solid corporate growth with positive operating results

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HOWOGE Wohnungsbaugesellschaft mbH: solid corporate growth with positive operating results

Berlin, 28^th April 2025. Today, HOWOGE Wohnungsbaugesellschaft mbH has published its IFRS consolidated annual report for 2024. Despite the ongoing challenges in the market, the publicly owned housing company completed the year with a positive consolidated result and continues to grow consistently. Accordingly, HOWOGE expanded its holdings last year through acquisitions and new builds by around 5,200 rental apartments to more than 81,600 residential units (as of 1^st January 2025). Taking into account the cash items net interest expenses and taxes on earnings, FFO (Funds from Operations) for the residential segment was around EUR 208 million. The loan-to-value ratio (LTV) for the residential segment was approximately 29 per cent (as of 31^st December 2024).

As managing director of HOWOGE Ulrich Schiller explains, “Whilst the market environment stabilised in 2024, there continues to be uncertainty regarding the development of real estate prices and interest rates due to the significantly increased investment plans of the federal government and escalating global trade conflicts. In 2024 alone, the population of Berlin grew by around 19,000. At the same time, planning permission and building completion figures are falling. This is creating additional demand in the market, especially for housing for low-to-middle-income households. The fact that we are able to continue to grow against this background is made possible by our very good operating result and our solid financial basis.”

Katharina Greis, managing director of HOWOGE: “Growth over the long term is only possible if it is based on a sound financing structure. For this reason, it is especially important in the case of a social business model to keep a close eye on the issue of economic viability and to be able to react flexibly with regard to financing. In addition to classical secured loans, HOWOGE also made use, for example, of a framework agreement with the Council of Europe Development Bank (CEB) and issued a Social Bond to enable it to invest in the creation and maintenance of social housing.”

Business development in the financial year 2024

HOWOGE can look back on a financial year with a positive operating result. Due to the growth in the company’s holdings and its new-build activities, income from lettings and leases grew by 4.8 per cent to EUR 403.8 million.

Despite increasing costs for maintenance and personnel, for example, the company succeeded in increasing its adjusted EBITDA to EUR 276.8 million (2023: EUR 257.2 million). After a market-related negative result arising from the valuation of its portfolio led to an annual shortfall in 2023, HOWOGE achieved a positive consolidated result of EUR 140 million in 2024. The loan-to-value ratio (LTV) for the residential segment was approximately 29 per cent as of 31^st December 2024 and so was significantly below the company’s self-imposed hurdle of 50 per cent.

The fair value of the HOWOGE portfolio, including building plots and school construction, was approximately EUR 13.1 billion as of 31^st December 2024.

To ensure its financial independence and defensive risk profile, HOWOGE has a long-term, diversified financing structure. For example, in the financial year 2024 HOWOGE successfully issued a Social Bond for the first time with a volume of EUR 300 million and a term of six years. The revenue raised was used to finance some of HOWOGE’s acquisitions.

Through its Debt Issuance Programme (DIP) with a total volume of EUR 4 billion, HOWOGE is also able to issue further corporate bonds at short notice.

The weighted average interest on all financial liabilities of HOWOGE was, at 1.7 per cent as of 31^st December 2024, significantly below current market interest rates. The average residual term of these financial liabilities was approximately eight years as of the reporting date.

The issuer rating of the company was also confirmed in 2024 as having a stable outlook by the two international rating agencies Fitch (AA-) and Standard & Poor’s (A). These ratings reflect the very good creditworthiness of HOWOGE.
 

Acquisitions and new builds

In 2024, HOWOGE carried out transactions with an overall volume of approximately EUR 1.4 billion. The largest transaction involved PRIMA Wohnbauten Privatisierungs-Management GmbH with around 4,500 apartments and the Stadtentwicklungsgesellschaft Busch mbH (SEG Buch) with building land reserves for approximately 1,200 residential units. With a volume of around EUR 700 million, this acquisition was the largest transaction in the German market in 2024.

In addition, the company acquired three new-build projects through forward deals, including the project Konnekt/Georg-Knorr-Park in Berlin-Marzahn with approximately 1,700 apartments.

As of 31^st December 2024, the holdings of HOWOGE consisted of approximately 77,100 apartments and around 1,150 commercial units. With the transfer of the PRIMA portfolio as of 1^st January 2025, HOWOGE’s portfolio has now grown to more than 81,600 residential units.

Despite the challenging market environment with high construction costs and volatile interest rates, HOWOGE built 670 new residential units in 2024. For the current financial year, the completion of around 900 apartments is planned.

Portfolio development and company growth

As of 31^st December 2024, the vacancy rate (based on floor space) of the entire residential portfolio continued, at 1.5 per cent, to be at a low level. At EUR 6.69 per square metre, the annual average rent also continued to be significantly below market rents. Following the adjustment to the cooperation agreement with the State of Berlin, there were moderate rent increases in HOWOGE’s holdings in 2024.

During 2024, 64.6 per cent of new lettings went to persons with a certificate of eligibility for public housing.

In 2024, HOWOGE invested a total of EUR 360 million in repairs, refurbishment and new builds. Of this sum, around EUR 108 million was invested in the maintenance and refurbishment of the existing portfolio.

As a public housing company, HOWOGE also has a clear focus on social engagement in its estates. In total, 141 initiatives and projects (2023: 134 initiatives and projects) were given financial support in 2024. Together with its expenditure on its own projects and participations in partner projects, HOWOGE’s support for social engagement amounted to approximately EUR 2.8 million in 2024 (2023: EUR 2.2 million).

HOWOGE also plays an active role as a partner in Berlin’s school building campaign. Currently, it is planned to build 27 new schools and to refurbish eleven school campuses. As of 31^st December 2024, seven schools were under construction. In 2024, two schools in the Allee der Kosmonauten were successfully completed and handed over to the borough of Lichtenberg. The completion of two further schools is planned for 2025.

Staff levels at HOWOGE rose by around 26 per cent in 2024 to approximately 1,400 persons. The particular reason for this increase was the acquisition of ATOZ Facility Solutions GmbH. In 2024, HOWOGE acquired this company with around 170 staff members as part of its in-house service strategy. With the founding of its subsidiary HOWOGE Reinigung GmbH in the summer of 2023, HOWOGE had started to provide facility management services in-house, which it had previously awarded to external providers.

Sustainability reporting

HOWOGE’s sustainability reporting was carried out for the first time this year in complete compliance with the Corporate Sustainability Reporting Directive (CSRD) and is integrated into the group management report of the IFRS consolidated financial statement. This means that HOWOGE is meeting the highest European standards in this area.

The implementation of the climate strategy, which was developed in 2023, is a key element of HOWOGE’s sustainability management. The goal is to achieve CO₂ emissions per square metre of below three kilograms per year and, therefore, climate neutrality by 2045. The current CO₂ emissions per square metre per year are 15.49 kilograms (2024), and the energy intensity without climate adjustment is 87.52 kWh/m² per year (2024).

HOWOGE started as early as the 1990s to refurbish its holdings, with the result that the proportion of its residential units partly or fully modernised since 1990 is around 88.4 per cent. The average energy efficiency rating of the overall portfolio is C.

In the reporting year 2024, the emissions balance of HOWOGE was compiled for the first time in accordance with the internationally recognised Greenhouse Gas Protocol and Reporting Standard (GHG). This standard covers direct emissions (Scope 1), emissions from purchased energy (Scope 2) and indirect emissions along the entire value creation chain (Scope 3). This means that HOWOGE is achieving greater comprehensive transparency regarding its climate impact and a sound basis for effective emissions reductions measures.

Since 2021, HOWOGE has also been reporting in accordance with the EU Taxonomy Regulation and for the third year in a row is demonstrating conformity with this regulation in certain business activities. Its taxonomy-aligned turnover is 20.6 per cent; the corresponding figure for its operating expenses is 27.1 per cent and for its capital expenditure 14.6 per cent.

Outlook

Despite continuing uncertainties in the macroeconomic environment, HOWOGE assumes that there will be stable market conditions and a positive development in the operating results of the company in the financial year 2025. The operational focus of HOWOGE will be to integrate its new holdings and to achieve its new-build plans. Thanks to its sound capital structure, HOWOGE continues to be well-positioned. For its business operations in the current financial year, HOWOGE anticipates an FFO in a range of EUR 180 to 200 million.

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 approximately 81,600 apartments (as of 1^st January 2025), 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 residential units. 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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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.