Annual Report 2020

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Portfolio in the Property Management Business

As of December 31, 2020, Vonovia had a total real estate portfolio comprising 415,688 residential units (2019: 416,236), 139,429 garages and parking spaces (2019: 138,176) and 6,564 commercial units (2019: 6,748). Our locations span 630 cities, towns and municipalities in Germany, Sweden and Austria. 74,021 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, 2020:

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

 

 

 

 

 

 

 

Vonovia Germany

355,285

22,177

2.2

47,782.8

2,099

25.4

Vonovia Sweden

38,248

2,738

2.3

6,219.4

2,090

17.4

Vonovia Austria

22,155

1,645

4.6

2,832.2

1,570

25.5

Total

415,688

26,560

2.4

56,834.4

2,063

24.2

* Fair value of the developed land excl. € 2,076.3 million, of which € 616.8 million for undeveloped land and inheritable building rights granted, € 386.1 million for assets under construction, € 779.1 million for development and € 294.2 million for other.
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.)

 

 

 

 

 

 

Vonovia Germany

1,883

1,805

6.95

2.8

1.7

Vonovia Sweden

357

331

10.31

4.7

2.0

Vonovia Austria

111

90

4.79

5.1

1.4

Total

2,352

2,225

7.16

3.1

1.7

* Shown based on the country-specific definition.

As of December 31, 2020, the Group’s real estate portfolio across Germany comprised 355,285 residential units, 97,093 garages and parking spaces and 3,786 commercial units distributed across 471 cities, towns and municipalities. The total living area amounted to 22,177,034 m2, with the average apartment size coming in at around 62 m2. With a vacancy rate of 2.2%, Vonovia generated an average monthly in-place rent of € 6.95 per m2 in Germany. The annualized in-place rent for the residential portfolio as of December 31, 2020 came to € 1,804.8 million for apartments.

In Sweden, the Group’s real estate portfolio comprised 38,248 residential units spanning a total living area of 2,738,209 m2, 25,019 garages and parking spaces and 2,172 commercial units. With a vacancy rate of 2.3%, the residential portfolio generated annualized in-place rent of € 330.7 million as of December 31, 2020. The apartments, which average 72 m2 in size, generate monthly in-place rent of € 10.31 per m2 (inclusive rent). Most of them are located in the Stockholm, Gothenburg and Malmö regions.

In the Austrian portfolio, which is largely located in Vienna, Vonovia achieved an annualized in-place rent of € 89.9 million as of December 31, 2020, with a vacancy rate of 4.6%, in the residential portfolio, which comprises 22,155 units covering total living space of 1,644,754 m2. The monthly in-place rent amounted to € 4.79 per m2 with an average apartment size of around 74 m2. The portfolio also comprised 17,317 garages and parking spaces and 606 commercial units.

Changes in the Portfolio

1,057 apartments were purchased in Germany in the second half of 2020.

In the course of 2020, properties from the portfolio earmarked for sale were also 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)

 

 

 

 

 

 

Disposal portfolios 2020

961

71.9

8.2

4.0

4.98

* Shown based on the country-specific definition.

In addition to the acquisition and sale of larger housing stocks, Vonovia’s portfolio changed in 2020 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, 2020, 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

 

 

 

 

 

 

 

Strategic

327,479

20,308

2.1

43,570.1

2,093

25.3

Operate

106,884

6,675

2.7

14,699.8

2,071

23.6

Invest

220,595

13,634

1.8

28,870.2

2,104

26.2

Recurring Sales

26,381

1,762

3.1

4,033.9

2,241

26.9

Non-core Disposals

1,425

107

10.9

178.8

1,197

16.5

Vonovia Germany

355,285

22,177

2.2

47,782.8

2,099

25.4

Vonovia Sweden

38,248

2,738

2.3

6,219.4

2,090

17.4

Vonovia Austria

22,155

1,645

4.6

2,832.2

1,570

25.5

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

 

 

 

 

 

 

Strategic

1,722

1,652

6.93

2.8

1.7

Operate

622

565

7.28

4.5

1.6

Invest

1,100

1,087

6.77

2.0

1.7

Recurring Sales

150

145

7.06

1.8

1.7

Non-core Disposals

11

8

7.40

2.4

1.7

Vonovia Germany

1,883

1,805

6.95

2.8

1.7

Vonovia Sweden

357

331

10.31

4.7

2.0

Vonovia Austria

111

90

4.79

5.1

1.4

* Shown based on the country-specific definition.

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, 2020, 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

 

 

 

 

 

 

 

Berlin

43,171

2,751

1.1

7,815.5

2,746

34.2

Rhine Main Area

27,290

1,744

1.6

4,934.0

2,784

27.1

Southern Ruhr Area

43,428

2,671

2.9

4,483.3

1,653

21.8

Rhineland

28,421

1,887

1.9

4,213.1

2,176

24.3

Dresden

38,505

2,195

3.0

4,044.5

1,763

23.5

Hamburg

19,724

1,246

1.4

3,087.2

2,412

27.0

Kiel

24,274

1,391

1.8

2,535.7

1,774

22.4

Munich

9,677

636

1.1

2,496.3

3,819

36.9

Stuttgart

13,609

854

1.7

2,319.9

2,666

27.4

Hanover

16,190

1,024

2.3

2,053.6

1,969

23.8

Northern Ruhr Area

25,076

1,549

2.9

1,893.8

1,211

17.0

Bremen

11,849

718

2.9

1,318.3

1,792

24.8

Leipzig

9,136

588

2.3

1,054.8

1,702

23.3

Westphalia

9,489

620

3.1

1,028.7

1,642

21.4

Freiburg

4,036

276

0.9

696.8

2,500

26.8

Other Strategic Locations

26,598

1,690

2.7

3,198.2

1,862

22.3

Total Strategic Locations

350,473

21,839

2.2

47,173.6

2,108

25.4

Non-Strategic Locations

4,812

338

5.5

609.2

1,579

21.3

Vonovia Germany

355,285

22,177

2.2

47,782.8

2,099

25.4

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

 

 

 

 

 

 

Berlin

228

216

6.63

–2.1

1.8

Rhine Main Area

182

176

8.58

3.4

1.8

Southern Ruhr Area

206

200

6.44

4.6

1.5

Rhineland

173

165

7.46

3.2

1.7

Dresden

172

162

6.34

2.1

1.7

Hamburg

114

110

7.44

3.9

1.6

Kiel

113

108

6.61

3.3

1.7

Munich

68

64

8.45

3.4

1.9

Stuttgart

85

82

8.15

2.5

1.8

Hanover

86

83

6.94

3.3

1.7

Northern Ruhr Area

112

108

6.00

3.0

1.3

Bremen

53

51

6.10

2.7

1.8

Leipzig

45

43

6.24

2.9

1.7

Westphalia

48

47

6.53

5.6

1.5

Freiburg

26

25

7.69

2.8

1.7

Other Strategic Locations

143

138

7.04

4.5

1.6

Total Strategic Locations

1,855

1,779

6.95

2.8

1.7

Non-Strategic Locations

29

25

6.69

1.7

1.6

Vonovia Germany

1,883

1,805

6.95

2.8

1.7

* Shown based on the country-specific definition.

Housing Stock by Regional Market

Total Vonovia Housing Portfolio (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.