4 Scope of Consolidation and Business Combinations
All in all, and including Vonovia SE, 736 companies (Dec. 31, 2020: 588) – thereof 441 (Dec. 31, 2020: 285) domestic companies and 295 (Dec. 31, 2020: 303) foreign companies – have been included in the consolidated financial statements as of December 31, 2021. In addition, joint activities were performed with two domestic companies (Dec. 31, 2020: two). In addition, 25 (Dec. 31, 2020: four) domestic companies and one (Dec. 31, 2020: one) foreign company were included as joint ventures and five domestic companies (Dec. 31, 2020: zero) and two (Dec. 31, 2020: two) foreign companies were included as associates accounted for using the equity method.
Three (Dec. 31, 2020: three) foreign companies are no longer included in the scope of consolidation as they are no longer considered to be material. These companies are shown as non-consolidated affiliated companies.
For all subsidiaries included in the consolidated financial statements, the reporting date is December 31.
The list of Vonovia shareholdings is appended to the Notes to the consolidated financial statements as an integral part thereof.
Companies that have made use of the exemption provision set out in Section 264 (3) of the German Commercial Code (HGB) are marked accordingly in the list of shareholdings.
The year-over-year changes in the consolidated companies as of December 31, 2021 result from 166 acquisitions, 14 mergers, an accrual, a liquidation and two sales. The change in joint ventures results from 23 acquisitions and two liquidations; the change in associates results from five acquisitions.
Acquisition of Deutsche Wohnen SE
On June 23, 2021 Vonovia SE, Bochum, published the offer document regarding its takeover offer to the shareholders of Deutsche Wohnen SE, Berlin, for the acquisition of the no-par-value shares held by them in Deutsche Wohnen SE against payment of a cash consideration of € 52.00 per share. The acceptance period for the takeover offer expired at midnight (local time in Frankfurt am Main) on July 21, 2021 (reference date).
By the end of the acceptance period, the takeover offer had been accepted for a total of 105,336,403 shares in Deutsche Wohnen. This corresponded to approx. 29.27% of the share capital and voting rights of Deutsche Wohnen.
As of the reference date, Vonovia SE directly held a total of 66,057,759 shares in Deutsche Wohnen that were purchased either on the market or by way of individual agreements. This corresponds to around 18.36% of the share capital and voting rights of Deutsche Wohnen SE.
On the reference date, the total number of Deutsche Wohnen shares to be taken into account for the minimum acceptance threshold therefore came to 171,394,162, corresponding to around 47.62% of the share capital and voting rights of Deutsche Wohnen SE.
The closing condition described in the offer of reaching the minimum acceptance threshold of 179,947,733 Deutsche Wohnen shares (corresponding to around 50% of the current share capital of Deutsche Wohnen SE) had not been reached as of the acceptance deadline. The closing condition had therefore definitively failed.
As a consequence of the definitive failure of this closing condition, both the takeover offer had lapsed and the agreements entered into as a result of the acceptance of the takeover offer ceased to exist. They were not executed. The 105,336,403 shares in Deutsche Wohnen that had been submitted were returned.
In addition, as of the reporting date, the bidder held financial instruments relating to 12,708,563 Deutsche Wohnen shares on the basis of a share purchase agreement concluded with Deutsche Wohnen SE but not yet executed. This corresponds to around 3.53% of the share capital and voting rights of Deutsche Wohnen SE. As the takeover offer was not successful, the condition precedent of the share purchase agreement has occurred and the share purchase agreement has been consummated.
This means that Vonovia SE held a total of 78,766,322 shares in Deutsche Wohnen as of July 21, 2021. This corresponds to approx. 21.89% of the share capital and voting rights of Deutsche Wohnen. As a result, Vonovia had a significant influence with effect from July 21, 2021.
As a result, the shares in Deutsche Wohnen SE were classified as an associate from this point onwards. For the period from July 21, 2021 until the acquisition date on September 30, 2021 profit shares of € 0.8 million were included in Vonovia’s income statement as net income from non-current financial assets accounted for using the equity method. This profit share corresponds to an average pro rata interest of 29.8% and reflects the proportion for which shares in the profit for the period under review existed. As part of Deutsche Wohnen’s inclusion as an associate as of July 21, 2021 the assets and liabilities of the Deutsche Wohnen Group, and in particular its real estate assets, were remeasured.
On August 1, 2021 Vonovia SE and Deutsche Wohnen SE announced that the business combination agreement had been revised and another offer would be published. The publication of another offer document was subject to approval for another timely public takeover offer made to the shareholders of Deutsche Wohnen SE being granted to Vonovia SE by the German Federal Financial Supervisory Authority (BaFin). The approval was granted on August 5, 2021.
Following the announcements made on August 1 and August 5, 2021 Vonovia SE announced the start of another voluntary public takeover offer for all outstanding shares in Deutsche Wohnen SE on August 23, 2021 publishing a corresponding offer document. As described in the offer document that was published, Vonovia offered cash consideration of € 53.00 for each share in Deutsche Wohnen. A minimum acceptance threshold of 50% was also a key closing condition. The offer period originally started on August 23 and ended at midnight (CEST) on September 20, 2021.
Up until the publication of the new offer document, Vonovia SE had acquired a further 29,201,317 shares in Deutsche Wohnen SE either on the market or by way of individual agreements. At this point in time, the total number of shares in Deutsche Wohnen held by Vonovia SE came to 107,967,639, corresponding to around 29.99% of the share capital and voting rights of Deutsche Wohnen.
On September 13, 2021 Vonovia SE announced that it would be waiving all offer conditions of the voluntary public takeover offer for the shares in Deutsche Wohnen SE. This was consistent with the offer document published on August 23, 2021 and was coordinated with Deutsche Wohnen SE. This move also resulted in the minimum acceptance threshold ceasing to apply. This meant that the offer was no longer subject to any further closing conditions; the acceptance period was extended by two weeks, meaning that it ended at midnight (CEST) on October 4, 2021. The further acceptance period started on October 8 and ended at midnight (CEST) on October 21, 2021.
Up until September 30, 2021 Vonovia SE had acquired a further 33,500,856 shares in Deutsche Wohnen either on the market or by way of individual agreements, and 42,999,948 shares in Deutsche Wohnen had been submitted during the acceptance period for the public takeover offer. All in all, this corresponds to a share of around 50.38% in the share capital entered in the commercial register on September 30, 2021 less 3,362,003 shares held by Deutsche Wohnen SE, for which the voting rights cannot be exercised.
The acquisition date on which Vonovia SE obtained control of Deutsche Wohnen SE was September 30, 2021. This transaction shall be treated as a business combination in accordance with IFRS 3.
The new valuation of the existing shares in Deutsche Wohnen SE required in connection with the first-time consolidation resulted in income of € 87.5 million. This was recognized in other operating income.
By the end of the further acceptance period at midnight CEST on October 21, 2021 the takeover offer had been accepted for a total of 198,463,161 shares in Deutsche Wohnen.
Since the acquisition of shares within the further acceptance period were effected under exactly the same conditions as in the first acceptance period and the two business transactions were related in terms of content and timing, these transactions are to be regarded as linked transactions. All in all, 87.36% of the share capital entitled to voting rights was included in the recognition of the business combination.
On October 14, 2021 Vonovia also converted convertible bonds of Deutsche Wohnen SE previously acquired on the market into 7,796,827 Deutsche Wohnen SE shares in a transaction not related to the takeover offer.
Therefore, the total number of shares entitled to voting rights held by Vonovia in Deutsche Wohnen SE as of December 31, 2021 amounts to 347,728,483. Of these shares, 198,463,161 were tendered as part of the takeover offer, 141,468,495 were acquired on the market or by way of individual agreements and 7,796,827 were added through the conversion of acquired convertible bonds. As of December 31, 2021 this represents 87.60% of the share capital entitled to voting rights. Deutsche Wohnen SE also holds a further 3,362,003 shares as own shares.
The following tables summarizes the development of the share capital shareholding in Deutsche Wohnen SE.
Development of the shareholding in Deutsche Wohnen SE
until date | number of shares | share quota | ||||
Market acquisitions | Jul. 21, 2021 | 66,057,759 | ||||
Acquisition through conditional purchase agreement | Jul. 21, 2021 | 12,708,563 | ||||
Date of inclusion using the equity method | Jul. 21, 2021 | 78,766,322 | 21.89% | |||
Market acquisitions | Aug.23, 2021 | 29,201,317 | ||||
Market acquisitions | Sept. 30, 2021 | 33,500,856 | ||||
Shares tendered during the offer phase | Sept. 30, 2021 | 42,999,948 | ||||
Acquisition date | Sept. 30, 2021 | 184,468,443 | 50.38% | |||
Shares tendered during the extended offer phase | Oct. 21, 2021 | 155,463,213 | ||||
Shares recognised in course of the business combination | 339,931,656 | 87.36% | ||||
Conversion of convertible bonds held | Oct. 14, 2021 | 7,796,827 | ||||
Reporting date | Dec. 31, 2021 | 347,728,483 | 87.60% | |||
As part of the provisional purchase price allocation, the total consideration of the acquisition comprises the following:
Acquisition of Deutsche Wohnen – Total consideration
The allocation of the total purchase price to the acquired assets and liabilities (PPA) of the Deutsche Wohnen Group as of the date of first-time consolidation is based on the financial statements of the Deutsche Wohnen Group as of September 30, 2021 and on the known necessary adjustments to the fair values of the assets and liabilities. As the acquisition date fell so close to the date on which the financial statements were prepared, the allocation was only provisional.
The assets and liabilities assumed in the course of the business combination had the following preliminary fair values as of the date of first-time consolidation:
Acquisition of Deutsche Wohnen – Fair values of assets and liabilities assumed in the course of the business combination
in € billion | |||
Investment properties | 28.2 | ||
Financial assets | 1.0 | ||
Cash and cash equivalents | 0.8 | ||
Assets held for sale | 2.2 | ||
Fair value of other assets | 1.4 | ||
Total assets | 33.6 | ||
Provisions | 0.5 | ||
Non-derivative financial liabilities | 11.2 | ||
Deferred tax liabilities | 5.4 | ||
Non-controlling interests | 0.5 | ||
Fair value of other liabilities | 0.7 | ||
Total liabilities | 18.3 | ||
Fair value net assets | 15.3 | ||
Consideration | 18.0 | ||
Non-controlling interests | 2.0 | ||
Goodwill | 4.7 | ||
The non-controlling interests are included based on the share of the assets and liabilities of Deutsche Wohnen SE that have been recognized.
The goodwill represents synergies from the future integration of the Deutsche Wohnen Group, in particular through the shared administration and management of the respective residential units. The goodwill was only provisionally allocated to one or several cash-generating units due to the still provisional allocation of the consideration to assets and liabilities.
In general, the discounted cash flow (DCF) method was used to measure investment properties. Under the DCF methodology, the expected future income and costs of a property are forecast over a detailed period and discounted to the date of valuation as the net present value. The measurement was performed at the level of a homogeneous valuation unit, meaning that it is consistent with the principle of individual valuation.
The fair value of the loans under the item non-derivative liabilities was determined as the sum of the amounts of future cash flows discounted to the acquisition date using a DCF method. The contractually agreed maturities and the interest and repayment schedules were used to determine the future cash flows of the loans. The yield curve used in the DCF calculation to discount the cash flows consists of a risk-free base curve and a premium for the risk of non-performance (“risk spread”).
Due to the change of ownership of more than 50% of the subscribed capital/voting rights in Deutsche Wohnen SE, tax loss carryforwards of Deutsche Wohnen SE and a small number of subordinated companies have been lost with effect for the future. Deferred tax assets were recognized on the company’s loss carryforward and offset against deferred tax liabilities. This offsetting was reversed and the deferred tax assets were no longer recognized due to the loss carryfowards that were eliminated as part of the PPA. In addition, deferred taxes that were not recognized due to the initial recognition exemption (also initial difference exemption) were recognized as part of the business combination. An initial recognition exemption refers to an exceptional scenario in which a deferred tax liability/deferred tax asset cannot be recognized if it results from the first-time recognition of an asset or liability, the underlying transaction is not a business combination and, at the time the transaction is executed, neither the earnings before tax recognized in the balance sheet nor the taxable net income are affected. The corresponding adjustments were made under deferred tax liabilities.
The measurement of the acquired joint ventures and associates under the item fair value of other assets took place using a DCF methodology based on the planning of the respective companies and the use of company-specific weighted average costs of capital (WACC).
The acquired brand rights in the area of nursing care, i.e., “Pflege & Wohnen Hamburg” and “Katharinenhof” under the item fair value of other assets, were measured using the relief-from-royalty method. This method is based on the assumption that the value of this intangible asset will correspond to the present value of the royalty fees saved after tax that are attributable to the asset concerned.
The multi-period excess earnings method (MEEM) was used to measure the existing care agreements under the item fair value of other assets. Using this method, the fair value of intangible assets is calculated as the residual value following deduction of hypothetical payments for the use of so-called “supporting assets.” In the process, it is assumed that a company that only owns the measurable intangible asset itself either licenses, leases or rents all other supporting assets necessary for the company’s operations. As such, fictitious usage fees for all supporting assets (“contributory asset charges [CACs]”) need to be determined and deducted as part of the MEEM.
As of September 30, 2021 the Deutsche Wohnen Group comprised 163 fully consolidated companies. The Deutsche Wohnen Group also held interests in 23 joint ventures and four associates. In addition to residential property management as its core business, the company’s business activities include nursing and assisted living, disposals/acquisitions and new construction/development as core business areas. In addition to its core business areas, the Deutsche Wohnen Group offers property-related services, such as property energy-efficiency management, the multimedia business and technical facility management, via subsidiaries or strategic shareholdings.
Starting on September 30, 2021 the Deutsche Wohnen Group contributed € 971.0 million to income, as well as € 262.9 million to profit for the period. This amount includes income of € 68.8 million from the business areas nursing and assisted living.
If the Deutsche Wohnen Group had already been fully included in the consolidated Group as of January 1, 2021 it would have contributed to the income in the amount of € 2,297.4 million and to profit/loss for the period in the amount of € 1,034.9 million.
Out of the trade receivables that were acquired, an amount of € 20.1 million is likely to have been uncollectible at the time of acquisition. The gross amount of the acquired trade receivables was € 80.9 million. The net carrying amount, which corresponds to the fair value, was € 60.8 million.
In the 2021 fiscal year, transaction costs related to the acquisition of the Deutsche Wohnen Group in the amount of € 210.8 million were recognized in other operating expenses affecting net income. € 89.0 million of this amount is recognized in other operating expenses, € 109.4 million in other financial result and € 12,4 million in interest expenses.
Acquisition of H&L Immobilien GmbH
On December 2, 2020 Vonovia SE announced that it had signed a contract concerning the acquisition of a 94.9% stake in H&L Immobilien GmbH (renamed Fjord Immobilien GmbH with an entry in the commercial register being made on February 8, 2021), Kiel, Germany, (“H&L”) via its wholly owned subsidiary Deutsche Annington Acquisition Holding GmbH.
The acquisition date, the time at which Vonovia SE obtained control of H&L, was December 30, 2020. This was the date on which the offer was settled. This transaction shall be treated as a business combination in accordance with IFRS 3.
As part of the purchase price allocation, the consideration transferred for the business combination comprises the following:
Acquisition of H&L Immobilien GmbH – Total consideration
The allocation of the total purchase price to the acquired assets and liabilities (PPA) of H&L as of the date of first-time consolidation is based on the financial statements of H&L as of December 31, 2020 and on the known necessary adjustments to the fair values of the assets and liabilities. The assets and liabilities assumed in the course of the business combination had the following fair values as of the date of first-time consolidation:
Acquisition of H&L Immobilien GmbH – Fair values of assets and liabilities assumed
in € million | |||
Investment properties | 123.0 | ||
Trade receivables | 0.1 | ||
Cash and cash equivalents | 2.2 | ||
Fair value of other assets | 0.1 | ||
Total assets | 125.4 | ||
Provisions | 0.5 | ||
Non-derivative financial liabilities | 36.6 | ||
Deferred tax liabilities | 26.1 | ||
Fair value of other liabilities | 3.4 | ||
Total liabilities | 66.6 | ||
Fair value net assets | 58.8 | ||
Consideration | 93.2 | ||
Goodwill | 34.4 | ||
There were no changes compared with the preliminary allocation of the total consideration as of December 31, 2020.
The valuation of the investment properties is based on the fair value determination as of December 31, 2020 which was carried out by CBRE on behalf of Vonovia.
The fair value of the loans was determined as the sum of the amounts of future cash flows discounted to the acquisition date using a discounted cash flow (DCF) methodology. The contractually agreed maturities and the interest and repayment schedules were used to determine the future cash flows of the loans. The yield curve used in the DCF calculation to discount the cash flows consists of a risk-free base curve and a premium for the risk of non-performance (“risk spread”).
The goodwill represents synergies from the future integration of H&L, in particular through the shared administration and management of the respective residential units in the North region. It was allocated to the cash-generating unit North business area.
In the 2021 fiscal year, H&L contributed € 5.8 million to income, as well as € 10.6 million to profit for the period.
The gross carrying amount of the acquired trade receivables was € 0.4 million. Transaction costs of € 0.0 million have been recognized in connection with the transaction in the 2021 fiscal year.
Adjusted EBITDA Development
The Adjusted EBITDA Development includes the gross profit from the development activities of “to sell” projects (income from sold development projects less production costs) and the gross profit from the development activities of “to hold” projects (fair value of the units developed for the company’s own portfolio less incurred production costs) less the operating expenses from the Development segment.
Adjusted EBITDA Deutsche Wohnen
The Adjusted EBITDA Deutsche Wohnen is calculated by deducting the operating expenses of the Deutsche Wohnen segment and the carrying amount of properties sold from the segment revenue of the Deutsche Wohnen Group.
Adjusted EBITDA Recurring Sales
The Adjusted EBITDA Recurring Sales compares the proceeds generated from the privatization business with the fair values of assets sold and also deducts the related costs of sale. In order to disclose profit and revenue in the period in which they are incurred and to report a sales margin, the fair value of properties sold, valued in accordance with IFRS 5, has to be adjusted to reflect realized/unrealized changes in value.
Adjusted EBITDA Rental
The Adjusted EBITDA Rental is calculated by deducting the operating expenses of the Rental segment and the expenses for maintenance in the Rental segment from the Group’s rental income.
Adjusted EBITDA Total
Adjusted EBITDA Total is the result before interest, taxes, depreciation and amortization (including income from other operational investments and intragroup profits) adjusted for effects that do not relate to the period, recur irregularly and that are atypical for business operation, and for net income from fair value adjustments to investment properties. These non-recurring items include the development of new fields of business and business processes, acquisition projects, expenses for refinancing and equity increases (where not treated as capital procurement costs), IPO preparation costs and expenses for pre-retirement part-time work arrangements and severance payments. The Adjusted EBITDA Total is derived from the sum of the Adjusted EBITDA Rental, Adjusted EBITDA Value-add, Adjusted EBITDA Recurring Sales, Adjusted EBITDA Development and Adjusted EBITDA Deutsche Wohnen.
Adjusted EBITDA Value-add
The Adjusted EBITDA Value-add is calculated by deducting operating expenses from the segment’s income.
COSO
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is a private-sector U.S. organization. It was founded in 1985. In 1992, COSO published the COSO model, an SEC-recognized standard for internal controls. This provided a basis for the documentation, analysis and design of internal control systems. In 2004, the model was further developed and the COSO Enterprise Risk Management (ERM) Framework was published. Since then, it has been used to structure and develop risk management systems.
Covenants
Requirements specified in loan agreements or bond conditions containing future obligations of the borrower or the bond obligor to meet specific requirements or to refrain from undertaking certain activities.
EPRA Key Figures
For information on the EPRA key figures, we refer to the chapter on segment reporting according to EPRA.
EPRA NTA
The presentation of the NTA based on the EPRA definition aims to show the net asset value in a long-term business model. NTA stands for Net Tangible Assets. The equity attributable to Vonovia’s shareholders is adjusted by deferred taxes, real estate transfer tax and other purchasers’ costs in relation to the existing portfolio and the fair value of derivative financial instruments after taking deferred taxes into account. Stated goodwill and other intangible assets are also deducted.
European Public Real Estate Association (EPRA)
The European Public Real Estate Association (EPRA) is a non-profit organization that has its registered headquarters in Brussels and represents the interests of listed European real estate companies. Its mission is to raise awareness of European listed real estate companies as a potential investment destination that offers an alternative to conventional investments. EPRA is a registered trademark of the European Public Real Estate Association.
European Public Real Estate Association (EPRA)
The European Public Real Estate Association (EPRA) is a non-profit organization that has its registered headquarters in Brussels and represents the interests of listed European real estate companies. Its mission is to raise awareness of European listed real estate companies as a potential investment destination that offers an alternative to conventional investments. EPRA is a registered trademark of the European Public Real Estate Association.
Fair Value
Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
Fair Value
Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
Fair Value
Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
Fair Value
Fair value is particularly relevant with regard to valuation in accordance with IAS 40 in conjunction with IFRS 13. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
GAV
The Gross Asset Value (GAV) of the recognized real estate investments. This consists of the owner-occupied properties, the investment properties including development to hold, the assets held for sale and the development to sell area. In the latter, both residential properties for which a purchase contract has been signed and those with the intention to sell – i.e., a purchase contract has not yet been signed – are included.
GAV
The Gross Asset Value (GAV) of the recognized real estate investments. This consists of the owner-occupied properties, the investment properties including development to hold, the assets held for sale and the development to sell area. In the latter, both residential properties for which a purchase contract has been signed and those with the intention to sell – i.e., a purchase contract has not yet been signed – are included.
Group FFO
Group FFO reflects the recurring earnings from the operating business. In addition to the adjusted EBITDA for the Rental, Value-add, Recurring Sales and Development segments, Group FFO allows for recurring current net interest expenses from non-derivative financial instruments as well as current income taxes. This key figure is not determined on the basis of any specific international reporting standard but is to be regarded as a supplement to other performance indicators determined in accordance with IFRS.
Maintenance
Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Maintenance
Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Maintenance
Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Maintenance
Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
LTV Ratio (Loan-to-Value Ratio)
The LTV ratio shows the extent to which financial liabilities are covered. It shows the ratio of non-derivative financial liabilities pursuant to IFRS, less foreign exchange rate effects, cash and cash equivalents less advance payments received by Development (period-related), receivables from disposals, plus purchase prices for outstanding acquisitions to the total fair values of the real estate portfolio, fair values of the projects/land currently under construction as well as receivables from the sale of real estate inventories (period-related) plus the fair values of outstanding acquisitions and investments in other real estate companies.
Rental Income
Rental income refers to the current gross income for rented units as agreed in the corresponding lease agreements before the deduction of non-transferable ancillary costs. The rental income from the Austrian property portfolio additionally includes maintenance and improvement contributions (EVB). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating and heating costs.
Rental Income
Rental income refers to the current gross income for rented units as agreed in the corresponding lease agreements before the deduction of non-transferable ancillary costs. The rental income from the Austrian property portfolio additionally includes maintenance and improvement contributions (EVB). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating and heating costs.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Sustainability Performance Index (SPI)
Index to measure non-financial performance. Vonovia’s sustainable activities are geared towards the top sustainability topics that we have identified, which are bundled in the Sustainability Performance Index. The Customer Satisfaction Index (CSI) is included in the calculation of the Sustainability Performance Index. The CSI is determined at regular intervals in systematic customer surveys conducted by an external service provider and shows the effectiveness and sustainability of our services for the customer. Other indicators used in the Sustainability Performance Index are the carbon savings achieved annually in housing stock, the energy efficiency of new buildings, the share of accessible (partial) modernization measures in relation to newly let apartments, the increase in employee satisfaction and diversity in the company’s top management team.
Sustainability Performance Index (SPI)
Index to measure non-financial performance. Vonovia’s sustainable activities are geared towards the top sustainability topics that we have identified, which are bundled in the Sustainability Performance Index. The Customer Satisfaction Index (CSI) is included in the calculation of the Sustainability Performance Index. The CSI is determined at regular intervals in systematic customer surveys conducted by an external service provider and shows the effectiveness and sustainability of our services for the customer. Other indicators used in the Sustainability Performance Index are the carbon savings achieved annually in housing stock, the energy efficiency of new buildings, the share of accessible (partial) modernization measures in relation to newly let apartments, the increase in employee satisfaction and diversity in the company’s top management team.
Non-core Disposals
We also report on the Other segment, which is not relevant from a corporate management perspective, in our segment reporting. This includes the sale, only as and when the right opportunities present themselves, of entire buildings or land (Non-core Disposals) that are likely to have below-average development potential in terms of rent growth in the medium term and are located in areas that can be described as peripheral compared with Vonovia’s overall portfolio and in view of future acquisitions.
Recurring Sales
The Recurring Sales segment includes the regular and sustainable disposals of individual condominiums from our portfolio. It does not include the sale of entire buildings or land (Non-core Disposals). These properties are only sold as and when the right opportunities present themselves, meaning that the sales do not form part of our operating business within the narrower sense of the term. Therefore, these sales will be reported under “Other” in our segment reporting.
Fair Value Step-up
Fair value step-up is the difference between the income from selling a unit and its current fair value in relation to its fair value. It shows the percentage increase in value for the company on the sale of a unit before further costs of sale.
Fair Value Step-up
Fair value step-up is the difference between the income from selling a unit and its current fair value in relation to its fair value. It shows the percentage increase in value for the company on the sale of a unit before further costs of sale.
Cash-generating Unit (CGU)
The cash-generating unit refers, in connection with the impairment testing of goodwill, to the smallest group of assets that generates cash inflows and outflows independently of the use of other assets or other cash-generating units (CGUs).