Image: APA/AFP/Ina Fassbender
The bottom line was a loss of around 2.1 billion euros due to a devaluation of the real estate portfolio, as the company recently reported. In the same period of the previous year, Vonovia had reported a profit of EUR 58.3 million.
In addition, the group, to which Buwog and Conwert belong in Austria, is suffering from the consequences of higher interest rates, exploding construction costs and high energy prices. In order to raise new funds, the group is now selling real estate holdings. 1,350 apartments were sold to CBRE Investment Management in New York for 560 million euros. The sale price was around seven percent below the book value of the property. The deal is expected to bring Vonovia around 1.6 billion euros.
The company plans further sales of real estate packages worth around 13 billion euros in order to finance investments worth billions. The German government’s plans to use 65 percent renewable energy for every newly installed heating system from 2024 are increasing the price pressure on unrenovated real estate. This, coupled with falling home prices, could further boost sales to US investors.
“Yes, the market is difficult,” said Vonovia CEO Rolf Buch when presenting the quarterly figures. The transaction to the US investment company underpins “the value of our portfolio”. Due to the crisis on the real estate market, Buch had announced that the company wanted to sell apartments after the expansion course of the past few years, including the takeover of the smaller competitor Deutsche Wohnen.
Signal effect for the market
The transactions of the industry leader could have a signal effect for the ailing German real estate market as a whole, in which there had hardly been any major sales in recent months due to high interest rates and falling real estate prices.
“After a difficult first quarter of 2023 with very little movement, the market is opening cautiously,” said Buch. “Buyers and sellers can come to an agreement again. This is cause for confidence.”
Source: Nachrichten
