Portfolio in the Development Business

The takeover of the BUWOG Group in 2018 marked a key step in Vonovia’s quest to expand its business model by including established real estate development and new construction business (development business). The subsequent integration of these activities has allowed Vonovia to build on its position as a market leader in Germany and Austria not only in the rental segment, but also in the development business. The integration process expanded Vonovia’s pre-existing potential to include extensive product and process expertise in the field of construction and in the development of residential construction projects, creating synergy potential for Vonovia. The BUWOG brand that Vonovia uses to run its development business was also assigned a value in its own right as part of the takeover.

It is under this strong brand that the development business area has become firmly established in Vienna and Berlin and associated with the very highest levels of customer satisfaction for our stakeholders. The first few residential construction projects are also being developed in Hamburg and Leipzig, and Vonovia aims to expand the development business to include other urban areas.

By way of example, the takeover of Bien-Ries AG in Hanau expanded the company’s development business in Germany to include the Rhine-Main region. The company was transformed into a German limited liability company (to operate as Bien-Ries GmbH) following the takeover in 2020. The development pipeline in the Rhine-Main region currently comprises a total of around 1,900 residential units in cities including Frankfurt am Main, Wiesbaden and Hanau as well as in attractive municipalities within a 30-minute radius of the financial hub of Frankfurt. From now on, and now that the company has been integrated in full, the development business in the Rhine-Main region will also be managed under the BUWOG brand name.

This provides Vonovia with an end-to-end development platform spanning the entire value chain – from the purchase of land to its development, project planning, construction and sale. With its substantial product pipeline of residential construction projects that are currently being built, planned or prepared, Vonovia, with the BUWOG brand, ranks among Germany’s top 5 building contractors and is the biggest private building contractor in Austria.

As a major player in the residential real estate segment, Vonovia is able to use its property development expertise to offer targeted solutions in response to current challenges such as the shortage of housing, climate change, integration and cross-generational housing. These challenges can be tackled successfully through long-standing experience, extensive market and sector expertise and intensive, ongoing market analysis, making a valuable contribution to society and to Vonovia.

Development Business Model

The Development segment allocates its projects to two different channels:

• Development to sell includes the units that are sold to investors or to future owner-occupiers directly.
• Development to hold refers to those residential construction projects whose apartments will be added to Vonovia’s rental portfolio upon their completion. This area also includes Vonovia’s pre-existing new construction business, which involves building new residential units on property that already belongs to the company using a serial and modular approach for new construction work. It also includes the Swedish new construction projects on the company’s own properties.

Development Business Model

Value Creation and Project Development

Vonovia is the leading residential real estate company in Germany and, together with its subsidiaries in Germany, Austria and Sweden, makes a key contribution to alleviating the shortage of housing through its real estate development activities. The strategy of incorporating process steps into the company’s own value chain allows Vonovia to provide stringent and targeted support to residential construction projects and to exploit cost synergies with regard to technical solutions and the pooling of procurement volumes. Being able to cover the entire residential property value chain internally allows the company to generate additional earnings contributions.

These additional earnings contributions can be generated sustainably thanks to Vonovia’s extensive development pipeline, which is distributed among Germany, Austria and Sweden.

Valuable Contributions to Society and the Group

Overview of Key Development Figures

In the 2020 fiscal year, the Development segment, with its Development to sell and Development to hold areas, made positive contributions to earnings in Germany, Austria and Sweden, therefore contributing to Vonovia’s successful growth.

In the Development to sell area, the income from disposal of properties came to € 297.7 million, with € 201.0 million attributable to project development in Germany and € 96.7 million attributable to project development in Austria. Income from interim leasing totaling € 1.2 million was also generated. A total of 646 units were completed in 2020.

As of December 31, 2020, there were 3,618 residential units in the to sell development pipeline, 2,617 of which related to projects under construction and 1,001 to short-term projects in the preparatory stages. The share attributable to project development in Germany comes to 1,959 units (1,339 units from projects under construction and 620 units from short-term projects in the preparatory stages), while the share attributable to project development in Austria comes to 1,659 units (1,278 units from projects under construction and 381 from short-term projects in the preparatory stages).

In the Development to hold area, a fair value of € 298.2 million was realized, with € 63.3 million attributable to project development in Germany, € 127.9 million attributable to project development in Austria, € 93.7 million attributable to new construction business in Germany and € 13.2 million to project development in Sweden. A total of 1,442 residential units were completed in this area, with 200 units from project development in Germany, 383 units from project development in Austria, 662 units from new construction in Germany and 197 units from project development in Sweden.

As of December 31, 2020, there were 7,333 residential unit in the to hold development pipeline, 3,064 of which related to projects under construction and 4,269 to short-term projects in the preparatory stages. The share in Germany comes to 5,725 units (2,237 of which related to projects under construction and 3,488 to short-term projects in the preparatory stages). The share in Austria comes to 1,152 units (718 of which related to projects under construction and 434 to short-term projects in the preparatory stages). The share in Sweden comes to 456 units (109 of which related to projects under construction and 347 to short-term projects in the preparatory stages).

Adjusted EBITDA of € 110.9 million was generated in the development segment. Including medium-term development potential of around 36,000 residential units, the development pipeline comprised a total of approximately 47,000 residential units at the end of 2020.

Development to Sell & to Hold (Number of Units)

Sustainable and Successful Development

As one of the most active residential building developers, Vonovia is aware of its responsibility for society as a whole. As a result, the topic of sustainability is firmly entrenched in our development business model. Sustainability aspects are taken into account early on when a project is still in the planning stages – that is, long before it’s ready for occupancy – based on life cycle analyses based on the building’s total useful life. Building certification plays a key role in demonstrating to investors, owners, tenants and interested members of the general public how sustainably a property is planned, built and managed.

The “MARINA TOWER” project, for example, a joint project involving BUWOG and IES Immobilien, was awarded the Austrian Sustainable Building Council’s (ÖGNI) gold sustainability certificate, as did the “SeeSee” project in Vienna’s Seestadt district. “Kennedy Garden” in the Penzing district of Vienna has been awarded the Greenpass sustainability certificate. The “BUWOG NEUMARIEN” new construction project in Berlin-Neukölln has also been successfully awarded gold certification by the German Sustainable Building Council (DGNB).

Sustainability is also, however, a top priority within Vonovia’s “own four walls,” such as at the new company site in Vienna. After a construction period spanning a total of around 25 months and only a few weeks of delay due to the coronavirus restrictions, the first few BUWOG employees moved into the new office building located at Rathausstraße 1 in Vienna’s 1st district on June 2, 2020. The building, designed by architects Schuberth und Schuberth/Stadler Prenn/Ostertag on the site of the former City of Vienna data center, presents itself as a modern working environment that also invites customers to feel at home. Right from the initial planning stage, the careful use of resources was identified as a top priority. Instead of simply demolishing the existing building, the former City of Vienna data center was dismantled in several stages and in close cooperation with BauKarussel. The new building was developed paying the highest possible attention to the use of sustainable building materials as well as product and chemicals management to ensure healthy ambient air. The building consultancy firm bauXund supported the execution process and made sure that the ecological building specifications for the construction project, the Austrian Sustainable Building Council (ÖGNI) criteria, were applied to all subcontractor services. The property was awarded DGNB pre-certification in gold during the construction period, and received ÖGNI gold certification after its completion.

In addition to the company’s own development activities, Vonovia also cooperates with research institutes in both Germany and Austria. One project that is particularly worthy of mention in Germany is “52 Grad Nord” in Berlin. Together with scientists from the Technical University of Berlin, a sustainable self-cleaning pond has been designed, which uses the vegetation around its perimeter and substrate filters to filter the rainwater that it collects using a biological process. The habitat and areas next to the banks of the pond have already attracted various types of insects, fish and microorganisms. “Smart city” initiatives are also being pursued in collaboration with the Institute of Urban and Regional Planning at the Technical University of Berlin.

Vonovia’s long-standing experience in the development business also includes extensive expertise in matters relating to sustainability, neighborhood development and integration. Real estate development projects regularly comprise an appropriate proportion of subsidized housing construction, such as “Kennedy Garden” in Vienna, “BUWOG NEUMARIEN” in Berlin and the development of the Bayerischer Bahnhof district in Leipzig, with around 30% of these developments made up of subsidized rental apartments.

BUWOG has received several awards for its neighborhood development projects, including the German Brand Award awarded by the German Design Council and the ICONIC AWARD 2020 for innovative architecture. 2002 saw the 52° Nord neighborhood in Berlin-Grünau receive the Award for German Residential Buildings (Award Deutscher Wohnungsbau), an architecture prize awarded by the Federal Foundation of Baukultur (Bundesstiftung Baukultur), among others, in the best neighborhood development project category.

Representative Project Development Measures

Germany

Preparatory stages

BAYERISCHER BAHNHOF DISTRICT, Leipzig
In Leipzig’s Südvorstadt, a new district featuring apartments, schools and day-care centers as well as office and commercial premises allowing employees to work close to home is being built on a total area spanning 36 hectares. In order to implement the objectives set by the City of Leipzig, BUWOG will be building around 1,500 rental apartments in two sub-areas of the Bayerischer Bahnhof district starting in 2021. After their completion, around 30% of the rental apartments will be subject to the criteria that apply to subsidized rental apartments. A park for the district, realized in conjunction with the other developers, will develop the area around the historic portico from south to north and combine high recreational value with ecological quality. https://www.buwog.de/de/projekt/bayerischer-bahnhof

Under construction

BUWOG LANDGUT, Hanau
New homes are being created for the fast-growing city of Hanau in the BUWOG LANDGUT neighborhood. The Landgut neighborhood consists of a total of 122 residential units, including 33 condominiums and 89 semi-detached houses, terraced houses and single-family residences, built in line with KfW-55 standards. A local energy center generates hot and heating water as well as electricity for the neighborhood using power-heat coupling. www.buwog-landgut.de

BUWOG PERGOLENVIERTEL, Hamburg
In Hamburg-Winterhude, on a plot of land covering an area of around 2,500 m² not far from the Stadtpark city park and the City Nord office hub, BUWOG is working – as part of the overall development of the Pergolenviertel neighborhood – to create barrier-free and fully accessible rental apartments as well as residential communities for occupancy by selected social agencies. A total of 95 subsidized and independently financed rental apartments will have been completed here by 2022, along with three commercial units. The plan is for around one-third of the site to be used in accordance with the “ViVo” concept: This includes a mix of assisted living for senior citizens, multigenerational homes, residential groups for socio-therapeutic housing concepts and various services for people with disabilities. www.buwog.de/de/projekt/pergolenviertel

BUWOG NEUE MITTE SCHÖNEFELD, Berlin
In the fast-growing area surrounding the new BER airport for the German capital, BUWOG is realizing a residential neighborhood for all generations: BUWOG NEUE MITTE SCHÖNEFELD is located right next to the town hall and enjoys good connections to Berlin and the attractive surrounding area. Around 330 condominiums with one to four rooms – all featuring balconies or terraces – will have been built here by 2023. The concept is rounded off by a smart energy supply for the neighborhood and a residential environment designed to harmonize with the natural habitat. www.neuemitte-schoenefeld.de

BUWOG SPEICHERBALLETT, Berlin
A sustainable residential district is being created in Spandau on the banks of the Havel river. During the first phase of construction, two historic warehouses will have been renovated by 2021 to house 82 condominiums. By 2022, as part of the second HAVELKIESEL construction phase, another 100 condominiums will have been built in three buildings with photovoltaic facilities installed on the roofs and systems allowing rainwater to be used for garden irrigation and toilet flushing. There are plans for further construction phases to build 260 rental apartments by 2023 and a further 185 residential units by 2024. www.speicherballett.de

Completed

BUWOG KOMPASSHÄUSER, Berlin
Four BUWOG “Kompasshäuser” wood-hybrid low-energy buildings housing a total of 50 apartments with two to five rooms each have been built in Berlin-Grünau. The use of wood, a renewable building material, has not only aesthetic but also ecological advantages and reduces the use of reinforced concrete. Thanks to their good insulation values in both directions, the buildings, which were completed in 2020, meet the KfW 40 standards. www.52grad-nord.de

Austria

Preparatory stages

RIVUS VIVERE, Vienna
In Vienna’s 23rd district, Vonovia is developing the large-scale “RIVUS” project, which will comprise more than 800 rental apartments and condominiums following its completion in the summer of 2022. A considerable part of the project, including the infrastructure and extensive courtyard area, has already been completed. In January 2021, construction work will start on “RIVUS Vivere,” which will round off the complex with its 296 rental apartments and additional infrastructure facilities.

All of the residential units feature private outdoor areas such as balconies, terraces or their own gardens. The site is home to a kindergarten, a state-of-the-art all-day elementary school with sports facilities on the roof as well as a large number of playgrounds and green spaces. The development is also focused on sustainability, including the installation of a photovoltaic plant on the roof. www.buwog.at/de/projekt/rivus-vivere

Under construction

MARINA TOWER, Vienna
The residential tower project, featuring around 500 premium residential units, enjoys excellent transport connections thanks to its prime location, with plans to implement a sustainable mobility concept, among other things. A deck will also be used to connect the development to the right bank of the Danube, opening up generous open spaces for public access and also making a key contribution to urban development. The MARINA TOWER has received the European Property Award several times and has also been awarded the gold sustainability certificate of the klimaaktiv climate protection initiative as well as of the Austrian Sustainable Building Council (ÖGNI). www.marinatower.at

HELIO Tower, Vienna
In Vienna’s 3rd district, three high-rise residential buildings known as “The Marks” are being built on top of an urban three-story base construction in the “Neu Marx” complex. BUWOG is developing one of the high-rise buildings spanning 33 stories for Vonovia as part of the joint project. The development will include a total of 228 independently financed condominiums and 173 rental apartments as part of Vienna’s Housing Construction Initiative, with completion scheduled for 2023. Ecological measures, such as 27 electric car charging stations or the generous bicycle arcade, ensure sustainable mobility. The “HELIO Tower” will house a kindergarten, stores and a restaurant, further adding to the location’s diverse infrastructure. www.helio.buwog.com

Kennedy Garden, Vienna
In the heart of Penzing, Vonovia is working on a total of 512 residential units of various sizes and with various different features spread over several structural elements. 124 rental apartments are being developed as part of the housing initiative focusing on “homes for single parents,” with 114 apartments planned as independently financed rental apartments and another 274 as independently financed condominiums. The project is scheduled for completion in the spring of 2022. The project has already been awarded the Greenpass sustainability certificate and received the European Property Award twice in 2020. www.kennedygarden.buwog.at

Inside XIX, Vienna
Vonovia is implementing the “BUWOG Inside XIX” project in one of Vienna’s most preferred locations. The former official building located at Gatterburggasse 12 is being given a new lease of life and is also being expanded to feature a newly constructed wing. The project will create a total of 116 premium residential units – 15 housed in the historical building and 101 in the new building – also with premium features such as smart home controls. The project is scheduled for completion in fall 2022. It received the European Property Award in 2020 for its stylish combination of old and new buildings. www.gatterburggasse.buwog.com

Completed

ERnteLAA, Vienna
“ERnteLAA” is considered a pioneering sustainable project and was awarded the GBB sustainability prize back in 2016. Following its completion in the fall of 2020, the climate protection measures implemented as part of the project received an accolade in the form of the European Property Award in the “Sustainable Residential Development” category. The project in the Liesing district of Vienna comprises a total of 191 rental apartments, 160 of which are part of Vienna’s Housing Construction Initiative. www.erntelaa.buwog.com