Results of Operations
Overview
Vonovia started the new fiscal year with a first quarter that was largely in line with expectations. Core business in the Rental segment showed positive economic development, bolstered by strong demand for rental apartments and positive rental price development. The overall conditions for the other segments remained subdued and virtually unchanged.
The following key figures provide an overview of the development of Adjusted EBT and other value drivers in the reporting period.
Any analysis of the figures reported has to consider the fact that the prior-year figures are reported based on the current segmentation.
The sale of the Care business activities has since been initiated by the Management Board of Deutsche Wohnen and this segment is expected to be sold before December 2024. Accordingly, the majority of the Care segment is presented as a discontinued operation. A small part of the original Care segment (25 properties operated by third parties) was transferred to the Rental segment and generated a business volume of € 6.1 million in segment revenue in the first quarter of 2024 (first quarter of 2023: € 6.0 million).
Adjusted EBT
Adjusted EBT | ||||||||
in € million | 3M 2023* | 3M 2024 | Change in % | 12M 2023 | ||||
Revenue in the Rental segment | 806.3 | 824.2 | 2.2 | 3,253.4 | ||||
Expenses for maintenance | -117.4 | -113.6 | -3.2 | -426.2 | ||||
Operating expenses in the Rental segment | -104.7 | -117.7 | 12.4 | -425.5 | ||||
Adjusted EBITDA Rental | 584.2 | 592.9 | 1.5 | 2,401.7 | ||||
Revenue in the Value-add segment | 345.4 | 325.1 | -5.9 | 1,224.7 | ||||
thereof external revenue | 35.7 | 28.2 | -21.0 | 130.9 | ||||
thereof internal revenue | 309.7 | 296.9 | -4.1 | 1,093.8 | ||||
Operating expenses in the Value-add segment | -319.0 | -313.6 | -1.7 | -1,119.2 | ||||
Adjusted EBITDA Value-add | 26.4 | 11.5 | -56.4 | 105.5 | ||||
Revenue in the Recurring Sales segment | 69.8 | 74.6 | 6.9 | 319.3 | ||||
Fair value of properties sold adjusted to reflect effects | -44.7 | -60.9 | 36.2 | -239.4 | ||||
Adjusted result Recurring Sales | 25.1 | 13.7 | -45.4 | 79.9 | ||||
Selling costs in the Recurring Sales segment | -3.3 | -4.6 | 39.4 | -16.5 | ||||
Adjusted EBITDA Recurring Sales | 21.8 | 9.1 | -58.3 | 63.4 | ||||
Revenue from disposal of | 30.2 | 30.6 | 1.3 | 348.6 | ||||
Cost of Development to sell | -25.0 | -27.3 | 9.2 | -300.9 | ||||
Gross profit Development to sell | 5.2 | 3.3 | -36.5 | 47.7 | ||||
Rental revenue Development | 1.2 | 1.7 | 41.7 | 5.1 | ||||
Operating expenses in the Development segment | -10.9 | -11.5 | 5.5 | -39.6 | ||||
Adjusted EBITDA Development* | -4.5 | -6.5 | 44.4 | 13.2 | ||||
Adjusted EBITDA Total (continued operations)* | 627.9 | 607.0 | -3.3 | 2,583.8 | ||||
Adjusted net financial result | -150.3 | -160.8 | 7.0 | -625.1 | ||||
Intragroup profit/-losses | -1.5 | -1.9 | 28.4 | 17.7 | ||||
Straight-line Depreciation** | -27.0 | -27.8 | 3.0 | -110.2 | ||||
Adjusted EBT (continued operations) | 449.1 | 416.5 | -7.3 | 1,866.2 | ||||
Adjusted EBT (continued operations per share in €*** | 0.56 | 0.51 | -9.4 | 2.31 | ||||
Minorities | 27.6 | 41.3 | 49.6 | 136.0 | ||||
Adjusted EBT (continued operations) after minorities | 421.5 | 375.2 | -11.0 | 1,730.2 | ||||
Adjusted EBT (continued operations) after minorities | 0.53 | 0.46 | -13.0 | 2.12 | ||||
- *Previous year's values (2023) adjusted to current key figure and segment definition.
- **Depreciation on concessions/property rights/licenses, self-developed software, self-used real estate, technical equipment and machinery, as well as other equipment/operating and business equipment.
- ***Based on the weighted average number of shares carrying dividend rights.
As of March 31, 2024, Vonovia had a workforce of 11,999 employees (March 31, 2023: 12,009) in its continuing operations.
As of the end of the first quarter of 2024, Vonovia managed a portfolio comprising 543,427 of its own residential units (end of the first quarter of 2023: 548,368), 163,230 garages and parking spaces (end of the first quarter of 2023: 164,985) and 8,523 commercial units (end of the first quarter of 2023: 8,817). Vonovia also managed 69,879 residential units (end of the first quarter of 2023: 70,583) on behalf of third parties.
Details on Results of Operations by Segment
Rental Segment
At the end of March 2024, the portfolio in the Rental segment had a vacancy rate of 2.2% (end of March 2023: 2.2%), meaning that it was nearly fully occupied.
Rental segment revenue increased by 2.2% (3M 2023: 2.5%), from € 806.3 million in the first three months of 2023 to € 824.2 million in the first three months of 2024. Of the Rental segment revenue, in the 2024 reporting period rental income in Germany accounted for € 704.3 million (3M 2023: € 692.0 million), rental income in Sweden for € 89.8 million (3M 2023: € 85.7 million) and rental income in Austria for € 30.1 million (3M 2023: € 28.6 million). Organic rent growth (twelve-month rolling) totaled 3.8% (3.4% as of March 31, 2023). The current rent increase due to market-related factors came to 2.1% (1.2% as of March 31, 2023), while the increase from property value improvements translated into a further 1.4% (1.5% as of March 31, 2023). All in all, this corresponds to a like-for-like rent increase of 3.5% (2.7% as of March 2023). New construction and vertical expansion measures also contributed 0.3% (0.7% as of March 31, 2023) to organic rent growth.
The average monthly in-place rent within the Rental segment at the end of March 2024 came to € 7.78 per m², compared to € 7.54 per m² at the end of March 2023. The monthly in-place rent at the end of March 2024 amounted to € 7.67 € per m² in Vonovia’s German portfolio (end of March 2023: € 7.46 per m²), to € 10.21 per m² in its Swedish portfolio (end of March 2023: € 9.70 per m²) and to € 5.51 per m² in its Austrian portfolio (end of March 2023: € 5.26 per m²). The rental income from the portfolio in Sweden is derived from inclusive rents, meaning that the amounts contain operating, heating and water supply costs. Moreover, the rental income from the Austrian real estate portfolio includes maintenance and improvement contributions (EVB).
We have adapted our modernization, new construction and maintenance strategy to reflect the current overall financial conditions in the 2024 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 | 3M 2023* | 3M 2024 | Change in % | 12M 2023 | ||||
Expenses for maintenance | 117.4 | 113.6 | -3.2 | 426.2 | ||||
Capitalized maintenance | 51.5 | 47.4 | -8.0 | 296.3 | ||||
Maintenance measures | 168.9 | 161.0 | -4.7 | 722.5 | ||||
Modernization & Portfolio Investments | 122.0 | 107.8 | -11.6 | 470.8 | ||||
New construction (to hold) | 54.0 | 47.8 | -11.5 | 291.2 | ||||
Modernization, Portfolio Investments and | 176.0 | 155.6 | -11.6 | 762.0 | ||||
Total Sum of Maintenance, Modernization, | 344.9 | 316.6 | -8.2 | 1,484.5 | ||||
- *Previous year's values (
2023) adjusted to current key figure and segment definition.
Operating expenses in the Rental segment in the first three months of 2024 were up by 12.4% on the figures for the first three months of 2023, from € 104.7 million to € 117.7 million. All in all, Adjusted EBITDA Rental came to € 592.9 million in the first three months of 2024, up by 1.5% on the prior-year value of € 584.2 million.
Value-add Segment
Developments in the Value-add segment were dominated by the current overall conditions for our own craftsmen’s organization. The reduced volume of modernization work, general price increases for construction services and materials, as well as productivity losses due to smaller-scale investments and increased costs due to a change to new technology (switch from gas heating to heat pumps) had a negative impact on economic development.
All in all, revenue from the Value-add segment came to € 325.1 million in the 2024 reporting period, down by 5.9% on the value of € 345.4 million seen in the first three months of 2023. External revenue from our Value-add activities with our end customers in the first three months of 2024 declined by 21.0% by comparison with the first three months of 2023, from € 35.7 million to € 28.2 million. This is mainly attributable to the trend in the area of energy sales. Intra-group revenue fell by 4.1%, from € 309.7 million in the first three months of 2023 to € 296.9 million in the first three months of 2024.
Operating expenses in the Value-add segment in the first three months of 2024 were down by 1.7% on the figures for the first three months of 2023, from € 319.0 million to € 313.6 million.
Adjusted EBITDA Value-add came to € 11.5 million in the first three months of 2024, which represents a significant decrease on the figure of € 26.4 million reported for the first three months of 2023.
Recurring Sales Segment
In the Recurring Sales segment, income from the disposal of properties in the first three months of 2024 came to € 74.6 million, which was 6.9% higher than the prior-year value of € 69.8 million in the first three months of 2023. 407 residential units were sold (3M 2023: 282), of which 340 were located in Germany (3M 2023: 143) and 67 in Austria (3M 2023: 139). Of this amount, income from sales in Germany accounted for € 57.3 million (3M 2023: € 31.8 million) and income from sales in Austria for € 17.3 million (3M 2023: € 38.0 million).
In the first three months of 2024, the fair value step-up in the portfolio came to 22.4% and was thus lower than the value of 56.0% seen in the first three months of 2023. This was due primarily to lower step-ups for sales in Germany.
Selling costs in the Recurring Sales segment came in at € 4.6 million in the first three months of 2024, up by 39.4% on the prior-year value of € 3.3 million seen in the first three months of 2023. Adjusted EBITDA Recurring Sales amounted to € 9.1 million in the first three months of 2024, down considerably on the value of € 21.8 million for the first three months of 2023.
Moreover, in the first three months of 2024, 2,409 residential units from the Non-core/Other portfolio (3M 2023: 381) were sold as part of our portfolio adjustment measures, with proceeds totaling € 265.6 million (3M 2023: € 46.0 million). At 0.1%, the fair value step-up for Non-core/Other disposals in the 2024 reporting period was significantly lower than the figure for the first three months of 2023 (19.7%).
Development Segment
Economic development in the Development segment was adversely affected above all by the rise in construction costs and interest rates in the reporting period.
In the “Development to sell” area, a total of 692 units were completed in Germany in the 2024 reporting period (3M 2023: 104 units). Proceeds from the sale of development properties to sell amounted to € 30.6 million (3M 2023: € 30.2 million) in the first three months of 2024. Of this amount, € 23.3 million was attributable to project development in Germany (3M 2023: € 18.3 million) and € 7.4 million to project development in Austria (3M 2023: € 11.9 million). The resulting gross profit for Development to sell came to € 3.3 million in the first three months of 2024, with a margin of 10.8% (3M 2023: € 5.2 million, margin of 17.2%).
Development operating expenses came to € 11.5 million in the first three months of 2024, which was 5.5% higher than the value of € 10.9 million for the first three months of 2023.
Adjusted EBITDA in the Development segment amounted to € -6.5 million in the 2024 reporting period (3M 2023: € -4.5 million).
In the “Development to hold” area, a total of 153 units were completed in the first three months of 2024 (3M 2023: 675 units), of which 153 were in Germany (3M 2023: 307 units), none were in Austria (3M 2023: 296 units) and none were in Sweden (3M 2023: 72 units).