DGAP-News: HOWOGE Wohnungsbaugesellschaft mit beschränkter Haftung / Key word(s): Real estate/Annual report
HOWOGE Wohnungsbaugesellschaft mit beschränkter Haftung: Solid growth course: HOWOGE Wohnungsbaugesellschaft expands holdings and closes successful 2021 financial year
28.04.2022 / 09:00
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Solid growth course: HOWOGE Wohnungsbaugesellschaft expands its stake and closes a successful 2021 financial year
– Growth of the stock by 15% to currently reach approximately 73,500 residential units (as of January 2022)
– Issuance of three bonds to finance the expansion with a total volume of 1.7 billion euros at an average interest rate of 0.647%
– At EUR 180.5 million, FFO (Funds from operations) at the level of the previous year
– Adjusted EBIDTA of €216.1 million (2020: €213.5 million)
– Total investments of around 500 million euros
Berlin, April 28, 2022. The public company HOWOGE Wohnungsbaugesellschaft mbH published today its IFRS annual accounts for 2021 and can report another successful financial year. As General Manager of HOWOGE Ulrich Schiller explains: “The year 2021 was marked by growth. Overall, we built over 500 new apartments, which were later added to our portfolio, and also acquired nearly 9,000 apartments. We can thus record a growth of our assets of 15%. in 2021.” General Manager HOWOGE Thomas Felgenhauer adds: “To finance its growth course, HOWOGE has implemented a debt issuance program for the first time. The company’s excellent credit rating and the very successful issuance of our first three bonds, with which we established our access to capital markets, are important pillars to ensure that we can continue to implement this strategy. »
Successful operating result
The financial year which has just ended has also been crowned with success from a financial point of view. Despite a slight increase in expenses, HOWOGE was able to achieve an adjusted EBITDA of EUR 216.1 million (2020: EUR 213.5 million). Taking into account financial charges and income taxes in cash, the FFO of 180.5 million euros is at the level of the previous year. The company’s balance sheet total increased by 24% to 13.5 billion euros in the year under review. The main drivers of this increase were the result of the valuation of our holdings – an increase of approximately 671 million euros – and the acquisition and financing of approximately 8,500 residential and commercial units belonging to Deutsche Wohnen and Vonovia .
The loan-to-value (LTV) ratio was 18% as of December 31, 2021. Thanks to the financing measures of our latest acquisitions, it will decrease to less than 30%, thus providing additional growth margin in our target corridor. for an LTV of less than 50%.
Capital Structure and Capital Market Orientation
In 2021, HOWOGE has managed to diversify its capital structure and in doing so, put it on an even broader footing. As of December 31, 2021, 46% of financing consisted of traditional bank loans, 47% of corporate bonds and approximately 7% of subsidized loans. The average interest lock-in period is 10 years. In addition, during the year, the company was able to reduce the weighted average interest rate on its borrowings by nearly 50 basis points to around 1%.
The high quality of HOWOGE’s real estate portfolio as well as the economic strength and stability of the company were confirmed in 2021 by its first issuer credit rating. Rating agencies S&P Global Ratings and Fitch Ratings have assigned HOWOGE an issuer credit rating of A and AA-, respectively. Based on these ratings, the company was able to successfully issue its first corporate bonds for a volume of 1.7 billion euros. The transaction consisted of unsecured fixed rate tranches with maturities of 3, 7 and 12 years and an average interest rate of 0.647%. The issue met demand across Europe and was oversubscribed five times, a clear testament to the attractiveness and quality of HOWOGE’s portfolio. The proceeds of this operation were mainly intended to finance the portfolio acquired from Deutsche Wohnen and Vonovia. This transaction was finalized in January 2022.
Growth and portfolio
As of December 31, 2021, HOWOGE’s portfolio consisted of 65,131 residential units, 874 commercial units and 12,578 other units. At 1.25% as of December 31, 2021, the vacancy rate remains low. At EUR 6.25 per m², the average rent in 2021 was significantly below market rents. In accordance with its cooperation agreement with the State of Berlin, HOWOGE rents new and existing apartments according to set requirements for rent levels and is bound by a quota to allocate apartments to tenants with a certificate of eligibility. to public housing (Wohnberechtigungsschein). In line with its mission to provide affordable housing for the long term, HOWOGE expanded its portfolio in fiscal year 2021 by a total of 1,100 residential units – 600 through acquisitions and approximately 500 through new developments. new construction projects. At the same time, preparations were made for the acquisition and integration of 8,267 residential units and 233 commercial units from Deutsche Wohnen and Vonovia. The transfer of the risks and rewards of this transaction was completed on January 1, 2022. Taking into account the most recent acquisitions and completed new constructions, HOWOGE’s portfolio today consists of approximately 73,500 residential units, which makes it one of the largest housing companies in Germany. . Currently, the company has 91 construction projects involving over 14,100 apartments that are either under construction or in the detailed planning stage. This year alone, the construction of just under 1,700 apartments is expected to be completed in Berlin.
In 2021, HOWOGE invested approximately 500 million euros in repairs, renovations and new constructions.
Sustainability as the basis of our business strategy
HOWOGE also confirmed once again its ambitious goal of achieving a climate-neutral portfolio. To achieve this goal, HOWOGE plans to build new homes in the future that are as climate-neutral as possible. In its existing building stock, the company plans to systematically replace the primary energy source for heating and hot water as well as the energy source for electricity with alternatives. And the goal in all of this is to develop solutions for entire neighborhoods. For one area, for example, studies are underway on the recovery of heat from wastewater. In addition, the use of wind turbines or heat pumps in zero-energy homes powered exclusively by green electricity is on the agenda. Meanwhile, HOWOGE Wärme GmbH, a subsidiary of the company, operates 24 factories that use renewable forms of energy. In 2021 alone, this meant that it was possible to generate a total of 900 MWh of CO2-free electricity and thus save about 329 tonnes of CO2.
HOWOGE is very well positioned in the market and has created important prerequisites to be able to continue its growth systematically. At the same time, the key element of the company’s strategy is and remains its social responsibility. Accordingly, HOWOGE thinks in terms of entire neighborhoods and integrates social infrastructure, retail and commercial spaces, as well as future-oriented concepts of sustainability and mobility into the development of these neighborhoods. In 2021, the company invested around 2.5 million euros in social projects. In addition, HOWOGE’s charitable foundation, Stiftung Stadtkultur, contributes to the strengthening of social, intergenerational and intercultural exchange. As part of the Berlin school building campaign, HOWOGE is also supporting the construction of 19 new schools, up to 7 timber frame schools and the renovation of 13 schools (from April 2022). In 2021, the foundation stone was laid for the first new school building for 1,600 pupils. The building will house a high school and a community school on the same campus.
Outlook / Forecast
The main task of the 2022 financial year is to integrate the portfolio that HOWOGE has acquired. Beyond that, HOWOGE will be monitoring the market for possible acquisition opportunities. As part of its new construction strategy, HOWOGE will create around 1,700 apartments in 2022, providing accommodation for over 3,000 tenants. The company expects an FFO of approximately 186 million euros in its commercial activities.
HOWOGE Wohnungsbaugesellschaft mbH is one of six state-owned municipal housing companies in Berlin. With a housing portfolio of more than 73,500 apartments, the company is one of the largest landlords in Germany. In the medium to long term, HOWOGE intends to grow its housing portfolio to around 100,000 apartments, in particular through new construction. As part of the Berlin School Building Campaign, HOWOGE is also building and carrying out major school renovations for the State of Berlin.
“Designing a livable Berlin of tomorrow – more than just a place to live”
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To the extent that this announcement contains forward-looking statements, such statements do not represent facts and are characterized by the words “expect”, “believe”, “estimate”, “intend”, “aim”. , “assume” or similar expressions. These statements express the current intentions, opinions or expectations and assumptions of HOWOGE Wohnungsbaugesellschaft mbH and are based on current plans, estimates and forecasts which HOWOGE Wohnungsbaugesellschaft mbH has made to the best of its knowledge, but which do not claim to be correct in the future. . . Forward-looking statements are subject to risks and uncertainties that are difficult to predict and generally cannot be influenced by HOWOGE Wohnungsbaugesellschaft mbH. It should be kept in mind that actual events or developments may differ materially from those contained or expressed in such forward-looking statements.
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