Thank you, Martin and welcome to our earnings call. Your hosts today are CEO, Rolf Buch and CFO, Philip Grosse.

I assume you have all had a chance to download the presentation. In case you have not, please go to our website and you will find it under latest publications.

If you have not yet had a chance to look at the presentation, you will find that it has two parts. The first one is a bit of a broader picture and the second one is what I think is a comprehensive set of results.

Rolf and Philip will now lead you through this presentation. And of course, we will be happy to answer your questions afterwards.

And with that, let me hand you over to Rolf.

Thank you, Rene and also from my side a warm welcome to all of you. Rene said already, we have a part of broader view and it is the reason, because it’s now we are starting our tenth year of existing on the stock market and our industry follows not only quarterly or yearly results, but a longer term focus and longer term trends.

That’s why I think it is helpful to understand what happened in the last years. Since our IPO in 2013, FFO per share was growing with a CAGR of 13%.

NTA or former NAV per share was growing within CAGR of 18%. This gives actually a 15% annual return or a 7.5% average organic return if you exclude the yield compression per annum.

And this I think is the first and very important message in the future, this trend I see no reason why it should change in the future, even if we are not giving you a long-term guidance. Today, we see a very undemanding equity valuation.

We have – we have seen at the moment the highest discount to NTA ever, which is wider than in the COVID-19 low point, which is above 30%. We see the highest FFO yield since IPO, which is 5.8% and we see a higher dividend yield than in real estate Europe average.

I often read that Vonovia is a bond proxy. I don’t think this is true.

We are an operating company. So looking only on rental yields is probably not correct.

It is better to look on FFO yields. And the gap between the 10-year bond and the FFO yield is more than 600 basis points.

So, also this is a record high number. It seems to me in the capital markets to be hardwired that there is a link between interest rates and values.

And we have argued for the last 9 years that there might be different drivers. For example, the value is driven by the imbalance between supply and demand for a basic product.

The economical rationale is clear. If there is more demand than supply, normally, prices are not decreasing, but increasing.

And this is what we have seen in the last years. And there is a second element.

We see significant construction cost inflation. And therefore, the new buildings will be more expensive.

So, there is no reasoning for widening the gap between new buildings and existing buildings. So, it is clear that as new buildings get more expensive, also existing buildings will get more expensive.

See, if you all – if you buy all of this, you still have not valued the value of the platform. The implied fee for asset and property management implied in our company is 0.2% of gross asset value, while others like fund operators or some peers, charge only 0.5% for asset management only or between 0.5% and 1% in general.

So, I think this is a lot of good reasons to buy Vonovia, because we agree with a lot of analysts saying this stock is, in the moment, very cheap. To go more in detail on this analysis, let’s start with Page 4.

We have delivered and you can see that this is a constant call. It was not a hockey stick.

We have delivered a 13% CAGR of FFO per share and dividend per share in the last years. And the trend here is very clear, it will continue actually growing like with all in the future.

So the same picture on values. Our NTA has grown by 17% CAGR since IPO.

And in light of the ongoing favorable fundamentals and organic proposed creation, we have to accept further value growth in the coming years. And again I repeat, there is no reason why the trend should change.

Let’s move on the second point, yields on Page 5. The share price is one thing.

But of course, this is impacted not only by our performance, but by macroeconomics and political news flow. Let’s ignore the overall capital markets perception for a moment and look at what we can influence as management.

Vonovia delivered a combined organic annual return via dividend yield and organic value growth of 7.5%. If you include yield compression, it was even closer to 15%.

So, organic growth potential is embedded in the gap between the regulated rent and the long-term upside trajectory based on relaxing rents and rents for new construction. Also, this will go on like in the past.

On to Page 6, in the light of the continuous growth in the yields that we have delivered, the current equity valuation looks rather undemanding. We are currently trading at 5.8% FFO yield compared to an average of 4.7% between 2013 and 2021.

The average for the European listed sector is 5.35 and I would argue that the risk profile is not really comparable. Similar picture on the dividend yield, our current yield is 4.1 versus 3.3 on average in the past and 3.6 for the listed real estate sector.

And finally, NTA, between the IPO and the end of last year, we were trading on average 9% premium to last reported NTA. Currently, we are trading at 32% discount to 2023 EPRA’s NTA, while the European real estate sector is trading at an 8% discount to 2021 NTA.

It seems to me, a firmly held belief that Vonovia is a real estate company and therefore, it is a bond boxy. There is so much focus on how our gross asset yield compared to the bond yield and how large or smaller the gap between these two are at the given time.

As you can see in the left hand chart, the gap of real bond yields has not fluctuated all that much during the last 5 years and is currently widening again. But what matters much more is the fact that we are an operating company, which delivers not just an initial asset yield, but an earning yield.

And on the basis of our ‘22 FFO guidance, the spread between the earnings yield and the real 10-year bond yield is higher than ever before and is more than 800 bps. And finally, before we get to the ‘21 results, let’s take a minute and reflect on what all this means going forward.

This is Page 8. We all see that assets in the direct market continue to be sold at a sustainable premium.

Again, no surprise to us given the main driver is supply and demand. Don’t forget, our product is not a discretionary product that you can choose not to consume.

It satisfies a fundamental need of which there is no real alternative. As long as this is the case in – and in the urban market, it will not change for a long time.

If I cannot see a scenario where price came down, it just makes no economical sense as long as demand exceeds supply. Add to this, the increasing need for modernization and energy efficiency and it becomes pretty obviously that the environment of our business will remain highly supportive because it is shaped by long-term mega trends that are not driven by upward directional changes.

With the energy price inflation, we are currently seeing the need for modernization and decarbonization is further magnified. And that means that we are in a very sweet spot with our overall business.

Vonovia offers in class – best-in-class access to the attractive sector. We are the ESG leader with a committed decarbonization pathway for the CO2 neutrality by 2045.

Adequate stakeholder reconciliation is firmly anchored in our business and therefore it is no doubt that it is becoming increasingly recognized by public and by lawmakers. We have a proven track record for scale and efficiencies.

We have developed a fully integrated management platform to cover the full residential lifecycle. And this is very obvious, if you look at our attractive implied asset and property management fees of 0.2% compared to 0.5% to 1% plus additional property management fee for non-listed real estate companies, this is a pretty good offer to our shareholders.

And with this, I close the general broader section and we are now coming to the highlights for the year – annual year 2021. I will start with the highlights on Page 11 and Philip then will go with you through the different segment results and financials.

The 2021 results include Deutsche Wohnen’s contribution for Q4, but on the standalone target, we are fully delivered on our guidance. Our EBITDA is up 19%, group FFO is up 24% in absolute numbers and slightly down on a per share basis as we had all the shares from the rights issue, but only one quarter of Deutsche Wohnen.

We are proposing a dividend of €1.66, up €0.06. The Sustainability Performance Index, SPI was 109%, especially thanks to good progress in CO2 reduction and customer and employee satisfaction.

The total value cost for Vonovia, excluding Deutsche Wohnen, was €8.2 billion or 14.3% like-for-like. The EPRA NTA was €66.73 plus 13.5% which includes the full effect of the subscription rights issue and the LTV is at 44%.

The Deutsche Wohnen integration is now part of our normal operating business and will be completed by the end of this year. So far, no material surprises and we do not expect any going further.

Deutsche Wohnen’s NTA was €54.39 at year end compared to our €53 offer price, this also looks good. For ‘22, we are guiding more than 20% growth for revenue, EBITDA and group FFO.

On ESG, let me just highlight our updated climate path for CO2 neutrality is now already by 2045. Well, we will see this later in the presentation.

Over to you, Philip.

Thank you, Rolf and also a warm welcome from my side, which is actually my first investor call in my new role. And I have to say, after a period of silence, I am very happy to continue the dialogue with all of you and yes, explain the developments and attractiveness of the resi sector and discuss it with you.

Now, over to the presentation. Moving to Page 12, with an overview on our 2021 earnings, the table includes the Deutsche Wohnen contribution.

As you can see on the right hand side, all key numbers however are also very much in line with the Vonovia standalone guidance. On group FFO, we of course have the distortion, as Rolf mentioned, between the fully loaded shares, including the rights issue and the absolute number that is three quarters of Vonovia standalone.

In that sense, 2021 clearly is a transition year. And when we get to the guidance and the FFO outlook, you will see that the trajectory is on its way and it will be apparent that we deliver also on a per share basis, very decent growth.

Let’s go to the segments on the next few pages, all of which by the way are excluding Deutsche Wohnen, because until the integration is complete and all numbers actually come from the same system, we will report Deutsche Wohnen as a separate segment in terms of EBITDA contribution in our 2022 reporting. I will start with the largest segment, which of course is rental.

This is on Page 13 of the slide deck. On a largely unchanged portfolio, we increased revenues by 3.3% and maintenance actually grew by a similar magnitude.

At the same time and that is good, operating expenses were down some 7% and that has resulted in an EBITDA contribution, which is 6% up in the year-on-year comparison. You can see the increased efficiency of our German platform also by looking at the EBITDA margin and cost per unit on the bottom right hand side of the slide here, margin up some 160 basis points year-on-year and cost per unit down some 15%.

On to the operating key performance indicators on Page 14, here the reported organic rent growth was 3.8%, but that includes the one-off effect from reversing the impact of the unconstitutional rent freeze law in Berlin. So, the true number you should focus on and by the way, also compare it with our guidance is 3.2%.

And the composition of that is 1% from market rent growth, 1.6% from modernization investments so our optimize and upgrade building programs, and 0.6% from new construction. Vacancy at the end of 2021, yes, very low 2.2%, continues to be driven almost exclusively by investments.

And in light of the supply/demand imbalance in our markets, we observe it is safe to assume that the vacancy rate will continue to remain at around the current level. On maintenance, we saw in the previous page that maintenance expenses were much in line with the prior quarter.

Capitalized maintenance, however, was up some €2.40 per square meter as we continue to remain on the side of caution when it comes to keeping our assets in good shape. Our maintenance levels as you know have been running high compared to the peer group and we are in line or even higher than the bond municipal owners.

Our efficiency is that which enables us to afford higher spending and make sure that our assets are very well taken care of. And this is a bit of a savings for us, I would say if we ever felt the need to trim maintenance because of cost inflation or otherwise I think we have quite a buffer that we can work on.

Let’s go to the value-add segment on Page 15. We continue to see good revenue growth in this segment, external revenues, up 14%; internal revenues, up 5%.

So the value-add story is very much intact. What we saw, however, in 2021 that was COVID-19 caused the implementation of numerous safety measures, which typically come at some cost and also resulted in a high level of sick leaves in current times and combined with the general shortage of labor, we had to rely much more on our external partners.

So the positive impact of our higher internal margins was absorbed by the need to bring in more external support. In addition, what we have also seen is price increases, in particular, for the procurement of energy.

And while this is being passed through to our tenants, the compensation will only occur with some time delay. And those two effects in the end were responsible that we saw a slight decline in EBITDA contribution.

But with the top line intact, I would not read too much into that. I do expect that we will see good EBITDA growth in this segment again in the running year.

Page 16, we see the results of our third segment, recurring sales, our privatization business. And just like in all other areas, we continue to see very strong momentum in the demand for our condominiums.

We sold 12% more units compared to the prior year and both revenues and fair values were up some 25%. So we were able to compensate the increased valuation level for a similar step up of slightly below 40%, in line with the last year.

Bottom line EBITDA contribution was €114 million, 23% more than 2020. And also outside the segment, we sold some 700 non-core units plus some land at a fair value step up of 50% which was contributing some €10 million to other earnings, so outside the EBITDA lines.

It’s by the way a very stable business. And with a large portfolio of almost 50,000 units, we have condomized – we actually have sufficient product for the next 15 years based on the current run-rate, so nice addition to our business.

Page 17 for development. By now, you will be used to the fact that our fourth segment is a bit chunkier than the other three.

So, there may always be some volatility between the quarters. We see this in the development sell part where we had a very large and very attractive global exit in Q4, contributing actually more than €50 million to gross profit.

And with that, it helped to increase the overall to sell revenue by 70%. And since the margin was considerably higher than last year, the gross profit more than doubled in 2021.

Volumes were also higher in the development-to-hold part. Here too, the top line increased faster than the underlying cost driving the gross profit and gross profit margin.

And in spite of some higher operating expenses, the bottom line EBITDA contribution was up 70% or €188 million. On Page 18, we take a look at the long-term potential in our development segment.

And to be clear, this for now is still excluding the development pipeline of Deutsche Wohnen. We have completed 1,373 units to hold, 827 units to sell, to be very precise here.

You will not be surprised if I tell you that we still face some challenges when it comes to building new apartments, red tape and the preparation construction process, slow process overall to obtain building permits, bottleneck in construction capacity, and of course, the not-in-my-backyard challenge. And all of that is obviously not a good message for someone whose DNR is the development business.

It does, however, bode very well for someone like us. The development is in addition to the main business of owning and operating a large portfolio.

And clearly, with the levels of completion we see, not just for us, but across the market, we are currently nowhere near to where we would need to be in terms of demand and that given the recent developments has even accelerated. In terms of our long-term pipeline, these are big numbers don’t change much from one quarter to the next.

In total, we are looking to close to 50,000, with 40,000 earmarked as developed to hold and some 9,000 units earmarked as developed to sell. For this year, we expect to complete about 3,600 units to hold and to sell.

Yes, on the next slide, on our valuation results. This is Page 19.

As you can see, total value growth was €8.2 billion for Vonovia stand-alone. It’s an increase of 14.3% like-for-like.

The breakdown is 4.7% from performance, 8.2% from yield compression, 1.4% from investments. And against that backdrop, the true number in terms of like-for-like, it is deducting for the investments is 12.9%.

This is the number I’m focusing on. With that, 2021 was the second best year behind 2016 in terms of value growth which we have actually seen.

When we look at the KPIs, Vonovia, again, on a stand-alone basis is now valued at 28x, net cold rent, €2,400 per square meter in Germany, and that appears rather conservative when we look at transaction comparables or replacement costs. We are sharing some more detail on different geographies on Page 20.

I don’t want to go through all the markets. By and large, it’s a pretty homogeneous picture, especially if you look beyond the 1-year time frame.

What I want to point out is Sweden. Here, we saw a total value growth of 21%, some catch-up effects given that inflation adjustments have occurred only with a certain time delay.

So I think we feel pretty good about our exposure in the Swedish market. Let’s go to EPRA NTA on Page 21.

Obviously, here with a strong valuation gain that was an important driver. The other ones are the Deutsche Wohnen transaction and the rights issue.

If we start with the total equity, we have some €10 billion more. And yes, that’s the impact of the rights issue, but also our profitability of €2.3 billion net of the €0.5 billion cash dividend payout.

Deferred taxes are up from the valuation gains, obviously, on which we booked, respectively, the deferred taxes, but also the contribution from Deutsche Wohnen. Similar to Q3 numbers, we only include 50% of the Deutsche Wohnen deferred taxes at this point versus some 90% for the Vonovia to-hold portfolio.

So against that backdrop, the EPRA NTA per share is probably some €3 per share, understated, given that most of the product we bought is for longer term to hold. You can also see that the goodwill has come down as a consequence of the impairment we saw following the strong valuation gains in 2021 in various regions in Germany, but also in Sweden.

The remaining goodwill we have, and that is outside the value-add segment and the development segment is some €1 billion. And if we are right about further valuation uplift in 2022, this should disappear anytime soon.

For one last time, you will see that the purchase cost in the NTA, and I will get to that on the next slide. The EPRA NTA per share growth, on this definition – so the old definition for 2021 was 13.5%, which does not seem all that bad in a year where we did the largest equity raise in real estate history at a price level that many felt, it would be massively dilutive.

Yes, I am sure you already picked up on some of the previous slides, but let me give you a bit more detail. On disclosure changes, you should expect starting in Q1 2022 and this is now on Page 22.

First, on EPRA NTA, we are all aware that – you are all aware that Vonovia has been adding back transaction costs for the whole portfolio, essentially treating them similar to deferred taxes as those are related to the disposal of assets. I personally believe that the comparability with the peer group is a very important argument and it is helpful for many reasons when companies from the same sectors – from the same sector are aligned on key metrics.

And this is why we have decided to eliminate that line item from the EPRA NTA calculation starting next quarter. Please also note that we will include, as to my comment on the previous page, the Deutsche Wohnen deferred taxes with 100%, not 50%.

So the net effect you will see in 2022, and that is based on 2021 numbers, though, is a per share decline in EPRA NTA of around €4. Second, on group FFO, I would like to be very clear the group FFO has been and will continue to be the relevant KPI to measure the recurring economic performance of the group.

Having said that we acknowledge the market’s desire to break out minorities from this number and this is why we’re starting again next quarter that we will be adding two lines below the group FFO, minorities and group FFO after minorities. And the minorities will include all minorities also from Deutsche Wohnen even though this is a non-cash minority as long as Deutsche Wohnen will not pay any dividends.

It will be the group FFO after minorities that we will use as a basis for the dividend. And the payout ratio will remain at the 70% you are familiar with.

And finally, and that is also to further increase alignment with the peer group, we will no longer eliminate IFRS 16 effects from the group FFO, in 2021 numbers, by the way, an effect of roughly €37 million. Moving to Page 23 that is on LTV, things are very much in line here as well.

Net debt is up with the original Deutsche Wohnen debt plus the €10 billion we raised last year. The €3.5 billion remaining bridge facility, by the way, was fully repaid on March 1 this year.

On the value side, we added more than €30 billion assets from Deutsche Wohnen and had the valuation uplift, both from Vonovia and Deutsche Wohnen. If we include the impact of the disposal to the city of Berlin, which closed in January this year, pro forma LTV is at a comfortable level of 44% at year end, and therefore, in line with our target range as we have promised.

However, when we look at the EBITDA multiple, 14.4x at the end of 2021, That will increase all things equal because this number is the average of the last 12 months, so it still includes lower debt volumes. So on a look-through basis, we will move towards 16x.

And as I do not want to draw a hard line, I think 16x net debt-to-EBITDA is probably at the very high end of what I feel comfortable with. And that will make it difficult for us to lever up further against yield compression.

On Page 24, we have our debt structure in the charts and 2021 column do include Deutsche Wohnen. The maturity profile remains very balanced combined with a fixed hedge ratio of debt and the funding mix, I do feel comfortable at this point.

Speaking of funding mix, you may have seen that we have issued a €1 billion promissory note a couple of weeks ago to further diversify our lender base. And we have also updated our sustainable finance framework, which now also cover social bonds in addition to green bonds and a couple of more details are on the next page.

Yes. What we wanted to do is to broaden the eligible portfolios for sustainable financing.

And the new framework, as I said, now also covers social bonds. We have also made further improvements and we are now proud to say that the new framework is aligned with the EU taxonomy rules as well as the standards of the International Capital Markets Association.

We have received, as you would expect, a second-party opinion in this case by ISS. The total amount of eligible assets at this point is some €21 billion, and that is already net of financing with a breakdown by purpose and geography on the right-hand side.

And that, by the way, does not yet include the social assets of Deutsche Wohnen, so I expect this asset pool to even increase further in 2022 as part of the integration. With that, Rolf back to you.

Thank you, Philip, and it is good to learn and to see that you are keeping the same discipline on our financial discipline especially focusing everybody in the company on the debt-to-EBITDA multiple. That’s why nobody gets crazy surprises.

So that’s very good. So let’s go on with Page 26.

I think most of you are now familiar with the Sustainability Performance Index SPI. And as you have seen, not only our operating and financial performance is strong, we also are very successful in our non-financial performance.

Our overall target achievement for the SPI was 109% versus the target of 100%. It was the good progress in CO2 reduction, in customer satisfaction and employee satisfaction that drove this performance.

For ‘22, we have set new targets and calibrated them to a target achievement rate of 100%. So you also will find the medium and long-term targets until ‘25 in the right-hand column.

On Page 27, we are very proud to present our new and accelerated science-based climate parts. It is based on an asset-by-asset analysis and represents a road map for CO2 neutrality until 2045.

There are, as you know, key three levers: first, a combined deep renovation. This is energy-efficient modernization that we have done during the many years now.

And our average rate is about 3%, which is slightly above what is required to reach the targets on the Paris Climate Agreement and of the European Union. Keep in mind that the average rate in Germany is only 1%.

But deep renovation alone will not bring us to CO2 neutrality. We are replacing conventional heating with hybrid systems and heat pumps.

We are putting photovoltaic on all sustainable roofs. This will be our 30,000 roof program.

We will also install our own local heating networks in our urban quarters, and they will be powered with renewable energy. We exploit the energy sector transmission towards district heating and clean electricity and thereby replace fossil fuels in our entire portfolio.

I think this is more urgent and more important than ever before if you look what happens in the East of Europe. Of course, it would be too easy to just say we will be CO2-neutral by 2045.

Not only do you need to explain how you will get there, you also need annual and interim targets so people can follow your – and make you accountable for the progress. This is why the Climate Path is so important for us.

The Climate Path was developed together with Vonovia Institutes and it is a modeled alongside the CEM1.5-degree path for multifamily houses. Page 28 brings me to our traveling subject.

For more than 75 years, Europe has seen – has been a guarantor for peace stability, security and prosperity. But now we have to witness the horrible events in Ukraine.

We are deeply saddened by the tragedy the war has brought on the people of Ukraine. We condemn the Russian aggression, and we stand with the Ukrainian people during these very difficult times.

Our workplace and our neighborhoods are great example for peaceful coexistence. We are proud of our employees for more than 17 nations, including Ukraine and Russia.

And in our urban quarters, people for more than 150 nations are living peacefully together. So it is possible to live peacefully together.

And of course, we want to help. The best way for us to do is that we can do best, provide housing and make sure that the process is as smooth as and easy as possible.

This is why we coordinated the relaunch of the dedicated online platforms, the so-called Wohnraumkarte, in cooperation with the Northern Australian state government and the Association of German housing companies to provide housing for Ukraine refugees. This platform provides local governments exclusively and easy access to vacant apartments available for refugees.

This enables a streaming – streamlined and coordinated matching of apartments with people in need. Several housing companies are joining in the effort and have also listed the available partners on the platform.

Let’s move on to Page 29. Helping the people in Ukraine and looking after the best – as a best for the refugee is the most important thing what we can do now.

But at the same time, we must not lose sight of a problem that has been growing for some time, and that is being actually magnified the states. Energy prices have been increasing much faster than rent for a long time now.

Of course, the conflict with Russia has accelerated the development. Apart from the humanity tragedy, the bar in the Ukraine has also shown very clearly importance of secure energy provision, responsible energy consumption and renewable energy generation.

Of course, the financial risk from rising energy prices sit fully with the tenants because energy costs are at least in Germany, a pass-through. But it would be too much easy to say this is not our problem.

As a responsible landlord, there are two things we need to make sure. First, when tenants get the ancillary deal for ‘22 and ‘23, some will find it is very difficult to pay the higher energy cost.

Just like with COVID-19, we will be prepared to agree on payment deferrables and installment payment to assist any tenant who is in struggle to pay the energy bill. And second, and even more important, we need to continue the progress of our climate path, reducing the energy consumption in our portfolio, increasing the use of renewable energy and decreasing our dependency on fossil fuels is the best protection against rising energy costs and of course, our biggest impact in the fight against climate change.

This is a long-term effort, and Vonovia is very well positioned to manage this challenge successfully. Not every owner will be able to make the transition and that may generate cost opportunities in the future.

Coming to inflation. There is a widely held notion that in a higher inflation environment, German resi is not a good place to be because we cannot pass inflation through higher rents.

Actually, this is just simply not true. First, two-third of our rent growth are investment-driven.

And because the rent increase is a function on the yield on cost, a higher investment amount because of inflation means higher rental cost. So the inflation risk does not sit as a land lord.

Of course, affordability is relevant, but there is a plenty of headroom, especially in an environment where there is inflation and salary increases. And second, and maybe more important, it is true that there is no direct link between inflation and market rent growth.

But there is a strong correlation as market rent growth close inflation with the entire – follow inflation with the time lag. Yes, we have seen a long period in Germany where we have not seen massive inflation, and that’s why we have not seen massive rental costs.

But it should not come as a surprise. When inflation is high and drives up construction prices, rent of our new construction, property values and general prices, including salary and wages, then it is clear that even in a regulated rent like the Mietspiegel, cannot ignore the development and cannot remain on the current level.

Instead, it is bound to follow inflation in the medium to long-term as higher salaries and wages and higher rents for new apartments and relating find their way into the data set of the Mietspiegel. We have looked back actually to the periods of high rental – of high inflation, where you have to look back in the Germany in the ‘70s.

And while it is, of course, not completely comparable, history is a good guide. In the ‘70s, when inflation and interest rates were high, the average rent growth from members of the German Association of housing companies was double digit.

And these were non-profit companies. So there is clearly a correlation between rents and general cost inflation.

On Page 31, we will talk about Deutsche Wohnen. We have spoken a lot about Deutsche Wohnen in ‘21.

Between our initial offer in May and the completion of the rights issue in December, it was clearly the dominating topic. The integration of Deutsche Wohnen will now be a major topic for us this year.

But do not accept similar surprises and news flows like during the transaction phase. The integration is a bread-and-butter business and is fully under our control.

Our team who is managing this integration has successfully completed seven integrations before, and this is the same on the Deutsche Wohnen side. So they know exactly what they have to do and at which and when it has to be done.

So far, we have seen not any material surprises, and we do not expect any going forward. We will update you on the synergy assessment in Q2.

So far for now, we are stacking with our original target of €105 million EBITDA. After finalizing the organizational concept towards the end of H1, H2 will see the implementation of the target organization, which in turn will be completed by the end of the year.

From ‘23 onwards, then the operational and financial processes will go live and integration is completed. I have said it often in the past, but maybe it is a good opportunity to repeat it.

It goes without saying that we will protect and respect minority shareholders right in everything that we do. The structure of minority owner is by no means new to us.

There are clear rules and we know exactly how to play them. Trust me, there is an intrinsic motivation because not only of minority shareholders look closely to make sure that everything is clear.

So do tax authorities. And you really don’t want to mess up with them because they can put you into prison.

But one thing is also clear, Vonovia owns 88% of Deutsche Wohnen and will not support any action that is not in our – that is in our disadvantage. And with this, back to Philip.

Yes. Thank you.

So to close up the presentation, a couple of words on guidance that is on Page 32. I think no need to go through all the line items.

Key message really is that top line revenue, EBITDA and Group FFO are all expected to grow by more than 20%. And please bear in mind that the 2022 portfolio will be a bit smaller, 21,000 units, and that accounts for an FFO impact of roughly €75 million or €0.10 per share.

What you also see, and that should not come as a surprise, investments will go up. That’s good news.

It will go up to €2.1 billion to €2.5 billion, and that is simply a function of the combined investments of the enlarged Vonovia/Deutsche Wohnen portfolio. Very briefly on the last page, before we dive into Q&A.

This is on my initial comment on the transition year 2021. If you look at 2021 in terms of FFO per share, we had all the shares but only one quarter of Deutsche Wohnen in our FFO, and that is why you see a small decline in the last year.

If you put aside 2021 and look at the growth rate between 2020 and 2022, you see 18% growth over these 2 years and even 23% if you were to include the synergies on a run rate basis. And with that, I hand it over back to Rolf for some closing remarks.

Thank you, Philip. So my summary for today’s call is this.

First, Vonovia has compelling track record of earning and value growth and organic returns. The current equity valuation seems to be demanding with FFO yields, dividend yields and NTA discount at backward levels.

Second, our operating business, including Deutsche Wohnen integration, is fully on track. The residential market fundamentals remain very positive.

Macroeconomic developments have very limited impact, and this gives us high visibilities on future growth potential. And third, we are the sector’s ESG leader with a committed decarbonization pathway for CO2 neutrality by 2045.

This gives us future growth potential and a lot of political support. And with this, thank you very much.

Thanks, Rolf. Thanks, Philip.

And I will hand it back to Martin, the moderator to open the Q&A for us, please.

Thank you. Very good afternoon all.

Well done for this presentation and with those new more transparent financial indicators. My question will be essentially around leverage from here.

Well, the first one is, is your net debt-to-EBITDA calculation at 14x to sell number one, calculated by credit agencies? And if not, what will be the outcome of the credit agency number?

My second question will be a follow-up on that one. If you may attend that effectively, as you said, 14x on your calculation, which is probably closer to 18x on my calculation net debt to EBITDA, it’s far too high and that’s to drive for the share price to rerate.

And what are your intentions in terms of deleveraging from here? Nursing homes, developments, the 25,000 units you’ve been indicating as potentially for sale in June last year at the time of the bid on the Deutsche Wohnen.

Can we have an update on that? And final question also related to leverage, what are your options right now with the 21% stake you have in Adler?

Thank you.

Okay. I guess the first two questions are for me, Marc.

The last is probably on Rolf. On the leverage side, yes, as I said on a look-through basis, based on our definition of adjusted EBITDA, we will be slightly above 16x net debt-to-EBITDA.

Rating agencies look a little bit different. On EBITDA metrics, what they do deduct in essence, is the EBITDA contribution of our development business plus the EBITDA contribution of our recurring sales business.

That actually is an analysis I do not share. In particular, recurring sales that I was making that notion in my presentation is really for the long-term, given that we have product for the next 15 years based on our current run rate to monetize the spread we see in markets, which are characterized by supply-demand imbalance.

And as such, monetize on the spread between our book values and market prices in the private market. But also 16x net debt-to-EBITDA is probably somewhat at the high end of what I consider appropriate.

And against that backdrop, the topic is not so much about de-leveraging at that stage. That also depends on cash we generate from potential opportunities, and there is nothing for now we can talk about in detail, but it requires discipline on our investment program that we at least remain in these barriers.

Probably, Marc, to add a little bit, the question of the disposal of the healthcare business is, of course, a decision which has to be taken by the Deutsche Wohnen Management Board and not by Vonovia. Let’s – you know my opinion that in the context of the overall balance sheet, €1.5 billion business, which is very different, seems probably to be too small.

And so that’s why I think we, as Vonovia, we would support the Deutsche Wohnen management to take a disposal decision. But anyhow, the Deutsche Wohnen management is probably well advised not to make it public before it is done.

So that’s why I think this is a clear answer on where Vonovia as a shareholder of Deutsche Wohnen stands. The second is Vonovia is also a shareholder of Adler.

As you have mentioned, we own around 20% of Adler. We have all – theoretically all options.

Having said this and looking on our stock price and the questions on debt-to-EBITDA, it is probably not the moment to speculate about further acquisitions. So you know us, we have been a long-term shareholder in other listed real estate companies.

And when the time is right, we will take the decisions.

Thank you very much.

Good afternoon. Thanks.

My first one is on guidance. As you indicate, minority should be deducted and you also mentioned the IFRS 16 adjustment.

Could you maybe give us an indication for your FFO guidance 2022 adjusted for those two items? That will be my first question.

And then maybe you could talk a bit about cost inflation. So what is the impact, not only in ‘22, but also in ‘23, given the fact that you probably have a lot of kind of precontracted prices, but that’s a bit more marginal impact on maintenance CapEx.

What’s kind of the like-for-like percentage increase in the money you have to spend? And then also maybe in the same way I talked through the impact on modernization economics, what this does for your – what it does for your projects that will be started from now onwards?

Thanks.

So should I take the first – the last question first, and then this is about the inflation. First of all, yes, you are right.

In the – new construction prices are contracted for 2022, we see a significant construction price index rise of more than 14%. We saw it in the last quarter, which will probably be also what we expect for the next periods.

In construction, this is not really an issue because the whole inflation is also taking place in the assets saying that the prices for newly built apartments, is growing with the same speed. So that it’s actually not an issue.

So we can pass on the inflation because of higher prices. In the maintenance, you know that we, as Vonovia, has spanned probably in the last years more maintenance, what was really necessary.

So if we would see a massive inflation, we would probably just keep the maintenance on the same level of today because we have actually put some money in the savings box by doing more maintenance. And in the end, keep in mind that we are very well inflation-protected because of our customer organization the construction cost index does not show up immediately in our cost structure.

Then on your question on guidance, I will try to give you some guidance. I mean, first of all, the effects of IFRS 16 reversal are already embedded in the guidance.

I mentioned before that the effect for 2021 is roughly €37 million. That, however, also only includes a quarter of Deutsche Wohnen contribution to this effect.

So on a full year basis, you can assume roughly €50 million which form part of our guidance. On the second point, I need to be a bit cautious because we haven’t yet provided an FFO guidance on the Deutsche Wohnen side.

But if you do a rough calculation, Deutsche Wohnen guided for an FFO of €550 million for the last year. If you deduct the impact of the Berlin deal, and I think Deutsche Wohnen guided also for an FFO impact of roughly €80 million.

You have a rough estimate of what the FFO contribution of Deutsche Wohnen could be and then mathematically apply the 87% ownership, the 70% payout ratio, and that will account for the vast majority of the minorities we will deduct for the running year.

Thanks. That’s pretty logical.

Maybe if I could just come back to the previous one, also on cost inflation. So I think I appreciate the answer on maintenance.

It did make sense. But I guess also on the modernization programs, there is a lot of material costs that you cannot control as much.

Let’s say, what – in terms of yield compression, on the yield on cost expectations, what should we take into account for the coming years if the current situation persists? Thanks.

So, I don’t want to be cynical now, but inflation on the cost is actually good news for our returns. Because you know the modernization is a fixed percentage of the costs we invest we put on the existing rent.

If the cost is increasing, we pass on actually inflation and we get literally an 8% yield on a bigger amount. So this is technically completely inflation-protected.

And that’s why this was my argument why a big part of our Rental growth is actually technically inflation-protected. So this is not a risk by inflation.

Alright. And that’s also because you’re always well into the limits of the maximum square meter increases.

So you’re saying you can always pass on the additional cost?

Yes. And you know we have set a limit of €2 per square meter.

The legal limit is €3. And we have today in the press announcement said that in cases where we have massive cost reduction in heating, we even will go above the €2.

But our average is €1.36, so we still have enough room, but we open today the possibility to increase and to speed up replacement of organic fuels that we also were ready to go above the €2 in the future.

I know on overstate...

There is no issues there.

Yes. No, I think that’s very helpful.

I think that’s very good to know. And I’m likely over-asking here, but given I have to call still, could you maybe detail your kind of feeling with regards to making – playing with the balance sheet a bit and then saying, well, this discount is too much we’re going to sell – we’re going to maybe sell a bit of assets and buy back shares because we – you’ve made a big point about the shares being too cheap.

How do you feel about addressing that actively?

We – as we said in last time, we – and some are still on this level, we have to answer the questions. There is different alternatives, one, as you mentioned, you can sell assets and buy back shares, but you have – you need a clear understanding what does this impact or how does this impact your business.

You can buy – you can sell assets and invest it in highly accretive investments. This is alternative – other alternative.

You can think about models, selling a part of your assets, but operating it, and all these combinations are thinkable. And let’s give us a few times, and then we will come up with answers.

But I think it is not good to announce it before we have a clear picture.

Alright. Thank you very much.

Hi, Jonathan Kownator. Thank you very much for taking my question.

I just wanted to come back to investments and actually regulation as well. The first thing is, obviously, you’re now guiding to €2.1 billion to €2.5 billion of investments, which if I understand correctly, is the natural aggregation of Deutsche Wohnen and Vonovia.

You’re also separately talking about an acceleration of your path for sustainability and net-zero. And obviously, also given the current situation, there may be strong motivation to further invest in your portfolio to accelerate the energy transition.

Bearing that in mind, do you expect further certainties from the regulations? How are we doing there?

And from the €2.1 billion, €2.5 billion level, is there even a possibility, obviously, with one that we check somehow. But could you look to even accelerate that given the need for the energy transition in Germany?

That’s my question. And obviously, the real color to that is if you have further details on the evolution of the regulation, the warm rent concept from investments, that would be helpful.

Thank you.

So to be very clear, the high – it should not be meant cynical. The high cost of energy actually makes our energetic modernization even from a tenant perspective, a very high return investment.

Because what we were challenging in the past was warm rent neutrality, this is – this gas price is not an issue anymore. So literally, the tenant is saving money if we are doing modernization, which, of course, increases our possibility of increasing of rent because it’s much more – it’s much less difficult.

You are pointing to a very important point. This is actually not a regulation, but actually is the support.

I think we see in the moment that the German government understands that we, all together, has made a massive mistake in the past by being dependent on Russian gas. We are all aware that we cannot change it immediately, but I think the political feeling is that we should change it as fast as possible.

And the easiest way to get less dependent on gas is to reduce the consumption of gas. And the math, there is two fields actually where we use gas.

One is for the industry and the other is for heating of our buildings. And that’s why I think it is clear that we will have massive support by the government to replace gas heating systems.

So yes, there might be a possibility that we increase investments in energy efficiency and specialty heating systems, which are even today, our – one of the best performing parts of our investments. And if this will top up as more subsidies, probably the biggest challenge will be to get enough material.

Because heating pumps, modern heating, combined heating, gas systems, are very rare resource, and we probably need all our purchasing power to get enough of this. That’s why I am really not ready to give you and I am not able to give you guidance for ‘22, but this will probably make us to revise our programs in ‘23 to speed up, because it’s high yielding investments.

Jonathan, let me also add some additional commentary from my side on the acceleration and the size of the investment program. What we have done for 2022 is to basically also look at what investments we can do based on our dividend policy, but also based on the cash we free up from recurring sales and development business.

In particular, in order to invest without further jeopardizing our capital structure, and that’s the number we put forward. What it does not say is as to how we may change in light of what is coming, the composition of investments between upgrade buildings in particular, and develop to hold, develop to sell business.

And I think this is the question mark, and we have to watch the evolution of what may or may not come.

And just to be clear on that last comment – thank you, it’s very helpful. If you – given what you have just said, if you were to change the mix within your investment guidance, do you think that would result in a higher return or lower return, i.e., higher energy…

Higher.

Higher return. Okay.

Good.

We would not change to get a lower return. The only option is to get a higher return, but this is under the condition that we get the material and we get the subsidy support.

Any idea from the government as to timing or any more details and obviously, there was a very recent plan already announced but very vague.

It’s only four weeks. And I think we have – we were fighting for three weeks that the German government does not stop the gas pipeline, the remaining gas pipeline in connection from Russia.

So, they have now decided not to stop it. So, it was a long four weeks.

So, that’s why I think we are not clear what will happen. I think the directive is very clear.

We have to get rid of the dependency on gas. And so the most important impact is to consume less, but I think the German government has not a clear idea how they will do it.

So, we of course, because of the – I repeat now, because of the higher energy costs, a lot of investments, it’s now even a good payback for our tenants because the energy cost is so high, and we are replacing our old systems with new ones, this would be a good deal for the tenant. It would make us much easier to realize this.

So, probably a better outcome, but of course, it should not be cynical because this is an issue for all our tenants to pay as a higher energy cost builds.

Thank you.

Hi. Good afternoon.

Two questions. First of all, I wanted to touch upon your investment program.

And obviously, you have been growing rate of around 3% to 4% per annum in terms of your organic rent growth. But now investments keep on going up every year and how would that impact your like-for-like growth going forward?

So technically, we are actually, in the moment, the investment is just based on the bigger portfolio. So, the entry cost of what we are guiding in absolute figure is getting bigger, but having – if you are referring to the question before, if we would go above the investment we are doing, of course, and the rental cost will go.

And if this is – it will be if we are going forward with a higher investment, this will even over-proportional goal because it’s an over-proportional yield, which we will deliver with investments.

And then my second part, in terms of thinking about the green CapEx or energetic modernizations. You did mention that you can get your loan cost generally around 8%.

Does that apply to those energetic modernizations as well? Seems to be in a bit of a contrast with peers who were guiding at a lower level, but you seem pretty optimistic in terms of the how…?

So, you are legally allowed to pass up 8% actually. It is probably better to say up to 8% because and sometimes you are passing on a little bit less and you are legally allowed to make it easier to get it through and do not have too much discussion with the tenants.

But having said that the cost for energy is so high, this is actually what I referred to saying that’s why it makes it a little bit easier for us to pass on to the tenants. So, the pressure on reducing what we are legally allowed to is probably becoming a little bit smaller.

What is probably a good guidance for your modeling for upgrade building and optimize apartment programs on average, you can expect a yield on cost of 5%. It’s getting a bit more complex.

If you look at the more complex longer term, refurbishments of entire neighborhoods and/or development, that’s multiyear. And that usually also goes hand-in-hand with a fairly significant value uplift, which is why the internal rate of return is the better metric to focus on.

And for that 7% to 8% is a good proxy as to what you can expect.

Thank you. And then maybe one add-on as well in terms of financing costs.

Unsecured bond market obviously has seeing financing rates increased quite a lot in recent months. I am just wondering what are you seeing in the debt financing market with German banks at the moment?

Yes. I mean as I have noted, I think we hit a good window with our promissory note where we out-placed the bond curve and achieved an average coupon of 1.1%.

But that’s the past. Yes, look, I mean, in the unsecured bond market for 10 years, you are these days and this is without the new issue premium talking almost 2%.

So, the picture has changed. If I look at spot rates in the secured banking market, that’s a bit more stable.

I would say some 10 basis points inside of what we see is in the unsecured market, roughly 80 basis points plus the spread. So, you are at roughly basis 180 basis points for 10 years in the secured banking market these days, plus in a broader sense, no – really no big issue for 2022.

I don’t expect any impact of the change in the financing environment. We have, as you know, a balanced and long-term maturity profile.

So, these changes and that’s kind of a natural hedge will only affect our P&L with a certain time delay.

Thank you.

Yes. Good afternoon.

I have got two quick questions on Page 18 of the presentation regarding the development activities. And could you just indicate we had around 1,400 units being completed while the target completion level was about 1,500 units.

What was the reason for the slightly lower completion levels? And second question, for 2022, you were guiding for targeting 3,600 total completions, what is the split between developed to hold and to sell?

Thank you.

On your first question, this is actually us somewhat maneuvering profits. We pushed out one project developed to hold into the next year.

So, it was a decision on purpose. The second question we have decided to give no further guidance on as to the split you can expect going forward between to hold to sell.

We are very clear, we are doing today, even if it’s development to hold projects, we are doing all – every apartment with a single land register. So theoretically, if you have a development to a hold, you can switch it to development, to sell and sell it as individual units, which is a traditional way how BUWOG is doing it.

So – and this depends if we have better investment opportunities and the development to hold. We are changing to development to sell and using the money for the better investment opportunity.

Thanks.

Good afternoon. Just two questions.

One is on property valuation. I mean one of your peers said to expect the value uplift in the first half of this year, roughly in the same magnitude as in the previous year.

I mean would you also be willing to provide a rough idea here?

As I have said, we are not giving you guidance. But if you see inflation, so it’s now coming back to.

If you see inflation in construction costs, by 14%, it is not completely crazy that you see similar inflation on new builds at least. And there is no reason why new build should grow in values, while existing are not growing in value.

So, this I think, what exactly explains the value uplift of the year ‘21. And we do not see any change in the development of cost and development of inflation in ‘22, at least not for the negative side.

So, that’s why it seems to me logical that we will see similar development in the year ‘22. But again, we are responsible to manage our business.

We are responsible to manage FFO and to be – to have in the right locations. And this is why we are not guiding value cost because this is a market and other people could guide it much better than we do.

But to be very clear, we do not see any indication that there is a change in trend.

Okay. Second question is on rent table growth.

I mean you point to a correlation to inflation and provide rather upbeat examples like, I think it was Hanover rent table plus 10%. But on the other hand, we have dampening effects like political pressure and also tighter regulations.

What rent table growth do you expect in the current inflation environment looking ahead and by when?

So, to be very clear, there is no further change in the rent table calculation for this period of this government, because nothing is more coming, more of this is very simple. We are looking back about 6 years.

So, that’s why of course, if inflation is coming in, it is only with one-sixth of this effect you will see during the years or if the rent table is coming every second year or third year, we see only in the half. For example, if it comes 3 years half of the effect in the next rent table, which is actually, if you can see in our slide, it is stabilizing the rental cost.

So, you have sometimes the years where the inflation is very low and the rental growth is higher. And then you see yields where inflation is very high and the rental cost is lower.

But what you see on the very long-term, and this is why you have to look backwards in the ‘70s, that in times where you have a longer period, high inflation, also rent is inflating, which is very simple, because first of all, for new-build apartments and fully modernized apartments there is even no mid-price brand. So, this is a full calculation of the construction price divided by the multiple, this is the rent.

And this is, of course impacting the rent table in this category immediately. But then there is in the most rent tables, a correlation between – if you have new buildings in one part of the city, actually, the whole rental level in the city goes up because it’s considered as a better quality city.

So, the rental table for the newly constructed buildings also has an impact on the existing rental table. And then there is, of course, a balance where if you have to pay so much for a newly apartment, the apartment, which is probably 5-years-old, also will get – people will be ready to pay more because the gap between a newly apartment and an existing apartment fully modernized is given by market.

It’s not given by a regulator. And that’s why you will see step-by-step in the rental table, if the newly – new build construction rent is increasing because of inflation, you will see the impact in all categories of the rental table, directly or indirectly, because the gap is the same.

And then in the end, if you have high inflation, and I think you only will see a longer term high inflation under the conditions that salaries will also increase because if salaries are not increasing, then inflation will become to adapt very soon. But assuming that salaries are actually following inflation, then the affordability is less an issue and the ability of politicians to allow further rental growth is no easy for them.

And there is another aspect. While Vonovia, because of our modernization program, we can – and we are partly inflation-protected, municipality companies are not inflation-protected because their percentage of rent of the normal organic rental growth of total rental growth is much higher.

And if you want to have municipality companies to go construction speed, you have to allow them to raise rents. Otherwise, you cannot generate the money because they have no capital market where they can get money for.

So, this means a politician in a high inflation environment will even push globally one day for higher inflation. But the whole political issue having an inflation in the rent table of 7% while inflation is 1% is gone.

If you have an inflation of 5%, having a rent table of 10%, which is for 2 years is not an issue anymore. So, that’s why it is clear that’s why it’s so important to look backward for a longer period where we have seen higher inflation and there you can see it happening.

What is not happening is that inflation goes up in 2022, you will immediately see it in the mix figure ‘22 or ‘23. You will probably see it in the mix figure ‘23 or ‘24, but not immediately.

So, there is a small delay, which is not an issue if you look on a longer run period.

Okay. Maybe a last one, I mean you point to on demanding stock valuation for Vonovia, I mean what could be a trigger in your view this to change?

It’s – I have learned from you actually – not from you personally, but from you as an investor society, that we should look on our KPIs which we can influence, and I think it’s you who is doing the stockpile. So, I would not give you any advice.

I would just say I consider this a very cheap stock and it’s a good idea to buy it.

I have some good ideas for research report, you could write.

Okay, great. Thank you.

Hi, good afternoon. I had two questions.

The first is on CapEx and the second is on scrip dividend. On CapEx, I know there have been some other questions on this, and I know you have given some good guidance on the overall CapEx envelope for next year.

But I am just trying to get a better sense of how profitable, how value creative your overall CapEx is or not. When I look at Page 61 in your presentation, you say you spent €1.3 billion in investment in 2021.

So, that’s 2.3% of your gross portfolio valuation at the end of 2020. And this year, you are guiding to €2.3 billion, also around 2.5% of your portfolio value.

And yet your rental growth contribution from investment is also somewhere around 2.5%. So, you are spending 2.5% to augment your rental growth by 2.5%.

So, that doesn’t – to me, that doesn’t sound very value creative. So, can you just give us a little bit more color on what – on how value creative and the overall blended yield on that CapEx, because either the rental growth from this CapEx spending is going to mean your organic rent growth is going to accelerate in 2023 and ‘24, or the blended yield on CapEx is a lot lower than the numbers that you are quoting.

So, if you can just give us a little bit more color on that, please? And then the second question is on scrip dividend.

You have spent a lot of time in the presentation talking about your discount to NTA. But clearly, your dividend – doing a scrip dividend at these prices is going to be very dilutive to your NTA or dilutive to your NTA, I should say.

So, how do you see that? Does it concern you that, or are you simply going to do a scrip dividend because it would help you from a liquidity point of view?

Thank you.

So, for the scrip dividend, a very easy answer. The second one is a little bit more complex.

But for the scrip dividend, very easy answer is there is no decision taken. I think it’s also much too early.

You know that the Supervisory Board has decided on the scrip dividend based on the proposal made by the management board the day before the annual meeting. So, this is still a few weeks to go.

In general, I think there is arguments for and against the scrip dividend at this situation. Scrip dividend is, by definition, a subscription rights issue.

So, it is everybody is actually getting awarded. So, it’s by definition, not dilutive in the sense if shareholders participate in the scrip dividend.

We have seen a lot of our investors which like to have a scrip dividend. But I also understand your point that if management team thinks that the value of the stock is very little, that this might be not a good moment to issue stock.

So, this is simply as it is, but we have not taken the decision and we have to look actually where we are when we have to take the decision.

Yes. Let me try your – the first point you have raised.

It’s always a bit complex, because you have in many of the investments two elements, which is a), rental increases, which you can measure by yield on cost metrics and b), fair value uplift. And the latter is in particular relevant for new construction.

So, if I were to make a back of the envelope calculation, you look actually at the like-for-like rental growth, excluding new construction, that’s roughly 1.6%. And if you measure that vis-à-vis what we have invested in upgrade apartments and optimized apartments, bearing in mind that the portion of the upgrade apartments is actually also value accretive, because it belongs to more complex refurbishment programs also with a value uplift, you will derive to the 4.5%, 5% I have been guiding to before in terms of yield on cost.

And the second, you can’t really read through our numbers, because part of our revaluation gain we are accounting for is investment-driven. And that is forming part of what we actually realize in the development business is what we realize in terms of complex refurbishments as additional value uplift on top of what we have capitalized.

And here, the best guidance I can give is to point to the 7% to 8% IRR. And you can assume for complex refurbishments that are typically roughly the 3-year programs for new development, even a bit longer.

And I think this also helps. I have mentioned at the beginning that if you look the total shareholder return without yield compression, we are actually in the past always about 7.5%.

So, this is actually also translating in this.

Perhaps, I can ask it in a different way. When you look at the assets on which you have spent CapEx, what is the difference in value uplift for those assets versus the ones on which you have not been spending non-maintenance CapEx?

Can you split that out or maybe that’s one to take offline?

Rough estimate is 20% to 25% more uplift on the assets where we have invested while the others.

That’s right. Thank you.

Hello gentlemen. Thank you for taking my questions.

Actually, two questions, maybe one-by-one. The first question would be on bit more supply chain-related.

I mean the repercussions of the Ukraine conflict and supply chains might be quite obvious. Do you see some critical points in supply chain when it comes to your refurbishment or construction business?

Maybe you could give us some color on that, please.

Yes, there is – you are right. There is some material coming from Ukraine, which is actually impacting windows and doors and some others.

So yes, there is an impact. It is not the same magnitude what we see in energy, so completely different magnitude.

In the moment, we have the information that we are not impacted directly. So, it is probably a little bit more work for our purchasing department.

But we have no issues directly with material coming from Ukraine, but we noticed that this is an issue in the market. But it’s always the same that we are probably the last who will recognize it in our supply pattern, because we will be the last one which will be kicked out from the customer list.

Okay. Understood.

My second question would be on the substitution of gas. Well, I think this is a story which might take some time, but as a substitution for gas, I asked you, I think, the question once.

The alternative of hydrogen might that be a plan that you are following, or do you have an update on your hydrogen efforts for us?

So first of all, the main substitute for gas will be solar power and heat pumps. So, this is the only solution which is left over because wooden pallet heating can be – is a second option, but it’s a very niche market.

So, this is the way. And now we are coming – actually, we are using hydrogen to store the electricity, because electricity on the roof is not necessarily produced in the same moment where you need it for the heat pumps.

And that’s why this is one experiment which we are doing, which is successfully running. But of course, it’s still or was under the old heat fuel cost, still not a good return.

That’s why it was a pilot. So, it might change or it will change if the gas price stays where it is.

But there is other alternatives where you actually store the heated water which might be also an alternative. So, this – in this context, yes, we are using H2.

What we think is probably a little bit too early, and we should not rely on it is that one day, we will replace gas directly with H2 and in the gas heating system will just burn H2. H2 at the moment is much too expensive for this and will be needed for other areas like steel production.

So, we need to think for the only solution which is left is actually heat pumps in combination with electricity or solar panels. And we are very successful.

So, by chance, it was just a chance. We were not aware because you know we all in Germany, we thought that gas is a solution for the next 10 years.

We were not aware that what we are doing – what we have done was exactly at the right moment. So, we are up and running with a heat pump-driven heating system.

And it was actually invented because we find that the long-term is necessary. Now we have to speed it up and to get it ready for as many apartments as we can.

Okay. Thank you.

And there, we are coming, of course to the situation where we do we get the heat pumps from where we get to people who can install it. So, we have a lot of labor shortage and a lot of material shortage in this respect.

Nothing to do with Ukraine, but just because we are not the only one who need to change the heating systems.

Okay. I see.

But we are well positioned. We are well positioned, better positioned than anybody else.

But still it’s a challenge.

No, that’s good to hear because a lot of people bought new gas heating systems in the last year. So, that’s really unlucky, I must say.

Okay.

Yes. Thanks very much, Martin.

And thanks, everyone, for joining. We are looking forward to continuing this dialogue with you in the coming days and weeks, and I have the impression that there is quite a lot to talk about.

While Philip and I will be on the road for a few days now meeting with investors, which is actually pretty exciting for a few of our approach or days, we will even have real meetings with real people, no Zoom, no Webex or any of that. So, let’s hope that it’s just the start for more to come.

As always, the team and I are available today and in the coming days and weeks for any questions, inquiries you may have. Please do not hesitate to reach out to us.

That’s it from our side for today. Have a great afternoon.

Have a great weekend and stay safe, happy and healthy. Thanks.