Financial Performance Indicators

Group FFO is key for managing the sustained operational earnings power of our business. It is calculated as follows:

Due to the limited extent to which Vonovia can control the operating results of those companies included using the equity method, the earnings components of these companies have no longer been included in the performance indicators that are relevant for tax purposes, Adjusted EBITDA Total and Group FFO, since the September 30, 2022 reporting date. The corresponding prior-year figures have been adjusted.

The individual EBITDA figures, after adjustments to reflect effects that do not relate to the period, recur irregularly or are atypical for business operation, form the basis for the operational management of the five segments.

The Adjusted EBITDA Rental reflects the operating profit from residential property management. It can be broken down into three central components: Rental segment revenue, expenses for maintenance and operating expenses in the Rental segment.

The latter include all expenses and income that do not relate to expenses for maintenance or rental income in the Rental segment.

In addition to the expenses for maintenance, we make large-scale investments in our real estate portfolios, with a distinction being made between capitalized maintenance and value-enhancing investment in the form of modernization and new construction measures for our own portfolio.

We manage business activities in the Value-add segment using the Adjusted EBITDA Value-add.

We measure the success of the Recurring Sales segment using Adjusted EBITDA Recurring Sales. The Adjusted EBITDA Recurring Sales compares the proceeds generated from the privatization business with the fair values of properties sold and the related costs of sale. In order to disclose profit and revenue in the period in which they are incurred and to report a sales margin, the fair value of properties sold, valued in accordance with IFRS 5, has to be adjusted to reflect realized/unrealized changes in value.

The Development segment is managed via the Adjusted EBITDA Development. In addition to the revenue from the sale of residential properties built in the reporting year to third parties and the associated costs, we also record the fair value that newly constructed properties create for our own portfolio, as well as the associated costs, as a means of measuring the success of the Development segment.

The Care segment includes all activities relating to the management of the Group’s own fully inpatient nursing care facilities and the leasing of nursing care properties to third parties. We manage business activities in the Care segment using segment revenue and the Adjusted EBITDA Care.

The Adjusted EBITDA Total is calculated as the sum total of the Adjusted EBITDA figures for our five segments. It expresses the overall performance of our sustainable operating business before interest, taxes, depreciation and amortization.

As financing is a fundamental component for the success of our business activities, we deduct the current interest expense, adjusted for special circumstances (FFO interest expense), from the Adjusted EBITDA Total. Taking current income taxes and consolidation effects into account, this allows us to calculate Group FFO, the key figure for the sustained earnings power of our business.

When it comes to managing the growth of our company, we also focus on total segment revenue. Total segment revenue includes all income generated by what are now five segments that contribute to value creation, i.e., that cover costs and make an earnings contribution.

In addition to our operational earnings power, the value of our property assets and our modernization and new construction measures are decisive for the further development of our company.

The EPRA Net Tangible Assets (EPRA NTA) is used to manage the company’s value. Our calculations are based on the best practice recommendations of the EPRA (European Public Real Estate Association). The indicator that is relevant from a corporate management perspective is the EPRA NTA per share.

Other non-operating financial key figures include the loan-to-value (LTV) ratio, which is used for monitoring the degree to which debt is covered by the value of the properties, the net-debt/EBITDA ratio, which is used for monitoring the degree to which debt is covered by our sustained operating result and the interest coverage ratio (ICR) , which expresses the extent to which interest is coveed by our sustained operating result.