Forecast Report

Business Outlook

Comparison of the Previous Forecasts with the Results from 2020

Despite the coronavirus pandemic, 2020 was a positive fiscal year for Vonovia. We achieved further growth in all operating segments. Thanks to our systematic and rapid crisis management, coupled with a high degree of digitalization, we were able to rise successfully to the challenges presented by the coronavirus crisis.

The coronavirus pandemic only had a minor impact on the Rental segment. In the Value-add segment, our modernization activities were only restricted temporarily, and only to a moderate degree, by the coronavirus crisis. In the Recurring Sales segment, there were a few isolated delays in apartment viewings. The Development segment performed well thanks to successful project developments and completions.

The table below provides an overview of the development of our forecast performance indicators, their target achievement level in the 2020 fiscal year as well as a forecast for the 2021 fiscal year.

At around € 4.4 billion, Total Tegment Revenue was up by 6.3% in 2020 as against the value of around € 4.1 billion achieved a year earlier, putting it on a par with the most recent forecast.

The Adjusted NAV per share came in at € 59.47 in 2020 on the prior-year value of € 52.00 (+14.4%). This includes effects from fair value adjustments of investment properties in the amount of € 3.7 billion in total (2019: € 4.1 billion). The distribution of the dividend – taking into account the scrip dividend with an acceptance rate of 40.7% (2019: 45.8%) – of € 504.6 million in 2020 had the opposite effect (2019: € 404.7 million). The EPRA NTA per share due to replace the Adjusted NAV per share in 2021 came in at € 62.71 in 2020 on the prior-year value of € 54.88 (+14.3%).

The Adjusted EBITDA Total rose by 8.5% from € 1,760.1 million to € 1,909.8 million. The latest forecast range was between € 1,875 million and € 1,925 million. In addition to the acquisition of Hembla effective from November 2019 (earnings contribution for the full year in 2020), the increase in adjusted EBITDA was also driven by organic growth resulting from new construction and modernization measures. All segments increased their adjusted EBITDA as against the previous year, the originally forecast slight drop in the Recurring Sales segment failed to materialize.

Group FFO rose by 10.6% from € 1,218.6 million in 2019 to € 1,348.2 million, ahead of the most recent forecast at the upper end of the forecast range of between € 1,275 million and € 1,325 million.

Customer satisfaction in 2020, measured using the performance indicator CSI, was up 8.6% on the previous year’s average, meaning it was also on a par with the level included in our most recent forecast. In the 2021 fiscal year, the CSI will be replaced by the Sustainability Performance Index. In addition to the CSI, the new index contains other key indicators that relate to our sustainability strategy (see the chapter on our management system ).

Forecast for the 2021 Fiscal Year

Our forecast for the 2021 fiscal year is based on determined and updated corporate planning for the Vonovia Group as a whole, and considers current business developments, the acquisition of Bien-Ries, possible opportunities and risks, and the expected impacts of the coronavirus pandemic. It also includes the key overall macroeconomic developments and the economic factors that are relevant to the real estate industry and our corporate strategy. Further information is provided in the section entitled Development of the Economy and the Industry and Fundamental Information About the Group. Beyond this, the Group’s further development remains exposed to general opportunities and risks (see chapter on Opportunities and Risks).

The forecast was based on the accounting principles used in the consolidated financial statements, with the adjustments described elsewhere in the management report being made. The forecast does not take account of any larger acquisitions of real estate portfolios.

We expect that the coronavirus pandemic will not have a significant impact on the key operational and financial figures of any of the operating segments and therefore will have no noteworthy impact on future business development. We are currently observing stable demand for rental apartments and no negative impact on market values as a result of the coronavirus pandemic.

We expect Total Segment Revenue to increase further in 2021. At the end of January 2020, the Berlin House of Representatives passed the Act on Rent Controls in the Housing Sector in Berlin (referred to in short as “rent freeze”). This came into force in February 2020. It remains disputed whether the law is constitutional. Assuming that the rent freeze is found to be constitutional, future rental income or rental development will have to be reduced for the period leading up to, and including, 2025. This could have a negative impact on fair values. Likewise, it cannot be ruled out that declining vacancy rates and fluctuation as well as lower return requirements of investors (yield compression) will subsequently have a compensatory effect on fair values. In addition, we expect the value of our company to increase further in 2021 and predict a moderate increase in EPRA NAV per share, leaving any further market-related changes in value out of the equation.

We predict that all operating segments will contribute to the increase in Adjusted EBITDA Total and Group FFO. The biggest absolute increases are expected to be seen in the Rental and Development segments. This is based, among other things, on the assumption that any potential CO₂ tax can be apportioned to tenants under the German Ancillary Costs Ordinance (Betriebskostenverordnung).

Bochum, Germany, February 23, 2021

The Management Board

Rolf Buch
(CEO)

Arnd Fittkau
(CRO)

Helene von Roeder
(CFO)

Daniel Riedl
(CDO)