The residential real estate giant Vonovia continues to clean up. The sale of apartments brings billions into the coffers – to reduce debts. Developments on the real estate market are causing problems for the group.
Germany’s largest residential real estate group Vonovia is making progress with the planned sale of apartments. The DAX group announced on Friday in Bochum that new construction projects for around 357 million euros had been sold to CBRE Investment Management.
Some of the apartments are still being completed. CBRE, a real estate asset manager, is purchasing a total of 1,200 apartments in Berlin at a price slightly below book value. Vonovia recently sold 1,213 apartments to the city of Dresden for 87.8 million euros. In addition, there would be the sale of commercial properties, among other things.
Vonovia also wants to raise money again by selling another stake in a real estate portfolio. Vonovia will sell around 30 percent of its portfolio in northern Germany to the financial investor Apollo for one billion euros. The majority of the approximately 31,000 apartments are located in Kiel, Bremen and Lübeck. The deal is expected to be completed by the end of the year. Apollo has already acquired a minority stake in Vonovia’s Südewo portfolio in Baden-Württemberg for the same amount this year.
According to Vonovia’s own information, this year it generated revenues of around 3.7 billion euros from apartment sales and the sale of minority shares. The DAX group originally wanted to earn around two billion euros from sales this year. After years of expansion, Vonovia wants to sell around 66,000 apartments with a total value of around 13 billion euros. The DAX group wants to use the proceeds from the sale to reduce its debts.
548,000 apartments in Germany, Sweden and Austria
Meanwhile, things were going worse for Vonovia in day-to-day business. Operating profit fell by 8.4 percent year-on-year to 1.45 billion euros in the first nine months. While business with project development, the sale of apartments and additional services in particular developed weaker, rental business performed significantly better due to the continued high demand for affordable housing in metropolitan areas.
According to the company, the rent rose to an average of 7.67 euros per square meter across the group at the end of September – that was 2.7 percent more than a year earlier. Sales fell by 8.1 percent to 4.2 billion euros in the nine months. The bottom line was that there was a loss of 3.8 billion euros in the reporting period due to billion-dollar devaluations in the real estate portfolio in the first half of the year. In the previous year, Vonovia reported a profit of 2.2 billion euros. The company confirmed its annual targets.
Vonovia grew strongly in the past few years of low interest rates, primarily through acquisitions at home and abroad. The group also benefited from rising rents in large cities and new buildings. In 2021, Vonovia took over Germany’s second-largest landlord, Deutsche Wohnen. As Europe’s largest private housing company, the group owns around 548,000 apartments in Germany, Sweden and Austria.