Portfolio Management Strategy
To date, we have split our overall real estate portfolio into the “Strategic” portfolio, which focuses on value-enhancing property management using the “Operate,” and “Upgrade Buildings” and “Optimize Apartments” approaches on the one hand and, on the other, into the “Non-Strategic” portfolio, which includes locations and properties that are not absolutely essential to the Group’s further strategic development, and the “Privatize & Non-Core” portfolio, which is intended to be sold directly.
In the future, the “Strategic” portfolio will be split into the “Operate” and “Invest” subportfolios. The “Invest” subportfolio will bundle the two former investment subportfolios “Upgrade Buildings” and “ Optimize Apartments.” This portfolio can capture the much greater variety of Vonovia investment programs more comprehensively. The new structure prevents any overlap and keeps the structure simple at the same time. The “Strategic” portfolio, which represents 92.2% of the overall portfolio in terms of fair value, contains locations that offer development potential that is above average and for which we are pursuing a value-enhancing property management strategy.
In the subportfolio “Operate” of the “Strategic” portfolio, we want to further increase the value of the properties by increasing rents, reducing vacancy levels and carrying out sustainable maintenance measures.
In the “Invest” subportfolio of the “Strategic” portfolio, we are generating 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. When it comes to investing in our apartments, our measures to improve residential standards are based on our customers’ needs. As well as modernizing or renovating bathrooms, installing new flooring and offering modern electrical installations, this also includes the demand for senior-friendly fittings.
The “Sell” portfolio includes locations and properties that are likely to have below-average development potential in terms of rent growth in the medium term and are located in areas that can be described as peripheral compared with Vonovia’s overall portfolio and in view of future acquisitions. This means that they do not represent strategic regions either. Properties in this portfolio are reviewed on a regular basis and offer additional sales potential.
The “Non-Core” properties will now be allocated to the “Non-Strategic” portfolio. As a result of the ongoing sales from the two previous “Non-Strategic” and “Non-Core” subportfolios, we felt that it made sense to bundle the remaining properties earmarked for sale, which are not intended for the privatization business, in one “Sell” portfolio.
In the “Privatize” portfolio, our focus is on generating additional added value by selling owner-occupied apartments and single-family houses at a premium compared with their fair value.
The properties in Austria are combined in the “Vonovia Austria” portfolio.