Vonovia’s 1H earnings up 18%

Germany's biggest residential landlord Vonovia has reported an increase in core profit (FFO 1) of 18% to €457.7m in the first half of 2017, it announced this month.

Vonovia attributes the growth to its billion-euro investment program and organic growth in its value-add arm.

‘Our investment program is on track. In particular, we are making good progress with our construction of new builds using vertical expansion and densification,’ said Vonovia’s CEO, Rolf Buch. ‘This also means that we are helping to combat the shortage of apartments in cities. At the same time, we are bringing our buildings into line with the latest energy standards and are further expanding our housing-related services. This will allow us to offer modern homes for our customers.’

The housing behemoth’s investment program for the year is also on track, with 98% of its €730m investment budget completed or committed. Vonovia plans to build around 2,000 apartments every year as part of its expansion drive. The investment program has also earmarked around €340m to maintain existing apartments.

Demand for German real estate has risen in recent years, especially on the part of investors seeking a safe haven and interest rates remain low, which has cut Vonovia’s financing costs. The arrival of more than one million migrants in 2015 and 2016 has also boosted demand for housing.

Vonovia has also expanded its housing-related services. The adjusted EBITDA Value-add Business almost doubled from €26m in the first half of 2016 to €45.6m in the first half of 2017.

‘Smart metering’ is used to monitor energy consumption at approximately 30,000 Vonovia apartments. The company is also building roof-mounted photovoltaic facilities in many locations. It is also installing new photovoltaic facilities with total output of around 2.2 megawatt peak in a total of 56 residential buildings in Dresden, which is enough to cover the power consumed by 800 households, according to the group.

Rental income came to €833.2m in the first half of the year. An increase in rents due to market-related factors (1.7 %) and the effects from property value improvements and new construction (2 %) increased the typical monthly rent per square metre to €6.12. The vacancy rate of 2.9 % is largely attributable to the renovation of apartments that become available as part of the extensive investment program.

Vonovia acquired Austrian developer Conwert for around €1.7b last September and its portfolio has now been integrated, as anticipated, in the first half. The number of people employed at Vonovia rose by 19.5 % year-on-year to a total of 8,257 employees.

Vonovia currently owns and manages around 355,000 residential units in Germany. Its portfolio is valued at around €30.8b as of end-June 2017.