German property giant Vonovia has obtained a €600 mln unsecured loan from the European Investment Bank (EIB) to support its multi-year energy-efficient building modernisation programme.
The loan has a term of 8 years with attractive interest rates which are significantly below alternative secured financing.
The new funds will be used to carry out the renovation of rental apartments with the aim of saving substantial amounts of energy. This will be done by insulating roofs and facades and switching to hybrid heating systems that use renewable energy, such as solar photovoltaic systems in combination with heat pumps. The financing will also cover energy-efficient new builds, increasing the size of the housing portfolio.
Vonovia is the largest private provider of rental homes in the low to medium price segment in Germany. It has set itself the target of making its portfolio virtually climate neutral by 2045.
The EIB expects the financing to encourage other investors such as commercial banks and capital market investors to start financing the energy renovation of buildings as well.
These renovations bring enormous benefits, such as a significant reduction in the energy consumption of upgraded apartments. This means that rent increases tied to upgrade costs will be more than compensated for through lower heating costs for tenants, providing an affordable way for them to help protect the climate.
Vonovia also uses a decarbonisation tool that digitally maps the entire portfolio and uses algorithms to determine the current and future greenhouse gas emissions of each individual building. This tool digitally benchmarks the emission reductions of each home against the 1.5 degrees Celsius Paris Agreement target, thus determining the ideal time for renovation.
EIB Vice-President Ambroise Fayolle, who oversees financing in Germany, said: ‘Together with Vonovia, we are committed to renovating residential buildings to make them energy efficient and thus contribute to achieving the European Union’s climate goals. We are particularly pleased that Vonovia has committed to make its entire housing portfolio climate neutral by 2045, with long-term affordable rents.’
‘Rising construction costs and interest rates have significantly changed the framework conditions for investments. The EIB is the ideal partner for our sustainable investment strategy, while also providing very attractive loan terms. It is helping us to make significant headway in achieving our goal of making our building portfolio virtually climate neutral by 2045. This will benefit the climate, our customers and society as a whole,’ added Philip Grosse, chief financial officer of Vonovia.
Bond issue
Vonovia also issued two unsecured bonds in social and green format this week raising total equity proceeds of €1.5 bn.
The bond issue, with a weighted average coupon of 4.875% and a weighted average maturity of 6.3 years, was almost six times oversubscribed.
