Vonovia SE

Investor Presentation • Aug 2, 2017

H1 2017 Earnings Call August 2, 2017 Rolf Buch, CEO

Dr. A. Stefan Kirsten, CFO

H1 2017 Highlights

Built-in organic growth dynamics continue

• Accelerated organic rent growth of 3.7% y-o-y (prior year: 2.8%)
• Adj. EBITDA Operations up 8.9% y-o-y.
• FFO 1 per share up 15.7% y-o-y (18.1% on average NOSH).

Execution of 2017 investment program running at full speed

• 98% of projects for €730m target investment volume completed or committed.
• Growing pipeline for space creation projects to achieve annual run rate of ~2,000 new units p.a.

Half-year valuation supports positive momentum

• Valuation exercise comprised ca. 2/3 of portfolio (20 largest cities plus five additional locations).
• €1.5bn l-f-l value increase (+5.2% overall and +7.1% for the sub-portfolio that was revalued).

Guidance for 2017 confirmed

• Operational integration of conwert completed.
• Performance of first six months fully confirms our expectations for the full year.
• Final guidance for 2017 and initial guidance for 2018 with 9M results in November.

Built-in Organic FFO 1 Growth Continues in H1

• The average portfolio size was similar y-o-y.
• Organic rent growth, better average portfolio quality and increased contribution from Value-add Business drove 8.9% Adj. EBITDA Operations growth in spite of temporary additional cost load from conwert.
• 15.7% FFO 1 per share growth despite slight dilution from conwert and scrip dividend.

		H1 2017	H1 2016	Delta
Average number of residential sqm	`000	22,226	21,938	+1.3%
Average number of residential units	#	355,570	351,720	+1.1%
Organic rent growth	%	3.7	2.8	+0.9pp
In-place rent (eop)	€/month/sqm	6.12	5.89	+3.9%
Vacancy rate (eop)	%	2.9	2.8	+0.1pp
Rental income	€m	833.2	774.7	+7.6%	+€58.5m
Maintenance expenses	€m	-127.3	-119.0	+7.0%
Operating expenses	€m	-132.4	-120.1	+10.2%
Adj. EBITDA Rental	€m	573.5	535.6	+7.1%	+€37.9m
Adj. EBITDA Value-add business	€m	45.6	26.0	+75.4%
Adj. EBITDA Operations	€m	607.6	558.1	+8.9%	+€49.5m
FFO interest expense	€m	-138.0	-162.8	-15.2%
Current income taxes FFO 1	€m	-11.9	-7.5	+58.7%
FFO 1	€m	457.7	387.8	+18.0%	+€69.9m
FFO 1 per share (eop NOSH)	€	0.96	0.83	+15.7%
FFO 1 per share (avg. NOSH)	€	0.98	0.83	+18.1%

Accelerating Rent Growth Momentum

Rent growth drivers (last 12M)	H1 2017	H1 2016	Delta
Sitting tenants (incl. subsidized rents)	1.2%	1.0%	+20 bps
New lettings	0.5%	0.7%	-20 bps
Subtotal market-driven rent growth	1.7%	1.7%	---
Modernization	1.9%	1.1%	+80 bps
Subtotal l-f-l rent growth	3.6%	2.8%	+80 bps
Space creation	0.1%	0.0%	+10 bps
Subtotal organic rent growth	3.7%	2.8%	+90 bps
Portfolio management (+ acquisitions ./. sales)	0.2%	2.8%	-260 bps
Total rent growth	3.9%	5.6%	-170 bps

• Continuously sustainable rent growth contribution from market rent growth plus accelerated rent growth from modernization with an increase by 80 bps y-o-y.
• 3.8-4.0% organic rent growth for 2017 partly driven by ca. €470m investment volume in 2016. This year's investment volume of ca. €730m is expected to push organic rent growth above 4% starting in 2018.

Positive rent growth trajectory
	2013	2014	2015	2016	2018+ 2017 (E) (E)
Market driven	1.6%	1.6%	1.7%	1.5%
Modernization	0.4%	0.9%	1.2%	1.8%
Space creation	---	---	---	---
Organic rent growth	1.9%	2.5%	2.9%	3.3%	3.8% - >4% 4.0%

Continued EBITDA Expansion

• Increasing momentum in Value-add Business lifts EBITDA Rental growth of 7.1% to an EBITDA Operations growth of 8.9% y-o-y.
• EBITDA Operations margin expansion (excl. maintenance) continues with 100 bps in H1 2017.

€m (unless indicated otherwise)	H1 2017	H1 2016	Delta
Rental income	833.2	774.7	+7.6%
Maintenance expenses	-127.3	-119.0	+7.0%
Operating expenses	-132.4	-120.1	+10.2%
Adj. EBITDA Rental	573.5	535.6	+7.1%
Income	483.8	333.6	+45.0%
of which external	80.1	56.7	+41.3%
of which internal	403.7	276.9	+45.8%
Operating expenses	-438.2	-307.6	+42.5%
Adj. EBITDA Value-add Business	45.6	26.0	+75.4%
Adj. EBITDA Other1	-11.5	-3.5	+228.6%
Adj. EBITDA Operations	607.6	558.1	+8.9%

¹ Mainly consolidation

Smooth Maturity Profile with Diverse Funding Mix

Debt structure	KPIs	June 30, 2017	Target
3-4 years 5-6 years	LTV	43.2%	Mid-to low forties
16% 13%	Unencumbered assets in %	61.7%	≥50%
1-2 years 12% 7-8 years	Debt/EBITDA3	11.2x
14% Subsidized Modernization	Total debt / total assets	40%	Ongoing
Debt 9-10 years 2%	Fixed/hedged debt ratio	97%	optimization with most
7% Mortgages 11-12 years	Global ICR (YTD)	4.7x	economic
12% 3% Structured	Financing cost	2.1%	funding
Equity Hybrid Debt Hybrid Loans 7% 5% 9% Bonds (years indicate maturity)	Weighted avg. maturity	6.7 years

¹ Average financing cost of debt maturing in the relevant year. ² Weighted avg. financing cost excl. Equity Hybrid. Including Equity Hybrid the avg. interest rate of debt maturing in 2021 is 3.7%. ³ Net Debt as of June 30 over H1 EBITDA Operations annualized.

LTV Well within Target Range Debt/EBITDA Multiple of 11.2x

LTV down to 43.2% and well within target range of 40%-45%.

€m (unless indicated otherwise)	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016
Non-derivative financial liabilities	14,257.6	14,435.3	13,371.0
Foreign exchange rate effects	-137.2	-194.8	-209.9
Cash and cash equivalents	-378.1	-1,007.9	-1,540.8
Net debt	13,742.3	13,232.6	11,620.3
Sales receivables	-180.0	-144.4	-135.4
Additional loan amount for outstanding acquisitions	---	275.0	---
Adj. net debt	13,562.3	13,363.2	11,484.9
Fair value of real estate portfolio	30,830.2	29,607.6	27,115.6
Shares in other real estate companies	564.6	520.4	503.1
Adj. fair value of real estate portfolio	31,394.8	30,128.0	27,618.7
LTV	43.2%	44.4%	41.6%

Debt/EBITDA multiple is net debt as of June 30 over H1 EBITDA Operations annualized.

FFO 1 per Share +15.7%

• Driven by better operational performance and lower interest expenses, FFO 1 per share was up 15.7% y-o-y for eop NOSH and up 18.1% for avg. NOSH.
• Number of shares outstanding increased from 466.0m to 476.5m (+2.2%) as a result of the scrip dividend and the conwert acquisition.¹

€m (unless indicated otherwise)	H1 2017	H1 2016	Delta
Adj. EBITDA Operations	607.6	558.1	8.9%
FFO interest expense	-138.0	-162.8	-15.2%
Current income taxes FFO 1	-11.9	-7.5	58.7%
FFO 1	457.7	387.8	18.0%
of which attributable to Vonovia's shareholders	431.1	362.3	19.0%
of which attributable to Vonovia's hybrid capital investors	20.0	20.0	-
of which attributable to non-controlling interests	6.6	5.5	20.0%
Capitalized maintenance	-30.5	-29.1	4.8%
AFFO	427.2	358.7	19.1%
Current income taxes FFO 2	-20.1	-25.0	-19.6%
Adjusted EBITDA Sales	44.3	46.5	-4.7%
FFO 2	481.9	409.3	17.7%
FFO 1 € / share (eop NOSH)	0.96	0.83	15.7%
FFO 1 € / share (avg. NOSH)	0.98	0.83	18.1%

¹ 8.6m additional new shares were created in July in the context of the GAGFAH merger.

Portfolio Valuation Update

• Valuation as of June 30 comprised the 20 largest cities of our portfolio, plus five additional locations, representing ca. 2/3 of the entire portfolio fair value. All other locations and values were left unchanged and adjusted only for capitalization.
• Total value uplift of €1.5bn (5.2%).
• Average portfolio FV of €1,341/sqm with an in-place multiple of 18.5x.
• Especially the valuation movement in Leipzig confirms our view on the conwert properties.

FV growth driver	Value uplift
	(%)	(€m)
Yield compression	2.8%	830
Investments	0.5%	150
Performance	1.3%	393
Fair value uplift of properties reviewed	4.7%	1,373
Investments into properties outside review	0.5%	140
Total fair value uplift	5.2%	1,513

¹ l-f-l valuation uplift compared to Dec. 31, 2016, excluding conwert, excluding Vienna.

Adj. NAV per Share Up 7.6% in H1 2017

Driven by the operating performance, the inclusion of conwert and the H1 valuation the Adj. NAV per share is up 7.6% in the first six months in spite of the 2.2% increase in the number of shares outstanding.

€m (unless indicated otherwise)	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016
Equity attributable to Vonovia's shareholders	13,368.0	12,706.5	12,467.8
Deferred taxes on investment properties and assets held for sale	5,307.9	4,827.4	4,550.3
Fair value of derivative financial instruments1	39.0	29.0	44.4
Deferred taxes on derivative financial instruments	-12.1	-14.3	-15.4
EPRA NAV	18,702.8	17,548.6	17,047.1
Goodwill	-2,931.8	-2,931.8	-2,718.9
Adj. NAV	15,771.0	14,616.8	14,328.2

EPRA NAV €/share	39.25	37.43	36.58
Adj. NAV €/share	33.10	31.18	30.75

¹ Adjusted for effects from cross currency swaps.

Investment Program well on Track

• Fully on track to execute 2017 investment program at an average yield on cost of ~7% unlevered.
• 98% of projects committed or already completed.

Note: Numbers include projects kicked off in 2016.

Ramping Up Space Creation

• The bottleneck is not availability of projects, building capacity or financing but construction permits including all preliminary approvals necessary.
• By way of planning, applying for building permits and doing construction work for different projects in parallel, Vonovia is developing a pipeline to ensure a steady flow of project completions going forward to achieve a target run rate of 2,000 new apartments p.a.

Vonovia's strategy: planning, applying for construction permits and building a multitude of projects in parallel

Note: indicated durations are averages based on Vonovia's experience and can vary between different projects.

Concept

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

Economics

• NAV does not account for Vonovia's Value-add Business.
• Applying the impairment test WACC¹ to the 2017E Adj. EBITDA Value-add Business translates into an additional value of ~€5.1 per share (~16% on top of Adj. NAV).

Penetration
Multimedia	ca. 75%
Smart metering	ca. 15%
Residential environment	ca. 20%
Craftsmen VTS	ca. 70% (maintenance) ca. 20% (modernization) target is around 70% to allow for enough flexibility in the volumes and to enable continuous benchmarking to market prices

Sales – Steady Cash Flow at Attractive Margins

• Overall sales volume lower than in prior-year period mostly as a result of portfolio transaction with LEG including privatizations in H1 2016.
• Non-core / Non-strategic sales include a relatively large share of commercial properties from conwert portfolio.

	PRIVATIZATION			NON-CORE / NON STRATEGIC	TOTAL
€m (unless indicated otherwise)	H1 2017	H1 2016	H1 2017	H1 2016	H1 2017	H1 2016
No. of units sold	1,160	1,441	3,324	17,694	4,484	19,135
Income from disposal	142.7	133.3	559.2	717.2	701.9	850.5
Fair value of disposal	-108.7	-99.1	-536.1	-693.1	-644.8	-792.2
Adj. profit from disposal	34.0	34.2	23.1	24.1	57.1	58.3
Fair value step-up (%)	31.3%	34.5%	4.3%	3.5%

Selling costs	-12.8	-11.8
Adj. EBITDA Sales	44.3	46.5

Guidance Unchanged and Confirmed

• Half way into the year we can fully confirm the 2017 guidance.
• Final 2017 guidance and initial 2018 guidance with 9m results in November.

	2016 Actuals	2017 Guidance (March 2017, excl. conwert)	2017 Guidance (May 2017, incl. conwert)	2017 Guidance (Aug. 2017, incl. conwert)
Organic rent growth (eop)	3.3%	3.5%-3.7%	3.8%-4.0%	 3.8%-4.0%
Vacancy (eop)	2.4%	<2.5%	<2.5%	 <2.5%
Rental Income (€m)	1,538.1	1,530-1,550	1,660-1,680	 1,660-1,680
FFO1 (€m)	760.8	830-850	900-920	 900-920
FFO1 (€/share)	1.63	1.78-1.82	~1.88	 1.86 – 1.90
Maintenance (€m)	320.1	~340	~340	 ~340
Modernization & Investments (€m)	472.3	700-730	~730	 ~730
Privatization (#)	2,701	~2,300	~2,300	 ~2,300
FV step-up (Privatization)	36.2%	~35%	~30%	 ~30%
Non-core (#)	23,930	opportunistic	opportunistic	 opportunistic
FV step-up (Non-Core)	5.4%	>0%	>0%	 >0%
Dividend/share	€1.12	~70% of FFO 1	~70% of FFO1	 ~70% of FFO1

Wrap-up

Built-in organic growth momentum continues

Investment program 2017 running at full steam

Half-year valuation results in attractive valuation gain

Guidance for 2017 fully confirmed

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
	Aug 2	Interim results 6M 2017
	Sep 7	Roadshow (Denver)
	Sep 8	Roadshow (Atlanta)
	Sep 13	BoAML Global Real Estate Conference (NYC)
	Sep 18	Berenberg / GS German Corporate Conference (Munich)
	Sep 19	Baader Investment Conference (Munich)*
	Sep 21	Roadshow (Hamburg)*
	Sep 27	Roadshow (Warsaw)*
	Sep 29	Societe Generale The Pan-European RE Conference (London)
	Nov 8	Interim results 9M 2017
	Nov 13-16	Management Roadshow (Europe)
	Nov 28	UBS Global Real Estate CEO/CFO Conference (London)
	Dec 1	Societe Generale The Premium Review Conference (Paris)
	Dec 5	Berenberg European Corporate Conference (Pennyhill)*
	Dec 11	HSBC Global Real Estate Conference (Cape Town)

Appendix

Attractive Dividend Policy

1 Rental income + EBITDA Value-add Business and Other; excluding sales effects. ² Midpoint 2017 guidance

Proven and Unchanged Strategy since IPO

VONOVIA
---------

Reputation & Customer Satisfaction
al n o 1 diti Tra	Property Management	Systematic optimization of operating performance and core business productivity through leveraging scaling effects High degree of standardization and industrialization throughout the entire organization
2	Financing	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
3	Portfolio Management	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 4 v o n n I	Value-add Business	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

		H1 2017	H1 2016	Delta
Average number of residential sqm	`000	22,226	21,938	+1.3%
In-place rent (eop)	€/month/sqm	6.12	5.89	+3.9%
Organic rent growth	%	3.7	2.8	0.9pp
Vacancy rate (eop)	%	2.9	2.8	+0.1pp
Rental income	€m	833.2	774.7	+7.6%
Cost per average unit	€	276	277	-0.4%
Adj. EBITDA Operations	€m	607.6	558.1	+8.9%
Rental	€m	573.5	535.6	+7.1%
Value-add Business	€m	45.6	26.0	+75.4%
Other (i.e. consolidation)	€m	-11.5	-3.5	+>100%
FFO 1	€m	457.7	387.8	+18.0%
FFO 1 per share (eop NOSH)	€	0.96	0.83	+15.7%
FFO 1 per share (avg. NOSH)	€	0.98	0.83	+18.1%
AFFO	€m	427.2	358.7	+19.1%
Adj. EBITDA Sales	€m	44.3	46.5	-4.7%
Adj. EBITDA (Total)	€m	651.9	604.6	+7.8%
FFO 2	€m	481.9	409.3	+17.7%
		Jun. 30, 2017	Dec. 31, 2016	Delta
Fair value of real estate portfolio	€m	30,830.2	27,115.6	+13.7%
EPRA NAV	€/share	39.25	36.58	+7.3%
Adj. NAV	€/share	33.10	30.75	+7.6%
LTV	%	43.2	41.6	-4.2pp

Pro-active Portfolio Management Clustering

Strategic units of conwert portfolio have initially all been included

in Operate and will be reclassified to UB and OA in the context of

96% of total fair value in Strategic and Privatization clusters.

the regular annual portfolio clustering in the fall.

June 30, 2017	Residential Units	In-place rent	Vacancy rate	Fair value	Fair value
Operate	105,972	(€/sqm) 6.29	(%) 2.8	(€bn) 9.7	(%) 31%
Upgrade Buildings (UB)	125,064	6.03	2.7	10.1	33%
Optimize Apartments (OA)	89,275	6.25	2.1	8.2	27%
Subtotal Strategic Clusters	320,311	6.18	2.6	27.9	91%
Privatize	16,180	6.01	4.3	1.5	5%
Non-strategic	8,862	4.85	8.9	0.3	1%
Non-core	5,259	4.99	8.2	0.3	1%
Total Germany	350,612	6.12	2.9	30.1	98%
Austria	2,203	6.24	3.1	0.6	2%
Total Residential Portfolio	352,815	6.12	2.9	30.7	100%

Fair value of the developed land excluding €156.0 million for undeveloped land, inheritable building rights granted and other.

All Strategic Markets Show Upward Potential

	Fair Value						In-place rent
Regional Market	(€m)	(€/sqm)	Residential units	Living area ('000 sqm)	Vacancy (%)	Total (p.a., €m)	Residential (p.a., €m)	(€/sqm)	Organic rent growth (%)	Multiple (in-place rent)	Average rent growth forecast CBRE (5 yrs) (%)	Average rent growth (%) from Optimize Apartments
Berlin	4,625	1,820	38,582	2,444	1.7	189	179	6.21	3.2	24.4	3.3	45.5
Rhine Main Area (Frankfurt, Darmstadt, Wiesbaden)	3,196	1,757	28,052	1,789	1.8	164	159	7.54	3.9	19.5	3.2	40.3
Rhineland (Cologne, Düsseldorf, Bonn)	3,105	1,464	30,756	2,063	3.1	167	159	6.65	4.3	18.5	2.8	29.4
Dresden	2,697	1,153	38,603	2,196	2.5	156	146	5.67	5.5	17.3	3.6	35.2
Southern Ruhr Area (Dortmund, Essen, Bochum)	2,678	963	44,528	2,721	3.3	181	174	5.52	4.1	14.8	2.1	29.1
Hamburg	1,787	1,648	16,584	1,051	2.2	87	83	6.67	3.7	20.5	3.0	38.6
Munich	1,692	2,564	9,752	642	0.8	62	58	7.60	3.4	27.3	4.5	46.5
Stuttgart	1,592	1,717	14,235	896	1.8	82	78	7.42	1.9	19.3	2.8	38.4
Northern Ruhr Area (Duisburg, Gelsenkirchen)	1,326	774	27,281	1,693	4.1	105	102	5.24	3.4	12.6	1.7	22.9
Hanover	1,100	1,236	13,826	875	3.0	63	61	6.01	3.2	17.3	2.7	34.1
Kiel	928	1,103	13,983	811	1.8	56	54	5.60	3.0	16.5	2.2	35.9
Bremen	854	1,147	11,921	723	3.7	47	44	5.34	1.8	18.2	2.9	33.6
Leipzig	680	1,096	9,171	587	4.2	41	38	5.69	1.6	16.5	2.4	21.7
Westphalia (Münster, Osnabrück)	613	968	9,651	625	2.2	41	40	5.46	2.8	14.9	2.5	30.9
Freiburg	508	1,816	4,055	277	1.8	23	22	6.83	3.4	22.1	3.7	45.6
Other Strategic Locations	1,967	1,261	24,012	1,524	2.9	115	111	6.22	4.4	17.1	3.1	34.6
Total Strategic Locations	29,349	1,361	334,992	20,916	2.6	1,582	1,508	6.17	3.7	18.6	2.9	34.4

Note: Difference between number of resi units in strategic locations and number of resi units in strategic clusters is due to privatization units that are included in the strategic locations but not in the strategic clusters.

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

Reconciliation IFRS Profit to FFO

€m (unless indicated otherwise)	H1 2017	H1 2016	Delta
IFRS PROFIT FOR THE PERIOD	1,064.6	147.9	+>100%
Financial result	148.6	276.1	-46.2%
Income taxes	588.0	109.9	+>100%
Depreciation and amortization	14.9	10.0	+49.0%
Income from fair value adjustments of investment properties	-1,164.7	---	---
= EBITDA IFRS	651.4	543.9	+19.8%
Non-recurring items	46.3	49.1	-5.7%
Total period adjustments from assets held for sale	-32.9	21.1	->100%
Income from investments in other real estate companies	-12.9	-9.5	->100%
= ADJUSTED EBITDA	651.9	604.6	+7.8%
Adjusted EBITDA Sales	-44.3	-46.5	-4.7%
= ADJUSTED EBITDA OPERATIONS	607.6	558.1	+8.9%
Interest expense FFO	-138.0	-162.8	-15.2%
Current income taxes FFO 1	-11.9	-7.5	+58.7%
= FFO 1	457.7	387.8	+18.0%
Capitalized maintenance	-30.5	-29.1	+4.8%
= AFFO	427.2	358.7	+19.1%
Current income taxes FFO2	-20.1	-25.0	-19.6%
FFO 2 (FFO 1 incl. Adjusted EBITDA Sales/current income taxes Sales)	481.9	409.3	+17.7%
FFO 1 per share in € (eop NOSH)	0.96	0.83	+15.7%
AFFO per share in € (eop NOSH)	0.90	0.77	+16.5%
Number of shares (million) eop	476.5	466.0	+2.2%

IFRS P&L

€m (unless indicated otherwise)	H1 2017	H1 2016	Delta
Income from property letting	1,171.6	1,100.0	6.5%
Other income from property management	20.8	19.4	7.2%
Income from property management	1,192.4	1,119.4	6.5%
Income from disposal of properties	701.9	850.5	-17.5%
Carrying amount of properties sold	-664.9	-830.4	-19.9%
Revaluation of assets held for sale	53.1	17.0	>100%
Profit on disposal of properties	90.1	37.1	>100%
Net income from fair value adjustments of investment properties	1,164.7	-
Capitalized internal expenses	199.5	125.0	59.6%
Cost of materials	-569.5	-506.6	12.4%
Personnel expenses	-207.6	-184.6	12.5%
Depreciation and amortization	-14.9	-10.0	48.4%
Other operating income	51.5	49.8	3.4%
Other operating expenses	-124.4	-106.4	17.0%
Financial income	43.7	21.6	>100%
Financial expenses	-172.9	-287.5	-39.9%
Earnings before taxes	1,652.6	257.8	>100%
Income taxes	-588.0	-109.9	>100%
Profit for the period	1,064.6	147.9	>100%
Attributable to:
Vonovia's shareholders	993.2	110.0	>100%
Vonovia's hybrid capital investors	14.8	14.8	0.0%
Non-controlling interests	56.6	23.1	>100%
Earnings per share (basic and diluted) in €	2.12	0.24	>100%

IFRS Balance Sheet (1/2 – Total Assets)

€m (unless indicated otherwise)	Jun. 30, 2017	Dec. 31, 2016	Delta
Assets
Intangible assets	2,957.8	2,743.1	7.8%
Property, plant and equipment	130.5	115.7	12.8%
Investment properties	30,495.7	26,980.3	13.0%
Financial assets	648.4	585.9	10.7%
Other assets	109.4	15.2	>100%
Deferred tax assets	24.9	19.6	27.0%
Total non-current assets	34,366.7	30,459.8	12.8%
Inventories	5.8	5.0	16.0%
Trade receivables	220.7	164.4	34.2%
Financial assets	102.1	153.2	-33.4%
Other assets	165.1	102.7	60.8%
Income tax receivables	28.4	34.6	-17.9%
Cash and cash equivalents	378.1	1,540.8	-75.5%
Assets held for sale	254.1	61.6	>100%
Total current assets	1,154.3	2,062.3	-44.0%
Total assets	35,521.0	32,522.1	9.2%

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

€m (unless indicated otherwise)	Jun. 30, 2017	Dec. 31, 2016	Delta
Equity and liabilities
Subscribed capital	476.5	466.0	2.3%
Capital reserves	5,673.4	5,334.9	6.3%
Retained earnings	7,136.3	6,665.4	7.1%
Other reserves	81.8	1.5	>100%
Total equity attributable to Vonovia's shareholders	13,368.0	12,467.8	7.2%
Equity attributable to hybrid capital investors	1,021.4	1,001.6	2.0%
Total equity attributable to Vonovia's shareholders and hybrid capital investors	14,389.4	13,469.4	6.8%
Non-controlling interests	885.7	419.0	>100%
Total equity	15,275.1	13,888.4	10.0%
Provisions	595.4	607.9	-2.1%
Trade payables	0.6	1.3	-53.8%
Non derivative financial liabilities	11,771.1	11,643.4	1.1%
Derivatives	18.0	19.1	-5.8%
Liabilities from finance leases	94.5	94.7	-0.2%
Liabilities to non-controlling interests	4.9	9.9	-50.5%
Other liabilities	80.8	83.3	-3.0%
Deferred tax liabilities	4,492.6	3,769.5	19.2%
Total non-current liabilities	17,057.9	16,229.1	5.1%
Provisions	360.8	370.8	-2.7%
Trade payables	123.5	138.8	-11.0%
Non derivative financial liabilities	2,486.5	1,727.6	43.9%
Derivatives	29.9	57.5	-48.0%
Liabilities from finance leases	11.2	4.5	>100%
Liabilities to non-controlling interests	0.4	2.7	-85.2%
Other liabilities	175.7	102.7	71.1%
Total current liabilities	3,188.0	2,404.6	32.6%
Total liabilities	20,245.9	18,633.7	8.7%
Total equity and liabilities	35,521.0	32,522.1	9.2%

Corporate Investment grade rating

Rating agency	Rating	Outlook	Last Update
Standard & Poor's	BBB+	Stable	06. Sep 16

Bond ratings

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%1	02 Oct 2017	BBB+
Bond 004 (USD-Bond)	10 years 5.000%	US25155FAB22	USD 250m	98.993%	4.580%1	02 Oct 2023	BBB+
Bond 005 (EMTN)	8 years 3.625%	DE000A1HRVD5	€ 500m	99.843%	3.625%	08 Oct 2021	BBB+
Bond 006 (Hybrid)	60 years 4.625%	XS1028959671	€ 700m	99.782%	4.625%	08. Apr 2074	BBB
Bond 007 (EMTN)	8 years 2.125%	DE000A1ZLUN1	€ 500m	99.412%	2.125%	09 July 2022	BBB+
Bond 008 (Hybrid)	perpetual 4%	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 June 2022	BBB+
Bond 011B (EMTN)	10 years 1.500%	DE000A182VT2	€ 500m	99.165%	1.500%	10 June 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+

¹ EUR-equivalent Coupon

Bond KPIs	Covenant	Level	Jun. 30, 2017
	LTV
	Total Debt / Total Assets	<60%	40%
	Secured LTV	<45%	10%
	Secured Debt / Total Assets
	ICR	>1.80x	4,1x
	Last 12M EBITDA / Last 12M Interest Expense
	Unencumbered Assets	>125%	224%
	Unencumbered Assets / Unsecured Debt

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

Conservative Valuation

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

Note: VNA 2010 – 2014 refers to Deutsche Annington Portfolio at the time; construction costs excluding land.

Acquisitions – Opportunistic but Disciplined

Historical Key Figures (1/2)

Financial Key Figures (€m, unless stated otherwise)	H1 2017	2016	2015	2014	2013
Rental income	833.2	1,538.1	1,414.6	789.3	728.0
Adjusted EBITDA Operations	607.6	1,094.0	957.6	503.4	442.4
Adjusted EBITDA Rental	573.5	1,046.2	924.4	482.6	433.0
Adjusted EBITDA Value-add Business	45.6	57.0	37.6	23.6	10.5
Adjusted EBITDA Other	-11.5	-9.2	-4.4	-2.8	-1.1
Income from disposal of properties	701.9	1,227.9	726.0	287.3	353.5
Adjusted EBITDA Sales	44.3	92,5	71.1	50.1	27.7
Adjusted EBITDA	651.9	1,186.5	1,028.7	553.5	470.1
EBITDA IFRS	651.4	1,083.7	838.4	500.3	431.0
FFO 1	457.7	760.8	608.0	286.6	223.5
thereof attributable to Vonovia shareholders	431.1	713.4	555.5	275.1	218.4
thereof attributable to Vonovia hybrid capital investors	20.0	40.0	33.0	-	-
thereof attributable to Non-controlling interests	6.6	7.4	19.5	11.5	5.1
FFO 2	481.9	823.8	662.1	336.7	251.2
AFFO	427.2	689.2	520.5	258.3	203.5
FFO 1 per share in €	0.96	1.63	1.30	1.00	0.95
Income from fair value adjustments of investment properties	1,164.7	3,236.1	1,323.5	371.1	553.7
EBT	1,652.6	3,859.8	1,734.5	589.1	689.6
Profit for the period	1,064.6	2,512.9	994.7	409.7	484.2
Cash flow from operating activities	475.4	828.9	689.8	453.2	259.6
Cash flow from investing activities	- 1,179.0	416.4	-3,239.8	-1,177.9	171.3
Cash flow from financing activities	-459.1	-2,812.4	4,093.1	1,741.7	-353.2
Maintenance and modernization	456.4	792.4	686.3	345.5	228.4
thereof for maintenance expenses and capitalized maintenance	158.8	320.1	330.7	173.8	157.6
thereof for modernization	297.6	472.3	355.6	171.7	70.8

The key figures of prior years have been adjusted to match the definitions of the 2016 fiscal year. The key figures per share are based on the shares carrying dividend rights on the corresponding reporting date. Values for 2013 and 2014 are TERP-adjusted.

Historical Key Figures (2/2)

Key Balance Sheet Figures (€m, unless stated otherwise)	Jun. 30, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec 31, 2014	Dec 31, 2013
Fair value of real estate portfolio	30,830.2	27,115.6	24,157.7	12,759.1	10,326.7
Adjusted NAV	15,771.0	14,328.2	11,273.5	6,472.0	5,123.4
Adjusted NAV per share in €	33.10	30.75	24.19	22.67	21.74
LTV (%)	43.2	41.6	46.9	22.67	48.1
Non-Financial Key Figures	H1 2017	2016	2015	2014	2013
Number of units managed	416,282	392,350	397,799	232,246	201,737
thereof own apartments	352,815	333,381	357,117	203,028	175,258
thereof apartments owned by others	63,467	58,969	40,682	29,218	26,479
Number of units bought	23,745	2,815	168,632	31,858	0
Number of units sold	4,484	26,631	15,174	4,081	6,720
thereof Privatize	1,160	2,701	2,979	2,238	2,576
thereof Non-Core	3,324	23,930	12,195	1,843	4,144
Vacancy rate (in %)	2.9	2.4	2.7	3.4	3.5
Monthly in-place rent in €/sqm	6.12	6.02	5.75	5.58	5.40
Monthly in-place rent organic growth (%)	3.7	3.3	-	-	-
Number of employees	8,257	7,437	6,368	3,850	2,935
EPRA Key Figures	H1 2017	2016	2015	2014	2013
EPRA NAV	18,702.8	17,047.1	13,988.2	6,578.0	5,123.4
EPRA NAV per share in €**	39.25	36.58	30.02	23.04	21.74
EPRA NNNAV		12,034.4	9,739.8	-	-
EPRA Earnings		448.5	329.2	-	-
EPRA Net Initial Yield in %		4.1	4.5	-	-
EPRA "topped-up" Net Initial Yield in %		4.1	4.5	-	-
EPRA Vacancy rate in % EPRA Cost Ratio (incl. direct vacancy costs) in %		2.2 28.4	2.5 31.9	3.0 -	3.1 -
EPRA Cost Ratio (excl. direct vacancy costs) in %		27.0	30.2	-	-

The key figures of prior years have been adjusted to match the definitions of the 2016 fiscal year. The key figures per share are based on the shares carrying dividend rights on the corresponding reporting date. Values for 2013 and 2014 are TERP-adjusted.

H1 2017 Earnings Call

Vacancy Rates – Annual Comparison

Illustration of Germany at Night

Illustration of Germany at Night

Note: Vonovia Strategic Portfolio

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

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

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.

Source: Factset, company data

Liquid Large-cap Stock

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

German Residential – Safe Harbor and Low Risk

Rental regulation safeguards high degree of stability

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

Sources: Federal Statistics Office, GdW (German Association of Professional Homeowners), REIS, BofA Merrill Lynch Global Research; 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

H1 2017 Earnings Call

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

New supply falls short of demand

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

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)

• While market prices are affected by the general interest levels there is no significant correlation.
• Other factors such as supply/demand imbalance, rental regulation, market rent growth, location of assets etc. outweigh the impact of interest rates when it comes to pricing residential real estate.
• The steep decline in interest rates (down by 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

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 Mid point guidance.

H1 2017 Earnings Call page 47

Frankfurt

Frankfurt

Frankfurt

Essen

Impressions

Dortmund Dresden

Dresden

Dresden

Impressions

Dortmund Essen

Essen Dortmund

Optimize Apartment

Optimize Apartment

Upgrade Building

H1 2017 Earnings Call page 53

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

Before After

H1 2017 Earnings Call

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

Neighbourhood Development "Eltingviertel"

H1 2017 Earnings Call

VTS Van

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

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

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

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

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

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

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

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

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

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

Tables and diagrams may include rounding effects.