Key Events During the Reporting Period
The coronavirus pandemic is having a pronounced adverse impact on the world’s economies, plunging them into a full-fledged recession. The fall report dated October 14, 2020, expects economic output in Germany to contract by 5.4% in 2020, with no recovery on the cards until the end of 2021 at the earliest. To date, Vonovia’s business model has proven to be robust and resilient throughout the pandemic. In the absence of any considerable impact on its net assets, financial position and results of operations, Vonovia is able to stand by its forecast for the 2020 fiscal year.
The focal point of Vonovia’s work of late has been the quest to successfully maintain its business processes and protect its employees and customers. Digitalized processes allow employees to switch seamlessly between working on location and working from home.
The Act on Rent Controls in the Housing Sector in Berlin (“rent freeze”), which came into force in February 2020 and whose constitutionality is still subject to question, has also had no material impact on our business.
After Vonovia initiated a squeeze-out for Hembla, corresponding measures aimed at the operational and financial integration of the business in Sweden based on the model of the existing management platform have been implemented and are going to plan based on the company’s experience of integration measures in the past.
Vonovia has strengthened its development business by expanding its activities in the Rhine-Main region with the complete acquisition of the project developer Bien-Ries GmbH, Hanau, at the beginning of April 2020. It will be integrated into the development organization operating under the BUWOG name in the course of 2020. The Bien-Ries business was included in the consolidated financial statements for the first time in the second quarter of 2020.
Vonovia placed two bonds with a total volume of € 1 billion on March 31, 2020, with the bond placement being completed in early April. Two further bonds with a total volume of € 1.5 billion were placed on July 3, 2020. This means that Vonovia enjoys unrestricted access to the capital market even in times of COVID-19.
Vonovia acquired a 2.6% stake in the Dutch Vesteda Residential Fund on June 26, 2020. Vesteda’s portfolio comprises more than 27,000 apartments in the middle-range price segment, mainly in the Randstad region in the Netherlands. The region is home to the major cities of Amsterdam and Rotterdam, among others. The stake has been acquired in a quest to gather direct practical experience on the Dutch market and compare it with Vonovia’s current markets.
The Annual General Meeting held on June 30, 2020, resolved to pay a dividend for the 2019 fiscal year in the amount of € 1.57 per share. During the subscription period, shareholders holding a total of 40.7% of the shares carrying dividend rights opted for the scrip dividend that had been offered as opposed to the cash dividend. As a result, 6,613,688 new shares were issued at a subscription price of € 52.438 and in a total amount of € 346.8 million. The Annual General Meeting was held as a virtual event for the first time, with shareholders able to follow the Annual General Meeting via a live stream.
The index issuer Stoxx Ltd. announced in early September that, effective September 18, 2020, Vonovia would be included in the European blue chip stock index EURO STOXX 50, an important index for a large number of international index funds and certificates. Since then, Vonovia has been the first and only residential real estate company ever to be part of this index. The basis for the classification was the free float market capitalization at the end of August 2020.
Vonovia implemented a capital increase involving 17,000,000 new shares on September 8, 2020. The new shares were placed with institutional investors in the scope of a private placement by means of an accelerated book building procedure and have carried dividend rights since January 1, 2020. The shares were granted at a placement price of € 59.00 per share. The gross proceeds from the issue amount to € 1.0 billion.
Customer satisfaction, measured based on the Customer Satisfaction Index (CSI), remained virtually unchanged in the third quarter of 2020 (-0.7 percentage points). The CSI was up by 4.6 percentage points as against the third quarter of 2019. There was a particular improvement in the scores awarded with regard to how friendly our caretakers are and how satisfied our tenants are with their homes, with a slight improvement in the assessment of how easy to understand ancillary costs bills are. The scores awarded for the service provided and the social environment/the neighborhood were lower than in the second quarter of 2020.