Vonovia SE

Investor Presentation • Sep 24, 2018

Company Presentation September 2018

Vonovia at a Glance	3
Business Update	6
Residential Market Data	20
Appendix	25

Vonovia at a Glance

• Largest listed European residential company with more than 400k apartments.
• Bread-and-butter business in German residential market with strong track record of optimization, standardization and industrialization via organic and acquisition growth.
• Industrialized approach leverages economies of scale in a highly homogeneous asset class.
• B-to-C business with ca. 13 years average tenant tenure.
• Strong internal growth profile via sustainable market rent growth, additional rent growth from portfolio investments and dynamic value-add business.
• Robust business model delivers highly stable and growing cash flows (Funds from Operations, "FFO 1").

Strategy

Vonovia at a Glance	3
Business Update	6
Residential Market Data	20
Appendix	25

Highlights

k ar e P n	Operations	Organic rent growth of 4.1% y-o-y. Operating expenses reduced by 16.8% to €110.2m as a result of eliminating the double cost structure from conwert included in H1 2017 as well as continued efficiency gains. Adj. EBITDA Operations margin (ex. maintenance) of 90.9% (+290bps y-o-y). Vonovia received the EPRA Gold Award for the 2017 Sustainability Report
a o ori al d- ct n Vi a sta g, o w vi u o B n o	FFO 1	FFO 1 increased by 11.5% y-o-y to €510.3m in H1 2018 as a result of better EBITDA Operations and lower interest expenses and income taxes.
xcl. V E	Valuation	H1 valuation comprised ca. 2/3 of portfolio (20 largest German locations plus six additional German locations and Vienna). 6.9% l-f-l value growth on revalued portfolio, of which 5.7% l-f-l valuation uplift (performance + yield compression). Total value growth of €1,765m represents 5.3% on the overall portfolio.
k ar P a ori	Adj. NAV	Adj. NAV grew by 10.5% to €20,634.4m in H1 2018. On a per-share basis, Adj. NAV was €39.83, up 3.5% ytd (6.8% higher NOSH).
ct Vi g, o w u B cl. n I	Guidance	2018 Guidance now includes Buwog and Victoria Park. FFO 1 guidance of €1,050m - €1,070m or €2.03 – €2.07 p.s. on the new number of 518.1m issued shares. Back-of-an-envelope calculation: Assuming Buwog and Victoria Park had fully contributed for the first six months, the pro FFO 1 per share guidance would have been €2.08 – €2.12.
	Company Presentation – September 2018	page 6

KPI Growth in spite of Smaller Portfolio and Higher NOSH

• Rental income slightly up 0.7% on a 3% smaller but higher quality portfolio.
• Adjusted EBITDA Operations up 4.1% because of substantially lower operating expenses and higher contribution from the Value-add Business.
• As a result, and supported by lower interest expenses, FFO grew by 11.5% (2.5% per share due to the 8.7% increase in NOSH from the May ABB and scrip dividend).

		H1 2018	H1 2017	Delta
Average number of residential sqm	`000	21,557	22,226	-3.0%	Portfolio reduction mainly
Average number of residential units	#	344,685	355,570	-3.1%	driven by clean-up sales
Organic rent growth (y-o-y)	%	4.1	3.7	+40 bps
In-place rent (eop)	€/month/sqm	6.41	6.12	+4.7%
Vacancy rate (eop)	%	2.8	2.9	-10 bps
Rental income	€m	838.8	833.2	+0.7%	+€5.6m
Maintenance expenses	€m	-131.6	-127.3	+3.4%
Operating expenses	€m	-110.2	-132.4	-16.8%	conwert synergies and efficiency improvements
Adj. EBITDA Rental	€m	597.0	573.5	+4.1%	+€23.5m
Adj. EBITDA Value-add Business	€m	51.7	45.6	+13.4%
Adj. EBITDA Operations	€m	632.6	607.6	+4.1%	+€25.0m
					• 8.7% higher NOSH
Interest expense FFO 1	€m	-114.3	-138.0	-17.2%	y-o-y • Back-of-an-envelope
Current income taxes FFO 1	€m	-8.0	-11.9	-32.8%	calculation: pro forma FFO 1 including full
FFO 1	€m	510.3	457.7	+11.5%	contribution from Buwog and Victoria +€52.6m
FFO 1 per share (eop NOSH)	€	0.98	0.96	+2.5%	Park in H1 would be ~€36m or
FFO 1 per share (avg. NOSH)	€	1.03	0.98	+5.8%	~7 cents higher

All numbers stand-alone Vonovia, excluding Buwog and Victoria Park

Rent Growth Acceleration Set to Continue

Rent growth drivers				Positive rent growth trajectory
(last 12M)	H1 2018	H1 2017	Delta		2013	2014	2015	2016	2017	2018(E)	2019(E)
				Market driven	1.6%	1.6%	1.7%	1.5%	1.6%	≈	≈
Sitting tenants (incl. subsidized rents)	1.1%	1.2%	-10bps	Modernization	0.4%	0.9%	1.2%	1.8%	2.5%
				Space creation	---	---	---	---	0.1%
New lettings (with no material investment)	0.4%	0.5%	-10bps	Organic rent growth	1.9%	2.5%	2.9%	3.3%	4.2%	~4.4%
Subtotal market driven rent growth	1.5%	1.7%	-20bps
Modernization (including new lettings with investments  Optimize Apartments)	2.5%	1.9%	+60bps	Investment track record (€m; includes modernization and space creation)
Subtotal l-f-l rent growth	4.0%	3.6%	+40bps					779	~1,000		~1,000
Space creation	0.1%	0.1%	---			356	472
Subtotal organic rent growth	4.1%	3.7%	+40bps	71 2013	172 2014	2015	2016	2017	2018(E)		2019+(E)

Smooth Maturity Profile with Diverse Funding Mix

¹incl. July 2018 Bond, which is not included in KPIs. ² Average financing cost of debt maturing in the relevant year. ³ Weighted avg. financing costs excl. Equity Hybrid. Including Equity Hybrid, avg. interest rate of debt maturing in 2021 is 3.4%.⁴ excl. Equity Hybrid. ⁵ excl. 2nd offer period of Buwog. ⁶ excl. Buwog and Victoria Park.

Company Presentation – September 2018

LTV Remains in Comfort Zone

• LTV as of June 30, 2018 was 43.9%.
• Current pro forma LTV, including 2nd offer period for Buwog and €500m bond issued in July, is ~45%.
• Against the background of the stable cash flows and the strong fundamentals in our portfolio locations we see continued upside potential for our property values, and we do not see material long-term downside risks.
• We therefore continue to believe that the LTV target range of 40% 45% is adequate for our low risk portfolio, and we feel comfortable with this range.
• Based on our internal LTV projections, an extremely bearish scenario with no yield compression in H2 2018 would result in an LTV of ~45%, so any yield compression will bring the LTV even deeper into our comfort zone (€500m of yield compression reduce the LTV level by ca. 50 bps).

€m (unless indicated otherwise)	Jun 30, 2018	Mar 31, 2018	Dec 31, 2017
Non-derivative financial liabilities	19,774.6	18,887.0	14,060.5
Foreign exchange rate effects	-29.6	-17.8	-23.5
Cash and cash equivalents	-865.8	-829.3	-266.2
Net debt	18,879.2	18,039.9	13,770.8
Sales receivables	-239.8	-232.4	-201.2
Adj. net debt	18,639.4	17,807.5	13,569.6
Fair value of real estate portfolio	41,732.3	38,485.6	33,436.3
Shares in other real estate companies	734.5	666.6	642.2
Adj. fair value of real estate portfolio	42,466.8	39,152.2	34,078.5
LTV	43.9%	45.5%	39.8%

Invest Cluster Offers Long-Term Organic Growth Potential

• 53% of portfolio in Invest Cluster and earmarked for value-enhancing investments in the next years
• Non-core sales almost completed
• 10% of portfolio outside of Germany

Residential	In-place rent	Vacancy rate	Fair value1
units	(€/sqm/month)	(%)	(€bn)	% of total
126,039	6.54	2.6	13.0	32%
217,270	6.35	2.6	21.4	53%
343,309	6.42	2.6	34.4	85%
13,183	6.22	4.1	1.5	4%
10,167	5.34	5.1	0.6	1%
366,659	6.38	2.7	36.5	90%
23,215	4.56	4.2	2.5	6%
14,052	8.83	1.4	1.6	4%

Note: In-place rents in Austria and Sweden are not fully comparable to Germany, as Sweden, for example, includes certain ancillary costs. The table above shows the rental level unadjusted to the German definition. ¹Fair value of the developed land excluding € 1,205.4 million, of which € 344.5 million for undeveloped land and inheritable building rights granted, € 251.9 million for assets under construction, € 461.7 million for development and € 147.3 million for other.

€1bn Investment Program on Track

• 2018 investment program well underway.
• All investment projects kicked-off or already completed.

Note: Numbers include projects kicked off in 2017.

L-f-l Value Uplift of 5.7%

• Valuation portfolio comprised the 20 largest cities of our German portfolio, plus six additional German locations and Vienna, representing ca. 2/3 of the entire portfolio. All other locations and values were left unchanged and adjusted only for capitalization.
• 6.9% l-f-l value growth on revalued portfolio, of which 5.7% l-f-l valuation uplift (performance + yield compression).
• Total value growth of €1,765m represents 5.3% on the overall portfolio.
• German portfolio as of June 30, 2018, valued at €1,561/sqm, 20.5x inplace rent multiple and 4.9% gross yield (Dec. 31, 2017: €1,475/sqm, 19.7x in-place rent and 5.1% yield).

Value drivers H1 (€m)
Performance	268
Rental development	228
Investments	40
Investments	347
Investments (within valuation portfolio)	240
Investments (outside of valuation portfolio)	107
Yield compression	1,150
Total value uplift	1,765

All numbers stand-alone Vonovia, excluding Buwog and Victoria Park

Continued NAV Growth

Adj. NAV is up 10.5% ytd or 3.5% per share in spite of 6.8% more issued shares.

€m (unless indicated otherwise)	Jun 30, 2018	Dec 31, 2017	Is Adj. NAV a good proxy for the value of a
			diverse operating business?
			By definition, the Adj. NAV
Equity attributable to Vonovia's shareholders	16,916.2	15,080.8	reflects the brick and mortar value of the
Deferred taxes on investment properties and assets held for sale	7,253.8	6,185.7	buildings
Fair value of derivative financial instruments1	93.4	26.9	applies market terms and assumes the
Deferred taxes on derivative financial instruments	-25.1	-8.8	properties are owned by "anyone"
EPRA NAV	24,238.3	21,284.6	This approach ignores
Goodwill	-3,603.9	-2,613.5	the Value-add Business
Adj. NAV	20,634.4	18,671.1	the cost advantage and operating platform
			of a professional owner
EPRA NAV €/share	46.79	43.88	the development business
Adj. NAV €/share	39.83	38.49	the cash flow from privatization

¹ Adjusted for effects from cross currency swaps.

Growing Contribution from Value-add Business

Concept

• Expansion of core business to extend the value chain by offering additional services and products that are directly linked to our customers and/or the properties and offer the same cash flow stability as the rental business.
• Insourcing of services to ensure maximum process management and cost control.
• Two types of Value-add Business
• 1. External income (e.g. multimedia, smart metering)
• 1. Internal savings (e.g. craftsmen, resi environment)
• New initiatives always follow same low risk pattern of
• Prototype development
• Proof of concept in pilot phase
• Roll-out across portfolio

Economics

• NAV does not account for Vonovia's Value-add Business.
• Applying the impairment test WACC¹ to the 2018E Adj. EBITDA Value-add Business translates into an additional value of ~€5.0 per share (~12% on top of H1 Adj. NAV).

	Penetration
Multimedia	ca. 80%
Smart metering	ca. 23%
Residential environment2	ca. 30%
Energy	~1%
Craftsmen VTS	ca. 70% (maintenance) ca. 40% (modernization) target is around 70% to allow for enough flexibility in the volumes and to enable continuous benchmarking to market prices
Adj. EBITDA Value-add Business (€m) 37.6 23.6	~120 102.1 57.0
2014 2015	2016 2017 2018(E)

Sales – Steady Cash Flow at Attractive Margins

• Total sales volume in H1 2018 was 6,115 residential units (prior-year period: 4,484), of which 1,030 from Privatization portfolio (prior-year period: 1,160) and 5,085 from Sell portfolio (prior-year period: 3,324).
• In spite of value growth of the portfolio, privatization fair value step-ups still came out to 30.5% for H1 2018.
• The sell portfolio disposals saw a record fair value step-up of 15.4% in H1 2018, driven largely by two block sales, as we are utilizing the high market liquidity to profitably dispose of our Sell Portfolio.
• The income and fair value figures of the Sell Portfolio for the prior-year period include a substantial amount of commercial property sales.

	PRIVATIZATION		SELL PORTFOLIO		TOTAL
€m (unless indicated otherwise)	H1 2018	H1 2017	H1 2018	H1 2017	H1 2018	H1 2017
Income from disposal	124.2	142.7	230.0	559.2	354.2	701.9
Fair value of disposal	-95.2	-108.7	-199.3	-536.1	-294.5	-644.8
Adj. profit from disposal	29.0	34.0	30.7	23.1	59.7	57.1
Fair value step-up (%)	30.5%	31.3%	15.4%	4.3%
Selling costs					11.4	-12.8
Adj. EBITDA Sales					48.3	44.3

	BUWOG	Victoria Park
Current Vonovia stake	90.7% voting rights	93.45% voting rights (including call options)
Impact in 2018	Starting with Q2	Starting with Q3
Integration	Operational integration of German operating business fully on track and expected to be completed by the end of 2018. Synergy realization expected from 2019 onwards.	Victoria Park management and staff remain largely in place, as Victoria Park continues to run its business broadly unchanged. Feasibility of joint purchasing, modernization work
Next steps	Buwog EGM to resolve on the Squeeze-out scheduled for Oct. 2. Cash compensation for minority shareholders of €29.05 per share.	and refinancing opportunities being reviewed. No integration planned as Victoria Park serves as the platform for Vonovia's potential growth in Sweden.

Comments

• European activities enhance accretive acquisition opportunities.
• Similar to Germany, we closely monitor these clearly defined geographies for opportunities, applying the same acquisition criteria:
• Austria run combined Buwog and conwert portfolio as scalable business. Disposals more prominent in Austrian business model because of low exit yields
• Sweden build on Victoria Park platform and consolidate Swedish residential market
• France largest long-term opportunity. Not material at this point and only a viable long-term option to the extent legislation changes and allows the payout of economic dividends from social housing
• Netherlands attractive market but no opportunities or viable partner at this point
• Other countries are not in our focus due to fundamentals, (lack of) regulation or similar related issues.

Increased Guidance Suggests ca. 8% FFO per share Growth

	2017 Actuals		2018 Guidance
		Initial (Nov. 2017)	Update (May 2018)	Update (Aug. 2018)
		Excl. Buwog & Victoria Park	Excl. Buwog & Victoria Park	Incl. Buwog & Victoria Park1
Organic rent growth (eop)	4.2%	4.6% - 4.8%	4.6% - 4.8%	~4.4%2 (VNA stand-alone)
Vacancy (eop)	2.5%	<2.5%	<2.5%	<2.5%
Rental Income (€m)	1,667.9	1,660 - 1,680	1,670 - 1,690	1,890 – 1,910
FFO1 (€m)	920.8	960 - 980	1,000 – 1,020 (VNA stand-alone)	1,050 – 1,070
FFO 1 (€/share, eop)	1.90	1.98 - 2.02	2.06 – 2.10 (VNA stand-alone)	2.03 – 2.07
Maintenance (€m)	346.2	~360	~360	~410
Modernization & Investments (€m)	778.6	~1,000	~1,000	~1,000
Privatization (number of units)	2,608	~2,300	~2,300	~2,800
FV step-up (Privatization)	32.7%	~30%	~30%	30% - 35%
Sell portfolio disposals (number of units)	11,780	opportunistic	opportunistic	up to 14,000
FV step-up (Sell Portfolio)	7.9%	>0%	~5%	10% - 15%
Dividend/share	€1.32	~70% of FFO1	~70% of FFO1	~70% of FFO1
Underlying number of shares	485.1	485.1	485.1	518.1

¹Buwog contribution for 9 months and without synergies and Victoria Park contribution for 6 months and without synergies.

²Excl. Buwog & Victoria Park. Adjustment to ~4.4% is purely timing-related and driven by (i) lower-than-anticipated new construction volume as a result of building permits taking too long and (ii) a small share of the rent growth from the modernization investments getting pushed into early 2019, as some projects cannot be fully settled by September, which is the deadline for including the projects in the 2018 organic rent growth. This slight delay is caused by poor weather conditions in the beginning of the year as well as limited craftsmen availability for carrying out the work on time and on budget.

Vonovia at a Glance	3
Business Update	6
Residential Market Data	20
Appendix	25

German Residential – Safe Harbor and Low Risk

Rental regulation safeguards high degree of stability

• Contrary to most other jurisdictions such as the USA, rental growth in Germany is regulated and not directly linked to CPI, GDP development etc.
• Rents are regulated via "Mietspiegel" (city-specific rent indices), which look at the asking rents of the previous four years to determine a rent growth level for existing tenants for the next two years.

Sources: Federal Statistics Office, GdW (German Association of Professional Homeowners), REIS, BofA Merrill Lynch Global Research, OECD. Note: Due to lack of q-o-q US rent growth data, the annual rent growth for a year is assumed to also be the q-o-q rent growth of that year.

German Residential – Landlords Benefit from Structural Imbalance between Supply and Demand

New supply falls short of demand

• Consensus estimates see a current shortage of around 1 million apartments in urban areas. Three main constraints stand in the way of material changes in the short and even medium term:
• Building permits often take several years because city administrations lack qualified personnel.
• Severe shortage of building capacity after years of downsizing.
• Substantial gap between in-place values and market replacement cost render construction in affordable segment economically unfeasible.

German Residential – Favorable Fundamentals

Growing number of smaller households Fragmented ownership structure

• While the overall population in Germany is expected to slightly decline, the number of households is forecast to grow until at least 2035 with a clear trend towards smaller households.
• The household growth is driven by various demographic and social trends including divorce rates, employment mobility etc.

Distribution of household sizes (million)

• Germany is the largest housing market in Europe with ~42m housing units, of which ~23m are rental units.
• Ownership structure is highly fragmented and majority of owners are non-professional landlords.
• Listed sector represents ~4% of total rental market.

Ownership structure (million units)

Sources: German Federal Statistics Office, GdW (German Association of Professional Homeowners). 2035(E) household numbers are based on trend scenario of the German Federal Statistics Office.

German Residential – Favorable Fundamentals

Cities across Europe are on the rise and the population living in cities is expected to grow substantially by 2030 and 2050, respectively.

% of population living in urban areas

Urbanization trend across Europe Increasing affordability in Germany

• Affordability in Germany is higher than France, UK, Spain and the Netherlands.
• Whereas most other European countries saw an increase, the share of rent-related payments in relation to disposable income declined in Germany between 2007 and 2016.

Rent as % of disposable household income*

Sources: United Nations, JLL Research, European Commission, Federal Statistics Office, Eurostat

Rene Hoffmann Head of Investor Relations Vonovia SE Universitätsstraße 133 44803 Bochum Germany

+49 234 314 1629 rene.hoffmann@vonovia.de investorrelations@vonovia.de www.vonovia.de

Contact		Financial Calendar
	Sep 24	GS/Berenberg German Corporate Conference, Munich
	Sep 25	Baader Investment Conference, Munich1
	Sep 26	BofAML Global Real Estate Conference, New York
	Sep 28	Societe Generale Pan-European Real Estate Conference, London
	Oct 10-11	Roadshow Scandinavia, Copenhagen & Stockholm1
	Nov 12-16	Roadshow Asia (Tokyo, Seoul, HK, Kuala Lumpur, Singapore)
	Dec 6	Interim results 9M 2018
	Dec 7-13	Roadshow Europe (Zurich, Paris, London, Amsterdam)
	Dec 12	EPRA Corporate Access Day, London
	Mar 7, 2019	FY2018 Results
	May 7, 2019	Interim results 3M 2019
	May 16, 2019	Annual General Meeting
	Jun 4-5, 2019	Capital Markets Day
	Aug 2, 2019	Interim results 6M 2019
	Nov 5, 2019	Interim results 9M 2019

Appendix

Pages	Content
26-38	H1 Results – Additional Data
39-40	Maintenance ≠ Capex ≠ Modernization Investments
41-45	Financing
46-47	Acquisitions
48	Dividend Track Record
49	Fair Value per sqm Evolution
50	Portfolio Evolution
51-53	Vonovia Shares
54-59	Sustainability
60	No Correlation between German Residential Yields and Interest Rates
61	Three Layers of Perception
62-64	Management Compensation
65-69	Pictures
70	Disclaimer

Continued EBITDA Margin Expansion

• Adj. EBITDA Operations is up 4.1% to €632.6m.
• EBITDA Operations margin (excl. maintenance) expanded to 90.9%.

€m	H1 2018	H1 2017	Delta
Rental income	838.8	833.2	+0.7%
Maintenance expenses	-131.6	-127.3	+3.4%
Operating expenses	-110.2	-132.4	-16.8%
Adj. EBITDA Rental	597.0	573.5	+4.1%
Income	610.4	483.8	+26.2%
of which external	88.3	80.1	+10.2%
of which internal	522.1	403.7	+29.3%
Operating expenses	-558.7	-438.2	+27.5%
Adj. EBITDA Value-add Business	51.7	45.6	+13.4%
Adj. EBITDA Other1	-16.1	-11.5	+40.0%
Adj. EBITDA Operations	632.6	607.6	+4.1%

¹ Mainly consolidation

All numbers stand-alone Vonovia, excluding Buwog and Victoria Park

Continued FFO Growth

Driven by better operational performance and lower interest expenses, FFO1 was up 11.5% y-o-y or 2.5% per share (eop) in spite of 8.7% more issued shares.

€m (unless indicated otherwise)	H1 2018	H1 2017	Delta
Adj. EBITDA Operations	632.6	607.6	4.1%
Interest expense FFO 1	-114.3	-138.0	-17.2%
Current income taxes FFO 1	-8.0	-11.9	-32.8%
FFO 1	510.3	457.7	11.5%
of which attributable to Vonovia's shareholders	484.7	431.1	12.4%
of which attributable to Vonovia's hybrid capital investors	20.0	20.0	0.0%
of which attributable to non-controlling interests	5.6	6.6	-15.2%
Capitalized maintenance	-49.1	-30.5	61.0%
AFFO	461.2	427.2	8.0%
Adjusted EBITDA Sales	48.3	44.3	9.0%
Current income taxes FFO 2	-13.8	-20.1	-31.3%
FFO 2	544.8	481.9	13.1%
FFO 1 € / share (eop NOSH) (H1 2018: 518.1m; H1 2017: 476.5m)	0.98	0.96	2.5%
FFO 1 € / share (avg. NOSH) (H1 2018: 493.2m; H1 2017: 468.2m)	1.03	0.98	5.8%

• Back-of-an-envelope calculation: pro forma FFO 1 including full contribution from Buwog and Victoria Park in H1 would be ~€36m or ~7 cents higher

In-place Valuation vs. Fair Value Uplift

New Construction Update

Commentary

• The obstacle to higher construction volumes remains building permits, which continue to take very long in most cities.
• In aggregate, the Vonovia Space Creation plus the Buwog Development Business are expected to deliver ca. 2,800 completions next year.
• Geographic split of Vonovia completions since 2016

Buwog Development Projects Approved since Takeover

Location	Project	Completion (est.)	Investment volume	Hold vs. sell (est.)
Berlin	"Kompasshäuser" (50 resi units) "Haus an der Dahme" (33 resi units) (Part of 52° Nord Project with a total of 1,019 residential units of which 216 have been completed)	05/2020	ca. €30m	Hold Sell
Vienna	Marina Tower (486 resi units, 7 commercial units) Marina Plaza (409 resi units, Rezoning required)	3/2021 10/2023	ca. €114m ca. €140m	Hold Sell
Vienna	ERnteLAA (191 resi units, 3 commercial units)	05/2020	Ca. €36m	Hold Sell

Reconciliation IFRS Profit to FFO

€m (unless indicated otherwise)	H1 2018	H1 2017	Delta
IFRS PROFIT FOR THE PERIOD	1,200.0	1,064.6	+12.7%
Financial result1	195.7	148.6	+31.7%
Income taxes	646.7	588.0	+10.0%
Depreciation and amortization	23.3	14.9	+56.4%
Net income from fair value adjustments of investment properties	-1,372.9	-1,164.7	+17.9%
= EBITDA IFRS	692.8	651.4	+6.4%
EBITDA IFRS BUWOG	-40.7	-	-
Non-recurring items	50.5	46.3	+9.1%
Total period adjustments from assets held for sale	-7.8	-32.9	-76.3%
Financial income from investments in other real estate companies	-13.9	-12.9	+7.8%
= ADJUSTED EBITDA	680.9	651.9	+4.4%
Adjusted EBITDA Sales	-48.3	-44.3	+9.0%
= ADJUSTED EBITDA OPERATIONS	632.6	607.6	+4.1%
FFO interest expense2	-114.3	-138.0	-17.2%
Current income taxes FFO1	-8.0	-11.9	-32.8%
= FFO1	510.3	457.7	+11.5%
Capitalized maintenance	-49.1	-30.5	+61.0%
= AFFO	461.2	427.2	+8.0%
Current income taxes Sales	-13.8	-20.1	-31.3%
FFO2 (FFO1 incl. Adjusted EBITDA Sales / Current income taxes Sales)	544.8	481.9	+13.1%
FFO1 per share in € (eop NOSH)	0.98	0.96	+2.5%
AFFO per share in € (eop NOSH)	0.89	0.90	-0.8%
Number of shares (million) eop	518.1	476.5

¹ Excluding income from investments. ² Including financial income from investments in other real estate companies.

IFRS P&L

€m (unless indicated otherwise)	H1 2018	H1 2017	Delta
Income from property letting	1,258.6	1,171.6	+7.4%
Other income from property management	24.3	20.8	+16.7%
Income from property management	1,282.9	1,192.4	+7.6%
Income from disposal of properties	386.4	701.9	-44.9%
Carrying amount of properties sold	-340.5	-664.9	-48.8%
Revaluation of assets held for sale	34.6	53.1	-34.8%
Profit on disposal of properties	80.5	90.1	-10.7%
Income from the disposal of properties (Development)	73.5	-	-
Cost of sold properties	-60.6	-	-
Profit on the disposal of properties (Development)	12.9	-	-
Net income from fair value adjustments of investment properties	1,372.9	1,164.7	+17.9%
Capitalized internal expenses	255.7	199.5	+28.2%
Cost of materials	-627.3	-569.5	+10.1%
Personnel expenses	-236.9	-207.6	+14.1%
Depreciation and amortization	-23.3	-14.9	+56.4%
Other operating income	50.4	51.5	-2.1%
Other operating expenses	-146.8	-124.4	+18.0%
Financial income	26.6	43.7	-39.1%
Financial expenses	-200.9	-172.9	+16.2%
Earnings before taxes	1,846.7	1,652.6	+11.8%
Income taxes	-646.7	-588.0	+10.0%
Profit for the period	1,200.0	1,064.6	+12.7%
Attributable to:
Vonovia's shareholders	1,143.4	993.2	+15.1%
Vonovia's hybrid capital investors	14.8	14.8	0%
Non-controlling interests	41.8	56.6	-26.1%
Earnings per share (basic and diluted) in €	2.30	2.12	+8.5%

IFRS Balance Sheet (1/2 – Total Assets)

€m (unless indicated otherwise)	Jun. 30, 2018	Dec. 31, 2017	Delta
Assets
Intangible assets	3,705.7	2,637.1	40.5%
Property, plant and equipment	222.1	177.6	25.1%
Investment properties	40,992.2	33,182.8	23.5%
Financial assets	808.4	698.0	15.8%
Other assets	18.9	13.8	37.0%
Deferred tax assets	10.5	10.3	1.9%
Total non-current assets	45,757.8	36,719.6	24.6%
Inventories	6.6	6.2	6.5%
Trade receivables	441.0	234.9	87.7%
Financial assets	14.2	0.5	>100%
Other assets	193.3	98.4	96.4%
Income tax receivables	44.2	47.9	-7.7%
Cash and cash equivalents	865.8	266.2	>100%
Real estate inventories	309.7	-	-
Assets held for sale	155.0	142.6	8.7%
Total current assets	2,029.8	796.7	>100%
Total assets	47,787.6	37,516.3	27.4%

IFRS Balance Sheet (2/2 – Total Equity and Liabilities)

€m (unless indicated otherwise)	Jun. 30, 2018	Dec. 31, 2017	Delta
Equity and liabilities
Subscribed capital	518.1	485.1	+6.8%
Capital reserves	7,182.2	5,966.3	+20.4%
Retained earnings	8,978.8	8,471.6	+6.0%
Other reserves	237.1	157.8	+50.3%
Total equity attributable to Vonovia's shareholders	16,916.2	15,080.8	+12.2%
Equity attributable to hybrid capital investors	1,021.4	1,001.6	+2.0%
Total equity attributable to Vonovia's shareholders and hybrid capital investors	17,937.6	16,082.4	+11.5%
Non-controlling interests	937.7	608.8	+54.0%
Total equity	18,875.3	16,691.2	+13.1%
Provisions	603.5	607.2	-0.6%
Trade payables	1.0	2.4	-58.3%
Non derivative financial liabilities	17,848.6	12,459.4	+43.3%
Derivatives	68.8	8.7	>100%
Liabilities from finance leases	94.5	94.7	-0.2%
Liabilities to non-controlling interests	31.7	24.9	+27.3%
Financial liabilities from tenant financing	54.7	-	-
Other liabilities	49.9	65.3	-23.6%
Deferred tax liabilities	6,388.4	5,322.6	+20.0%
Total non-current liabilities	25,141.1	18,585.2	+35.3%
Provisions	405.1	376.5	+7.6%
Trade payables	207.4	130.7	+58.7%
Non derivative financial liabilities	1,926.0	1,601.1	+20.3%
Derivatives	362.2	4.4	>100%
Liabilities from finance leases	4.8	4.6	+4.3%
Liabilities to non-controlling interests	6.7	9.0	-25.6%
Financial liabilities from tenant financing	100.2	7.7	>100%
Other liabilities	758.8	105.9	>100%
Total current liabilities	3,771.2	2,239.9	+68.4%
Total liabilities	28,912.3	20,825.1	+38.8%
Total equity and liabilities	47,787.6	37,516.3	+27.4%

€m (unless indicated otherwise)	H1 2018	H1 2017	Delta
Cash flow from operating activities	513.5	475.4	8.0%
Cash flow from investing activities	-3,158.7	-1,179.0	>100%
Cash flow from financing activities	3,244.8	-459.1	---
Net changes in cash and cash equivalents	599.6	-1,162.7	---
Cash and cash equivalents at the beginning of the period	266.2	1,540.8	-82.7%
Cash and cash equivalents at the end of the period	865.8	378.1	>100%

€m (unless indicated otherwise)	H1 2018	H1 2017	Delta
Expenses for ancillary costs	334.1	317.5	5.2%
Expenses for maintenance	247.4	204.0	21.3%
Other cost of purchased goods and services	45.8	48.0	-4.6%
Total cost of materials	627.3	569.5	10.1%

All Strategic Markets Show Upward Potential

	Fair value1							In-place rent
Regional Market	(€m)	(€/sqm)	Residential units	Living area ('000 sqm)	Vacancy (%)	Total (p.a., €m)	Residential (p.a., €m)	Residential (€/sqm/month)	Organic rent growth (%)	Multiple (in-place rent)	Average rent growth forecast CBRE (5 yrs) (%)	Reversionary potential2 (%) from Optimize Apartments
Berlin	6,328	2,183	44,010	2,806	1.9	225	214	6.46	3.9	28.2	4.3	47.7
Rhine Main Area (Frankfurt, Darmstadt, Wiesbaden)	3,650	2,022	27,821	1,775	2.4	170	164	7.83	3.9	21.5	3.5	41.7
Rhineland (Cologne, Düsseldorf, Bonn)	3,376	1,650	29,699	1,989	3.0	168	160	6.91	3.3	20.1	3.1	27.1
Southern Ruhr Area (Dortmund, Essen, Bochum)	3,124	1,140	43,836	2,680	3.4	185	179	5.76	4.5	16.9	2.9	30.4
Dresden	2,980	1,275	38,576	2,194	2.8	161	151	5.88	3.8	18.5	3.7	33.2
Hamburg	2,348	1,796	20,095	1,274	1.7	107	102	6.80	4.6	22.0	3.3	43.7
Munich	1,902	2,900	9,695	637	0.9	64	60	7.88	3.7	29.9	4.8	55.1
Stuttgart	1,826	1,989	14,116	889	1.9	84	80	7.65	3.1	21.8	3.1	40.3
Kiel	1,816	1,289	23,475	1,351	2.0	101	95	6.00	5.6	18.0	3.2	39.9
Hanover	1,511	1,448	16,261	1,023	2.8	78	75	6.31	5.1	19.3	2.9	40.6
Northern Ruhr Area (Duisburg, Gelsenkirchen)	1,442	873	26,394	1,631	3.6	107	103	5.49	4.5	13.5	2.4	25.8
Bremen	1,036	1,365	12,090	733	3.5	50	47	5.54	3.1	20.9	3.6	29.7
Leipzig	809	1,303	9,166	587	5.1	42	39	5.85	3.0	19.4	2.9	25.5
Westphalia (Münster, Osnabrück)	723	1,164	9,475	614	2.5	42	41	5.77	5.1	17.0	3.0	40.0
Freiburg	554	1,984	4,044	276	1.7	24	23	7.12	4.3	23.2	4.1	44.6
Other Strategic Locations	2,348	1,359	26,648	1,690	2.8	131	126	6.40	4.8	17.9	3.3	40.2
Total Strategic Locations Germany	35,772	1,567	355,401	22,149	2.7	1,738	1,659	6.41	4.1	20.6	3.4	36.4
Austria	2,468	1,299	23,215	1,733	4.2	108	91	4.56	n/a	22.8	n/a	n/a
Sweden	1,599	1,462	14,052	997	1.4	115	104	8.83	n/a	14.0	n/a	n/a

Note: In-place rents in Austria and Sweden are not fully comparable to Germany, as Sweden, for example, includes certain ancillary costs. The table above shows the rental level unadjusted to the German definition.

¹ Fair value of the developed land excluding € 1,205.4 million, of which € 344.5 million for undeveloped land and inheritable building rights granted, € 251.9 million for assets under construction, € 461.7 million for development and € 147.3 million for other. ² Average spread between new rents and old rents for all relettings under Optimize Apartment investment strategy.

¹All numbers stand-alone Vonovia, excluding Buwog and Victoria Park.

German Resi: Capitalized Expenses ≠ Modernization Investments

	Capex is a maintenance expense that is capitalized on the balance sheet because it has a value-enhancing element.
Modernization is not capex	In contrast to modernization investments, capex does not result in rent growth.
	Capex is not discretionary.
	Our annual €1bn modernization program does not require new equity.
	The equity portion comes from the FFO 1 funds that are not paid out as dividends.
Modernization is NAV accretive	The remainder is funded with debt (often specific debt facilities dedicated to modernization work and at very favorable terms).
	The value rerating following the modernization work renders the investment program LTV neutral.
	Modernization investment leads to rent growth and increases performance (and dividend potential).
In terms of cash, modernization is similar	Equity or organic cash flow is invested (usually supplemented with debt) for a return.
to an acquisition	The yield on that investment contributes to future rent growth / cash flows.

Maintenance ≠ Capitalized Expenses ≠ Modernization Investments

		Description	Relevant for FFO and P&L	Relevant for AFFO	Relevant for cash flow	Comes with a yield and generates rent growth	Capitalized on the balance sheet	German Civil Code Regulation
e esi bl a R h	Maintenance expenses	• Required to broadly maintain the property value
n s ui a g m n er sti G y di n	Capitalized expenses	Protect future • EBITDAs Reactive, non • discretionary						§558
es i arl e ori e cl g e hre cat T	Modernization investments	• Changes character of a building or flat • Enhance future EBITDAs • Pro-active, discretionary						§559

• expenses and modernization investments are often disclosed as one even though German Civil Code Regulation allows for and even requires separate treatment of capitalized expenses and modernization investments.
• Subtracting modernization investment in Vonovia's AFFO is questionable, as modernization investments are, similar to an acquisition,
• partly debt-financed
• discretionary
• Impact of modernization investments on rent growth is similar to an acquisition, hence the inclusion in organic rent growth.

Cyclicality of Debt Instruments Requires Diversification

Source: Dealogic, Bloomberg, Broker research, Deutsche Bundesbank, Verband deutscher Pfandbriefbanken (VdP), FactSet.

¹ Quarterly Mortgage Pfandbrief issuances for 2005-2012 based on equal distribution of annual issuances based on VdP data; 2013 -3Q2017 figures based on Deutsche Bundesbank

² Corporate bond issuance volume includes senior unsecured and hybrid bonds ≥ €50m, issued in EUR in Western Europe

³ Excludes Mortgage Pfandbriefe in Q2 2018 as data not yet available.

Currently used by Vonovia

Bond KPIs	Covenant	Level	Jun 30, 2018
	LTV	<60%	41%
	Total Debt / Total Assets
	Secured LTV	<45%	12%
	Secured Debt / Total Assets
	ICR1	>1.80x	5.1x
	Last 12M EBITDA / Last 12M Interest Expense
	Unencumbered Assets	>125%	215%
	Unencumbered Assets / Unsecured Debt

Rating KPIs	Covenant	Level (BBB+)
	Debt to Capital Total Debt / Total Equity + Total Debt	<60%
	ICR Last 12M EBITDA / Last 12M Interest Expense	>1.80x

¹ excl. Buwog and Victoria Park.

Corporate Investment grade rating as of 2018-08-02

Rating agency	Rating	Outlook	Last Update
Standard & Poor's	BBB+	Stable	02 Aug 2018

Bond ratings as of 2018-08-02

Name	Tenor & Coupon	ISIN	Amount	Issue price	Coupon	Final Maturity Date	Rating
Bond 002 (EUR-Bond)	6 years 3.125%	DE000A1HNW52	€ 600m	99.935%	3.125%	25 July 2019	BBB+
Bond 004 (USD-Bond)	10 years 5.000%	US25155FAB22	USD 250m	98.993%	4.580%1	02 Oct 2023	BBB+
Bond 005 (EMTN)	8 years 3.625%	DE000A1HRVD5	€ 500m	99.843%	3.625%	08 Oct 2021	BBB+
Bond 006 (Hybrid)	60 years 4.625%	XS1028959671	€ 700m	99.782%	4.625%	08 Apr 2074	BBB
Bond 007 (EMTN)	8 years 2.125%	DE000A1ZLUN1	€ 500m	99.412%	2.125%	09 July 2022	BBB+
Bond 008 (Hybrid)	perpetual 4.000%	XS1117300837	€ 1,000m	100.000%	4.000%	perpetual	BBB
Bond 009A (EMTN)	5 years 0.875%	DE000A1ZY971	€ 500m	99.263%	0.875%	30 Mar 2020	BBB+
Bond 009B (EMTN)	10 years 1.500%	DE000A1ZY989	€ 500m	98.455%	1.5000%	31 Mar 2025	BBB+
Bond 010B (EMTN)	5 years 1.625%	DE000A18V138	€ 1,250m	99.852%	1.625%	15 Dec 2020	BBB+
Bond 010C (EMTN)	8 years 2.250%	DE000A18V146	€ 1,000m	99.085%	2.2500%	15 Dec 2023	BBB+
Bond 011A (EMTN)	6 years 0.875%	DE000A182VS4	€ 500m	99.530%	0.875%	10 Jun 2022	BBB+
Bond 011B (EMTN)	10 years 1.500%	DE000A182VT2	€ 500m	99.165%	1.5000%	10 Jun 2026	BBB+
Bond 012 (EMTN)	2 years 3M EURIBOR+0.380%	DE000A185WC9	€ 500m	100.000%	0.140% hedged	13 Sep 2018	BBB+
Bond 013 (EMTN)	8 years 1.250%	DE000A189ZX0	€ 1,000m	99.037%	1.250%	06 Dec 2024	BBB+
Bond 014A (EMTN)	5 years 0.750%	DE000A19B8D4	€ 500m	99.863%	0.750%	25 Jan 2022	BBB+
Bond 014B (EMTN)	10 years 1.750%	DE000A19B8E2	€ 500m	99.266%	1.750%	25 Jan 2027	BBB+
Bond 015 (EMTN)	8 years 1.125%	DE000A19NS93	€ 500m	99.386%	1.125%	08 Sep 2025	BBB+
Bond 016 (EMTN)	2 years 3M EURIBOR+0.350%	DE000A19SE11	€ 500m	100.448%	3M EURIBOR+0.350%	20 Nov 2019	BBB+
Bond 017A (EMTN)	6 years 0.750%	DE000A19UR61	€ 500m	99.330%	0.750%	15 Jan 2024	BBB+
Bond 017B (EMTN)	10 years 1.500%	DE000A19UR79	€ 500m	100.805%	1.500%	14 Jan 2028	BBB+
Bond 018A (EMTN)	4.75 years 3M EURIBOR+0.450%	DE000A19X793	€ 600m	100.000%	0.793% hedged	22 Dec 2022	BBB+
Bond 018B (EMTN)	8 years 1.500%	DE000A19X8A4	€ 500m	99.188%	1.500%	22 Mar 2026	BBB+
Bond 018C (EMTN)	12 years 2.125%	DE000A19X8B2	€ 500m	98.967%	2.125%	22 Mar 2030	BBB+
Bond 018D (EMTN)	20 years 2.750%	DE000A19X8C0	€ 500m	97.896%	2.750%	22 Mar 2038	BBB+
Bond 019 (EMTN)	5 years 0.875%	DE000A192ZH7	€ 500m	99.437%	0.875%	03 Jul 2023	BBB+

¹ EUR-equivalent Coupon

Acquisitions – Opportunistic but Disciplined

Company Presentation – September 2018

		Larger acquisitions (>1,000 units deal size)	Fair Value in EUR/sqm			In-place rent in EUR/sqm
ar e Y	Deal	Residential units #	TOP Locations	@ Acquisition	30.06.2018	∆	@ Acquisition	30.06.2018	∆
4 1 0	DEWAG	11,300	Berlin, Hamburg, Cologne, Frankfurt/Main	1,344	2,014	50%	6.76	7.61	13%
2	VITUS	20,500	Bremen, Kiel	807	1,334	65%	5.06	5.66	12%
5 1 0 2	GAGFAH	144,600	Dresden, Berlin, Hamburg	889	1,493	68%	5.40	6.17	14%
	FRANCONIA	4,100	Berlin, Dresden	1,044	1,727	65%	5.82	6.44	11%
	SÜDEWO	19,400	Stuttgart, Karlsruhe, Mannheim, Ulm	1,380	1,836	33%	6.83	7.34	8%
6 1 0 2	GRAINGER/Heitman	2,400	Munich, Mannheim	1,501	2,020	35%	7.09	7.74	9%
7 1	conwert (Germany & Austria)	23,400	Berlin, Leipzig, Potsdam, Wien	1,353	1,694	25%	5.88	6.25	6%
0 2	thereof Germany	21,200	Berlin, Leipzig, Potsdam	1,218	1,586	30%	5.86	6.15	5%
	thereof Austria	2,200	Vienna	1,986	2,243	13%	6.11	7.16	17%

Note: Without most recent acquisitions in 2018

Sustainable FFO 1 Growth and an Attractive Dividend Policy

¹ Rental income + EBITDA Value-add Business and Other; excluding sales effects. ² Midpoint guidance.

Conservative Valuation Levels

In-place values are still way below replacement values, in spite of accelerating valuation growth in recent years.

Note: VNA 2010 – 2014 refers to Deutsche Annington Portfolio at the time; construction costs excluding land. The land value refers to share of total fair value allocated to land. Source for market costs: Arbeitsgemeinschaft für zeitgemäßes Bauen e.V.

Company Presentation – September 2018

Vonovia location

High-influx cities ("Schwarmstädte"). For more information: http://investoren.vonovia.de/websites/vonovia/English/4050/financial-reports-_-presentations.html

VNA share price performance since IPO vs. DAX and EPRA Europe Index

Vonovia History

• Seed portfolios of today's Vonovia have origin in public housing provided by government, large employers and similar landlords with a view towards offering affordable housing.
• At beginning of last decade, private equity invested in German residential on a large scale including into what is Vonovia today (mainly Deutsche Annington and Gagfah then).
• IPO in 2013.
• Final exit of private equity in 2014.

Date	NOSH (million)	Comment
December 31, 2016	466.0
March 31, 2017	468.8	conwert acquisition
June 30, 2017	476.5	Scrip dividend
September 30, 2017	485.1	Gagfah cross-border merger
December 31, 2017	485.1
March 31, 2018	485.1
June 30, 2018	518.1	€1bn ABB in 05/2018; scrip dividend

The number of outstanding shares is always available at http://investoren.vonovia.de/websites/vonovia/English/2010/key-share-information.html

Integrated element of Vonovia's business model

• With almost 400,000 apartments throughout Germany, Vonovia is the country's leading residential real estate company. This role in the housing landscape imposes on us a particular responsibility to actively shape the development of the housing industry.
• We aim to live up to the responsibility by pursuing a continuous dialogue with our stakeholder groups, and by considering social and ecological issues in our core activities. A key priority for us is to use our business model and our holistic approach to help resolve the most urgent challenges in the housing industry and make a positive contribution to social development.

Sustainability reporting at Vonovia

• Separate Sustainability Reporting Unit at Vonovia.
• Started Sustainability Reporting in 2015 with our first sustainability report published in 2016, based on GRI G4 guidelines.
• Publication of third Sustainability Report in 2018, in accordance with the core option of the GRI standards, including the voluntary sector-specific disclosures for "Constriction and Real Estate". The report is available at: http://reports.vonovia.de/2017/sustainability-report/
• Vonovia received the EPRA Gold Award for the 2017 Sustainability Report.
• Sustainability Report for 2018 to be published in April 2019.

Achievements since last report

• Expansion of the key figures base
• Clearer definition of boundaries for CO2 calculation
• Adaptation of the structure to the requirements of the CSR guidelines implementation law
• Online only: Sustainability Report only available online

Highlights

• Vonovia achieves renovation ratio of 5%
• Achieved energy savings of more than 45% for refurbished buildings
• Annual CO2 savings of approx. 50,000 tons
• Quarters development supports good neighborhood
• Company strengthens diversity
• Trainee rate of 5.5% emphasizes high significance

"The most important thing we can do as the housing sector to tackle climate change is to upgrade our portfolio," Rolf Buch, CEO Vonovia.

In 2017, Vonovia invested >€1 bn in its properties, including maintenance. Volume of modernization ~€779 m, almost 65% above 2016.

Vonovia exceeded the German government's targets for the energy efficient renovation of housing stock: 3 % of apartments are to be modernized p.a., Vonovia has hit 5 %. Nationwide, this rate is around 1 %.

For new constructions, Vonovia considers feasibility of photovoltaics; within 2 years, volume of electricity generated by our own photovoltaic systems has grown from 0 to a total of 5,510 MWh, resulting in an annual saving of 2,900 metric tons of carbon dioxide.

We are currently working on equipping existing units with photovoltaic systems and explore further possibilities: e.g. additional use of battery storage systems, cogeneration units and corresponding e-mobility concepts for tenants. The first charging stations for

e-cars are to be built on Vonovia premises before the end of 2018.

• One of the focus points of our modernization efforts has been the Ruhr area, in particular Dortmund and Essen.
• In 2017 alone, CO2 emissions were reduced by around 23,000 metric tons due to energy efficient modernization. This corresponds to calculated energy savings of more than 45% for refurbished buildings, depending on the individual consumption (Determination of these values is based on the standards of the international Greenhouse Gas Protocol).
• The company explicitly supports the goals of the Paris Climate Protection Agreement and the German Federal Government's Climate Protection Plan – housing stock should be almost climateneutral by 2050.
• The related energy savings also result in significant benefits for the tenants through lower heating costs.

"It is our social responsibility to act sustainably in order to support requirements by the German federal government. However, we also see declining acceptance for modernization measures, in particular in cities with a shortage in housing. That is why, with our projects, we have to pay even greater attention to ensuring that there is no displacement and that people can stay in their homes. We want to provide security to our tenants."

• Vonovia is committed to good neighborhoods and actively supports initiatives to enable a peaceful and enjoyable environment for our tenants.
• One example is our cooperation with the City of Cologne, the Lukas Podolski Foundation and the non-profit youth welfare organization RheinFlanke e.V., a district in Cologne Gremberghoven which focuses on the support of young people with a special focus on immigrants.

• The overall focus is a new modern and functional sports ground. In addition, a new youth center has been created, where sports activities, career counselling, holiday programs, and handicraft courses take place.

• 33% women on Vonovia's Supervisory Board.

• 25% women on Vonovia's Management Board.
• Vonovia aims to improve compatibility of family and career. Out of 219 employees who took parental leave in 2017, more than 40% were male.
• Vonovia focuses on employees with different qualifications and backgrounds. This also includes the integration of refugees into the labor market: In 2017, 14 refugees completed on-the-job training at Vonovia, we also support young refugees through internships or by offering to initially work in supportive activities.

• Trainees at Vonovia: 5.5% of total workforce. Vonovia is above average: According to the Federal Institute for Vocational Education and Training, the number for larger companies is at 4.5%.

• While market prices are affected by general interest rate levels, there is no significant correlation.

• Other factors such as supply/demand imbalance, rental regulation, market rent growth, location of assets etc. outweigh the impact of interest rates when it comes to pricing residential real estate.
• The steep decline in interest rates (down by 760bps since 1992) is not mirrored by asset yields (down by 160bps since 1992).
• Asset yields outperformed interest rates by ca. 240bps on average since 1992 and 520bps in June 2016.

¹ Yearly asset yields vs. rolling 200d average of 10y interest rates Sources: Thomson Reuters, bulwiengesa

Three Valuation Layers with Different Volatilities

• High degree of stability and predictability of underlying business (layer 1) and portfolio valuation (layer 2) is not reflected in share price development (layer 3), as equity markets appear to apply valuation parameters that are substantially less material for Vonovia's operating performance.

Total remuneration cap

Share Holding Provision

• Mandatory share ownership

• 100% of annual fixed remuneration (excl. pension) (accumulation on a pro rata basis during first 4 years)

• FFO1 is key figure in the industry for managing the sustained operational earnings power of our business.

• Adj. NAV per share as standard figure for the value of our property assets (calculation according to EPRA best practice standards, after corrections for goodwill).
• EBITDA Sales: Measure of success of our sales activities.
• Personal targets related to individual department responsibilities or overlapping targets (e.g. integration projects).

Rationale

• LTIP plan which aims to ensure that remuneration structure focuses on sustainable corporate development.
• Relative TSR is from an investor perspective a well established and accepted performance measure, focusing on absolute share price performance and easily comparable with peers.
• Customer Satisfaction Index (CSI): Based on customer surveys and reflects how our services are perceived and accepted by our customers.
• Shareholder alignment safeguarded by (i) relative performance targets (FFO per share and NAV per share) as well as (ii) calculation method which takes actual share price performance into account.

Impressions

Optimize Apartment

Upgrade Building

Modular Construction

Modular Construction

This presentation has been specifically prepared by Vonovia SE and/or its affiliates (together, "Vonovia") for internal use. Consequently, it may not be sufficient or appropriate for the purpose for which a third party might use it.

This presentation has been provided for information purposes only and is being circulated on a confidential basis. This presentation shall be used only in accordance with applicable law, e.g. regarding national and international insider dealing rules, and must not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by the recipient to any other person. Receipt of this presentation constitutes an express agreement to be bound by such confidentiality and the other terms set out herein.

This presentation includes statements, estimates, opinions and projections with respect to anticipated future performance of Vonovia ("forward-looking statements") which reflect various assumptions concerning anticipated results taken from Vonovia's current business plan or from public sources which have not been independently verified or assessed by Vonovia and which may or may not prove to be correct. Any forward-looking statements reflect current expectations based on the current business plan and various other assumptions and involve significant risks and uncertainties and should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Any forward-looking statements only speak as at the date the presentation is provided to the recipient. It is up to the recipient of this presentation to make its own assessment of the validity of any forward-looking statements and assumptions and no liability is accepted by Vonovia in respect of the achievement of such forward-looking statements and assumptions.

Vonovia accepts no liability whatsoever to the extent permitted by applicable law for any direct, indirect or consequential loss or penalty arising from any use of this presentation, its contents or preparation or otherwise in connection with it.

No representation or warranty (whether express or implied) is given in respect of any information in this presentation or that this presentation is suitable for the recipient's purposes. The delivery of this presentation does not imply that the information herein is correct as at any time subsequent to the date hereof.

Vonovia has no obligation whatsoever to update or revise any of the information, forward-looking statements or the conclusions contained herein or to reflect new events or circumstances or to correct any inaccuracies which may become apparent subsequent to the date hereof.

This presentation does not, and is not intended to, constitute or form part of, and should not be construed as, an offer to sell, or a solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities of the Company nor shall it or any part of it form the basis of or be relied upon in connection with or act as any inducement to enter into any contract or commitment or investment decision whatsoever.

This presentation is neither an advertisement nor a prospectus and is made available on the express understanding that it does not contain all information that may be required to evaluate, and will not be used by the attendees/recipients in connection with, the purchase of or investment in any securities of the Company. This presentation is selective in nature and does not purport to contain all information that may be required to evaluate the Company and/or its securities. No reliance may or should be placed for any purpose whatsoever on the information contained in this presentation, or on its completeness, accuracy or fairness.

This presentation is not directed to or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.

Neither this presentation nor the information contained in it may be taken, transmitted or distributed directly or indirectly into or within the United States, its territories or possessions. This presentation is not an offer of securities for sale in the United States. The securities of the Company have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States. Consequently, the securities of the Company may not be offered, sold, resold, transferred, delivered or distributed, directly or indirectly, into or within in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States unless registered under the Securities Act.

Tables and diagrams may include rounding effects.