable business development in the first nine months of 2022.
As of September 30, 2022, Vonovia employed 15,851 people (September 30, 2021: 16,051).
Total segment revenue in the Vonovia Group increased by 31.4% from € 3,517.0 million in the first nine months of 2021 to € 4,619.7 million in the first nine months of 2022. Deutsche Wohnen was the main contributor to this increase, with a volume of € 906.9 million in 2022.
Total Segment Revenue
Total Segment Revenue
in € million | 9M 2021 | 9M 2022 | Change in % | 12M 2021 | ||||
Rental income | 1,764.7 | 2,367.2 | 34.1 | 2,571.9 | ||||
Other income from property management unless included in the operating expenses in the Rental segment | 40.8 | 316.8 | >100 | 141.7 | ||||
Income from disposals Recurring Sales (incl. Deutsche Wohnen) | 422.2 | 392.6 | -7.0 | 477.2 | ||||
Internal revenue Value-add | 798.3 | 851.5 | 6.7 | 1,107.2 | ||||
Income from disposal of properties | 328.8 | 486.9 | 48.1 | 519.6 | ||||
Fair value Development to hold (incl. Deutsche Wohnen) | 162.2 | 204.7 | 26.2 | 362.3 | ||||
Total Segment Revenue | 3,517.0 | 4,619.7 | 31.4 | 5,179.9 | ||||
The overview below shows the other key figures for the company’s results of operations, as well as their reconciliation to the performance indicator Group FFO:
Group FFO
Group FFO
in € million | 9M 2021* | 9M 2022 | Change in % | 12M 2021* | ||||
Revenue in the Rental segment | 1,762.7 | 1,789.0 | 1.5 | 2,361.6 | ||||
Expenses for maintenance | -245.3 | -250.5 | 2.1 | -332.7 | ||||
Operating expenses in the Rental segment | -277.8 | -291.3 | 4.9 | -389.5 | ||||
Adjusted EBITDA Rental | 1,239.6 | 1,247.2 | 0.6 | 1,639.4 | ||||
Revenue in the Value-add segment | 840.1 | 916.5 | 9.1 | 1,165.8 | ||||
thereof external revenue | 41.8 | 65.0 | 55.5 | 58.6 | ||||
thereof internal revenue | 798.3 | 851.5 | 6.7 | 1,107.2 | ||||
Operating expenses in the Value-add segment | -724.5 | -800.6 | 10.5 | -1,017.0 | ||||
Adjusted EBITDA Value-add | 115.6 | 115.9 | 0.3 | 148.8 | ||||
Revenue in the Recurring Sales segment | 422.2 | 378.6 | -10.3 | 477.0 | ||||
Fair value of properties sold adjusted to reflect effects not relating to the period from assets held for sale in the Recurring Sales segment | -302.7 | -263.1 | -13.1 | -343.7 | ||||
Adjusted result Recurring Sales | 119.5 | 115.5 | -3.3 | 133.3 | ||||
Selling costs in the Recurring Sales segment | -14.0 | -11.2 | -20.0 | -19.3 | ||||
Adjusted EBITDA Recurring Sales | 105.5 | 104.3 | -1.1 | 114.0 | ||||
Revenue from disposal of Development to sell properties | 328.8 | 456.7 | 38.9 | 503.7 | ||||
Cost of Development to sell | -270.3 | -362.9 | 34.3 | -367.2 | ||||
Gross profit Development to sell | 58.5 | 93.8 | 60.3 | 136.5 | ||||
Fair value Development to hold | 162.2 | 170.3 | 5.0 | 362.3 | ||||
Cost of Development to hold** | -117.9 | -129.3 | 9.7 | -277.4 | ||||
Gross profit Development to hold | 44.3 | 41.0 | -7.4 | 84.9 | ||||
Rental revenue Development | 1.0 | 1.7 | 70.0 | 1.8 | ||||
Operating expenses in the Development segment | -24.0 | -23.7 | -1.3 | -35.5 | ||||
Adjusted EBITDA Development | 79.8 | 112.8 | 41.4 | 187.7 | ||||
Adjusted EBITDA Deutsche Wohnen | – | 529.9 | – | 164.5 | ||||
Adjusted EBITDA Total | 1,540.5 | 2,110.1 | 37.0 | 2,254.4 | ||||
FFO interest expense | -267.5 | -361.9 | 35.3 | -397.7 | ||||
Current income taxes FFO | -58.2 | -97.3 | 67.2 | -65.2 | ||||
Consolidation*** | -45.9 | -73.1 | 59.3 | -97.1 | ||||
Group FFO | 1,168.9 | 1,577.8 | 35.0 | 1,694.4 | ||||
Group FFO after non-controlling interests | 1,153.1 | 1,515.8 | 31.5 | 1,654.4 | ||||
- *Prior-year figures adjusted to new adjusted EBITDA definition (excluding results from at-equity investments), adjustments Adjusted EBITDA Total/Group FFO 9M 2021: € 0.4 million, 12M 2021: € 14.9 million.
- **Excluding capitalized interest on borrowed capital in 9M 2022 of € 0.0 million (9M 2021 € 0.9 million), 12M 2021: € 0.9 million.
- ***Based on the new 2022 definition, without elimination of IFRS 16 effect, thereof intragroup profits in 9M 2022: € -22.4 million (9M 2021: € -27.2 million), 12M 2021: € -37.8 million, gross profit Development to hold in 9M 2022: € -41.0 million (9M 2021: € -44.3 million), 12M 2021: € -84.9 million, 9M and 12M 2021: FFO-at-equity effect Deutsche Wohnen: € 25.6 million.
At the end of September 2022, Vonovia (including Deutsche Wohnen) managed a portfolio comprising 549,010 of its own residential units (September 30, 2021: 568,451), 163,727 garages and parking spaces (September 30, 2021: 170,147) and 8,858 commercial units (September 30, 2021: 9,365). 72,386 residential units (September 30, 2021: 71,427) are also managed for other owners.
Details on results of operations by segment
Rental segment
At the end of September 2022, the portfolio in the Rental segment had a vacancy rate of 2.2% (end of Q3 2021: 2.7%), meaning that our apartments were once again virtually fully occupied.
The segment revenue in the Rental segment increased by 1.5% year-on-year in the first nine months of 2022, mainly due to organic growth resulting from new construction and modernization and also taking into account the Berlin portfolio that was sold at the start of 2022 (9M 2021: 3.3%), to total € 1,789.0 million. Of the segment revenue in the Rental segment in the 2022 reporting period, € 1,439.4 million is attributable to rental income in Germany (9M 2021: € 1,414.7 million), € 267.6 million to rental income in Sweden (9M 2021: € 266.6 million) and € 82.0 million to rental income in Austria (9M 2021: € 81.4 million).
Organic rent growth (twelve-month rolling) totaled 3.3% (3.5% as of September 30, 2021). The current rent increase due to market-related factors came to 1.0% (1.1% as of September 30, 2021) and the increase from property value improvements translated into a further 1.6% (1.8% as of September 30, 2021). All in all, this produces a like-for-like rent increase of 2.6% (2.9% as of September 30, 2021). New construction measures and measures to add extra stories also contributed 0.7% (0.6% as of September 30, 2021) to organic rent growth.
The average monthly in-place rent within the Rental segment at the end of September 2022 came to € 7.47 per m² (excluding Deutsche Wohnen) compared to € 7.34 per m² at the end of September 2021. The monthly in-place rent in the German portfolio at the end of September 2022 came to € 7.33 per m² (September 30, 2021: € 7.14 per m²), with the figure for the Swedish portfolio coming to € 9.93 per m² (September 30, 2021: € 10.34 per m²) and the figure for the Austrian portfolio coming to € 5.05 per m² (September 30, 2021: € 4.87 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 real estate 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.
Maintenance, Modernization and New Construction
Maintenance, Modernization and New Construction
in € million | 9M 2021 | 9M 2022 | Change in % | 12M 2021 | ||||
Expenses for maintenance | 245.3 | 250.5 | 2.1 | 332.7 | ||||
Capitalized maintenance | 208.2 | 216.6 | 4.0 | 333.7 | ||||
Maintenance measures | 453.5 | 467.1 | 3.0 | 666.4 | ||||
Modernization measures | 547.8 | 518.8 | -5.3 | 758.6 | ||||
New construction (to hold) | 353.8 | 345.1 | -2.5 | 526.6 | ||||
Modernization and new construction measures | 901.6 | 863.9 | -4.2 | 1,285.2 | ||||
Cost of maintenance, modernization and new construction Deutsche Wohnen | – | 424.3 | – | 234.0 | ||||
Total cost of maintenance, modernization and new construction | 1,355.1 | 1,755.3 | 29.5 | 2,185.6 | ||||
Operating expenses in the Rental segment in the first nine months of 2022 were up by 4.9% on the figures for the first nine months of 2021, from € 277.8 million to € 291.3 million. This was due, in particular, to higher administrative expenses. All in all, the Adjusted EBITDA Rental came to € 1,247.2 million in the first nine months of 2022, up by 0.6% on the prior-year value of € 1,239.6 million.
Value-add segment
The Value-add segment continued to feel 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 € 916.5 million in the 2022 reporting period, up by 9.1% on the value of € 840.1 million seen in the first nine months of 2021. External revenue from our Value-add activities with our end customers in the first nine months of 2022 were up by 55.5% on the first nine months of 2021, from € 41.8 million to € 65.0 million, mainly due to energy distribution. Group revenue rose by 6.7% from € 798.3 million in the first nine months of 2021 to € 851.5 million in the first nine months of 2022.
Operating expenses in the Value-add segment in the first nine months of 2022 were up by 10.5% on the figures for the first nine months of 2021, from € 724.5 million to € 800.6 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 € 115.9 million in the first nine months of 2022, 0.3% higher than the figure of € 115.6 million reported for the first nine months of 2021.
Recurring Sales segment
In the Recurring Sales segment, income from the disposal of properties in the first nine months of 2022 were down to € 378.6 million, 10.3% lower than the 2021 value of €422.2 million due to volume-related factors, with 1,711 units sold (9M 2021: 2,367), thereof 1,314 in Germany (9M 2021: 1,928) and 397 in Austria (9M 2021: 439). Income of € 272.9 million is attributable to sales in Germany (9M 2021: € 321.6 million) and € 105.5 million to sales in Austria (9M 2021: € 100.6 million).
In the first nine months of 2022, the fair value step-up in the portfolio came to 43.9%, up on the value of 39.5% seen in the first nine months 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 € 11.2 million in the first nine months of 2022, down by 20.0% on the value of € 14.0 million seen in the first nine months of 2021. Adjusted EBITDA Recurring Sales came in at € 104.3 million in the first nine months of 2022, down by 1.1% on the value of € 105.5 million seen in the first nine months of 2021 due to volume-related factors, despite an improved margin.
In addition, we made 4,871 Non-core Disposals of residential units as part of our portfolio adjustment measures in the first nine months of 2022 (9M 2021: 620) with total proceeds of € 978.0 million (9M 2021: € 49.5 million). This also includes the block sale from Vonovia’s Berlin portfolio. At 5.1%, 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 (50.7%).
Development segment
In the “Development to sell” area, a total of 636 units were completed in the first nine months of 2022 (9M 2021: 580), thereof 60 in Germany (9M 2021: 496) and 576 units in Austria (9M 2021: 84 units). In the first nine months of 2022, income from the disposal of “Development to sell” properties amounted to € 456.7 million (9M 2021: € 328.8 million), with € 213.4 million attributable to project development in Germany (9M 2021: € 174.3 million) and € 243.3 million to project development in Austria (9M 2021: € 154.5 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 € 93.8 million in the first nine months of 2022 (9M 2021: € 58.5 million).
In the “Development to hold” area, a total of 816 units were completed in the first nine months of 2022 (9M 2021: 786 units), thereof 716 in Germany (9M 2021: 506 units) and 100 in Sweden (9M 2021: 154; in Austria 9M 2021: 126 units). In the Development to hold area, a fair value of € 170.3 million was achieved in the 2022 reporting period (9M 2021: € 162.2 million), which was fully attributable to project development in Germany (9M 2021: € 96.5 million, Sweden 9M 2021: € 21.4 million, Austria 9M 2021: € 44.3 million). The gross profit for “Development to hold” came to € 41.0 million in the first nine months of 2022 (9M 2021: € 44.3 million).
Development operating expenses came to € 23.7 million in the first nine months of 2022, down by 1.3% on the value of € 24.0 million seen in the first nine months of 2021. The Adjusted EBITDA for the Development segment amounted to € 112.8 million in the 2022 reporting period (9M 2021: € 79.8 million).
Deutsche Wohnen segment
At the end of the third quarter of 2022, Deutsche Wohnen’s portfolio comprised 140,079 residential units. It continued to be virtually fully occupied with a vacancy rate of 1.8%.
In the first nine months of 2022, the Deutsche Wohnen Group generated segment revenue of € 906.9 million, of which € 575.5 million was mainly attributable to rental income and € 207.9 million to income from the nursing and assisted living sector.
Adjusted EBITDA Deutsche Wohnen came to € 529.9 million in the first nine months of 2022.
At the end of September 2022, the average monthly in-place rent in the Deutsche Wohnen portfolio came to € 7.45 per m².
In the first nine months of 2022, a total of 11,786 units were sold from the Deutsche Wohnen portfolio.
Adjusted EBITDA Development
The Adjusted EBITDA Development includes the gross profit from the development activities of “to sell” projects (income from sold development projects less production costs) and the gross profit from the development activities of “to hold” projects (fair value of the units developed for the company’s own portfolio less incurred production costs) less the operating expenses from the Development segment.
Adjusted EBITDA Deutsche Wohnen
The Adjusted EBITDA Deutsche Wohnen is calculated by deducting the operating expenses of the Deutsche Wohnen segment and the carrying amount of properties sold from the segment revenue of the Deutsche Wohnen Group.
Adjusted EBITDA Recurring Sales
The Adjusted EBITDA Recurring Sales compares the proceeds generated from the privatization business with the fair values of assets sold and also deducts the related costs of sale. In order to disclose profit and revenue in the period in which they are incurred and to report a sales margin, the fair value of properties sold, valued in accordance with IFRS 5, has to be adjusted to reflect realized/unrealized changes in value.
Adjusted EBITDA Rental
The Adjusted EBITDA Rental is calculated by deducting the operating expenses of the Rental segment and the expenses for maintenance in the Rental segment from the Group’s rental income.
Adjusted EBITDA Total
Adjusted EBITDA Total is the result before interest, taxes, depreciation and amortization (including income from other operational investments and intragroup profits) adjusted for effects that do not relate to the period, recur irregularly and that are atypical for business operation, and for net income from fair value adjustments to investment properties. These non-recurring items include the development of new fields of business and business processes, acquisition projects, expenses for refinancing and equity increases (where not treated as capital procurement costs), IPO preparation costs and expenses for pre-retirement part-time work arrangements and severance payments. The Adjusted EBITDA Total is derived from the sum of the Adjusted EBITDA Rental, Adjusted EBITDA Value-add, Adjusted EBITDA Recurring Sales, Adjusted EBITDA Development and Adjusted EBITDA Deutsche Wohnen.
Adjusted EBITDA Value-add
The Adjusted EBITDA Value-add is calculated by deducting operating expenses from the segment’s income.
COSO
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is a private-sector U.S. organization. It was founded in 1985. In 1992, COSO published the COSO model, an SEC-recognized standard for internal controls. This provided a basis for the documentation, analysis and design of internal control systems. In 2004, the model was further developed and the COSO Enterprise Risk Management (ERM) Framework was published. Since then, it has been used to structure and develop risk management systems.
Covenants
Requirements specified in loan agreements or bond conditions containing future obligations of the borrower or the bond obligor to meet specific requirements or to refrain from undertaking certain activities.
EPRA Key Figures
For information on the EPRA key figures, we refer to the chapter on segment reporting according to EPRA.
EPRA NTA
The presentation of the NTA based on the EPRA definition aims to show the net asset value in a long-term business model. NTA stands for Net Tangible Assets. The equity attributable to Vonovia’s shareholders is adjusted by deferred taxes, real estate transfer tax and other purchasers’ costs in relation to the existing portfolio and the fair value of derivative financial instruments after taking deferred taxes into account. Stated goodwill and other intangible assets are also deducted.
European Public Real Estate Association (EPRA)
The European Public Real Estate Association (EPRA) is a non-profit organization that has its registered headquarters in Brussels and represents the interests of listed European real estate companies. Its mission is to raise awareness of European listed real estate companies as a potential investment destination that offers an alternative to conventional investments. EPRA is a registered trademark of the European Public Real Estate Association.
European Public Real Estate Association (EPRA)
The European Public Real Estate Association (EPRA) is a non-profit organization that has its registered headquarters in Brussels and represents the interests of listed European real estate companies. Its mission is to raise awareness of European listed real estate companies as a potential investment destination that offers an alternative to conventional investments. EPRA is a registered trademark of the European Public Real Estate Association.
Fair Value
Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
Fair Value
Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
Fair Value
Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
Fair Value
Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
GAV
The Gross Asset Value (GAV) of the recognized real estate investments. This consists of the owner-occupied properties, the investment properties including development to hold, the assets held for sale and the development to sell area. In the latter, both residential properties for which a purchase contract has been signed and those with the intention to sell – i.e., a purchase contract has not yet been signed – are included.
GAV
The Gross Asset Value (GAV) of the recognized real estate investments. This consists of the owner-occupied properties, the investment properties including development to hold, the assets held for sale and the development to sell area. In the latter, both residential properties for which a purchase contract has been signed and those with the intention to sell – i.e., a purchase contract has not yet been signed – are included.
Group FFO
Group FFO reflects the recurring earnings from the operating business. In addition to the adjusted EBITDA for the Rental, Value-add, Recurring Sales and Development segments, Group FFO allows for recurring current net interest expenses from non-derivative financial instruments as well as current income taxes. This key figure is not determined on the basis of any specific international reporting standard but is to be regarded as a supplement to other performance indicators determined in accordance with IFRS.
Maintenance
Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Maintenance
Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Maintenance
Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Maintenance
Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
LTV Ratio (Loan-to-Value Ratio)
The LTV ratio shows the extent to which financial liabilities are covered. It shows the ratio of non-derivative financial liabilities pursuant to IFRS, less foreign exchange rate effects, cash and cash equivalents less advance payments received by Development (period-related), receivables from disposals, plus purchase prices for outstanding acquisitions to the total fair values of the real estate portfolio, fair values of the projects/land currently under construction as well as receivables from the sale of real estate inventories (period-related) plus the fair values of outstanding acquisitions and investments in other real estate companies.
Rental Income
Rental income refers to the current gross income for rented units as agreed in the corresponding lease agreements before the deduction of non-transferable ancillary costs. The rental income from the Austrian property portfolio additionally includes maintenance and improvement contributions (EVB). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating and heating costs.
Rental Income
Rental income refers to the current gross income for rented units as agreed in the corresponding lease agreements before the deduction of non-transferable ancillary costs. The rental income from the Austrian property portfolio additionally includes maintenance and improvement contributions (EVB). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating and heating costs.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Sustainability Performance Index (SPI)
Index to measure non-financial performance. Vonovia’s sustainable activities are geared towards the top sustainability topics that we have identified, which are bundled in the Sustainability Performance Index. The Customer Satisfaction Index (CSI) is included in the calculation of the Sustainability Performance Index. The CSI is determined at regular intervals in systematic customer surveys conducted by an external service provider and shows the effectiveness and sustainability of our services for the customer. Other indicators used in the Sustainability Performance Index are the carbon savings achieved annually in housing stock, the energy efficiency of new buildings, the share of accessible (partial) modernization measures in relation to newly let apartments, the increase in employee satisfaction and diversity in the company’s top management team.
Sustainability Performance Index (SPI)
Index to measure non-financial performance. Vonovia’s sustainable activities are geared towards the top sustainability topics that we have identified, which are bundled in the Sustainability Performance Index. The Customer Satisfaction Index (CSI) is included in the calculation of the Sustainability Performance Index. The CSI is determined at regular intervals in systematic customer surveys conducted by an external service provider and shows the effectiveness and sustainability of our services for the customer. Other indicators used in the Sustainability Performance Index are the carbon savings achieved annually in housing stock, the energy efficiency of new buildings, the share of accessible (partial) modernization measures in relation to newly let apartments, the increase in employee satisfaction and diversity in the company’s top management team.
Non-core Disposals
We also report on the Other segment, which is not relevant from a corporate management perspective, in our segment reporting. This includes the sale, only as and when the right opportunities present themselves, of entire buildings or land (Non-core Disposals) that are likely to have below-average development potential in terms of rent growth in the medium term and are located in areas that can be described as peripheral compared with Vonovia’s overall portfolio and in view of future acquisitions.
Recurring Sales
The Recurring Sales segment includes the regular and sustainable disposals of individual condominiums from our portfolio. It does not include the sale of entire buildings or land (Non-core Disposals). These properties are only sold as and when the right opportunities present themselves, meaning that the sales do not form part of our operating business within the narrower sense of the term. Therefore, these sales will be reported under “Other” in our segment reporting.
Fair Value Step-up
Fair value step-up is the difference between the income from selling a unit and its current fair value in relation to its fair value. It shows the percentage increase in value for the company on the sale of a unit before further costs of sale.
Fair Value Step-up
Fair value step-up is the difference between the income from selling a unit and its current fair value in relation to its fair value. It shows the percentage increase in value for the company on the sale of a unit before further costs of sale.
Cash-generating Unit (CGU)
The cash-generating unit refers, in connection with the impairment testing of goodwill, to the smallest group of assets that generates cash inflows and outflows independently of the use of other assets or other cash-generating units (CGUs).