Rental

Following the successful integration of the GAGFAH, Franconia and SÜDEWO subportfolios, which were acquired in the previous year, into the Vonovia real estate portfolio, our Rental segment developed positively in the 2016 fiscal year. These acquired subportfolios were included with a full fiscal year volume for the very first time in 2016.

Adjusted EBITDA Rental

in € million

 

2016

 

2015

*

Correction to property management costs for 2015 from the previous figure of € -247.6 million to € -248.0 million in operating expenses due to the exclusion of financial income from investments in other real estate companies from adjusted EBITDA in the 2016 reporting period.

 

 

 

 

 

Rental income

 

1,538.1

 

1,414.6

Maintenance expenses

 

-247.4

 

-242.2

Operating expenses*

 

-244.5

 

-248.0

Adjusted EBITDA Rental

 

1,046.2

 

924.4

Adjusted EBITDA Rental rose by 13.2% from € 924.4 million in 2015 to € 1,046.2 million in 2016.

Rental income in the Rental segment rose by 8.7% from € 1,414.6 million in 2015 to € 1,538.1 million in 2016. The GAGFAH portfolio contributed € 562.5 million (March to December 2015: € 479.3 million) to this amount, with the Franconia portfolio contributing € 19.6 million (April to December 2015: € 14.5 million) and the SÜDEWO portfolio contributing € 104.6 million (July to December 2015: € 52.3 million). If we leave the addition of the acquired portfolios of GAGFAH, Franconia, SÜDEWO and the portfolio acquired in the first quarter of 2016 out of the equation, then came to € 838.0 million in 2016, down slightly on the level seen in the previous year of € 868.4 million as a result of sales.

The per square meter rose by 4.7% from € 5.75/m2 as of December 2015 to € 6.02/m2 in December 2016. At the end of December 2016, the GAGFAH portfolio was included in the Group value at a monthly in-place rent of € 5.74/m2 (end of December 2015: € 5.55/m2), the Franconia portfolio at a monthly in-place rent of € 6.07/m2 (end of December 2015: € 5.89/m2), and the SÜDEWO portfolio at a of € 7.04/m2 (end of December 2015: € 6.87/m2). The monthly in-place rent per square meter, on a like-for-like basis (incl. GAGFAH, Franconia and SÜDEWO), came to € 6.01/m2 at the end of 2016. This corresponds to an increase of 3.3% compared to € 5.82/m2 the end of December 2015.

We further reduced our in the 2016 reporting period. The vacancy rate dropped from 2.7% at the end of 2015 to 2.4% at the end of 2016. This development also had a positive impact on rental income. Accordingly, the vacancy rate fell from 2.5% at the end of 2015 to 2.2% at the end of 2016.

We consistently continued our modernization and strategy in the 2016 fiscal year as planned. Expenses for maintenance totaled € 247.4 million in 2016 and were therefore up by 2.1% over the expenses for maintenance incurred in 2015, namely € 242.2 million, largely due to acquisitions.

In 2016, expenses for maintenance totaling € 94.4 million were attributable to the GAGFAH portfolio (March to December 2015: € 82.3 million), with € 3.6 million attributable to the Franconia portfolio (April to December 2015: € 3.4 million) and € 11.9 million attributable to the SÜDEWO portfolio (July to December 2015: € 3.9 million). Expenses for in the subportfolio, excluding the acquired GAGFAH, Franconia and SÜDEWO portfolios, came in at € 137.5 million in 2016, down by around 10% on the figure for 2015 (€ 152.6 million), mainly due to sales. We increased our value-enhancing modernization program by more than 32.8% in the 2016 fiscal year, from € 355.6 million in 2015 to € 472.3 million in 2016. This means that, including capitalized maintenance of € 72.7 million (2015: € 88.5 million), we invested a total volume of € 792.4 million (2015: € 686.3 million) in maintenance and modernization work on our properties in the 2016 fiscal year.

The capitalized maintenance and in the Rental segment can be derived largely from the reported capitalized modernization costs for investment properties, plus the interim profits made by our own craftsmen’s organization, which is responsible for performing/coordinating services. The term “capitalized maintenance” refers to the capitalizable expenses that help maintain the value of the real estate portfolio. The term “modernization measures” refers to the capitalizable expenses that help increase the value of the real estate portfolio.

Maintenance and Modernization

in € million

 

2016

 

2015

*

Incl. intra-Group profits for 2016: € 45.5 million (thereof € 1.1 million capitalized maintenance, thereof € 8.7 million modernization); 2015: € 31.0 million (thereof € 1.0 million capitalized maintenance, thereof € 3.8 million modernization), new construction in 2016: € 13.9 million (2015: € 1.5 million).

 

 

 

 

 

Expenses for maintenance

 

247.4

 

242.2

Capitalized maintenance

 

72.7

 

88.5

Modernization work

 

472.3

 

355.6

Total cost of modernization and maintenance*

 

792.4

 

686.3

In relation to the average number of square meters of living area, this corresponds to spending on modernization and maintenance of € 36.18/m2 in the 2016 reporting period (2015: € 33.04/m2).

In the 2016 fiscal year, operating expenses in the Rental segment came to € -244.5 million, up by 1.4% on the prior-year value of € -248.0 million due to acquisitions.

Rental Income
Rental income refers to the current gross income for rented units as agreed in the corresponding rent agreements before the deduction of non-transferable ancillary costs.
Monthly In-Place Rent
The monthly in-place rent is measured in € per square meter and is the current gross rental income per month for rented units as agreed in the corresponding rent agreements at the end of the relevant month before deduction of non-transferable ancillary costs divided by the living area of the rented units. The in-place rent is often referred to as the net cold rent. The monthly in-place rent (in €/m2) on a like-for-like basis refers to the monthly in-place rent for the residential portfolio that was already held by Vonovia 12 months previously, i.e., portfolio changes during this period are not included in the calculation of the in-place rent on a like-for-like basis.
Monthly In-Place Rent
The monthly in-place rent is measured in € per square meter and is the current gross rental income per month for rented units as agreed in the corresponding rent agreements at the end of the relevant month before deduction of non-transferable ancillary costs divided by the living area of the rented units. The in-place rent is often referred to as the net cold rent. The monthly in-place rent (in €/m2) on a like-for-like basis refers to the monthly in-place rent for the residential portfolio that was already held by Vonovia 12 months previously, i.e., portfolio changes during this period are not included in the calculation of the in-place rent on a like-for-like basis.
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.
EPRA (European Public Real Estate Association)
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.
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.
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 handicapped-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.