Vonovia Annual Report 2024

29 Financial Assets Accounted for Using the Equity Method

As of the reporting date, Vonovia held interests in 17 joint ventures and 14 associates (December 31, 2023: 17 joint ventures and eleven associates).

Gropyus AG

The shares in Gropyus AG have been reclassified to financial assets accounted for using the equity method. This reclassification is also due to the fact that the shares have increased from 18.9% to 20.5% and to the fact that Daniel Riedl was elected Chairman of the Supervisory Board of Gropyus AG at the Supervisory Board meeting held on April 26, 2024. The shares were remeasured in accordance with IFRS 9 prior to reclassification. The change in fair value was reported without affecting net income. As a result, the non-current equity investment was classified as of June 30, 2024, as a financial asset accounted for using the equity method at its carrying amount of € 82.7 million.

Share purchases and participation in a capital increase in the third quarter of 2024 mean that the stake in Gropyus AG has increased from 20.5% to 23.9%.

The at-equity adjustment of the investment in Gropyus AG has resulted in a positive result of € 1.1 million since Gropyus inclusion as a company accounted for using the equity method (2023: € - million). An ad hoc impairment test was performed on the interest in Gropyus AG as of December 31, 2024. No need for impairment arose.

The table below shows financial information for Gropyus AG as of December 31, 2024.

Financial information for Gropyus AG

in € million	Jun. 30, 2024 Gropyus AG	Dec. 31, 2024 Gropyus AG

Non-current assets	68.8	77.7
Current assets
Cash and cash equivalents	6.6	14.4
Other current assets	35.2	38.8
Total current assets	41.8	53.2
Non-current liabilities	7.9	7.9
Current liabilities	65.8	56.2
Equity (100%)	36.8	66.8

Group share in %	20.5%	23.9%
Group share of net assets	7.5	16.0
Group adjustments	75.2	94.8
Carrying amount of share in joint venture	82.7	110.8

Revenues	1.4	22.8
Interest income	0.3	0.6
Depreciation and amortization	-1.4	-2.5
Other operating expenses	-6.7	-37.3
Interest expenses	-0.8	-2.2
Total results and comprehensive income for the fiscal year (100%)	-25.0	-49.8

Mosaik Funds

In August 2024, Vonovia sold eleven development projects for € 489.0 million to a fund launched by HIH Invest, Projekt Mosaik GmbH & Co. KG. A transfer of six properties with a purchase price of € 302.2 million had been made by December 31, 2024. Further QUARTERBACK Immobilien AG project developments were also sold to the fund for € 141.7 million. The transfer of properties worth € 28.0 million had already been completed by December 31, 2024.

In October 2024, Vonovia sold a further ten additional development projects for around € 515.9 million to another fund launched by HIH Invest, Projekt Mosaik II GmbH & Co. KG. Properties worth € 69.6 million had been transferred by December 31, 2024 within this context.

Vonovia has a 49.2% stake in both funds. Interim profits from the disposal of real estate inventories in the amount of € 4.2 million were deducted from the consolidated results as part of the sale.

In the 2024 fiscal year, the funds contributed € 0.0 million to Vonovia’s consolidated results.

The table below provides financial information for Projekt Mosaik GmbH & Co. KG and Projekt Mosaik II GmbH & Co. KG:

Financial information for Projekt Mosaik and Projekt Mosaik II GmbH

in € million	Dec. 31, 2024 Projekt Mosaik GmbH & Co. KG	Dec. 31, 2024 Projekt Mosaik II GmbH & Co. KG

Total current assets	404.9	79.8
Non-current liabilities	174.9	30.6
Current liabilities	10.2	1.8
Equity (100%)	219.8	47.4

Group share in %	49.2%	49.2%
Group share of net assets	108.1	23.3
Group adjustments	-4.5	0.4
Carrying amount of share in joint venture	103.6	23.7

Interest income	0.4	0.1
Other operating expenses	-0.1	-0.1
Interest expenses	0.0	0.0
Total results and comprehensive income for the fiscal year (100%)	0.3	0.0

QUARTERBACK Group

Vonovia also holds 40% of the non-listed QUARTERBACK Immobilien AG whose registered office is situated in Leipzig. QUARTERBACK Immobilien AG is a project developer with operations throughout Germany focusing on the central German region.

On July 6, 2024, the new energies business area previously managed within QUARTERBACK Immobilien AG was sold to the sister company QUARTERBACK New Energy Holding GmbH and removed from the group structure. In the future, the company will operate under the name QUARTERBACK New Energy Holding GmbH as an independent sister company of QUARTERBACK Immobilien AG.

Prior to this transaction, Vonovia had purchased 40% of the shares in QUARTERBACK New Energy Holding GmbH. which has its registered office in Leipzig, via its wholly-owned subsidiary Larry II Targetco GmbH, Berlin. This means that the stake in QUARTERBACK New Energy Holding GmbH matches that in QUARTERBACK Immobilien AG.

The value for the initial recognition of the stake in QUARTERBACK New Energy Holding GmbH is € 0.1 million. As part of the agreed shareholder loan for up to € 100.0 million, € 90.0 million had been paid out by December 31, 2024 and a further € 4.0 million was paid into the company as a capital contribution.

An expected credit loss of € 45.0 million was recognized as part of a review of the recoverability of the loan.

Vonovia also holds interests in eleven (December 31, 2023: eleven) non-listed financial investments of QUARTERBACK Immobilien AG, with equity interests of between 44% and 50% (QUARTERBACK property companies), that were classified as joint ventures.

The 40% interest in the non-listed QUARTERBACK Immobilien AG and in the eleven non-listed financial investments of QUARTERBACK Immobilien AG and QUARTERBACK New Energy Holding was adjusted on the basis of the financial information as of December 31, 2024, that was available on the preparation cut-off date.

Financial information of the QUARTERBACK property companies

in € million	Dec. 31, 2023 QUARTERBACK Immobilien AG	Dec. 31, 2024 QUARTERBACK Immobilien AG	Sep. 30, 2024 QUARTERBACK New Energy Holding GmbH	Dec. 31, 2024 QUARTERBACK New Energy Holding GmbH	Dec. 31, 2023 QUARTERBACK- Objekt- gesellschaften	Dec. 31, 2024 QUARTERBACK- Objekt- gesellschaften

Non-current assets	752.3	235.1	61.7	70.0	235.0	20.8
Current assets
Cash and cash equivalents	90.1	86.2	12.9	7.3	16.1	9.4
Other current assets	1,494.5	1,855.3	82.2	139.0	480.3	660.9
Total current assets	1,584.6	1,941.5	95.1	146.3	496.4	670.3
Non-current liabilities	595.7	371.1	74.2	69.7	139.1	102.5
Current liabilities	1,537.1	1,746.6	148.5	146.5	409.0	462.8
Non-controlling interests	39.5	36.0	-1.0	–	10.9	9.8
Equity	164.6	22.9	-64.9	0.1	172.3	116.0

Group share in %	40%	40%	40%	40%	44% to 50%	44% to 50%
Group share of net assets	65.8	9.2	-26.0	0.0	79.9	52.8
Group adjustments	-51.3	-9.2	26.1	0.0	7.7	4.1
Carrying amount of share in joint venture	14.5	0.0	0.1	0.0	87.6	56.9

Revenues	427.5	493.2	1.2	2.3	101.6	76.2
Change in inventories	94.5	-56.1	64.8	70.0	6.9	-9.2
Interest income	6.0	5.7	0.1	0.1	7.8	5.7
Depreciation and amortization	-6.1	-5.6	-0.2	-0.5	-0.2	-0.1
Interest expenses	-101.6	-121.1	-4.0	-8.2	-28.6	-32.5
Income taxes	37.9	4.5	-0.7	-1.1	6.6	5.1
Total results and comprehensive income for the fiscal year (100%)	-147.4	-154.6	-2.8	-10.6	-58.6	-56.3

The at-equity adjustment of the investments in the Quarterback Group described above produces a negative result of € -49.3 million as of December 31, 2024 (2023: € -73.2 million). The part of the loss for the reporting period that was not recognized comes to € 47.3 million (2023: € - million).

In the 2024 fiscal year, Vonovia concluded purchase agreements to acquire land to build on from the QUARTERBACK Immobilien Group. Within the same context, selective purchase agreements were also concluded to acquire property management units from QUARTERBACK Immobilien AG. The total volume of the purchase agreements concluded in 2024 comes to around € 1.3 billion. The transactions are scheduled to be closed in the first half of 2025.

Further transactions in order to acquire land to build on from the QUARTERBACK property companies are planned for the first half 2025. The total volume of the other planned purchase agreements comes to around € 0.2 billion.

The loan receivables from the QUARTERBACK Immobilien Group and the QUARTERBACK property companies included in the financial assets have been offset against the outstanding purchase price components within the scope of these transactions.

Vonovia assumes that the outstanding receivables from the QUARTERBACK Immobilien Group following the closing of the transactions will not be recoverable. As a result, it has recognized a corresponding cumulative impairment loss of € 296.8 million on these receivables, with € 276.7 million recognized in the 2024 fiscal year.

Interest income collected in the 2024 fiscal year was also written off in full. The impairment loss recognized for this interest income is shown netted against the interest income.

Vonovia also assumes that receivables from the QUARTERBACK property companies will not be recoverable. As a result, it recognized a corresponding impairment loss of € 43.2 million on these receivables in the 2024 fiscal year.

The additional impairment loss recognized for loan receivables is shown in the line item “Impairment losses on financial assets” in the consolidated income statement.

Other investments accounted for using the equity method

In addition to these investments, Vonovia also holds interests in 15 (December 31, 2023: 16) other entities that are accounted for using the equity method and are currently of minor importance; quoted market prices are not available.

The interests were adjusted for these entities provided that corresponding financial information was available.

The following table shows, in aggregated form, the carrying amount and the share of profit and other comprehensive income of these companies:

Aggregated information to other entities

in € million	Dec. 31, 2023	Dec. 31, 2024

Carrying amount of shares in companies accounted for using the equity method	55.8	49.3
Group share of net income from companies not accounted for using the equity method	10% to 50%	10% to 50%
Pro rata total comprehensive income	-2.5	-5.6

With regard to the other 15 entities, Vonovia has no significant financial obligations or guarantees with respect to joint ventures and associates.

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)

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.

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

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

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)

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.

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)

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.