Management Model

Our corporate governance is based on our corporate strategy and our sustainable business activities. In the 2018 fiscal year, we expanded our business activities outside of Germany with the purchase of BUWOG AG and Victoria Park AB, with the acquisition of BUWOG adding development activities to the scope of our business. Details on this can be found in the previous chapters.

As part of the expansion of our business activities, we made adjustments to our management system with effect from the fourth quarter 2018 to include the Development segment. The segment formerly known as the Sales segment was also renamed , and the sale of buildings and properties where these relate to “Non-core Disposals” is now shown as a separate business activity.

This means that, for the purposes of managing the company, we make a distinction between four segments: Rental, Value-add, Recurring Sales and Development.

The Rental segment combines all of the business activities that are aimed at the value-enhancing management of our own residential real estate. It includes our property management activities in Germany, Austria and Sweden.

The Value-add segment (formerly known as “Value-add Business”) bundles all of the housing-related services that we have expanded our core rental business to include. These services include both the and modernization work on our properties and services that are closely related to the rental business. We allocate the activities relating to the craftsmen’s and residential environment organization, the condominium administration business, the cable TV business, metering services, energy supplies and our insurance services to the Value-add segment.

The Recurring Sales segment (formerly part of the “Sales” segment) includes the regular and sustainable disposals of individual condominiums and single-family houses from our portfolio. It does not include the sale of entire buildings or land (). These properties are only sold as and when the right opportunities present themselves, meaning that the sales do not form part of the Recurring Sales segment. We report these opportunistic sales in the Other column of the segment report. In the previous reporting period, Recurring Sales and Non-core Disposals were shown combined in the Sales segment. As a result, the prior-year figures have been adjusted accordingly for the current reporting period.

The Development segment encompasses the project development of new residential buildings. This covers the value chain starting with the purchase of land without any development plan/dedicated purpose and ending with the completion of new buildings and new construction measures on our own properties. These properties are either incorporated into our own portfolio or sold to third parties. The Development segment deals with projects in selected attractive locations. Project development work is currently focusing on Berlin, Hamburg and Vienna. The value creation from the valuation of the properties at market prices will be allocated to the Development segment when these properties are incorporated into our own portfolio.

We have also redefined our Funds from Operations (FFO). The new Group FFO now includes the earnings contributions made by all four segments: Rental, Value-add, and Development.

Management Model (Graphic)
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.
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.
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.
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.