9 Subsequent Events

The second acceptance deadline extended as part of the purchase of Hembla ended on January 8, 2020. During this acceptance period, the offer was accepted by additional shareholders of Hembla, who held a total of 1,204,821 Class B Hembla shares, representing approximately 1.0% of the total voting rights and approximately 1.3% of the share capital. Following the expiry of the extended acceptance deadline and the settlement on January 9, 2020, HomeStar holds a total of 6,136,989 Class A shares and 82,487,247 Class B shares, which corresponds to approximately 96.3% of the total voting rights and approximately 95.4% of the share capital in Hembla. In addition, a further 242,333 class B shares had been acquired on the market by February 25, 2020. As part of the delisting process, the last day of trading for Hembla shares on Nasdaq Stockholm was January 10, 2020.

Via its Dutch subsidiary Vonovia Finance B.V., Vonovia increased the EMTN bond of € 500 million that runs until March 2026 by € 200 million with effect from January 30, 2020. Vonovia Finance B.V. took out in February 2020 secured financing for Vonovia of over € 300 million with Landesbank Baden-Württemberg with a term of ten years.

At the end of January 2020, the Berlin House of Representatives passed the Act on Rent Controls in the Housing Sector in Berlin (referred to in short as “rent freeze”). This came into force in February 2020. Since the constitutionality of the law is disputed, several complaints have already been announced, including a complaint before the Federal Constitutional Court. A judicial review can be expected.

The law provides for a rent freeze for five years, whereby the effective rent that was agreed up until June 18, 2019, in accordance with the German Civil Code may not be exceeded. Exceptions pertain to new buildings constructed from 2014 onwards, housing provided by social organizations, publicly funded new housing construction, residential homes and uninhabitable housing that is renovated and again made habitable. A regulation on rent ceilings has also been created. These ceilings range from 3.92 to 9.80 €/m² and are essentially based on the rents in the Berlin rent indices from 2013. A rent that exceeds these ceilings is also to be generally reduced to the permissible level, which is to be done nine months after the law comes into force. Modernizations, including necessary energy-efficiency refurbishment, may only be passed on in the amount of 1.00 €/m².

There is a risk that, depending on the constitutionality of the rent freeze in particular, future rental income or rental development could be reduced, with a knock-on effect on fair values. The potential implications can be estimated via the sensitivities shown in the notes to the consolidated financial statements. Likewise, it cannot be ruled out that a decline in the vacancy rate and fluctuation as well as lower return requirements of investors (yield compression) will have a compensatory effect on fair values. There is no evidence of any impact on fair values at present.