Risks Related to Operating Business

In the operating business, we identified the three amber risks (2024: three) explained below at the end of 2025.

The residential properties held in the Rental segment are subject to a regular valuation process. Details can be found in the notes to the consolidated financial statements in Chapter [D27] Investment Properties Changing overall conditions on the real estate and capital markets mean that future market developments, such as inflation and a further increase in interest rates, could reduce the value of the properties further. Lower property values would push up the company’s loan-to-value ratio (LTV), which could have a negative impact on its ability to raise capital. The balance sheet operating risk “future market development leads to a drop in property values,” which was already classified as an amber risk in 2024, was once again classified as an amber risk in 2025 with an expected amount of loss of € 2,400-6,000 million (2024: € 2,400-6,000 million) and an expected probability of occurrence of 5-39% (2024: 5-39%). In order to limit risk, Vonovia is committed to maintaining both the current diversification of its portfolio and a conservative capital structure (maintaining its investment grade rating).

The development in the supply of, and demand for, existing residential properties has a significant influence on the real estate prices and volumes that can be achieved and, as a result, a direct impact on both Adjusted EBITDA in the Recurring Sales segment and the success of Non Core sales. On the supply side, a sufficient number of homes will be needed in the portfolio marked for sale. These homes must meet the defined criteria as regards fair value, market value, vacancy and property condition in order for the company to generate the planned sales volumes and margins. On the market side, a scenario in which interest rates were to remain permanently high and/or increase further can lead to buyers no longer being able to finance the home prices asked for on the market. This could reduce demand and result in lower home prices. Negative performance on the supply and/or demand side is thus a risk with an impact on profit and loss in the Recurring Sales segment. The amber operating risk with an impact on profit and loss “deteriorating residential property market situation with regard to supply and demand for the sale of apartments” (2024: “deteriorating residential property market situation with regard to apartment sales/buyer behavior”) was assessed, at the end of the reporting period, as having an expected amount of loss of € 450-900 million (2024: € 450-900 million) and an expected probability of occurrence of 5-39% (2024: 5-39%). Home prices recovered significantly in the 2025 fiscal year, which was reflected particularly in higher sales prices and margins.

In order to limit and monitor risk, regular reporting on sales volumes and prices and regular monitoring of target prices and sales volume targets by Controlling has been implemented alongside a process for identifying ideal prices. Regular updates to the portfolio segmentation and clusters also helps to ensure sufficient product availability, i.e., a sales portfolio offering adequate volume and quality.

As regards the sale of our development projects, we have identified a risk that the sale and rental of newly built apartments will become more difficult to achieve, particularly as a result of significantly increased construction costs and, in turn, considerably higher sale prices or rents. The demand risks will respond accordingly. Additionally, an insufficient product mix or potential buyers’ need for financing could prove counterproductive for Vonovia. We have adjusted our plans for investments in new builds accordingly. The operating risk with an impact on profit and loss “Development sale risk”, which was already classified as an amber risk in 2024, was assessed as having a potential amount of loss of € 180-450 million in 2025 (2024: € 180-450 million). The expected probability of occurrence was unchanged at 40-59%. In order to be able to respond to market changes early on, in-depth market studies and analyses are prepared at regular intervals and are analyzed in connection with reports prepared by renowned real estate experts. Any market changes that are identified are taken into account when analyzing the real estate portfolio, meaning that they have a significant impact on sales planning.