News

Interim result as at 30 September 2016
Deutsche Wohnen achieves significant increase in profitability and raises its forecast for 2016 once again

• Increase in FFO I by 32 % to more than EUR 300 million
• Increase of at least EUR 2.2 billion in value of portfolio expected for 2016
• Investment programme, including new construction, expanded to EUR 1.5 billion
• EPRA NAV forecast raised to approximately EUR 30 per share for 2016

Frankfurt am Main / Berlin, 15 November 2016. In the first nine months of the financial year 2016, Deutsche Wohnen performed strongly once again and generated a group profit of EUR 638.4 million (previous year: EUR 521.7 million). FFO I (Funds from Operations: operating result after current interest and taxes) rose in comparison to the previous year by approximately 32 % to EUR 301.4 million (previous year: EUR 228.7 million). FFO I per share rose by 22 % to EUR 0.89. FFO II, which includes earnings from disposals, improved by 20 % to EUR 347.8 million (previous year: EUR 289.5 million) and per share by approximately 12 % to EUR 1.03.

EPRA NAV (undiluted) increased by around 9 % to EUR 25.10 per share (31 December 2015: EUR 23.01 per share). The Loan-to-Value (LTV) ratio of the group was 41.7 % as at the reporting date (31 December 2015: 38.0 %).

Increase in value clear evidence of continued market dynamics

The positive development in the value of the property portfolio is supported by the continued buoyancy of the housing market. As Philip Grosse, CFO of Deutsche Wohnen AG, points out, "Current transactions, especially on the Berlin residential property market, regularly achieve prices that are significantly higher than the valuation we have given to comparable properties in our portfolio. For this reason, we are expecting the revaluation of our portfolio to represent an increase in value of EUR 2.2 billion for the whole of 2016. This figure includes the valuation gain of EUR 0.7 billion which we already realized as at 30 June 2016."

Investment programme expanded significantly

In order to further enhance the quality of our property portfolio, the existing investment programme of EUR 400 million has been expanded to EUR 1.0 billion. By 2021, Deutsche Wohnen plans to invest in approximately 30,000 flats with above-average future prospects. In addition, a redensification and new construction programme of just under EUR 0.5 billion has been agreed, so that we can use existing land reserves efficiently and create approximately 2,200 flats within the next four years.

As Michael Zahn, CEO of Deutsche Wohnen AG, explains, "Berlin is just at the beginning of its development towards becoming a successful, international metropolis. But this also comes with enormous challenges, which we are actively seeking to address. We intend to make significant investments in our portfolio, especially in Berlin, in order to be able to provide contemporary flats for an urban population. In doing so, we plan to work in a spirit of partnership with the relevant local authorities and to set high standards of quality in terms of both architecture and urban design. In all of this, our guiding principle is not short-term profit but sustainable investment and value creation."

Clear increase in operating results

As at 30 September 2016, the portfolio of Deutsche Wohnen AG comprised approximately 160,000 residential and commercial units with a fair value of approximately EUR 13.5 billion. The average in-place rent of the entire portfolio was EUR 6.05 per sqm as at 30 September 2016, with a vacancy rate of 1.8 %. On a like-for-like basis, Deutsche Wohnen generated rental growth of 3.2 % in the core and growth regions compared with the previous year. Moreover, the vacancy rate in these regions fell from 1.7 % to 1.5 %.

In the first nine months of the financial year 2016, rental income rose to EUR 526.1 million (previous year: EUR 473.1 million), leading to an operating result (Net Operating Income - NOI) of EUR 414.6 million (previous year: EUR 360.3 million). Accordingly, the NOI margin increased from 76.2 % to 78.8 %. The adjusted EBITDA (without disposals) improved by 19 % to EUR 405 million (previous year: EUR 341.4 million). The rise in rental income contributed to this result, as did further efficiency gains in business operations and a reduction in administrative costs. The EBITDA margin, adjusted for disposals, rose by just under 5 percentage points from 72.2 % to 77.0 %.

The sale of 3,605 units (previous year: 8,430) resulted in earnings from disposals of EUR 46.4 million (previous year: 60.8 million). The lower amount of block disposals led to an increase in the gross margin from an average of 15 % to 22 %. With an occupancy rate of almost 99 %, the segment Nursing and Assisted Living was able to contribute earnings of EUR 13.7 million (previous year: EUR 12.0 million).

Outlook

For the financial year 2016, Deutsche Wohnen is confirming its forecast of FFO I of at least EUR 380 million. This would mean a dividend of approximately EUR 0.73 per share, an increase of around 35 % compared to the previous year. Without special effects, and assuming that overall conditions remain the same, Deutsche Wohnen is anticipating an EPRA NAV of around EUR 30 per share for 2016 following the revaluation of its portfolio. This represents an increase of around 30 % compared with 31 December 2015. The LTV ratio will fall to below 40% by the end of the year.

Deutsche Wohnen

Deutsche Wohnen is one of the largest publicly listed residential property companies in Germany and Europe with a business focus on managing and developing its mainly residential property portfolio. As at 30 September 2016, the portfolio comprised a total of 160,474 units, of which 158,274 were residential and 2,200 commercial. Deutsche Wohnen is listed in the Deutsche Börse's MDAX and is also included in the leading indices EPRA/NAREIT, STOXX^(R) Europe 600 and GPR 15.

Important information

This publication constitutes neither an offer of sale nor an invitation to purchase securities.

To the extent that this document contains any forward-looking statements, these are not to be understood as statements of fact and are characterised by the use of the words "will", "expect", "believe", "estimate", "intend", "aim", "assume" and similar expressions. These statements are an expression of the intentions, views or current expectations and assumptions of Deutsche Wohnen and those individuals acting in concert with it. These forward-looking statements are based on current plans, estimates and forecasts that have been generated by Deutsche Wohnen and the individuals acting in concert with it to the best of their knowledge; however, they do not constitute a guarantee of the accuracy of those plans, estimates and forecasts in future contexts. Forward-looking statements are subject to risks and uncertainties, which can usually only be predicted with some difficulty and generally fall outside of the sphere of influence of Deutsche Wohnen or the individuals acting in concert with it. It should be kept in mind that actual events or consequences may deviate significantly from those indicated or contained in such forward-looking statements.