Business Outlook

The forecast was based on the accounting principles used in the consolidated financial statements, with the adjustments described elsewhere in the Group management report being made. The forecast does not take account of any larger acquisitions of real estate portfolios.

Our forecast for the 2023 fiscal year is based on corporate planning that is determined and updated for the Vonovia Group as a whole and considers current business developments, the completed integration of Deutsche Wohnen, possible opportunities and risks, potential after-effects of the coronavirus pandemic and the effects of the war in Ukraine. It also includes the key overall macroeconomic developments and the economic factors that are relevant to the real estate industry and our corporate strategy. Further information is provided in the sections titled  Development of the Economy and the Industry and  Fundamental Information About the Group in the 2022 Annual Report.

Compared to the opportunities and risks set out in the interim report for H1 2023, the following changes in the assessment of the overall risk position had arisen at the end of the third quarter of 2023: The overall number of risks increased from 104 in H1 2023 to 115 at the end of the third quarter due to additional green risks that are not significant. The number of significant amber risks remained at 9, with the risk “unfavorable exchange rate developments” being downgraded from amber to green. With an unchanged potential amount of loss of € 40–150 million, the expected probability of occurrence was reduced from 40–59% to 5-39%. The risk “material impact of legal disputes,” previously green, was upgraded to amber. This takes account of a legal dispute with a social insurance provider. The expected potential amount of loss of originally € 40–150 million was adjusted to € 150-375 million with an unchanged probability of occurrence of 5-39%. For the amber risk “unfavorable exchange rate developments,” the expected potential amount of loss was reduced from originally >€ 750 million to € 375-750 million with an unchanged probability of occurrence of 5-39%.

We expect price increases triggered by the Ukraine crisis, particularly on the energy markets, to have a substantial impact on Vonovia and our customers. While these will have a direct impact on ancillary expenses, they will also have an indirect effect on all areas of the economy due to general price increases. We also expect prices for construction materials to remain high, which will affect our construction projects as well.

Rising interest rates and inflation continue to create increased volatility on the equity and debt capital markets, also due to, or exacerbated by, the war in Ukraine. We therefore assess the overall economic situation and developments on an ongoing basis, particularly with regard to the return requirements for investment and divestment decisions.

We expect a moderate drop in total segment revenue in 2023. We also expect Adjusted EBITDA Total to be slightly below the prior-year level. Both key figures are currently being influenced to a considerable degree by the sales risks on the transaction market.

We expect the EBITDA contribution for the Rental segment to increase moderately given the further increase in demand for rental apartments. In the Value-add segment, we expect to see a significant year-on-year drop in results due to the reduced investment volume. Due to the strong result in the 2022 fiscal year, the updated project valuations and the sales risks on the transaction market, we expect to see a very sharp drop in EBITDA in the Development segment. We also expect to see a very sharp drop in EBITDA in the Recurring Sales segment due to a similar situation on the transaction market. As far as the Care segment is concerned, we predict a significant drop in EBITDA in 2023 due to positive one-off effects in 2022.

We also expect borrowed capital costs to increase further, and current income taxes to increase due to the higher transaction volume.

As a result, we expect a moderate decline in Group FFO.

In addition, we expect the value of our company to increase further in 2023 and predict a slight increase in EPRA NTA per share, leaving any further market-related changes in value out of the equation.

Due to the increased cost of capital as described above, we anticipate a decline in modernization/portfolio investments and new construction/densification in 2023.

Due to our extended sales efforts and the associated lower share of Recurring Sales in relation to the total sales volume, we are not providing any forecast as to the number of units sold and the step-up Recurring Sales from H1 2023 onwards.

Based on the individual weighted targets and the values planned for the 2023 fiscal year in each case, we predict a total value of 105-110% for the Sustainability Performance Index.

The following table, which presents material and selected key figures, provides an overview of our forecast for 2023.

Material and selected key figures incl. forecast

Actual 2022

Forecast for 2023

Forecast for 2023 in the 2023 H1 Report

Forecast for 2023 in the 2023 Q3 Report

Total Segment Revenue

€ 6.3 billion

€ 6.4–7.2 billion

€ 6.4–7.2 billion

moderately below previous year

Adjusted EBITDA Total

€ 2,763.1 million

€ 2.6–2.85 billion

€ 2.6–2.85 billion

lower end of
€ 2.6–2.85 billion

Group FFO

€ 2,035.6 million

€ 1.75–1.95 billion

€ 1.75–1.95 billion

mid-point of
€ 1.75–1.95 billion

Group FFO per share*

€ 2.56

suspended

€ 2.15–2.39

mid-point of
€ 2.15–2.39

EPRA NTA per share*

€ 57.48

suspended

suspended

suspended

Sustainability Performance Index (SPI)**

103.0%

~100%

~100%

105–110%

Rental income

€ 3,168.1 million

€ 3.15–3.25 billion

€ 3.15–3.25 billion

upper end of
€ 3.15–3.25 billion

Organic rent growth (eop)

3.3%

above previous year

3.6–3.9%

3.7–3.8%

Modernization/portfolio investments

€ 837.4 million

~€ 0.5 billion

~€ 0.5 billion

~€ 0.5 billion

New construction/space creation

€ 607.1 million

~€ 0.35 billion

~€ 0.35 billion

~€ 0.35 billion

Number of units sold Recurring Sales

2,710

3,000–3,500

suspended

suspended

Fair value step-up Recurring Sales

38.8%

~25%

suspended

suspended

  1. *Based on the shares carrying dividend rights on the reporting date.
  2. **Up to and including 2022, excluding Deutsche Wohnen. From 2023 forecast, including Deutsche Wohnen (excluding Care segment and SYNVIA).

For the new 2024 financial year, we expect our key performance indicator “Adjusted EBITDA Total” to be at the same level as in 2023. We expect Group FFO and Group FFO per share to be moderately lower in 2024 than in the 2023 financial year due to higher sales-related taxes and higher interest rates.

Taking the sales into account, we expect rental income to remain at the same level as in 2023. We expect investments in the refurbishment of our housing stock, as well as investments in new construction and densification, to be moderately above the level of the 2023 financial year.

The sustainability performance index is forecast at 100%. The organic rental growth expected for 2024 will be published in the Q4 reporting.

Bochum, Germany, November 1, 2023

The Management Board