Long-term Growth

Management Approach

In recent years, housing has become a scarce resource in many places, particularly in Germany’s major cities and their surrounding areas. Vonovia wants to contribute to a long-term solution to this problem by providing modern and affordable homes.

In order to achieve this, we are safeguarding our stable corporate growth by focusing on the long-term development of our portfolio and the range of services we offer. We are also strengthening our core business by focusing on the targeted expansion of our portfolio in Germany and in selected major European cities that offer growth potential by way of acquisitions and new construction.

Vonovia’s business model is built on three main pillars:

• The rental of affordable homes
• Development/new construction for the creation of new homes
• The provision of housing-related services at fair prices

This approach allows us to help ensure affordable rents and low ancillary costs in the long term, meaning that tenants are happy to stay in our apartments. 203-1

Corporate Strategy

Since 2013, we have been pursuing a corporate strategy based on four basic approaches: property management, portfolio management, financing and Value-add. A further pillar, our acquisition strategy, is designed to strengthen the impact of the first four strategic approaches as the opportunity arises. This is complemented by our internationalization strategy, i.e., the approach of tapping into other European markets.

• Property management: Improving key operating figures through efficient property management using the scalable management platform and digitalization, improving quality and efficiency in our customer services, efficiently managing maintenance and modernization measures.
• Financing: Securing sufficient, optimized liquidity, a balanced structure and maturity of debt, optimizing financing costs with an internationally competitive financing structure and safeguarding ratings.
• Portfolio management: Renting out properties in a manner that increases value by optimizing existing properties and investing in maintenance and modernization; improving energy efficiency in the portfolio; expanding the development business involving the construction of condominiums both for investors and for the company’s own use, and the established new construction and vertical expansion activities; pooling capacities by focusing on strategic regions.
• Value-add: Adding customer-oriented services with a close relationship to the rental business to our core business. These include, for example, technical services, managing the residential environment, property management, multimedia services, metering services, decentralized energy supply, caretaker services, managing outdoor and green spaces.

The 4+2 Pillars of Our Strategy

• Acquisition: Boosting the effectiveness of the core strategies through continual checks, and including suitable portfolios in the list of existing properties.
• Internationalization: Analysis of potential target markets in Europe, targeted direct investments in European markets to generate added value.

A detailed description of our 4+2 corporate strategy can be found in our 2019 Annual Report (see chapter Strategy, AR 2019).

Corporate Governance

Vonovia’s corporate governance is based on our corporate strategy and is aligned with our sustainable business activities. In the 2019 fiscal year, the management system that had been implemented in the previous year was continued unchanged.

We have four segments: Rental, Value-add, Recurring Sales and Development.

• Rental: This segment covers all business activities related to the management of our portfolio in a way that increases value.
• Value-add: This segment pools all housing-related services performed by the craftsmen’s and residential environment organization, the condominium administration business, the cable TV business, metering services, energy supplies and our insurance services.
• Recurring Sales: This segment covers all regular sales of individual condominiums and single family homes.
• Development: This segment covers project development in new residential buildings.

Our integrated planning and controlling system is based on key financial and non-financial performance indicators. It enables us to align our business activities effectively with the aim of sustainably increasing company value.

You can find out more about our corporate governance in our 2019 Annual Report.