Portfolio Structure

Portfolio in the Property Management Business

As of December 31, 2023, the Group had a total real estate portfolio comprising 545,919 residential units (2022: 548,524), 164,330 garages and parking spaces (2022: 164,330) and 8,691 commercial units (2022: 8,838). Our locations span 616 cities, towns and municipalities in Germany, Sweden and Austria. 71,424 residential units are also managed for other owners. Most of the properties in the Group’s portfolio are multifamily homes.

In terms of fair value, around 89% of the real estate portfolio is located in Germany. The Swedish portfolio accounts for around 8% of the fair value, while the share of the Austrian portfolio comes to around 3%. The portfolio is as follows as of December 31, 2023:

Portfolio and Fair Value by Country

	Portfolio			Fair value*
	Residential units	Living area (in thou. m²)	Vacancy (in %)	(in € million)	(in €/m²)	In-place rent multiplier**

Vonovia Germany	485,074	29,830	1.7	70,618.1	2,297	25.1
Vonovia Sweden	39,629	2,826	3.7	6,402.5	2,088	17.9
Vonovia Austria	21,216	1,560	4.4	2,771.6	1,612	22.5
Vonovia total	545,919	34,215	2.0	79,792.2	2,246	24.2

*Fair value of the developed land excluding € 4,135.4 million, of which € 494.5 million for undeveloped land and inheritable building rights granted, € 226.0 million for assets under construction, € 2,104.2 million for development, € 936.9 million for care portfolio and € 373.8 million for other.
**Shown based on the country-specific definition (see glossary Monthly In-place Rent).

Rent and Rental Growth by Country

	In-place rent*			Rent increase
	Total (p. a. in € million)	Residential (p. a. in € million)	Residential (in €/m²)	Organic (in %)	Market rent forecast valuation (in % p. a.)**

Vonovia Germany	2,811	2,681	7.63	3.5	2.1
Vonovia Sweden	358	332	10.18	4.9	2.2
Vonovia Austria	123	98	5.47	7.7	1.7
Vonovia total	3,292	3,111	7.74	3.8	2.1

*Shown based on the country-specific definition (see glossary Monthly In-place Rent).
**10-year horizon higher (see chapter on fair values in the management report).

As of December 31, 2023, the Group’s real estate portfolio across Germany comprised 485,074 residential units, 122,330 garages and parking spaces and 5,981 commercial units distributed across 465 cities, towns and municipalities. The total living area amounted to 29,830,046 m², with the average apartment size coming in at around 61 m². With a vacancy rate of 1.7%, an average monthly in-place rent of € 7.63 per m² was generated in Germany. The annualized in-place rent for the residential portfolio as of December 31, 2023, came to € 2,681 million for apartments.

In Sweden, the Group’s real estate portfolio comprised 39,629 residential units spanning a total living area of 2,825,617 m², 25,459 garages and parking spaces and 2,115 commercial units. With a vacancy rate of 3.7%, the residential portfolio generated annualized in-place rent of € 332 million as of December 31, 2023. The apartments, which average 71 m² in size, generate monthly in-place rent of € 10.18 per m² (inclusive). Most of them are located in the Stockholm, Gothenburg and Malmö regions.

In the Austrian portfolio, which is largely located in Vienna, Vonovia achieved an annualized in-place rent of € 98 million as of December 31, 2023, with a vacancy rate of 4.4% in the residential portfolio, which comprises 21,216 units covering total living space of 1,559,542 m². The monthly in-place rent amounted to € 5.47 per m² with an average apartment size of around 74 m². The portfolio also comprised 16,541 garages and parking spaces and 595 commercial units.

Changes in the Portfolio

There were no major acquisitions in the course of 2023.

Properties from the portfolio earmarked for sale were disposed of in several transactions as part of the implementation of the portfolio management strategy. At the time of each transfer of possession, benefits and encumbrances, the statistics for the portfolios sold were as follows:

Disposal portfolios

				In-place rent*
	Residential units	Living area (in thou. m²)	Vacancy (in %)	Residential (p. a. in € million)	Residential (in €/m²)

Disposal portfolios 2023	2,111	139.3	1.9	17.0	11.43

*Shown based on the country-specific definition (see glossary: monthly in-place rent).

Vonovia continues to develop its portfolio dynamically. In addition to the sale of larger housing stocks, Vonovia’s portfolio changed primarily in 2023 as a result of the construction of new apartments and attic extensions on the one hand, and disposals of condominiums and multifamily homes from the portfolio earmarked for sale on the other.

Vonovia invests in its strategic holdings in particular in line with its climate path to promote sustainability and in line with its innovation strategy. We act on behalf of neighborhoods with the (new) development of our urban portfolios. The lion’s share of the portfolio in Germany consists of neighborhoods that we have classified as urban quarters. The remaining existing buildings largely comprise smaller clusters of buildings and solitary properties that we have grouped together as urban clusters. Even though, unlike urban quarters, urban clusters do not relate to entire neighborhoods, they are also managed using the same long-term asset and property management approaches based on our operating platform.

Following the implementation of the annual structured reassessment of all potential, as of December 31, 2023, Vonovia’s portfolio is as follows:

Portfolio and Fair Value by Strategy

Portfolio and Fair Value by Portfolio

	Portfolio			Fair value*
	Residential units	Living area (in thou. m²)	Vacancy (in %)	(in € million)	(in €/m²)

Strategic	420,604	25,720	1.6	59,807.8	2,280
Urban Quarters	339,941	20,591	1.5	48,927.4	2,334
Urban Clusters	80,663	5,129	1.8	10,880.4	2,064
Recurring Sales	26,996	1,850	2.5	4,383.0	2,322
MFH Sales	22,421	1,420	1.1	4,778.0	3,230
Non Core	15,053	840	4.3	1,649.4	1,452
Vonovia Germany	485,074	29,830	1.7	70,618.1	2,297

*Fair value of the developed land excluding undeveloped land and inheritable building rights granted, assets under construction, development, Care portfolio and other.

Rent and Rental Growth by Strategy

Rent and Rental Growth by Portfolio

	In-place rent			Rent increase
	Total (p. a. in € million)	Residential (p. a. in € million)	Residential (in €/m²)	Organic (in %)

Strategic	2,380	2,298	7.57	3.6
Urban Quarters	1,897	1,837	7.56	3.7
Urban Clusters	483	460	7.63	3.5
Recurring Sales	169	163	7.51	2.6
MFH Sales	165	156	9.28	2.5
Non Core	97	65	6.71	2.8
Vonovia Germany	2,811	2,681	7.63	3.5

In order to boost transparency in portfolio presentation, we also break our portfolio in Germany down into 15 regional markets. The regional market classification is orientated toward the residential real estate market regions in Germany. These markets are core towns/cities and their surroundings, mainly urban areas. Our decision to focus on the regional markets that are particularly relevant to Vonovia is our way of looking ahead to the future and provides an overview of our strategic core portfolio in Germany.

In relation to the fair value, 95% of our German portfolio is located in 15 regional markets. Only a small part of our strategic portfolios is located outside of these 15 markets. We have referred to this group as “Other strategic locations”. Our stocks earmarked for sale from the “Recurring Sales”; “MFH Sales” and “Non Core“subportfolios in locations that do not include any strategic stocks are shown as “Non-strategic locations”. The fact that our portfolio is spread nationwide makes us more independent of the circumstances prevailing on individual regional markets.

As of December 31, 2023, the German portfolio is as follows, broken down into regional markets:

Portfolio and Fair Value by Regional Market

	Portfolio			Fair value*
	Residential units	Living area (in thou. m²)	Vacancy (in %)	(in € million)	(in €/m²)	In-place rent multiplier

Berlin	143,057	8,562	0.8	23,881.0	2,704	29.4
Rhine Main Area	36,528	2,306	2.4	6,610.7	2,794	25.1
Southern Ruhr Area	42,972	2,654	2.5	5,168.6	1,917	22.8
Rhineland	31,578	2,074	1.8	5,045.8	2,367	24.0
Dresden	44,899	2,600	2.3	5,031.5	1,834	22.6
Hamburg	20,108	1,257	1.1	3,229.2	2,505	25.8
Hanover	22,077	1,391	2.0	2,886.6	2,002	22.4
Kiel	25,299	1,455	1.9	2,774.6	1,855	21.1
Munich	10,523	682	1.3	2,743.7	3,884	33.9
Stuttgart	13,323	838	1.6	2,249.5	2,637	24.9
Northern Ruhr Area	24,383	1,503	2.2	2,044.6	1,347	17.4
Leipzig	14,245	936	2.2	1,890.6	1,873	23.6
Bremen	11,714	712	1.6	1,439.3	1,971	24.6
Westphalia	9,435	617	2.0	1,091.3	1,750	20.5
Freiburg	4,033	275	0.5	727.1	2,621	25.5
Other strategic locations	27,515	1,746	2.8	3,394.9	1,909	21.5
Total strategic locations	481,689	29,607	1.7	70,209.1	2,303	25.2
Non-strategic locations	3,385	223	3.3	409.0	1,649	18.1
Vonovia Germany	485,074	29,830	1.7	70,618.1	2,297	25.1

*Fair value of the developed land excluding undeveloped land and inheritable building rights granted, assets under construction, development, Care portfolio and other.

Rent and Rental Growth by Regional Market

	In-place rent			Rent increase
	Total (p. a. in € million)	Residential (p. a. in € million)	Residential (in €/m²)	Organic (in %)	Market rent forecast valuation (in % p. a.)*

Berlin	813	774	7.60	3.9	2.3
Rhine Main Area	263	253	9.34	2.8	2.2
Southern Ruhr Area	226	220	7.11	4.3	1.8
Rhineland	210	200	8.19	2.7	2.1
Dresden	222	208	6.82	2.8	2.1
Hamburg	125	120	8.07	2.9	2.1
Hanover	129	121	7.42	3.2	2.0
Kiel	132	126	7.40	4.6	2.0
Munich	81	77	9.53	6.0	2.3
Stuttgart	90	88	8.88	3.7	2.2
Northern Ruhr Area	118	114	6.45	2.7	1.6
Leipzig	80	73	6.65	2.9	2.0
Bremen	59	56	6.67	2.9	2.0
Westphalia	53	52	7.18	4.0	2.0
Freiburg	29	28	8.46	2.9	2.0
Other strategic locations	158	152	7.50	2.9	2.0
Total strategic locations	2,788	2,663	7.63	3.5	2.1
Non-strategic locations	23	18	7.07	2.0	1.9
Vonovia Germany	2,811	2,681	7.63	3.5	2.1

*10-year horizon higher (see chapter on fair values in the management report).

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)

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

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

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

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

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

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

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)

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

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)

Non-core