Vonovia SE

Investor Presentation • Jun 6, 2018

Company Presentation June 2018

Vonovia at a glance

• Largest European residential real estate company with ca. 400k apartments and >€20bn market cap
• Portfolio located across 15 regional urban growth markets
• Industrialized approach leverages economies of scale in a highly homogeneous asset class
• B-to-C business with 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 sustainable and growing cash flows
• Predictable top and bottom line with downside protection and upside potential
• Average apartment size of ~61 sqm
• Vacancy ~2.8% almost fully let
• ~ €1,040 million operating profit before sales (FFO 1)¹
• Dresden Essen Berlin Dividend policy: approx. 70% of FFO 1

Vonovia location

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

¹ Guidance mid-point for 2018.

Company Presentation June 2018

Proven 4+1 Strategy is Evolving into 4+2 Strategy

Reputation & Customer Satisfaction
al n o ti di	Property Management 1	Systematic optimization of operating performance and Mergers & 5 core business productivity through leveraging scaling Acquisitions effects
a r T e v ti a v o n n I	Financing 2 Portfolio Management 3	High degree of standardization and industrialization throughout the entire organization Continuous review of on- off-market opportunities to lever economies of scale and Ensure well-balanced financing mix and maturity apply strategic pillars 1-4 to a profile with low financing costs, investment grade growing portfolio credit rating and adequate liquidity at all times All acquisitions must meet the	and
		Fast and unfettered access to equity and debt capital stringent acquisition criteria markets at all times Portfolio optimization by way of tactical acquisitions and non-core/non-strategic disposals to ensure
		6 European Activities exposure to strong local markets Pro-active development of the portfolio through investments to offer the right products in the right Building on existing German markets and on a long-term basis operations
	Value-add Business 4	Measured approach Expansion of core business to extend the value chain by offering additional services and products that are Excellent partners for directly linked to our customers and/or the properties cooperation Insourcing of services to ensure maximum process Leveraging know how, management and cost control experience and best practices
	Core Strategies Opportunistic Strategies

Core Strategies with Impeccable Track Record

Core Strategies with Impeccable Track Record…

• More than 51k non-core units sold since IPO (28% of IPO portfolio volume)
• Number of portfolio locations reduced by 29%; portfolio now concentrated across 15 growth regions
• Investment program grown from €71m for 2013 to €1bn for 2018 and annually going forward

Investment track record

• Insourcing of services to increase customer satisfaction and extend the value chain
• Leveraging the B-to-C nature of the business and the long-term customer relationship
• Most dynamic and innovative part of the business

… Leading to Sustainable FFO 1 Growth and an Attractive Dividend Policy

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

• Economies of scale evident in cost per average unit.
• Incremental cost per average unit for new acquisitions tend to be substantially lower.

¹Peer values based on own calculations on the basis of peer disclosure.

Smooth Maturity Profile with Diverse Funding Mix

¹ incl. BUWOG loans assumed as mortgages. 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 3.6%. ⁴ all numbers incl. BUWOG. ⁵ excl. Equity Hybrid.

Substantial Reduction of Portfolio Locations

Vonovia location

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

Investment Program on an Increasingly Broader Footing

		Neighborhood Development	Full-scale approach to developing entire areas in a city, taking economic and social criteria into account.
n o uti vol E m nt Progra e m vest n I		Space Creation	New constructions between existing buildings and additional floors on buildings and on land that we already own.
		New Initiatives	Primarily bathrooms and kitchens modernized upon tenants' initiatives as well as replacement of old heating systems with modern installations.
		Upgrade Building (UB)	Energy-efficient modernization of the building shell and communal areas (heat insulation for facades and roofs, windows, heating systems).
		Optimize Apartment (OA)	Refurbishment of turnover apartments (bathroom, flooring, wiring), usually senior-friendly modernization.

Investment Program Evolution

• The investment program has not only grown in size but also in complexity.
• While a yield-to-cost calculation is appropriate for investments that generate relatively quick pay-back periods, such as OA or UB, the larger investments space creation and neighborhood development generate value only over a longer period of time.
• For these types of projects, an IRR calculation is more adequate and after using it for internal reporting purposes already from the program inception, we will now use this metric in the external reporting as well.
• The target IRR for the overall investment program is >8%.
• OA and UB will continue to be measured against a 7% yield-to-cost target.

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 ~€5.3 per share (~14% on top of Q1 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) 57.0 37.6	~120 102.1
23.6 2014 2015 2016	2017 2018(E)

Acquisitions – Opportunistic but Disciplined

Company Presentation June 2018

Increased Guidance

• All guidance elements are excluding BUWOG, except for FFO 1, FFO 1 per share and dividend.
• For H1 results on Aug. 31 we will present an update on all guidance elements including BUWOG.
• Based on an apples-to-apples definition, we estimate BUWOG's FFO 1 contribution for 2018 to be €30m.

	2017 Actuals	2018 Guidance Initial (Nov. 2017)	2018 Guidance Update (May 2018)
Organic rent growth (eop)	4.2%	4.6% - 4.8%	 4.6% - 4.8%
Vacancy (eop)	2.5%	<2.5%	 <2.5%
Rental Income (€m)	1,667.9	1,660 - 1,680	1,670 - 1,690
FFO1 (€m)	920.8	960 - 980	1,030 – 1,050 (1,000 – 1,020 VNA stand-alone)
FFO1 (€/share, eop)	1.90	2.022 1.98 -	2.162 2.12 - 2.102 VNA stand-alone) (2.06 –
Maintenance (€m)	346.2	~360	 ~360
Modernization & Investments (€m)	778.6	~1,000	 ~1,000
Privatization (number of units)	2,608	~2,300	 ~2,300
FV step-up (Privatization)	32.7%	~30%	 ~30%
Non-core (number of units)	11,780	opportunistic	 opportunistic
FV step-up (Sell Portfolio)	7.9%	>0%	~5%
Dividend/share	€1.321	~70% of FFO1	~70% of FFO1

¹ Proposed to the 2018 Annual General Meeting. ² Based on 485.1m of shares outstanding.

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.

Disclaimer

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.