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Investor Presentation Jan. 2025
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Vonovia At A Glance Jan. 2025 2 Best Investment Opportunity in Multi-family Housing Vonovia shares • Largest European real estate stock with ~€25bn market cap. • Only real estate stock in German blue-chip DAX 40 index. • ADTV of ~€60m. • Fully independent board. Europe’s largest real estate company and pure-play residential landlord • Providing a home to 540,000 households. • Business built on long-term megatrends of urbanization, supply/demand imbalance, and decarbonization. • Superior position of residential assets within real estate sector: No threat of “Kodak effect” or disruptive force. Ownership structure Two sources of shareholder returns Dividends Organic value creation from rent growth 14.9% 8.6% 3.8% 69.7% 3.0% Norges Bank BlackRock APG Other free float DWS
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Megatrends Offer Great Investment Opportunities Jan. 2025 3 Estimated Volumes Are Much Too High for Government Solutions 1 Government target. Investment volume based on assuming 60sqm and €4,000/sqm construction costs. 2 GdW (Association of German Housing Companies). 3 IW German Economic Institute. Support from megatrends while other real estate sectors fight disruptive changes Climate Change Demographic Change Supply-/ Demand Imbalance Up to €120bn investment volume every year to decarbonize Germany’s housing stock.2 Shortage of 2 million apartments suitable for elderly people.3 €100bn investment volume every year to complete 400k apartments per year.1 • A struggling construction industry and an ever-growing supply/demand gap are not a sustainable situation. Required investment volumes are much too high to be delivered by government or through subsidies. • Any meaningful investment volume will require an investment and regulatory environment that is sufficiently attractive for private funding.
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Megatrend Urbanization & Supply/Demand Imbalance Jan. 2025 4 1 Adapted from ZIA forecast based on Empirica and Pestel Institute. 0 100 200 300 400 500 600 700 800 900 1,000 2022 2023 2024E 2025E 2026E 2027E Gap up to 340k Cum. gap up to 480k Cum. gap up to 600k Cum. gap up to 720k Cum. gap up to 780k Cum. gap up to 830k completions permits additional demand Ukraine war expected demand new construction Gov’t target 1. Declining levels of new construction meet increasing levels of demand. 2. Vonovia’s assets are located in urban markets with a robust long-term growth trajectory. 3. High occupancy and rent collection rates are evidence of extremely tight market conditions. Increasing supply/demand imbalance (‘000 units)1 Geographic exposure of Vonovia’s portfolio in Germany Rental KPIs are evidence of extremely tight market conditions Vonovia’s portfolio is located in the right urban markets Vacancy only a function of turnaround time in case of fluctuation Virtually full collection of rents and ancillary expenses All-time low 98% Occupancy rate 99.7% Collection rate ~8% Fluctuation rate 1 2 3
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Robust Long-term Upward Trajectory for Vonovia’s Rent Levels Jan. 2025 5 Increasing Real Market Levels As Supply/Demand Imbalance Trumps Regulation 1 Source: Value Marktdatenbank (formerly empirica-systeme), Q3 2024. Asking rents excluding furnished apartments and new constructions. Market data reflects the weighted average for Vonovia’s German portfolio. • Average reversionary potential for Vonovia’s current in-place rent of up to 38% vs. Vonovia reletting rent and 96% vs. real market reletting rents. • For Vonovia’s largest market, Berlin, average reversionary potential of up to 51% vs. Vonovia reletting rent and 171% vs. real market reletting rents. • Wide disparity of gross initial yields based on in-place values. • Structural supply/demand imbalance keeps upward pressure on real market rents, and Vonovia’s rents are expected to follow on a robust long-term upward trajectory at an annual rate of ca. 4%. Germany (current rent level €/sqm) Berlin (current rent level €/sqm) 7.8 4.1% Vonovia in-place rent 8.5 (+10%) (excl. invest) 4.5% 5.7% Vonovia reletting rent 12.0 (+53%) (median) 6.3% 8.1% Real market reletting rent1 10.8 (+38%) (incl. invest) 15.3 (+96%) (80% percentile) Initial yield 7.8 3.5% Vonovia in-place rent 8.7 (+10%) (excl. invest) 3.9% 5.3% Vonovia reletting rent 15.1 (+94%) (median) 6.8% 9.5% Real market reletting rent1 11.7 (+51%) (incl. invest) 21.1 (+171%) (80% percentile) Initial yield Vonovia’s regulated levels Market reality Vonovia’s regulated levels Market reality
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Megatrend Climate Change Jan. 2025 6 1 Agora Energiewende (2023): “Die Energiewende in Deutschland: Stand der Dinge 2022. Rückblick auf die wesentlichen Entwicklungen sowie Ausblick auf 2023.” 2 Vonovia Sustainability Report 2016. Vonovia German resi portfolio. 5.0% of portfolio without EPCs not included. 3 Vonovia 2023 data. 5.0% of portfolio without EPCs not included. 4 Includes scopes 1 & 2 as well as scope 3.3 “Fuel- and energy-related activities upstream;” referring to German building stock (incl. Deutsche Wohnen) and using market-based emission factors where available. Development of energy sector according to Scenario Agora Energiewende KNDE 20245; For comparison: CRREM pathway MFH 1.5° DE 2045=5.4kg CO2e/sqm per year (07/2021); Climate pathway development supported by Fraunhofer ISE. Per-sqm values based on rental area, not total floor space. Data refers to year end. 1. Vonovia has a science-based climate path for CO2 neutrality by 2045. 2. Vonovia’s share of worst-performing buildings is <3% vs. 16% for the German market. 3. Vonovia’s unparalleled expertise can be a meaningful value driver in the context of Germany’s real estate decarbonization needs. Vonovia will be CO2 neutral by 20454 Vonovia’s Climate Targets Align with 1.5-degree Target of Paris Climate Agreement Strong track record of yielding investments (6-7% NIY; >10% IRR) have put Vonovia’s portfolio far ahead of the market Energy efficiency classes Vonovia vs. German market CO2 intensity (kg CO2e/sqm/year) 1 2 3 • Comprehensive and unparalleled expertise in decarbonizing residential real estate. • Competitive advantage through substantial economies of scale, superior purchasing power, R&D capabilities and track record.
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Successful Balance Sheet Stabilization in spite of Challenging Times Jan. 2025 7 Debt KPI Targets Reflective of Low Business Risk Profile 1 Q3 2024 cash on hand + disposals signed but not closed yet. 2 Promissory notes, bearer bonds, registered bonds. Current Internal target LTV1 46.0% 40-45% ND/EBITDA1 15.1x 14-15x ICR 3.7x >3.5x 46% 14% 34% 7% Bonds Green / social bonds Bank loans Other2 Rating Agency Rating Outlook Last update S&P BBB+ Stable Aug. 23, 2024 Moody’s Baa1 Stable Feb. 1, 2024 Fitch BBB+ Stable Mar. 28, 2024 Scope A- Negative Jul. 2, 2024 • Diverse funding mix and solid investment grade rating • Pro forma cash position of €4.6bn1 covers all near-term maturities. • Debt KPIs under control to safeguard good investment grade rating. Pro-active management of debt KPIs safeguards solid investment grade rating and unfettered access to debt capital Diverse funding mix
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Strong Structural Market Drivers for Vonovia Jan. 2025 8 Structural Market Drivers Supply/Demand Imbalance Cumulative housing shortage up to 830k by 2027E, government target of €100bn investment volume p.a. Climate Change 39% reduction in GHG emissions required to reach government goal by 2030. Required investment volume of €120bn p.a. Demographic Change >31% of German population 65 or older by 2050. Vonovia’s Right to Win Focus on Urban Growth Areas Pro-active geographic focus on urban areas with greatest supply/demand imbalance. Market-leading in Modernization Energy efficiency of portfolio significantly ahead of German average. Unparalleled Scale Industry-leading number of apartments ready for senior citizens, through vacant unit refurbishments. Is uniquely positioned for all market trends Fragmented Market Market opportunity from inefficiencies and lack of consolidation. Unparalleled Moat Most efficient platform and proven best-in- class ability to roll up market. … giving long-running, recurring and growing income for Vonovia
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Vonovia’s Evolving Value Proposition Jan. 2025 9 Developing and Growing the Building Blocks of Value Creation Rental yield Building Scale 1 NAV Pre-2024 2028+ Capture of value chain Value Focus: Rental yield Yield enhancement through asset improvement Gains from asset portfolio trading Return on non-rental businesses Deploying the Platform 3 Rental yield Yield enhancement through asset improvement Further gains from asset portfolio trading Increased return on non-rental businesses, including 3rd party market “2nd Vonovia” 4 Rental yield Yield enhancement through asset improvement Initiating non-rental businesses Enhancing the Platform 2
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Broad-based Business Across Entire Value Chain Jan. 2025 10 Sector-leading Earnings and Value Generation Rental business Rock solid, low risk, and highly predictable Return to Performance Expanded Business Areas Accelerated Tech-Supported Investments • Wholly-owned VTS craftsmen organization & increasing investment volume • Recurring Sales • Development to Sell • Energy Operations • Stranded Assets • Occupancy Rights • 3rd Party Market/2nd Vonovia • Serial Modernization • Energy Cube heat pump & PV ~4% organic rent growth p.a. (based on €1bn investments; higher rent growth from increasing investments) >99.5% rent collection Full occupancy (except for apartments undergoing refurbishment during tenant turnover) Non-rental business (Value-add, Recurring Sales, Development) Additional earnings & value generation not reflected in NTA 2024E 2028E Adj. EBITDA Total ~€2.65bn €3.2-3.5bn Rental Non-rental ~90% 75-80% ~10% 20-25%
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Disclaimer Jan. 2025 11 This presentation has been specifically prepared by Vonovia SE and/or its affiliates (together, “Vonovia”) for internal use. Consequently, it may not be sufficient or appropriate for the purpose for which a third party might use it. This presentation has been provided for information purposes only and is being circulated on a confidential basis. This presentation shall be used only in accordance with applicable law, e.g. regarding national and international insider dealing rules, and must not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by the recipient to any other person. Receipt of this presentation constitutes an express agreement to be bound by such confidentiality and the other terms set out herein. This presentation includes statements, estimates, opinions and projections with respect to anticipated future performance of Vonovia ("forward-looking statements") which reflect various assumptions concerning anticipated results taken from Vonovia’s current business plan or from public sources which have not been independently verified or assessed by Vonovia and which may or may not prove to be correct. Any forward-looking statements reflect current expectations based on the current business plan and various other assumptions and involve significant risks and uncertainties and should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Any forward-looking statements only speak as at the date the presentation is provided to the recipient. It is up to the recipient of this presentation to make its own assessment of the validity of any forward-looking statements and assumptions and no liability is accepted by Vonovia in respect of the achievement of such forward-looking statements and assumptions. Vonovia accepts no liability whatsoever to the extent permitted by applicable law for any direct, indirect or consequential loss or penalty arising from any use of this presentation, its contents or preparation or otherwise in connection with it. No representation or warranty (whether express or implied) is given in respect of any information in this presentation or that this presentation is suitable for the recipient’s purposes. The delivery of this presentation does not imply that the information herein is correct as at any time subsequent to the date hereof. Vonovia has no obligation whatsoever to update or revise any of the information, forward-looking statements or the conclusions contained herein or to reflect new events or circumstances or to correct any inaccuracies which may become apparent subsequent to the date hereof. This presentation does not, and is not intended to, constitute or form part of, and should not be construed as, an offer to sell, or a solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities of the Company nor shall it or any part of it form the basis of or be relied upon in connection with or act as any inducement to enter into any contract or commitment or investment decision whatsoever. This presentation is neither an advertisement nor a prospectus and is made available on the express understanding that it does not contain all information that may be required to evaluate, and will not be used by the attendees/recipients in connection with, the purchase of or investment in any securities of the Company. This presentation is selective in nature and does not purport to contain all information that may be required to evaluate the Company and/or its securities. No reliance may or should be placed for any purpose whatsoever on the information contained in this presentation, or on its completeness, accuracy or fairness. This presentation is not directed to or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. Neither this presentation nor the information contained in it may be taken, transmitted or distributed directly or indirectly into or within the United States, its territories or possessions. This presentation is not an offer of securities for sale in the United States. The securities of the Company have not been and will not be registered under the US Securities Act of 1933, as amended (the “Securities Act”) or with any securities regulatory authority of any state or other jurisdiction of the United States. Consequently, the securities of the Company may not be offered, sold, resold, transferred, delivered or distributed, directly or indirectly, into or within in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States unless registered under the Securities Act. Tables and diagrams may include rounding effects. Per share numbers for 2013-2014 are TERP adjusted (TERP factor: 1.051). Subscription rights offering in 2015 due to Südewo acquisition. Per share numbers for 2013-2020 are TERP adjusted (TERP factor: 1.067). Subscription rights offering in 2021 due to Deutsche Wohnen acquisition.