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HOWOGE Wohnungsbaugesellschaft mbH: positive operational results for first half-year 2023 – investments in new builds, climate protection and the development of existing holdings

Berlin, 28^th August 2023. HOWOGE Wohnungsbaugesellschaft mbH can look back on a successful first half of the year. The municipal housing company continues to expand, and in the first half-year 2023 it increased its portfolio to approximately 75,650 units by completing more than 200 new-build apartments. By the end of the year, it is planned to complete a further 1,000 new-build apartments. The company’s operating result also shows an increase. FFO (Funds from Operations) was at EUR 101.2 million - an increase of around six per cent compared with the previous year. As of 30^th June 2023, the loan-to-value ratio (LTV) was at approximately 31 per cent. As HOWOGE managing director Ulrich Schiller explains, “We continue to operate in difficult market conditions. However, our commercial strength enables us to continue on our chosen course, focusing in particular on the creation of affordable housing and the achievement of our climate protection goals. At the same time, we are broadening the scope of our operations. Accordingly, having founded our cleaning services subsidiary HOWOGE Reinigung GmbH, we have begun to take direct responsibility for cleaning the buildings in our portfolio.” HOWOGE managing director Katharina Greis adds, “Our sound capital structure provides the foundation for us to be able to hold our own in the current macroeconomic environment. This is also shown by the recent confirmation of our rating.”

Financial development

In the first half-year of 2023, HOWOGE posted a positive operating result. Due to the growth in our portfolio from new builds, earnings from lettings and leasing rose by four per cent to EUR 191.9 million (H1 2022: EUR 184.4 million). The adjusted EBITDA was EUR 131.8 million (H1 2022: EUR 120.3 million). Taking into account the cash item interest expenses and income as well as taxes on earnings, the resulting FFO of EUR 101.2 million represented an increase of approximately six per cent.

Despite the downward adjustment of eight per cent in the value of our portfolio in the first half-year of 2023 following their valuation, the LTV, at 31 per cent, is significantly within the scope of our target corridor of under 50 per cent.

HOWOGE has a sound capital structure with a balanced credit line profile. Moreover, the rating agencies S&P (A) and Fitch (AA-) confirmed the first-class creditworthiness of HOWOGE just recently - with both agencies attesting a stable outlook. As Katharina Greis explains, “HOWOGE expanded its diversified portfolio of financial instruments by adding a Social Finance Framework in July 2023. This now makes it possible for HOWOGE to issue social bonds. Having recourse to a broad range of financing instruments, we can react flexibly to purchasing opportunities and, at the same time, invest actively in new builds as well as our existing portfolio.” In August, we published our . This policy statement reinforces the values that are self-evident for HOWOGE. At the same time, our municipal company is making a binding commitment to its employees and society that it will observe human rights.

Growth and portfolio development

As of 30^th June 2023, HOWOGE held 75,650 apartments and 1,137 commercial units in its portfolio and employed 1,037 staff. At 1.1 per cent as of 30^th June 2023, the vacancy rate - based on floor space - continued to be low whilst the average net cold rent (rent excluding operating costs) of the residential units of EUR 6.42 per square metre was significantly lower than market rents.

HOWOGE is one of the largest housing companies and project developers in Germany. Despite the difficult market conditions, the state-owned company succeeded in building 231 new apartments in the first half-year. According to current plans, a total of approximately 1,200 new apartments with socially responsible rents will have been completed in Berlin by the end of the year.

In addition, as part of Berlin’s school building campaign, HOWOGE is taking on for the State of Berlin in particular the building of new secondary schools and the fundamental refurbishment of existing schools. In the first half-year of 2023, the foundation stone for a grammar school in Marzahn-Hellersdorf with places for around 830 pupils was laid. This means that currently there are four schools under construction offering total places for more than 3,000 pupils. In autumn, construction work will start on a further school for around 1,300 pupils.

Alongside the building of new apartments and social infrastructure, an important goal for our company is to achieve climate neutrality in all of its holdings. As Ulrich Schiller says, “In May, we significantly expanded our development plans for solar energy. In ten years at the latest there will be a solar plant producing green electricity for our tenants on every suitable roof at HOWOGE. To this end, we are investing EUR 71 million.” Even today, HOWOGE supplies around 3,800 tenant households with electricity from the roof of their apartment building. And this year will see the launch of a pilot project for supplying climate-neutral heating and hot water in existing holdings. Finally, electricity-only buildings, in which heating and hot water will be supplied exclusively using electricity, are currently being planned.

As well as the supply of HOWOGE’s holdings with heating and hot water and the provision of ancillary services (concierge, janitors and neighbourhood support services), facility cleaning will increasingly be carried out from within the HOWOGE group of companies. In July 2023, HOWOGE Reinigung GmbH went into business and will initially take on the cleaning work for 19,000 apartments within our portfolio. By 2025, it is intended to expand these cleaning services to cover all of our holdings.

Outlook

HOWOGE is continuing on its growth course. By the end of the year, the total holdings will probably consist of more than 76,000 apartments. Moreover, the acquisition of residential holdings remains part of HOWOGE’s growth strategy. After a successful first six months this year, HOWOGE can confirm its forecast for its business operations and continues to anticipate an FFO of EUR 180 to 200 million for 2023.

About HOWOGE

HOWOGE Wohnungsbaugesellschaft mbH is one of the six publicly owned housing companies belonging to the State of Berlin. With a housing portfolio of 75,650 apartments (as of 30^th June 2023), 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.

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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.