Portfolio Management Strategy

The portfolio management strategy aims to optimize building stocks by way of investments, tactical acquisitions and sales.

Our properties have been split into three portfolios since March 31, 2015:

  1. : This portfolio comprises the “Operate,” “Upgrade Buildings” and “Upgrade Apartments” subportfolios.
  2. : This portfolio includes locations and properties that are not absolutely essential to the Group’s further strategic development.
  3. The & Non-Core” portfolio comprises the “Privatize” and “Non-Core” subportfolios.

The “Strategic” portfolio, which represents 92.1% of the overall portfolio in terms of , contains locations that offer development potential that is above average and for which we are pursuing a value-enhancing property management strategy. The “Strategic” portfolio is, in turn, split into three subportfolios:

In the “Operate” subportfolio, which accounts for 28.1% of the overall portfolio, our strategy is to further increase the value of the properties by increasing rents, reducing vacancy levels and carrying out sustainable measures. The high portfolio density, among other factors, means that we are able to manage our housing stocks very efficiently. In the “Upgrade Buildings” subportfolio, which accounts for 35.1% of the overall portfolio in terms of fair value, we are creating additional added value by implementing an extensive program of investments that responds to climate protection concerns and focuses on investments in energy-efficient renovation. Most of our investments are in heat insulation for facades and roofs, as well as in new windows and heating systems.

In the “Upgrade Apartments” subportfolio, which accounts for 28.9% of the overall portfolio, we take the reletting of units as an opportunity to make extensive investments in apartment fittings, for example, by modernizing bathrooms or installing new floors and electrical installations that are in line with the latest standards. This means that the properties can meet our customers’ current demand for modern residential standards, including the demand for senior-friendly fittings, for example.

The “Non-Strategic” portfolio accounts for 1.0% of the overall portfolio. It contains locations and properties that were identified in the latest extensive review of the overall portfolio as not being absolutely essential for further development. The portfolio includes, on the one hand, locations that are likely to have below-average development potential in terms of rent growth in the medium term and, on the other, locations in areas that can be described as peripheral compared with the overall portfolio and in view of future acquisitions, meaning that they do not represent strategic regions. Properties in the portfolio are reviewed on a regular basis and offer further sale potential.

The “Privatize & Non-Core” portfolio comprises the “Privatize” and “Non-Core” subportfolios.

In the subportfolio, which accounts for 5.9% of the overall portfolio, our focus is on generating additional added value by privatizing owner-occupied apartments and single-family houses at a premium compared with their fair value.

In the “Non-Core” subportfolio, which accounts for 1.1% of the overall portfolio, 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 microlocation that is of similarly below-average quality. This means that these properties are not suitable for successful management using Vonovia’s standardized processes in the long run.

Strategic
The “Strategic” subportfolio contains locations that offer development potential that is above average and for which we are pursuing a value-enhancing property management strategy.
Non-Core/Non-Strategic
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.
Privatize
In the “Privatize” subportfolio, our focus is on generating additional added value by privatizing owner-occupied apartments and single-family houses at a premium compared with their fair value.
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.
Maintenance
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.
Strategic
The “Strategic” subportfolio contains locations that offer development potential that is above average and for which we are pursuing a value-enhancing property management strategy.
Non-Core/Non-Strategic
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.
Privatize
In the “Privatize” subportfolio, our focus is on generating additional added value by privatizing owner-occupied apartments and single-family houses at a premium compared with their fair value.