Portfolio Structure

In addition to the acquisition and sale of larger housing stocks, Vonovia’s portfolio changed in 2016 as a result of additions arising from tactical acquisitions and attic extensions on the one hand, and disposals of owner-occupied apartments from our portfolio and the sale of multifamily residences from the and Non- portfolio on the other.

Furthermore, our regular portfolio reviews due to strategic reassessments resulted in certain housing stocks being reallocated within the overall portfolio.

Following the implementation of the annual structured reassessment of all potential, as of December 31, 2016, Vonovia’s residential portfolio is as follows:

 

 

 

 

 

 

 

 

Residential In-place rent

 

 

as at Dec. 31, 2016

 

Units

 

Living area
(in thou. m2)

 

Vacancy rate
(in %)

 

(p.a. in € million)

 

(in €/m2)

 

Change like-for- like (in %)*

 

Fair value
(in €/m2)

*

The underlying portfolio has a fair value of € 25,650.2 million.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Strategic

 

302,710

 

18,749

 

2.1

 

1,338.4

 

6.07

 

+ 3.4

 

1,290

Operate

 

88,359

 

5,475

 

2.2

 

403.9

 

6.28

 

+ 3.1

 

1,281

Upgrade Buildings

 

125,016

 

7,581

 

2.2

 

523.7

 

5.89

 

+ 3.8

 

1,236

Optimize Apartments

 

89,335

 

5,692

 

1.8

 

410.9

 

6.12

 

+ 3.3

 

1,370

Privatize

 

17,195

 

1,180

 

4.2

 

81.0

 

5.97

 

+ 2.3

 

1,323

Non-Strategic

 

7,480

 

455

 

7.3

 

23.8

 

4.70

 

+ 1.9

 

576

Non-Core

 

5,996

 

397

 

7.1

 

21.7

 

4.96

 

+ 1.8

 

685

Total

 

333,381

 

20,781

 

2.4

 

1,464.9

 

6.02

 

+ 3.3

 

1,264

In order to boost transparency among the portfolios, we showed our extended portfolio in 15 regional markets for the first time in our reporting on the third quarter of 2016. This presentation allows us to provide a better regional overview of our portfolio. We have also supplemented the key figures we have reported to date to include “rental development”. This provides a comprehensive picture of our portfolio.

The regional market classification is orientated toward the residential real estate market regions in Germany. These markets are core towns/cities and their surrounding metropolitan areas that are largely similar in terms of the supply of real estate and the real estate market, both at present and in the forecasts. They are also the markets that especially benefit from domestic migration. This definition of the real estate market regions is based on the definition developed by the German Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR). Where local real estate markets show overlaps, we have grouped them together.

Our decision to focus on the selected 15 regional markets that are particularly relevant to Vonovia is our way of looking ahead to the future. This approach provides an overview of our strategic core portfolio. The regional market breakdown does not include our housing stocks from the Non-Core and subportfolios, or stocks for privatization in locations that do not include any stocks.

In relation to the , 91% of our total portfolio is located in 15 regional markets. Only a small part of our strategic stock is located outside of the metropolitan regional markets that we have defined. We have referred to this group as “Other strategic locations” (7% of the total fair value).

Breakdown of Strategic Housing Stock by Regional Market

 

 

Fair value

 

 

 

 

 

 

 

 

 

In-place rent

 

 

Regional market

 

(in € million)

 

(in €/m2)

 

Multiple (in-place rent)

 

Residential units

 

Living area (in thou. m2)

 

Vacancy (in %)

 

Total
(p.a. in € million)

 

Residential
(p.a. in € million)

 

Residential (in €/m2)

 

Change like-for-like (in %)

 

Average rent growth forecast CBRE (5 yrs)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Berlin

 

3,448.3

 

1,640

 

22.6

 

32,454

 

2,034

 

1.5

 

152

 

145

 

6.02

 

3.2

 

3.1

Rhine Main Area (Frankfurt, Darmstadt, Wiesbaden)

 

3,099.8

 

1,695

 

19.0

 

28,203

 

1,799

 

2.2

 

163

 

157

 

7.42

 

3.7

 

3.3

Rhineland (Cologne, Düsseldorf, Bonn)

 

2,847.4

 

1,437

 

18.2

 

28,669

 

1,928

 

2.6

 

157

 

149

 

6.60

 

4.0

 

2.9

Dresden

 

2,438.6

 

1,070

 

16.4

 

37,983

 

2,155

 

1.8

 

149

 

139

 

5.47

 

3.7

 

3.2

Southern Ruhr Area (Dortmund, Essen, Bochum)

 

2,370.7

 

889

 

13.8

 

42,834

 

2,606

 

2.7

 

172

 

165

 

5.43

 

3.5

 

1.9

Hamburg

 

1,733.2

 

1,595

 

20.0

 

16,644

 

1,054

 

1.8

 

87

 

82

 

6.55

 

3.5

 

3.1

Munich

 

1,651.9

 

2,497

 

26.8

 

9,773

 

643

 

0.7

 

62

 

57

 

7.50

 

3.8

 

4.6

Stuttgart

 

1,584.7

 

1,701

 

19.3

 

14,303

 

901

 

1.7

 

82

 

78

 

7.36

 

2.2

 

2.9

Northern Ruhr Area (Duisburg, Gelsenkirchen)

 

1,290.8

 

758

 

12.4

 

27,097

 

1,680

 

3.2

 

104

 

101

 

5.18

 

3.5

 

1.8

Hanover

 

1,027.1

 

1,167

 

16.6

 

13,668

 

866

 

2.3

 

62

 

60

 

5.88

 

2.8

 

2.9

Kiel

 

861.2

 

1,020

 

15.4

 

13,989

 

813

 

1.3

 

56

 

53

 

5.49

 

2.4

 

2.3

Bremen

 

761.6

 

1,070

 

17.1

 

11,339

 

691

 

3.1

 

45

 

42

 

5.27

 

3.7

 

3.1

Westphalia (Münster, Osnabrück)

 

588.9

 

929

 

14.5

 

9,652

 

625

 

2.3

 

41

 

39

 

5.38

 

3.7

 

2.6

Freiburg

 

493.3

 

1,759

 

21.6

 

4,063

 

278

 

1.0

 

23

 

22

 

6.72

 

3.0

 

3.8

Leipzig

 

260.7

 

1,010

 

15.3

 

4,089

 

255

 

2.6

 

17

 

17

 

5.61

 

1.4

 

2.4

Other strategic locations

 

1,882.5

 

1,243

 

17.1

 

23,514

 

1,490

 

2.3

 

110

 

106

 

6.10

 

3.5

 

3.1

Total strategic locations

 

26,340.7

 

1,293

 

17.8

 

318,274

 

19,817

 

2.2

 

1,480

 

1,412

 

6.07

 

3.4

 

2.9

A look at the six largest regional markets, from Berlin to the Rhineland, the Rhine-Main region, the southern Ruhr area, Dresden and Stuttgart, already shows our balanced presence in strong markets across Germany.

In addition to these focal points, we also have properties primarily in very prospering regions, such as Hamburg, Munich and Freiburg.

Both the increase in in-place rents and the development in new contract rents show that we are able to generate above-average growth rates across Germany, without being reliant on the conditions in individual growth markets.

The foundation for this success lies in our business model, which focuses not only on professional property management but also on successfully leveraging all of the investment potential available: We have been modernizing our buildings and apartments for years now – and this approach is paying off.

Privatize
In the “Privatize” subportfolio, our focus is on generating additional added value by privatizing owner-occupied apartments and single-family houses at a premium compared with their fair value.
Non-Core/Non-Strategic
In the “Non-Core” subportfolio, our focus is on selling properties in locations that offer below-average development potential in the medium to long term to private and institutional investors. Limited potential is defined, in particular, by below-average property condition combined with a location that is of similarly below-average quality.
The “Non-Strategic” subportfolio contains locations and properties that were identified in the latest extensive review of the overall portfolio as not being absolutely essential for further strategic development. Properties in the “Non-Strategic” portfolio are reviewed on a regular basis and offer further sale potential.
Strategic
The “Strategic” subportfolio contains locations that offer development potential that is above average and for which we are pursuing a value-enhancing property management strategy.
Non-Core/Non-Strategic
In the “Non-Core” subportfolio, our focus is on selling properties in locations that offer below-average development potential in the medium to long term to private and institutional investors. Limited potential is defined, in particular, by below-average property condition combined with a location that is of similarly below-average quality.
The “Non-Strategic” subportfolio contains locations and properties that were identified in the latest extensive review of the overall portfolio as not being absolutely essential for further strategic development. Properties in the “Non-Strategic” portfolio are reviewed on a regular basis and offer further sale potential.
Strategic
The “Strategic” subportfolio contains locations that offer development potential that is above average and for which we are pursuing a value-enhancing property management strategy.
Fair Value
Valuation pursuant to IAS 40 in conjunction with IFRS 13. The estimated value of an asset. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.