Dear Shareholders, Dear Employees, Dear Readers,

Let’s start with the most important aspect from an entrepreneurial perspective: Vonovia is putting its foot on the gas and is set to grow again – no small matter given the current economic climate. We had our foot on the proverbial brakes for more than two years, taking a disciplined approach to our capital resources in response to the rapid rise in interest rates. We sold properties and focused on our core business in a quest to stabilize our balance sheet. Our decision to put liquidity ahead of profitability concerns was a successful move.

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

This gives us reason to be very confident as we look ahead to this year and beyond. We have developed new growth opportunities. We have set a clear target of achieving EBITDA growth of around 30% by 2028.

We have developed a best-in-class platform at Vonovia that spans the entire housing industry life cycle, ranging from smart purchases or serial new construction and efficient management, to neighborhood development, serial refurbishment systems and the direct supply of sustainable energy. We have a fantastic team on board. The Vonovia team tops the table as the market leader, quite deservedly so.

Before I go into detail regarding our outlook, let me get back to where we started.

When we went public in 2013, we completely revamped our financing and gave pension funds, insurance companies and international investors the opportunity to invest their money in residential real estate in Germany by buying shares. The trust placed in our strategy and the private funds entrusted to us significantly reduced our cost of capital. This gave us a unique opportunity to grow both organically and as, and when, the right opportunities presented themselves, and propelled Vonovia to the status of the European market leader in the period from 2013 to 2021. Our transactions allowed us to grow not just in quantitative, but also in qualitative terms. Back in 2010, we had around 190,000 apartments – primarily in the German federal state of North Rhine-Westphalia. Now, our portfolio now includes around 540,000 apartments in the most attractive cities in Germany, Sweden and Austria.

In particular, the highlight of this period – the takeover of Deutsche Wohnen in 2021 – took Vonovia to the next level and saw us use our unprecedented size and process efficiency to create value. As an example, the property management costs per apartment, which stood at around € 830 in 2013, have since been reduced to around € 300. At the same time, the operating EBITDA margin has risen from around 60% to approximately 80%.

At the extraordinary Annual General Meeting held on January 24, 2025, you approved the conclusion of a control and profit-transfer agreement with Deutsche Wohnen SE. This will give us even greater financial leeway. The agreement will bring us even closer as a group and will help us to grow. I would like to thank you, our shareholders, for giving us your clear approval for this move.

Many companies have turned to outsourcing in recent years. We, on the other hand, have invested in our own staff, recruited our own craftsmen and craftswomen and set up the biggest gardening and landscaping service in Germany. Today, more than 5,000 employees work in our neighborhoods under the Vonovia flag, a structure that is unique in the housing industry.

At the same time, we have digitalized the company, developed a customer app and expanded our hardship management system.

Since 2018, we have been actively doing our bit to help alleviate the shortage of housing in Germany. We are building new apartments in urban areas, many of them using modular construction methods. Today, we are one of the largest project developers in Germany and Austria and have already built just under 17,500 apartments.

We are also leading the field in other areas, for example, when it comes to the energy revolution in our neighborhoods. We have developed our climate path, driven by the need to reduce carbon emissions. Our refurbishment rate is well ahead of the national average. While in 2015, 24.6% of our buildings were still assigned to energy efficiency classes G and H, the figure today comes to only around 3%. This serves as impressive testi- mony to how we can refurbish properties and help to make progress in protecting our climate. We are expanding our photovoltaic network and installing heat pumps. We are modernizing our homes to make them accessible and ensure they meet the needs of older tenants in times of demographic change.

So – to stay with the metaphor – we were moving at high speed from 2013 onwards while keeping a steady hand on the wheel. And then came Russia’s war of aggression against Ukraine, which changed so many things, in so many places. Across the globe, in Europe, in Germany, and for Vonovia, too.

We decisively responded to this break in the second half of 2022 by developing viable solutions. We changed direction, shifting our focus away from growth and profitability and toward increased capital discipline and generating liquidity to take pressure off our balance sheet. Over the past three years, we have generated additional cash resources amounting to around € 11 billion from our free cash flow. This was achieved from our operating business, using sales and joint ventures. We have maintained good investment grade ratings throughout. Today, our pro forma debt-to-equity ratio stands at 45.8%, which is almost back within our target corridor. And we have achieved all of this despite a marked devaluation in our portfolio properties since 2022.

In all honestly, it was a very painful process. I would like to express my most sincere thanks to our employees for sticking by us throughout.

We have shown that Vonovia can be flexible even in times of crisis. And that’s not all. The crisis has made the company even more efficient.

We spent around ten years turning Vonovia into the European market leader. Now is the time to build on these efficient processes, this platform, and this high-quality portfolio and take our growth to the next level. In terms of total income, we are aiming to report an adjusted EBITDA of between € 3.2 billion and € 3.5 billion by 2028, an increase of around 30% compared to 2024. Our three areas of business other than Rental – Value-add, Development and Recurring Sales – which currently contribute around 9% to adjusted EBITDA, are to make a total contribution of between 20% and 25%.

This growth trajectory is split into three main strategic initiatives:

1. Return to Performance: Our craftsmen’s organization will be expanding the services it offers and becoming more efficient through higher volumes and standardization. We will be ramping up our new construction activities again with immediate effect. As the market recovers, we will be focusing on sales figures and margins in Recurring Sales again.

2. Investment in technical innovation: We will be opening our wallet again and plan to more than double our annual capital expenditure to as much as € 2 billion by 2028. This year alone, we expect to spend € 1.2 billion. After successful pilot projects over the last two years, we will be focusing primarily on serial modernization, modular new construction and the expansion of state-of-the-art heating infrastructure using photovoltaics and heat pumps.

By the end of this year, we will have launched projects for 3,000 new apartments – most of them in urban areas. Serial construction and measures to optimize energy standards will help us to make these projects cost effective. We have identified potential for almost 70,000 new residential units on land in our portfolio, which we plan to realize in the long term – on vacant plots, via densification, and through vertical expansion.

3. We will also be exploring new avenues for growth. We will be offering our business model and our best-in-class platform to the market.

We also want to exploit our experience to buy properties that offer potential and then refurbish them to meet the latest energy efficiency standards.

We will continue to build on our energy management expertise and supply our customers with green heating directly in self-sufficient neighborhoods.

In order to counteract the shortage of skilled workers in Germany, we are exploring how we might enter into alliances with other commercial and service companies to make homes available to employees directly.

Let’s round things off by taking a look at the past 2024 fiscal year:

We can be very satisfied with what we have achieved! All of our target values reached the upper end of our guidance. Adjusted EBITDA Total came to about € 2.6 billion. Our Rental business is the biggest contributor to total comprehensive income, accounting for 91%. As was to be expected, adjusted EBT was down slightly in a year-on-year comparison at € 1.8 billion.

Our apartments are, and remain, virtually fully occupied. At 4.1%, organic rent growth was slightly lower than the value for the previous year. All in all, our core business contributed just under € 2.4 billion and was almost on a par with 2023 despite sales and higher maintenance expenses. The other segments remained stable overall as expected. After a marked downward trend, value development bottomed out in the second half of 2024 and has stabilized. The EPRA NTA showed similar development to the fair value of around € 82 billion and came in at € 37.2 billion as of the reporting date, amounting to € 45.23 per share.

Deutsche Wohnen also successfully completed the announced disposal of the Care portfolio in January 2025 with the last few sales.

Dear Shareholders,

This is a good time to address our outlook ahead of the ordinary Annual General Meeting to be held on May 28, 2025: Our business is showing stable development. The outlook is positive. As a result, the Supervisory Board will be proposing – based on our dividend policy – a dividend of € 1.22 per share at this meeting. This is higher than the dividend for the last two years and underscores our successful development. The dividend is based on adjusted EBT and on the premise that Vonovia always has to have sufficient funds available to finance our projects.

We expect to report adjusted EBITDA of between € 2.70 billion and € 2.80 billion in the 2025 fiscal year. Adjusted EBT is expected to come in between € 1.75 billion and € 1.85 billion. This guidance lays a crucial foundation for the amounts that I have mentioned as part of our outlook for the coming years.

On behalf of the Management Board as a whole, I would like to thank you for supporting us on the path we have mapped out. As investors, you provide the basis for our growth. As employees, you give us the opportunity to turn our plans into a reality and keep the promises we have made our customers.

We want rents to remain affordable for people. This is a task we are committed to every single day – by implementing our business model, approaching policymakers with ideas and forging ahead with dialogue in our sector. Team Vonovia will do everything in its power to remain on hand to support the people living in our apartments and neighborhoods.

Speaking of dialogue and cooperation, this is likely the key to how we should treat each other as a society. On that note, I am looking forward to the next meeting with you.

Bochum, March 2025

Sincerely,

Rolf Buch (CEO)
Chairman of the Management Board