Letter to
our shareholders


Dear Shareholders, Dear Sir/Madam,

In keeping with its own mission statement, Deutsche Wohnen’s actions are driven by sustainable investment and the creation of values. At the same time, we always keep in mind the people who reside and live in our properties. They are drawn to fast-growing and prosperous metropolitan areas and they are increasingly demanding sustainable and high-quality products and materials. Our focus on the growing German metropolitan areas, and in particular Berlin, is underpinned by current market research conducted by leading institutions as well as by our operating figures in terms of rents, vacancy and average sales prices. This path has not only made us one of the largest companies in the real estate industry, but also a partner trusted by stakeholders. And rightly so, because the financial year 2017 was a very successful one – also from the point of view of our stakeholders.

Historic high: Group profit

Deutsche Wohnen once more recorded significant improvements in all of its key figures in the financial year 2017: Group profit totalled EUR 1,763.3 million, exceeding the already high level from the previous year of EUR 1,623.2 million. A key factor was the renewed appreciation of our property portfolio. The key figure FFO I – Funds from Operations without disposals – which is decisively important for us, rose significantly by 13% to 432.3 million euros due to acquisitions and operative improvements in our portfolio. Per share the FFO I even improved by 18% (diluted). We also succeeded in increasing our EPRA NAV (net asset value) per share by 20% from 29.68 euros to 35.74 euros.

Our financing strategy is conservative and long-term: At 34.5% the loan-to-value ratio, which measures the Group's debt ratio, is below the self-imposed target range of 35% to 40%. We were able to further reduce the average interest rate to 1.3% with an average maturity of our financing measures of eight years. Our creditworthiness has been rated A– and A3 by the international rating agencies Standard & Poor's and Moody's, each with a stable outlook.

The capital market mirrors this success

On the capital market, the successful path taken by Deutsche Wohnen has also been evident: The price of the Deutsche Wohnen share rose by approximately 25% in 2017! Thus, the share clearly outperformed the German indices DAX and MDAX as well as the benchmark EPRA Europe. The Management Board and the Supervisory Board propose the adoption by the Annual General Meeting of a resolution in favour of the payment of a dividend in the amount of EUR 0.80 per share for the financial year 2017, an increase of 8%!

Thanks to our team

We would like to take this opportunity to thank our employees for their outstanding service. They have made the remarkable success of the past few years possible – with their commitment and their exemplary professionalism. In the future, we will continue to do our utmost to hold our own as an attractive employer in the real estate sector and promote our employees extensively and individually.

An excellent portfolio with significant appreciation in value

The positive market development of recent years continued in 2017 as well. The pace of growth is strongest in the German metropolitan areas and conurbations, where most of our holdings are located. As a result, our properties once again recorded a significant increase in value of EUR 2.4 billion in the financial year 2017.

With over 163,000 residential and commercial units, a fair value of around EUR 18.9 billion and an annualised annual rent of EUR 767 million, we manage one of the largest property portfolios in Germany today. Transactions in the amount of approximately 1 billion contributed to the growth of this portfolio in 2017. Market capitalisation rose to EUR 12.9 billion in the year under review thanks to the positive development of the share price, making Deutsche Wohnen the third largest publicly listed real estate company in Europe!

With regard to our portfolio, we remain on our successful path and continue to focus on the fastgrowing and prosperous conurbations of Germany. All of our holdings can be found here today. With a share of more than 70% of the total portfolio – that is about 114,000 apartments and about 1,800 commercial units – Berlin is our core market.

In order to further increase the quality of our portfolio in the future, we will invest more than EUR 1 billion in approximately 30,000 residential units with above-average future prospects by 2022. Furthermore, we have plans for extensive new construction measures, over the next few years to urgently supply.

Well-positioned for the future

Housing is changing in many ways. That's why we are increasingly offering property-related services aimed at attracting and retaining clients. In addition, these service offerings broaden our value creation chain. Through strategic shareholdings and through subsidiaries, we are increasing our contact with our customers and providing high quality services. In addition to technical facility management and multimedia, this applies above all to energy supply. Since 1st January 2018, we have already supplied 75% of the centrally supplied Deutsche Wohnen portfolio with energy through our joint venture G+D.

We also intend to expand the Nursing and Assisted Living segment, in which we have been well-positioned for many years with our strategic subsidiary KATHARINENHOF®. The reason is quite obvious: With demographic change, demand for beds in nursing homes is increasing. We will continue to integrate our nursing and residential operations through targeted acquisitions.

Given the positive outlook for the German residential property market, particularly in metropolitan areas, we expect our property portfolio to develop positively in 2018. We also expect to realise FFO I in the amount of approximately EUR 470 million and adjusted EBITDA – without disposals – in the amount of approximately EUR 615 million in the financial year 2018.

In conclusion, we can say that Deutsche Wohnen is excellently positioned and will consistently pursue its successful course of success. We have created the conditions for this in recent years. We would be pleased if you continue to accompany us in the future!

Berlin, March 2018

Michael Zahn
Chief Executive Officer

Lars Wittan
Representative Chief Executive Officer

Philip Grosse
Management Board