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Dear Shareholders, Dear Employees, Dear Readers,

Here at Vonovia, we have adopted a clear stance that has been guiding us in everything we do for many years now. One of our guiding principles is “Seeing the Big Picture – Taking Action.” The message this conveys is that we are masters of our trade. And we are rising to the challenges associated with it. We are resolute in the entrepreneurial decisions we make. This has allowed us to evolve into Europe’s leading residential real estate company over the last few years. We are improving the services we offer our tenants, increasing customer satisfaction and cutting costs. We are doing our bit to help solve social issues. We provide safe homes for well over a million people from across the globe. This is a responsibility that we live up to.


from left: Daniel Riedl Member of the Management Board (CDO); Arnd Fittkau Member of the Management Board (CRO); Rolf Buch Chairman of the Management Board (CEO); Philip Grosse Member of the Management Board (CFO); Ruth Werhahn of the Management Board (CHRO)

Despite the mounting uncertainties in the world around us, our guiding principle remains unchanged. We once again got down to getting things done last year. We took action as opposed to adopting a “wait and see” approach. The intensity of the interest rate turnaround was unusual. It marked the most drastic rise in interest rates in such a short space of time since the Federal Republic of Germany was established.

Our response to this development has been to exercise capital discipline. We adapted our investment strategy, launched an ambitious sale program and entered into new joint venture partnerships to take considerable pressure off our balance sheet. We still have good access to capital in an ongoing difficult environment. At the beginning of 2024, we placed a significantly oversubscribed bond on the UK financial market for the very first time, followed by our first bond in Swiss francs. This is testimony to the trust that international investors place in us. Our ratings are also stable at a high level.

In 2023, we realized real estate sales, including joint venture structures, worth around € 4 billion, doubling our original target for the year. Transactions on this sort of scale are currently a rarity on the market. We sold apartments at prices close to or above the carrying amount; commercial properties were sold at prices slightly below the carrying amount.

While the adjustments we made to our new construction strategy in response to the high interest rates and construction costs were urgently required, we did not decide to stop our construction activities altogether. It goes without saying that we will complete all of the projects we have already started. As a result, 2,425 residential units were created in 2023. We will complete a similar number of apartments this year, too. We are also continuing to develop new construction projects, but only until the building permit stage for the time being. This is our way of sending out a clear signal: It remains our aim to provide affordable homes. We want to, and we will, continue to build. In order to do so, however, we need policymakers to create reliable long-term overall conditions and a stable market environment.

We are also continuing to invest heavily in climate protection. Last year saw us invest € 1.5 billion in the long-term quality of our residential property as we continue on our climate pathway: By 2045, we will manage a virtually climate-neutral portfolio. This, too, remains an ambitious task in financial, energy technology and operational terms. In 2024 we will be increasing our investment volume and, in particular, stepping up our energy-efficient refurbishments. We will also be driving ahead with the expansion of photovoltaics and the installation of heat pumps.

One piece of very good news is that we have had Ruth Werhahn on board as our CHRO since October 1, 2023. She is a proven expert with a wealth of experience. Over the past ten years, our workforce has quadrupled. They put their talents and skills into practice day after day to serve customers – helping us to live up to our most important service promise. Our independent HR executive division will help us to further boost our appeal as an employer.

Let’s take a look at our financial figures:

Our core Rental business continues to perform well. It is supported by a sustained low vacancy rate and synergies resulting from the merger with Deutsche Wohnen. Adjusted EBITDA from our rental activities rose to € 2.4 billion, up 6.5% on the previous year despite disposals.

Adjusted EBITDA Total, including the non-strategic Care business, amounted to € 2.6 billion. Accounting for 92% of our overall business, rental is by far the largest item. The Value-add, Development and Recurring Sales segments fall short of the previous year’s figures as was to be expected due to market conditions. Group FFO is down to € 1.8 billion due to interest rate developments. We are reporting Group FFO per share of € 2.23 for 2023. This means we have met our forecast for 2023 for all key figures.

With a vacancy rate of 2.0%, Vonovia’s portfolio of residential properties is virtually fully occupied as of the reporting date. Rents increased by 3.8%.

On the reporting date, our portfolio comprised around 546,000 apartments and had a fair value of € 83.9 billion. The residential real estate portfolio value dropped 6.6% in the first half of 2023 and 4.2% in the second half due to the changes in the market environment and disposals. On a positive note, however, this trend weakened as the year progressed. As a result of the development in fair value, the EPRA NTA is 16.6% lower than the December 2022 figure at € 38.1 billion. The EPRA NTA per share came to € 46.82 on the reporting date. The pro forma loan-to-value ratio LTV amounts to 46.7%. The target corridor of 40% to 45% remains the relevant reference value.

Based on this financial development and together with the Supervisory Board, we will be proposing a dividend of € 0.90 per share to you on May 8, 2024. This proposal is around 6% higher than the dividend for 2022. We believe that this strikes a good balance between the ongoing need for cost discipline and appropriate participation in our business results. It goes without saying that the decision on the dividend lies with you, our shareholders. We hope, however, that our proposal gives you a clear basis on which to make a decision.

So what lies ahead for us in 2024?

One thing is certain: It will be an interesting year, and one that we have set ambitious targets for. As usual, we will be passionate in our pursuit of these targets. Following the extremely successful sales in the previous year, we aim to sell residential property worth € 3 billion in 2024 to stabilize the LTV. We will be there for our customers, will continue on our climate path and will again invest heavily in our portfolio.

Going forward, we will be making a clearer distinction in our management system between earnings orientation and liquidity orientation. This is our way of reflecting the current market environment and the resulting need to manage our liquidity. Taking into account what is currently a much more relevant sale segment, Group FFO does not allow us to make a sufficient distinction in this regard. While it reflects the earnings contributions made by disposals, it does not capture the liquidity inflows they generate in full. In this respect, Group FFO is a mixture of earnings and cash flow, meaning that it is not a clear performance indicator.

Going forward, Vonovia will reconcile Adjusted EBITDA to earnings before taxes (Adjusted EBT), establishing this as the central measure of earnings. EBT is a standard performance indicator for companies; as such, it offers high levels of transparency and allows for comparisons to be drawn with other industries. Like our existing Adjusted EBITDA, Adjusted EBT is adjusted to reflect effects that do not relate to the period, recur irregularly or are atypical for business operation. Unlike Group FFO, this Adjusted EBT includes depreciation and amortization as a measure of loss in value, but does not include current income taxes, as these are not part of operating value creation.

As the leading indicator of internal financing and, as a result, liquidity management, Vonovia will also be reporting its operating free cash flow (OFCF) in the future.

The overall framework will remain challenging. Nevertheless, we are also witnessing a number of positive trends. The latest inflation data, which reached its lowest level in two and a half years in January 2024, suggests that the investment climate is starting to brighten up. The central banks are signaling stable interest rates at the very least, with a chance of initial interest rate hikes.

The plans we have made are such that we can take action from a position of strength at all times: Our unsecured liabilities are already covered in full, taking into account the latest bond issues, until the end of the third quarter of 2025.

For the financial year, we expect an Adjusted EBITDA contribution in the range of € 2.55 billion to € 2.65 billion, while Adjusted EBT is expected to be in the range of € 1.70 billion to € 1.80 billion. From 2024, we will no longer manage the Care business held for sale as a segment, and will report it under Development to hold in the valuation, but no longer in Adjusted EBITDA. Looking ahead to future developments, we will focus more on increasing our income again once we know for certain that real estate valuations have bottomed out.

The replacement of Group FFO necessitates a new basis for the dividend from 2024. The aim is to ensure a solid dividend based on Adjusted EBT and sufficient financing for investments at all times. As in previous years, shareholders will again have the choice between a cash dividend and a scrip dividend.

I’d like to finish on a personal note:

Since the beginning of the year, more than one million people in Germany have taken to the streets to demonstrate against right-wing extremism. These peaceful demonstrations send out a strong signal for our democracy and for values that are shared by many countries around the world. These are values shared by Ruth Werhahn, Arnd Fittkau, Philip Grosse, Daniel Riedl and myself – as the entire Vonovia Management Board. The determination these people have shown is encouraging.

Vonovia is like Germany itself: diverse, tolerant, humanitarian and reliant on immigration. Just take the example of the Ruhr region: Without immigration, this region could never have established itself as an economic powerhouse and brought prosperity to people throughout Germany.

In this spirit of cohesion and openness, let us address the tasks waiting for us in 2024 with a positive attitude – together with my Management Board team, our employees, our business partners and you, our shareholders.

Bochum, March 2024


Rolf Buch (CEO)
Chairman of the Management Board