Details on results of operations by segment

Rental segment

At the end of June 2023, the portfolio in the Rental segment had a vacancy rate of 2.2% (end of June 2022: 2.4%), meaning that it was once again virtually fully occupied.

The segment revenue in the Rental segment increased by a total of 2.3% year-on-year in the first six months of 2023, mainly due to organic growth resulting from new construction and modernization, also taking into account the Berlin portfolio that was sold at the beginning of 2022, (H1 2022: 1.6%) to total € 1,606.4 million (H1 2022: € 1,570.5 million). Of the segment revenue in the Rental segment in the 2023 reporting period, € 1,376.5 million is attributable to rental income in Germany (H1 2022: € 1,338.0 million), € 171.4 million to rental income in Sweden (H1 2022: € 178.5 million) and € 58.5 million to rental income in Austria (H1 2022: € 54.0 million).

Organic rent growth (twelve-month rolling) totaled 3.5% (H1 2022: 3.4%). The current rent increase due to market-related factors came to 1.5% (H1 2022: 1.0%) and the increase from property value improvements translated into a further 1.2% (H1 2022: 1.7%). All in all, this produces a like-for-like rent increase of 2.7% (H1 2021: 2.7%). New construction measures and measures to add extra stories also contributed 0.8% (H1 2021: 0.7%) to organic rent growth.

The average monthly in-place rent within the Rental segment at the end of June 2023 came to € 7.58 per m² compared to € 7.44 per m² at the end of June 2022 (including Deutsche Wohnen). The monthly in-place rent in the German portfolio at the end of June 2023 came to € 7.51 per m² (June 30, 2022: € 7.32 per m² including Deutsche Wohnen), with a figure of € 9.50 per m² (June 30, 2022: € 10.00 per m²) for the Swedish portfolio and € 5.37 per m² for the Austrian portfolio (June 30, 2022: € 5.01 per m²). The rental income from the portfolio in Sweden reflects inclusive rents, meaning that the amounts contain operating, heating and water supply costs. The rental income from the Austrian real estate portfolio additionally includes maintenance and improvement contributions (EVB).

We have continued with our refurbishment, new construction and maintenance strategy, which has been adjusted to reflect the current overall conditions, in the 2023 fiscal year. The overview below provides details on maintenance, modernization and new construction.

Operating expenses in the Rental segment in the first half of 2023 were down by 17.4 % on the figures for the first half of 2022, from € 243.7 million to € 201.2 million. All in all, the Adjusted EBITDA Rental came to € 1,198.2 million in the first six months of 2023, up by 7.8% on the prior-year value of € 1,111.7 million.

Value-add segment

Developments in the Value-add segment remained dominated by the new overall conditions for our own craftsmen’s organization. General price increases for construction services and materials, as well as productivity losses due to the shortage of skilled labor, had a negative impact on economic development. In addition, short-term changes in the technology for heating modernization measures resulted in lower service provision.

All in all, revenue from the Value-add segment came to € 619.8 million in the 2023 reporting period, down by 2.8% on the value of € 637.4 million seen in the first six months of 2022 . External revenue from our Value-add activities with our end customers in the first six months of 2023 were up by 15.3% on the first six months of 2022, from € 57.6 million to € 66.4 million. Group revenue fell by 4.6% in the first six months of 2023 from € 579.8 million in the first six months of 2022 to € 553.4 million.

Operating expenses in the Value-add segment in the first six months of 2023 were up by 4.0% on the figures for the first six months of 2022, from € 553.5 million to € 575.7 million. This was due in particular to higher construction and energy costs.

Adjusted EBITDA Value-add came to € 44.1 million in the first six months of 2023, considerably lower than the figure of € 83.9 million reported for the first six months of 2022.

Recurring Sales segment

In the Recurring Sales segment, income from the disposal of properties in the first six months of 2023 was down to € 141.4 million, 52.1% lower than the 2022 value of € 295.2 million due to volume-related factors, with 628 units sold (H1 2022: 1,349), 412 of which were in Germany (H1 2022: 1,046) and 216 of which were located in Austria (H1 2022: 303). Income of € 82.7 million is attributable to sales in Germany (H1 2022: € 216.7 million), with € 58.7 million to sales in Austria (H1 2022: € 78.4 million; and € 0.2 million to sales in Sweden in H1 2022).

In the first half of 2023, the fair value step-up in the portfolio came to 45.6%, up on the value of 44.9% seen in the first half of 2022. This was due primarily to much higher step-ups for sales in Austria.

Selling costs in the Recurring Sales segment came in at € 7.3 million in the first half of 2023, down by 20.7% on the value of € 9.2 million seen in the first half of 2022. Adjusted EBITDA Recurring Sales came in at € 37.0 million in the first half of 2023, down considerably on the value of € 82.3 million seen in the first half of 2022.

In the first half of 2023, 654 residential units from the Non Core/Other portfolio (H1 2022: 16,399) were also sold as part of our portfolio adjustment measures, with proceeds totaling € 101.0 million (H1 2022: € 2,627.2 million). At 9.2%, the fair value step-up for Non Core/Other disposals in the 2023 reporting period was higher than for the same period in the previous year (1.2%).

Development segment

In the Development to sell area, a total of 231 units were completed in the first half of 2023 (H1 2022: 592 units), 104 in Germany (H1 2022: 16 units) and 127 in Austria (H1 2022: 576 units). Income from the disposal of development properties to sell came to € 218.3 million in the first half of the 2023 fiscal year (H1 2022: € 363.2 million), with € 189.6 million attributable to project development in Germany (H1 2022: € 173.8 million) and € 28.7 million attributable to project development in Austria (H1 2022: € 189.4 million). In Austria, the decline was chiefly due to a lower notarization volume compared to the previous year. The resulting gross profit for Development to sell came to € 22.6 million in the first half of 2023 with a margin of 10.4% (H1 2022: € 71.2 million, margin of 19.6%).

In the Development to hold area, a total of 962 units were completed in the first half of 2023 (H1 2022: 511 units), 502 in Germany (H1 2022: 448), 296 in Austria (H1 2022: 0 units) and 164 in Sweden (H1 2022: 63 units). In the Development to hold area, a fair value of € 193.6 million was achieved in the 2023 reporting period (H1 2022: € 97.0 million). € 82.6 million of this amount was attributable to project development in Germany (H1 2022: € 97.0 million), with € 84.2 million attributable to project development in Austria (H1 2022: € 0.0 million) and € 26.8 million attributable to project development in Sweden. The gross profit for Development to hold came to € 14.2 million in the first six months of 2023 with a margin of 7.3 % (H1 2022: € 28.8 million, margin of 29.7%).

Development operating expenses amounted to € 15.3 million in the first half of 2023, 9.5% lower than the € 16.9 million reported in the first half of 2022. The Adjusted EBITDA for the Development segment amounted to € 23.8 million in the 2023 reporting period (H1 2022: € 84.9 million).

Care Segment

The Care segment developed as expected in the first six months of 2023. At the end of the first half of 2023, there were still 72 care properties in the Rental portfolio, 71 of which were still owned by Vonovia.

Segment revenue came to € 143.9 million in the first half of 2023, 5.1% higher than the value of € 136.9 million for the first half of 2022.

Expenses for maintenance came to € 2.6 million in the 2023 reporting period (H1 2022: € 2.9 million).

Operating expenses in the Care segment amounted to € 106.1 million in the first six months of 2023, as against € 91.0 million in the first six months of 2022. This is due primarily to higher personnel and energy costs as well as delayed adjustments to nursing fund payments.

The Adjusted EBITDA Care came in at € 35.2 million in the 2023 reporting period, down by 18.1% on the prior-year value of € 43.0 million.