Vonovia CEO says capital increase less likely after property sale, ET RealEstate

November 3, 2023

DUESSELDORF: Vonovia, Germany‘s largest real estate group, said on Friday that it was unlikely to carry out a capital increase after selling property to cut debt, prompting a nearly 8% jump in its shares in early trade.

Vonovia had said in recent months it had enough flexibility to avoid a capital increase, but market speculation that it may need to resort to such a measure had persisted.

Germany’s biggest landlord has been looking to offload property to reduce its debt, as the country’s real-estate sector struggles with its worst crisis in decades.

The broader industry has been marked by insolvencies, cancelled transactions, falling prices and a decline in construction jobs.

The company, which on Friday reported a loss in the first nine months of the year, aims to keep debt, or its so-called loan-to-value ratio, between 40% and 45%, which it reached in the third quarter after the sale of properties. The ratio was 46.8% at the end of the second quarter.

“The fact that we are now back in the corridor … makes a capital increase increasingly unlikely,” Chief Executive Officer Rolf Buch told reporters.

The company’s shares were the strongest gainer in Germany’s DAX index of blue-chips in early morning trade, before paring some of the gains to trade up around 3% at 0847 GMT.

Vonovia said its funds from operation (FFO), a key profit metric, would likely be moderately lower in 2024 than in the current financial year on higher taxes and interest.

It affirmed its 2023 FFO guidance of 1.75 billion euros ($1.9 billion) to 1.95 billion euros.

“We’re on course for this year. Despite difficult circumstances, we’ve succeeded in doing what we set out to do,” said Buch.

Vonovia posted a 3.81 billion euro loss for the first nine months, compared with 2.21 billion euros in profit a year earlier.

  • Published On Nov 3, 2023 at 05:30 PM IST

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