Vonovia : H1 Analyst Presentation August 2020

Vonovia : H1 Analyst Presentation August 2020

Vonovia SE

Equities

VNA

DE000A1ML7J1

Real Estate Development & Operations

Company Profile

Analysts' Consensus

Latest news about Vonovia SE

Chart Vonovia SE

Income Statement Evolution

Analysis / Opinion

Ratings for Vonovia SE

EPS Revisions

Quarterly earnings - Rate of surprise

Sector Residential Real Estate Development

August 05, 2020 at 04:27 am EDT

H1 2020 Earnings Call

August 5, 2020

Rolf Buch, CEO

Helene von Roeder, CFO

Agenda

Thomas Köhler, craftsman at Vonovia, installs a photovoltaic facility on the roof of one of our properties in Dresden. This is one of ca. 300 PV facilities currently up and running as part of our

"1,000 roofs program."

H1 2020 Results	Equity Story		Additional
	&		Information		See
	Business Overview				Page
				Finder

					on page
					65 for
pages 3-19	pages 21-42		pages 44-65		detailed
		index

H1 2020 Earnings Call

page 2

Agenda H1 Results

Highlights	4
Segments	5-11
NAV & Valuation	12-15
LTV & Financing	16-17

Guidance 2020	18
Wrap-up	19

H1 2020 Earnings Call

page 3

Highlights H1 2020

Continuously robust performance with no meaningful impact from COVID-19

3.9% organic rent growth y-o-y(H1 2019: 4.0%).

Performance Adj. EBITDA Total €942.2m (+8.0%).

Group FFO €676.3m (+11.0%) and €1.25 per share (+11.0%).

Adj. NAV p.s. €54.72 (+5.4% since YE2019).

€2.2bn (5.6%) value growth in H1 2020 (ca. 2/3 of the portfolio revalued)

NAV &				€1.8bn (4.7%) from performance and YC
			€0.3bn (0.9%) from investments

Valuation
	Continued value growth across all regions except for Berlin (+0.9% from performance and YC).

		First-timereporting of new EPRA NAV Metrics with EPRA NTA of €58.14 p.s. and EPRA NRV

		of €71.81 p.s.
Capital		LTV 42.7% (-40bps ytd) pro forma for recent dividend payment (59%/41% cash/scrip ratio).

Structure		Net debt/EBITDA multiple 12.0x (+50bps ytd).

Guidance	Guidance 2020 fully confirmed with €1,875m - €1,925m for Adj. EBITDA Total and €1,275m -
2020	€1,325m Group FFO

H1 2020 Earnings Call

page 4

Operating Performance Remains Strong

On the back of a ca. 5% larger portfolio and performance improvements, the Adj. EBITDA Total grew by 8.0% and the Group FFO by 11.0%.

€m (unless indicated otherwise)	H1 2020	H1 2019


Adj. EBITDA Rental	781.4	724.0
	67.6	75.7
Adj. EBITDA Value-add

Adj. EBITDA Recurring Sales	48.1	42.4
		30.7
Adj. EBITDA Development	45.1

Adj. EBITDA Total	942.2	872.8	8.0%

FFO interest expenses	-188.8	-177.8

Current income taxes FFO	-19.8	-30.6
Consolidation1
-57.3	-55.3
Group FFO	676.3	609.1	11.0%
of which Vonovia shareholders	648.2	582.6

of which hybrid investors	20.0	20.0

of which non-controlling interests	8.1	6.5


Number of shares (eop)	542.3	542.3
Group FFO per share (eop NOSH)	1.25	1.12
11.0%
Group FFO per share (avg. NOSH)	1.25	1.16

Adj. EBITDA Total (€m)

+8%

942.2

872.8

415	+5%
	396

H1 2020

H1 2019

Development

Recurring Sales

Value-add

Rental

Residential units (`000)2

1 Consolidation in H1 2020 (H1 2019) comprised intragroup profits of €16.1m (€23.8m), gross profit of development to hold of €26.5m (€17.7m), and IFRS 16 effects of €14.7m (€13.8m). 2 Quarterly average.

H1 2020 Earnings Call

page 5

Rental Segment

Acquisitions and Organic Growth Drive Adj. EBITDA Rental

Rental Segment (€m)	H1 2020	H1 2019	Delta

Rental income	1,132.9	1,014.8	+11.6%

Maintenance expenses	-154.7	-147.0	+5.2%

Operating expenses	-196.8	-143.8	+36.9%

Adj. EBITDA Rental	781.4	724.0	+7.9%

Rental income growth in H1 2020 was driven by the

acquisition of Hembla (+€89m) plus organic rental

growth.

The increase in operating expenses was mainly attributable to two Hembla-related reasons:

more all-inclusive rents2 in Sweden compared to H1 2019;

double cost structure between Victoria Park and Hembla (synergies not yet realized).

Rental income by geography

14%

Germany

Austria

Sweden

81%

EBITDA Operations margin Germany1

								71.4% 73.6% 75.0%	76.5% 77.5%
		830
			754	67.7%

60.8% 63.8%
	645
			570

										498

											445

												394


2013	2014		2015	2016	2017	2018	2019	H1 2020
			EBITDA Operations margin Germany		Cost per unit Germany (€)

1 EBITDA Operations margin (Adj. EBITDA Rental + Adj. EBITDA Value-add - intragroup profits) / Rental Income. Margin 2019 and beyond includes positive impact from IFRS 16. Cost per unit is defined as (Rental Income

- EBITDA Operations + Maintenance) / average no. of units. 2 In Sweden, rental income includes ancillary costs. Rough estimate assuming 30% of rental income relates to ancillary expenses would reduce the Rental income and Operating expenses by ca. €50m in H1 2020 and ca. €20m in H1 2019.

H1 2020 Earnings Call

page 6

Rental Segment

Operating KPIs Rental Segment

Organic rent growth of 3.9% year-on-year

Vacancy rate stable and largely the result of investments.

Expensed maintenance on prior-year level; capitalized maintenance elevated as a result of increased volume of targeted larger-scale measures planned for 2020.

Organic rent growth (y-o-y; %)

3.9		4.0
		0.3
0.6
	2.5
2.3

1.0		1.2

	H1 2020			H1 2019
	Market		Modernization		New construction

Vacancy rate (%)			Expensed and capitalized maintenance (€/sqm)

2.8	2.9	9.3
	8.3

3.5	2.5

		5.8	5.8

H1 2020	H1 2019			H1 2020	H1 2019
				Expensed maintenance	Capitalized maintenance

H1 2020 Earnings Call

page 7

Adj. EBITDA Value-add Initiatives Keep Moving in the Right Direction

Value-add

Segment

Highlights

Segments

NAV & Valuation

LTV

Guidance

Wrap-up

Appendix

& Financing

Continued expansion and roll-out of different value-add initiatives in H1 2020 on track as planned Multimedia supply to 329k customers (+10% y-o-y)

65% of all residential environment services provided with own employees (+15pp y-o-y)

Smart metering supply to ca. 210k customers (+10% y-o-y)

Energy supply to 68,000 delivery points for electricity and gas in the portfolio (+27% y-o-y) H1 2020 Adj. EBITDA Value add impacted by

Temporary effect from COVID-19 related delays in our modernization program

Lower residential environment service volume due to mild winter temperatures

Value-add Segment (€m)	H1 2020	H1 2019	Delta

Income	760.4	760.9	-0.1%
of which external	131.2	134.9	-2.7%

of which internal	629.2	626.0	+0.5%
Operating expenses Value-add	-692.8	-685.2	+1.1%
Adj. EBITDA Value-add	67.6	75.7	-10.7%

Value-add EBITDA mostly from internal savings1

Craftsmen cost savings (VTS)

Multimedia

Residential environment

Smart metering

Energy

Other (e.g. 3rd party management, insurance)

1 Distribution based on 2020 Budget

H1 2020 Earnings Call

page 8

Recurring Sales

Segment

Demand for Individual Condos Remains Strong

Sales volume, gross proceeds, and fair value base higher than in the previous year, reflecting the ongoing positive momentum.

Outside the Recurring Sales Segment we sold 604 non-core units in H1 2020 with a fair value step-up of 36.5%, partly driven by the disposal of a commercial property.

Recurring sales by geography1

Austria

29%

Germany

71%

Recurring Sales Segment (€m)	H1 2020	H1 2019	Delta

Units sold	1,327	1,234	+7.5%
Gross proceeds	195.0	174.9	+11.5%
Fair value	-140.5	-124.5	+12.9%
Adjusted result	54.5	50.4	+8.1%

Fair-valuestep-up	38.8%	40.5%	-170bps
Selling costs	-6.4	-8.0	-20.0%
Adj. EBITDA Recurring Sales	48.1	42.4	+13.4%

1 Based on sales proceeds.

H1 2020 Earnings Call

page 9

						Development
						Segment
Adj. EBITDA Development Ramp-up Continues
Highlights	Segments	NAV & Valuation	LTV	Guidance	Wrap-up	Appendix
& Financing


				Development to sell (by income)	Development to hold (by fair value)

Development segment broadly in line with our expectations.

Operating expenses in H1 2020 impacted by comparatively lower administrative and personnel costs and the reversal of provisions that are no longer required.

Sweden

Austria

23%

Germany

44%

Austria

Germany54%

77%

Development Segment (€m)	H1 2020	H1 2019	Delta
Income from disposal of "to sell" properties	107.5	124.9	-13.9%
Cost of Development to sell	-83.7	-95.2	-12.1%
Gross profit Development to sell	23.8	29.7	-19.9%
Fair value Development to hold	144.7	103.8	39.4%
Cost of Development to hold	-118.2	-86.1	37.3%
Gross profit Development to hold	26.5	17.7	49.7%
Operating expenses Development segment	-5.2	-16.7	-68.9%
Adj. EBITDA Development	45.1	30.7	46.9%

Note: This segment includes the contribution of to-sell and to-hold constructions of new buildings. Not included is the construction of new apartments by adding floors to existing buildings, as this happens in the context of, and is accounted for, under modernization.

H1 2020 Earnings Call

page 10

Development

Segment

Vonovia's Contribution towards Reducing the Housing Shortage

New rental apartments for our own portfolio ("to hold")

534 units completed in H1 2020 (including floor additions). Total pipeline of ca. 41,000 apartments, of which more than 70% in Germany and the remainder in Austria and Sweden. Average apartment size between 60-70 sqm and broadly in line with overall portfolio average.

The development to-hold investment volume is part of the overall investment program.

New apartments for retail disposal ("to sell")

83 units completed in H1 2020.

Total pipeline volume of ca. €3.2bn (ca. 9,000 apartments), of

Under construction

Short-term pipeline

Longer-term pipeline

87%

2020 target: ~1,300 completions

which ca. 70% in Germany and ca. 30% in Austria.

20%

Under construction

Investment capital for Development to sell is not part of investment program.

Average apartment size between 70-80 sqm.

Average investment volume of €4.5k - €5.0k per sqm.

Expected gross margin between 20-25% on average.

	9%	Short-term pipeline
71%		Longer-term pipeline

2020 target: >300 completions

H1 2020 Earnings Call

page 11

H1 2020 with Strong Value Growth

H1 2020 fair value evolution (€bn)

53.3				53.4	2.3		55.7
0.2	0.3	0.2	-0.02

								Ca. 2/3 of portfolio
					+5,6%	41.2	revaluedin H1 2019
				39.0	(26 largest German cities

								plus Vienna plus Sweden)
								Rest of portfolio
				14.4			14.5	not revaluedin H1 2019
						(only capitalization of
								€142m investments)
12/2019	Acquisitions	Sales	New	12/2019	Total value	Currency	06/2020
			constructions	rebased	growth	impact

Valuation KPIs	Vonovia	Germany	Sweden	Austria
June 30, 2020	Total

In-place rent	23,4x	24.4x	17.2x1	25.3x1
multiple

Fair value	1,954	1,992	1,938	1,496
€/sqm

L-f-l value	5.6%	6.3%	2.5%	2.8%
growth2

Fair value	55,73	46.6	5.9	3.2
€bn

Value growth drivers		H1	2020		H1	2019
	Actual		Assuming Berlin

		= H1 2019 level


	€m	%		€m	%	€m	%

Performance & Yield	1,822	4.7%		2,446	6.3%	2,234		7.1%
compression

Investments4	347	0.9%		347	0.9%	279		0.9%
Total4	2,169	5.6%		2,794	7.2%	2,513		7.9%

1 In-place rents in Austria and Sweden are not fully comparable to Germany, as Sweden includes ancillary costs and Austria includes maintenance and property improvement contributions from tenants. The data above shows the rental level unadjusted to the German definition. 2 Local currency. 3 Including €1.9bn for undeveloped land, inheritable building rights granted (€0.6bn), assets under construction (€0.4bn), development (€0.6bn) and other (€0.3bn) and excluding €0.3bn IFRS16 use of rights. 4 Excl. €142m capitalized investments outside of revalued portfolio.

H1 2020 Earnings Call

page 12

Broad-based Value Growth across All German Regional Markets

	Fair
Regional Market	Value
	(€m)

Berlin	7,593

Rhine Main Area	4,657

Southern Ruhr Area	4,181

Rhineland	3,996

Dresden	3,903

Hamburg	2,910

Munich	2,362

Stuttgart	2,211

Kiel	2,284

Hanover	1,991

Northern Ruhr Area	1,738
(Duisburg only)

Bremen	1,279

Leipzig	993

Westphalia	959

Freiburg	673

% share of	Perfor-
Regional Market	mance	Invest
revalued in H1	&

2020	YC
	0.9%	0.4%
	7.1%	0.6%
	7.7%	1.7%
	5.9%	0.5%
	8.0%	0.9%
	6.9%	0.8%
	4.9%	0.4%
	6.8%	0.4%
	8.4%	0.6%
	6.8%	0.9%
	7.8%	2.4%
	7.3%	1.3%
	5.9%	0.3%
	7.8%	3.5%
	2.5%	0.5%

Value uplift from performance, YC and investments (l-f-l)

Kiel 9.0%
Hamburg 7.7%
Bremen 8.6%
Hanover 7.6%	Berlin 1.4%
Westphalia 11.4%
N. Ruhr Area 10.2%
S. Ruhr Area 9.3%
	Leipzig 6.2%
Rhineland 6.4%	Dresden 8.9%

Rhine Main 7.7%

Stuttgart 7.3%

Munich 5.2%

Freiburg 3.0%

H1 2020 Earnings Call

page 13

EPRA NAV and Adj. NAV

Highlights	Segments	NAV & Valuation	LTV	Guidance	Wrap-up	Appendix
& Financing

€m	Jun. 30, 2020	Dec. 31, 20191
(unless indicated otherwise)
Equity attributable to Vonovia's shareholders			19,308.3
19,985.8
Deferred taxes on investment properties	11,078.6		10,288.9

Fair value of derivative financial instruments2	22.5		1.6
Deferred taxes on derivative financial instruments	-8.7		-6.3
EPRA NAV	31,078.2		29,592.5
Goodwill	-1,405.0		-1,430.6
Adj. NAV	29,673.2		28,161.9	+5.4%

EPRA NAV €/share	57.31		54.57
Adj. NAV €/share	54.72		51.93		+5.4%
Number of shares (eop)	542.3		542.3

In response to the profound evolution of property company's business models and in order to help capital markets better understand the dynamic of the underlying operations, EPRA has developed new EPRA NAV Metrics effective for reporting periods starting Jan 1, 2020. In the context of the portfolio valuation update as of June 30, 2020, Vonovia for the first time reports the following new EPRA NAV metrics:

Net Tangible Assets (NTA): Proxy for brick-and-mortar value of the long-termholding portfolio

Net Reinstatement Value (NRV): Beyond the bricks - aims to represent the value required to rebuild the company

For now, Vonovia will continue to also report the previous NAVs but expects to retire the three Performance Measures EPRA NAV, Adj. NAV and EPRA NNNAV in due course.

Note: The new EPRA NAV Metrics also include a Net Disposal Value (NDV), which is a proxy for a liquidation value assuming all assets are sold at fair value, therefore including the crystallization of deferred taxes. Vonovia intends to publish the NDV with the FY2020 results. 1 Dec. 31, 2019, numbers adjusted (cf. Note A2 of H1 2020 financial report). 2 Adjusted for effects from cross currency swaps.

H1 2020 Earnings Call

page 14

The Two New Leading NAV Metrics

Net Tangible Assets (NTA) and Net Replacement Value (NRV)

Net Tangible Assets (NTA) - "brick and mortar"

Proxy for long-term holding portfolio value

Assumes the disposal of assets that do not form part of the long-term holding portfolio

Deferred taxes on assets and purchaser's costs, such as

RETT, relating to the disposal portfolio, are therefore excluded

Equity to EPRA NTA bridge (€m)

29,6061				3,438	31,527
14	1,405		3,959
	125
		521

			Disposal portfolio	€58.14

					p.s.
IFRS share-	FV of financial	Goodwill	Intangibles	Real estate	NTA
holders'	instruments		(IFRS balance	transfer tax
equity (+ def.			sheet)	(and other
taxes on				purchaser's
holding portf.)				costs)

Net Reinstatement Value (NRV) - "beyond the bricks"

Proxy for company value

Represents the value required to rebuild the company

Reflects long-term nature of the business and is based on the assumption that assets are held in perpetuity

( deferred taxes on assets and purchaser's costs, such as RETT, are therefore added back)

Intangible values are included with the enterprise values of the Value-add and Development segments, net of the respective carrying amounts. The enterprise value is the result of a DCF valuation by an independent valuer and based on Vonovia's internal 5-year business plan

Equity to EPRA NRV bridge (€m)

38,941

3,959

31,065			3,903
14

€71.81

p.s.

IFRS share-	FV of financial FV of intangibles	Real estate	NRV
holders' equity	instruments	transfer tax (and
(+ def. taxes		other purchaser's
on inv. prop.)		costs)

1 Excl. deferred taxes on disposal portfolio (€1,459m). Note: The new EPRA NAV Metrics also include a Net Disposal Value (NDV), which is a proxy for a liquidation value assuming all assets are sold at fair value, therefore including the crystallization of deferred taxes. Vonovia intends to publish the NDV with the FY2020 results.

H1 2020 Earnings Call

page 15

LTV well within Target Range

Based on the stable cash flows and the strong long-termfundamentals in our portfolio locations,

largely driven by a structural supply/demand imbalance, we see continued upside potential for our

property values and do not see material long-term downside risks for our portfolio.

We remain committed to our LTV target range of 40-45%.

€m	Jun 30, 2020	Dec 31, 2019
(unless indicated otherwise)

Non-derivative financial liabilities Foreign exchange rate effects Cash and cash equivalents

Net debt

Sales receivables/prepayments

Adj. net debt

Fair value of real estate portfolio

Shares in other real estate companies

Adj. fair value of real estate portfolio

LTV

LTV (incl. perpetual hybrid)

Net debt/EBITDA multiple1

	24,404.3	23,574.9
	-38.5	-37.8
	-949.2	-500.7
	23,416.6	23,036.4
	-29.6	21.4
	23,387.0	23,057.8
	55,698.6	53,316.4
	309.9	149.5
Adjusted for the 2019	56,008.5	53,465.9
dividend payment
(€1.57 p.s. with 41%	41.8%	43.1%
scrip ratio) the LTV is
42.7%	43.5%	45.0%

	12.0x	11.5x

1 Adj. net debt quarterly average over Adj. EBITDA Total (LTM), adj. for IFRS 16 effect.

H1 2020 Earnings Call

page 16

Solid Capital Structure with Smooth Maturity Profile and Diverse Funding Mix

KPI / criteria	Jun. 30, 2020	Dec. 31, 2019

Corporate rating (Scope)	A-	A-

	BBB+	BBB+
Corporate rating (S&P)	(BRP4:	(BRP4:

	"excellent")	"strong")
LTV2 (net debt / fair value)	42.7%3	43.1%
Net debt/EBITDA multiple1	12.0x	11.5x

Fixed/hedged debt ratio2	96%	96%
Average cost of debt2	1.5%	1.5%
Weighted average maturity (years)2	7.9	7.9
Most recent bond issuances (July 2020)
€750m, 6 years	0.625%
€750m, 10 years	1.000%

Bond covenants	Required level	Current level
(June 30, 2020)

LTV	<60%	41%
(Total debt / total assets)

Secured LTV	<45%	14%
(Secured debt / total assets)

ICR	>1.8x	5.0x
(LTM EBITDA / LTM interest expense)

Unencumbered assets	>125%	201%
(Unencumbered assets / unsecured debt)

Evolution of LTV and Interest Cover Ratio

																			4.9	5.0
																		4.7
49.0%	49.7%									4.6


							47.3%
								3.7								43.1%

									3.0	41.6%			42.8%	42.7%	3		target
						2.7

											39.8%
		2.2																			range



2013	2014	2015	2016	2017	2018	2019	H1 2020
							LTV (%)					Interest Cover Ratio

Diverse funding mix with no more than 12% of debt maturing annually (as of end of July 2020)

€m		Corporate bond
3,000					8%



2,000				18%			Equity hybrid


1,000				9%		61%	Structured loans




0				4%			Mortgage loans
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 from	Subsidized modernization debt

2033			& EIB loans

1 Adj. net debt annual average over Total EBITDA. 2 Excl. equity hybrid. 3 Pro forma as of June 30, 2020, accounting for 2019 dividend (including the 41% scrip ratio). 4 BRP = business risk profile.

H1 2020 Earnings Call

page 17

2020 Guidance Fully Confirmed

	2019 Actuals	2020 Current Guidance

Rental Income	€2,075m	€~2.3bn
Organic rent growth1 (eop)	3.9%	~3.3 - 3.8%
Recurring Sales (# of units)	2,607	~2,500
FV step-up Recurring Sales	41.3%	~30%

Adj. EBITDA Total (€m)	1,760	1,875 - 1,925
Group FFO (€m)	1,219	1,275 - 1,325
Dividend (€/share)	1.57	70%
of Group FFO per share

Investments (€m)	1,489	1,300 - 1,600

1 If the one-off reduction of rents in Berlin to 120% of the rent ceiling is implemented in November, as currently planned, we expect to come out towards the lower end of the range; similarly, if it is not implemented we expect to come out towards the higher end of the range

H1 2020 Earnings Call

page 18

Wrap-up

Our business continues to perform very stable and fully in line with our expectations.

We have proven the robustness of our business model and are only marginally impacted by COVID- 19.

The underlying market fundamentals are intact and the environment in which we operate remains very favorable.

We remain confident in our ability to deliver growth as per our 2020 guidance and beyond.

Vonovia is more than brick and mortar and the new EPRA metrics are good proxies to show the value of the portfolio vs. the value of the company.

H1 2020 Earnings Call

page 19

Agenda

"A Heart for Bees" says this sign in Leipzig. For the end of 2020 Vonovia targets having 100 insect habitats plus 100,000 sqm of wildflower meadows in cooperation with Germany's Nature and Biodiversity Conservation Union NABU.

H1 2020 Results	Equity Story		Additional
	&		Information		See
	Business Overview				Page
				Finder

					on page
					65 for
pages 3-19	pages 21-42		pages 44-65		detailed
		index

H1 2020 Earnings Call

page 20

Europe's Leading Owner and Operator of Residential Real Estate

Long-term owner and full-scale

operator of Europe's largest listed

multifamily housing portfolio with

close to 415k apartments for small and medium incomes

>€56bn fair market value

~€30bn market capitalization

Geographic split (by no. of units)

85%

Germany Austria Sweden

Stockholm

38k Gothenburg

apartments Malmö

15 urban

354k growth apartments1 markets

Mainly

22k Vienna apartments

Growing recurring cash earnings per share and DPS				Two types of sustainable shareholder returns3
Dividend policy: ~70% of recurring cash earnings are distributed as dividends
										2.25							9.2%	9.3%	8.4%	8.5%
						1.90	2.06
												7.1%
					1.63				1.57
				1.30	1.32	1.44				5.4%		5.6%	6.1%	4.8%	5.2%

				1.12					3.8%
0.95	1.00	0.94									2.6%

0.67	0.74

														2.8%	3.3%	3.6%	3.2%	3.6%	3.3%

2013	2014	2015	2016	2017	2018	2019	2020E	2014	2015	2016	2017	2018	2019
			Recurring cash earnings ("FFO")2			Dividend						Dividend yield		Organic asset value growth (excl. YC)

1 Incl. 27k apartments in other strategic locations plus 5k in non-strategic locations that are not shown on the map. 2 2013-2018 FFO is "FFO1" and 2019+ FFO is "Group FFO." 3 Dividend yield plus l-f-l organic asset value growth from operating performance and investments (excluding yield compression).

H1 2020 Earnings Call

page 21

Fully Committed to the Long-term Nature of Our Business

MEGATRENDS	Urbanization	Energy	Demographic
efficiency	change


We give people a place they call home	We are a driving force in the housing industry

Serving a basic need in a highly relevant market

Scalable B-to-C

business

beyond the

bricks

Our products & services give more than one million people an affordable home in their apartment and neighborhood.

Our actions are guided by a long-term view and a careful balance between all stakeholders.

We have the best-in class operating platform to serve our customers in regulated markets across the entire residential real estate value chain.

Our experience and knowhow enable us to scale our business in attractive European markets.

Long-term owner and full-scale operator of Europe's largest listed multifamily housing portfolio

We have the scale and the skills as well as the innovative and financial strength to help managing the megatrends.

We develop solutions for the housing market and are a reliable partner for municipalities & communities in our neighborhoods.

We offer sustainable per- share earnings and value growth with superior downside risk protection to our investors.

We have the necessary access to capital markets to finance the required investments.

We are

part

of the solution

Sustainable

earnings und value growth

License to		Contribution to climate	Operating in		Our business conduct is
	residential markets
operate	E	protection and CO2	S brings with it a	G	built around trust,
reduction	transparency & reliability
		special responsibility

H1 2020 Earnings Call

page 22

Germany's Tried and Tested Social Security System Ensures That No One

Has to Lose A Roof Over Their Head In Case of Financial Distress

§	"The Federal Republic of Germany is a democratic and social federal state."
Article 20(1) of the German Basic Law.
!	German's social market economy is based on the principle of solidarity that underpins
Germany's social security systems. Anyone who cannot participate in the labor market or
society because of misfortune, illness, disability, or old age is looked after by the community.

4 layers

protection

for

tenants

Kurzarbeitergeld: Short-term labor allowance of 60% to 67% of net salary to keep employees in employment and avoid layoffs despite lack of work.
ALG I: Unemployment benefit based on 60% to 67% of net salary.
ALG II: Basic benefits to cover cost-of-living expense including "appropriate levels of expenditure for housing."
Sozialhilfe: last safety net to protect people from poverty and exclusion, covering necessary living expenses including food, accommodation and clothing.

Paid out of the national	Housing benefits:
Subsidy towards
unemployment fund to
housing costs for
which employees and
people with low
employers contribute
equally every month	incomes to enable
	people to live in
	adequate, family-
	friendly conditions.

Anyone who can

Tax-funded	demonstrate that

	he or she is in need
	is legally entitled.

Additional

layers of

protection

during

COVID-19 pandemic

No financial background check for a period of 6 months for assistance granted between March 1 and June 30.
Simplified application process: informal applications can be made by phone, e-mail, online or personal visit to the local government office.
Increased benefits: Kurzarbeitergeld increased from 60%-67% to up to 80%-87%.

Source: Social Security at a Glance 2019. Federal Ministry of Labour and Social Affairs. https://www.bmas.de/EN/Services/Publications/a998-social-security-at-a-glance.html

H1 2020 Earnings Call

page 23

Long-term Structural Support from Residential Market Trends

Highlights	Segments	NAV & Valuation	LTV		Guidance	Wrap-up	Appendix
& Financing



Urbanization1				Structural supply/demand imbalance2

Growing (above average)

Growing

No clear direction

Shrinking

Shrinking (above average)

of German population living in cities
84%

77%

20152050E

Germany's average annual residential completions of the last five years fall short of estimated required volumes

700		Completions (`000)
600		Government target rate ('000)

500

400

300
200
100
0
1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021

Large gap between in-place values and replacement costs3

No correlation pattern between interest rates & asset yields4

Vonovia (Germany) - fair value/sqm (€; total lettable area) vs. construction costs	Other factors such as supply/demand imbalance, rental regulation, market rent growth,
location of assets etc. seem to outweigh the impact of interest rates when it comes to

							Factor	pricing residential real estate.

	building						2.5x - 3.0x
							1
	land
							0.8

								0.6
					1,677	1,865		0.4
				1,475			0.2

			1,264
		1,054					0
901	964						-0.2


								-0.4
								-0.6
								-0.8
								-1	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018
2013	2014	2015	2016	2017	2018	2019	Market costs	1992

							for new
							constructions														Correlation

1 Source: BBSR (https://gis.uba.de/maps/resources/apps/bbsr/index.html?lang=de) 2 Sources: Federal Statistics Office, German government (1.5m completions during current legislative period). 3 Note: VNA 2010 - 2014 refers to Deutsche Annington Portfolio at the time; construction costs excluding land. The land value refers to the share of total fair value allocated to land. 4 Yearly asset yields vs. rolling 200d average of 10y interest rates. Sources: Thomson Reuters, bulwiengesa.

H1 2020 Earnings Call

page 24

Stable Market Rent Growth Leveraged with Investments

Vonovia has three different organic rent growth drivers

Investment Program drives performance, value and quality

New construction

Modernization

Market

Additional rent from new sqm

Incremental rent from modernization

energy efficiency improvements
("Upgrade Building") and
senior-friendlyapartment conversion
("Optimize Apartment")

Incremental rent from market rent adjustments (Mietspiegel) and re- lettings without investments

€m								1,300
		New construction
			Target			-
		Upgrade Building
			IRR of		1,489	1,600

		Optimize Apartment		9-10%

				1,139
				356	472	779




71	172



2013	2014	2015	2016	2017	2018	2019	2020E

Regulated environment provides stable market rent growth1

Regulated rents (Germany)

Unregulated rents (USA)

%
6
4
2
0	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
-2

-4
-6
-8
-10
-12
		GDP, quarterly development y-o-y									Rent growth; quarterly development y-o-y

No direct connection between Vonovia market rent growth and inflation but over time broadly in line

3.0%
2.5%
2.0%
1.5%													Ø1.4%

1.0%													Ø1.4%

0.5%
0.0%
2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
		Inflation Germany		VNA market rent growth

1 Sources: Federal Statistics Office, GdW (German Association of Professional Homeowners), REIS, BofA Merrill Lynch Global Research, OECD, Note: Due to lack of q-o-q rent growth data for the US, the annual rent growth for a year is assumed to also be the q-o-q rent growth of that year. US rent growth 2020 is full-year estimate. US GDP Q2 2020 is the Advanced Estimate of the US Bureau of Economic Analysis as of July 30, 2020 (32.9% annualized), converted to a y-o-y comparison.

H1 2020 Earnings Call

page 25

Scalable B-to-C Business Beyond the Bricks

Business Segments across Entire Life Cycle of the Assets

Rental		Value-add		Development		Recurring Sales

		Ancillary service		Construction of
Efficient			apartments for		Disposal of
	business
management of			(i) own portfolio		individual apartments
	for internal savings
own portfolio			(ii) disposal to third		to retail buyers
	and external income
			parties

Average duration of our	Leveraging long-term	Vonovia is one of the
rental contracts is 13	customer relations to	largest builders of new
years	generate additional cash	homes in Germany
	flows from internal
No cluster risk because of	savings and external	Size, efficiencies and
B-to-C business	income	innovation lead to building
granularity		costs below fair market
	Customer benefit through	values
High degree of insourcing	better service and/or
and standardization along	lower cost
our value chain

Steady sales volume of ca. 2.5k apartments p.a.

Sales prices of ~30% above fair market value capture the spread between book value and retail value

H1 2020 Earnings Call

page 26

Scalable B-to-C Business Beyond the Bricks

Full-scale Operating Platform Enables Insourcing Strategy

Residential real estate is a granular operating business. Vonovia has built a scalable platform to efficiently manage large portfolios and to provide the full range of services largely in-house.

Property Management

~1,500

Lettings agents & caretakers

Face to the customer and eyes and ears on the ground in our local markets

Technical Service

~5,000

Craftsmen

Wholly owned craftsmen subsidiary ("VTS") for large share of maintenance and modernization plus pooling of entire purchasing power

Residential EnvironmentService Center

~1,000	~1,000
Landscape gardeners	Service Agents
Maintenance of gray and green areas and snow/ice	Centralized property management including inbound calls
removal in the winter	and e-mails, ancillary cost billing, contract management,
	maintenance dispatch and rent growth management

Best-in-class	Fully SAP	High degree of	Efficient process	Superior cost
service levels	based	standardization	management	control

H1 2020 Earnings Call

page 27

Long-term Track Record of Sustainable Growth

FFO (€/share)1			Dividend (€/share)

		+15% CAGR				+15% CAGR

			2.25			1.57
		1.90	2.06			1.44
					1.32
		1.63				1.12
		1.30				0.94
0.95	1.00		0.67	0.74

2013 2014 2015 2016 2017 2018 20192013 2014 2015 2016 2017 2018 2019

Adj. NAV (€/share)	LTV and Interest Cover Ratio

		+16% CAGR
														4.9

												4.7

		51.9	49.0%	49.7%					4.6


		44.9				47.3%
									3.7
		38.5

									3.0		42.8%	43.1%
		30.8
							2.7	41.6%
												target
										39.8%			range
	22.7	24.2			2.2
21.7


2013	2014	2015	2016	2017	2018	2019	2013	2014	2015	2016	2017	2018	2019

									LTV (%)			Interest Cover Ratio

1 Based on prevailing internal management KPI, which was FFO1 from 2013-2018 and Group FFO in 2019.

H1 2020 Earnings Call

page 28

Scalable B-to-C Business Beyond the Bricks

Increasing Profitability via Scale and Efficiencies

Our strategy is to own for generations and create scale effects and efficiencies (buy & hold), and

Portfolio size (eop, '000)

therefore different from a financial investor with

a limited investment horizon (buy & sell)

>8m	>2.5m	>0.7m	>0.6m
				…
Invoices to	Inbound	Ancillary	Maintenance
expenses	& repair jobs
process p.a.	calls p.a.
bills p.a.	p.a.

175

396 416

357 333 347

203

Granular Operating Business

Unique scalable platform to efficiently manage a large residential real estate portfolio driven by industrialization, standardization and optimization with best-in-class service

Digitalization still in early stage with cost-reduction potential in the medium- and long-term

Impact of scale to continue with acquisitions -

incremental Cost per unit (Germany) is around €250

2013 2014 2015 2016 2017 2018 2019

Proof of scalability1

								73.6%	75.0%	76.5%
	830						71.4%


			754		67.7%

				63.8%
60.8%		645

						570

								498

											445

												394


2013	2014	2015	2016	2017	2018	2019
		EBITDA Operations margin Germany			Cost per unit Germany (€)

1 EBITDA Operations margin (Adj. EBITDA Rental + Adj. EBITDA Value-add - intragroup profits). 2019 margin includes positive impact from IFRS 16. Cost per unit is defined as (Rental Income - EBITDA Operations + Maintenance) / average no. of units.

H1 2020 Earnings Call

page 29

Scalable B-to-C Business Beyond the Bricks

Leveraging the B-to-C Nature of Our Business

Value-add: lower cost & higher income

Savings from	Additional
insourcing of services	revenues from
to ensure maximum	walking back the
process management	value chain and
and cost control	offering services at
	market prices but on
	a lower cost basis
	due to scale and
	efficiencies

Customer benefit is in lower cost

and/or better service quality

Evolution of Value-add segment (Adj. EBITDA, €m)

146.3

121.2

102.1

37.6

23.6

10.5

2013

2014

2015

2016

2017

2018

2019

EBITDA contribution from different Value-add initiatives1

Craftsmen cost savings (VTS)

Multimedia

Residential environment

Smart metering

Energy

Other (e.g. 3rd party management, insurance)

1 Distribution based on 2020 Budget

H1 2020 Earnings Call

page 30

Scalable B-to-C Business Beyond the Bricks

Opportunistic Increase of Scalability via Mergers & Acquisitions

Highlights	Segments	NAV & Valuation	LTV		Guidance	Wrap-up	Appendix
& Financing



Portfolio evolution by number of apartments ('000)				Major transactions since IPO

			4	414	04/2014

					~11k units
180		316			10/2014
				~30k units
	86				03/2015

					~145k units
IPO	Sales	Acq.	New	H1 2020	07/2015
			construction

					~19k units

Portfolio acquisition criteria

Strategic Rationale	Financial Discipline	01/2017
~23k units

Long-term view of the	At least neutral to
investment grade
portfolio with a focus	03/2018
rating
on urban growth

(assuming 50% equity/	~48k units
regions
50% debt financing)

Earnings Accretion	Value Accretion	06/2018
	At least neutral to	~14k units
Accretive to EBITDA
Adj. NAV per share
Rental yield	12/2019
or similar1

~21k units

First sizeable portfolio

acquisition

First sizeable corporate

acquisition

Mixed cash/stock public

takeover

Sizeable all equity financed

portfolio acquisition

Public takeover and first

acquisition outside Germany

Public takeover and acquisition

of critical mass in Austria

Public takeover and acquisition

of "nucleus" in Sweden

Acquisition of critical mass in

Sweden

1 EPRA has published new Best Practice Recommendations to replace EPRA NAV with a revised but broadly similar metric. We expect the NTA to be the most adequate replacement of the Adj. NAV.

H1 2020 Earnings Call

page 31

Scalable B-to-C Business Beyond the Bricks

Implementation of Vonovia Business Model in Comparable Markets

Vonovia has developed an operating platform and a unique business model for the efficient management of large residential portfolios in regulated environments.

We are convinced that this business model can be implemented outside of Germany in comparable markets: large urban rental markets with a supply- demand imbalance and a regulated rental environment.

No specific target rate or ratios in terms of German vs. non-German exposure  disciplined but highly opportunistic approach.

M&A activities in European target markets are subject to the same criteria as in Germany.

15 Urban
Growth				Stockholm

Regions				Gothenburg

				Malmö

Randstad

(greater

Amsterdam)

Île-de-France (greater Paris)

Mainly

Vienna

	Germany		Austria		Sweden		France		Netherlands
							10% stake in portfolio	2.6% stake in portfolio
	355k residential units		22k residential units		38k residential units		with 4k residential		with 27k residential
							units		units

•	Primary home market and	•	Run scalable operating	•	Prove that Vonovia	•	Largest long-term	•	Continue market
	expected to remain dominant in		business (Austrian SAP		business model works		potential		research
	the foreseeable future.		client successfully		outside Germany	•	Active engagement and	•	Active engagement and
•	Home of Vonovia business		implemented)	•	Market consolidation on		networking to safeguard		networking with
	model that we are seeking to	•	"Austrian model" along		the basis of Victoria		pole position for when		opportunistic approach
	repeat in similar markets		build-hold-sell value		Park and Hembla		opportunity arises
			chain		combination


H1 2020 Earnings Call		page 32

Megatrends - Challenge & Opportunity

% of population living in cities

87%

84%

	77%	79%

Urbanization	Germany	W. Europe
2015	2050E

% of modernized housing units

			~4%
		~3%
	~1%
Energy	Avg. Germany	Required run	Vonovia 2019
efficiency
	rate Germany

% of population above/below 65 years

	21%	31%		20%	29%

	79%	69%		80%	71%

Demographic
2015 Germany 2050E			2015 W. Europe 2050E
change			65 or older			younger than 65

The dominant megatrends represent a challenge and

an opportunity at the same time

The key to solving the residential markets' problems lies in finding workable solutions for these megatrends in the

interest of all stakeholders

The investments required to meet these challenges are enormous. The German Housing Association GdW estimates the investment volume required until 2030 to be around €800bn

Large residential players with sustainable business models and access to capital market funding play an important role in finding and implementing solutions

Sources: United Nations, Prognos AG

H1 2020 Earnings Call

page 33

Long-term Support from Megatrends

Focus on Urban Areas with Long-term Supply/Demand Imbalance

Portfolio evolution

Vonovia

~70k non-core apartments sold since IPO in 2013
Vonovia Portfolio March 2015	Vonovia Strategic Portfolio
~99% of current portfolio located in urban	347k apartments in 818 locations	350k apartments in ~400 locations

growth regions for long-term ownership and subject
to structural supply-demand imbalance
Aggregate total value growth 2017-2019 (%)1
40.8%

6.0%

Strategic Portfolio

Non-core locations

Market view of growing and shrinking regions2

The German Federal Office for Construction and Urban Development (BBSR) has analyzed all cities and counties in Germany on the basis of the average development in terms of population growth, net migration, working population (age 20- 64), unemployment rate and trade tax revenue.

The results fully confirm our portfolio

management decisions

Germany (market)

Strategic Portfolio (Vonovia)

Shrinking (above average)

Shrinking

No clear direction

Growing

Growing (above average)

Vonovia location High-influx cities ("Schwarmstädte"). For more information: http://investoren.vonovia.de/websites/vonovia/English/4050/financial-reports-_-presentations.html1 Simple addition of 2017-2019 valuation results excluding compound interest effects. 2 Source: BBSR (https://gis.uba.de/maps/resources/apps/bbsr/index.html?lang=de) 2

H1 2020 Earnings Call

page 34

The Most Efficient Solution to the Consequences of Germany's Housing

Shortage in Urban Areas is New Construction.

Vonovia Leads by Example

Largest homebuilders in Germany1

Vonovia/Buwog

Bonava

Consus

Instone

ABG Frankfurt

BPD

Pandion

GEWOFAG

Project Imm. W.

Otto Wulff

200

400

600

'000 sqm living area

Majority of newly built apartments is to hold, substantially de-risking

the business compared to "typical" developers who build to sell. Three forms of new constructions:

On top of existing buildings by adding an additional floor ("roof extension")

On open spaces in between buildings in our neighborhoods ("densification")

On land that we acquire and develop ("project development") Depending on the specific circumstances of the construction project we

use conventional and modular construction methods.

1 Top 7 cities, includes projects completed between 2017 and 2024 (expected), Data source: bulwiengesa, company data.

H1 2020 Earnings Call

page 35

Long-term Support from Megatrends

Investments into Existing Portfolio and New Construction

New construction: Construction of apartments for our own portfolio through entirely new buildings or floor additions to existing buildings applying modular and conventional construction methods.

Upgrade Building: Energy efficient building modernization usually including new facades, roofs, windows and heating systems.

Upgrade	Optimize	New
Building	Apartment	construction

Optimize Apartment: Primarily senior-friendly apartment renovation usually				Neighborhood Development

including new bathrooms, modern electrical installations, new flooring, etc.

€m		2020E Investment Program (€m)
	New construction
	1,300	1,300
	Upgrade Building

	-	-
	Optimize Apartment

	1,600	1,600

						1,489
Target						range			range	range

IRR of				1,139
9-10%
				779
								611
		356	472

71	172

2013	2014	2015	2016	2017	2018	2019	2020E	H1 2020	Kicked-off	Pipeline	2020E

H1 2020 Earnings Call

page 36

Long-term Support from Megatrends

More than €550m Neighborhood Development Investments

While each project is different depending on specific local requirements and opportunities, neighborhood development projects usually include energy efficient modernization, construction of new apartments, apartment modernization and general upgrade of the neighborhood environment.

Bielefeld (2017)

Sennestadt

302 apartments

3 years construction time

€16m investment

Dortmund (2017) Westerfilde Nord + Süd 639 apartments

3 years construction time €28m investment

Essen (2016)

Eltingviertel

420 apartments

5 years construction time €27m investment

Aachen (2016)

Preuswald

397 apartments

3 years construction time €10m investment

Bochum (2019)

Weitmar

1,558 apartments

4 years construction time €81m investment

Duisburg (2019)

Hüttenheim

228 apartments

3 years construction time €27m investment

Frankfurt (2017)

Knorrquartier

150 apartments

2 years construction time €14m investment

Note: Year refers to year of initial investment. Pie chart refers to estimated degree of project completion.

Kiel (2018) Gaarden (Förde)

682 apartments

5 years construction time €30m investment

Hamburg (2018)

Wilhelmsburg

1,451 apartments

4 years construction time €90m investment

Berlin (2017)

Lettekiez

919 apartments

3 years construction time

€36m investment

Berlin (2017)

Tegel- Ziekowstraße 1,470 apartments

6 years construction time €111m investment

Berlin (2016) Afrikanisches Viertel 422 apartments

5 years construction time €43m investment

Wustermark (2020)

Elstal

70 apartments

4 years construction time €8m investment

Kornwestheim (2019)

Südkorn

277 apartments

4 years construction time €34m investment

H1 2020 Earnings Call

page 37

Serving a Fundamental Need in a Highly Relevant Market

Main Focus Points of Our Sustainability and ESG Dimensions

ENVIRONMENTAL

Largest and most meaningful positive impact is through increasing
energy efficiency and CO2 reduction of the >50,000 buildings in our portfolio
Ca. one million tCO2e emissions per year
Committed to Germany's ambitious target of achieving a virtually climate neutral building stock by 2050  energy efficient modernization of our portfolio at rate of >3% p.a.
Researching innovative ways to
reduce CO2 emissions and increase the use of renewable energy

SOCIAL

Deeply rooted in the middle of society with products & services that impact the lives of more than one million people
One's home is not a product like any other  it serves a basic need alongside food and oxygen
As a partner in the local markets in which we operate we provide answers to the challenges of the housing sector
Most important solution lies in the construction of new and affordable apartments; as one of Germany's largest homebuilders we lead by example
Responsibility for ~10,000 employees from 74 countries

G• We bear responsibility for offering

OVERNANCE

our employees a working environment in which they are

• Business conduct is built around happy, heathy and able to

trust, transparency and reliability advance in line with their own

• Inexpeverythctationsng we do we play by the

• Vonovia academy

rules and are compliant with all

• Comprehensive health relevant laws, directives, social

management

normsGenerousand agreementshome office regulation

and part-time models

• Continuous and open dialogue with

• Ausbildung

• allWeiterbildungstakeholders

• We will only be successful if our stakeholders feel that they can rely on us

As Europe's largest listed landlord we provide a home to around 1 million people from ca. 170 nations. All of

our actions have more than just an economic dimension.

H1 2020 Earnings Call

page 38

ESG - High Run-rate in Energy-efficient Modernization & Innovative Research in the Field of CO2 Reduction

We support the German government's ambitious target of establishing

a virtually climate-neutral building stock in Germany by 2050

% of modernized housing units
	~5%	~5%		5

	~4%		7	6


		Required	1

		run rate in
		Germany
~1%				8

			2
Avg. Germany	Vonovia 2019 Vonovia 2018 Vonovia 2017		3

Climate Protection Through Innovation ->Bochum-Weitmar District

In partnership with renowned Fraunhofer institutes, Vonovia is implementing a three-yearhands-on innovation project as part of Open District Hub e. V. in our neighborhood in Bochum-Weitmar to develop and test new technologies in ongoing operations.

The aim of the project is to supply the neighborhood with electricity and heating that is as carbon-neutral as possible. We aim to achieve this by linking the energy sectors via a central platform.

A smart, self-learning energy management system then ensures that the right energy is distributed to tenants when they need it - at electric charging stations, in the form of electricity for tenants' own households or in the form of heating.

Measures at apartment level:

011 Implementation of measures that do not involve any structural intervention, e.g., optimized heating system settings

022 Digitalization of buildings and apartments, e.g., to feature smart meters

Measures at building level:

033 Energy-efficient refurbishment, e.g., measures relating to the building shells and heating systems

044 Infrastructure for e-mobility, e.g., charging stations and e-wall sockets

055 Sustainable energy supply, e.g., photovoltaic systems for tenant electricity

Measures at neighborhood level:

066 Building digitalization and networking

077 Sector coupling (heat, electricity, mobility, etc.) in the neighborhood via digital platform

088 Storage and distribution of energy generated in a decentralized structure enables on-site consumption

099 Promotion of biodiversity

H1 2020 Earnings Call

page 39

ESG - Deeply rooted in the middle of society with products & services that impact the lives of more than one million people

CUSTOMERS

Business philosophy above and beyond what is legally required
Self-imposedobligation to limit ourselves to maximum rent increase of €2/sqm after invest
Guarantee to customers 70+ years that rents will remain affordable irrespective of legal rent increase opportunities
In-housecraftsmen organization to ensure swift response time to repair & maintenance needs
Multilingual service center for customer enquiries with 24/7 emergency service and tenant app to access all relevant data and for state-of-the-artcustomer-landlord communication

SOCIETY

Availability and affordability of housing is one of key social questions of our time. The most effective answer to address this challenge is new construction. With almost 2,000 apartments per year we are part of the solution
Several hundred million of investments in neighborhood development to make sure that people feel at home not only within their apartments but also within their local neighborhood
Various foundations, donations and different initiatives (e.g. photo award) support our commitment to society

EMPLOYEES

• We bear responsibility for offering

• We bear responsibility for offering our employees a working

our employees a working environmentininwhichwhichtheytheyareare

happpy,healthyheathyandabletoto advance in line with their own

advance in line with their expectations

expectations

• Vonovia academy

• OurComprehensiveVonovia academyhealthcontinuously offersmanagementrange of training and

• Generous home office regulation coaching opportunities

and part-time models

• ComprehensiveAusbildung health

• managementWeiterbildung

• Generous home office regulation and part-time models to enable employees to balance career and family

• Signatory of Diversity Charter and committed to appreciation, tolerance and respect

H1 2020 Earnings Call

page 40

ESG- Highly Robust Corporate Governance

The duties and authorities of the three governing bodies derive from the SE Regulation, the German Stock Corporation Act and the Articles of Association. In addition, Vonovia is fully in compliance with the German Corporate Governance Code.

In the two-tiergovernance system, the management and monitoring of the business are strictly separated from each other.

Annual General Meeting (AGM)

•

Shareholders can exercise their voting rights.

Decision making includes the appropriation of profit, discharge of members of the SVB and MB, and capital authorization.

Two-tier Governance System

Supervisory Board (SVB)

Appoints, supervises and advises MB
Examines and adopts the annual financial statements
Forms Supervisory Board Committees
Fully independent
Board profile with all required skills and experience

Jürgen	Prof. Dr.	Burkhard Ulrich	Vitus	Dr. Florian	Dr. Ute
Fitschen	Edgar Ernst	Drescher	Eckert	Funck	Geipel-Faber
(Chairman)

Daniel	Hildegard	Prof. Dr.	Dr. Ariane	Clara-Christina	Christian
Just	Müller	Klaus Rauscher	Reinhart	Streit	Ulbrich

Management Board (MB)

Jointly accountable for independently managing the business in the best interest of the company and its stakeholders
Informs the SVB regularly and comprehensively
Develops the company's strategy, coordinates it with the
SVB and executes that strategy

CEO	CFO
Rolf	Helene
Buch	von Roeder

CRO	CDO
Arnd	Daniel
Fittkau	Riedl

H1 2020 Earnings Call

page 41

Why Vonovia?

Granular B-to-C business with high degree of stability. Business model is resilient, predictable and provides downside protection.

Long-term owner and full-scale operator with proven track record of scale and efficiencies in regulated residential real estate markets.

The megatrends urbanization, energy efficiency and demographic change provide structural support and long-term tailwind for the business.

Uniquely positioned in Germany with ability and ambition to implement Vonovia's business model in selected European metropolitan areas.

Fully committed to long-term nature of the business and the importance of sustainability.

H1 2020 Earnings Call

page 42

Agenda

Kevin Drexler is one of almost 500 trainees across more than a dozen professions Vonovia-wide. Kevin and his ca. 900 colleagues in our residential environment business, are responsible for 14m sqm of green spaces, 300km of hedges, 220,000 trees and much more to ensure that our tenants live in a neighborhood they gladly call home.

H1 2020 Results	Equity Story		Additional
	&		Information		See
	Business Overview				Page
				Finder

					on page
					65 for
pages 3-19	pages 21-42		pages 44-65		detailed
		index

H1 2020 Earnings Call

page 43

Portfolio Cluster

55% of German portfolio earmarked for

investment strategy, safeguarding long-term sustainability of our Optimize Apartment and Upgrade

Building investment strategy

604 non-core units sold in H1 2020 with a fair value step-up of ca. 36.5%, partly driven by the

disposal of a commercial property

Sweden 11%

Austria 5%

Non-core 1%

Recurring

Sales 7%

Invest 55%

Operate 22%

Jun 30, 2020		Fair value1		Residential	In-place rent
(€bn)	% of total	(€/sqm)	units	(€/sqm/month)

Operate	11,578	22%	1,993	85,450	7.26
Invest	29,351	55%	1,986	238,189	6.73
Strategic	40,929	76%	1,988	323,639	6.87
Recurring Sales	3,919	7%	2,111	27,167	6.99
Non-core	433	1%	1,513	3,581	6.52
Vonovia Germany	45,282	84%	1,992	354,387	6.88
Vonovia Sweden	5,762	11%	1,938	38,130	9.65
Vonovia Austria	2,726	5%	1,496	22,362	4.73
Vonovia Total	53,770	100%	1,954	414,879	7.03

Note: In-place rents in Austria and Sweden are not fully comparable to Germany, as Sweden includes ancillary costs and Austria includes maintenance and property improvement contributions from tenants. The table above shows the rental level unadjusted to the German definition. 1 Fair value of the developed land excluding €1,928.1m, of which €582.3m for undeveloped land and inheritable building rights granted, €400.0m for assets under construction, €599.1m for development, and €346.7m other.

H1 2020 Earnings Call

page 44

Regional Cluster

Regional Market

Fair value1
(€m)		(€/sqm)	Residential	Vacancy
	units	(%)

		In-place rent						Market rent	Average rent
						Purchase
		Residential	Organic rent	Multiple			increase	growth (LTM,
Total	Residential		power index
(€/sqm/	growth	(in-place			forecast	%) from
(p.a., €m)	(p.a., €m)		(market
month)	(y-o-y, %)	rent)			Valuation (%	Optimize
			data)2
								p.a.)	Apartment

Berlin

Rhine Main Area (Frankfurt,

Darmstadt, Wiesbaden)

Southern Ruhr Area (Dortmund,

Essen, Bochum)

Rhineland (Cologne, Düsseldorf,

Bonn)

Dresden

Hamburg

Munich

Stuttgart

Kiel

Hanover

Northern Ruhr Area (Duisburg,

Gelsenkirchen)

Bremen

Leipzig

Westphalia (Münster, Osnabrück)

Freiburg

Other Strategic Locations

Total Strategic Locations

Non-Strategic Locations

7,593	2,720	42,365	1.2	232	220	6.90	3.4	32.7	81.3	1.6	45.1
4,657	2,615	27,421	1.8	179	173	8.42	3.3	26.0	105.9	1.8	26.9

4,181	1,543	43,445	3.3	200	195	6.30	5.1	20.9	89.1	1.5	26.7

3,996	2,059	28,495	2.2	171	163	7.34	3.0	23.4	100.8	1.7	26.8

3,903	1,701	38,516	3.7	169	160	6.20	3.6	23.1	82.6	1.7	22.9
2,910	2,271	19,750	1.6	112	108	7.30	3.9	25.9	98.9	1.6	39.0

2,362	3,618	9,663	1.5	66	62	8.33	3.1	35.6	123.7	1.9	36.9

2,211	2,488	13,753	1.7	86	82	8.08	2.7	25.8	105.7	1.8	32.3
2,284	1,655	23,219	2.4	106	102	6.48	3.9	21.5	74.8	1.7	31.8
1,991	1,903	16,252	2.8	85	82	6.82	3.7	23.5	90.3	1.7	30.9

1,738	1,093	25,454	3.5	111	108	5.90	3.6	15.6	81.4	1.2	31.2

1,279	1,728	11,852	3.4	52	50	6.01	5.0	24.5	84.3	1.8	20.9
993	1,619	9,052	3.7	44	41	6.15	2.4	22.6	76.3	1.8	22.7
959	1,534	9,479	3.3	47	45	6.35	5.6	20.6	90.9	1.5	33.7

673	2,414	4,040	2.1	25	25	7.61	3.5	26.4	86.9	1.7	41.6

2,950	1,703	26,762	3.5	139	134	6.85	3.4	21.2		1.6	31.5
44,683	2,000	349,518	2.6	1,825	1,750	6.88	3.7	24.5		1.6	30.8
599	1,566	4,869	5.1	29	26	6.57	2.0	20.9		1.6	26.1

Total Germany	45,282	1,992	354,387	2.7	1,854	1,776	6.88	3.6	24.4	1.6	30.7
Vonovia Sweden	5,762	1,938	38,130	2.6	335	308	9.65	4.8	17.2	1.7	-
Vonovia Austria	2,726	1,496	22,362	4.7	108	90	4.73	4.2	25.3	1.4	-
Total	53,770	1,954	414,879	2.8	2,297	2,174	7.03	3.9	23.4	1.7	-

H1 2020 Earnings Call

page 45

Substantial Rent Growth Pipeline

Increasingly comprehensive investment projects incl. neighborhood developments and new

construction result in more extended periods between investment and full rent growth realization.

From the investment programs 2017 to 2020 an aggregate incremental rental income of ~ €96m p.a.

is still in the pipeline as investments are underway but not fully completed.

Year-by-year rent growth materialization from investment programs

			1%			3%
								4%
							12%			19%		Rent growth from investment

									19%		program 3 years earlier

	39%	38%	41%



								37%				31%		Rent growth from investment
													program 2 years earlier

									38%
100%

												22%		Rent growth from investment
													program 1 year earlier

	61%	60%	56%	50%


									38%
									28%		Rent growth from same-year
													investment program

2015	2016	2017	2018	2019	2020E	2021E

Year of rent increase execution

Explanatory note: Of the investment-driven rent growth in 2020, for example, 38% come from the investment program 2020, 38% from investment program 2019, 19% from the investment program 2018 and the remaining 4% from the investment program 2017.

H1 2020 Earnings Call

page 46

Distribution of Construction Year Clusters

<1919	4%
1919-1948	11%
1949-1959				30%	Typical post WWII

			constructions with mostly

					up to 5 floors in larger
					clusters; key focus for
1960-1969			21%		neighborhood development

			investment activities
1970-1979		18%	Mostly dense high rise

	constructions; particularly
1980-1989	8%		efficient to manage

1990-1999	7%
2000+	1%

Note: German portfolio only. Construction year indicates year of initial construction and disregards comprehensive modernization work.

H1 2020 Earnings Call

page 47

New EPRA NAV Metrics

Net Tangible Assets (NTA) - "holding portfolio value" Net Reinstatement Value (NRV) - "beyond the bricks"

	Proxy for brick-and-mortar value of the long-term		Aims to represent the value required to rebuild the
	holding portfolio		company
€m	€m	4.4%

37,306

5.3%

38,941

29,932

31,527

€71.81

€68.79

p.s.

€58.14

p.s.

€55.20

p.s.

Dec 31, 2019

Jun 30, 2020

Dec 31, 2019

Jun 30, 2020

H1 2020 Earnings Call

page 48

Reconciliation from Old to New EPRA NAV Metrics

Net Tangible Assets (NTA) - "holding portfolio value" Net Reinstatement Value (NRV) - "beyond the bricks"

	Proxy for brick-and-mortar value of the long-term		Aims to represent the value required to rebuild the
	holding portfolio		company

EPRA NAV to EPRA NTA bridge (€m)		EPRA NAV to EPRA NRV bridge (€m)

			38,941
			3,959

31,078			31,527	31,078	3,903

	1,405	1,459	3,438

		125

					€71.81
					p.s.
€57.31			€58.14	€57.31
		p.s.
p.s.			p.s.

EPRA NAV Goodwill Deferred	Intangibles Real estate	NTA	EPRA NAV	FV of intangibles Real estate	NRV
taxes on	(IFRS) transfer tax			transfer tax
disposal	(and other			(and other
portfolio	purchaser's			purchaser's
	costs)1			costs)

1 Long-term Holding portfolio only. Note: The new EPRA NAV Metrics also include a Net Disposal Value (NDV), which is a proxy for a liquidation value assuming all assets are sold at fair value, therefore including the crystallization of deferred taxes. Vonovia intends to publish the NDV with the FY2020 results.

H1 2020 Earnings Call

page 49

Detailed Overview of Old and New EPRA NAV Metrics

Highlights	Segments	NAV & Valuation	LTV		Guidance	Wrap-up	Appendix
& Financing



OldEPRA NAV Metrics (€m)				NewEPRA NAV Metrics (€m)

31,065							31,078
	14	0	0	0	0	0

€57.31

p.s.

IFRS	FV of	Goodwill	Intangibles	FV of fixed	FV of	Real estate	NAV
shareholders'	financial		(IFRS	interest	intangibles	transfer tax
equity (+	instruments		balance	rate debt		(and other
def. taxes on			sheet)			purchaser's
inv. prop.)						costs)

31,065	14						29,673
		0	0	0	0
		1,405

							€54.72
							p.s.
IFRS	FV of	Goodwill	Intangibles	FV of fixed	FV of	Real estate	Adj. NAV
shareholders'	financial		(IFRS	interest	intangibles	transfer tax
equity (+	instruments		balance	rate debt		(and other
def. taxes on			sheet)			purchaser's
inv. prop.)						costs)

							38,941
						3,959
31,065	14	0	0	0	3,903		€71.81

							p.s.
IFRS	FV of	Goodwill	Intangibles	FV of fixed	FV of	Real estate	NRV
shareholders'	financial		(IFRS	interest	intangibles	transfer tax
equity (+	instruments		balance	rate debt		(and other
def. taxes on			sheet)			purchaser's
inv. prop.)						costs)
29,6061							31,527
14					3,438
		125	0	0
		1,405

							€58.14
							p.s.
IFRS	FV of	Goodwill	Intangibles	FV of fixed	FV of	Real estate	NTA
shareholders'	financial		(IFRS	interest	intangibles	transfer tax
equity (+	instruments		balance	rate debt		(and other
def. taxes on			sheet)			purchaser's
holding						costs)2
portfolio)

1 Excl. deferred taxes on disposal portfolio (€1,459m). 2 Long-termHolding portfolio only. Note: The new EPRA NAV Metrics also include a Net Disposal Value (NDV), which is a proxy for a liquidation value, not dissimilar to the EPRA NNNAV, assuming all assets are sold at fair value, therefore including the crystallization of deferred taxes. Vonovia intends to publish an the NDV with the FY2020 results.

H1 2020 Earnings Call

page 50

Illustrative Overview of Investment Program Funding

Rental Income

Maintenance expenses
Operating expenses

EBITDA Value-add
EBITDA Recurring Sales
EBITDA Development

Total EBITDA

Interest expenses
Current income taxes
Consolidation/non-cashitems

Group FFO

Comprehensive investment program to drive organic growth and portfolio improvements

Size of investment program is calibrated to remain within LTV target range

Funded with retained cash, proceeds from recurring sales plus (often subsidized) loans

€1.3bn - €1.6bn

~70% for dividend1	~30%
cash	scrip	retained earnings

Capitalized maintenance
Hybrid coupon & minorities
One-offs

Earnings available for investment program

Incremental

debt

Sales

proceeds

Earnings

contribution

Including funding from KfW and

EIB

~2,500 units @30% est. gross margin

1 Average historic cash/scrip ratio has been 56%/44% since inception in 2016

Investment Program

H1 2020 Earnings Call

page 51

Stable Track Record in Recurring Sales Segment

The Recurring Sales Segment comprises of single-unit sales from a defined subportfolio of ca. 27k units1. All apartments have an individual land register entry and are eligible for disposal from a legal point of view. The cash proceeds from Recurring Sales are used as an equity contribution for the investment program.

Historical disposal volumes and FV step-up2

3,000							50%
2,500							40%

2,000						H2
						30%
						est.

1,500
							20%
1,000
500						H1	10%

0							0%
2014	2015	2016	2017	2018	2019	H1 2020

Sold units

FV step-up

Current guidance

Note: FV step-up dependent on level of fair values in relation to sales prices. 1 German portfolio only; recurring sales are also made from the Austrian portfolio. 2 2018 onwards also including recurring sales in Austria.

H1 2020 Earnings Call

page 52

Acquisitions - Opportunistic but Disciplined

Acquisition pipeline ('000 units)

340

																									2013: Dewag+ Vitus (~41 k)1
																									2015: Gagfah (~145 k) 1
																									2015: Südewo (~19 k) 1
																									2016: conwert (~23 k) 1
			252																				2017: Buwog (~48 k) 1
																						2018: Victoria Park (~14 k) 1
		240
			224																						2019: Hembla (~21 k) 1

											219
																						206
		175
		158																								163

140	136
			121		114

			105
							97
			87												83							83
														77
			71
								69								66	67
			61

			54																			52

							44							37						37	41.5
																					35

						18													26				25	22
																							17
																		7							7	5	3



		Examined		Analyzed in more detail		Due Diligence, partly ongoing			Bids			Signed
				2013		2014	2015			2016			2017		2018	2019			H1 2020

1Acquisitions are shown for all categories in the year the acquisition process started.

H1 2020 Earnings Call

page 53

Acquisition Track Record

Highlights		Segments	NAV & Valuation		LTV		Guidance		Wrap-up	Appendix
	& Financing



Larger acquisitions											Fair Value per sqm
Year		Deal	Residential units			TOP Locations	@ Acquisition		Jun 30, 2020	∆
		#


		DEWAG		11,300		Berlin, Hamburg, Cologne,	€ 1,344		€ 2,570	91%
					Frankfurt
2014

		VITUS1		20,500			Bremen, Kiel	€ 807		€ 1,664	106%

		GAGFAH		144,600		Dresden, Berlin, Hamburg	€ 889		€ 1,934	118%
2015		FRANCONIA		4,100			Berlin, Dresden	€ 1,044		€ 2,174	108%

		SÜDEWO		19,400	Stuttgart, Karlsruhe, Mannheim,	€ 1,380		€ 2,265	64%
					Ulm

2016		GRAINGER		2,400			Munich, Mannheim	€ 1,501		€ 2,588	72%

		CONWERT		23,400	Berlin, Leipzig, Potsdam, Vienna	€ 1,353		€ 2,130	57%
		(Germany & Austria)

		thereof Germany		21,200		Berlin, Leipzig, Potsdam	€ 1,218		€ 2,036	67%
2017		thereof Austria		2,200			Vienna	€ 1,986		€ 2,614	32%


		PROIMMO		1,000			Hanover	€ 1,617		€ 1,976	22%

		BUWOG		48,300	Berlin, Lübeck, Vienna, Villach	€ 1,244		€ 1,574	27%
		(Germany & Austria)

		thereof Germany		27,000			Berlin, Lübeck, Kiel	€ 1,330		€ 1,821	37%
2018		thereof Austria		21,300			Vienna, Villach, Graz	€ 1,157		€ 1,335	15%


		VICTORIA PARK		14,000	Stockholm, Malmö, Gothenburg	SEK 15,286		SEK 18,670	22%
		(Sweden)

		AKELIUS		2,300		Stockholm, Gothenburg	SEK 25,933		SEK 27,484	6%
		(Sweden)
2019
	HEMBLA		21,400			Stockholm	SEK 20,157		SEK 20,640	2%

		(Sweden)

	Total		312,700

Note: Excluding smaller tactical acquisitions. 1 Net of subportfolio sold right after the acquisition

H1 2020 Earnings Call

page 54

Bonds / Rating

Highlights	Segments	NAV & Valuation	LTV	Guidance	Wrap-up	Appendix
& Financing

Corporate Investment grade rating		as of 2018-08-02
Rating agency	Rating	Outlook	Last Update		July 22: S&P's updated Vonovia's business risk
Scope	A-	Stable	13 Dec 2019
	profile from "strong" to "excellent"
Standard & Poor's	BBB+	Stable	22 Jul 2020

Bond ratings			as of 2018-08-02
Name	Tenor & Coupon	ISIN	Amount	Issue price	Coupon	Final Maturity Date	Rating
							Scope	S&P


Bond 024B (EMTN)	10 years 1.000%	DE000A28ZQQ5	€ 750m	99.189%	1.000%	09 Jul 2030	A-	BBB+
Bond 024A (EMTN)	6 years 0.625%	DE000A28ZQP7	€ 750m	99.684%	0.625%	09 Jul 2026	A-	BBB+

Bond 023B (EMTN)	10 years 2.250%	DE000A28VQD2	€ 500m	98.908%	2.250%	07 Apr 2030	A-	BBB+
Bond 023A (EMTN)	4 years 1.625%	DE000A28VQC4	€ 500m	99.831%	1.625%	07 Apr 2024	A-	BBB+
Bond 022C (EMTN)	20 years 1.625%	DE000A2R8NE1	€ 500m	98.105%	1.625%	07 Oct 2039	A-	BBB+
Bond 022B (EMTN)	8 years 0.625%	DE000A2R8ND3	€ 500m	98.941%	0.625%	07 Oct 2027	A-	BBB+

Bond 022A (EMTN)	3.5 years 0.125%	DE000A2R8NC5	€ 500m	99.882%	0.125%	06 Apr 2023	A-	BBB+
Bond 021B (EMTN)	15 years 1.125%	DE000A2R7JE1	€ 500m	99.822%	1.125%	14 Sep 2034	A-	BBB+

Bond 021A (EMTN)	10 years 0.500%	DE000A2R7JD3	€ 500m	98.965%	0.500%	14 Sep 2029	A-	BBB+
Bond 020 (EMTN)	6.5 years 1.800%	DE000A2RWZZ6	€ 500m	99.836%	1.800%	29 Jun 2025	A-	BBB+
Bond 019 (EMTN)	5 years 0.875%	DE000A192ZH7	€ 500m	99.437%	0.875%	03 Jul 2023	A-	BBB+
Bond 018D (EMTN)	20 years 2.750%	DE000A19X8C0	€ 500m	97.896%	2.750%	22 Mar 2038	A-	BBB+

Bond 018C (EMTN)	12 years 2.125%	DE000A19X8B2	€ 500m	98.967%	2.125%	22 Mar 2030	A-	BBB+
Bond 018B (EMTN)	8 years 1.500%	DE000A19X8A4	€ 700m(1)	101.119%	1.500%	22 Mar 2026	A-	BBB+
Bond 018A (EMTN)	4.75 years 3M EURIBOR+0.450%	DE000A19X793	€ 600m	100.000%	0.793% hedged	22 Dec 2022	A-	BBB+
Bond 017B (EMTN)	10 years 1.500%	DE000A19UR79	€ 500m	99.439%	1.500%	14 Jan 2028	A-	BBB+
Bond 017A (EMTN)	6 years 0.750%	DE000A19UR61	€ 500m	99.330%	0.750%	15 Jan 2024	A-	BBB+
Bond 015 (EMTN)	8 years 1.125%	DE000A19NS93	€ 500m	99.386%	1.125%	08 Sep 2025	A-	BBB+

Bond 014B (EMTN)	10 years 1.750%	DE000A19B8E2	€ 500m	99.266%	1.750%	25 Jan 2027	A-	BBB+
Bond 014A (EMTN)	5 years 0.750%	DE000A19B8D4	€ 500m	99.863%	0.750%	25 Jan 2022	A-	BBB+
Bond 013 (EMTN)	8 years 1.250%	DE000A189ZX0	€ 1,000m	99.037%	1.250%	06 Dec 2024	A-	BBB+
Bond 011B (EMTN)	10 years 1.500%	DE000A182VT2	€ 500m	99.165%	1.500%	10 Jun 2026	A-	BBB+

Bond 011A (EMTN)	6 years 0.875%	DE000A182VS4	€ 500m	99.530%	0.875%	10 Jun 2022	A-	BBB+
Bond 010C (EMTN)	8 years 2.250%	DE000A18V146	€ 1,000m	99.085%	2.250%	15 Dec 2023	A-	BBB+

Bond 010B (EMTN)	5 years 1.625%	DE000A18V138	€ 752m(2)	99.852%	1.625%	15 Dec 2020	A-	BBB+
Bond 009B (EMTN)	10 years 1.500%	DE000A1ZY989	€ 500m	98.455%	1.500%	31 Mar 2025	A-	BBB+

Bond 008 (Hybrid)	perpetual 4%	XS1117300837	€ 1,000m	100.000%	4.000%	perpetual	BBB	BBB-
Bond 007 (EMTN)	8 years 2.125%	DE000A1ZLUN1	€ 500m	99.412%	2.125%	09 Jul 2022	A-	BBB+
Bond 005 (EMTN)	8 years 3.625%	DE000A1HRVD5	€ 500m	99.843%	3.625%	08 Oct 2021	A-	BBB+
Bond 004 (USD-Bond)	10 years 5.000%	US25155FAB22	USD 250m	98.993%	4.580%(3)	02 Oct 2023	A-	BBB+

incl. Tap Bond €200m, Issue date 06 Feb 2020
Nominal amount outstanding after Liability Management in Sep 2019
EUR-equivalentCoupon

H1 2020 Earnings Call

page 55

History of Vonovia

Late 19th century

until

1980s

Social housing in not-for-profit regime

The commercialization

of Germany's housing

market came in the wake of the "Neue Heimat" scandal in the

~2000

until 2013

Private equity domination

Predominantly Anglo- Saxon private equity funds bought hundreds of thousands of apartments from public and corporate owners.

	2013
	until
	2018
IPO	Beginning of
in 2013
	consolidation in the
	German residential
Professionalization	market
of the business

Proactive Portfolio management: €3bn invested in portfolio modernization.

Acquisition and integration of more than 290k apartments.

Disposal of 77k non-core apartments.

Scalability & industrialization: EBITDA Operations margin of 75% (+15 percentage points since IPO).

2018

onwards

Opportunistic expansion into selected European metropolitan areas

While Germany is expected to remain the dominant market in our portfolio also for the foreseeable future we want to build on our knowledge and track record by bringing our strategy and expertise to comparable residential markets outside of Germany.

1980s (bankruptcy of more than 250k union-owned apartments).

Push towards more professionalization but also short-term orientation.

We built the German leader with

the potential and ambition

to become

a unique European champion

H1 2020 Earnings Call

page 56

Residential Market Fundamentals (Germany)

Household Sizes and Ownership Structure

Growing number of smaller households

While the overall population in Germany is expected to slightly decline, the number of households is forecast to grow until at least 2035 with a clear trend towards smaller households.

The household growth is driven by various demographic and social trends including divorce rates, employment mobility etc.

Fragmented ownership structure

Germany is the largest housing market in Europe with ~42m housing units, of which ~23m are rental units. Ownership structure is highly fragmented and majority of owners are non-professional landlords.

Listed sector represents ~4% of total rental market.

Distribution of household sizes (million)

			41.4	43.2
40.1		1.1
	1.4
		3.3
	1.4
		3.8
4.0			4.4

5.2		4.9

						15.4	5 or more persons
			14.0			4 persons

13.6						3 persons



								2 persons

15.8	17.3	19.0			1 person





2008	2018	2035E

Ownership structure (million units)

Amateur landlords		15.0

Professional, not listed	2.3

Government owned	2.3

Cooperatives	2.1

Listed property companies	0.9

Churches and other	0.6

Sources: German Federal Statistics Office, GdW (German Association of Professional Homeowners). 2035E household numbers are based on trend scenario of the German Federal Statistics Office.

H1 2020 Earnings Call

page 57

Liquid Large-cap Stock

Highlights	Segments	NAV & Valuation		LTV	Guidance	Wrap-up	Appendix
& Financing


	Blackrock
		First day of trading			July 11, 2013
		7.6% Norges		No. of shares outstanding (incl. 08/2020		548.9 million
		6.5%		capital increase for scrip dividend)
		FMR		Free float			93.5%
		3.4%
		DWS
			ISIN			DE000A1ML7J1
		3.1%

		APG		Ticker symbol			VNA
		3.1%
			Share class		Registered shares with no par value

				Main listing			Frankfurt Stock Exchange
	Other
			Market segment			Regulated Market, Prime Standard
	76.3%			Major indices		DAX, Stoxx Europe 600, MSCI, GPR 250 World,

FTSE EPRA/NAREIT Europe, GPTMS150

According to German law the lowest threshold for voting rights notifications is at 3%

Share price (rebased to 100)

Hembla

Beginning

(21k)

Stoxx 600

Victoria

European

inclusion

Park (14k)

expansion;

400

conwert

cooperation

MSCI

Südewo

(23k)

with CDC

Buwog

inclusion

Habitat

(48k)

350

(19k)

25 bn)

DeWag &

M-DAX

Gagfah

DAX

(€

inclusion

(145k)

300

Vitus (41k)

inclusion

cap

market

S-DAX

+51%

250

inclusion

+277%

200

+25%

Vonovia

150

100

Sep-13Nov-13Jan-14Mar-14May-14Jul-14Sep-14Nov-14Jan-15Mar-15May-15

Jul-15Sep-15Nov-15Jan-16Mar-16May-16

Jul-16Sep-16Nov-16Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18

Jul-18Sep-18Nov-18Jan-19Mar-19May-19Jul-19Sep-19Nov-19Jan-20Mar-20May-20Jul-20

Jul-13

Vonovia	DAX	EPRA Europe	Total market cap Vonovia (€bn; weighted avg.)	Index inclusion	Acquisition

Source: Factset, company data; VNA performance is total shareholder return (share price plus dividends reinvested)

H1 2020 Earnings Call

page 58

Long-term Structural Support from Fundamental Residential Market Trends (Sweden)

The market fundamentals in Sweden are very comparable to Germany.

High degree of similarities in terms of urbanization, rental regulation, supply/demand imbalance and gap between in-place values and replacement values.

Large gap between in-place values and replacement costs2

Victoria Park3 - fair value/sqm (SEK; total lettable area) vs. construction costs

Robust rent growth in regulated environments1

Rent growth in regulated markets follows a sustainable upward trajectory and is largely independent from GDP developments; rents in unregulated markets go up and down broadly in line with the GDP development

Regulated (Sweden)

4
2
0

2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
-2
-4
-6
			GDP, quarterly development y-o-y								Rent growth; quarterly development y-o-y

Structural supply/demand imbalance

Sweden's average annual residential completions of the last five years fall short of estimated required volumes

building

land

Factor

2.5x - 3.0x

100 Completions (`000)

90Est. required volume (`000)

						19,434
				14,319	15,793

			12,108
		10,375
	8,662
6,580


2013	2014	2015	2016	2017	2018	2019	Market costs
								for new

constructions

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

1 Sources: REIS, BofA Merrill Lynch Global Research, OECD, Statistics Sweden. Note: Due to lack of q-o-q rent growth data for the US and Sweden, the annual rent growth for a year is assumed to also be the q-o-q rent growth of that year. US rent growth 2020 is full-year estimate. US GDP Q2 2020 is the Advanced Estimate of the US Bureau of Economic Analysis as of July 30, 2020 (32.9% annualized), converted to a y-o-y comparison. 2 Note: The land value refers to the share of total fair value allocated to land. Allocation between building and land in Sweden assumed to be similar to Germany. Sources: Swedish National Board of Housing, Building and Planning, Statistics Sweden. 3 2019 includes portfolio acquired from Akelius.

H1 2020 Earnings Call

page 59

Sweden's Social Security and Welfare System Ensures That Citizens in Need can Rely on Comprehensive Public Support

"The personal, economic and cultural welfare of the individual shall be fundamental aims of public activity. In particular, the public institutions shall secure the right to

employment, housing and education, and shall promote social care and social security, as well as favorable conditions for good health."

Chapter 1, Article 2(2), The Instrument of Government, The Constitution of Sweden

Similar to Germany, Sweden's social market economy is based on the principle of solidarity

and citizens can rely on a comprehensive social security and welfare system. People who cannot participate in the labor market or society because of misfortune, illness, disability, or old age is looked after by the community.

Protection

and

support

for

tenants

Arbetslöshetsersättning: Unemployment benefits of up to 80% of previous salary. Based on previous income (at most SEK 20,000 p.m. before tax), or basic benefit of about SEK 8,000 p.m. if previously a full-time employee. The benefit is limited in time.
Försörjningsstöd: Benefits for anyone who otherwise can't get a reasonable standard of living (includes housing, food, clothing and telephone). Given on a need-basis and handled by municipality's social service.
Sickness benefits for employees and job seekers
Disability allowance/Merkostnadsersättning: Benefits for extra costs incurred by disability.

Housing benefits "Bostadsbidrag" and "Bostadstillägg":

Housing allowances aimed to people in certain groups that can't afford housing.

Housing allowance for families with children
Housing allowance for young people without children (below 29 years)
Housing supplement for the elderly Receiving other types of support can include an opportunity to apply for additional benefits to cover housing costs.

Source: Försäkringskassan https://www.forsakringskassan.se/

H1 2020 Earnings Call

page 60

IR Contact & Financial Calendar

Contact

Rene Hoffmann (Head of IR)

Primary contact for Sell side, Buy side +49 234 314 1629 rene.hoffmann@vonovia.de

Stefan Heinz

Primary contact for Sell side, Buy side +49 234 314 2384 stefan.heinz@vonovia.de

Oliver Larmann

Primary contact for private investors, AGM +49 234 314 1609 oliver.larmann@vonovia.de

General inquiries investorrelations@vonovia.de

App & Website

Financial Calendar 2020

Aug 5	Interim results H1 2020
Aug 13	Roadshow Geneva and Milano (Berenberg) 1 VIRTUAL
Aug 19	Bankhaus Lampe Conference, Baden Baden (Bankhaus Lampe)1 VIRTUAL
Aug 20	HSBC European Real Estate Conference, Frankfurt (HSBC)1 VIRTUAL
Aug 24-28	Roadshow Asia (Bank of America)1 VIRTUAL
Sep 1	GS European Real Estate Conference 2020 (Goldman Sachs) VIRTUAL
Sep 3	Corporate Conference 2020, Frankfurt (Commerzbank)1 VIRTUAL
Sep 7	Jefferies Jefferies German / European Property Virtual Conference VIRTUAL1
Sep 15-16	BofAML Global Real Estate Conference 2020 NYC (BofAML) VIRTUAL
Sep 21	German Corporate Conf. 2020, Munich (Berenberg & Goldman Sachs) VIRTUAL
Sep 24	Investment Conference 2020, Munich (Baader)1 VIRTUAL
Oct 1	Commerzbank Real Estate Forum, London (Commerzbank) 1
Nov 4	Interim results 9M 2020
Nov 24	Kempen's 17th London Conference (Kempen) VIRTUAL
Dec 1	UBS Global Real Estate Conference 2020 London (UBS)
Dec 2	SocGen Flagship Conference Paris (Societe Generale) VIRTUAL

https://investors.vonovia.de

1 IR only

The most up-to-date financial calendar is always available online.

H1 2020 Earnings Call

page 61

Disclaimer

This presentation has been specifically prepared by Vonovia SE and/or its affiliates (together, "Vonovia") for internal use. Consequently, it may not be sufficient or appropriate for the purpose for which a third party might use it.

This presentation has been provided for information purposes only and is being circulated on a confidential basis. This presentation shall be used only in accordance with applicable law, e.g. regarding national and international insider dealing rules, and must not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by the recipient to any other person. Receipt of this presentation constitutes an express agreement to be bound by such confidentiality and the other terms set out herein.

This presentation includes statements, estimates, opinions and projections with respect to anticipated future performance of Vonovia ("forward-looking statements") which reflect various assumptions concerning anticipated results taken from Vonovia's current business plan or from public sources which have not been independently verified or assessed by Vonovia and which may or may not prove to be correct. Any forward-looking statements reflect current expectations based on the current business plan and various other assumptions and involve significant risks and uncertainties and should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Any forward-looking statements only speak as at the date the presentation is provided to the recipient. It is up to the recipient of this presentation to make its own assessment of the validity of any forward-looking statements and assumptions and no liability is accepted by Vonovia in respect of the achievement of such forward-looking statements and assumptions.

Vonovia accepts no liability whatsoever to the extent permitted by applicable law for any direct, indirect or consequential loss or penalty arising from any use of this presentation, its contents or preparation or otherwise in connection with it.

No representation or warranty (whether express or implied) is given in respect of any information in this presentation or that this presentation is suitable for the recipient's purposes. The delivery of this presentation does not imply that the information herein is correct as at any time subsequent to the date hereof.

Vonovia has no obligation whatsoever to update or revise any of the information, forward-looking statements or the conclusions contained herein or to reflect new events or circumstances or to correct any inaccuracies which may become apparent subsequent to the date hereof.

This presentation does not, and is not intended to, constitute or form part of, and should not be construed as, an offer to sell, or a solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities of the Company nor shall it or any part of it form the basis of or be relied upon in connection with or act as any inducement to enter into any contract or commitment or investment decision whatsoever.

This presentation is neither an advertisement nor a prospectus and is made available on the express understanding that it does not contain all information that may be required to evaluate, and will not be used by the attendees/recipients in connection with, the purchase of or investment in any securities of the Company. This presentation is selective in nature and does not purport to contain all information that may be required to evaluate the Company and/or its securities. No reliance may or should be placed for any purpose whatsoever on the information contained in this presentation, or on its completeness, accuracy or fairness.

This presentation is not directed to or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.

Neither this presentation nor the information contained in it may be taken, transmitted or distributed directly or indirectly into or within the United States, its territories or possessions. This presentation is not an offer of securities for sale in the United States. The securities of the Company have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States. Consequently, the securities of the Company may not be offered, sold, resold, transferred, delivered or distributed, directly or indirectly, into or within in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States unless registered under the Securities Act.

Tables and diagrams may include rounding effects. Per-share numbers for 2013 and 2014 are TERP-adjusted.

H1 2020 Earnings Call

page 62

For Your Notes

H1 2020 Earnings Call

page 63

For Your Notes

H1 2020 Earnings Call

page 64

	H1 2020 Results		Equity Story and Business Overview		Additional Information

3	Agenda H1 Results	21	Vonovia at a Glance	44	Portfolio Cluster
4	Highlights Q1	22	Strategy	45	Regional Cluster
5	Segment Overview	23	Social Welfare System Germany	46	Construction Year Clusters

6	Adj. EBITDA Rental	24	Strong Residential Market Fundamentals	47	Rent Growth Pipeline
7	Operating KPIs	25	Rent Growth	48	New EPRA NAV Metrics (I)
8	Adj. EBITDA Value-add	26	Business Segments	49	New EPRA NAV Metrics (II)
9	Adj. EBITDA Recurring Sales	27	Full-scale Operating Platform	50	New EPRA NAV Metrics (III)

10	Adj. EBITDA Development	28	KPI Track Record	51	Investment Program Funding
11	Development Pipeline	29	Scale & Efficiencies	52	Recurring Sales
12	H1 valuation	30	Value-add	53	Historic M&A Pipeline

13	H1 valuation - Regional Markets	31	M&A History and Criteria	54	Acquisition Track Record
14	NAV	32	European Activities	55	Overview of Corporate Bonds
15	New NAV Metrics	33	Megatrends	56	History of Vonovia

16	LTV	34	Exposure to the Right Markets	57	Market Data Germany
17	Financing Overview & Covenants	35	Homebuilder Market	58	Share Information
18	Guidance	36	Investment Program	59	Market Data Sweden
19	Wrap-up	37	Neighborhood Development	60	Social Welfare System Sweden

		38	ESG	61	IR Contact & Financial Calendar
		39	E	62	Disclaimer
		40	S

		41	G

42 Why Vonovia?

H1 2020 Earnings Call

page 65

Attachments

Original document
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Disclaimer

Vonovia SE published this content on 05 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 August 2020 08:26:06 UTC

Market Closed - Xetra Other stock markets 11:35:01 2024-05-13 am EDT			5-day change	1st Jan Change
27.9 ^EUR	+1.01%		-1.06%	-2.24%

May. 09	20 billion euros for housing subsidies - fraction for social housing	DP
May. 08	Landlord sued - BGH examines offsetting rental damage and deposit	DP

Highlights

NAV & Valuation

& Financing

	1st Jan change	Capi.
VONOVIA SE	-2.24%	24.23B
CHINA VANKE CO., LTD.	-29.06%	11.5B
AKELIUS RESIDENTIAL PROPERTY AB	+7.84%	10.76B
DEUTSCHE WOHNEN SE	-24.98%	7.68B
VINHOMES	-7.18%	6.9B
VINGROUP	+0.90%	6.58B
LEG IMMOBILIEN SE	+4.16%	6.56B
IIDA GROUP HOLDINGS CO., LTD.	-1.70%	3.72B
OPEN HOUSE GROUP CO., LTD.	+17.05%	3.71B
TRICON RESIDENTIAL INC.	+27.20%	3.32B