30 Financial Assets Accounted for Using the Equity Method

As of the reporting date, Vonovia held interests in 26 joint ventures and eight associates (December 31, 2021: 26 joint ventures and seven associates).

The change is due to control of 20.5% of the shares in Adler Group S.A., which were previously held by Aggregate Holdings Invest S.A., passing to Vonovia as part of a debt recovery action on February 22, 2022.

The shares had been pledged to secure a loan that Vonovia had granted on October 7, 2021, to replace a bank loan of Aggregate Holdings Invest S.A.

At the time of the debt recovery action, the shares in the Adler Group had been reported at their market value of € 251.4 million as investments in associates accounted for using the equity method.

As the value of the assets offered in the form of the call option of € 25.3 million and the other loan of € 215.3 million was lower than the value of the shares acquired, taking into account costs and interest this resulted in a negative difference of € 9.4 million, which was disclosed as other operating income in profit or loss.

As current information is not yet available, no adjustments were made in connection with the remeasurement of the assets and liabilities.

As of June 30, 2022, an impairment loss of € 160.6 million was recognized for the shares in the Adler Group as part of an ad hoc impairment test. The development of the Adler Group’s share price was identified as a triggering event within the meaning of IAS 28.

The adjustment based on the equity method, taking into account the pro rata total comprehensive income of the Adler Group of € -152.7 million for the period from March 31, 2022, to September 30, 2022, was made as of December 31. Taking into account the existing investment carrying amount of € 90.8 million, the adjustment was only made in the amount of the investment carrying amount. The value recognized for the non-current equity investment amounts to € 0.0 million as of December 31, 2022.

The impairment loss and the income adjustment were recognized in the consolidated income statement under net income from non-current financial assets accounted for using the equity method.

Vonovia also holds 40% of the non-listed QUARTERBACK Immobilien AG with registered office in Leipzig, which was classed as an associate as of December 31, 2022. QUARTERBACK Immobilien AG is a project developer with operations throughout Germany focusing on the central German region. The investment strengthens Vonovia’s development business.

Vonovia also holds interests in eleven (December 31, 2021: eleven) non-listed financial investments of QUARTERBACK Immobilien AG, with equity interests of between 44% and 50% (QUARTERBACK property companies), that were classified as joint ventures.

The 40% stake in the non-listed QUARTERBACK Immobilien AG and QBI’s eleven non-listed financial investments in which Vonovia holds a stake of between 44% and 50% in each case was adjusted on the basis of the financial information as of December 31, 2022, that was available on the preparation cut-off date.

The total purchase price was definitively allocated to the acquired assets and liabilities as of September 30, 2022 and did not result in any major adjustments.

The at-equity adjustment of the investments in the QUARTERBACK Group results in a negative result of € 8.5 million as of December 31, 2022 (Q4 2021: € 3.7 million).

As of June 30, 2022, an impairment loss of € 120.8 million was recognized for QUARTERBACK Immobilien AG as part of an ad hoc impairment test. The increased cost of capital was identified as a triggering event within the meaning of IAS 28. Due to the final purchase price allocation, the associated reassessment was used for the impairment test as of June 30, 2022. This produced an adjusted impairment loss of € 167.8 million retroactive to June 30, 2022. No further need for impairment was identified as part of the regular impairment test as of December 31, 2022.

The impairment loss identified was recognized in the consolidated income statement under net income from non-current financial assets accounted for using the equity method.

In addition to these investments, Vonovia also holds interests in 21 (December 31, 2021: 21) other entities that are accounted for using the equity method and are currently of minor importance; quoted market prices are not available.

Within other non-current equity investments, a need for impairment of € 2.3 million was identified for one non-current equity investment as part of the regular impairment test as of December 31, 2022.

The following table shows, in aggregated form, the carrying amount and the share of profit and other comprehensive income of these companies:

The interests were adjusted for these entities provided that corresponding financial information was available.

With regard to the other 21 entities, Vonovia has no significant financial obligations or guarantees with respect to joint ventures and associates.