Vonovia SE — Call Transcript 2017

Mar 7, 2017

FY2016 Earnings Call March 7, 2017

Rolf Buch, CEO Dr. A. Stefan Kirsten, CFO

Highlights

FFO Growth

• 2016 FFO1 per share* up 25.1%, driven by internal growth.
• 10% organic FFO1 growth guided for 2017 (i.e. excluding conwert).
• Sustainable organic FFO1 growth built in for 2018 and beyond.

NAV Growth

• 2016 Adj. NAV per share* up 27.1%, driven by performance improvements, investments and yield compression from exposure to dynamic regional markets.
• Further substantial fair value growth potential to be unlocked in 2017 and beyond.

Improvements across all KPIs

Compelling Guidance 2017

• Vonovia standalone guidance confirmed confident to reach upper end.
• Initial assumption for FFO1 contribution from conwert acquisition expected to be at least €60m.

Updates on Several Housekeeping Topics

^* Please see Glossary / Sources in the Appendix for further information.

Built-in Sustainable Organic FFO Growth

• FFO is expected to grow organically, as rental income and EBITDA growth continue to accelerate.
• Broadly stable interest rate levels would be an additional contributor to FFO growth.

¹ Including Adj. EBITDA Other; ² Based on internal 5-year plan as of Sep. 2016

		2016	2015	Delta
In-place rent l-f-l (eop)	€/month/sqm	6.01	5.82	+3.3%
In-place rent (eop)	€/month/sqm	6.02	5.75	+4.7%

Rent growth driver	2016 Contribution	2015 Contribution
Sitting tenants (incl. subsidized rents)	0.9%	1.1%
New lettings	0.6%	0.6%
Subtotal market-driven rent growth	1.5%	1.7%
Modernization	1.8%	1.2%
Subtotal l-f-l rent growth	3.3%	2.9%
Space creation	0.0%	0.0%
Subtotal organic rent growth	3.3%	2.9%
Portfolio management (+ acquisitions ./. sales)	1.4%	0.1%
Total rent growth	4.7%	3.0%

Note: 2015 includes 0.1% contribution from subsidized rents

Stable Maintenance – Growing Modernization

• Stable maintenance expenses on a per sqm basis y-o-y.
• The maintenance capitalization ratio* is not an input factor but an outcome; i.e. what type of work is expensed vs. capitalized is determined by the accounting rules implemented as a pre-defined SAPprocess.

€m (unless indicated otherwise)	2016	2015	Delta	€/sqm	2016	2015	Delta
Expenses for maintenance	247.4	242.2	+2.1%	Expenses for maintenance	11.50	11.66	-1.3%
Capitalized maintenance	72.7	88.5	-17.9%	Capitalized maintenance	3.38	4.26	-20.7%
Total	320.1	330.7	-3.2%	Total	14.88	15.92	-6.5%
Maintenance capitalization ratio*	23%	27%

Growing Investment Program

• Modernization investments and space creation are increasingly meaningful organic growth drivers.
• Investments in year one generally lead to rent growth in year two.

¹ Program year; ² Additional rental income from investment yield. Illustrative as portion of the additional rent may shift between years.

Increasing Organic Growth through Extension Strategy

FFO

• Extension business with increasing significance and compelling growth rates.
• Contribution to Adj. EBITDA Operations* expected to grow from ~5% in 2016 to ~8% in 2017.
• Built-in growth for future years as successful programs are applied to the entire portfolio and new initiatives are tested and rolled out.

Continued EBITDA Margin Expansion

• Adj. EBITDA Operations margin* of 70.9% in 2016, up from 67.7% in 2015.
• Expensed vs. capitalized maintenance varies between companies and is a major discretionary factor in the EBITDA margin, which is why Vonovia reports Adj. EBITDA margins incl. and excl. maintenance.
• Excluding expensed maintenance and including operating costs and corporate SG&A the margin was 87.0% in 2016 up from 84.8% in 2015.

¹ Cost per unit: (Rental Income – EBITDA Operations + Maintenance) / average # units. ² Mainly consolidation * Please see Glossary / Sources in the Appendix for further information.

³ Rounded figures.

Development of Unencumberance Ratio / Impact on Financing Strategy

• Unencumberance ratio dropped from 49.6% pre GAGFAH down to 32.1% including GAGFAH in 2015.
• After TAURUS CMBS prepayment unencumberance ratio is ca. 69%.
• This provides enough headroom for conwert integration and implementation of GAGFAH merger as well as full flexibility for our financing strategy with secured and unsecured debt instruments.
• For each upcoming refinancing we can now choose the most suitable debt instrument.

¹ Figures as of Dec. 31, 2016, prepayment of TAURUS CMBS in February 2017 and €1.0bn bond issuance from January 2017 considered.

Established Player in Debt Capital Markets

• Maturity profile further smoothened through most recent bond issuances (€2.5bn unsecured corporate bonds in 2016 and €1.0bn in January 2017).
• Redemption of all 3 CMBS structures inherited in the Gagfah takeover now completed (early redemption of third and last CMBS "Taurus" was Feb. 14, 2017).
• Average interest rate now down to 2.1% from 2.6% at the end of 2015.
• Unencumberance ratio up from 0% in June 2013 to currently 69%.
• Vonovia has established itself as one of the Top 15 Euro Investment Grade Corporate Issuers between 2014 and 2016 and has substantially reduced the issuance costs in the process.

Top 15 Euro IG Corporate Issuers 2014-2016 (€m)
Issuer	2016	2015	2014	Total 2014-2016	Average Funding p.a.
1 BMW	5,919	8,205	6,170	20,294	6,765
2 VW	-	8,910	10,700	19,610	6,537
3 Anheuser-Busch inBev	13,250	3,000	2,500	18,750	6,250
4 Total SA	7,000	5,000	5,300	17,300	5,767
5 Daimler AG	10,980	3,077	3,070	17,127	5,709
6 Royal Dutch Shell	4,000	3,450	5,825	13,275	4,425
7 Telefonica SA	5,900	1,467	5,650	13,017	4,339
8 Vodafone	7,750	750	3,410	11,910	3,970
9 Coca-Cola	500	8,500	2,000	11,000	3,667
10 BP pic	3,775	2,500	4,000	10,275	3,425
11 Sanofi	4,800	2,260	3,000	10,060	3,353
12 Renault	3,830	3,200	2,200	9,230	3,077
13 Bayer AG	1,500	1,300	6,250	9,050	3,017
14 Vonovia SE	2,500	4,000	2,200	8,700	2,900
15 Verizon	3,250	-	5,400	8,650	2,883

Source: Bank of America Merrill Lynch

FFO

Substantial LTV Reduction

€m (unless indicated otherwise)	Dec. 31, 2016	Dec. 31, 2015	Delta
Non-derivative financial liabilities	13,371.0	14,939.9	-10.5%
Foreign exchange rate effects	-209.9	-179.4	17.0%
Cash and cash equivalents	-1,540.8	-3,107.9	-50.4%
Net debt	11,620.3	11,652.6	-0.3%
Sales receivables	-135.4	-330.0	-59.0%
Additional loan amount for outstanding acquisitions	---	134.9
Adj. net debt	11,484.9	11,457.5	0.2%
Fair value of real estate portfolio	27,115.6	24,157.7	12.2%
Fair value of outstanding acquisitions	---	240.0
Shares in other real estate companies	503.1	13.7	>100%
Adj. fair value of real estate portfolio	27,618.7	24,411.4	13.1%
LTV	41.6%	46.9%	-530bps

Depending on the final outcome of the second offer period for conwert, the pro forma LTV* will be around 45% and therefore below the 2015YE level and towards the upper end of our target range.

Vonovia uses the valuation uplift to buy conwert in a predominantly all-cash transaction, effectively translating value growth into an accretive acquisition.

25.1% FFO1 per Share* Growth

• Increased Adj. EBITDA Operations* and reduced financing costs lead to 25.1% FFO1 growth.
• AFFO* of €689.2m is approx. 1.3x proposed dividend amount.

€m (unless indicated otherwise)	FY 2016	FY 2015	Delta
Adj. EBITDA Operations*	1,094.0	957.6	+14.2%
FFO interest expense	-322.7	-339.4	-4.9%
Current income taxes FFO1	-10.5	-10.2	+2.9%
FFO1	760.8	608.0	+25.1%
of which attributable to Vonovia's shareholders	713.4	555.5	+28.4%
of which attributable to Vonovia's hybrid capital investors	40.0	33.0	+21.2%
of which attributable to non-controlling interests	7.4	19.5	-62.1%
Capitalized maintenance	-71.6	-87.5	-18.2%
AFFO*	689.2	520.5	+32.4%
Current income taxes FFO2	-29.5	-17.0	+73.5%
Adjusted EBITDA Sales*	92.5	71.1	+30.1%
FFO2	823.8	662.1	+24.4%
/ share* FFO1 € (eop NOSH)	1.63	1.30	+25.1%
/ share* FFO1 € (avg. NOSH)	1.63	1.51	+8.5%
/ share* AFFO € (eop NOSH)	1.48	1.12	+32.4%
/ share* AFFO € (avg. NOSH)	1.48	1.29	+14.8%

Privatization Margin Up; Record Non-core Volume

• Privatization volume slightly below prior year but improved margin of 36.2%.
• Increased non-core and non-strategic volume for a combined total of 36,125 units over last two years, actively tapping the transaction market to clean up the portfolio.

€m (unless indicated otherwise)	2016	2015	2016	2015	2016	2015
	Privatization			Non-core/Non-strategic	Total
No. of units sold	2,701	2,979	23,930	12.195	26,631	15,174
Income from disposal	267.4	262.7	960.5	463.3	1,227.9	726.0
Fair value of disposal*	-196.3	-201.3	-911.4	-424.4	1,107.7	625.7
Adj. profit from disposal	71.1	61.4	49.1	38.9	120.2	100.3
Fair value step-up* (%)	36.2%	30.5%	5.4%	9.2%

Selling costs		-27.7	-29.2
Adj. EBITDA Sales*		92.5	71.1

Estimated Value Growth Potential to be Unlocked

Our portfolio management strategy of modernization investments, space creation and a focus on growth markets is expected to result in substantial value creation going forward.

NAV

1) What we can influence

• Value growth potential from modernization investments.
• 30% valuation uplift for properties following modernization work in Upgrade Building Cluster.
• 30% rent growth for Modernization Clusters³.
• 10% rent growth for Operate Cluster.
• Value growth potential from space creation.
• 26k units at average letting rent of €10 per sqm and month and a market multiple of 25x.

2) Market dynamics beyond our influence

Assumption for value growth potential from exposure to growth markets with positive dynamics through additional yield compression / multiple expansion.

Note: Value growth shown on this page is indicative. While we believe the underlying assumptions are reasonable, the actual future development may differ. ¹ Strategic portfolio only incl. privatization properties in strategic locations; ² Market comparables; ³ (i) Upgrade Buildings plus (ii) Optimize Apartments plus (iii) Optimize Apartments within Upgrade Buildings Cluster (Total volume of currently ~290k units)

Valuation uplift of 16.2% contributes to 27.1% Adj. NAV per share* growth.

€m (unless indicated otherwise)	Dec. 31, 2016	Dec. 31, 2015	Delta
Equity attributable to Vonovia's shareholders	12,467.8	10,620.5	+17.4%
Deferred taxes on investment properties and assets held for sale	4,550.3	3,241.2	+40.4%
Fair value of derivative financial instruments1	44.4	169.9	-73.9%
Deferred taxes on derivative financial instruments	-15.4	-43.4	-64.5%
EPRA NAV*	17,047.1	13,988.2	+21.9%
Goodwill	-2,718.9	-2,714.7	+0.2%
Adj. NAV*	14,328.2	11,273.5	+27.1%
EPRA NAV €/share*	36.58	30.02	+21.9%
Adj. NAV €/share*	30.75	24.19	+27.1%

¹ Adjusted for effects from cross currency swaps

Valuation Uplift Across All Regional Markets – But Varying Magnitudes

Fair value (€ million)	Fair value (€/sqm)	Multiple (in-place-rent)	Change in value (€ million)	Change in value (l-f-l in %)	of which yield compression
3,448	1,640	22.6	753.2	28.0%	24.2%
2,847	1,437	18.2	351.9	14.4%	8.4%
3,100	1,695	19.0	386.8	14.5%	9.8%
2,371	889	13.8	220.0	10.3%	2.8%
2,439	1,070	16.4	331.6	15.7%	4.9%
1,585	1,701	19.3	170.1	12.6%	9.8%
1,733	1,595	20.0	274.9	19.0%	16.4%
1,652	2,497	26.8	290.5	22.9%	19.6%
1,291	758	12.4	67.9	5.6%	0.5%
1,027	1,167	16.6	145.1	16.7%	8.1%
861	1,020	15.4	143.2	20.0%	11.7%
762	1,070	17.1	118.5	18.8%	14.0%
589	929	14.5	74.3	14.5%	6.0%
493	1,759	21.6	104.6	26.9%	23.2%
261	1,010	15.3	28.3	12.2%	8.8%
1,882	1,243	17.1	246.1	15.1%	8.6%
26,341	1,293	17.8	3,707.1	16.6%	10.9%

Strongest valuation uplift in Berlin, Munich and Freiburg.

NAV

B locations such as Bremen, Kiel and Hannover with above-average valuation gains, but Northern Ruhr Area with only 5.6% uplift underperformed all other Regional Markets.

FY2016 Earnings Call page 17

Strategic Clusters – Highest Yield Compression in Modernization Clusters

• The highest uplift from both yield compression and overall was in the two modernization clusters Upgrade buildings and Optimize apartments, confirming our modernization strategy.
• Yield compression also in Non-core and Non-strategic locations but substantially higher in strategic markets.

Strategic Cluster	Fair value (€ million)	Fair value (€/sqm)	Multiple (in-place-rent)	Change in value (€ million)	Change in value (l-f-l in %)	of which yield compression
Operate	7,602	1,281	16.4	887.8	13.5%	8.8%
Upgrade buildings	9,470	1,236	17.9	1553.7	19.8%	12.2%
Optimize apartments	7,800	1,370	19.0	1087.6	16.5%	11.4%
Strategic	24,872	1,290	17.7	3,529.2	16.8%	10.9%
Privatize	1,586	1,323	18.9	189.1	13.5%	10.4%
Non-Strategic	265	576	11.0	14.2	5.4%	3.8%
Non-Core	290	685	12.5	13.5	5.5%	2.7%
Total	27,013	1,264	17.6	3,745.9	16.3%	10.7%

Value Growth of Acquisition Portfolios Exceeds Goodwill

• Aggregate value growth of close to €3bn across acquisition portfolios.
• Acquisition premium already fully recovered through value accretion.

€m	Acquisition year	Fair Value at acquisition (l-f-l current portfolio)1	Fair value Dec. 31, 2016	Value growth since acquisition	Goodwill	Value growth vs. goodwill
Dewag	2014	980	1,259	279	11	268
Vitus	2014	988	1,260	272	95	177
Gagfah	2015	7,714	9,753	2,039	2,265	-226
Franconia	2015	284	361	77	-	77
Südewo	2015	1,732	1,966	234	346	-112
Grainger Portfolio	2016	251	263	12	-	12
Total		11,949	14,862	2,913	2,717	196

NAV

¹ Acquisition portfolio adjusted for sales and shown on a like-for-like basis for better comparison. Delta to total goodwill results from IVV acquisition with a goodwill of €2.1m.

Goodwill – Headroom Grown, Value Up, Performance Assumptions Confirmed

• While the fair value grew across all cash generating units (CGU) in 2016, the impairment test still resulted in a 1.1% increase of the headroom for the goodwill, as most regions saw the increase in fair value supported by an increase in the underlying cash flows.
• Except for the Region East (predominantly Berlin), the change in the headroom for the goodwill was considerably smaller than the respective fair value uplift; i.e. the fair value uplift in most regions was also driven by a stronger cash flow profile.

		% of total headroom Dec. 31, 2016	Headroom 2016 vs. 2015	Fair Value 2016 vs. 2015
CGU 1	North (Hamburg, Kiel, etc.)	13%	-5.1%	+16.7%
CGU 2	East (predominantly Berlin)	6%	-27.0%	+26.2%
CGU 3	Southeast (Dresden, Leipzig, etc.)	9%	-2.5%	+12.5%
CGU 4	West (Dortmund, Essen, etc.)	16%	-4.9%	+6.3%
CGU 5	Middle (Frankfurt, Cologne, etc.)	19%	+5.3%	+13.8%
CGU 6	South (Munich, Stuttgart, etc.)	17%	+19.3%	+14.5%
CGU 7	Central	2%	n/a	n/a
CGU 8	Extension segment	19%	n/a	n/a
	Total	100%

Development of Fair Value and Headroom

CGU = cash generating unit

Modular Construction – Pilot Project Completed

NAV

• Pilot project in Bochum with 14 residential units.
• Factory-based construction of modules with construction costs of €1,800 per sqm (all-in, excl. land, which we already owned).
• On-site assembly of modules within only 5 days.
• Construction completed in mid December 2016 and fully let by mid January 2017.
• In-place rent of slightly above €9 per sqm (vs. €7.20 for Vonovia properties in immediate vicinity).
• Estimated completion of ~1,000 units in 2017¹.

¹ Subject to obtaining building permits

Pro-active Portfolio Management

Investments*		More than €1bn invested in value-enhancing modernization* between 2013 and 2016.					Pro-active portfolio management results in material improvements in
							quality of assets and
Disposal*		Sale of ~42k Non-core and Non-strategic assets (2013-2016) with below-average quality, location and/or strategic potential.					locations.
							Well-positioned to benefit
Acquisition*			Acquisition of more than 220k units (2013- 2017 YTD, incl. conwert) in attractive regions and complementary to the existing portfolio.				from strong underlying fundamentals of entire German residential market.
Dec. 31, 2016 (unless indicated otherwise)	Residential Units	In-place rent (€/sqm)	Vacancy rate (%)	Fair value (€bn)	Fair value (%) at IPO in 20131	Fair value (%)
Operate	88,359	6.28	2.2	7.6	38%	28%
Upgrade Buildings (UB)	125,016	5.89	2.2	9.5	22%	35%	64% of fair value

Operate	88,359	6.28	2.2	7.6	38%	28%
Upgrade Buildings (UB)	125,016	5.89	2.2	9.5	22%	35%	64% of fair value in OA and UB
Optimize Apartments (OA)	89,335	6.12	1.8	7.8	13%	29%
Subtotal Strategic Clusters	302,710	6.07	2.1	24.9	73%	92%
Privatize	17,195	5.97	4.2	1.6	14%	6%	Non-core and non-strategic volume down to
Non-strategic	7,480	4.70	7.3	0.3	8%	1%	2% (~€0.6bn) of total asset
Non-core	5,996	4.96	7.1	0.3	5%	1%	value.
Total	333,381	6.02	2.4	27.0	100%	100%

* Please see Glossary / Sources in the Appendix for further information.

¹ The cluster "Non-strategic" was introduced after the IPO. For comparison purposes, locations considered Non-strategic as of Sep 30, 2016, were defined as Non-strategic as of the IPO date as well.

All Regional Markets Show Upward Potential

VONOVIA
---------	--	--

	Fair Value						In-place rent
Regional Markets	(€ million)	(€/sqm)	Multiple (in-place rent)	Residential units	Living area ('000 sqm)	Vacancy (%)	Total (p.a. € million)	Residential (p.a. € million)	(€/ month/ sqm)	Change like-for-like (%)	Average p.a. rent growth forecast CBRE (5 yrs)* (%)	Average rent growth (%) from Optimize Apartments
Berlin	3,448	1,640	22.6	32,454	2,034	1.5	152	145	6.02	3.2	3.1	40.7
Rhine Main Area (Frankfurt, Darmstadt, Wiesbaden)	3,100	1,695	19.0	28,203	1,799	2.2	163	157	7.42	3.7	3.3	37.9
Rhineland (Cologne, Düsseldorf, Bonn)	2,847	1,437	18.2	28,669	1,928	2.6	157	149	6.60	4.0	2.9	31.5
Dresden	2,439	1,070	16.4	37,983	2,155	1.8	149	139	5.47	3.7	3.2	36.8
Southern Ruhr Area (Dortmund, Essen, Bochum)	2,371	889	13.8	42,834	2,606	2.7	172	165	5.43	3.5	1.9	29.5
Hamburg	1,733	1,595	20.0	16,644	1,054	1.8	87	82	6.55	3.5	3.1	34.8
Munich	1,652	2,497	26.8	9,773	643	0.7	62	57	7.50	3.8	4.6	51.9
Stuttgart	1,585	1,701	19.3	14,303	901	1.7	82	78	7.36	2.2	2.9	35.2
Northern Ruhr Area (Duisburg, Gelsenkirchen)	1,291	758	12.4	27,097	1,680	3.2	104	101	5.18	3.5	1.8	24.1
Hanover	1,027	1,167	16.6	13,668	866	2.3	62	60	5.88	2.8	2.9	33.3
Kiel	861	1,020	15.4	13,989	813	1.3	56	53	5.49	2.4	2.3	33.9
Bremen	762	1,070	17.1	11,339	691	3.1	45	42	5.27	3.7	3.1	33.8
Westphalia (Münster, Osnabrück)	589	929	14.5	9,652	625	2.3	41	39	5.38	3.7	2.6	28.6
Freiburg	493	1,759	21.6	4,063	278	1.0	23	22	6.72	3.0	3.8	41.2
Leipzig	261	1,010	15.3	4,089	255	2.6	17	17	5.61	1.4	2.4	23.5
Other Strategic Locations	1,882	1,243	17.1	23,514	1,490	2.3	110	106	6.10	3.5	3.1	35.0
Total Strategic Locations	26,341	1,293	17.8	318,274	19,817	2.2	1,480	1,412	6.07	3.4	2.9	34.2
* Please see Glossary / Sources in the Appendix for further information.

Standalone Guidance Confirmed

(Vonovia excl. conwert)

	2015 Actuals	2016 Actuals	2017 Guidance (Nov. 2016, excl. conwert)
L-f-l rent growth (eop)	2.9%	3.3%	3.5%-3.7%	Accelerating rent growth
Vacancy (eop)	2.7%	2.4%	<2.5%	Stable top line inspite of
Rental Income (€m)	1,414.6	1,538.1	1,530-1,550	~24,000 non-core sales in 2016
FFO1 (€m)	608.0	760.8	830-850	Double digit % organic growth
Maintenance (€m)	330.7	~320.1	~340
Modernization & Investments (€m)	355.6	472.3	700-730
Privatization (#)	2,979	2,701	~2,300
FV step-up* (Privatization)	30.5%	36.2%	~35%
Non-core (#)	12,195	23,930	opportunistic
FV step-up* (Non-Core)	9.2%	5.4%	>0%
Dividend/share	€0.94	€1.121	70% of FFO 1

¹ To be proposed to the Annual General Shareholder Meeting

First Indication for FFO1 Contribution from conwert

• Full Vonovia guidance for 2017 including conwert will be published with Q1 2017 results on May 24.
• Vonovia stand-alone guidance for FFO1 is €830m - €850m.
• Conservative first assessment based on conwert 2016 FFO1 guidance of €80m as a starting point gives in an initial assumption of approx. €60m FFO1 contribution from conwert for 2017.
• In any scenario second offer period all cash or all shares and irrespective of acceptance ratio – the conwert acquisition is FFO1 per share and NAV per share accretive from day 1.

number of shares and excluding impact from conwert acquisition

Inflation protection with additional operational uplift

1 Guidance mid-point

* Please see Glossary / Sources in the Appendix for further information

I	Conwert update
II	Scrip dividend as alternative
III	Next portfolio valuation at the end of Q2 2017
IV	Gagfah: cross-border merger
V	Vonovia's stake in Deutsche Wohnen
VI	CEO contract extended to Feb. 2023

Housekeeping I conwert Meets All Acquisition Criteria

• One of the largest European RE transactions in 2016 with €2.8bn transaction volume.
• After four failed takeover attempts in recent years by third parties, Vonovia successfully completed the transaction within only four months.
• Terms communicated upon announcement in September were never changed even when markets turned negative.
• Flawless execution from preparation to the announcement and all the way to the settlement; no leakage, no delays, no interloper, no regulatory intervention, no changes to deal structure or timing.

Smooth transaction What has changed since the announcement

	At Announcement	Since Announcement / Today
Share vs. cash	Share alternative at €17.58 per share substantially more attractive than mandatory cash offer at €16.16 per share	Of the 72.9m shares, only 0.7m were tendered for shares with the remaining 72.2 for cash
Financial synergies	€5m (€61m break costs to realize synergies)	Current interest rate environment makes realization of these synergies difficult to achieve
Operational synergies	Operational synergies of €7m	First view indicates higher operational synergies than anticipated
conwert non core portfolio	~€600m	~€330m have been closed or announced since Sep 5
conwert NAV	€16.40 as per Q2 2016	~€17 (est.) as per YE2016

Next update with Q1 earnings release on May 24

	Sep 5, 2016	Announcement of the intention to make a voluntary take-over offer Support from conwert board and management Commitment from Adler to tender all its conwert shares
	Oct 6 & Oct 28, 2016	Approval from German Federal Cartel Office; Clearance from Austrian Federal Competition Authority
	Nov 17, 2016	Publication of the offer document
	Nov 18 – Dec 19, 2016	Acceptance period
	Dec 22, 2016	Publication of final results of acceptance period: 71.54% acceptance ratio
	Dec 23, 2016	Start of second acceptance period
	Jan 16, 2017	Payment and settlement (conwert fully consolidated as of Jan 10, 2017)
	Jan 27, 2017	conwert EGM (Vonovia holds 4 of the 6 seats on conwert's Administrative Board)
	Mar 3, 2017	71.54% current acceptance ratio
	Mar 23, 2017	End of second acceptance period
	Apr 2017	Payment and settlement second acceptance period
	Jul 2017	All relevant conwert data and systems fully integrated in Vonovia platform

Future dates are indicative and subject to change.

Choice	Scrip dividend as an alternative to cash dividends offers choice to investors.
Increasingly best practice	Well established in many international markets like the US or UK and increasingly popular in Germany as well. E.ON, Deutsche Telekom, Lufthansa and others have been offering their shareholders for some years now cash dividends and as an alternative an equal dividend amount in the form of shares.
Process	Supervisory Board defines scrip dividend structure and price. Annual General Meeting approves total dividend amount. Shareholders choose cash or shares until early June. Payout date will be mid-June.

Valuation & Timing	Gross asset real estate value represents more than 83% of total assets. Equity capital markets continue to use the NAV as share price proxy. NAV guidance without yield compression is of limited use. So far no need to conduct more than one valuation a year, but with more pronounced yield compression in many local markets in 2016 and most likely beyond the annual valuation cycle is too long. Next portfolio valuation will be as of June 30, 2017.
Methodology & Process	Same Methodology for half-year valuation as for the year-end valuation. For practical purposes, the valuation pool will comprise the largest 20 cities plus any other location for which there is indication of strong valuation movements. Data set and result of mid-year valuation will be meaningful enough to ensure that majority of the valuation movements of first two quarters is captured and reflected in financial accounts. Process and timing agreed with our auditors. Half-year valuations to be conducted for as long as there is market evidence of material valuation changes over a 6-months period.
	NAV guidance suspended

Vonovia ownership	Vonovia holds 93.8% of all Gagfah shares.
Redemption of CMBS completed	After redeeming the last Gagfah CMBS in Feb 2017, Vonovia is currently analyzing the final step of the integration by way of a cross-border merger of Gagfah S.A. into Vonovia SE, effectively completing the last leg of the integration and further reducing legal and governance complexities.
Cross-border merger	A successful merger would lead to a mandatory exchange of all outstanding shareholders' Gagfah shares against Vonovia shares in a fixed exchange ratio. After completing the company valuations and after a merger audit by a court-appointed, independent auditor, the governing bodies of Vonovia SE and Gagfah S.A. will deliberate on the merger and the exchange ratio.

Vonovia's stake in Deutsche Wohnen	Vonovia owns 16.8m shares in Deutsche Wohnen. This equals 4.74% based on the 354.7m shares outstanding.
Purchase price & unrealized gains	The shares were purchased at an average purchase price of €24.10 for a total consideration of €405.5m. Based on the €31.67 closing price on March 3, 2017, the stake has a market value of €532.6m, resulting in a book gain of €127.1m (+31%).
	Deutsche Wohnen shares are accounted for under "available-for-sale securities" in IFRS (in non-current assets).
Deutsche Wohnen stake in Vonovia's numbers	Accounting on a mark-to-market basis, with adjustments to fair market value accounted for in "Other comprehensive income."
	Included with market value in LTV denominator.
	FFO interest expense includes interest expense for share purchase (approx. €6m) and
	dividend payment of €9.1m for 2016.

Housekeeping VI CEO Contract Extended to 2023

CFO Dr. A. Stefan Kirsten

• Since 2011 CFO of Vonovia
• Former CEO of Majid Al Futtaiim Group LLC (real estate development company focusing mainly on retail and entertainment ventures in the Emirates)
• Former CFO of Metro AG and ThyssenKrupp AG in Germany
• Contract expires Dec. 31, 2020

CEO Rolf Buch

• Since 2013 CEO of Vonovia
• Former management board member of Bertelsmann SE
• Former CEO of Arvato AG (global BPO service provider with more than 60,000 employees in over 40 countries)

Contract expires Feb. 28, 2023

COO Klaus Freiberg

• Board member since 2010
• Responsible for the property management (customer care service, management and letting of portfolio)
• Former senior manager of Arvato Group; supervised and optimized the service centers of Deutsche Post and Deutsche Telekom
• Contract expires Jan. 31, 2022

CCO Gerald Klinck

• Board member since 2012
• Former CFO of GAGFAH Group
• 20+ years experience in leading positions in the real estate industry
• Contract expires at the AGM 2018

Built-in sustainable organic FFO1 growth going forward.

• FFO1 is expected to grow organically, as rental income and EBITDA growth continue to accelerate.
• Broadly stable interest rate levels would be an additional contributor to FFO1 growth.
• Positive FFO1 trajectory even in an immediate 200bps interest rate hike scenario.

Fair value growth potential to be unlocked.

• Our portfolio management strategy has put the portfolio on a growth track.
• Modernization investments and space creation are expected to be the main drivers of future value growth.
• Yield compression / multiple expansion from exposure to growth markets expected to be additional value driver.

IR Contact & Financial Calendar

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

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

Contact Financial Calendar 2017

Mar 7	FY 2016 results
Mar 8-10	Roadshow (London, Frankfurt, Amsterdam)
Mar 10	Kempen European Property Seminar (New York)
Mar 13	Roadshow (Paris)
Mar 22	Commerzbank Resi Property Forum (London), IR only
Mar 23	HSBC Real Estate Conference (Frankfurt), IR only
Mar 28-30	Management Roadshow (China)
Mar 29	BofAML European Real Estate Conference (London), IR only
Mar 30	Bankhaus Lampe Deutschlandkonferenz (Baden Baden), IR only
May 9	Estimated record day for dividend entitlement
May 16	Annual General Meeting
May 24	Interim results 3M 2017
May 24	Berenberg European Conference (USA)
June 1	Kepler Cheuvreux German Property Day (Paris)
Jun 7	Goldman Sachs European Financials Conference (Madrid)
June 8	Kempen European Property Seminar (Amsterdam)
~ June 12	Estimated dividend payment date
June 19-20	Capital Markets Day (Bochum)
June 22	dBAccess Berlin Conference (Berlin)
Aug 2	Interim results 6M 2017
Nov 8	Interim results 9M 2017

Vonovia Investor Relations Tablet App

Now available for iOS and Android

Appendix

			2016	2015	Delta
	Average number of residential sqm	`000	21,509	20,773	+3.5%
	In-place rent (eop)	€/month/sqm	6.02	5.75	+4.7%
	In-place rent l-f-l (eop)	€/month/sqm	6.01	5.82	+3.3%
	Vacancy rate (eop)	%	2.4%	2.7%	-30bps
+10.2% per avg. unit*	Rental income	€m	1,538.1	1,414.6	+8.7%
(€3,172 vs.	average unit* Cost per	€	570	645	-11.6%
€2,878)	Adj. EBITDA Operations*	€m	1,094.0	957.6	+14.2%
	Rental*	€m	1,046.2	924.4	+13.2%
	Extension*	€m	57.0	37.6	+51.6%
	Other (i.e. consolidation)	€m	-9.2	-4.4	>100%
+20.7%	FFO 1	€m	760.8	608.0	+25.1%
per sqm	FFO 1 per share* (eop NOSH)	€	1.63	1.30	+25.1%
(€2,206 vs. €1,827)	FFO 1 per share* (avg. NOSH)	€	1.63	1.51	+8.5%
	AFFO*	€m	689.2	520.5	+32.4%
	Adj. EBITDA Sales*	€m	92.5	71.1	+30.1%
	Adj. EBITDA (Total)	€m	1,186.5	1,028.7	+15.3%
	FFO 2	€m	823.8	662.1	+24.4%
+19.9% per sqm (€1,264 vs.			Dec. 31, 2016	Dec. 31, 2015	Delta
€1,054)	Fair value of real estate portfolio	€m	27,115.6	24,157.7	+12.2%
	EPRA NAV*	€/share	36.58	30.02	+21.9%
	Adj. NAV*	€/share	30.75	24.19	+27.1%
	LTV	%	41.6%	46.9%	-530bps
	Dividend paid	€m	438.0	276.2	€161.8m

Reconciliation IFRS Profit to FFO

€m (unless indicated otherwise)	FY 2016	FY 2015	Delta
0				Increase due to fair value
PROFIT FOR THE PERIOD	2,512.9	994.7	152.6%	adjustment of investment
Financial result	433.0	414.0	4.6%	properties vs. increase of deferred tax liabilities
Income taxes	1,346.9	739.8	82.1%
Depreciation and amortization	27.0	13.4	>100%
Net income from fair value adjustments of investment properties	-3,236.1	-1,323.5	>100%	EBITDA increase mainly driven
= EBITDA IFRS	1,083.7	838.4	29.3%	by rental business
Non-recurring items	94.5	209.4	-54.9%
Total period adjustments from assets held for sale	17.9	-18.7	>100%
Financial income from investments in other real estate companies	-9.6	-0.4	>100%	Increase of adjusted EBITDA
= ADJUSTED EBITDA	1,186.5	1,028.7	15.3%	sales* due to higher Non-core
Adjusted EBITDA Sales*	-92.5	-71.1	30.1%	sales volume and higher core step-ups
= ADJUSTED EBITDA OPERATIONS*	1,094.0	957.6	14.2%
Interest expense FFO	-322.7	-339.4	-4.9%
Current income taxes FFO 1	-10.5	-10.2	2.9%	Adjusted EBITDA Operations*
= FFO 1	760.8	608.0	25.1%	reflects operational performance as well as
Capitalized maintenance	-71.6	-87.5	-18.2%	acquisitions* and expansion
= AFFO*	689.2	520.5	32.4%	strategy in Extension Segment
Current income taxes FFO2	-29.5	-17.0	73.5%
FFO 2 (FFO 1 incl. Adjusted EBITDA Sales*/current income taxes Sales)	823.8	662.1	24.4%
NOSH)* FFO 1 per share in € (eop	1.63	1.30	25.1%
* AFFO per share in € (eop NOSH)	1.48	1.12	32.4%
Number of shares (million) eop	466	466	---

P&L

€m (unless indicated otherwise) 0 Income from property letting Other income from property management Income from property management	FY 2016 2,170.0 39.3 2,209.3 1,227.9 -1,177.7 52.0 102.2	FY 2015 2,035.3 28.2 2,063.5 726.0 -658.7 51.7	Delta 6.6% 39.4% 7.1% 69.1% 78.8% 0.6%	L-f-l-rent increase of 3.3%, thereof 1.8% due to modernization*. Vacancy rate down from 2.7% in 2015 to 2.4% in 2016 Increase in sales from 15,174 in 2015 to 26,631 in 2016 (thereof 23,930 non-core); lower non-core step-up in 2016 5.4% (2015: 9.2%)
Income from disposal of properties
Carrying amount of properties sold
Revaluation of assets held for sale
Profit on disposal of properties		119.0	-14.1%
Net income from fair value adjustments of investment properties	3,236.1	1,323.5	>100%	Positive operational development and high market
Capitalized internal expenses	341.0	174.9	95.0%	dynamics for residential property market in Germany
Cost of materials	-1,081.9	-972.5	11.2%
Personnel expenses	-353.8	-359.7	-1.6%
Depreciation and amortization	-27.0	-13.4	>100%	Significant expansion of value
Other operating income	105.3	73.1	44.0%	accretive modernization
Other operating expenses	-249.5	-263.5	-5.3%
Financial income	27.1	8.0	>100%
Financial expenses	-449.0	-418.4	7.3%
Earnings before tax	3,859.8	1,734.5	>100%
Income taxes	-1,346.9	-739.8	82.1%
Profit for the period	2,512.9	994.7	>100%
Attributable to:
Vonovia's shareholders	2,300.7	923.5	>100%
Vonovia's hybrid capital investors	40.0	40.0	0.0%
Non-controlling interests	172.2	31.2	>100%
Earnings per share (basic and diluted) in €	4.94	2.29	>100%

* Please see Glossary / Sources in the Appendix for further information.

Balance Sheet (1/2 – Total Assets)

€m (unless indicated otherwise)	Dec. 31, 2016	Dec. 31, 2015	Delta
Assets
Intangible assets	2,743.1	2,724.0	0.7%	Increase mainly due to
Property, plant and equipment	115.7	70.7	63.6%	revaluation € 3.2bn
Investment properties	26,980.3	23,431.3	15.1%	Increase mainly due to the
Financial assets	585.9	221.7	>100%	acquisition* and valuation of Deutsche Wohnen shares
Other assets	15.2	158.5	-90.4%
Income tax receivables	-	0.1	-100%	2015 include advance payments made on acquisitions of companies and
Deferred tax assets	19.6	72.3	-72.9%	real estate
Total non-current assets	30,459.8	26,678.6	14.2%
Inventories	5.0	3.8	31.6%	Decrease due to lower receivables from the sale of
Trade receivables	164.4	352.2	-53.3%	properties
Financial assets	153.2	2.0	>100%	Positive market values from cross-currency swaps
Other assets	102.7	113.4	-9.4%
Income tax receivables	34.6	23.1	49.8%	Decrease mainly due to scheduled and unscheduled
Cash and cash equivalents	1,540.8	3,107.9	-50.4%	loan repayments, mainly GRF 1 and 3-yr 2013 bond
Assets held for sale	61.6	678.1	-90.9%
Total current assets	2,062.3	4,280.5	-51.8%	2015 including 13,570 units sale to LEG
Total assets	32,522.1	30,959.1	5.0%

* Please see Glossary / Sources in the Appendix for further information.

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

€m (unless indicated otherwise)	Dec. 31, 2016	Dec. 31, 2015	Delta
Equity and liabilities
Subscribed capital	466.0	466.0	0.0%	Increase results from
Capital reserves	5,334.9	5,892.5	-9.5%	revaluation of Deutsche
Retained earnings	6,665.4	4,309.9	54.7%	Wohnen shares partly
Other reserves	1.5	-47.9	>100%	compensated by the valuation of cash flow hedges
Total equity attributable to Vonovia's shareholders	12,467.8	10,620.5	17.4%
Equity attributable to hybrid capital investors	1,001.6	1,001.6	0.0%
Total equity attributable to Vonovia's shareholders and hybrid capital investors	13469.4	11,622.1	15.9%
Non-controlling interests	419.0	244.8	71.2%	Mainly repayment
Total equity	13,888.4	11,866.9	17.0%	of CMBS GRF 1 and CMBS GRF2 and repayments of
Provisions	607.9	612.9	-0.8%	portfolio loans, issue of EMTN
Trade payables	1.3	0.9	44.4%	bonds of total € 2.5bn
Non derivative financial liabilities	11,643.4	13,951.3	-16.5%
Derivatives	19.1	144.5	-86.8%	Decrease mainly due to
Liabilities from finance leases	94.7	94.9	-0.2%	contractual reductions and
Liabilities to non-controlling interests	9.9	46.3	-78.6%	premature terminations
Other liabilities	83.3	25.9	>100%
Deferred tax liabilities	3,769.5	2,528.3	49.1%	The 2016 figures include
Total non-current liabilities	16,229.1	17,405.0	-6.8%	purchase price liabilities in the
Provisions	370.8	429.5	-13.7%	amount of € 76.1m
Trade payables	138.8	91.6	51.5%
Non derivative financial liabilities	1,727.6	988.6	74.8%
Derivatives	57.5	58.8	-2.2%	The increase results from the final maturity of two Bonds in
Liabilities from finance leases	4.5	4.4	2.3%	2017
Liabilities to non-controlling interests	2.7	9.8	-72.4%
Other liabilities	102.7	104.5	-1.7%
Total current liabilities	2,404.6	1,687.2	42.5%
Total liabilities	18,633.7	19,092.2	-2.4%
Total equity and liabilities	32,522.1	30,959.1	5.0%

	FY 2016 /	FY 2015 /
	Dec. 31, 2016	Dec. 31, 2015
Headcount (eop)	7,437	6,368
EPRA vacancy rate (eop)	2.2%	2.5%
IFRS profit for the period (€/share)	4.94	2.29
Number of units acquired	2,815	168,632
Number of units sold	26,631	15,174
Total residential sqm ('000; eop)	20,781	22,271

Valuation parameters	2016	2015
Management costs per residential unit p.a.	€255	€252
Maintenance costs (ongoing + apt. improvement per sqm) p.a.	€13.66 p.a.	€13.41 p.a.
Discount rate	5.5%	5.8%
Capitalization rate	4.3%	4.7%
Market rent increase p.a.	1.2% p.a.	1.2% p.a.
Stabilized vacancy rate	2.4%	2.7%
Valuation results	2016	2015
Net initial yield	4.0%	4.5%
Gross yield	5.7%	6.5%
In-place rent multiple	17.6x	15.4x
Fair Value (€/sqm)	1,264	1,054

Substantial value growth across the portfolio but yield compression clearly more pronounced in some regions than others.

2015				2016				Delta
	Fair Value				Fair Value				Fair Value
Regional Markets	(€ million)	(€/sqm)	Multiple (in-place rent)	Residential units	(€ million)	(€/sqm)	Multiple (in-place rent)	Residential units	(€/sqm)	Multiple (in-place rent)
Berlin	2,709.2	1,282	18.2	32,563	3,448.3	1,640	22.6	32,454	28%	24%
Rhine Main Area (Frankfurt, Darmstadt, Wiesbaden)	2,708.4	1,479	17.2	28,262	3,099.8	1,695	19.0	28,203	15%	10%
Rhineland (Cologne, Düsseldorf, Bonn)	2,460.9	1,256	16.5	28,214	2,847.4	1,437	18.2	28,669	14%	10%
Dresden	2,108.7	923	14.7	38,047	2,438.6	1,070	16.4	37,983	16%	11%
Southern Ruhr Area (Dortmund, Essen, Bochum)	2,169.1	808	12.9	43,224	2,370.7	889	13.8	42,834	10%	7%
Hamburg	1,455.3	1,341	17.5	16,622	1,733.2	1,595	20.0	16,644	19%	14%
Munich	1,292.4	1,996	22.8	9,543	1,651.9	2,497	26.8	9,773	25%	18%
Stuttgart	1,355.3	1,529	17.5	13,743	1,584.7	1,701	19.3	14,303	11%	10%
Northern Ruhr Area (Duisburg, Gelsenkirchen)	1,245.5	719	12.2	27,531	1,290.8	758	12.4	27,097	5%	2%
Hanover	877.8	1,003	14.6	13,575	1,027.1	1,167	16.6	13,668	16%	14%
Kiel	719.5	850	13.2	14,009	861.2	1,020	15.4	13,989	20%	17%
Bremen	630.9	898	14.7	11,170	761.6	1,070	17.1	11,339	19%	16%
Westphalia (Münster, Osnabrück)	513.9	812	13.2	9,638	588.9	929	14.5	9,652	14%	10%
Freiburg	389.8	1,386	17.5	4,076	493.3	1,759	21.6	4,063	27%	23%
Leipzig	234.2	900	14.1	4,116	260.7	1,010	15.3	4,089	12%	9%
Other Strategic Locations	1,655.0	1,075	15.3	23,931	1,882.5	1,243	17.1	23,514	16%	12%
Total Strategic Locations	22,525.7	1,106	15.7	318,264	26,340.7	1,293	17.8	318,274	17%	13%

Y-o-y Valuation Growth

Substantial value growth across the portfolio but movements clearly more pronounced in some regions than others.

Note: Excluding Non-strategic locations; Changes are real case, not like-for-like

Corporate Investment grade rating as of 2015-09-30

Rating agency	Rating	Outlook	Last Update
Standard & Poor's	BBB+	Stable	06 September 2016

Bond ratings as of 2015-09-30

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 003 (USD-Bond)	4 years 3.200%	US25155FAA49	USD 750m	100.000%	2.970%*	02 Oct 2017	BBB+
Bond 004 (USD-Bond)	10 years 5.000%	US25155FAB22	USD 250m	98.993%	4.580%*	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%	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%	1.500%	31 Mar 2025	BBB+
Bond 010A (EMTN)	2 years 0.950%+3M EURIBOR	DE000A18V120	€ 750m	100.000%	0.835% hedged	15 Dec 2017	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%	2.250%	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%	1.500%	10 Jun 2026	BBB+
Bond 012 (EMTN)	2 years 0.380%+3M EURIBOR	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 14A (EMTN)	5 years 0.750%	DE000A19B8D4	€ 500m	99.863%	0.750%	25 Jan 2022	BBB+
Bond 14B (EMTN)	10 years 1.750%	DE000A19B8E2	€ 500m	99.266%	1.750%	25 Jan 2027	BBB+

* EUR-equivalent Coupon

Bond KPIs	Covenant	Level	Dec. 31, 2016
	LTV*
	Total Debt / Total Assets	<60%	41%
	Secured LTV*	<45%
	Secured Debt / Total Assets		11%
	ICR*
	Last 12M EBITDA / Last 12M Interest Expense	>1.80x	3.68x
	Unencumbered Assets*
	Unencumbered Assets / Unsecured Debt	>125%	225%

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

Gagfah Synergy Realization

Original estimate of €84m total synergies from Gagfah acquisition vs. final estimate of €137m.

Conservative Valuation

In-place valuations are still only half of replacement values, in spite of accelerating valuation growth in recent years.

* Please see Glossary / Sources in the Appendix for further information. Note: VNA 2010 – 2014 refers to Deutsche Annington Portfolio at the time

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

Acquisitions – Opportunistic but Disciplined

conwert Immobilien SE transaction closed in Q1 2017.

Proven and Unchanged Strategy since IPO

	VONOVIA

Reputation & Customer Satisfaction
al n o diti Tra	Property Management 1	Systematic optimization of operating performance and core business productivity through leveraging scaling effects High degree of standardization and industrialization throughout the entire organization
	Financing 2	Ensure well-balanced financing mix and maturity profile with low financing costs, investment grade credit rating and adequate liquidity at all times Fast and unfettered access to equity and debt capital markets at all times	Mergers & 5 Acquisitions Continuous review of on- and
	Portfolio Management 3	Portfolio optimization by way of tactical acquisitions and non-core/non-strategic disposals to ensure exposure to strong local markets Pro-active development of the portfolio through investments to offer the right products in the right markets and on a long-term basis	off-market opportunities to lever economies of scale and apply strategic pillars 1-4 to a growing portfolio All acquisitions must meet the stringent acquisition criteria
e v ati v o n n I	4 Extension	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 Insourcing of services to ensure maximum process management and cost control

Vonovia at a Glance

Germany's largest residential landlord with national footprint in urban regional markets

Strategic Portfolio

• Vonovia Location
• High-influx cities ("Schwarmstädte")

Munich Karlsruhe Dortmund

Note: Excluding conwert acquisition

• Residential real estate company with B-to-C characteristics.
• Industrialized approach leverages economies of scale in a highly homogeneous asset class.
• Strong internal growth profile via sustainable market rent growth, additional rent growth from portfolio investments and dynamic extension business.
• Market leadership with nationwide footprint offers additional growth opportunities.
• Robust business model delivers highly stable and growing cash flows.
• Predictable top and bottom line with downside protection and upside potential.
• 333k apartments
• Average apartment size of ~61 sqm
• Vacancy ~2.4% almost fully let
• 13.5 years average tenure
• ~ €1,540m stable rental income
• ~ €760m operating profit before sales (FFO 1)
• Dividend policy: approx. 70% of FFO 1

If You Want to Know Where Germans Live - Follow the Light

Illustration of Germany at Night

Strong Overlap with Vonovia Portfolio

Illustration of Germany at Night

German Residential – Safe Harbor and Low Risk

German residential market: important pillar of the German economy

• With a GDP contribution of more than €500bn the German residential real estate industry represents more than 18% of Germany's GDP.
• Germany and its resilient economy provide a comparatively safe harbor for foreign investments.
• Germany is the economic powerhouse and growth engine of Europe.
• Due to its regulatory structure, the German residential rental market is largely immune to macro-economic fluctuations and offers high cash flow visibility.
• Residential market provides superior returns especially in low interest rate environment.

Sources: Federal Statistics Office, GdW (German Association of Professional Homeowners), REIS, BofA Merrill Lynch Global Research; BIP USA: IMF, Statista 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 – Favorable Fundamentals

New Supply falls short of demand

• After record construction volumes in the 1990s, new volumes have plummeted as Germany has reduced its building capacity.
• While volumes have been recovering from all-time lows in 2009 and 2010, the current levels are still short of demand.
• Large gap between building permits and actual new constructions during last seven years.
• Discrepancy between new demand and new supply is forecast to continue and add to supply/demand imbalance already evident in many urban areas.
• Substantial disconnect between in-place values and market replacement cost.

Sources: Federal Statistics Office, IW Köln, GdW (German Association of Professional Homeowners)

German Residential – Favorable Fundamentals

Low home ownership ratio – Germans prefer to rent Rental housing very affordable in Germany

• With the exception of Switzerland, Germany has the lowest homeownership ratio in Europe.
• Rental regulation, favorable tenant laws, the general perception that home buying is a life-time decision and comparatively stringent financing requirements are main drivers for low homeownership rate.

Home ownership rate 2015 in %

• Affordability in Germany is higher than in the UK or France.
• Whereas most other European countries saw an increase, the share of rent-related payments in relation to disposable income declined in Germany between 2005 and 2015.

Rent as % of disposable household income

Sources: Federal Statistics Office, Eurostat

German Residential – Favorable Fundamentals

• 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.

Ownership structure (million units)

Listed sector represents ~4% of total rental market.

Fragmented ownership structure Growing number of smaller households

• While the overall population in Germany is expected to slightly decline, the number of households is forecast to grow until at least 2030 with a clear trend towards smaller households.
• The household growth is driven by various demographic and social trends including divorce rates, employment mobility etc.

Sources: Federal Statistics Office, GdW (German Association of Professional Homeowners)

No Correlation between Interest Rates and Property Values

• The steep decline in interest rates (down by 7.4% since 1992) is not mirrored by asset yields (down by 1.1% since 1992).
• Asset yields outperformed interest rates by 2.2% on average since 1992 and 5.4% in June 2015.

¹ Yearly asset yields vs. rolling 200d average of 10y interest rates

Sources: Thomson Reuters, bulwiengesa

*Other shared services: Internal Audit, Communications, Central Procurement, Insurances, Investor Relations, Accounting

Attractive Dividend Policy

1 Rental income + EBITDA Extension and Other; excluding sales effects; ² To be proposed to the Annual General Shareholder Meeting. ³ Vonovia standalone guidance for 2017, excluding impact from conwert acquisition. *Please see Glossary / Sources in the Appendix for further information. 2017(E): effects from conwert takeover not taken into account

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.

Liquid Large-cap Stock

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.

¹ To be proposed to the Annual General Shareholder Meeting. ² based on eop number of shares and excluding impact from conwert acquisition. *Please see Glossary / Sources in the Appendix for further information.

FY2016 Earnings Call page 66

Extension - Innovation as Growth Driver

Continuous flow of innovative projects that are all immediately linked to the apartment or customer/rental contract.

Frankfurt, Odenwaldstr. 2-4b

Frankfurt, Am Lindenbaum 15-85A

Frankfurt, Friedlebenstr. 32

Essen, Meistersingerstrasse 20-24C

Impressions

Dresden, Niederseidewitzer Weg, 32-40

Dortmund, Binsengarten 8-24 A Dresden, Kipsdorfer Strasse, 123-139

Dresden, Berzdorfer Str. 20-24

Impressions

Essen, Feldwiese 16-30 Dortmund, Doerwerstr, 68-70

Dortmund, Lippmannstr. 2-14 Essen, Bonnekampstr. 18-43 B

Optimize Apartment

Optimize Apartment

Upgrade Building

FY2016 Earnings Call page 73

Upgrade Building

Upgrade Building

Modernization - Impressions

Addition of new floor plus modernization investment Addition of new floor plus modernization investment

Upgrade Building Upgrade Building

Before After

Floor Addition

Pictures taken at the production site of our cooperation partner Modulbau Lingen.

Neighbourhood Development "Eltingviertel"

TGS Van

Glossary / Sources

Item	Comment / Description / Source
Acquisition	200k units include the acquisition of Vitus (30k), Dewag (11k), Franconia (5k), Südewo (20k), and Gagfah (140k)
Acquisition pipeline: "Analyzed in more detail"	Generally interesting and reviewed by central Acquisitions Department
Acquisition pipeline: "Bids"	Submission of indicative or binding offer following a due diligence
Acquisition pipeline: "Due Diligence"	Thorough review of promising transactions of "Analyzed in more detail" category, including support from respective Vonovia Regions
Acquisition pipeline: "Examined"	Offers received (duplicates excluded)
Acquisition pipeline: "Signed"	Signed purchase agreement after successful bid
Adj. EBITDA Extension	(Income not related to EBITDA Rental or EBITDA Sales) - (Operating expenses not related to EBITDA Rental or EBITDA Sales); 2016E and 2017E estimates are based on the Internal Management Report
Adj. EBITDA Operations	Adj. EBITDA - Adj. EBITDA Sales
Adj. EBITDA Operations margin	Adj. EBITDA Operations / Total rental income
Adj. EBITDA Operations margin (excl. Maintenance)	(Adj. EBITDA Operations + Maintenance expenses) / Total rental income
Adj. EBITDA Operations per average unit	Adj. EBITDA Operations / average number of own apartments in the reporting period
Adj. EBITDA Rental	Rental income - Maintenance expenses - Operating expenses
Adj. EBITDA Sales	IFRS profit on disposal of properties - revaluation (realized) of assets held for sale + revaluation from disposal of assets held for sale - Selling costs
Adj. NAV	Net Asset Value as defined by the European Public Real Estate Association (EPRA) minus goodwill amount
Adj. NAV per share	Net Asset Value as defined by the European Public Real Estate Association (EPRA) minus goodwill amount divided by the number of shares at the end of the reporting period
AFFO	FFO 1 - Capitalized Maintenance
AFFO per share (avg. NOSH)	AFFO / average number of shares in the reporting period (9M 2016: 466.0m; 9M 2015: 383.0m)
AFFO per share (eop NOSH)	AFFO / number of shares at the end of the reporting period (466m shares for both Sep. 30, 2016 and Sep. 30, 2015)
Avg. rent growth forecast CBRE (5yrs)	Average rent growth CAGR 5 years forecast in the current CBRE market valuation.
Cost per €100m (bond issuance)	Legal fees, bookrunner fees, rating agency fee, others
Cost per average unit	(Operating expenses of the Rental segment + Adj. EBITDA Extension/Other) / average number of own apartments in the reporting period
Covenant: ICR	Adj. EBITDA (total) / FFO interest expense (each calculated for the last twelve months)
Covenant: LTV	Total non derivative financial liabilities / total assets (as shown in the balance sheet)

Glossary / Sources

Item	Comment / Description / Source
Covenant: Secured LTV	Total secured non derivative financial liabilities / total assets (as shown in the balance sheet)
Covenant: Unencumbered assets	Total unencumbered assets / total unsecured non derivative financial liabilities
Debt/EBITDA	Net Debt/EBITDA operations; based on internal forecast for 2016 on the basis of 9M actuals
Disposal	42k units sold includes reported sales of 4.1k in 2013, 1.8k in 2014, 12.2k in 2015 and the estimate of around 24k for 2016
EPRA NAV	Net Asset Value as defined by the European Public Real Estate Association (EPRA)
EPRA NAV per share	Net Asset Value as defined by the European Public Real Estate Association (EPRA) divided by the number of shares at the end of the reporting period (466m shares for both Sep. 30, 2016 and Sep. 30, 2015)
EPRA NAV per share 2017 guidance	Based on current EPRA NAV per share forecast for 2016 and then adjusted for estimates: (i) 2017 FFO 1, (ii) disposals, (iii) fair value gain through rent growth, (iv) dividend payout; does not include any impact from yield compression
Fair value of disposal	Carrying amount of properties sold + Revaluation from sale of assets held for sale
Fair value step-up	Income from disposal / fair value of disposal
FFO1 per average unit	FFO 1 / average number of own apartments in the reporting period (9M 2015: 316.7k; 9M 2015: 347.7k)
FFO1 per share	Unless indicated otherwise, FFO per share is calculated on the basis of the number of shares as of the end of the reporting period (466m shares for both Sep. 30, 2016 and Sep. 30, 2015)
FFO1 per share (avg. NOSH)	FFO1 / average number of shares in the reporting period (9M 2016: 466.0m; 9M 2015: 383.0m)
FFO1 per share (eop NOSH)	FFO1 / number of shares at the end of the reporting period (466m shares for both Sep. 30, 2016 and Sep. 30, 2015)
ICR	Adj. EBITDA (total) / FFO interest expense (each calculated for the last twelve months)
Investments	Reported investment amounts for 2013 (€65m), 2014 (€172m) and 2015 (€356m) + estimated volume for 2016 of €470m-€500m
Maintenance capitalization ratio	Capitalized maintenance / (Expenses for maintenance + Capitalized maintenance)
Market costs for new constructions	Average market costs for building German multifamily houses
Number of months until costs are earned by rental income	Based on Forecast 3+9 2016
Pro forma LTV	Source: Internal Management Report
Re-letting rent growth (y-o-y)	(Re-letting rent current period - Re-letting rent prior period) / Re-letting rent prior period
Unencumbered assets	Market value of unencumbered portfolio / total portfolio value
VNA modular construction costs	Actual costs for pilot project for modular construction in Bochum

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 DA'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.