Financing

The agency Standard & Poor’s has assigned Vonovia a long-term corporate credit rating of ‘BBB+’ with a stable outlook and a short-term credit rating of ‘A-2’. This was confirmed in the letter dated December 19, 2017 and takes the potential takeover of BUWOG into account. At the same time, the credit rating for the issued unsecured bonds is ‘BBB+’. The credit rating for the subordinated hybrid bonds is ‘BBB-’.

A European medium-term notes program (EMTN program) has been launched for the Group via Vonovia Finance B. V., allowing funds to be raised quickly at any time using bond issues, without any major administrative outlay. The prospectus for the EMTN program has to be updated annually and approved by the financial supervisory authority of the Grand Duchy of Luxembourg (CSSF). The current prospectus is still valid until the end of April 2018.

Vonovia Finance B. V. has currently placed a total bond volume of € 11.2 billion, € 8.8 billion of which relates to the EMTN program on the reporting date of December 31, 2017. This also includes a bond of € 1.0 billion issued as part of the EMTN program in January 2018. The total volume also includes € 1.7 billion in hybrid bonds, € 1.0 billion of which is reported as equity.

In November 2017, Vonovia Finance B. V. concluded a master commercial paper agreement with a total volume of € 500 million, for which funds with a maximum term of 364 days could be raised at short notice. A volume of € 410 million had been issued under this master program as of December 31, 2017.

The debt maturity profile of Vonovia’s financing was as follows as of December 31, 2017:

Maturity Profile

Maturity profile (bar chart)

The 2017 fiscal year was characterized by the financing of the cash component of the conwert takeover and by the refinancing of the first few financing arrangements entered into after the IPO and following the CMBS GRAND financing that was repaid at that time.

In the 2017 fiscal year, financing with a volume of € 1,744.0 million was repaid prematurely, also including the CMBS financing with the working title Taurus from the takeover of Gagfah in the amount of € 1,017.7 million, as well as conwert financing of € 362.5 million.

Scheduled repayments were made in the amount of € 1,504.7 million, with € 124.5 million of this amount attributable to conwert, € 1,347.1 million to structured financing and bonds and € 33.1 million to mortgages. In September, the USD 750 million bond was repaid in the amount of € 554.9 million, followed by the planned repayment of the EMTN drawdown from December 2015 in the amount of € 750 million in December. Together with the repayment of the USD bond, the corresponding cross-currency swaps were also settled.

In return, Vonovia Finance B. V. issued bonds with a total volume of € 2,000 million as part of the EMTN program in 2017, including two tranches of € 500 million in January 2017 (coupon: 0.75%/1.75%) and one in September and in November in an amount of € 500 million in each case, with the September issue having a coupon of 1.125% while the November issue is a floating rate bond.

Vonovia Finance B. V. also issued short-term commercial papers in the amount of € 410 million as part of the commercial paper program with a volume of € 500 million.

Subsidized development loans were taken out with the European Investment Bank (EIB) in the amount of € 300 million and with the German government-owned development bank KfW-Bank in the amount of € 494.6 million in total to further support the modernization program.

The working capital facility was drawn down in the amount of € 178.9 million during the year.

On January 8, 2018, on bond issue had also already been made in two tranches with a total volume of € 1 billion in connection with the statutory requirement to provide financing for the public takeover offer made to BUWOG AG. In addition, a bridge facility worth € 2.65 billion was also agreed with J.P. Morgan in the context of the BUWOG takeover offer. This facility would be drawn down in connection with the completion of the takeover of BUWOG.

In addition, the financing provided by Berlin-Hannoversche Hypothekenbank which falls due in 2018 and, at the time, constituted the first partial refinancing component of the GRAND CMBS, was extended early in January 2018 until 2028 in the amount of € 500 million. Furthermore, financing in the amount of around € 1.1 billion will fall due in 2018, including the EMTN drawdown from September 2016 in the amount of € 500 million and the commercial papers in the amount of € 410 million.

For more detailed information on financing, please refer to the relevant explanations in the notes under “Non-Derivative Financial Liabilities.”

In connection with the issue of unsecured bonds by Vonovia Finance B. V., Vonovia has undertaken to comply with the following standard market :

  • Limitations on incurrence of financial indebtedness
  • of consolidated coverage ratio
  • Maintenance of total unencumbered assets

The existing structured and secured financing arrangements also require adherence to certain standard market covenants. Any failure to meet the agreed financial covenants could have a negative effect on the liquidity status.

The (loan-to-value) is as follows as of the end of the year:

in € million

 

Dec. 31, 2016

 

Dec. 31, 2017

 

Change in %

 

 

 

 

 

 

 

Non derivative financial liabilities

 

13,371.0

 

14,060.5

 

5.2

Foreign exchange rate effects

 

-209.9

 

-23.5

 

-88.8

Cash and cash equivalents

 

-1,540.8

 

-266.2

 

-82.7

Net debt

 

11,620.3

 

13,770.8

 

18.5

Sales receivables

 

-135.4

 

-201.2

 

48.6

Adjusted net debt

 

11,484.9

 

13,569.6

 

18.2

 

 

 

 

 

 

 

Fair value of the real estate portfolio

 

27,115.6

 

33,436.3

 

23.3

Shares in other real estate companies

 

503.1

 

642.2

 

27.6

Adjusted fair value of the real estate portfolio

 

27,618.7

 

34,078.5

 

23.4

 

 

 

 

 

 

 

LTV

 

41.6%

 

39.8%

 

-1.8 pp

The financial have been fulfilled as of the reporting date.

in € million

 

Dec. 31, 2016

 

Dec. 31, 2017

 

Change in %

 

 

 

 

 

 

 

Non-derivative financial liabilities

 

13,371.0

 

14,060.5

 

5.2

Total assets

 

32,522.1

 

37,516.3

 

15.4

 

 

 

 

 

 

 

LTV bond covenants

 

41.1%

 

37.5%

 

-3.6 pp

Rating
Classification of debtors or securities with regard to their creditworthiness or credit quality according to credit ratings. The classification is generally performed by rating agencies.
Rating
Classification of debtors or securities with regard to their creditworthiness or credit quality according to credit ratings. The classification is generally performed by rating agencies.
Covenants
Requirements specified in loan agreements or bond conditions containing future obligations of the borrower or the bond obligor to meet specific requirements or to refrain from undertaking certain activities.
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.
LTV Ratio (Loan-to-Value Ratio)
The LTV ratio shows the extent to which financial liabilities are covered. It shows the ratio of non-derivative financial liabilities pursuant to IFRS, less foreign exchange rate effects, cash and cash equivalents, receivables from disposals, plus purchase prices for outstanding acquisitions, to the total fair values of the real estate portfolio, plus the fair values of outstanding acquisitions and investments in other real estate companies.
Covenants
Requirements specified in loan agreements or bond conditions containing future obligations of the borrower or the bond obligor to meet specific requirements or to refrain from undertaking certain activities.