Vonovia SE — Call Transcript 2016

Aug 2, 2016

H1 2016 Earnings Call August 2, 2016 Rolf Buch, CEO Dr. A. Stefan Kirsten, CFO

Highlights

Strong operating performance and synergy contributions from prior acquisitions result in successful first half 2016

• In-place rent of €5.89 (+5.6% y-o-y). L-f-l rent growth of 2.8% y-o-y
• Adjusted EBITDA Operations of €558.1m or €1,587 per unit (+11.5% y-o-y)
• FFO 1 of €387.8m or €0.83 per share (up 16.6% on a per-share basis)

Pro-active portfolio management has led to quality improvements through modernization investments, disposals and acquisitions since IPO and especially over the last 12 months

• Strategic Cluster increased by ~23k units y-o-y
• ~28k units sold from the Non-core/Non-strategic Clusters y-o-y
• In-place rent of €5.89, up 5.6% y-o-y driven by
• ~3.1% market development and modernization investments in Strategic Cluster
• ~1.2% disposals
• ~1.3% acquisitions
• FV/sqm up 14.1%

2016 guidance increase following H1 operational excellence and reflecting strong momentum

• L-f-l rent growth 3.0% 3.2%
• Rental income €1,530m €1,550m
• Vacancy rate ~2.5%
• FFO1 €740m €760m (€1.59 €1.63 per share; +24% y-o-y)
• DPS €1.05 unchanged for now. We will revisit our DPS guidance with our 9M results; depending on acquisition activity, we will measure DPS in line with our stated dividend policy.

H1 2015 per share data is TERP-adjusted

		Reputation & Customer Satisfaction
al n o diti Tra	Property Management 1 Strategy	In-place rent CAGR of 3.5% (2013 – H1 2016) Vacancy rate reduced by 100bps (2013 – 2016E) Cost per unit reduced by ca. 30% (2013 – 2016E)
	2 Financing Strategy	BBB+ investment grade rating with >50% unencumbered assets and diverse funding mix Established the company as a first-class frequent issuer with very competitive funding costs	Acquisition 5 Strategy
	Portfolio Management 3 Strategy	Disposal of ~36k non-core/non-strategic units (2013 – H1 2016) Investment volume of more than €1bn (2013 – 2016E)	Acquisition of more than 200k units in 6 transactions
e v ati v o n n I	4 Extension Strategy	Adj. EBITDA Extension was €0.0m in 2013 and will grow to more than €50m by year-end 2016(E)

Strong Development of KPIs

			H1 2016	H1 2015	Delta
Overall in-place rent growth is evidence of	In-place rent (eop)	€/month/sqm	5.89	5.58	5.6%
successful portfolio	In-place rent l-f-l (eop)	€/month/sqm	5.81	5.65	2.8%
management	Vacancy rate (eop)	%	2.8	3.5	-70bps
	Cost per Unit	€	277	316	-12.3%
	Rental income	€m	774.7	628.0	23.4%
+11.5% per unit (€1,587 vs. €1,423)	Adj. EBITDA Operations	€m	558.1	426.2	30.9%
	Rental	€m	535.6	406.0	31.9%
	Extension	€m	26.0	21.1	23.2%
	Other	€m	-3.5	-0.9	>100%
	FFO 1	€m	387.8	269.0	44.2%
+22.8% per unit (€1,103 vs. €898)	FFO 1 per share (eop NOSH)	€	0.83	0.71	16.6%
	FFO 1 per share (avg. NOSH)	€	0.83	0.79	5.9%
	AFFO	€m	358.7	229.3	56.4%
	Adj. EBITDA Sales	€m	46.5	19.5	>100%
	Adj. EBITDA (Total)	€m	604.6	445.7	35.7%
	FFO 2	€m	409.3	283.8	44.2%
+2.9% per sqm (€1,085 vs. €1,054)
			June 30, 2016	Dec. 31, 2015	Delta
	Fair value of real estate portfolio	€m	23,794.1	24,157.7	-1.5%
Accounting for €0.94 dividend paid out in	EPRA NAV	€/share	29.34	30.02	-2.3%
May 2016, NAV is	Adj. EPRA NAV	€/share	23.50	24.19	-2.8%
stable y-o-y. Portfolio valuation at	LTV	%	47.4	46.9	+50bps
year end	Dividend paid	€m	438.0	276.2	€161.8m

H1 2015 per share data is TERP-adjusted

Growing EBITDA and EBITDA Margins

• Adj. EBITDA Operations margin of 71.9 % in H1 2016, up from 67.9 % in H1 2015
• Expensed vs. capitalized maintenance varies between companies and is a major swing factor in the EBITDA margin, which is why Vonovia reports EBITDA margin incl. and excl. maintenance
• Excluding expensed maintenance and including the full platform costs, the Adj. EBITDA margin was 87.4% after 84.9% in H1 2015

Re-active Maintenance and Pro-active Modernization

• Re-active maintenance of €148.3m in H1; ~€340m expected for the full year
• Pro-active modernization investments of €147.0m, up 25% and fully on track to successfully invest the 2016 target volume of €470m-€500m for
• Optimize Apartments
• Upgrade Buildings and
• New Initiatives and Space Creation through modular, serial building to add affordable housing space in strained markets with structural supply shortage and sustainably growing demand

€m	H1 2016	H1 2015	Delta	€/sqm	H1 2016	H1 2015	Delta
Expenses for maintenance	119.0	107.1	11.1%	Expenses for maintenance	5.42	5.72	-5.2%
Capitalized maintenance	29.3	40.1	-26.9%	Capitalized Maintenance	1.34	2.14	-37.5%
Total	148.3	147.2	0.7%	Total	6.76	7.86	-14.0%
Modernization investments	147.0	118.0	24.6%	Modernization investments	6.70	6.29	6.5%

FFO per Share Up 16.6% y-o-y

• Adj. EBITDA Operations growth of more than 30% and only marginally higher interest expenses result in FFO growth of more than 44% in absolute numbers and 16.6% on a per-share basis
• Prior-year current income tax numbers broken down between Operations and Sales

€m (unless indicated otherwise)	H1 2016	H1 2015	Delta
Adj. EBITDA Operations	558.1	426.2	30.9%
FFO interest expense	-162.8	-152.7	6.6%
Current income tax (Operations)	-7.5	-4.5	66.7%
FFO 1	387.8	269.0	44.2%
of which attributable to shareholders	362.3	246.4	45.8%
of which attributable to hybrid investors	20.0	12.8	56.3%
of which attributable to minorities	5.5	9.8	-12.2%
Capitalized maintenance	-29.1	-39.7	-26.7%
AFFO	358.7	229.3	56.4%
Current income tax (Sales)	-25.0	-4.7	>100%
Adjusted EBITDA Sales	46.5	19.5	>100%
FFO 2	409.3	283.8	44.2%
FFO 1 € / share (eop NOSH)	0.83	0.71	16.6%
AFFO € / share (eop NOSH)	0.77	0.61	26.5%

H1 2015 per share data is TERP-adjusted

EPRA NAV Impacted by Dividend Payout

No portfolio revaluation in H1

• Full portfolio valuation at year end indications suggest substantial yield compression on the back of growing transaction multiples in the market, increasing margins in our own sales programs and improved market rent growth
• Accounting for €0.94 dividend (€438m) paid in May 2016 the NAV is stable

€m (unless indicated otherwise)	June 30, 2016	Dec. 31, 2015	Delta
Equity attributable to Vonovia's shareholders	10,305.5	10,620.5	-3.0%
Deferred taxes on investment properties and assets held for sale	3,245.0	3,241.2	0.1%
Fair value of derivative financial instruments1	161.7	169.9	-4.8%
Deferred taxes on derivative financial instruments	-40.5	-43.4	-6.7%
EPRA NAV	13,671.7	13,988.2	-2.3%
Goodwill	-2,718.9	-2,714.7	0.2%
Adj. EPRA NAV	10,952.8	11,273.5	-2.8%
EPRA NAV €/share	29.34	30.02	-2.3%
Adj. EPRA NAV €/share	23.50	24.19	-2.8%
1 Adjusted for effects from cross currency swaps

H1 2016 Earnings Call

Seasonal dividend effect

€m (unless indicated otherwise)	June 30, 2016	Dec. 31, 2015	Delta
Non-derivative financial liabilities	15,058.6	14,939.9	0.8%
Foreign exchange rate effects	-161.6	-179.4	-9.9%
Cash and cash equivalents	-3,109.9	-3,107.9	0.1%
Net debt	11,787.1	11,652.6	1.2%
Sales receivables	-266.8	-330.0	-19.2%
Additional loan amount for outstanding acquisitions	---	134.9	n/a
Adj. net debt	11,520.3	11,457.5	0.6%
Fair value of real estate portfolio	23,794.1	24,157.7	-1.5%
Fair value of outstanding acquisitions	---	240.0	n/a
Shares in other real estate companies	514.4	13.7	>100%
Adj. fair value of real estate portfolio	24,308.5	24,411.4	-0.4%
LTV	47.4%	46.9%	+50 bps

KPIs	June 30, 2016	Target
LTV	47.4%	Mid-to low forties
Unencumbered assets in %	44%	≥50%
Fixed/hedged debt ratio	99%
Global ICR (YTD)	3.7x	Ongoing optimization
Financing cost	2.5%	with most economic funding
Weighted avg. maturity	6.0 years

EMTN Issuance Costs - Economies of Scale

• We have managed to establish ourselves as a first class frequent issuer on the capital markets since our IPO.
• In the most recent EMTN issuance we were even able to change market practice by negotiating a flat fee, i.e. irrespective of the tenor, which resulted in the lowest cost per €100m issuance so far.
• 4 of our bonds so far have been purchased through the ECB's Corporate Sector Purchase Program.

Cost per €100m (1)	€m
April 2014 Hybrid	1.21
Dec 2014 Hybrid	1.00
EMTN 2013	0.79
Yankee	0.78
Eurobond 2013	0.63
EMTN 2014	0.56
EMTN March 2015	0.46
EMTN Dec 2015	0.46
EMTN June 2016	0.39

(1) Excluding contingency; including some cost estimates for the most recent transactions as not all bills have been fully settled yet.

Pro-active Portfolio Management

Including the full impact of acquisitions, modernization investments and non-core/nonstrategic sales, our action-driven portfolio management strategy delivered compelling results.

June 30, 2015	Residential units	In-place rent (€/sqm)	Vacancy rate	Fair value (%)	Fair value (€/sqm)	Multiple on in-place rent
STRATEGIC	278,366	5.72	2.5%	84%	1,006	14.7
NON-CORE / NON-STRATEGIC	48,373	4.71	8.4%	9%	592	11.3
PRIVATIZE	21,477	5.60	4.7%	7%	1,034	16.0
TOTAL	348,216	5.58	3.5%	100%	951	14.4

June 30, 2016	Residential units	In-place rent (€/sqm)	Vacancy rate	Fair value (€bn)	Fair value (€/sqm)	Multiple on in-place rent
STRATEGIC	301,756	5.97	2.4%	91%	1,114	15.6
NON-CORE / NON-STRATEGIC	20,406	4.69	7.9%	3%	574	11.1
PRIVATIZE	18,280	5.87	4.5%	6%	1,172	17.1
TOTAL	340,442	5.89	2.8%	100%	1,085	15.5

• Strategic Cluster
• grew by more than 23k units
• vacancy rate of 2.4%
• FV of 1,114 per sqm

Total Portfolio

• in-place rent up 5.6% overall (~3.1% Strategic Cluster, ~1.2% Disposals and ~1.3% Acquisitions)
• FV per sqm +14.1%
• multiple expansion by 1.1x

Note: Vonovia's standard clusters have been aggregated for the purpose of highlighting the different developments between the strategic and the non-strategic parts of the portfolio. "Strategic" includes the Clusters Operate, Upgrade Buildings and Optimize Apartments. Please see page 35 for a full break-down of the individual clusters.

Growing Investment Program Well on Track

• Sustainable and growing investment program at attractive yields of at least 7%
• 75% of total units covered by modernization program 2013-2016 in 25 cities across Germany. It's not just the region – it's the right project in the right region!
• Growing contribution from new initiatives (e.g. heating system upgrades, bathrooms)
• Increasing space creation volumes (guidance depends on timely granting of construction permits)
• Plenty of opportunity within current portfolio more than 50% of total fair value in UB and OA clusters

Adj. EBITDA Sales more than Doubled

• Slightly higher privatization volume and fair value step-up y-o-y
• Successful Non-core/Non-strategic sales mainly through portfolio sale to LEG (13.5k) in Q1 and three other block sales (ca. 2.9k units) in Q2

€m (unless indicated otherwise)	H1 2016	H1 2015	H1 2016	H1 2015	H1 2016	H1 2015
	Privatization		Non-core/Non-strategic		Total
No. of units sold	1,441	1,221	17,694	2,829	19,135	4,050
Income from disposal	133.3	123.6	717.2	97.8	850.5	221.4
Fair value of disposal	-99.1	-92.8	-693.1	-97.0	-792.2	-189.8
Adj. profit from disposal	34.2	30.8	24.1	0.8	58.3	31.6
Fair value step-up (%)	34.5%	33.2%	3.5%	0.8%

Organic Growth from Extension Business

Adj. EBITDA Extension comprises
Our own craftsmen's organization (all of Vonovia's maintenance and modernization work is performed or coordinated by DTGS)
Our organization for the maintaining of our properties' outside facilities and green areas
The provision of cable television to our tenants
Condominium management for our own apartments and for third parties
Third-party property management Metering services for water and heating
consumption Insurance services for our own apartments and for
third parties

• Extension business with increasing significance and compelling growth rates
• Vonovia, through its subsidiaries, now employs 4,146 craftsmen, caretakers and gardeners (+24% y-o-y)
• Subsidiary for 3rd-party and condo management now with 22 local offices in Germany managing a total of 71k units
• Multimedia service contracts now rolled out to 179k units (+63.2% since year-end 2015)

€m	H1 2016	H1 2015	Delta
Income		175.2	90.4%
of which external		22.6	>100%
of which internal		152.6	81.5%
Operating expenses		-154.1	99.6%
Adj. EBITDA Extension		21.1	23.2%

H1 2016 Earnings Call

Pro-active Portfolio Management between 2013 and 2016

Modernization

More than €1bn invested in value-enhancing modernization in the context of Upgrade Building and Optimize Apartment Strategies

Disposal

Sale of ~36k non-core and non-strategic assets (2013- 2016ytd) with below-average quality, location or potential

Acquisition

Acquisition of more than 200k units (2013-2016ytd) in attractive regions and complimentary to the existing portfolio

Pro-active portfolio management has resulted in material improvements in quality of assets and locations.

Well-positioned to benefit from strong underlying fundamentals of German residential market.

Guidance Increase on the Back of a Strong H1

	2015 actuals	Initial Guidance for 2016 (in Nov. '15)	Updated Guidance for 2016 (in May '16)	Guidance for 2016 (new)	Depends on fluctuation
L-f-l rental growth (eop)	2.9%	2.8-3.0%	2.8-3.0%	3.0-3.2%	and modernization completions and will
Vacancy (eop)	2.7%	~3%	~2.7%	~2.5%	largely impact rental income in 2017
Rental Income (€m)	1,415	1,500-1,520	1,520-1,540	1,530-1,550
FFO1 (€m)	608	690-710	720-740	740-760
FFO1/share (eop NOSH)	€1.30	€1.48-1.52	€1.55-1.59	€1.59-1.63	Yield compression not included in this guidance but strong
EPRA NAV/share (eop)	€30.02	€30-31	€30-31	€30-31	indications for substantial yield
Adj. NAV/share (eop)	€24.19	€24-25	€24-25	€24-25	compression at year end
Maintenance (€m)	331	~330	~330	~340
Modernization (€m)	356	430-500	430-500	470-500	2015 included mining homes as a one-off; adjusted for that
Privatization (#)	2,979	~2,400	~2,400	~2,400	Privatization volume is stable but with higher
FMV step-up (Privatization)	30.5%	~30%	30%	>35%	margins
Non-core (#)	12,195	opportunistic	opportunistic	opportunistic	DPS will be revisited
FMV step-up (Non-Core)	9.2%	~0%	~0%	~5%	after Q3; depending on acquisition activity,
Dividend/share	€0.94	~70% of FFO1	€1.05	€1.051 (+12% y-o-y)	we will measure our DPS in line with stated dividend policy

¹Current expectation for proposal to the 2017 Annual Shareholder Meeting

• Operational excellence in the first half of 2016 with good visibility of growing momentum Action-driven portfolio management is clearly bearing fruit and positively impacting KPIs Second guidance increase underlines strength of business strategy and execution Strong cash flow profile and stability of the business model are sought-after assets especially in volatile times
• Outlook on 9M Reporting on November 3
• Final review of 2016 guidance incl. dividend
• Range for expected yield compression in 2016
• First guidance for 2017
• Breakdown of rent growth development by local markets

Rene Hoffmann Head of Investor Relations Vonovia SE Philippstr. 3 44803 Bochum Germany

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

Contact Financial Calendar

September 7-13	Management Roadshow USA
September 14	BAML Global Real Estate Conference, NYC
September 19	Berenberg / Goldman Sachs German Corporate
	Conference, Munich
September 20	Baader Investment Conference, Munich
October 5	IR Roadshow, Poland
October 12-13	IR Roadshow, Scandinavia
November 3	Interim results 9M 2016
November 4-11	Management Roadshow, Europe
November 30	UBS Global Real Estate CEO/CFO Conference, London
March 7	FY 2016 results
May 9	Interim results Q1 2017
May 16	Annual General Meeting
August 2	Interim results 6M 2017
November 8	Interim results 9M 2017

APPENDIX

H1 2016 Earnings Call

Action-driven Portfolio Improvement

• More than 50% of current portfolio in Upgrade Buildings and Optimize Apartments Cluster offer significant investment potential for sustainable organic growth
• Difference in KPIs of Strategic and Non-strategic/Non-core Clusters underline strength of Vonovia's core portfolio and show potential of the ongoing portfolio improvement through disposals

June 30, 2016	Residential Units	In-place rent	Vacancy Rate	Fair value	Fair value	Multiple on in-place rent
		(€/sqm)	(%)	(€bn)	(€/sqm)
Operate	125,563	5.95	2.4%	8.7	1,066	14.8
Upgrade buildings	102,760	5.85	2.5%	7.0	1,104	15.9
Optimize apartments	73,433	6.16	2.2%	5.7	1,212	16.8
Subtotal Strategic Clusters	301,756	5.97	2.4%	21.5	1,114	15.6
Privatize	18,280	5.87	4.5%	1.5	1,172	17.1
Non-strategic	12,453	4.78	7.3%	0.5	596	11.1
Non-core	7,953	4.55	9.0%	0.3	541	11.0
Total	340,442	5.89	2.8%	23.7	1,085	15.5

EBITDA

Bridge to Adjusted EBITDA (€m)	H1 2016	H1 2015	Change (%)
Profit for the period	147.9	84.9	74.2
Net interest result	276.1	237.1	16.4	EBITDA increase mainly
Income taxes	109.9	59.3	85.3	driven by rental business
Depreciation	10.0	4.8	108.3
Net income from fair value adjustments of investment properties	-	-	-
EBITDA IFRS	543.9	386.1	40.9	Increase of adjusted EBITDA
Non-recurring items	49.1	60.2	-18.4	Sales mainly due to higher
Total period adjustments from assets held for sale	21.1	-0.2	>100%	Non-core sales volume,
Income from investments in other real estate companies	-9.5	-0.4	>100%	higher Non-core step-ups and higher step-ups in
Adjusted EBITDA	604.6	445.7	35.7	Privatization
Adjusted EBITDA Sales	-46.5	-19.5	>100%
Adjusted EBITDA Other	3.5	0.9	>100%	Increase of adjusted EBITDA
Adjusted EBITDA Extension	-26.0	-21.1	23.2	Extension reflects our
= Adjusted EBITDA Rental	535.6	406.0	31.9	expansion strategy to the extent they are not accounted
Adjusted EBITDA Extension	26.0	21.1	23.2	for under rental income
Adjusted EBITDA Other	-3.5	-0.9	>100%
Interest expense FFO	-162.8	-152.7	6.6
Current income taxes FFO 1*	-7.5	-4.5	66.7
=FFO 1	387.8	269.0	44.2
Capitalised maintenance	-29.1	-39.7	-26.7
= AFFO	358.7	229.3	56.4	Adjusted EBITDA Rental
Current income taxes Sales*	-25.0	-4.7	na	reflects acquisitions as well
FFO 2 (FFO incl. Adjusted EBITDA Sales/current income taxes sales)	409.3	283.8	44.2	as operational performance
FFO 1 per share in €**	0.83	0.71	16.6
AFFO per share in €**	0.77	0.61	26.5
Number of shares	466,001	358,462	30.0

H1 2015 per share data is TERP-adjusted

H1 2016 Earnings Call

€m	H1 2016	H1 2015	Change (%)	Increase mainly acquisition-related,
Income from property letting	1,100.0	913.8	20.4	additionally in-place rent on a like-for-like
Other income from property management	19.4	14.0	38.6	basis increased by 2.8%; additionally vacancy rate decreased by 0.7pp
Income from property management	1,119.4	927.8	20.7
Income from disposal of properties	850.5	221.4	284.1
Carrying amount of properties sold	-830.4	-204.8	305.5	Increase due to higher Non-core Sales volume, including LEG portfolio sale of
Revaluation of assets held for sale	17.0	15.2	11.8	13,570 units in Q1 and 3 portfolio sales of
Profit on disposal of properties	37.1	31.8	16.7	total 2,913 units in Q2
Net income from fair value adjustments of investment properties	-	-	-
Capitalized internal expenses	125.0	65.3	91.4	Increase due to in-sourcing effect of
Cost of materials	-506.6	-425.4	19.1	craftsmen organization and larger volume
Personnel expenses	-184.6	-138.1	33.7	of maintenance and modernization work
Depreciation and amortisation	-10.0	-4.8	108.3
Other operating income	49.8	36.9	35.0	Ramp-up from 5,877 to 6,909 employees
Other operating expenses	-106.4	-113.2	-6.0	leads to increased personnel expenses
Financial income	21.6	2.7	>100	which primarily result from TGS growth
Financial expenses	-287.5	-238.8	20.4
Earnings before tax	257.8	144.2	78.8
Income taxes	-109.9	-59.3	85.3	Increase mainly driven by issuing EMTN
Profit for the period	147.9	84.9	74.2	Bond of €3.0bn in December 2015
Attributable to:
Vonovia's shareholders	110.0	60.8	80.9
Vonovia's hybrid capital investors	14.8	14.8	0.0
Non-controlling interests	23.1	9.3	148.4
Earnings per share (basis and diluted) in €	0.24	0.19	24.2

Balance Sheet (1/2)

€m	June 30, 2016	December 31, 2015	Change (%)
Intangible Assets	2,741.7	2,724.0	0.6
Property, plant and equipment	84.2	70.7	19.1
Investment properties	23,695.9	23,431.3	1.1	Increase mainly due to the acquisition and valuation of
Financial assets	710.8	221.7	>100%	Deutsche Wohnen shares
Other assets	16.4	158.5	-89.7
Income tax receivables	0.1	0.1	0.0
Deferred tax assets	71.3	72.3	-1.4
Total non-current assets	27,320.4	26,678.6	2.4
Inventories	5.1	3.8	34.2
Trade receivables	286.3	352.2	-18.7
Financial assets	-	2.0	-100.0
Other assets	141.3	113.4	24.6
Income tax receivables	23.9	23.1	3.5
Cash and cash equivalents	3,109.9	3,107.9	0.1	Decrease is due to the sale
Assets held for sale	54.1	678.1	-92.0	of 13,570 units to LEG in Q1
Total current assets	3,620.6	4,280.5	-15.4
Total assets	30,941.0	30.959.1	-0.1

Balance Sheet (2/2)

€m	June 30, 2016	December 31, 2015	Change (%)
Subscribed capital	466.0	466.0	0.0
Capital reserves	5,891.4	5,892.5	0.0
Retained earnings	3,939.3	4,309.9	-8.6	Increase mainly result from
Other reserves	8.8	-47.9	>100	the valuation of the Deutsche Wohnen shares
Total equity attributable to Vonovia's shareholders	10,305.5	10,620.5	-3.0
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	11,326.9	11,622.1	-2.5
Non-controlling interests	271.4	244.8	10.9
Total equity	11,598.3	11,866.9	-2.3
Provisions	651.7	612.9	6.3
Trade payables	0.8	0.9	-11.1
Non-derivative financial liabilities	14,120.2	13,951.3	1.2
Derivatives	139.3	144.5	-3.6
Liabilities from finance leases	94.4	94.9	-0.5
Liabilities to non-controlling interests	39.4	46.3	-14.9
Other liabilities	27.6	25.9	6.6
Deferred tax liabilities	2,587.2	2,528.3	2.3
Total non-current liabilities	17,660.6	17,405.0	1.5
Provisions	414.3	429.5	-3.5
Trade payables	94.5	91.6	3.2
Non-derivative financial liabilities	938.4	988.6	-5.1
Derivatives	54.7	58.8	-7.0
Liabilities from finance leases	4.7	4.4	6.8
Liabilities to non-controlling interests	16.0	9.8	63.3
Other liabilities	159.5	104.5	52.6
Total current liabilities	1,682.1	1,687.2	-0.3
Total liabilities	19,342.7	19,092.2	1.3
Total equity and liabilities	30,941.0	30,959.1	-0.1

H1 2016 Earnings Call

Corporate Investment grade rating as of 2015-09-30

Rating agency	Rating	Outlook	Last Update
Standard & Poor's	BBB+	Stable	10 May 2016

Bond ratings as of 2015-09-30

	ISIN	Amount	Issue price	Coupon	Final Maturity Date	Rating
3 years 2.125%					25 July 2016(2)
Euro Bond	DE000A1HNTJ5	€ 700m	99.793%	2.125%		BBB+
6 years 3.125%	DE000A1HNW52	€ 600m	99.935%	3.125%	25 July 2019	BBB+
Euro Bond
4 years 3.200%	144A: US25155FAA49	USD 750m	100.000%	3.200%	2 Oct 2017	BBB+
Yankee Bond	Reg S: USN8172PAC88			(2.970%)(1)
10 years 5.000%	144A: US25155FAB22	USD 250m	98.993%	5.000%	2 Oct 2023	BBB+
Yankee Bond	Reg S: USN8172PAD61			(4.580%)(1)
8 years 3.625%	DE000A1HRVD5	€ 500m	99.843%	3.625%	8 Oct 2021	BBB+
EMTN (Series No. 1)
60 years 4.625%	XS1028959671	€ 700m	99.782%	4.625%	8 Apr 2074	BBB
Hybrid Bond
8 years 2.125%	DE000A1ZLUN1	€ 500m	99.412%	2.125%	9 July 2022	BBB+
EMTN (Series No. 2)
perpetual 4%	XS1117300837	€ 1,000m	100.000%	4.000%	perpetual	BBB
Hybrid Bond
5 years 0.875% EMTN (Series No. 3)	DE000A1ZY971	€ 500m	99.263%	0.875%	30 Mar 2020	BBB+
10 years 1.500%
EMTN (Series No. 4)	DE000A1ZY989	€ 500m	98.455%	1.5000%	31 Mar 2025	BBB+
2 years 0.950%+3M EURIBOR				0.950%+3M EURIBOR
EMTN (Series No. 5)	DE000A18V120	€ 750m	100.000%	(0.835% hedged)	15 Dec 2017	BBB+
5 years 1.625%
EMTN (Series No. 6)	DE000A18V138	€ 1,250m	99.852%	1.625%	15 Dec 2020	BBB+
8 years 2.250%
EMTN (Series No. 7)	DE000A18V146	€ 1,000m	99.085%	2.2500%	15 Dec 2023	BBB+
6 years 0.875%
EMTN (Series No. 8)	DE000A182VS4	€ 500m	99.530%	0.875%	10 Jun 2022	BBB+
10 years 1.500%
EMTN (Series No. 9)	DE000A182VT2	€ 500m	99.165%	1.5000%	10 Jun 2026	BBB+
(1) EUR-equivalent re-offer yield (2) Repaid on July 25

Bond KPIs	Covenant	Level	Actual
	LTV	<60%	49%
	Total Debt / Total Assets Secured LTV
	Secured Debt / Total Assets	<45%	20%
	ICR LTM1 EBITDA / LTM Interest Expense	>1.80x	3.40x
	Unencumbered Assets
	Unencumbered Assets / Unsecured Debt	>125%	200%

Rating KPIs	Covenant	Level (BBB+)
	Debt to Capital
	Total Debt / Total Equity + Total Debt	<60%
	ICR
	LTM1 EBITDA / LTM Interest Expense	>1.80x

¹ LTM = last 12 months

Name	Amount	Coupon	Contractual Maturity
German Residential Funding 2013-1 Limited (irrevocable commitment to repay in full at next IPD on Aug. 22, 2016)	€ 1,797m	2.80%	22 Aug 2018
German Residential Funding 2013-2 Limited	€ 607 m	2.78%	27 Nov 2018
Taurus 2013 (GMF1) PLC	€ 1,027 m	3.35%	21 May 2018

Expected prepayment fees for early CMBS redemption (€m)
IPD	GRF-1	GRF-2	WOBA
Aug 2016	26.5	21.5	10.6
Nov 2016		9.5	6.7
Feb 2017		7.2	2.8
May 2017		5.0	1.4
Aug 2017		2.7	0.1
Nov 2017		1.1	0.0
Feb 2018		0.4	0.0
May 2018		0.0	0.0
Aug 2018		0.0	na
Nov 2018		0.0	na

Hedge break costs not considered.

Values may differ in case of deviation from sales plan.

Portfolio KPIs by Top 25 Cities

City	Residential	In-place rent	Vacancy rate	Vacancy rate	Share rent
	units	(€/sqm)	June 30, 2016	June 30, 2015	controlled
Dresden	37,893	5.37	2.3%	2.8%	0.0%
Berlin	30,495	5.91	1.5%	1.4%	8.7%
Dortmund	19,408	5.16	2.7%	2.9%	13.9%
Essen	12,109	5.41	5.1%	4.9%	15.1%
Kiel	11,970	5.40	1.5%	1.7%	32.3%
Frankfurt am Main	11,686	7.82	0.8%	1.1%	12.8%
Bremen	11,270	5.26	3.8%	4.1%	23.2%
Hamburg	10,969	6.57	1.4%	0.9%	15.5%
Bochum	7,513	5.49	2.5%	2.9%	9.4%
Hannover	7,190	6.08	2.3%	2.1%	21.9%
Köln	6,403	7.18	1.5%	1.1%	10.3%
Duisburg	5,524	5.23	3.9%	5.3%	3.4%
München	5,480	7.17	1.0%	0.8%	40.7%
Bonn	5,172	6.47	2.2%	1.8%	25.8%
Stuttgart	4,641	8.14	1.7%	1.2%	25.0%
Bielefeld	4,628	5.06	2.7%	2.5%	34.2%
Heidenheim an der Brenz	3,955	6.05	4.8%	5.8%	9.0%
Osnabrück	3,915	5.62	2.7%	4.4%	17.2%
Gelsenkirchen	3,861	4.94	5.4%	7.3%	7.6%
Düsseldorf	3,534	7.34	2.2%	2.7%	19.6%
Braunschweig	3,496	5.54	1.6%	0.4%	0.3%
Gladbeck	3,127	5.17	3.0%	3.2%	9.1%
Zwickau	3,106	4.28	10.6%	11.3%	0.0%
Herne	2,908	5.13	2.6%	5.0%	6.3%
Mannheim	2,747	6.69	4.1%	2.4%	8.5%
Subtotal TOP 25	223,000	5.87	2.5%	2.9%	13.0%
Remaining cities	117,442	5.92	3.4%	4.6%	13.9%
Total	340,442	5.89	2.8%	3.5%	13.3%

Note: Residential portfolio only

H1 2016 Earnings Call page 31

Valuation KPIs by Top 25 Cities

City	Fair value	Share	Fair Value	Annualized in	Multiple
		in terms of FV		place rent (€m)
	(€m)		(€/sqm)	June 30, 2016	(in-place rent)
Dresden	2,113	8.9%	928	144.8	14.6
Berlin	2,568	10.8%	1,305	140.1	18.3
Dortmund	979	4.1%	818	73.3	13.4
Essen	633	2.7%	810	49.3	12.8
Kiel	615	2.6%	848	47.0	13.1
Frankfurt am Main	1,222	5.2%	1,678	68.6	17.8
Bremen	641	2.7%	910	43.6	14.7
Hamburg	1,052	4.4%	1,468	56.9	18.5
Bochum	354	1.5%	815	28.3	12.5
Hannover	510	2.2%	1,082	34.2	14.9
Köln	722	3.1%	1,572	39.4	18.3
Duisburg	255	1.1%	739	21.4	11.9
München	887	3.7%	2,367	33.4	26.5
Bonn	505	2.1%	1,377	28.2	17.9
Stuttgart	566	2.4%	1,877	29.2	19.4
Bielefeld	221	0.9%	711	18.5	11.9
Heidenheim an der Brenz	229	1.0%	931	17.5	13.1
Osnabrück	225	1.0%	892	16.8	13.4
Gelsenkirchen	167	0.7%	647	14.3	11.7
Düsseldorf	400	1.7%	1,612	22.3	18.0
Braunschweig	202	0.9%	937	14.3	14.2
Gladbeck	145	0.6%	752	11.8	12.3
Zwickau	71	0.3%	399	8.1	8.7
Herne	144	0.6%	779	11.4	12.6
Mannheim	230	1.0%	1,238	14.7	15.6
Subtotal TOP 25	15,655	66.1%	1,109	987.4	15.9
Remaining cities	8,028	33.9%	1,043	538.0	14.9
Total	23,684	100.0%	1,085	1,525.4	15.5

Pro-active Portfolio Management (excl. Acquisitions)

Even excluding acquisitions and just focusing on modernization investments and noncore/non-strategic sales, our action-driven portfolio management strategy has yielded considerable improvements.

June 30, 2015	Residential units	In-place rent (€/sqm)	Vacancy rate	Fair value (€bn)	Fair value (€/sqm)	Multiple on in-place rent
STRATEGIC	278,366	5.72	2.5%	17.8	1,006	14.7
NON-CORE / NON-STRATEGIC	48,373	4.71	8.4%	1.8	592	11.3
PRIVATIZE	21,477	5.60	4.7%	1.5	1,034	16.0
TOTAL	348,216	5.58	3.5%	21.2	951	14.4

June 30, 2016	Residential units	In-place rent (€/sqm)	Vacancy rate	Fair value (€bn)	Fair value (€/sqm)	Multiple on in-place rent
STRATEGIC	282,806	5.90	2.4%	19.7	1,092	15.5
NON-CORE / NON-STRATEGIC	19,661	4.65	8.1%	0.7	555	10.8
PRIVATIZE	16,333	5.72	4.5%	1.3	1,136	17.0
TOTAL	318,800	5.82	2.8%	21.7	1,062	15.4

• Non-core/non-strategic volume reduced by almost 29k units
• In-place rent up 4.3% overall, driven by market rent growth, modernization investments and sale of below-average parts of the portfolio
• Vacancy rate down by 70bps
• FV per sqm +11.6%
• Multiple expansion by 1.0x

Note: Vonovia's standard clusters have been aggregated for the purpose of highlighting the different developments between the strategic and the non-strategic parts of the portfolio. "Strategic" includes the Clusters Operate, Upgrade Buildings and Optimize Apartments; "Non-strategic" includes the Clusters Non-strategic and Non-core. Please see page 34 for a full break-down of the individual clusters.

June 30, 2015	Residential units	In-place rent (€/sqm)	Vacancy rate	Fair value (€bn)	Fair value (€/sqm)	Multiple on in place rent
Operate	192,106	5.64	2.5%	11.9	972	14.3
Upgrade Buildings	49,411	5.69	2.6%	3.2	1,020	15.3
Optimize Apartments	36,849	6.19	2.5%	2.8	1,155	15.9
Privatize	21,477	5.60	4.7%	1.5	1,034	16.0
Non-strategic	31,676	4.81	6.9%	1.3	636	11.6
Non-core	16,697	4.50	11.4%	0.5	507	10.6
TOTAL	348,216	5.58	3.5%	21.2	951	14.4

June 30, 2016	Residential units	In-place rent (€/sqm)	Vacancy rate	Fair value (€bn)	Fair value (€/sqm)	Multiple on in place rent
Operate	114,363	5.89	2.4%	7.8	1,047	14.7
Upgrade Buildings	97,033	5.73	2.4%	6.4	1,069	15.7
Optimize Apartments	71,410	6.12	2.2%	5.5	1,196	16.7
Privatize	16,333	5.72	4.5%	1.3	1,136	17.0
Non-strategic	12,031	4.74	7.5%	0.4	574	10.9
Non-core	7,630	4.50	9.1%	0.3	525	10.8
TOTAL	318,800	5.82	2.8%	21.7	1,062	15.4

Note: as per June 30, 2015, all of GAGFAH's strategic portfolio had been allocated to "Operate," and there was no breakdown between Operate, Upgrade Buildings and Optimize Apartments at that time.

June 30, 2015	Residential units	In-place rent (€/sqm)	Vacancy rate	Fair value (€bn)	Fair value (€/sqm)	Multiple on in place rent
Operate	192,106	5.64	2.5%	11.9	972	14.3
Upgrade Buildings	49,411	5.69	2.6%	3.2	1,020	15.3
Optimize Apartments	36,849	6.19	2.5%	2.8	1,155	15.9
Privatize	21,477	5.60	4.7%	1.5	1,034	16.0
Non-strategic	31,676	4.81	6.9%	1.3	636	11.6
Non-core	16,697	4.50	11.4%	0.5	507	10.6
TOTAL	348,216	5.58	3.5%	21.2	951	14.4

June 30, 2016	Residential units	In-place rent (€/sqm)	Vacancy rate	Fair value (€bn)	Fair value (€/sqm)	Multiple on in place rent
Operate	125,563	5.95	2.4%	8.7	1,066	14.8
Upgrade Buildings	102,760	5.85	2.5%	7.0	1,104	15.9
Optimize Apartments	73,433	6.16	2.2%	5.7	1,212	16.8
Privatize	18,280	5.87	4.5%	1.5	1,172	17.1
Non-strategic	12,453	4.78	7.3%	0.5	596	11.1
Non-core	7,953	4.55	9.0%	0.3	541	11.0
TOTAL	340,442	5.89	2.8%	23.7	1,085	15.5

Note: as per June 30, 2015, all of GAGFAH's strategic portfolio had been allocated to "Operate," and there was no breakdown between Operate, Upgrade Buildings and Optimize Apartments at that time.

	H1 2016 /	H1 2015 /
	June 30, 2016	June 30, 2015
Headcount	6,909	5,877
Number of units under 3rd-party management	53,843	41,734
EPRA vacancy rate	2.6%	3.2%
IFRS profit for the period	147.9	84.9
Number of units acquired	2,440	148,709
Number of units sold	19,135	4,050

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Tables and diagrams may include rounding effects.