Deutsche Wohnen (DWNI) Q2 2024 earnings summary

Executive summary

• Rental business saw strong demand, positive rent trends, and near-full occupancy, with a vacancy rate of 1.7% at H1 2024, down from 1.9% year-over-year.

• Real estate values appear to have bottomed out in Q2 2024, with higher transaction volumes and a successful sale of Care business portfolios.

• Adjusted EBITDA Total (continuing operations) was €324.9M, down 1.0% year-over-year; Adjusted EBT (continuing operations) rose 1.6% to €281.4M.

• Profit for the period improved to €-202.8M from €-1,391.1M year-over-year, mainly due to lower negative fair value adjustments.

• Annual General Meeting approved all agenda items, including a €0.04 per share dividend for 2023.

Financial highlights

• Rental segment revenue increased 2.6% year-over-year to €412.7M; organic rent growth reached 3.7%.

• Adjusted EBITDA Rental fell 3.3% to €314.2M; Value-add segment Adjusted EBITDA rose sharply to €8.0M from €1.8M.

• Adjusted EBITDA Recurring Sales was €1.0M, down 16.7% year-over-year; Development segment Adjusted EBITDA rose to €1.7M.

• Net income from fair value adjustments of investment properties was €-518.5M, a significant improvement from €-2,175.1M year-over-year.

• Operating Free Cash Flow more than tripled to €263.0M from €82.0M year-over-year.

Outlook and guidance

• Adjusted EBITDA Total for 2024 expected to be on par with the previous year; Adjusted EBT forecast slightly below prior year due to higher borrowing costs.

• NAV per share is expected to increase slightly, excluding further market-related property value changes.

• CO2 intensity of the portfolio is projected to decline slightly year-over-year.

• Construction and commodity price increases, high interest rates, and inflation are expected to continue impacting costs and market volatility.