Vonovia : Nächste Schritte nach dem Urteil des Bundesverfassungsgerichts zum Berliner Mietendeckel (english version)

Next Steps Following the Ruling of the German Federal Constitutional Court on the Berlin Rent Freeze

April 15, 2021

Our Understanding of the Ruling at this Point

Several constitutional proceedings were filed against the MietenWoG Berlin ("Berlin Rent Freeze") in early 2020 after the law was enacted.

Since then, the "First Senate" and "Second Senate" of the Federal Constitutional Court and the

Constitutional Court of the Federal State of Berlin have each been working separately on the cases that they are competent for.

On April 15, 2021, the "Second Senate" of the Federal Constitutional Court now declared the Berlin Rent Freeze as unconstitutional and therefore void, because a federal state does not have the legal competence to pass its own rental legislation in competition to federal rental regulation.

The decision has the force of law and the consequence that the law is to be regarded as never having existed; it never had legal effects.

The court's decision approves that the State of Berlin was not allowed under the federal

constitution to enact this law that contradicts principles of federal rent law.

The declaration of voidness is final. We expect that the other Senate of the Federal Constitutional Court and the Constitutional Court of Berlin will discontinue its ongoing proceedings.

page 2

The Broader Picture Remains Challenging

		The Federal Constitutional Court Ruling comes at a very critical time with general elections for the
Critical		federal government and also for the Berlin state government on Sep 26.
timing		Most likely, there will also be a referendum on the issue of nationalization; it is not unreasonable to
		believe that the nationalization debate will gain further momentum on the back of this ruling.
		Unfortunately, there is a high risk that some landlords will now fall back into the familiar reflex of
The stakes		doing everything that is legally possible; foregone rents may be clawed back and tenants who owe
are high		at least two months' rent and cannot pay may be evicted. This would undoubtedly make an already
		tense situation even worse and put a solution further out of reach.
Challenge		The Berlin housing market is more supply-constrained today than it was before the Berlin Rent
bigger than		Freeze. (Building permits were down 9.2% in 2020; this was the fourth consecutive y-o-y decline).1
ever		Investments in energy efficiency and senior friendly refurbishments have also been held back.
		Tenants in Berlin are now afraid about the financial consequences that the failed Rent Freeze
		legislation might have on them.
Clear		Vonovia is fully aware of the severity of the situation - it will not be enough to simply install a
	hardship management or to promise to look at problems on a case by case basis as they arise.
messaging
	In this current environment, it is critical to provide clarity and certainty.
required
	That is why Vonovia has decided not to claw back any of the foregone rent from the rent freeze.
		We do not want our tenants to suffer financial consequences because of political decisions that were
		made.
Vonovia is		Vonovia is a reliable partner for all stakeholders and determined to be part of the solution in
serious about		stabilizing the housing market.
stakeholder		All stakeholders are called upon to de-escalateand join forces towards a viable path forward to
reconciliation		refurbish the housing stock and add new affordable apartments to the market.

Source: 1 Statistical Office of Berlin/Brandenburg.

page 3

The Next Steps for Our Operating Business

		As a result of the Berlin Rent Freeze Legislation, Vonovia tenants paid ca. €10m less than
No clawback		they would have without the rent freeze.
	We believe it is important to contribute to de-escalating the situation following the
of foregone
	positive verdict for the industry.
rents
		This is a clear and unambiguous signal that we are serious about our balanced stakeholder
		approach.
Resetting		We will reset rents back to the levels prior to the Berlin Rent Freeze, including the
	reversal of the 11/2020 rent reduction.
the rent
levels going		In cases where the 2019 Mietspiegel data allows rent increases, we will adjust rental levels
forward		based on Mietspiegel.
Information		We will send a letter to all of our Berlin tenants to inform them about the amount of
to tenants		foregone rent that we will not claw back as well as about their new rent level.
Portfolio		We will reboot our Upgrade Building investments, Neighborhood Development
	projects, and Optimize Apartment modernizations for energy efficiency and CO2
investments
	reduction and to provide much-neededsenior-friendly apartments.

page 4

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.

page 5