Vonovia SE: Vonovia Achieves Record Growth in 2017 and Expresses Optimistic Outlook for 2018 Fiscal

2017 Fiscal Year
Vonovia Achieves Record Growth in 2017 and Expresses Optimistic Outlook for 2018 Fiscal Year

Successful Business Development in 2017 Thanks to Organic Growth and Integration of conwert.

- FFO 1 up by 21 % to EUR 920.8 million (2016: EUR 760.8 million); FFO 1 per share rises to EUR 1.90 (2016: EUR 1.63)

- Vacancy rate remains low at 2.5 % (2016: 2.4 %)

- Approx. 20 % growth in EPRA NAV per share to EUR43.88 (2016: EUR36.58)

- Planned dividend proposal of EUR 1.32 per share (+EUR 0.20 as against 2016)

Portfolio Strategy Opens Up Additional Growth Prospects

- Portfolio optimization boosts value of the company again

- Billions invested in new construction, improvements to the portfolio
and neighborhood development

- LTV reduced to 39.8 %

- Planned takeover of Buwog AG to strengthen presence in Austria

Positive Outlook for 2018 Confirmed

- Further increase in earnings power in 2018: FFO 1 of between approximately EUR 960 million and approximately EUR 980 million predicted (not including Buwog)

- Up to EUR 1.4 billion earmarked for new construction and improvements to the portfolio

- Relocation to the new corporate headquarters in Bochum in May

Bochum, March 6, 2018 - In 2017, Vonovia SE ("Vonovia") seamlessly continued its very positive business development from the previous year. All key figures showed positive development. New construction and portfolio investments running into the billions are on track. Housing-related services (Value-add Business) were expanded again, while the selective sale of properties resulted in further portfolio optimization at the same time. Based on this performance, the Management Board and the Supervisory Board will be proposing a dividend of EUR 1.32 per share to the Annual General Meeting on May 9, 2018 (2016: EUR 1.12).
This corresponds to an increase of 18 % over 2016 and to a dividend yield of 3.5 % based on the share price on February 28, 2018.

"After five successful years on the stock exchange, we have demonstrated that our scalable business model is the right approach. Our business development is solid, and we are offering a wider range of services. We have once again boosted our earnings power thanks to greater efficiency, positive financing effects and growth in our Value-add Business. The fact that our customer satisfaction levels have increased again is at least equally encouraging," said Rolf Buch, CEO of Vonovia.

Greater Efficiency Boosts Operational Earnings Power Again,
Portfolio Optimization Increases Company Value

Vonovia increased its FFO 1 - its operating result - by 21 % in the 2017 fiscal year to EUR 920.8 million (2016: EUR 760.8 million). The increase is due to greater efficiency, positive financing effects, the conwert portfolio - which had already been completely integrated in the second quarter - and the growth resulting from property-related services. This corresponds to FFO 1 per share of EUR 1.90 (2016: EUR 1.63). The EPRA NAV - real estate assets without liabilities - increased to EUR 21,284.6 million (2016: EUR 17,047.1 million); the EPRA NAV per share rose to EUR 43.88 (2016: EUR 36.58). At EUR 38.49, the adjusted NAV per share - excluding goodwill from acquisitions - was up by around 25 % on the prior-year value of EUR 30.75. The positive development in the value of the company's properties overall in the amount of around EUR 4.2 billion is due primarily to portfolio optimization, extensive investment and the ongoing high demand for apartments.

The value of the real estate portfolio came to EUR 33.4 billion as of December 31, 2017 (December 31, 2016: EUR 27.1 billion). The number of apartments rose to 346,644 units (December 31, 2016: 333,381). Vonovia sold a total of just under 12,000 apartments in 2017 and acquired almost 25,000. The company significantly reduced its portfolio in regions that are not strategically relevant. Vonovia was also able to reduce its LTV (loan-to-value) ratio to 39.8 %.

The vacancy rate remained at a low level of 2.5 % in a year-over-year comparison (2016: 2.4 %) An increase in rents due to market-related factors (1.6 %) and the effects from property value improvements and new construction (2.6 %) increased the monthly rent per square meter to EUR 6.27.
Rental income came to EUR 1,667.9 million (2016: EUR 1,538.1 million). With an EBITDA contribution of EUR 102.1 million (2016: EUR 57.0 million), the property-related services (Value-add Business) made a significant contribution to the company's success. Profit for the period rose to EUR 2,566.9 million (2016: EUR 2,512.9 million).

Billions Invested in New Construction, Improvements to the Portfolio and Neighborhood Development

In 2017, Vonovia invested a total of around EUR 1.1 billion in its portfolio. The investment program for new construction, improvements in property value, energy-efficient modernization and neighborhood development was increased to EUR 778.6 million (2016: EUR 472.3 million). In addition, EUR 346.2 million (2016: EUR 320.1 million) was spent on maintenance measures.

The company plans to build around 2,000 new apartments a year. In 2017, Vonovia initiated the construction of more than 1,000 new apartments, some of which have already been completed. To this end, Vonovia is placing particular emphasis on targeted densification and vertical expansion using prefabricated modules and the following three concepts: Precast concrete construction, wood hybrid and steel skeleton.

In the fall of 2017, the company concluded a framework agreement with Max Bögl Modulbau AG in the precast concrete construction sector. In Bayreuth, the first residential building in cooperation with Max Bögl was completed in February 2018 after a construction period of only four months. Work on the modular construction of the building, which includes 20 new apartments, had commenced in October 2017, with the topping-out ceremony being held shortly afterward in November. The investment volume for this project came to around EUR 2.5 million. The apartments range between an area of 40 and 140 square meters each, with the building offering around 1,300 square meters of total living area. Following projects in Bochum, Dortmund, Wiesbaden and Bayreuth, the company is planning new construction projects in Munich, Bremen, Hamburg, Berlin, Dresden and Frankfurt in 2018.

Competitive Strategy Opens up Additional Growth Prospects

The opportunities and challenges facing many European metropolitan areas are similar to those in Germany. This creates a large number of development opportunities, including outside the core market in Germany. Vonovia took the first step in this direction in October, when it concluded a partnership agreement with the French Groupe SNI, which is now operating under its new name CDC habitat. CDC habitat is France's biggest landlord with around 348,000 apartments. The collaboration is aimed primarily at knowledge sharing and also aims to identify common growth and investment options.

In early February 2018, Vonovia made a purchase offer to the shareholders in the Austrian company Buwog AG for their shares, as announced in December 2017. The first acceptance deadline is March 12, 2018.

The move would see the Austrian portfolio grow to around 24,000 apartments in the future, with a focus on Vienna in particular and also on the regional centers of Graz, Klagenfurt, Salzburg and Villach. Buwog has an additional 27,000 apartments in Germany, in cities including Berlin and Hamburg.

Growth in Residential Environment, Security and Digitalization Services

Vonovia is responsible for a large proportion of the company's repair and maintenance work, with approximately 5,000 of its own employees, and carries out the Upgrade Buildings and Upgrade Apartments investment programs. In the 2017 fiscal year, Vonovia performed around 586,000 smaller repairs and renovated around 40,000 apartments.

In 2017, Vonovia also performed an increasing proportion of the services relating to the upkeep of the residential environment itself and is training its own employees in these areas. More than 600 gardening and landscaping employees are now responsible for managing the outdoor areas. The residential environment plays a key role in neighborhood development measures, in particular. The new green spaces and playgrounds, as well as the creation of neighborhood centers to provide residents with a place to meet up and communicate, boosts tenants' quality of life and satisfaction levels.

Together with the State Criminal Police Agency of North Rhine-Westphalia, Vonovia has developed an offering that significantly increases customer security and can be installed on request. The new product line includes window and balcony security devices, door protection in the form of reinforced bolts and the installation of burglar-proof apartment entrance doors. Around 300 apartments are to be equipped with these features in 2018.

Vonovia is using digitalization to boost efficiency, customer satisfaction and sustainability. Smart metering, for example, makes meter reading easier. Vonovia used automated meter reading for 80,000 apartments in 2017 (2016: 30,000).

Positive Outlook for 2018 Confirmed - Change in Supervisory Board and Management Board

Vonovia is very confident in its outlook for 2018. The company expects its FFO 1 to increase to somewhere in the range of EUR 960 million to EUR 980 million, or between EUR 1.98 and EUR 2.02 per share based on the current number of shares (not including Buwog). Vonovia will continue to make extensive investments in its real estate portfolio in 2018. Including maintenance expenses of EUR 360 million, the company plans to invest a total volume of up to EUR 1.4 billion in new construction and portfolio improvement measures in the 2018 fiscal year. Vonovia also plans to move into the new corporate headquarters in Bochum in May 2018, which consists of 1,200 modular construction elements.

As was published yesterday, the Supervisory Board of Vonovia SE has decided to recommend Jürgen Fitschen as a new member of the Supervisory Board at the next scheduled Annual General Meeting on May 9, 2018. He is to take over as Chair of the Supervisory Board of Vonovia. In addition, Dr. Stefan Kirsten, CFO of Vonovia, has made the decision to leave the Management Board of Vonovia with effect from the end of the Annual General Meeting on May 9, 2018. He will be handing responsibility for his Management Board functions over to Helene von Roeder.

2017 Annual Report:
DE: http://reports.vonovia.de/2017/geschaeftsbericht/
EN: http://reports.vonovia.de/2017/annual-report

Media center: https://www.vonovia.de/ueber-vonovia/presse/mediathek

Further information can be found in the press section.

The presentation of the business results will be transmitted on March 6, 2018, starting at 10:30 a.m., at https://presse.vonovia.de/bilanzpressekonferenz. Please note that the link will only be available shortly before the event starts.

2018 Financial Calendar:

May 7, 2018: Publication of the key figures for the first three months of 2018
May 9, 2018: Annual General Meeting

* Previously "Adjusted EBITDA Extension"

About Vonovia

Vonovia SE is Germany's leading nationwide residential real estate company. Vonovia currently owns and manages around 347,000 residential units in all of Germany's attractive cities and regions. Its portfolio is worth approximately EUR 33.4 billion. As a modern service company, Vonovia focuses on customer orientation and tenant satisfaction. Offering tenants affordable, attractive and livable homes is a prerequisite for the company's successful development. Accordingly, Vonovia makes long-term investments in the maintenance, modernization and senior-friendly conversion of its properties. The company will also be creating more and more new apartments by realizing infill developments and adding to existing buildings.

The company, which is based in Bochum, has been listed on the stock exchange since 2013 and on the DAX 30 since September 2015. Vonovia SE is also listed on the international indices STOXX Europe 600, MSCI Germany, GPR 250 and EPRA/NAREIT Europe. Vonovia has a workforce of approximately 8,400 employees.

Additional Information:
Approval: Regulated Market/Prime Standard, Frankfurt Stock Exchange
ISIN DE000A1ML7J1
WKN A1ML7J
Common code 094567408
Registered headquarters of Vonovia SE: Bochum, Germany, Bochum Local Court, HRB 16879
Business address of Vonovia SE: Philippstrasse 3, 44803 Bochum, Germany

This press release has been issued by Vonovia SE and/or its subsidiaries solely for information purposes. This press release may contain statements, assumptions, opinions and predictions about the anticipated future development of Vonovia ("forward-looking statements") that reproduce various assumptions regarding, e.g., results derived from Vonovia's current business or from publicly available sources that have not been subject to an independent audit or in-depth evaluation by Vonovia and that may turn out to be incorrect at a later stage. All forward-looking statements express current expectations based on the current business plan and various other assumptions and therefore come with risks and uncertainties that are not insignificant. All forward-looking statements should not therefore be taken as a guarantee for future performance or results and, furthermore, do not necessarily constitute exact indicators that the forecast results will be achieved. All forward-looking statements relate solely to the day on which this press release was issued to its recipients. It is the responsibility of the recipients of this press release to conduct a more detailed analysis of the validity of forward-looking statements and the underlying assumptions. Vonovia accepts no responsibility for any direct or indirect damages or losses or subsequent damages or losses, as well as penalties that the recipients may incur by using the press release, its contents and, in particular, all forward-looking statements or in any other way, as far as this is legally permissible. Vonovia does not provide any guarantees or assurances (either explicitly or implicitly) in respect of the information contained in this press release. Vonovia is not obliged to update or correct the information, forward-looking statements or conclusions drawn in this press release or to include subsequent events or circumstances or to report inaccuracies that become known after the date of this press release.