Annual Report 2017
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Annual Report 2017 Creating today the city of tomorrow Deutsche Wohnen is one of the leading publicly listed property companies in Germany and Europe with a business focus on managing and developing its portfolio, which consists mainly of residential properties. We profit from a vivid market development and the continously high demand for residential properties. The current portfolio comprise approximately 163,000 residential and commericial units with a total value of EUR 18.9 billion. Group key figures of the Deutsche Wohnen SE Profit and loss statement 2017 2016 Change Rental income EUR m 744.2 704.5 5.6% Earnings from Residential Property Management EUR m 612.8 586.4 4.5% Earnings from Disposals EUR m 50.3 54.3 –7.4% Earnings from Nursing ans Assisted Living EUR m 48.0 16.8 185.7% Corporate expenses EUR m –81.3 –73.7 10.3% EBITDA EUR m 600.8 575.1 4.5% EBT (adjusted) EUR m 501.7 453.7 10.6% EBT (as reported) EUR m 2,598.2 2,489.2 4.4% Group profit after taxes EUR m 1,763.3 1,623.2 8.6% Group profit after taxes¹ EUR per share 4.88 4.69 3.9% FFO I EUR m 432.3 383.9 12.6% FFO I (undiluted)¹ EUR per share 1.23 1.14 7.9% FFO I (diluted)² EUR per share 1.23 1.04 18.3% FFO II EUR m 482.6 438.2 10.1% FFO II (undiluted)¹ EUR per share 1.37 1.30 5.4% FFO II (diluted)² EUR per share 1.37 1.18 16.1% EPRA earnings EUR m 394.5 359.5 9.7% 31/12/2017 31/12/2016 Change Balance sheet Investment properties EUR m 19,628.4 16,005.1 3,623.3 Current assets EUR m 772.9 669.2 103.7 Equity EUR m 10,211.0 8,234.0 1,977.0 Net financial liabilities EUR m 6,883.6 6,185.2 698.4 Loan-to-value ratio (LTV) in % 34.5 37.7 –3.2 Total assets EUR m 20,539.4 16,783.6 3,755.8 Share Share price (closing price) EUR per share 36.46 29.84 22.2% Number of shares m 354.67 337.48 17.19 Market capitalisation EUR bn 12.9 10.1 27.7% Net Asset Value (NAV) EPRA NAV (undiluted) EUR m 12,676.8 10,017.0 2,659.8 EPRA NAV (undiluted) EUR per share 35.74 29.68 20.4% EPRA NAV (diluted) EUR per share 35.74 29.69 20.4% Fair values Fair value of real estate property³ EUR m 18,864 15,465 3,399.0 Fair value per sqm residential and commercial area³ EUR per sqm 1,886 1,580 19.4% 1 Based on average number around 352.12 million issued shares in 2017 and around 337.45 million in 2016 2 Based on average number around 352.12 million issued shares in 2017 and around 370.81 million in 2016, assuming in each case a conversion of the convertible bonds in the money. 3 Only comprises residential and commercial buildings, without Nursing and Assisted Living Kiel Lübeck Berlin Brunswick Hanover Potsdam Magdeburg Halle Dusseldorf Dresden Leipzig Cologne Erfurt Bonn Overview of our portfolio Wiesbaden Frankfurt/Main – 18.9 billion EUR portfolio value Mainz – 163,000 residential and commercial units Ludwigshafen – 71% in Berlin Mannheim CORE+ 87% Dynamic markets with strong rental growth CORE 12% Markets with moderately rising rents Architectual Our focus Shaping the metropolis culture for p. 5 urban living Our stance Thinking in terms of opportunity p. 13 Creating Our responsibility Bridging the today generation gap p. 25 the city of tomorrow Deutsche Wohnen is one of the leading real estate companies GERMANY within Germany and Europe. IS CHANGING, Our focus is on the manage AND WE ARE ment and development of our real estate holdings, which are CHANGING WITH IT. primarily located in German metro politan areas. Our port folio currently comprises more than 163,000 residential and commer cial units with a + 40,000 total value of approximately is the annual net EUR 18.9 billion – 70% of which increase in the number are located in the Grea ter of inhabitants in Berlin Berlin region. + 4 million additional inhabitants, or approximately 85 million in total, will live in Germany by 2030 1/4 of all German citizens will be over the age of 66 by 2040 Form follows function: In the 1920s, the architect Bruno Taut developed a new type of window for kitchen spaces – a tiny detail offering a world of possibilities, and one which is also reflected in the layout of our new magazine. CONTENTS 2 Editorial 5 Shaping the metropolis 6 Beholden to the spirit of Berlin Modernism 8 Living in Germany: The trend towards greater urbanisation continues 10 Making large investments with great attention to detail 13 Thinking in terms of opportunity 14 Krampnitz – more than just new housing 18 Responding to the needs of our tenants 20 Housing – a brave new world 23 The key to a whole new living experience 25 Bridging the generation gap 26 A convivial home, a well-kept home – not just a nursing home 28 Bringing new life to a historic building 30 Responsibility and profitability 32 Generations talking 2 Creating today the city of tomorrow. There is a shortage of housing in Germany! The areas most affected by this shortage are those which draw the great- est number of newcomers: the country’s metropolitan areas and conurba- tions, which at the same time are the areas with a sound economy and ready capital. So, why is too little housing being built? The reason for this is a failure on the part of the government to create the necessary conditions. Ever more con straints, on the one hand, and demand for fast and cheap construction, on the other hand, are mutually exclusive factors. One number says it all: 40 percent of the costs incurred in connec- tion with the construction of new builds are due to speci fi cations imposed by the federal government, the federal states and local authorities! 3 And it is not enough to simply make existing building However, we also feel called upon to rise to a number structures available. Some fundamental issues are of new challenges, particularly those presented by in need of resolution. How should we use the finite the younger generation, with its desire to experience space available in these locations? How should we “intelligent” housing, or so-called smart homes. Our respond to demographic change? Or – how should we digital flat-share represents a practical experiment in manage energy consumption sensibly? In short, it is this regard: Students in Kreuzberg are experiencing concepts for the provision of housing in the cities of tomorrow’s way of living in the here-and-now and tomorrow which drive us forward today. We are in the in the process evaluating the smart home solutions process of developing and realising these concepts, to which are available on the market. In addition to which end Deutsche Wohnen also works closely with setting up this “living lab”, we have also developed a academics, administrators, architects and industry. In smart home solution of our very own this past year, the past three years, we have invested approximately which will be installed in an initial 3,000 residential € 780 million in our existing holdings. New residential units this coming year with a view to lowering the units will be built in the Greater Berlin region, Frank- energy consumption of those properties. On the other furt / Main, Leipzig and Dresden in the following years. hand, an ageing population means greater demand in another market – namely housing for the elderly – Our economic success is contingent upon our having and we are expanding the range of services we offer satisfied tenants who are happy to live in our proper- in this area accordingly. ties. Our goal is to provide them with modern residen- tial units offering high standards and backed up by In all of our endeavours, we are fortunate to have the good service. Our employees work to achieve this support of employees who are committed to doing every day. However, sometimes things still do not go their very best in carrying out work that they are exactly as we would wish, and we strive to learn from en thusiastic about here at Deutsche Wohnen. They these experiences so as to be able to better handle are not only crucial to our economic success – they such situations in the future. Our efforts in this regard are also a reflection of our society as a whole. At are very much appreciated by our tenants, most of Deutsche Wohnen, individuals with long-standing whom feel comfortable in their home environment, as experience in the housing sector work side-by-side is evidenced by the results of our first tenant survey. with enthusiastic newcomers just starting out along Such positive feedback motivates us to continue along their career path. You can read more about this on our chosen path while constantly making impro- page 32. vements where we can. I hope you find this issue a stimulating read! Kind regards, Michael Zahn Chief Executive Officer of Deutsche Wohnen SE 4 Deutsche Wohnen is a major player in the German housing sector. While Berlin, where approximately 114,000 of our resi- dential units are located, is one of our most impor tant locations, it is by no means the only one.