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Results of Operations

Overview

The following key figures provide an overview of how Vonovia’s results of operations and their drivers developed in the 2023 fiscal year.

Key Figures on Results of Operations

in € million

2022*

2023

Change in %

Total Segment Revenue (continuing operations)*

5,566.2

5,151.1

-7.5

Revenue in the Rental segment

3,186.7

3,253.4

2.1

Revenue in the Value-add segment

1,272.0

1,224.7

-3.7

Revenue in the Recurring Sales segment

543.4

319.3

-41.2

Revenue in the Development segment*

564.1

353.7

-37.3

Total Segment Revenue from discontinued operations

256.8

266.8

3.9

Adjusted EBITDA Total (continuing operations)*

2,606.1

2,583.8

-0.9

Adjusted EBITDA Rental

2,254.3

2,401.7

6.5

Adjusted EBITDA Value-add

126.7

105.5

-16.7

Adjusted EBITDA Recurring Sales

135.1

63.4

-53.1

Adjusted EBITDA Development*

90.0

13.2

-85.3

Adjusted EBITDA from discontinued operations

63.8

53.9

-15.5

Group FFO (continuing operations)

1,981.6

1,801.6

-9.1

Monthly in-place rent in €/m²

7.49

7.74

3.3

Average area of own apartments in the reporting period
(in thou. m²)

34,525

34,349

-0.5

Average number of own units (number of units)

550,342

547,905

-0.4

Vacancy rate (in %)

2.0

2.0

Maintenance expenses and capitalized maintenance (€/m²)

24.81

21.03

-15.2

thereof expenses for maintenance (€/m²)

12.86

12.41

-3.5

thereof capitalized maintenance (€/m²)

11.95

8.62

-27.9

Number of units bought

969

63

-93.5

Number of units sold

19,760

3,838

-80.6

thereof Recurring Sales

2,710

1,590

-41.3

thereof Non Core/other

17,050

2,248

-86.8

Number of new apartments completed

3,749

2,425

29.4

thereof own apartments

2,071

1,309

-36.8

thereof apartments for sale

1,678

1,116

-33.5

Number of employees (as of December 31)

12,117

11,977

-1.2

  1. *Previous year’s values (

    2022) adjusted to current key figure and segment definition -> [A2] Adjustment to Prior-year Figures.

In the 2023 fiscal year, total segment revenue (continuing operations) came to € 5,151.1 million, down by 7.5% on the value for the previous year (€ 5,566.2 million). This decline was due primarily to lower sales in the Recurring Sales segment and lower proceeds from the sale of real estate inventories due to volume-related aspects.

Total Segment Revenue

Total Segment Revenue

in € million

2022*

2023

Change in %

Rental income

3,191.4

3,259.6

2.1

Other income from property management unless included in the operating expenses in the Rental segment

118.2

129.8

9.8

Income from disposals Recurring Sales

515.8

314.8

-39.0

Internal revenue Value-add

1,152.4

1,093.8

-5.1

Income from disposal of properties

588.4

353.1

-40.0

Total Segment Revenue (continuing operations)

5,566.2

5,151.1

-7.5

  1. *Previous year’s values (

    2022) adjusted to current key figure and segment definition -> [A2] Adjustment to Prior-year Figures.

The following key figures provide an overview of the development in Group FFO and other value drivers in the reporting period.

Group FFO

Group FFO

in € million

2022*

2023

Change in %

Revenue in the Rental segment

3,186.7

3,253.4

2.1

Expenses for maintenance

-443.9

-426.2

-4.0

Operating expenses in the Rental segment

-488.5

-425.5

-12.9

Adjusted EBITDA Rental

2,254.3

2,401.7

6.5

Revenue in the Value-add segment

1,272.0

1,224.7

-3.7

thereof external revenue

119.6

130.9

9.4

thereof internal revenue

1,152.4

1,093.8

-5.1

Operating expenses in the Value-add segment

-1,145.3

-1,119.2

-2.3

Adjusted EBITDA Value-add

126.7

105.5

-16.7

Revenue in the Recurring Sales segment

543.4

319.3

-41.2

Fair value of properties sold adjusted to reflect effects not relating to the period from assets held for sale in the Recurring Sales segment

-391.6

-239.4

-38.9

Adjusted result Recurring Sales

151.8

79.9

-47.4

Selling costs in the Recurring Sales segment

-16.7

-16.5

-1.2

Adjusted EBITDA Recurring Sales

135.1

63.4

-53.1

Revenue from disposal of Development to sell properties

560.6

348.6

-37.8

Cost of Development to sell

-440.4

-300.9

-31.7

Gross profit Development to sell

120.2

47.7

-60.3

Rental revenue Development

3.5

5.1

45.7

Operating expenses in the Development segment

-33.7

-39.6

17.5

Adjusted EBITDA Development*

90.0

13.2

-85.3

Adjusted EBITDA Total (continuing operations)*

2,606.1

2,583.8

-0.9

FFO interest expense*

-492.6

-619.6

25.8

Current income taxes FFO

-136.6

-180.3

32.0

Intragroup losses*

4.7

17.7

>100

Group FFO (continuing operations)*

1,981.6

1,801.6

-9.1

Group FFO per share (continuing operations) in €**

2.51

2.23

-11.1

Group FFO after non-controlling interests

1,895.0

1,717.8

-9.4

Group FFO after non-controlling interests per share in €**

2.40

2.13

-11.4

Group FFO (discontinued operations)

54.0

45.5

-15.7

  1. *Previous year’s values (2022) adjusted to current key figure and segment definition -> [A2] Adjustment to Prior-year Figures.
  2. **Based on the weighted average number of shares carrying dividend rights.

At the end of 2023, Vonovia managed a portfolio comprising 545,919 of its own residential units (2022: 548,524), 164,330 garages and parking spaces (2022: 164,330) and 8,691 commercial units (2022: 8,838). 71,424 residential units (2022: 72,779) were also managed for other owners.

Details on Results of Operations by Segment

Rental Segment

The Rental segment showed positive development overall in the 2023 fiscal year. At the end of 2023, the portfolio had a vacancy rate of 2.0% (end of 2022: 2.0%), meaning that it was nearly fully occupied.

In the 2023 financial year, Rental segment revenue increased by 2.1% to € 3,253.4 million (2022: € 3,186.7 million). Of the segment revenue in the Rental segment in the 2023 reporting period, € 2,790.1 million is attributable to rental income in Germany (2022: € 2,717.9 million), € 341.6 million to rental income in Sweden (2022: € 354.5 million) and € 121.7 million to rental income in Austria (2022: € 114.3 million).

Organic rent growth (twelve-month rolling) totaled 3.8% (3.3% as of December 31, 2022). The current rent increase due to market-related factors came to 2.3% (1.0% as of December 31, 2022) and the increase from property value improvements translated into a further 1.0% (1.6% as of December 31, 2022). All in all, this produced a like-for-like rent increase of 3.3% (2.6% as of December 31, 2022). New construction measures and measures to add extra stories also contributed 0.5% (0.7% as of December 31, 2022) to organic rent growth.

The average monthly in-place rent within the Rental segment at the end of 2023 came to € 7.74 per sqm compared to € 7.49 per sqm as of December 31, 2022. The monthly in-place rent in the German portfolio at the end of December 2023 came to € 7.63 per sqm (December 31, 2022: € 7.40 per sqm), with a figure of € 10.18 per sqm (December 31, 2022: € 9.73 per sqm) for the Swedish portfolio and € 5.47 per sqm for the Austrian portfolio (December 31, 2022: € 5.18 per sqm). The rental income from the portfolio in Sweden reflects all-inclusive rents, meaning that the amounts contain operating, heating and water supply costs.

We adapted our modernization, new construction and maintenance strategy to reflect the current overall financial conditions in the 2023 fiscal year. The overview below provides details on maintenance, modernization and new construction.

Maintenance, Modernization and New Construction

Maintenance, Modernization and New Construction

in € million

2022*

2023

Change in %

Expenses for maintenance

443.9

426.2

-4.0

Capitalized maintenance

412.6

296.3

-28.2

Maintenance measures

856.5

722.5

-15.6

Modernization measures

837.4

470.8

-43.8

New construction (to hold)

572.4

291.2

-49.1

Modernization and new construction measures

1,409.8

762.0

-45.9

Total cost of maintenance, modernization and
new construction

2,266.3

1,484.5

-34.5

  1. * Previous year’s values (​​2022) adjusted to current key figure and segment definition -> [A2] Adjustment to Prior-year Figures.

Operating expenses in the Rental segment in the 2023 fiscal year were down by 12.9% on the figures for the prior year, from € 488.5 million to € 425.5 million. This is due primarily to synergies achieved and positive one-off effects as part of the integration of Deutsche Wohnen. All in all, the Adjusted EBITDA Rental came to € 2,401.7  million in the 2023 fiscal year, up by 6.5% on the prior-year value of € 2,254.3 million.

Value-add Segment

Developments in the Value-add segment were dominated by the new overall conditions for our own craftsmen’s organization. The reduced volume of modernization work, general price increases for construction services and materials, as well as productivity losses due to smaller-scale investments and increased costs due to a change to new technology (switch from gas heating to heat pumps) had a negative impact on economic development. Energy sales, on the other hand, developed positively.

In the Value-add segment, income totaled € 1,224.7 million in the 2023 fiscal year, down by 3.7% on the prior-year figure of € 1,272.0 million. External revenue from our Value-add activities with our end customers rose by 9.4% from € 119.6 million in 2022 to € 130.9 million in 2023. This was due primarily to higher revenue from energy sales. Group revenue fell by 5.1% in the 2023 fiscal year from € 1,152.4 million in 2022 to € 1,093.8 million. This is mainly due to the reduced volume of modernization measures in 2023.

In the 2023 fiscal year, operating expenses in the Value-add segment were down by 2.3% on the figures for the prior year, from € 1,145.3 million to € 1,119.2 million.

The Adjusted EBITDA Value-add came to € 105.5 million in the 2023 fiscal year, 16.7% below the prior-year figure of € 126.7 million.

Recurring Sales Segment

In the Recurring Sales segment, income from the disposal of properties in the 2023 fiscal year was down to € 319.3 million, 41.2% lower than the 2022 value of € 543.4 million due to volume-related factors, with 1,590 units sold (2022: 2,710), 1,201 of which were in Germany (2022: 2,293) and 389 of which were located in Austria (2022: 417). Income of € 214.6 million is attributable to sales in Germany (2022: € 430.8 million) and € 104.7 million to sales in Austria (2022: € 112.6 million).

The fair value step-up came in at 33.4% in the 2023 fiscal year, down on the prior-year value of 38.8%. This was due primarily to lower step-ups for sales in Germany.

Selling costs in the Recurring Sales segment came in at € 16.5 million in 2023, almost on a par with the previous year.

Adjusted EBITDA Recurring Sales came in at € 63.4 million in the 2023 fiscal year, down significantly on the value of € 135.1 million seen in the prior year.

In the 2023 fiscal year, 2,248 residential units from the Non Core/Other portfolio (2022: 17,050) were sold as part of our portfolio adjustment measures, with proceeds totaling € 553.7 million (2022: € 2,726.8 million). At 1.1% in 2023, the fair value step-up for Non Core/Other was lower than for the previous year at 1.7%.

Development Segment

Economic development in the Development segment was hit primarily by the increased construction costs and interest rates in the reporting period.

In the Development to sell area, a total of 1,116 units were completed in the 2023 fiscal year (2022: 1,678 units), 760 in Germany (2022: 484 ) and 356 in Austria (2022: 1,194 units). Income from the disposal of development properties to sell came to € 348.6 million in the 2023 fiscal year (2022: € 560.6 million), with € 296.7 million attributable to project development in Germany (2022: € 257.1 million) and € 51.9 million attributable to project development in Austria (2022: € 303.5 million). The prior-year figures included a global exit (Gäblerstrasse). The resulting gross profit from Development to sell came to € 47.7 million in the 2023 financial year with a margin of 13.7% (2022: € 120.2 million, margin 21.4%).

Development operating expenses came to € 39.6 million in the 2023 fiscal year, 17.5% above the prior-year value of € 33.7 million mainly due to non-capitalizable property development expenses.

The Adjusted EBITDA for the Development segment amounted to € 13.2 million in the 2023 reporting period (2022: € 90.0 million).

In the Development to hold area, a total of 1,309 units were completed in 2023 (2022: 2,071 units), 839 in Germany (2022: 1,338 units), 296 in Austria (2022: 592 units) and 174 in Sweden (2022: 141 units).

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.