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Opportunities Arising from the Operating Business

The megatrend of digitalization is also having an impact on the real estate sector, as was reflected not least in the establishment of a new Management Board division for digitalization and innovation at Vonovia as of January 1, 2022. Vonovia will continue to make systematic investments in testing and expanding new technologies in the future, too, in particular in the areas of “artificial intelligence” or “robotics.” We expect the systematic rollout of these and other technologies within the company, for example aimed at “predictive maintenance,” “home automation,” “process automation” and “building information system,” and at the interface with our customers, to create additional opportunities.

Predictive maintenance, for example, could allow potential damage to elevators or heating units to be recognized in a timely manner, and prevented as a result, in the future. Smart home systems could allow tenants to consciously manage their energy costs. And digital communication platforms have the potential to improve dialogue with tenants, but also to support loyalty to the company and links within the neighborhood. These opportunities for the company’s operating business resulting from digitalization should also have an impact on and through customer satisfaction.

Targeted acquisitions and collaboration initiatives with suitable start-ups at all stages in the value chain to enable the further implementation of digital solutions within Vonovia’s processes, but also at the various interfaces, could open up further earnings and expertise potential for the company.

The digitalization of public administration could promote the much-called-for streamlining of administrative and, in particular, approval processes, with a positive impact, for example, on Vonovia’s development/new construction business thanks to the quicker approval of building applications.

We also see the potential acquisition of larger portfolios in Germany, as well as the targeted small-scale “tactical” acquisitions of single or multiple buildings in specific locations and targeted measures in the residential environment as an opportunity to improve the nature and quality of whole residential districts and thus increase the appeal of our apartments for our customers and the value of our residential properties. In the current market environment, acquisition opportunities can certainly arise where the required internal financing is available.

Vonovia manages its housing portfolios throughout Germany using standardized systems and processes. The acquisition of further residential real estate portfolios offers the opportunity to generate additional value through harmonization effects and economies of scale on the property management side, in development and with regard to housing-related services by reducing the costs per residential unit. This approach is also reflected in the merger with Deutsche Wohnen, which was expected to generate synergies of € 105 million a year. Due to Vonovia’s extensive experience in integrating companies into its systems and processes, further operating efficiency gains for both groups extending beyond the conservative expectations that have been applied to date could well arise.

Our own craftsmen’s organization is responsible for repair and maintenance services for our residential properties. We are aiming to continually increase the proportion of building and apartment optimizing services we provide ourselves via our craftsmen’s organization as well as new building construction and reduce the proportion of third-party services that we need to purchase. In particular due to the shortage of workers with the desired skills and the availability of corresponding capacities, we intend to extend the scope of these services to cover all kinds of technical work and thus bring added value from these services to Vonovia. This is being supported by corresponding HR management concepts.

The merger with Deutsche Wohnen also allows experience in housing-related services, primarily in metering services, multimedia services and energy supply, to be bundled. This creates economic potential on the one hand, but also potential with regard to the services offered to customers and, as a result, customer satisfaction on the other.