NOT FOR PUBLICATION, DISTRIBUTION OR FORWARDING, EITHER DIRECTLY OR INDIRECTLY, IN OR TO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION OR PUBLICATION WOULD BE UNLAWFUL.

Solid growth course: HOWOGE Wohnungsbaugesellschaft expands its holdings and completes a successful financial year 2021

- Growth of holdings by 15% to currently around 73,500 residential units (as of January 2022)

- Issue of three bonds to finance expansion with a total volume of EUR 1.7 billion at an average interest rate of 0.647 %

- At EUR 180.5 million, FFO (Funds from operations) at level of previous year

- Adjusted EBIDTA of EUR 216.1 million (2020: EUR 213.5 million)

- Total investments of approximately EUR 500 million

Berlin, 28 April 2022. The state-owned HOWOGE Wohnungsbaugesellschaft mbH published its IFRS annual statement of accounts for 2021 today and can report another successful financial year. As HOWOGE managing director Ulrich Schiller explains, "The year 2021 was characterised by growth. Overall, we built more than 500 new apartments, which were then added to our portfolio, and acquired almost 9,000 apartments as well. Accordingly, we can report growth in our holdings of 15 per cent in 2021." HOWOGE managing director Thomas Felgenhauer adds, "To finance its course of growth, HOWOGE set up a debt issuance programme for the first time. The company's excellent credit rating and the very successful issue of our first three bonds, with which we established our access to the capital markets, are important pillars in ensuring that we can continue to implement this strategy."

Successful operating result
The business year just completed was equally successful financially. 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 expenditure and cash taxes on earnings, the FFO of EUR 180.5 million was at the level of the previous year. The company's total assets increased by 24 % to EUR 13.5 billion in the reporting year. The key drivers for this increase were the outcome of the valuation of our holdings - an increase of around EUR 671 million - and the acquisition and financing of approximately 8,500 residential and commercial units belonging to Deutsche Wohnen and Vonovia.

The loan-to-value ratio (LTV) was 18 % as of 31 December 2021. As a result of the financing measures for our most recent acquisitions, it will rise to under 30 %, thus providing scope for further growth within our target corridor for LTV of below 50 %.

Capital structure and capital market orientation
In 2021, HOWOGE succeeded in diversifying its capital structure and, in so doing, placing it on even broader foundations. As of 31 December 2021, 46 % of financing consisted of classic bank loans, 47 % of corporate bonds and around 7 % of subsidized loans. The average lock-in period for interest is 10 years. Moreover, in the course of the year, the company was able to reduce the weighted average interest rate on its loans by almost 50 basis points to approximately 1 %.

The high quality of HOWOGE's property portfolio and the company's economic strength and stability were confirmed in 2021 by its first issuer credit rating. The rating agencies S&P Global Ratings and Fitch Ratings gave 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 with a volume of EUR 1.7 billion. The transaction consisted of unsecured, fixed-interest tranches with maturities of 3, 7 and 12 years and an average interest rate of 0.647 %. The issuance met with demand throughout Europe and was oversubscribed fivefold, which is clear evidence of the attractiveness and quality of HOWOGE's portfolio. The proceeds from this transaction were earmarked primarily for the financing of the acquired portfolio from Deutsche Wohnen and Vonovia. This transaction was completed in January 2022.

Growth and portfolio
As of 31 December 2021, HOWOGE's portfolio consisted of 65,131 residential units, 874 commercial units and 12,578 other units. At 1.25 % as of 31 December 2021, the vacancy rate remained low. At EUR 6.25 per sqm, the average rent in 2021 was significantly below market rents. Pursuant to its cooperation agreement with the State of Berlin, HOWOGE lets new-build and existing apartments according to fixed requirements with regard to rent levels and is bound by a quota for allocating apartments to tenants with a certificate of eligibility for public housing (Wohnberechtigungsschein). In line with its mission to ensure affordable housing over the long term, HOWOGE expanded its portfolio in the financial year 2021 by a total of 1,100 residential units - 600 through acquisitions and around 500 by completing new-build 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 risks and rewards for this transaction was completed as of 1 January 2022. Taking into consideration the most recent acquisitions and completed new-builds, HOWOGE's portfolio consists of approximately 73,500 residential units today, making it one of the largest housing companies in Germany. Currently, the company has 91 building projects involving more than 14,100 apartments that are either under construction or at the detailed planning stage. In this year alone, it is expected that the construction of just under 1,700 apartments will be completed in Berlin.
In 2021, HOWOGE invested approximately EUR 500 million in repairs, refurbishment and new builds.

Sustainability as the basis of our business strategy

HOWOGE has also once again confirmed its ambitious goal of achieving climate-neutral portfolio. To achieve this goal, HOWOGE is planning to build new housing in future that is as climate-neutral as possible. In its existing housing stock, the company plans to systematically replace the primary energy source for heating and hot water and also the energy source for electricity with alternatives. And the aim in all of this is to develop solutions for entire neighbourhoods. For one estate, for example, there are studies underway into heat recovery from waste water. Moreover, the use of wind turbines or heat pumps in zero-energy housing that is supplied exclusively with green electricity is on the agenda. In the meantime, HOWOGE Wärme GmbH, a subsidiary of the company, is operating 24 plants 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 thereby to save around 329 tons of CO₂.

HOWOGE is very well positioned in the market and has created important preconditions for being able to systematically continue its course of growth. 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 neighbourhoods and integrates social infrastructure, retail and commercial spaces, and forward-looking sustainability and mobility concepts into the development of these neighbourhoods. In 2021, the company invested around EUR 2.5 million in social projects. In addition, HOWOGE's charitable foundation Stiftung Stadtkultur is making a contribution to strengthening social, intergenerational and intercultural exchange. As part of Berlin's school building campaign, HOWOGE is also taking on for the State of Berlin the building of 19 new schools, up to 7 timber-frame schools and the refurbishment of 13 schools (as of April 2022). In 2021, the foundation stone was laid for the first new school building for 1,600 pupils. The building will accommodate a grammar school and community school on one campus.

Outlook / Forecast

The key task in the financial year 2022 is to integrate the portfolio that HOWOGE has acquired. Beyond this, HOWOGE will monitor the market with regard to possible acquisition opportunities. As part of its new-build strategy, HOWOGE will create around 1,700 apartments in 2022, providing a home for more than 3,000 tenants. The company anticipates an FFO of around EUR 186 million in its business operations.

HOWOGE

HOWOGE Wohnungsbaugesellschaft mbH is one of six municipal housing companies owned by the State of Berlin. With a housing portfolio of more than 73,500 apartments, the company is one of Germany's largest landlords. 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 Berlin's school building campaign, HOWOGE is also building and carrying out major school refurbishments for the State of Berlin.

"Designing a liveable Berlin of tomorrow - more than just a place to live"

Important notice:

This publication is neither an offer to sell nor a solicitation to buy securities.

To the extent that this announcement contains forward-looking statements, such statements do not represent facts and are characterised by the words "expect", "believe", "estimate", "intend", "aim", "assume" or similar expressions. Such statements express the intentions, opinions or current 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 usually cannot be influenced by HOWOGE Wohnungsbaugesellschaft mbH. It should be kept in mind that the actual events or developments may differ materially from those contained in or expressed by such forward-looking statements.