Portfolio Structure

As of December 31, 2017, the Group had a real estate portfolio across Germany comprising 344,586 residential units, 89,588 garages and parking spaces and 3,888 commercial units. Our locations span 576 cities, towns and municipalities. 62,631 residential units are also managed for other owners. Most of the properties in the Group’s portfolio are multifamily residences.

The Group’s German real estate portfolio covered 21,530,449 m2 of living area in total as of December 31, 2017, with the average apartment size coming in at approximately 62 m2. The average unit consists of two or three rooms, a kitchen and a bathroom.

The came to 2.5% on December 31, 2017, and Vonovia generated average of € 6.27 per m2. The annualized in-place rent came to € 1,579.6 million for apartments, € 49.5 million for commercial units and € 26.8 million for garages and parking spaces.

Our Group’s portfolio also includes our Austrian real estate portfolio, consisting of 2,058 residential units located largely in Vienna.

Changes in the Portfolio

At the beginning of the 2017 fiscal year, the takeover of conwert Immobilien Invest SE saw our portfolio increase by an additional 23,543 apartments, the majority of which are located in the fast-growing cities of Leipzig, Berlin, Potsdam, Dresden and Vienna.

The conwert acquisition portfolio was as follows at the time of the takeover:

 

 

 

 

 

 

 

 

In-place rent

conwert

 

Residential units

 

Living area (in thou. m2)

 

Vacancy rate (in %)

 

(p. a. € million)

 

(€/m2/month)

 

 

 

 

 

 

 

 

 

 

 

Germany

 

21,298

 

1,376

 

2.7

 

93.4

 

5.81

Austria

 

2,245

 

156

 

2.4

 

11.0

 

6.03

Total

 

23,543

 

1,531

 

2.7

 

104.4

 

5.84

In the course of 2017, properties in the “Non-Core” and “Non-Strategic” portfolios were sold as part of several partial sales during the implementation of the portfolio management strategy.

At the time of the sale, the statistics for the portfolios sold were as follows:

 

 

 

 

 

 

 

 

In-place rent

 

 

Residential units

 

Living area (in thou. m2)

 

Vacancy rate (in %)

 

(p. a. € million)

 

(€/m2/month)

 

 

 

 

 

 

 

 

 

 

 

Package sales

 

5,865

 

366

 

7.0

 

20.9

 

5.12

In addition to the acquisition and sale of larger housing stocks, Vonovia’s portfolio changed in 2017 as a result of additions arising from tactical acquisitions, the construction of new apartments and attic extensions on the one hand, and disposals of owner-occupied apartments from our portfolio and the sale of multifamily residences from the “Non-Core” and “Non-Strategic” portfolio on the other. Furthermore, our regular portfolio reviews due to strategic reassessments resulted in certain housing stocks being reallocated within the overall portfolio. As part of the review, we also made two adjustments to the structure of our portfolio in addition to the strategic reassessment:

  1. The two former investment subportfolios “Upgrade Buildings” and “Optimize Apartments” have been combined in a new “Invest” subportfolio. This portfolio can capture the much greater variety of Vonovia investment programs more comprehensively, while preventing any overlap and keeping the structure simple at the same time.
  2. As a result of the ongoing sales from the two previous “Non-Strategic” und “Non-Core” subportfolios, it makes sense to bundle the remaining properties earmarked for sale, which are not intended for the privatization business, in one “Sell” subsegment.

Following the implementation of the annual structured reassessment of all potential, as of December 31, 2017, Vonovia’s residential portfolio is as follows:

 

 

Fair value*

 

 

 

 

 

 

 

 

 

In-place rent

 

 

as at Dec. 31, 2017

 

(in € million)

 

(in €/m2)

 

Multiple (in-place rent)

 

Residential units

 

Living area (in thou. m2)

 

Vacancy rate (in %)

 

Total (p. a. in € million)

 

Residential (p. a. in € million)

 

Residential (in €/m2)

 

Change organic (in %)

 

Average rent growth forecast CBRE (5 yrs)

*

Fair value of the developed land excluding € 331.4 million for undeveloped land, inheritable building rights granted, construction in progress and other.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Strategic

 

30,508.0

 

1,492

 

19.8

 

319,014

 

19,817

 

2.3

 

1,543

 

1,470

 

6.33

 

4.3

 

3.4

Operate

 

10,252.9

 

1,494

 

18.6

 

101,697

 

6,311

 

2.3

 

550

 

484

 

6.55

 

4.6

 

3.2

Invest

 

20,255.1

 

1,492

 

20.4

 

217,317

 

13,507

 

2.2

 

993

 

986

 

6.22

 

4.2

 

3.4

Privatize

 

1,509.7

 

1,522

 

21.1

 

14,099

 

976

 

3.4

 

72

 

69

 

6.13

 

2.0

 

3.6

Sell

 

535.6

 

702

 

12.9

 

11,473

 

737

 

8.4

 

41

 

40

 

4.93

 

1.8

 

2.0

Vonovia Germany

 

32,553.3

 

1,466

 

19.7

 

344,586

 

21,530

 

2.5

 

1,656

 

1,580

 

6.27

 

4.2

 

3.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vonovia Austria

 

551.6

 

2,194

 

26.2

 

2,058

 

142

 

2.9

 

21

 

11

 

6.51

 

 

n/a

Total

 

33,104.9

 

1,475

 

19.7

 

346,644

 

21,672

 

2.5

 

1,677

 

1,590

 

6.27

 

4.2

 

n/a

Housing Stock by Regional Market – Number of Units

346,644 Units (including units at other locations)

Housing Stock by Regional Market (graph)

Planned Portfolio Investments in 2018*

~€ 1 billion

Planned Portfolio Investments in 2018 (graph)

* including € 70 million for other projects at preparation stage

In order to boost transparency among the portfolios, we showed our extended portfolio in 15 regional markets for the first time in our reporting in 2016. The regional market classification is orientated toward the residential real estate market regions in Germany. These markets are core towns/cities and their surroundings, mainly metropolitan areas. Our decision to focus on these regional markets that are particularly relevant to Vonovia is our way of looking ahead to the future and provides an overview of our strategic core portfolio.

In relation to the fair value, 90% of our total portfolio is located in 15 regional markets. Only a small part of our strategic stock is located outside of these 15 markets. We have referred to this group as “Other strategic locations” (6% of the total ). The regional market breakdown does not include our housing stocks from the “Sell” subportfolio and stocks for privatization in locations that do not include any strategic stocks.

As of December 31, 2017, our strategic core portfolio is as follows, broken down into regional markets:

 

 

Fair value*

 

 

 

 

 

 

 

 

 

In-place rent

 

 

Regional market

 

(in € million)

 

(in €/m2)

 

Multiple (in-place rent)

 

Residential units

 

Living area (in thou. m2)

 

Vacancy rate (in %)

 

Total (p. a. in € million)

 

Residential (p. a. in € million)

 

Residential (in €/m2)

 

Change organic (in %)

 

Average rent growth forecast CBRE (5 yrs)

*

Fair value of the developed land excluding € 331.4 million for undeveloped land, inheritable building rights granted, construction in progress and other.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Berlin

 

5,181.9

 

2,035

 

26.6

 

38,664

 

2,449

 

1.5

 

195

 

184

 

6.35

 

3.9

 

4.3

Rhine Main Area

 

3,525.1

 

1,946

 

21.0

 

27,921

 

1,781

 

1.4

 

168

 

162

 

7.70

 

3.8

 

3.4

Rhineland

 

3,240.3

 

1,581

 

19.4

 

29,753

 

1,992

 

2.6

 

167

 

159

 

6.82

 

3.8

 

3.1

Southern Ruhr Area

 

2,884.2

 

1,051

 

15.8

 

43,900

 

2,682

 

2.9

 

183

 

176

 

5.64

 

4.2

 

2.9

Dresden

 

2,875.2

 

1,230

 

18.1

 

38,563

 

2,193

 

2.4

 

159

 

148

 

5.79

 

5.7

 

3.7

Hamburg

 

1,940.1

 

1,795

 

21.6

 

16,534

 

1,048

 

2.0

 

90

 

85

 

6.86

 

5.2

 

3.3

Munich

 

1,820.2

 

2,771

 

29.1

 

9,708

 

639

 

0.8

 

62

 

59

 

7.71

 

3.1

 

4.8

Stuttgart

 

1,742.0

 

1,893

 

20.9

 

14,152

 

891

 

1.5

 

83

 

79

 

7.53

 

2.4

 

3.1

Northern Ruhr Area

 

1,417.5

 

854

 

13.4

 

26,532

 

1,640

 

3.4

 

105

 

102

 

5.37

 

3.6

 

2.5

Hanover

 

1,297.5

 

1,374

 

18.5

 

14,592

 

926

 

2.7

 

70

 

67

 

6.21

 

5.2

 

2.9

Kiel

 

992.3

 

1,192

 

17.2

 

13,801

 

802

 

1.8

 

58

 

55

 

5.81

 

5.7

 

3.2

Bremen

 

913.9

 

1,230

 

19.1

 

11,905

 

722

 

2.9

 

48

 

45

 

5.42

 

3.2

 

3.6

Leipzig

 

763.3

 

1,229

 

18.4

 

9,174

 

588

 

4.0

 

41

 

39

 

5.74

 

2.6

 

2.9

Westphalia

 

667.0

 

1,075

 

16.0

 

9,471

 

613

 

1.9

 

42

 

41

 

5.64

 

4.1

 

3.0

Freiburg

 

545.0

 

1,949

 

23.0

 

4,048

 

277

 

0.9

 

24

 

23

 

6.98

 

3.8

 

4.1

Other strategic locations

 

2,102.8

 

1,404

 

18.4

 

23,172

 

1,464

 

2.3

 

114

 

110

 

6.40

 

5.2

 

3.3

Total strategic locations Germany

 

31,908.2

 

1,495

 

19.8

 

331,890

 

20,705

 

2.3

 

1,608

 

1,534

 

6.32

 

4.2

 

3.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Austria

 

551.6

 

2,194

 

26.2

 

2,058

 

142

 

2.9

 

21

 

11

 

6.51

 

 

n/a

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

In addition to these focal points, we also have properties in very prosperous regions, such as Hanover, Leipzig and Freiburg.

The increase in in-place rents show that we are able to generate high 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: For example, we have been modernizing our buildings and apartments for years now – and this approach is paying off.

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.
Monthly In-Place Rent
The monthly in-place rent is measured in euro 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 so-called “Nettokaltmiete” (rent excl. ancilliary costs such as heating etc.). 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. If we also include the increase in rent due to new construction measures and measures to add extra stories, then we arrive at the organic increase in rent.
Privatize portfolio
In the “Privatize” portfolio, 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.
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.