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Environmental Issues

Environmental issues include the following material topics for Vonovia: “Reducing CO2 in the real estate portfolio” and “Sustainable new construction and refurbishment” (see Materiality Matrix).

The mitigation of global warming and the protection of natural resources for life on earth are some of the most important challenges facing society as a whole in our time. As such, environmental and climate protection is accorded paramount importance within our sustainability strategy. Targets set at international level, such as the Paris Agreement and the European Union Green Deal, as well as those set at national level, such as the goal set by the German Federal Government to achieve climate neutrality by 2045, are of high significance for Vonovia in this regard.

As Europe’s housing industry market leader with our own real estate portfolio of 545,919 residential units and our development activities, we possess significant levers for protecting the environmental and climate. Here, our main concern is greenhouse gas emissions that can be largely influenced directly in connection with supplying our buildings with heat and warm water, known as Scope 1 and 2 emissions. Greenhouse gas emissions from the upstream value chain (Scope 3 emissions) and other environmental aspects are also relevant for us, meaning that we are increasingly collecting data on them.

Vonovia has set itself the target of achieving a virtually greenhouse gas-neutral housing stock by 2045, with carbon intensity of less than 5 kg of CO₂ equivalents per sqm of rental area (in terms of Scope 1, 2 and 3.3). By 2030, our housing stock in Germany is to have a CO₂ intensity of less than 25 kg CO₂e per sqm. Binding interim targets have been defined for the next five years so that we can achieve this goal.

Vonovia Climate Path: Strategy for Decarbonizing the Housing Stock

We had our climate pathway’s compatibility with the Paris Agreement target calculated using the XDC model from right.based on science in 2022. The XDC model converts CO2 emissions based on our climate pathway into a number of degrees that shows by how much the earth’s temperature would increase if the entire world’s climate performance were identical to that of Vonovia. The 1.5° target path of the Carbon Risk Real Estate Monitor (CRREM) for multifamily residences in Germany (as of July 2021) was used as a benchmark. This calculation revealed that, taking into account long-term sales that are already planned and Recurring Sales, Vonovia’s climate pathway is compatible with global warming of 1.4° Celsius.

Defining and implementing the climate pathway is part of our systematic way of tackling climate change – with regard to both Vonovia's contribution to mitigating climate change and the effects of climate change on our company’s economic development. In continuing to develop and implement our climate pathway, we maintain an overview of the risks, e.g., those resulting from future increases in prices for causing greenhouse gas emissions or the impact of climate change on our buildings, as well as the opportunities, e.g., in the form of climate-resilient and particularly competitive neighborhoods.   The recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD) constitute important guidance in this regard.

Since 2022, Vonovia has been using an IT tool in accordance with EU taxonomy requirements in order to analyze the physical risks associated with climate change. This tool enables physical climate risks to be identified and evaluated for the Group-wide portfolio on a continuous basis using the prescribed climate scenarios (RCP2.6, RCP4.5 and RCP8.5).

This climate risk tool covers Vonovia’s portfolio and development projects in Germany, Austria and Sweden and allows material negative impacts on our business activities due to the effects of climate change to be analyzed at portfolio and property level. The climate risks examined using this tool are heat, drought, increases in precipitation, wind and storms, snow loads and flooding. Depending on the granularity of the available data source, we measure climate risks at the building or neighborhood level and are able to identify the climate risks for each building in the portfolio and, as a result, its vulnerability.

The risk assessment at company level is based on scenario RCP4.5, which, according to the United Nations (UNEP Emissions Gap Report 2023), represents an increase of around 2 to 3 degrees Celsius in the global average temperature that will result from the national contributions to climate change mitigation that have currently been defined and implemented. In this scenario, no material risk at portfolio level has been identified for any of the climate-related hazards up to 2045.

Relevant risks could arise at the level of individual neighborhoods or buildings. As part of Vonovia’s modernization strategy, potential adaptations are to be defined at portfolio level in the future and then implemented individually for the properties or neighborhoods concerned. Adaptation measures include, in particular, insulating buildings and replacing windows to provide protection against heat and cold, creating shade using blinds and shutters, and installing suitable equipment designed to handle the infiltration and absorption of larger amounts of precipitation. In the future, the individual findings from the climate risk analysis will be incorporated into the specific neighborhood profiles that provide the guidelines for managing and developing a neighborhood.

Implementation of the TCFD Recommendations at Vonovia

Implementation of the TCFD Recommendations at Vonovia

Content of the Recommendations

Implementation at Vonovia

Additional Information

Governance

Organizational structureof the company regardingclimate-related risks andopportunities

The entire Management Board bears responsibility for sustainability and climate protection, as well as climate-related risks and opportunities.

2023 Annual Report:The CompanyCorporate StructureSustainability Management at VonoviaManagement SystemEnvironmental IssuesOpportunities and Risks2022 Sustainability Report:Environment and Climate

Management of Opportunities and Risks

In its Strategy, Finance and Sustainability Committee, the Supervisory Board addresses climate protection and relevant risks and opportunities, among other topics. 

The Sustainability Committee – comprising the entire Management Board and representatives of the central functional departments Sustainability/Strategy, Controlling, Communication, Investor Relations and Accounting – determines the strategy and targets and monitors progress.

The central department Sustainability/Strategy, within the executive division of the CEO, coordinates and spearheads the development and implementation of relevant measures.

Climate-related risks are calculated and collated on a half-yearly basis as part of the company-wide risk management process; the process is coordinated by Controlling, with the Management Board taking the final decision on the risk assessment.

Energy efficiency modernization and the expansion of renewable energies for heating and powering the existing portfolio in Germany is the responsibility of the CRO (Regions and Portfolio Management); for Austria, the CDO is responsible, for Sweden the CEO of Victoriahem.

The non-financial performance indicator used in the management system is the Sustainability Performance Index (SPI). It includes the carbon intensity of the housing stock in Germany and the average primary energy consumption for development projects.

Strategy

Actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy and financial planning

As key drivers of long-term business success, climate protection and CO₂ reduction are fundamental components of the corporate strategy.

2023 Annual Report:StrategySustainability Management at VonoviaEnvironmental IssuesRisk Assessment Based on Sustainability Aspects2022 Sustainability Report:Environment and Climate

New Construction and Conversions

A binding climate pathway, taking into account various scenarios, defined in cooperation with the scientific community.

The climate pathway and scenarios for the portfolio are stored in the decarbonization tool.

An extensive modernization program to increase energy efficiency, as well as the use of heat pumps and connections to heating networks (fuel switch).

No material physical risks currently determined; transitory risks including through legislation in Germany (CO₂ pricing) and the European Union, as well as through a lack of cost-effectiveness of energy efficiency modernization and the development of renewable energy generation in the current regulatory framework (balance between investments and capacity for passing on costs/affordability for tenants). 

Opportunities can be found, in particular, in optimization at neighborhood level and our own decentralized energy generation for supplying heat and providing tenants with electricity from renewable energy sources, especially photovoltaics.

Risk Management

How the organizationidentifies, assesses, andmanages climate-relatedrisks

Climate-related risks form part of the company-wide risk management process; half-yearly evaluation of all risks by the management.

2023 Annual Report:Environmental IssuesRisk Assessment Based on Sustainability AspectsOpportunities and Risks2022 Sustainability Report:

Management of Opportunities and Risks

Physical risks are analyzed in a separate climate risk tool using various IPCC scenarios. Material risks are addressed in the further development of the neighborhoods and in the planning for development projects, and appropriate potential adaptations are defined and implemented.

The climate risk analysis performed using the climate risk tool does not indicate any material physical risks for Vonovia’s housing stock.

Metrics and Targets

Metrics and targets usedto assess and managerelevant climate-relatedrisks and opportunities

Extensive data on greenhouse gas emissions based on the GHG emission protocol

2023 Annual Report:StrategyManagement SystemEnvironmental Issues2022 Sustainability Report:Environment and ClimateNew Construction and Conversions

Environmental Key Figures

GHG emissions in the portfolio (in Germany) in 2023: 973,255 metric tons of CO2e (Scopes 1, 2, 3*).

Expansion of renewable energies using photovoltaics (PV): 1,353 installations with a nominal output of 53.1 MWp

Targets:

Virtually greenhouse gas-neutral housing stock by 2045 (<5 kg CO2e per sqm rental area).

Reduction of CO₂ intensity to less than 25 kg CO₂e per sqm of rental area by 2030 in Germany.

Installation of photovoltaic systems with a nominal output of around 300 MWp by 2026.

Reduction in average primary energy consumption in completed new buildings to 27 kWh per sqm by 2025.

  1. *Scope 3.3: “Fuel and energy-related activities upstream”.

CO2 Reduction in the Real Estate Portfolio

The CO2 intensity of the building portfolio represents the central indicator of our climate performance management. It is also an extremely important component of the Sustainability Performance Index (SPI) and therefore of the Management System and the renumeration paid to senior management. In the reporting year, the CO2 intensity for our housing stock in Germany was 31.7 kg CO2e per sqm of rental area, down by around 3.9% year-on-year (2022: 33.0 kg CO2e per sqm). In addition to the modernization measures implemented in the reporting year despite the lower investment volume, this development can also be traced back to numerous energy certificate updates. As the economic conditions remain challenging, for example the increased cost of capital and construction costs and the uncertain subsidy conditions, we have nevertheless kept the medium-term targets of our climate pathway unchanged. For 2024, this equates to a figure that is roughly on a par with the previous year. If, however, we manage to implement our reduction levers successfully, we are confident that we will once again report figures that are below those set out in our climate pathway.

Material performance indicator - SPI

Material Performance Indicator – Carbon intensity of the existing portfolio (in Germany)

Category

Unit

2022

2023

Target for 2024

Carbon intensity of the housing stock Vonovia SE (in Germany)*

kg CO₂e/‌ m² rental area

33.0

31.7

roughly same level as the previous year

  1. * Total portfolio excl. Care segment, based on final energy figures from energy performance certificates, in some cases including specific CO₂ factors from district heating suppliers.

The transformation plan for our housing stock, our climate pathway, consists of three levers:

  1. Saving energy through energy-efficient modernization of the building envelope
  2. Increasing the share of renewable energies in the neighborhood
  3. Fundamental transformation of the energy sector

In order to operationalize this transformation plan, Vonovia uses the decarbonization tool (DCT), which maps its housing stock with all of the relevant ecological and economic characteristics. The DCT provides an overall plan showing how the housing stock needs to be modernized in detail in order to meet the Group’s overall target and the time frame in which this must be done. Individual solution plans are identified for all buildings which are then set out in more specific detail in the plans for energy-efficient modernization and the energy concepts.

In doing so, we adopt a holistic view at neighborhood level, examining both the modernization of the building envelope (insulation of facades, basement ceilings and attics, and replacement of windows) and the conversion of the energy supply to climate-friendly systems in their wider context. We believe that many integrated solutions for energy provision with renewable energies and CO₂ optimization can often be implemented in a more technically feasible and economically viable way within larger neighborhoods. Our approach is shaped by the concept of sequential development. This means that, depending on the efficiency class and existing energy supply, the measures to enhance the individual buildings and advance towards the 2045 targets set in the climate pathway are staggered in some cases. When it comes to the specific implementation process, tailored and economically viable concepts are developed for scalable solutions that focus on linking the heat, electricity and mobility sectors.

Public-sector subsidy programs are being used for many of the modernization measures in order to minimize the costs for our tenants. Here, federal subsidies for energy-efficient buildings (BEG) play a particularly crucial role. Planning in the real estate sector involves long timescales and is complex, especially in a neighborhood context. Uncertainty surrounding the continuation of subsidy programs that have been initiated, or surrounding the structure of programs that have been announced, is currently making it much more difficult for us to plan.

We achieved an overall refurbishment rate of 1.2% in the reporting year. The year-on-year decline (2022: 1.8% excluding Deutsche Wohnen) can be traced back to the fact that the 2023 investment volume was lower owing to the sharp rise in the cost of capital. Nevertheless, we exceeded our target corridor of between 0.3% and 0.8%. This was due to numerous modernization projects implemented by Deutsche Wohnen that had already been commenced before the reporting year and were completed in 2023. Looking ahead to 2024, we expect the refurbishment rate to be roughly on the same level as 2023.

Material performance indicator

Material Performance Indicator – Refurbishment rate (in Germany)

Category

Unit

2022

2023

Target for 2024

Refurbishment rate (in Germany)*

%

1.8

1.2

same level as the previous year

  1. * Change of the calculation basis to completions per calendar year, corresponding correction of the figure for 2022. 2023 actual incl. Deutsche Wohnen (excl. Care segment).

In order to make energy-efficient building refurbishment even more cost-effective in the medium and long term, we continued to forge ahead further with serial refurbishment in the reporting year. Following on from a pilot project implemented in Bochum in 2022, another refurbishment project based on the Energiesprong principle was carried out in the reporting year. In Witten, four and, for the first time, eight-story apartment buildings including six to 24 apartments were fitted with prefabricated, glass-faced facade elements featuring a honeycomb structure that allows solar radiation to be used to generate heat. Heat is also generated by a highly efficient heat pump powered by green electricity generated by photovoltaics on the roof and facades. The windows have integrated blinds and allow for living area ventilation. Overall, the project will upgrade the buildings from energy efficiency class E to A+ after the refurbishment. The project is cost-neutral for tenants in the medium and long term. Preparations for further serial refurbishment projects are currently underway.

Since as early as 2022, we have been accelerating the electrification of heat generation through our heat pump initiative, a key component in our quest to implement our climate pathway. Based on a pilot batch of 50 heating networks involving 108 buildings in Dortmund, primarily implemented in the reporting year, key challenges related to use of the technology in apartment buildings were identified and addressed with relevant stakeholders. In addition to the installation of the air-to-water heat pumps, the focus was also on replacing radiators wherever this was necessary in order to further reduce the supply temperature to enable efficient heat pump operation. The measure will reduce the carbon emissions from the 50 heating networks by 40%. The findings will be used to expand the initiative to cover other regions.

Another aspect of implementing the climate pathway is increasing energy generation from renewable sources. Vonovia continued the program it had launched back in 2021 to expand electricity generation using photovoltaics in the reporting year. The focus is on ensuring that the electricity generated is used directly in the neighborhood – to supply our tenants and to operate heat pumps. The installation of these systems is therefore also closely interlinked with the heat pump initiative and the modernization program.

At the end of the reporting year, Vonovia owned 1,353 photovoltaic systems with an installed output of 53.1 MWp. This outstripped the target of 43.3 MWp by far (+22.6%). Starting in 2024, the pace of PV expansion is to be accelerated significantly again: Instead of our original plan of having around 280 MWp of installed capacity by 2030, we are aiming to install around 300 MWp of capacity by the end of 2026. We are aiming for additional capacity of 80 MWp in the 2024 fiscal year. In the long term, we intend to fit all suitable roof spaces in the German portfolio with PV panels by 2050.

Material performance indicator

Material Performance Indicator – Number of photovoltaic plants

Category

Unit

2022

2023

Target for 2024

Number of photovoltaic plants*

number

527

1,353

Installed output

MWp

19.1

53.1

133.1

  1. * Photovoltaic systems (feed-in points) owned by the Group as of Dec. 31; adjustment of the figures for FY 2022 (exclusion of six contracting systems in Austria).

The reporting year saw Vonovia set up an integrated system for housing-related infrastructure services under the “Quartierwerk“ umbrella. This encompasses activities relating to renewable energies and energy sales, as well as metering services, multimedia and the Internet of Things (IoT).

Vonovia is offering its customers the opportunity to purchase electricity from renewable energy sources via its own energy distribution company (VESG). By providing green energy that has been generated or certified in the neighborhood, we are supplying 45,000 households with around 50 GWh of low-cost electricity and helping them to reduce greenhouse gas emissions. Our objective is to maximize the share of energy we produce ourselves for the benefit of our customers and the environment, and also to use it for our housing-related services, e.g., e-mobility.  The purchase of certified green electricity to supply communal areas makes a further contribution to our climate strategy.

Vonovia is also forging ahead with digitalization in the field of heat supply. In the reporting year, more than 1,450 gas-fired heating systems had already been connected to a digital solution developed in collaboration with the start-up Othermo, which detects heating system failures in real time and supports optimized adjustments to the system technology. This system offers the potential to save around 15% in energy and CO2, with direct benefits for tenants.

The energy innovation team, which is part of the Innovation & Business Building department, actively works to help ensure that climate pathway targets are met by analyzing and testing innovative technologies. Projects in the reporting year focused on the introduction of a simulation tool that allows even complex energy systems and flows in the neighborhood to be mapped in various configurations in a short space of time. This allows the technical and commercial design of new technologies to be analyzed directly in detail, allowing for faster and better decisions in the context of specific neighborhood development. Preparations were also under way for a pilot project for the selection and introduction of an energy management system in the reporting year. The aim is to make a central technical system operational for efficient operational control and optimization as well as flexible marketing of electricity generation from photovoltaics. The energy management system is designed to control energy flows, especially electricity flows, at portfolio level and also prepare forecasts of electricity demand and electricity production depending on user behavior and weather data in order to make optimum use of the spot market for surplus or required electricity. The pilot projects will start at the beginning of 2024. Vonovia is also partnering in two funded research projects. The EU-funded Neutralpath project in Dresden is looking into how the district heating supply temperature can be reduced and the formation of legionella prevented at the same time. Seven different technological systems are being tested are part of the project. The ReFaTEk project is researching what is known as the energy clinker, a technology in which the facade is to serve as an additional heat source for a heat pump via a brine pipeline in the clinker.

A further key lever for our climate pathway is the supply of sufficient quantities of CO₂-free district heating and electricity by the energy sector. This requires the energy sector to implement the targets set by policymakers for phasing out coal and increasing the share of renewable energies in energy or electricity generation. We consider the mandatory municipal heating planning process to be an important step towards this goal. This can provide long-term planning security with respect to the availability of district heating within the municipalities. The German Heat Planning Act (Wärmeplanungsgesetz) also features mandatory targets for the decarbonization of heating networks. One good example in practice is the Bochum heat transition project that Vonovia is involved in. One key element of this project involves adopting an integrated view of heat and electricity generation that takes all stakeholders in the municipality into account. District heating is always an important lever for us where it is economically viable to connect additional properties to a district heating network while making consistent progress in decarbonizing heat generation by public utilities companies. As a result, Vonovia is examining the decarbonization strategies of the most important district heating providers and, based on these conclusions, drawing up potential courses of action for incorporating them into its long-term neighborhood strategy.

The Portfolio Management department, which reports to the Chief Rental Officer (CRO), is responsible for coordinating the energy-efficient modernization activities. The neighborhoods and buildings to be modernized are selected in a targeted manner in cooperation with the regions, and the optimal degree of modernization and modernization roadmap for each building is defined. The investments for the modernization programs and PV expansion are approved by the Management Board. The newly established “Quartierwerk“ unit is also part of the Chief Rental Officer’s (CRO) executive division, meaning that it is closely linked to the management of the portfolio. Innovation & Business Building with the energy innovation team falls under the CEO’s executive division.

In Austria, energy efficiency modernization measures are, just like overall business operations in Austria, the responsibility of the Chief Development Officer (CDO) under the BUWOG umbrella, where they are led by the Real Estate Management division. Since 2011, BUWOG has been a partner of the “klimaaktiv Pakt” climate protection initiative launched by the Austrian Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology. As part of this initiative, BUWOG has defined the goal of achieving a reduction in greenhouse gas emissions of 55% and an increase in energy efficiency of 35% by 2030 compared to the baseline year of 2005. Both targets are likely to be met ahead of time. The highest share of the CO₂ reduction will be accounted for by modernization and improvements to existing stocks, particularly energy-efficient refurbishment, improvements in the efficiency of heating systems and conversion to more environmentally-friendly energy sources, in particular district heating. Furthermore, all oil heating systems are to be replaced by 2030, five years earlier than required by law. BUWOG has had a certified energy management system that is consistent with ISO 50001 standards in place in Austria since 2013/2014 and in Germany since 2018. The system is a tool used voluntarily to systematically manage energy performance and improve it continuously. The corresponding establishment of processes that reflect this policy in the company and clear objectives serve to increase energy efficiency, reduce energy consumption and cut energy costs. The regular review audit was completed successfully in the reporting year.

In Sweden, around 90% of existing Victoriahem buildings are supplied with district heating, the generation of which already produces extremely low CO₂ emissions. Therefore, the road to climate neutrality at Victoriahem will primarily be shaped by further decarbonization of heating supply, coupled with ongoing improvements in energy efficiency. Heat pumps are also being installed in selected buildings during modernization work to support the heat supply and make it more flexible. The aim is to reduce energy consumption (electricity and heat) by 30% per sqm by 2030 compared to 2015. The current reduction level is around 25%. In 2022, Victoriahem also joined the Swedish housing association’s “Allmännyttans klimatinitiativ”, which aims to achieve an energy supply that does not feature any fossil fuels by 2030.

Sustainable Construction and Refurbishment

Vonovia’s new construction activities are helping to create urgently needed new and affordable homes, especially in metropolitan areas. The development business operating under the BUWOG brand is active in both the development of attractive, sustainable and diverse residential neighborhoods in Germany and Austria, and the densification of buildings as part of the development of existing neighborhoods. The activities of the BUWOG development business in Germany and Austria are the responsibility of the Chief Development Officer (CDO), and the individual development projects are approved by the Management Board.

By taking a holistic neighborhood-based approach to developments, we bring together planning expertise and construction. Our focus is on the development of large, inner-city properties in major cities (known as brownfield projects) that require a whole range of requirements to be taken into account. This allows us to create additional homes and avoid additional sealing, for example by converting sealed industrial areas into state-of-the-art residential neighborhoods. Our approach is complemented by our Building Information Management (BIM) strategy, which allows us to identify effective measures on the basis of data from across the entire life cycle of our neighborhoods. This reflects our commitment to long-term sustainability, which takes a close look at every stage of a building’s life – from finding plots of land through to handing over the keys and demolition – in order to minimize its emissions, the impact it has on the environment and the amount of resources that it consumes.

The average primary energy demand of newly constructed buildings, in relation to rental area, is the most important non-financial performance indicator in development. This performance indicator is part of the Sustainability Performance Index (SPI) and planning process and must be made transparent as part of all Management Board approvals of new-build and development projects. In 2023, the average primary energy demand was 25.3 kWh per sqm per year, down considerably on that of the previous year as planned. We anticipate higher primary energy demand for 2024 due to a number of projects resulting from the merger with Deutsche Wohnen.

Material performance indicator - SPI

Material Performance Indicator – Average primary energy requirement – new construction

Category

Unit

2022

2023

Target for 2024

Average primary energy demand – new construction*

kWh/m² p. a.

37.7

25.3

33.7

  1. *Based on energy performance certificates, excluding commercial projects and extensions.

In the reporting year, BUWOG prepared a sustainability strategy for development that is to be implemented starting in 2024. Guides, specifications and tools have been developed in 14 topic areas to address the full range of sustainability aspects in new construction. These include optimized heat supply in the neighborhood, the use of ecological building materials and designs for open spaces. The strategy is based on the use of the German efficiency house standard or the basic criteria of Austria’s “klimaaktiv” initiative.

Numerous results from the previous year’s “Perspectives on the Future of Construction” dialogue process, in which Vonovia had, among other things, made a commitment to give greater consideration to life cycle assessments and to increase the use of sustainable building materials and the recyclability of constructions, were also incorporated into the elaboration of the Development sustainability strategy. The reporting year saw BUWOG become a member of the Timber Construction Coalition (Koalition für Holzbau), an initiative that brings together academics, planners, architects and project developers with the aim of improving acceptance of, and overall conditions for, timber construction in Germany. Timber construction is already playing an increasingly important role at Vonovia: with the “Hygge Höfe” residential neighborhood that is currently under construction, BUWOG is in the process of building a timber construction neighborhood in Berlin-Kaulsdorf, featuring 166 residential units using an innovative timber hybrid construction method. The method saves around 64% in CO2 compared to conventional concrete construction. The method also involves unsealing the soil: A site that was previously fully sealed will be largely unsealed and landscaped as part of the neighborhood development plans.

Designing the residential environment and preserving biodiversity are top priorities for us. Numerous buildings feature green spaces that serve as natural habitats for flora and fauna at ground level, on roofs or on facades. In addition to the optical effects, these green spaces also offer a practical added value, for example, by slowing the flow of rainwater into the partially overburdened municipal sewage system and by making a considerable contribution to the microclimate, especially by preventing urban heat islands in built-up areas.  We also take care to conserve resources and protect the environment during construction. We also take the neighborhood criteria of the DGNB (German Sustainable Building Council) for biodiversity (ENV2.4) and water cycle systems (ENV2.2) into consideration and already meet these standards in various neighborhoods.

Adjusted EBT

Adjusted EBT is the Group’s leading indicator of profitability as of 2024. The IFRS profit for the period is reconciled to earnings before taxes (EBT). This EBT is adjusted to reflect special effects based on the definition that has applied to date (effects that do not relate to the period, recur irregularly or are atypical for business operations). The net financial result is also adjusted to reflect non-cash and actuarial valuation effects that recur irregularly. The further adjustments to reflect the effects of IAS 40 measurement, writedowns, other (Non Core/Other result), net income from non-current financial assets accounted for using the equity method and effects from residential properties held for sale produce the Group’s Adjusted EBT.

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 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.

MFH Sales

We also report on the Other segment, which is not relevant from a corporate management perspective, in our segment reporting. This portfolio involves the sale of multifamily homes that are not proving profitable (MFH Sales).

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.

Monthly In-place Rent

The monthly in-place rent is measured in euros per square meter and is the current gross rental income per month for rented units as agreed in the corresponding rent agreements at the end of the relevant month before deduction of non-transferable ancillary costs divided by the living area of the rented units. 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.

The in-place rent is often referred to as the “Nettokaltmiete” (net rent excl. ancillary costs such as heating, etc.). The monthly in-place rent (in € per square meter) on a like-forlike basis refers to the monthly in-place rent for the residential portfolio that was already held by Vonovia 12 months previously, i.e., portfolio changes during this period are not included in the calculation of the in-place rent on a like-forlike basis. If we also include the increase in rent due to new construction measures and measures to add extra stories, then we arrive at the organic increase in rent.

Monthly In-place Rent

The monthly in-place rent is measured in euros per square meter and is the current gross rental income per month for rented units as agreed in the corresponding rent agreements at the end of the relevant month before deduction of non-transferable ancillary costs divided by the living area of the rented units. 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.

The in-place rent is often referred to as the “Nettokaltmiete” (net rent excl. ancillary costs such as heating, etc.). The monthly in-place rent (in € per square meter) on a like-forlike basis refers to the monthly in-place rent for the residential portfolio that was already held by Vonovia 12 months previously, i.e., portfolio changes during this period are not included in the calculation of the in-place rent on a like-forlike basis. If we also include the increase in rent due to new construction measures and measures to add extra stories, then we arrive at the organic increase in rent.

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.

Net Debt/EBITA

Net Debt/EBITDA reflects average adjusted net debt in relation to the Adjusted EBITDA Total.

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.

Operating Free Cash-Flow

The Adjusted EBT will be used as a basis for a reconciliation to the Operating Free Cash Flow (OFCF) as the leading indicator of internal financing. Depreciation and amortization will be added to Adjusted EBT, and the liquidity contribution made by the Recurring Sales segment, as well as the change in working capital, will be taken into account. Capitalized maintenance and dividend payments made to parties outside of the Group, as well as income tax paid, are subtracted from this figure. This operating free cash flow is a measure of the Group’s operational capacity to generate cash surpluses and, as a result, of its internal financing power.

Rating

Classification of debtors or securities with regard to their creditworthiness or credit quality according to credit ratings. The classification is generally performed by rating agencies.

Rating

Classification of debtors or securities with regard to their creditworthiness or credit quality according to credit ratings. The classification is generally performed by rating agencies.

Rating

Classification of debtors or securities with regard to their creditworthiness or credit quality according to credit ratings. The classification is generally performed by rating agencies.

Rating

Classification of debtors or securities with regard to their creditworthiness or credit quality according to credit ratings. The classification is generally performed by rating agencies.

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).

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).

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).

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).

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).

Non-core

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.

Non-core

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.