Expected Development of Business & Forecast

Expected Development of Business

Comparison of the Forecast with the Results from the 2016 Fiscal Year

The 2016 fiscal year was a very successful year for Vonovia overall. Bolstered by the acquisitions made in 2015 and the further expansion of our Extension business, we were able to further expand our leading market position in 2016.

At the level of the Group as a whole, we were able to achieve a significant further improvement in our most meaningful performance indicators within the meaning of DRS 20 in the 2016 fiscal year, namely adjusted NAV per share, and , exceeding the forecast we published in the 2015 Annual Report by far and achieving the forecast values most recently published in the Interim Report for the third quarter of 2016.

Our adjusted NAV per share came in at € 30.75 in 2016, up by 27.1% on the prior-year value of € 24.19 and by 2.5% on the most recent forecast of around € 30. This includes effects from adjustments of investment properties in the amount of € 3.2 billion in total. The distribution of the dividend of € 438.0 million to our shareholders in 2016 had the opposite effect. Our increased by 21.9%, from € 13,988.2 million at the end of 2015 to € 17,047.1 million as of December 31, 2016.

FFO 1 rose by 25.1 % to € 760.8 million in 2016 (2015: € 608.0 million), on a par with the most recent forecast value of around € 760 million and well ahead of the forecast range of between € 690 million and € 710 million announced at the beginning of the year in the 2015 Annual Report. This was largely due to the much earlier realization of synergy potential from the integration of GAGFAH and SÜDEWO, the acquisition of an additional real estate portfolio comprising around 2,400 units with effect from January 1, 2016 and business developments that were generally better than expected in the 2015 Annual Report.

We were also able to further improve our customer satisfaction levels, which overshot the level we had expected. With growth of 8%, we were able to clearly exceed our target for 2016 of an increase in the CSI of more than 5%.

The table below provides an overview of the development of our forecast performance indicators and the target achievement level for these indicators in 2016.



Actual 2015


Forecast for 2016
in the 2015 Annual Report


Last Forecast for 2016 in the 2016 Q3 Report


Actual 2016


Forecast 2017**


Monthly in-place rent in 2015 per m2 (like-for-like) incl. GAGFAH, Franconia, SÜDEWO


excl. conwert












Adjusted EPRA NAV/share


€ 24.19


€ 24–25


approx. € 30


€ 30.75


€ 31–32

EPRA NAV/share


€ 30.02


€ 30–31


approx. € 36


€ 36.58


€ 37–38



€ 608.0 million


€ 690–710 million


approx. € 760 million


€ 760.8 million


€ 830–850 million

FFO 1/share


€ 1.30


€ 1.48–1.52


approx. € 1.63


€ 1.63


€ 1.78–1.82



Increase of 2.8%


Increase of up to 5%


Increase > 5%


Increase of 8%


Similar CSI as 2016

Monthly in-place rent €/m2 (like-for-like)*


€ 5.82


Increase of 2.8–3.0%


Increase of 3.0–3.2%


€ 6.01


Increase of 3.5–3.7%

Vacancy rate




approx. 3%


approx. 2.5%




< 2.5%

Maintenance incl. capitalized maintenance


€ 330.7 million


approx. € 330 million


approx. € 340 million


€ 320.1 million


> 16 €/m2



€ 355.6 million


€ 430–500 million


€ 470–500 million


€ 472.3 million


€ 700–730 million

Number of units sold Privatize




approx. 2,400


approx. 2,500




approx. 2,300

Step-up Privatize




approx. 30%


> 35%




approx. 35%

Number of units sold Non-Core




Continue opportunistic sales


Up to 24,000, Continue opportunistic sales




Continue opportunistic sales

Step-up Non-Core






approx. 5%





Forecast for the 2017 Fiscal Year

Our forecast for the 2017 fiscal year is based on the corporate planning for the Vonovia Group as a whole described in the chapter on our management system. Our plans for 2017 have taken appropriate account of possible opportunities and risks associated with the company’s future development, meaning that these plans reflect realistic expectations regarding portfolio development and Vonovia’s development. The forecast data below is based on Vonovia’s portfolio as it stood when the plans for 2017 were drawn up in the fall of 2016.

We also plan to use the conwert takeover, which was completed in January 2017, to grow further in attractive locations. At the time the management report was prepared, final reporting figures for conwert were not yet available for the fiscal year ending on December 31, 2016. In addition, while the integration of conwert, including the harmonization of the forecasting process, had already started, this process had not yet been completed at the time the management report was prepared. In line with our acquisition criteria and based on conwert’s size characteristics, we expect the takeover of conwert to have a slightly positive impact on our key figures FFO 1/share and NAV/share in the 2017 fiscal year. The effects resulting from the takeover of conwert, however, have not been included in the forecast values.

Furthermore, the Group’s further development remains exposed to general opportunities and risks. These have been described in the chapter on opportunities and risks.

The forecast for the main performance indicators was based on the accounting principles used in the annual financial statements, with the adjustments described elsewhere in the management report being made.

The planning for 2017 is based on the above-mentioned assumptions on the development of the overall economy and on the development of the real estate market in Germany.

In the 2017 fiscal year, we once again plan to further expand our leading position on the German residential real estate market and continue with our successful business strategy. In particular, we will be further expanding our investment program in the areas of modernization and new construction, as well as our activities in the Extension segment. We will continue to pursue our established sales strategy in 2017 and dispose of properties that do not fit with our real estate portfolio in the long term and do not meet our location, quality and/or return requirements.

We expect to be able to increase the value of the company even further in 2017. By the end of 2017, we expect to have increased the NAV per share to € 37–38. This corresponds to an adjusted NAV per share (excl. goodwill) of € 31–32. This improvement does not include an expected increase in the market value of our real estate (“yield compression”).

We plan to further improve our sustained operational earnings power in the 2017 fiscal year. The taken in the 2016 fiscal year will also help us to achieve this. We predict that FFO 1 will increase to somewhere in the range of € 830 million to € 850 million in 2017. This works out at an FFO 1 per share of between € 1.78 and € 1.82. This forecast does not take account of any further larger acquisitions of real estate portfolios and, in particular, does not include the takeover of conwert. In the 2017 fiscal year, we will continue to forge ahead with our efforts to improve our customer service. Given the marked increase in customer satisfaction in the 2016 fiscal year, we expect to see a similar CSI in 2017.

We will be stepping up our investments in our properties considerably in 2017. We plan to implement a modernization program with a volume of € 700 million – € 730 million in the 2017 fiscal year. The focus will remain on energy-efficient modernizations, the refurbishment of units to improve the standard of comfort, and on senior-friendly conversions. We will also, however, be investing in programs such as modernization in response to tenant requests, the development of residential districts, the construction of new apartments and the addition of stories to existing properties. In addition, we expect to perform ongoing work, including capitalized maintenance, with a volume of over € 16 per square meter. All in all, this equates to a maintenance and modernization volume of up to € 1 billion in the 2017 fiscal year.

As far as rental development is concerned, we expect the per square meter to increase by between 3.5% and 3.7 % on a like-for-like basis in 2017. We expect the to come in at under 2.5 % at the end of 2017. All in all, we expect to remain stable at a level of around € 1.5 billion despite the planned sales.

In the Sales segment, we will continue to pursue our strategy of selective sales. In the privatization business, we expect around 2,300 apartments to be sold in 2017 with a step up on the fair value of these apartments of around 35%. We will also continue with our strategy of selling properties from the subportfolio with slightly positive step-ups insofar as corresponding opportunities present themselves.

We again plan to allow our shareholders to participate adequately in our company’s success in 2016 and intend to propose a dividend of € 1.12 per share.

Düsseldorf, Germany, February 28, 2017

Rolf Buch (CEO) (signature)

Rolf Buch

Klaus Freiberg (COO) (signature)

Klaus Freiberg

Dr. A. Stefan Kirsten (CFO) (signature)

Dr. A. Stefan Kirsten

Gerald Klinck (CCO) (signature)

Gerald Klinck

The profit or loss for the period to reflect the adjusted profit or loss from sales; period adjustments from assets held for sale; specific effects that do not relate to the period, are non-recurring or do not relate to the objective of the company; the net income from fair value adjustments of investment properties; depreciation and amortization; deferred and prior-year current taxes (tax expenses/income); transaction costs; prepayment penalties and commitment interest; valuation effects on financial instruments; the unwinding of discounting for provisions, particularly provisions for pensions, and other prior-year interest expenses and income that are not of a long-term nature.
CSI (Customer Satisfaction Index)
The CSI is determined at regular intervals by means of systematic customer surveys and reflects how our services are perceived and accepted by our customers. The CSI is determined on the basis of points given by the customers for our properties and their neighborhood, customer service and commercial and technical support as well as maintenance and modernization management.
Fair Value
Valuation pursuant to IAS 40 in conjunction with IFRS 13. The estimated value of an asset. The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
The presentation of the NAV based on the EPRA definition aims to show the net asset value in a long-term business model. The equity attributable to Vonovia’s shareholders is adjusted to reflect deferred taxes on investment properties/assets held for sale, the fair value of derivative financial instruments and the deferred taxes on derivative financial instruments. In order to boost transparency, an adjusted NAV, which involves eliminating goodwill in full, is also reported.
EPRA (European Public Real Estate Association)
The European Public Real Estate Association (EPRA) is a non-profit organization that has its registered headquarters in Brussels and represents the interests of listed European real estate companies. Its mission is to raise awareness of European listed real estate companies as a potential investment destination that offers an alternative to conventional investments. EPRA is a registered trademark of the European Public Real Estate Association.
Modernization Measures
Modernization measures are long-term and sustainable value-enhancing investments in housing and building stocks. Energy-efficient refurbishments generally involve improvements to the building shell and communal areas as well as the heat and electricity supply systems. Typical examples are the installation of heating systems, the renovation of balconies and the retrofitting of prefabricated balconies as well as the implementation of energy-saving projects, such as the installation of double-glazed windows and heat insulation, e.g., facade insulation, insulation of the top story ceilings and basement ceilings. In addition to modernization of the apartment electrics, the refurbishment work upgrades the apartments, typically through the installation of modern and/or handicapped-accessible bathrooms, the installation of new doors and the laying of high-quality and non-slip flooring. Where required, the floor plans are altered to meet changed housing needs.
Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Monthly In-Place Rent
The monthly in-place rent is measured in € per square meter and is the current gross rental income per month for rented units as agreed in the corresponding rent agreements at the end of the relevant month before deduction of non-transferable ancillary costs divided by the living area of the rented units. The in-place rent is often referred to as the net cold rent. The monthly in-place rent (in €/m2) on a like-for-like basis refers to the monthly in-place rent for the residential portfolio that was already held by Vonovia 12 months previously, i.e., portfolio changes during this period are not included in the calculation of the in-place rent on a like-for-like basis.
Vacancy Rate
The vacancy rate is the number of empty units as a percentage of the total units owned by the company. The vacant units are counted at the end of each month.
Rental Income
Rental income refers to the current gross income for rented units as agreed in the corresponding rent agreements before the deduction of non-transferable ancillary costs.
In the “Non-Core” subportfolio, our focus is on selling properties in locations that offer below-average development potential in the medium to long term to private and institutional investors. Limited potential is defined, in particular, by below-average property condition combined with a location that is of similarly below-average quality.
The “Non-Strategic” subportfolio contains locations and properties that were identified in the latest extensive review of the overall portfolio as not being absolutely essential for further strategic development. Properties in the “Non-Strategic” portfolio are reviewed on a regular basis and offer further sale potential.