Business Development in the First Three Months of 2024

Key Events During the Reporting Period

The core Rental business has got off to a successful start in the 2024 fiscal year. This was mainly based on a high level of demand for rental apartments and a positive rent trend. With a vacancy rate of 2.2% at the end of the first quarter of 2024 (end of the first quarter of 2023: 2.2%), Vonovia’s residential real estate portfolio was virtually fully occupied. 

To date, the overall conditions for the other operating segments are virtually unchanged in the first quarter of 2024 by comparison with the past fiscal year. The interest rate level is continuing to hamper potential transactions in the Recurring Sales and Development segments.

In the first quarter of 2024, the Customer Satisfaction Index (CSI) was 0.6 percentage points below the value seen in the previous year. The level of customer satisfaction has increased by 0.1 percentage points by comparison with the average for the year 2023 as a whole.

On January 18, 2024, Vonovia issued a bond on the UK financial market for the first time. This unsecured bond has a 5.5% coupon (4.55% after currency hedging) and a twelve-year term. It has a volume of GBP 400 million (approx. € 465.1 million).

Vonovia successfully placed a further unsecured bond with a volume of CHF 150 million (approx. € 159.3 million) on February 14, 2024. This bond has a term expiring in 2029 and a 2.565% coupon (4.16% after currency hedging).  

With these two bonds, Vonovia has opened up additional financial markets and access to potential debt investors, while at the same time exploiting arbitrage advantages.

Following the end of the first quarter, on April 10, 2024 Vonovia issued an unsecured social bond with a 4.25% coupon rate and a ten-year term.  It had a volume of € 850 million. This bond’s terms are consistent with the Sustainable Finance Framework which the company defined in February 2022.

In addition, in early April Vonovia repaid a two-year social bond with a volume of SEK 500 million (approx. € 50 million) in Sweden.

On April 8, 2024, a € 336.1 million bond was repaid as scheduled.

With regards to Vonovia’s efforts to sell off its Care segment, in mid-April it successfully concluded sales contracts for three properties. It continues to expect to complete the sale of its Care segment by December 31, 2024.

As part of Vonovia’s efforts to sell off a portfolio in Berlin, a notarized sales contract was successfully concluded on April 23, 2024. Two companies with around 4,500 residential units and a real estate value of approx. € 700.0 million will be disposed of within the scope of this transaction. The transaction is expected to be closed on December 31, 2024.

For these sales transactions, Vonovia expects overall to realize a sale at the fair value of the underlying real estate portfolios.

With the publication of the 2023 annual financial statements on March 14, 2024, the Management Board and the Supervisory Board reported that they would provide the Annual General Meeting of Vonovia SE with a proposal to distribute a dividend of € 0.90 per share for the 2023 fiscal year. This amount is approx. 6% higher than the previous year’s dividend. 

From the 2024 fiscal year onwards, a modified management system has been introduced. This uses the Adjusted EBT indicator and is thus more clearly focused on profitability and internal financing. In the future, this performance indicator will also serve as the key parameter for Vonovia’s dividend policy.

On March 28, 2024, the rating agency Fitch awarded Vonovia an investment grade rating for the first time: BBB+ with a stable outlook. As positive factors, its analysis emphasizes the stability of the regulated rental housing market in Germany, the strong level of demand for residential units and Vonovia’s very high occupancy rate (98%). 

As reported, on March 7, 2023, Vonovia was informed by the public prosecutor’s office in Bochum during the course of necessary search measures connected to an ongoing investigation that former and, at that time, current technical employees were being investigated on suspicion of corruption. The persons under suspicion may also have caused damage for Vonovia by overriding and circumventing controls and compliance policies. Vonovia continues to cooperate fully with the investigating authorities.

The auditing firm Deloitte and the law firm Hengeler Mueller were commissioned to perform a forensic assessment of all the facts of the case. They have determined that Vonovia’s tenants have not suffered any harm.

The loss incurred by Vonovia has been calculated as not more than 1% of the order volume awarded by Vonovia, which corresponds to a low single-digit million amount.