Development of the Economy and the Industry
According to the European Commission, the European economy has lost momentum following its robust expansion in the years following the pandemic in 2021 and 2022 and against the backdrop of the high cost of living, weak foreign demand and tighter monetary policy. In its fall forecast, the Commission expects GDP growth of 0.6% in the EU and in the eurozone for 2023. Economic activity is expected to recover slightly in the future as consumption picks up thanks to a continued robust labor market, sustained wage growth and a further slowdown in inflation. In light of the challenging underlying conditions, the Federal Statistical Office (Destatis) estimates that the German economy shrank by 0.3% in terms of gross domestic product (GDP) in 2023 compared to the previous year. According to Destatis, this meant that the recovery from the deep slump in the coronavirus year 2020 was not sustained. According to the National Institute of Economic Research (NIER), gross domestic product in Sweden is estimated to have fallen by 0.2% in 2023. The Swedish economy is running below capacity and the output gap is likely to widen in 2024. According to the Institute of Economic Research, Austrian GDP is expected to have contracted by 0.8%. The economy is being adversely affected by lower real incomes due to inflation and a global industrial downturn. For 2024, GDP growth of 0.9% is forecast for Germany (IfW Kiel), 1.0% for Sweden (National Institute of Economic Research, NIER) and 0.9% for Austria (Institute of Economic Research, WIFO).
According to the German Federal Employment Agency, the German labor market also felt the impact of the weak economy. Unemployment and underemployment (excluding short-time work) increased year-on-year. However, employment also increased slightly at the same time. The unemployment rate based on the total civilian labor force rose by 0.4 percentage points to 5.7% on average in 2023. The NIER estimates the unemployment rate in Sweden at 7.7% in 2023, which is approx. 0.2 percentage points more than in the previous year. According to national calculations by the Austrian Public Employment Service (AMS), the unemployment rate in Austria was 6.4% and thus 0.1 percentage points higher than in the previous year. Based on respective national definitions, the average unemployment rate expected in 2024 is 5.8% for Germany (IfW Kiel), 8.4% in Sweden (NIER) and 6.4% in Austria (WIFO).
Inflation weakened again in 2023, following a noticeable increase in 2022 due to pressure associated with the prices of energy, food and other raw materials. Measured against the respective national Consumer Price Indexes (CPI), the average inflation rate was likely 5.9% in Germany, 8.5% in Sweden and 7.8% in Austria, based on figures from the national statistical offices. It is expected that the price spikes will continue to tail off in 2024 and that inflation will be lower. Among other things, the declining price trends in energy, food and consumer staples are cited as price dampeners for Germany, with lower energy and raw material prices for Sweden and lower fuel prices for Austria. Based on respective national definitions, a CPI increase of 2.3% is expected for Germany (IfW Kiel), 2.9% for Sweden (National Institute of Economic Research) and 4.0% for Austria (WIFO).
In a quest to make a timely return to its 2% medium-term inflation target, the European Central Bank (ECB) raised key rates further in several steps in 2023, most recently to 4.50% in September 2023. According to the IfW Kiel, the cycle of interest rate hikes has probably come to an end. High inflation also prompted the Swedish Riksbank to take further steps to lift its policy rate starting at the beginning of the year, most recently raising it to 4.00% in September 2023. According to the National Institute of Economic Research, the policy rate could fall again from summer 2024. In this overall environment, interest rates for construction in Germany, Sweden and Austria were higher on average in 2023 than in the previous year. In Germany, there were signs of a slight decline in interest rates for construction at the end of the year.
The interest rate environment is having an adverse impact on the real estate markets. The residential property markets had already begun to cool down in the course of 2022 and the residential investment market is dominated by price adjustment processes and low transaction figures. Despite this, according to Savills, the underlying conditions on the housing market in Germany are very attractive from an investor’s perspective. The correction in prices caused by interest rates in the past year is being counteracted by a further short-term increase in supply shortages. The situation on the rental apartment market is likely to continue to tighten from the tenant perspective, and most owners can expect further rental growth. According to bulwiengesa, demand in this area is also growing due to the shift of potential buyers into the rental market. Quoted rents continued to increase across Germany; empirica reports that they were 5.7% higher on average over all years of construction in the fourth quarter of 2023 (new construction 5.6%) than in the same quarter of the previous year. According to DB Research, new contract rents are expected to grow by around 5% in the current year, and rents for existing contracts by around 2.2%. According to data supplied by SCB, rents in Sweden rose by an average of 4.1% in 2023. The initial data on rent negotiations for 2024 from “Hem & Hyra,” the member magazine published by the Swedish tenants’ association (“Hyresgästföreningen”), point towards a further sharp rise in rents. In Austria, rents (including newly let apartments) increased in 2023 compared to the previous year by 7.9% according to the Austrian statistical office. According to RE/MAX, rents not subject to rent restrictions are likely to continue to rise in 2024 due to demand.
The pace of purchase price growth cooled noticeably in Germany, Sweden and Austria in 2022. The trend towards declining prices in Germany generally continued in 2023. The empirica price index for condominiums (all years of construction) was 5.5% lower in the fourth quarter of 2023 compared to the same period of the previous year. In the new construction segment, the price index was up by 0.2% year-on-year in the fourth quarter of 2023 thanks to a slight increase from the mid-point of the year onwards. DB Research assumes that the market adjustment will soon be complete. According to Svensk Mäklarstatistik, prices for tenant-owned apartments (Bostadsrätter) in Sweden were 1.4% higher in December 2023 compared with the same month of the previous year. However, after a noticeable recovery at the start of 2023, prices began to fall again in the last quarter of the year. Swedbank’s experts expect residential real estate prices to bottom out in the first half of 2024. The values of the current residential real estate price index of the Austrian central bank (OeNB) on the basis of new and used condominiums and single-family residences show a decrease in Austria in the third quarter of 2023 of 2.9% compared with the previous year. Measured in terms of quarter-on-quarter increases, residential property prices fell by around 2% in the fourth quarter of 2022. In the first to third quarters of 2023, the decline was then much more moderate at between -0.2% and -0.4%. According to RE/MAX, the price trend for residential property in Austria will initially take a downward trajectory in 2024.
The size of the population in Germany, Sweden and Austria is estimated to have risen again in 2023 and is expected to increase further. There is still a shortage of apartments in many large cities and urban areas. Construction activity, however, is expected to drop. The current mix of high construction prices and increased interest rates is having a noticeable impact. The GdW estimates that only 242,000 apartments will have been completed in Germany in 2023, compared to 295,000 in 2022. This figure could fall to 214,000 in 2024. The German federal government had set itself the goal of building 400,000 new apartments per year in Germany. According to JLL, the declining volume of new construction in years to come will further increase the excess demand on the rental apartment markets in particular. Boverket estimates that around 67,000 apartments will have to be built every year in Sweden until 2030. In 2023, only around 60,000 apartments are expected to have been completed. According to Boverket’s calculations, completions will fall to around 40,000 apartments in 2024 and around 25,000 apartments in 2025. This means that the additional annual need will not be met. According to the OeNB, Austria is witnessing the end of a pronounced residential construction cycle. According to Bank Austria, residential construction activity there has addressed the marked increase in the demand for homes in recent years. The volume of residential construction will shrink significantly in 2023 and 2024. Although the expected new construction activity should largely meet demand in terms of volume, Bank Austria says it remains to be seen whether demand will be met in all segments, especially in the affordable housing segment.
Residential construction is in a difficult phase in all three countries due to the combination of higher interest rates, less favorable financing conditions and increased construction costs. In Germany, the government had also reduced new construction subsidies, and it imposed more stringent new construction standards at the start of 2023. In addition, there is uncertainty surrounding housing policy after the 2021 supplementary budget was declared unlawful at the end of 2023, requiring the renegotiation of the 2024 budget. Investment subsidies for rental apartments in Sweden were discontinued as of the end of 2022. In the current circumstances, new construction developments are barely viable in commercial terms.
The German residential investment market was cautious in 2023. According to CBRE, the transaction volume amounted to € 5.7 billion, 59% lower than in the previous year and the lowest transaction volume since 2011. The main reasons given for this weak development are the difference in price expectations between buyers and sellers, as well as the uncertainties following the German Buildings Energy Act (GEG) and the associated loss of investor confidence. According to CBRE, prime yields in the top seven cities have risen by almost 80 basis points to 3.34% since the end of 2022. CBRE expects the residential transaction market to pick up in 2024 with an investment volume of around € 8 billion. The drivers for this include the ongoing portfolio adjustments of listed real estate companies and the refinancing gap of late-cycle investors. According to Colliers, properties worth € 7.8 billion were traded across all segments on the Swedish transaction market in 2023, representing a year-on-year decrease of approx. 59%. In terms of transaction volume, residential properties were the second-largest asset class after logistics properties with a share of 23% (2022: 28%). According to CBRE, the Austrian real estate investment market saw a transaction volume of approximately € 2.9 billion across all segments in the 2023 fiscal year, down by around one-third on the previous year. The share of the residential segment stood at only 9%.
Housing policy developments in 2023 and at the start of 2024 in Germany included changes to the GEG, in which the permissible primary energy level for new construction was tightened at the start of 2023. On January 1, 2024, an amendment came into force aimed at increasing the proportion of renewable energies in heating systems and at reducing emissions. Reforms were also made to the Federal Funding for Efficient Buildings (BEG): Since the beginning of 2023, new conditions have applied for refurbishments to achieve energy-efficiency building standards as well as for individual measures. Since March 1, 2023, funding guidelines have been available for climate-friendly new construction, with loans available on more favorable terms for environmentally friendly buildings that meet the KfW Efficiency House 40 standard. However, the funding had been used up by December 2023. Applications should be possible again after the 2024 budget is in force. The new BEG – Individual Measures Directive also came into force on January 1, 2024. This directive promotes the replacement of fossil fuel heating systems with climate-friendly ones by subsidizing investment costs. A law on the division of CO2 costs between landlord and tenant came into force on January 1, 2023, and the costs per ton of CO2 emitted increased from the start of 2024. The straight-line rate for the depreciation of residential buildings was increased from 2% to 3% as of January 1, 2023 and applies to residential buildings completed from January 2023. A proposed declining balance depreciation for new residential construction as part of the German Growth Opportunities Act has been postponed for now. An agreement reached in December on the reform of the EU Buildings Directive provides for, among other things, the reduction of energy consumption in residential buildings. The EU is waiving the obligation to refurbish poorly insulated private residential buildings. The agreement still has to be formally approved by the respective EU institutions. At the end of June 2023, an expert commission convened by the Berlin Senate came to the conclusion that the socialization of major residential real estate companies is possible from a legal perspective. The Berlin State Government is now examining a framework socialization act. In Austria, indicative rents were increased as of April 1, 2023, with category-based rents being increased effective July 1, 2023. From 2024, a rent cap will apply that limits the increase in indicative rents, category-based rents and rents for non-profit apartments. This does not include unrestricted rental agreements.
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.
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.
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.
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.