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Solid capital structure: HOWOGE Wohnungsbaugesellschaft mbH continues to grow and to invest in achieving a climate-neutral portfolio
 

Berlin, 29 August 2022. HOWOGE Wohnungsbaugesellschaft mbH can look back on a successful first half of the year. As of 30 June 2022, the holdings of the state-owned company had grown to approximately 74,500 apartments and 1,100 commercial units as a result of both acquisitions and new builds. In comparison with the previous year, Funds from operations (FFO) increased from EUR 89.7 million to EUR 95.4 million. The loan-to-value ratio (LTV) of 27.2 % and a solid capital structure enable the company to continue both to grow and to invest in its holdings despite the profound changes to general business conditions as a result of the prevailing geopolitical circumstances. As HOWOGE managing director Ulrich Schiller explains, “The market is changing rapidly at the moment. Rising construction costs, the current policy on interest rates, inflation and the energy crisis are not just having an impact on us as a company but also on our tenants. We intend to face these challenges together by, for example, adjusting advance payments for operating costs and actively saving energy. At the same time, we are in dialogue with our building partners to find ways in which we can continue to pursue our new-build targets despite rising construction and financing costs.” HOWOGE managing director Thomas Felgenhauer adds, “HOWOGE is in a very stable financial situation. The rise in FFO, EBITDA, and a solid LTV clearly show that we have positioned the company well and can hold our own even in a difficult economic environment.”
 

Financial development

The financial results from the first half of 2022 were positive. As a result of our larger portfolio of apartments, rental and lease revenue rose by 20 % to EUR 184.4 million (H1 2021: EUR 153.4 million). Despite increased expenditure due to acquisitions, HOWOGE was able to achieve an adjusted EBITDA of EUR 120.3 million (H1 2021: EUR 106.4 million). The cash item interest expenses rose due to acquisitions to approximately EUR 21 million (H1 2021: EUR 14.6 million). Taking into account income taxes payable, the FFO of EUR 95.4 million represents an increase of around 6 %. The valuation of our holdings confirmed the fair value of the portfolio to be EUR 13.6 billion. Due to this higher value, the LTV was approximately 27 % as of 30 June 2022 and so is comfortably within the target corridor of under 50 %.

Thomas Felgenhauer: “HOWOGE has a solid capital structure with a balanced maturity profile. In other words, there is no major refinancing due in the short term.” The first-class creditworthiness of HOWOGE was confirmed just recently by the rating agencies S&P (A) and Fitch (AA-), both of which attested to HOWOGE a stable outlook.
 

Growth and portfolio development

As a result of acquisitions and new builds, the total holdings of HOWOGE have risen from 65,131 apartments and 874 commercial units (reporting date: 31 December 2021) to 74,493 residential and 1,140 commercial units (reporting date: 30 June 2022). A key factor in this increase was the acquisition in 2021 of around 8,300 apartments and more than 200 commercial units from Deutsche Wohnen and Vonovia. This transaction was completed in January 2022. In addition to this acquisition, HOWOGE expanded its holdings by completing 734 new-build apartments. A particular flagship project was LIESE, a 22-floor residential tower block with 394 apartments in Frankfurter Allee in which 50 % of the apartments are let at subsidised rents. HOWOGE is planning to build its first ever wind farm on the roof of the building. Ulrich Schiller: “The current situation demands that we should work with greater intensity to drive the expansion of alternative energy generation. This is very much part of our DNA as a state-owned company. Against this background, we will continue to systematically develop solar energy in our holdings and to maintain our commitment to achieving a climate-neutral portfolio.”

At 1.6 % as of 30 June 2022, the vacancy rate continued to be low, and the average rent of EUR 6.37 per square metre was significantly below market rents. The slight increase in average rents of 1.6 % compared with the end of the previous year results on the one hand from the adjustment of rents to their previous level prior to the Berlin rent freeze and on the other hand from the addition of acquisitions to our holdings. Following the growth of our portfolio, staff levels at HOWOGE have increased to just under 1,000 employees.
 

Outlook

HOWOGE is very much on course to create a total of approximately 1,700 climate-friendly new-build apartments in Berlin with socially responsible rents by the end of the year. This means that the overall size of our portfolio will rise to approximately 75,500 apartments. At the same time, HOWOGE continues to look out for any opportunities on the market to make acquisitions. After a successful half-year, HOWOGE can confirm its forecast and anticipates an FFO of around EUR 200 million for the financial year 2022.

HOWOGE

HOWOGE Wohnungsbaugesellschaft mbH is one of the six publicly owned housing companies belonging to the State of Berlin. With a housing portfolio of approximately 74,500 apartments, the company is one of the largest landlords in Germany. In the medium to long term, HOWOGE intends to expand its housing portfolio, particularly through new builds, to around 100,000 apartments. As part of the Berlin school building campaign, HOWOGE is also taking on for the State of Berlin the refurbishment of existing schools and the building of new ones.

“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.