Overview of the Results of Operations

Vonovia showed successful business development overall in the first nine months of the 2018 fiscal year. This development was characterized, in particular, by the acquisitions of BUWOG and Victoria Park. In the following sections of the chapter “Results of Operations,” all key figures are reported without BUWOG except those that are explicitly marked otherwise. Victoria Park was consolidated for the first time as of June 30, 2018, meaning that earnings contributions from the months from July to September 2018 are included in the Rental segment.

Within the Group, income from property management amounted to € 1,994.5 million in the first nine months of 2018, up 11.6% from the prior-year value of € 1,787.9 million in the nine-month period of 2017. The increase was mainly due to the development in in the Rental segment, which rose by 3.1% from € 1,249.4 million to € 1,287.6 million.

As of September 30, 2018, Vonovia’s real estate portfolio comprised 400,735 residential units, 119,416 garages and parking spaces and 5,256 commercial units. Of those, 45,567 residential units are attributable to BUWOG and conwert in Germany, 23,238 residential units to Austria and 14,051 apartments to Victoria Park in Sweden. We also manage 83,628 residential units for other owners.

The following key figures provide an overview of the development in (Group excl. BUWOG) and other value drivers in the reporting period:

FFO 1

in € million

 

9M 2017

 

9M 2018

 

Change in %

 

12M 2017

 

 

 

 

 

 

 

 

 

Rental income

 

1,249.4

 

1,287.6

 

3.1

 

1,667.9

Expenses for maintenance

 

-192.2

 

-202.2

 

5.2

 

-258.0

Operating expenses

 

-191.3

 

-173.4

 

-9.4

 

-259.9

Adjusted EBITDA Rental

 

865.9

 

912.0

 

5.3

 

1,150.0

 

 

 

 

 

 

 

 

 

Revenue Value-add Business

 

795.4

 

1,002.0

 

26.0

 

1,170.5

thereof external revenue

 

115.1

 

125.0

 

8.6

 

161.6

thereof internal revenue

 

680.3

 

877.0

 

28.9

 

1,008.9

Operating expenses

 

-719.4

 

-911.3

 

26.7

 

-1,068.4

Adjusted EBITDA Value-add Business

 

76.0

 

90.7

 

19.3

 

102.1

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Other

 

-19.8

 

-26.5

 

33.8

 

-27.9

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Operations

 

922.1

 

976.2

 

5.9

 

1,224.2

 

 

 

 

 

 

 

 

 

FFO 1 interest expense

 

-216.5

 

-189.2

 

-12.6

 

-287.5

Current income taxes FFO 1

 

-15.1

 

-8.8

 

-41.7

 

-15.9

 

 

 

 

 

 

 

 

 

FFO 1

 

690.5

 

778.2

 

12.7

 

920.8

In the first nine months of 2018, the primary key figure for the sustained earnings power of the core business, , was increased by € 87.7 million or 12.7%, from € 690.5 million to € 778.2 million. This trend was once again fueled primarily by the positive development in adjusted EBITDA Operations, which rose by 5.9% from € 922.1 million to € 976.2 million during the reporting period.

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.
FFO 1
The profit or loss for the period to reflect the adjusted profit or loss from sales; period adjustments from assets held for sale; specific effects that do not relate to the period, are non-recurring or do not relate to the objective of the company; the net income from fair value adjustments of investment properties; depreciation and amortization; deferred and prior-year current taxes (tax expenses/income); transaction costs; prepayment penalties and commitment interest; valuation effects on financial instruments; the unwinding of discounting for provisions, particularly provisions for pensions, and other prior-year interest expenses and income that are not of a long-term nature.
FFO 1
The profit or loss for the period to reflect the adjusted profit or loss from sales; period adjustments from assets held for sale; specific effects that do not relate to the period, are non-recurring or do not relate to the objective of the company; the net income from fair value adjustments of investment properties; depreciation and amortization; deferred and prior-year current taxes (tax expenses/income); transaction costs; prepayment penalties and commitment interest; valuation effects on financial instruments; the unwinding of discounting for provisions, particularly provisions for pensions, and other prior-year interest expenses and income that are not of a long-term nature.