Vonovia : Capital Markets Update

Capital Markets Update

• Federal Elections Outlook
• Rights Issue Considerations
• Illustrative NTA & FFO Accretion Scenarios

September 20, 2021

German Federal Election: Polls Suggest A Tight Race

Based on most recent polls several combinations are possible and a clear winner combination with an obvious mandate to form the new government looks unlikely.

Current min/max polling results (based on eight leading pollsters (%))

30					27
25		25
				25										Not
20														considered/
												not eligible for
	20
			17							a coalition
15									13
				15			12
10												9
											11
								10
										7
5
											6			6
0
CDU/CSU SPD Greens		FDP The Left AfD	Other
									(Liberals)

Source:https://www.wahlrecht.de/umfragen/as of Sep. 17, 2021

Possible coalitions (based on simple averages across eight leading pollsters (%))

"Germany"

22

26

11

"Traffic Light"

26

16

11

"Jamaica"

22

16

11

"R2G"	26	16	6

ca. 46% votes

needed for a

majority (est.)

Page 2

What to Expect After the Election

• As polls indicate a tight race it seems likely that the election results will not deliver a clear outcome and different coalitions will be possible.
• Any coalition will require substantial consensus, and it is impossible to predict what concessions will be made by which party and on which issue.
• The very strict hardline positions laid out in the various manifestos will most likely be diluted in coalition negotiations as parties are forced to find consensus and common ground.
• In light of (i) the consensual view across party lines to combat climate change and reduce CO2 and (ii) the high ratio of retail landlords (65%) there seems to be a factual need for housing policy to remain sufficiently balanced in order to increase much needed CO2 reduction efforts and also to leave enough
  "breathing room" for private owners.

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Investments, Modernization, and Climate Protection

Consensus on Need to Reduce CO2 but Different Ways to Get There

CDU/CSU	SPD	The Greens	FDP (Liberals)	The Left
• Climate neutrality	• Climate neutrality no	• 100% renewable	• Deregulation to	• Climate neutrality
until 2045	later than 2045	energy by 2035	accelerate energy	until 2035
• Tax incentives for	• Subsidies for	• Increase	turnaround	• Introduce climate
modernization	modernization	modernization rate	• Implement	protection as a
investments	investments and	• Reduce	environmental	government target in
• Strengthen landlord-	urban quarter	modernization	policies free from	Germany's Basic Law
to-tenant electricity	developments	allowance	ideology	• Increase energy
models	• Achieve CO2	(€1.50/sqm)	• Support a lively and	efficient
• Support innovative	neutrality in the real	• Refurbishments to be	innovative start-up	modernization rate
research including	estate sector	neutral to warm	culture	by a factor of 3x
electrolyzers, fuel	• Use CO2 tax to	rents via "1/3 model"	• Comprehensive	• Refurbishments to be
cells, hydrogen	incentivize energy-	with equal burden	reform of energy-	neutral to warm
technology,	efficient	sharing between	related taxes and	rents
photovoltaics, and	modernizations	tenant, landlord and	fees	• Support landlord-to-
innovation centers	among home owners	tax payer		tenant electricity
	• Support landlord-to-	• Subsidy programs		models
	tenant electricity	and tax incentives
	models	for owners
	• Expand renewable	• Distribution along
	energy and increase	energy efficiency
	energy efficiency	classes
	• Make Germany the	• Increase CO2 tax to
	leader in hydrogen	€60 by 2023 (instead
	technology	of 2025)
	• Support innovative	• Simplify and support
	forms of renewable	landlord-to-tenant
	energy generation	electricity models
		• Include Paris Climate
		Agreement Targets
		in Germany's Basic
		law

Sources: Parties' manifestos and "First 100 Days Action Plans"

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Rental Regulation

Differences Even Within Individual Parties

CDU/CSU	SPD	The Greens	FDP (Liberals)	The Left
• Measures to increase	• Round table for	• Limit regular rent	• Abolish the 10% rent	• Enable rent freeze
supply instead of	affordable housing	increases to 2% p.a.	cap on relettings	legislation anywhere
additional regulation	with all relevant	• Ensure wide use of	(Mietpreisbremse)	in Germany
(sufficient new	stakeholders	qualified Mietspiegel	• Expropriation and	• Rent increase
supply considered to	• Rent increase in line	as firm legal basis for	regulation lead to	moratorium in tight
be the best form of	with inflation	rent increases	less supply and are	housing markets
tenant protection)	• Temporary	• Continue and	not a solution	• End "share deal
	moratorium on rent	enforce 10% rent	• Increase supply	abuse"
	increases in tight	cap on relettings	through deregulation
	housing markets	(Mietpreisbremse)
	• Continue 10% rent	• Allow for federal
	cap on relettings	legislation to
	(Mietpreisbremse)	implement rent
	• Increase look-back	ceilings
	period for Mietspiegel	• Increase look-back
	to 8 yeas	period for Mietspiegel
		to 20 years
		• End "share deal
		abuse"

Sources: Parties' manifestos and "First 100 Days Action Plans"

Page 5