Business Outlook

The forecast was based on the accounting principles used in the consolidated financial statements, with the adjustments described elsewhere in the management report being made. The forecast does not take account of any larger acquisitions of real estate portfolios.

Our forecast for the 2024 fiscal year is based on determined and updated corporate planning for the Vonovia Group as a whole, and considers current business developments as well as possible opportunities and risks. It also includes the key overall macroeconomic developments and the economic factors that are relevant to the real estate industry and our corporate strategy. Further information is provided in the sections of the 2023 Annual Report entitled Development of the Economy and the Industry and Fundamental Information About the Group. Beyond this, the Group’s further development remains exposed to general opportunities and risks (see  Opportunities and Risks).

Compared to the opportunities and risks set out in the interim report for H1 2024, the following changes in the assessment of the overall risk position had arisen at the end of the third quarter of 2024: The overall number of risks has decreased from 118 in H1 2024 to 116 at the end of the third quarter. This reflects the fact that four green, non-significant risks are no longer applicable, while two new green, non-significant risks have been added. The number of significant amber risks fell to nine. The “Material impact of legal disputes” risk, which was previously classified as amber, has been reduced, in terms of the amount of loss, due to the recognition in the balance sheet of the risk associated with legal disputes with a social insurance provider in the amount of € 140.0 million (with a maximum risk of € 240.0 million), and is now classified as a green risk. In addition, the loss amount for the risk of “Higher refinancing costs due to changes in risk profile” was increased from € 180-450 million to € 450-900 million, with the probability of occurrence remaining unchanged at 5-39%. This is mainly attributable to an increased margin in a scenario of higher refinancing costs.

We expect the price increases on the construction and commodity markets, in particular, to continue to have a moderate impact on Vonovia and our customers. While these will have a direct impact on ancillary expenses, they will also have an indirect effect on all areas of the economy due to general price increases. We also expect prices for construction materials to remain high, which will affect our construction projects as well. Continued high interest rates and inflation are leading to increased volatility on the equity and debt capital markets. We therefore assess the overall economic situation and developments on an ongoing basis, particularly with regard to the return requirements for investment and divestment decisions.

The EBITDA contribution for our core Rental business is expected to more or less match the previous year’s level. In a year-on-year comparison, organic rent increases and associated higher rental income will be offset by higher rent losses from sales resulting in a smaller portfolio. For the Value-add segment, we anticipate a very strong increase in adjusted EBITDA in 2024, mainly driven by the ramp-up of our investment activities and a positive effect from the leasing of coax networks, which will not be reflected to the same extent next year. We also predict a strong increase in the EBITDA contribution provided by our Development segment based on an increased level of demand for new condominiums. Due to the prioritization of liquidity over profitability in the sale of existing apartments, we expect adjusted EBITDA for the Recurring Sales segment to be moderately below the previous year’s level. At Group level, for 2024 we therefore expect to see an Adjusted EBITDA Total that is slightly higher than in the previous year.

The rise in interest rates over the last two years is resulting in a marked increase in borrowing costs and the associated negative adjusted net financial result. Based on stable depreciation and amortization, we therefore expect Adjusted EBT to be slightly below the previous year’s level.

Due in particular to heavier investment in our existing portfolio, we expect our investment activity to increase in 2024. In addition, we expect the value of our company to increase further and, as a result, predict a slight increase in EPRA NTA per share, before taking into consideration any further market-related changes in property values.

The values for the individual weighted targets for the 2024 fiscal year produce a forecast of 100% for the Sustainability Performance Index.

The following table, which presents material and selected key figures, provides an overview of our forecast for 2024 and an initial outlook for the 2025 fiscal year.

Bochum, October 29, 2024

The Management Board