Forecast for the 2018 Fiscal Year
Our forecast for the 2018 fiscal year is based on the corporate planning for the Vonovia Group as a whole described in the chapter on our management system. Our plans for 2018 have taken appropriate account of possible opportunities and risks associated with the company’s future development, meaning that these plans reflect realistic expectations regarding portfolio development and Vonovia’s development. The forecast data below is based on Vonovia’s portfolio as it stood when the plans for 2018 were drawn up in the fall of 2017.
Furthermore, the Group’s further development remains exposed to general opportunities and risks. These have been described in the chapter on opportunities and risks.
The forecast for the main performance indicators was based on the accounting principles used in the annual financial statements, with the adjustments described elsewhere in the management report being made.
The planning for 2018 is based on the above-mentioned assumptions on the development of the overall economy and on the development of the real estate market in Germany.
In the 2018 fiscal year, we once again plan to further expand our leading position on the German residential real estate market and continue with our successful business strategy. In particular, we will be further expanding our investment program in the areas of modernization and new construction as well as our activities in the Value-add Business segment. We will continue to pursue our established sales strategy in 2018 and dispose of properties that do not fit with our real estate portfolio in the long term and do not meet our location, quality and/or return requirements.
We plan to further improve our sustained operational earnings power in the 2018 fiscal year. The modernization measures taken in the 2017 fiscal year will also help us to achieve this. We predict that FFO 1 will increase to somewhere in the range of € 960 million and € 980 million in 2018. This corresponds to an FFO 1 per share – based on an unchanged number of shares – of € 1.98 and € 2.02. The forecast does not take account of any further larger acquisitions of real estate portfolios. In the 2018 fiscal year, we will continue to forge ahead with our efforts to improve our customer service. Given the renewed increase in customer satisfaction in the 2017 fiscal year, we expect to see a similar CSI in 2018. We expect the value of our company to increase further in 2018 and predict a moderate increase in NAV/share.
We will continue to invest a considerable amount in our real estate portfolio in 2018. In the 2018 fiscal year, we plan to spend around € 1 billion on modernization measures, including new construction. The focus will remain on energy-efficient modernizations, the refurbishment of units to improve the standard of comfort, and on senior-friendly conversions. We will also, however, be investing in programs such as modernization in response to tenant request, the development of residential districts, the construction of new apartments and the addition of stories to existing properties. In addition, we expect to perform ongoing maintenance work, including capitalized maintenance, with a volume of around € 360 million. All in all, this equates to a maintenance and modernization volume of up to € 1.4 billion in the 2018 fiscal year.
As far as rental development is concerned, we expect the monthly in-place rent per square meter to increase organically by between 4.6% and 4.8% in 2018. We expect the vacancy rate to come in at under 2.5% at the end of 2018. All in all, we expect rental income to remain stable at a level of between € 1,660 million and € 1,680 million despite the planned sales.
In the Sales segment, we will continue to pursue our strategy of selective sales. In the privatization business, we expect around 2,300 apartments to be sold in 2018 with a step-up on the fair value of these apartments of around 30%. We will also continue with our strategy of selling properties from the Sell portfolio with slightly positive step-ups insofar as corresponding opportunities present themselves.
We again plan to allow our shareholders to participate adequately in our company’s success in 2017 and intend to propose a dividend of € 1.32 per share.
Bochum, Germany, February 26, 2018
Rolf Buch (CEO)
Dr. A. Stefan Kirsten (CFO)
Klaus Freiberg (COO)
Gerald Klinck (CCO)