Annual Report 2019

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Portfolio in the Property Management Business

As of December 31, 2019, Vonovia had a total real estate portfolio comprising 416,236 residential units, 138,176 garages and parking spaces and 6,748 commercial units. Our locations span 653 cities, towns and municipalities in Germany, Sweden and Austria. 78,691 residential units are also managed for other owners. Most of the properties in the Group’s portfolio are multifamily residences.

In terms of fair value, most of the properties (around 84%) are located in Germany. The Swedish portfolio accounts for around 11% of the fair value, while the share of the Austrian portfolio comes to around 5%. The portfolio is as follows as of December 31, 2019:

Portfolio and Fair Value by Country

 

Portfolio

Fair value*

 

Residential units

Living area (in thou. m2)

Vacancy
(in %)

(in € million)

(€/m2)

In-place rent multiplier

*

Fair value of the developed land excluding € 1,743.4 million, of which € 547.5 million for undeveloped land and inheritable building rights granted, € 387.9 million for assets under construction, € 531.9 million for development and € 276.1 million for other.

 

 

 

 

 

 

 

Vonovia Germany

355,708

22,212

2.5

43,276.2

1,893

23.5

Vonovia Sweden

38,065

2,730

2.3

5,642.0

1,899

17.1

Vonovia Austria

22,463

1,675

4.7

2,654.9

1,455

24.7

Total

416,236

26,617

2.6

51,573.1

1,865

22.6
Rent and Rental Growth by Country

 

In-place rent*

Rent increase

 

Total (p.a. in € million)

Residential (p.a. in € million)

Residential (in €/m2)

Organic
(in %)

Market rent forecast valuation (in % p. a.)

*

Shown based on the country-specific definition.

 

 

 

 

 

 

Vonovia Germany

1,842

1,761

6.79

3.7

1.7

Vonovia Sweden

331

303

9.46

5.3

2.0

Vonovia Austria

107

89

4.64

4.1

1.6

Total

2,280

2,154

6.93

3.9

1.7

As of December 31, 2019, the Group’s real estate portfolio across Germany comprised 355,708 residential units, 95,544 garages and parking spaces and 3,978 commercial units distributed across 493 cities, towns and municipalities. The total living area amounted to 22,212,425 m2, with the average apartment size coming in at around 62 m2. With a vacancy rate of 2.5%, Vonovia generated an average monthly in-place rent of € 6.79 per m2 in Germany. The annualized in-place rent as of December 31, 2019, came to € 1,761.5 million for apartments, € 51.7 million for commercial units and € 28.6 million for garages and parking spaces.

In Sweden, the Group’s real estate portfolio comprised 38,065 residential units spanning a total living area of 2,730,111 m2, 25,274 garages and parking spaces and 2,194 commercial units. With a vacancy rate of 2.3%, the residential portfolio generated annualized in-place rent of € 302.9 million as of December 31, 2019. The apartments, which average 72 m2 in size, generate monthly in-place rent of € 9.46 per m2 (inclusive). Most of them are located in the Stockholm, Gothenburg and Malmo regions.

In the Austrian portfolio, which is largely located in Vienna, Vonovia achieved an annualized in-place rent of € 89.1 million as of December 31, 2019, with a vacancy rate of 4.7%, in the residential portfolio, which comprises 22,463 units covering total living space of 1,675,177 m2. The monthly in-place rent amounted to € 4.64 per m2 with an average apartment size of around 75 m2. The portfolio also comprised 17,358 garages and parking spaces and 576 commercial units.

Changes in the Portfolio

In the first half of the year, Vonovia acquired 2,340 apartments in the greater Stockholm and Gothenburg regions from Akelius Residential Property. At the end of the fiscal year, a portfolio consisting of 21,385 apartments, largely in the greater Stockholm region, was added to Vonovia’s portfolio as a result of the takeover of a majority stake in Hembla AB.

The acquisition portfolios were as follows at the time of the takeovers:

 

 

 

 

In-place rent*

 

Residential units

Living area (in thou. m2)

Vacancy
(in %)

Residential (p.a. in € million)

Residential (€/m2)

*

Shown based on the country-specific definition.

 

 

 

 

 

 

Hembla AB

21,385

1,533

3.3

168

9.42

Akelius

2,340

179

2.5

21

10.19

In the course of 2019, properties from the portfolio earmarked for sale were disposed of in several sales as part of 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
(in %)

Residential (p.a. in € million)

Residential (€/m2)

*

Shown based on the country-specific definition.

 

 

 

 

 

 

Disposal portfolios 2019

2,125

138.7

25.0

7

5.43

In addition to the acquisition and sale of larger housing stocks, Vonovia’s portfolio changed in 2019 as a result of additions arising from tactical acquisitions, the construction of new apartments and attic extensions on the one hand, and disposals of condominiums and multifamily residences from the portfolio earmarked for sale on the other. Furthermore, our regular portfolio reviews due to strategic reassessments resulted in certain housing stocks being reallocated within the German portfolio. Following the implementation of the annual structured reassessment of all potential, as of December 31, 2019, Vonovia’s portfolio is as follows:

Portfolio and Fair Value by Portfolio Cluster

 

Portfolio

Fair value*

 

Residential units

Living area (in thou. m2)

Vacancy
(in %)

(in € million)

(€/m2)

In-place rent multiplier

*

Fair value of the developed land excluding undeveloped land and inheritable building rights granted, assets under construction, development and other.

 

 

 

 

 

 

 

Strategic

323,360

20,031

2.3

38,875.0

1,891

23.4

Operate

85,125

5,351

3.3

10,954.0

1,893

22.0

Invest

238,235

14,680

2.0

27,920.9

1,890

24.0

Recurring Sales

28,153

1,882

3.0

3,887.2

2,021

24.8

Non-core Disposals

4,195

299

7.6

514.0

1,333

19.4

Vonovia Germany

355,708

22,212

2.5

43,276.2

1,893

23.5

Vonovia Sweden

38,065

2,730

2.3

5,642.0

1,899

17.1

Vonovia Austria

22,463

1,675

4.7

2,654.9

1,455

24.7
Rent and Rental Growth by Portfolio Cluster

 

In-place rent*

Rent increase

 

Total (p.a. in € million)

Residential (p.a. in € million)

Residential (in €/m2)

Organic
(in %)

Market rent forecast valuation (in % p. a.)

*

Shown based on the country-specific definition.

 

 

 

 

 

 

Strategic

1,659

1,589

6.78

3.9

1.7

Operate

498

442

7.17

6.0

1.7

Invest

1,161

1,148

6.64

3.0

1.7

Recurring Sales

157

151

6.90

2.8

1.7

Non-core Disposals

26

21

6.26

0.4

1.8

Vonovia Germany

1,842

1,761

6.79

3.7

1.7

Vonovia Sweden

331

303

9.46

5.3

2.0

Vonovia Austria

107

89

4.64

4.1

1.6

In order to boost transparency in portfolio presentation, we also break our portfolio in Germany down into 15 regional markets. 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 urban areas. Our decision to focus on the 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 Germany.

In relation to the fair value, 92% of our German 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” (around 7% of the total fair value). Our stocks earmarked for sale from the “Non-core Disposals” and “Recurring Sales” subportfolios in locations that do not include any strategic stocks are shown as “Non-strategic Locations”. The fact that our portfolio is spread nationwide makes us more independent of the circumstances prevailing on individual regional markets.

As of December 31, 2019, the German portfolio is as follows, broken down into regional markets:

Portfolio and Fair Value by Regional Market

 

Portfolio

Fair value*

 

Residential units

Living area (in thou. m2)

Vacancy
(in %)

(in € million)

(€/m2)

In-place rent multiplier

*

Fair value of the developed land excluding undeveloped land and inheritable building rights granted, assets under construction, development and other.

 

 

 

 

 

 

 

Berlin

42,241

2,687

1.2

7,450.0

2,677

32.6

Rhine Main area

27,488

1,755

1.4

4,432.0

2,484

24.9

Southern Ruhr area

43,579

2,674

3.1

3,850.5

1,417

19.5

Rhineland

28,523

1,892

2.3

3,822.7

1,969

22.7

Dresden

38,519

2,195

3.4

3,584.8

1,563

21.4

Hamburg

19,818

1,252

1.8

2,762.2

2,148

25.0

Munich

9,668

636

1.0

2,283.3

3,493

34.6

Stuttgart

13,796

869

1.4

2,122.9

2,382

24.7

Kiel

23,220

1,336

2.2

2,101.9

1,523

20.1

Hanover

16,287

1,028

2.5

1,873.5

1,790

22.3

Northern Ruhr area

25,608

1,584

3.2

1,696.9

1,061

15.4

Bremen

11,853

717

3.1

1,182.3

1,597

22.8

Leipzig

9,185

588

2.8

958.3

1,544

21.6

Westphalia

9,473

616

3.2

903.2

1,449

19.8

Freiburg

4,043

276

1.1

657.2

2,355

25.9

Other strategic locations

26,778

1,703

3.1

2,899.8

1,673

21.0

Total strategic locations

350,079

21,807

2.4

42,581.5

1,903

23.6

Non-strategic locations

5,629

405

7.0

694.7

1,409

20.0

Vonovia Germany

355,708

22,212

2.5

43,276.2

1,893

23.5
Rent and Rental Growth by Regional Market

 

In-place rent*

Rent increase

 

Total (p.a. in € million)

Residential (p.a. in € million)

Residential (in €/m2)

Organic
(in %)

Market rent forecast valuation (in % p. a.)

*

Shown based on the country-specific definition.

 

 

 

 

 

 

Berlin

228

217

6.84

3.7

1.8

Rhine Main area

178

172

8.32

3.8

1.8

Southern Ruhr area

198

192

6.19

5.0

1.5

Rhineland

169

161

7.26

3.0

1.7

Dresden

168

158

6.23

3.9

1.7

Hamburg

110

106

7.16

3.6

1.6

Munich

66

62

8.24

2.9

1.9

Stuttgart

86

82

8.04

3.6

1.8

Kiel

105

100

6.38

4.1

1.7

Hanover

84

81

6.74

4.1

1.7

Northern Ruhr area

110

107

5.82

3.3

1.2

Bremen

52

49

5.94

5.1

1.8

Leipzig

44

42

6.11

2.5

1.8

Westphalia

46

45

6.23

4.9

1.5

Freiburg

25

25

7.50

3.0

1.7

Other strategic locations

138

133

6.75

3.4

1.6

Total strategic locations

1,807

1,733

6.79

3.8

1.7

Non-strategic locations

35

29

6.35

0.5

1.7

Vonovia Germany

1,842

1,761

6.79

3.7

1.7

Housing Stock by Regional Market

Housing Stock by Regional Market (Graphic)
Fair Value
Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
Monthly In-Place Rent
The monthly in-place rent is measured in euros 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 rental income from the Austrian property portfolio additionally includes maintenance and improvement contributions (EVB). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating and heating costs. The in-place rent is often referred to as the “Nettokaltmiete” (net rent excl. ancillary costs such as heating, etc.). The monthly in-place rent (in € per square meter) 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.
Non-core Disposals
We also report on the Other segment, which is not relevant from a corporate management perspective, in our segment reporting. This includes the sale, only as and when the right opportunities present themselves, of entire buildings or land (Non-core Disposals) that are likely to have below-average development potential in terms of rent growth in the medium term and are located in areas that can be described as peripheral compared with Vonovia’s overall portfolio and in view of future acquisitions.
Recurring Sales
The Recurring Sales segment includes the regular and sustainable disposals of individual condominiums from our portfolio. It does not include the sale of entire buildings or land (Non-core disposals). These properties are only sold as and when the right opportunities present themselves, meaning that the sales do not form part of our operating business within the narrower sense of the term. Therefore, these sales will be reported under “Other” in our segment reporting.
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.