36 Assets and Liabilities Held for Sale and Assets and Liabilities of Discontinued Operations
Accounting Policies
Assets held for sale include those non-current assets that can, and are extremely likely to be, sold at standard conditions in their current state. A sale is deemed to be highly probable if there is a commitment to a plan to sell the asset, an active program to locate a buyer and complete the plan has been initiated, the asset is being actively marketed for sale at a reasonable price, and a sale is expected to be completed within one year of the date on which the asset is classified as held for sale. Investment properties held for sale are recognized at the contractually agreed sales price or, if this is not available, at the estimated sales price. If there is a disposal group, it is recognized at fair value less costs to sell, if the latter is lower than the net carrying amount of the disposal group.
This item not only includes individual non-current assets that are to be sold, but also groups of assets (disposal groups). Discontinued operations are reported separately as an item in their own right. In cases involving disposal groups and discontinued operations, all liabilities to be sold together with the corresponding assets as part of one and the same transaction are also reclassified to the items “Liabilities in connection with assets held for sale” or “Liabilities of discontinued operations.”
Vonovia accounts for investment properties as assets held for sale when notarized purchase contracts have been signed or a declaration of intent to purchase has been signed by both parties as of the reporting date but transfer of title will, under the contract, not take place until the subsequent reporting period. Investment properties held for sale are recognized at the contractually agreed sales price. If there is a disposal group, it is recognized at fair value less costs to sell, if the latter is lower than the net carrying amount of the disposal group.
A discontinued operation refers to a scenario in which a separate major line of business or a geographical area of operations is classed as held for sale, or if a business activity is part of a single coordinated plan for such a sale. A line of business has to be distinct from the other activities for accounting purposes before it can be classified as a discontinued operation. The result is presented separately from the continuing operations in the consolidated income statement. The comparative year is restated as if the discontinued operation had been classified as such from the start of that year.
Assets and Liabilities Held for Sale
As part of Vonovia’s efforts to sell off a portfolio in Berlin, a notarized sales contract was successfully concluded on April 23, 2024. Two companies with around 4,500 residential units and a real estate value of approx. € 700.0 million will be disposed of within the scope of this transaction. The assets and liabilities of the two affected property-holding companies (share deal) are therefore recognized as a disposal group in the balance sheet as of December 31, 2024. Cash and cash equivalents of € 8.2 million are included as part of the disposal group. The other assets are almost exclusively composed of investment properties in the Rental segment. Liabilities mainly comprise deferred tax liabilities.
Vonovia had successfully concluded a notarized sales contract for around 1,970 residential units and six commercial units in the Rental segment on July 26, 2024. The purchase price of around € 300.0 million is slightly higher than the carrying amounts of the properties sold recognized at the time of the negotiations. Part of the portfolio had already been transferred as of the reporting date. Assets worth around € 213.0 million, for which the risks and rewards are expected to be transferred in the first half of 2025, are presented as assets held for sale in the balance sheet as of December 31, 2024.
The increase during the fiscal year is also due to other portfolios in the Rental segment where sales efforts have progressed to the point that a sale within one year can be expected. The purchase price estimates/offers to date are slightly higher than the carrying amounts recognized for the properties to be sold.
The sales during the year of real estate portfolios from the Rental segment which, as of December 31, 2023, had been classified as assets and liabilities held for sale had the opposite effect.
Impairment Losses on the Disposal Group
The management currently expects the purchase price to match the balance of IFRS 5 assets and liabilities less costs to sell.
Assets and Liabilities Held for Sale of the Discontinued Operation
As of December 31, 2024, the assets and liabilities of the discontinued Care segment were as follows:
Assets from the discontinued operations
in € million | Dec. 31, 2023 | Dec. 31, 2024 | |||
Intangible assets | 22.6 | 9.3 | |||
Property, plant and equipment | 28.9 | 34.3 | |||
Investment properties | 619.4 | 606.0 | |||
Other assets | 40.3 | 4.0 | |||
Total non-current assets of discontinued operations | 711.2 | 653.6 | |||
Inventories | 0.9 | 0.5 | |||
Trade receivables | 9.0 | 25.9 | |||
Other assets | 2.0 | 5.9 | |||
Income tax receivables | 2.6 | 0.5 | |||
Cash and cash equivalents | 44.4 | 43.5 | |||
Total current assets of discontinued operations | 58.9 | 76.3 | |||
Total assets of discontinued operations | 770.1 | 729.9 | |||
The drop in non-current assets and liabilities of the discontinued operation is due to the sale of Care properties generating proceeds on disposal of € 87.7 million (2023: € - million) with a carrying amount of € 90.8 million (2023: € - million). This was offset primarily by capitalizable maintenance and modernization expenses within investment properties.
Liabilities from the discontinued operations
in € million | Dec. 31, 2023 | Dec. 31, 2024 | |||
Provisions | 30.7 | 32.4 | |||
Non-derivative financial liabilities | 35.6 | – | |||
Lease liabilities | 3.6 | 1.7 | |||
Deferred tax liabilities | 23.2 | 5.0 | |||
Total non-current liabilities of discontinued operations | 93.1 | 39.1 | |||
Provisions | 1.0 | 13.3 | |||
Trade payables | 11.2 | 6.4 | |||
Non-derivative financial liabilities | 0.8 | – | |||
Lease liabilities | 1.0 | 1.8 | |||
Current income taxes | 11.4 | 0.3 | |||
Other liabilities | 23.5 | 16.5 | |||
Total current liabilities of discontinued operations | 48.9 | 38.3 | |||
Total liabilities of discontinued operations | 142.0 | 77.4 | |||
The earnings contribution from discontinued operations is comprised as follows.
Earnings contribution from the discontinued operations
in € million | 2023 | 2024 | |||
Revenue from property letting | 0.6 | – | |||
Other revenue from property management | 266.7 | 296.2 | |||
Revenue from property management | 267.3 | 296.2 | |||
Income from disposal of properties | – | 87.7 | |||
Carrying amount of properties sold | – | -90.8 | |||
Profit from the disposal of properties | – | -3.1 | |||
Net income from fair value adjustments of investment properties | -193.3 | -8.2 | |||
Cost of materials | -55.4 | -54.5 | |||
Personnel expenses | -164.3 | -184.0 | |||
Depreciation and amortization | -53.9 | – | |||
Other operating income | 27.3 | 17.6 | |||
Net income from the derecognition of financial assets measured at amortized cost | 0.4 | 0.3 | |||
Other operating expenses | -20.7 | -22.1 | |||
Interest income | 0.2 | ||||
Interest expenses | -1.2 | -1.7 | |||
Earnings before tax | -193.8 | 40.7 | |||
Income taxes | 45.7 | -0.7 | |||
Profit for the period from discontinued operations | -148.1 | 40.0 | |||
Valuation result from discontinued operations | – | -13.4 | |||
Profit for the period from discontinued operations | -148.1 | 26.6 | |||
Intra-Group transactions were eliminated from the consolidated financial results in full. The eliminations were allocated to continuing operations and discontinued operations so as to take account of the decision not to continue these transactions after the disposal, as the Management Board considers this type of presentation to be useful.
For this purpose, the Management Board has eliminated the revenue generated from transactions with continuing operations in the result from continuing operations, as no services will be exchanged between the continuing operations and the discontinued operations after the sale.
In the fiscal year, in addition to the sale of three nursing care properties for which the transfer of title had already been completed in 2024, further sales contracts were signed for 40 nursing care properties and the “Katharinenhof” and “PFLEGEN & WOHNEN HAMBURG” nursing care businesses. The transactions for which the contracts have been signed include all assets and liabilities of the discontinued operations and are scheduled to result in a transfer of title in the first nine months of 2025.
Disclosures on Employees
As of December 31, 2024, Vonovia had 3,912 employees (December 31, 2023: 3,806) working in the business area belonging to the discontinued operations. 2,977 were female as of December 31, 2024 (December 31, 2023: 2,931) and 935 were male (December 31, 2023: 875). The average figure for the year was 3,881 employees (2023: 3,864). As of December 31, 2024, Vonovia had 417 apprentices (December 31, 2023: 385) working in the business area belonging to the discontinued operations.
Cumulative Income or Expenses Included in Other Comprehensive Income
A cumulative result from the measurement of actuarial gains and losses in connection with the disposal group in the amount of € -10.0 million taking into account deferred tax effects (December 31, 2023: € -12.8 million), and € -11.9 million excluding tax effects (December 31, 2023: € -15.2 million), is included in other comprehensive income.
€ -2.4 million (2023: € 1.1 million) of the gains and losses recognized in other comprehensive income during the period, or € -2.8 million (2023: € 0.9 million) excluding tax effects, are attributable to Vonovia’s shareholders and € -0.3 million (2023: € 0.2 million), or € -0.4 million (2023: € 0.1 million) excluding tax effects, is attributable to non-controlling shareholders.
Earnings per Share
The earnings per share attributable to the profit for the period of the discontinued operations came to € 0.03 (2023: € -0.16) for the 2024 fiscal year.
Cash Flows From the Discontinued Operation
Key Data from the Statement of Cash Flows
Cash Flows from the discontinued operations
in € million | 2023 | 2024 | |||
Cash flow from operating activities | 57.1 | 47.1 | |||
Cash flow from investing activities | -43.2 | -46.4 | |||
Cash flow from financing activities | -11.1 | -1.6 | |||
Net changes in cash and cash equivalents of discontinued operations | 2.8 | -0.9 | |||
Cash and cash equivalents at the beginning of the period | 41.6 | 44.4 | |||
Cash and cash equivalents at the end of the period of discontinued operations | 44.4 | 43.5 | |||
Impairment Losses on the Discontinued
Operations
Impairment Losses on the Discontinued Operations at the lower of its carrying amount and fair value less costs to sell produced impairment losses of € 13.4 million (tax effect: deferred tax income of € 3.0 million). The impairment losses relate to the impairment of the customer base within the disposal group.
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 Deutsche Wohnen
The Adjusted EBITDA Deutsche Wohnen is calculated by deducting the operating expenses of the Deutsche Wohnen segment and the carrying amount of properties sold from the segment revenue of the Deutsche Wohnen Group.
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.
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.
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.
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.
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).
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.