Capital Market Outlook

As Vonovia does not have any operating business or business relationships in the UK, Brexit is not expected to have any direct negative consequences for Vonovia. This means that the implications of Brexit for Vonovia are likely to be neutral at the very least.

The reputation of German real estate stocks as a safe haven could be enhanced as a result of Brexit if investors opt to pull capital out of real estate stocks in the UK and seek alternative investment opportunities. This sort of increased demand could actually have a positive impact on the performance of Vonovia’s shares.

We concur with a large number of analysts and market participants and expect very receptive borrowing markets and attractive financing conditions to continue in the medium term due to the positive economic outlook and the exceptionally high levels of liquidity. Given the global nature of the borrowing markets, we do not currently expect the ongoing Brexit negotiations to have any impact in this regard either.

With a level of debt that is consistently in the Pfandbrief-eligible range and their investment grade , Vonovia’s debt instruments will remain a sought-after investment even if liquidity levels drop. We do not expect to see any direct correlation between interest rate developments and earnings given the long maturities of our financing instruments and the steady maturity profile. Rather, it is evident that the supply/demand situation and, as a result, rental development has much more of an impact on earnings. In addition, the results of the Value-add Business are completely unrelated to interest rates.

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