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13 Net Income from Fair Value Adjustment of Investment Properties

Investment properties are generally measured by the in-house valuation department according to the fair value model. The fair value for the nursing care properties and undeveloped land are calculated by independent experts using a DCF method and are adjusted, where appropriate, based on findings from market observation and transactions. Any gains or losses from a change in fair value are recognized in the income statement affecting net income.

The measurement of the investment properties led to a valuation loss of € -1,269.8 million in the 2022 fiscal year (2021: gain of € 7,393.8 million) (see [D28] Investment Properties). This includes € 22.6 million (2021: € -12.1 million) for the measurement of right-of-use assets (IFRS 16).

The figure also includes the valuation result from buildings under construction (new construction/development to hold) that were completed during the reporting period and were moved to the Rental portfolio. A fair value measurement is performed for the first time when the properties are completed. This resulted in a valuation effect of € 90.8 million in the 2022 fiscal year (2021: € 83.9 million).

As a result of Management Board resolutions passed in the fourth quarter of 2022 to sell project developments that had originally been intended for the company’s own portfolio, an impairment loss on capitalized costs in the amount of € 206.8 million, which is part of the net income from fair value adjustments of investment properties, was calculated prior to the transfer to real estate inventories.

In the valuation result for 2022, the effects of investing activities and the positive development of Vonovia’s operating business were overshadowed by rising return expectations on the part of investors, which explains the negative performance overall.