Portfolio Management Strategy

We continue to split our overall real estate portfolio into the “Strategic” portfolio, which focuses on value-enhancing property management using the “Operate” and “Invest” approaches on the one hand and, on the other, into the portfolio, which is intended to be sold to tenants, owner-occupiers and capital investors, and the portfolio, which includes locations and properties that are not absolutely essential to the Group’s further strategic development.

In the “Operate” subportfolio of the “Strategic” portfolio, we aim to further increase the value of the properties by carrying out sustainable measures, increasing rents and reducing vacancy levels. In the “Invest” subportfolio, 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.

We want to continue to create new living space in our portfolio in the future as part of our densification strategy. The first set of new construction projects has already been successfully completed and others are in the planning stages. These also include moves to add extra stories to existing buildings. New construction and vertical expansion projects are frequently realized using a standardized series construction system with the help of pre-configured segments, making them much quicker to complete. Modular construction using pre-configured elements allows standardization and scaling at a low cost, while ensuring reliable project implementation at the same time.

Thanks to the acquisition of BUWOG, the portfolio management strategy also includes the activities of the development business in Germany and Austria on land purchased specifically for this purpose, adding another profitable element to Vonovia’s value chain. The acquisition also results in the transfer of substantial expertise between the development business and Vonovia’s established new construction and vertical expansion activities. The development business includes the construction of owner-occupied apartments for sale to private investors and owner-occupiers, as well as the construction of rented apartments to be managed by the company itself. These activities will continue to be performed under the established BUWOG brand in the future.

In the “Recurring Sales” portfolio, our focus is on generating additional added value by selling owner-occupied apartments and single-family houses at a premium compared with their .

The “Non-core Disposals” portfolio includes locations and properties that are not earmarked for privatization, 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. Properties in this portfolio are reviewed on a regular basis and offer further sale potential.

The properties in Austria and Sweden are combined in the “Vonovia Austria” and “Vonovia Sweden” portfolios respectively.

Recurring Sales
The Recurring Sales segment (formerly part of the “Sales” segment) includes the regular and sustainable disposals of individual condominiums from our portfolio. It does not include the sale of entire buildings or land (Non-core disposals). These properties are only sold as and when the right opportunities present themselves, meaning that the sales do not form part of our operating business within the narrower sense of the term. Therefore, these sales will be reported under “Other” in our segment reporting.
Non-core Disposals
We also report the Other segment, which is not relevant from a corporate management perspective, in our segment reporting. This includes the sale, only as and when the right opportunities present themselves, of entire buildings or land (Non-core Disposals) 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.
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.
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.