Economic Development in the First Half-year of 2024

Key Events During the Reporting Period

The core Rental business was characterized by a high level of demand for rental apartments and a positive rent trend in the first half of 2024. With a vacancy rate of 2.2% at the end of the first half of 2024 (end of the first half of 2023: 2.2%), Vonovia’s residential real estate portfolio was virtually fully occupied.  

The second quarter of 2024 saw higher real estate transaction volumes and a bottoming out of real estate values. The slight cut in the ECB key rate in June 2024 is likely to favor future transactions, particularly in the Recurring Sales and Development segments.

The Customer Satisfaction Index (CSI) was 7.1 percentage points above the value seen in the previous year in the second quarter of 2024. On average, the level of customer satisfaction in 2024 to date has increased by 3.5 percentage points as against the year 2023 as a whole.

On January 18, 2024, Vonovia issued a bond in pound sterling 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 in Switzerland 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.

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, on April 8, 2024, Vonovia repaid a two-year social bond with a volume of SEK 500 million (approx. € 50 million) in Sweden.

A bond in the amount of € 336.1 million was repaid as scheduled on the same day.

With regards to Vonovia’s efforts to sell off its Care segment, sales contracts for six properties were concluded successfully. The sale of its discontinued operations is still expected to be completed by December 31, 2024.

A notarized sales contract for a portfolio in Berlin was successfully concluded on April 23, 2024. The transaction executed with two state-owned Berlin housing construction companies will see around 4,500 residential units with a value of around € 700.0 million being sold as part of a share deal. The transaction is expected to be closed on December 31, 2024.

In addition, Vonovia successfully concluded a notarized sales contract for around 1,970 residential units and six commercial units on July 26, 2024. The purchase price of around € 300.0 million is slightly higher than the carrying amounts of the properties sold recognized at the time of the negotiations.

The Annual General Meeting held on May 8, 2024 resolved to pay a dividend for the 2023 fiscal year in the amount of € 0.90 per share. 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 30.93% of the shares carrying dividend rights opted for the scrip dividend instead of the cash dividend. As a result, 8,207,927 new shares were issued using the company’s authorized capital for a total of € 226,785,023.01. The total amount of the dividend distributed in cash therefore came to € 506,395,475.19.

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. The Adjusted EBT will be used as a basis for a reconciliation to the operating free cash flow (OFCF) as the leading indicator of internal financing. This operating free cash flow is a measure of the Group’s operational capacity to generate cash surpluses and, as a result, of its internal financing power.

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 level occupancy rate (98%).