Roughly stabilised. Slight erosion of FFO in 2024.

Organic growth accelerated slightly in Q3 23. Vonovia completed its disposals, which now amount to €3.7bn, at prices in line with the book values. The outlook for 2024 is for a slight decline in FFO.

Early signs of a stabilisation?

Management quote : “Too early for a reliable H2 outlook, but the appears to show the first signs of stabilization.”

First material steps in the right direction

Rental revenue provided no significant surprise, whereas values adjusted strongly in a single quarter (-4% since December 2022). A couple of disposals should alleviate the pressure on the balance sheet but some key sector issues remain to be addressed.

A halving of the cash dividend. What's next?

Vonovia has adopted the mid-way of halving its cash dividend, thus saving €700m of cash. Further measures are under way to preserve the balance sheet. The share price is trading below its 2013 IPO level restated for inflation.

Joint efforts by communities are required

In FY 23, lfl top-line growth is expected to be above that of FY 22. FFO should be slightly down, nevertheless. By asking for joint efforts by communities, Vonovia admitted that the property sector can’t solve large issues alone.

Stable NAV per share sequentially

By announcing that it could make disposals to deleverage its balance sheet by €13bn vs. the c.€100bn GAV, Vonovia has effectively flagged a further reduction in debt.

In a much more defensive mood in Q1 22

In FY 22, Vonovia will sell c.€0.9bn of newbuilt apartments rather than renting them. This will help to lighten its balance sheet but it questions Vonovia’s own expectations, in our view.

€8bn cash capital increase on track

Guidance was broadly unchanged. Capital increase is scheduled for the end of November 2021. Vonovia will raise c.€8bn. Details of it are unavailable yet.

Waiving the minimum acceptance threshold: a defensive move

Having secured 40% of the target’s shares, Vonovia wasn’t comfortable with the 50% threshold. The latter was removed last night. The company will extend the acceptance period.

Disposals pushed both EBITDA higher, but nice organic figures too

Top-line guidance was stable. EBITDA guidance was raised thanks to increasing disposals awaited in FY 21 (2,800 units vs. an initial guidance of 2,500). Whereas rents were up 3% lfl, values were up c.14% at an annual pace (H1 21).

Merging with Deutsche Wohnen

An unexpected friendly takeover bid will lead to the creation of the indisputable residential landlord in Europe. Vonovia will pay twice the price offered in 2015-16. The tender offer should close in August 2021.

Slowing yield compression in the biggest cities

Q1 21 was strictly in line with the H2 20 set of figures with lfl growth standing at 3.0%. It was 4.0% in H1 19. We stick to our negative stance. Vonovia pointed to the “very challenging picture” in Berlin. A new “Mietspiegel” will emerge soon there: indexation will therefore be low in FY 21.

Once again: positive revaluation outlook in FY 21

Vonovia reached the lower side of its lfl growth guidance in FY 20. It was nevertheless bullish when considering the FY 21 outlook. Q4 20 was hurt by a “one-off” in the city of Berlin but rents did not slow outside Berlin.

Good Q3 20 overall. But slowing lfl growth.

Vonovia released a decent set of Q3 20 figures with a further good performance expected for H2 20 as far as book values are concerned. The make-up of its guidance has changed a bit due to the lower contribution from lfl growth. Nothing really material to date and the big picture doesn’t change. Both the figures and the company’s safe haven status look secure until February 2021. The consequences of the second lockdown on German housing and consumer confidence will however need to be revisited du

A lower than c. 3% cost of equity...really?

The €1bn capital increase will replace the €1bn hybrid capital. We believe that, like other companies, Vonovia is seizing the opportunity of its record high share price. This move underlines just how expensive the shares can be considered to be. By Vonovia too?

LIBERUM: Plus500: Strategic progress pays dividends

Tatton Asset Management (TAM LN) - Record net inflows

Tatton, the leading on-platform discretionary fund manager (DFM) and IFA support services Group has released a trading update ahead of its results to 31 March 2024, due on 18 June 2024.

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

Ondo InsurTech FY24 Trading Update

Ondo InsurTech has released a brief post-YE update revealing its good progress continued through 2H24 and consequently FY24 will be in line with market expectations.

BlackRock World Mining

BRWM’s managers: we see all the classic signs of high commodity prices...

NextEnergy Solar Fund - Attractive Refinancing

The refinancing of a £135m revolving credit facility and the extension of a similar £70m facility gives NESF firepower as development opportunities for new solar are especially attractive thanks to lower module prices in Europe. They give the fund key financial flexibility at a critical time as it pursues its capital recycling programme.

Morning Note – 18 April 2024

The Hardman & Co Monthly: April 2024

Feature article: Steady as she goes, but could be better: A review of investment company liquidity since 2016 Liquidity is the lifeblood of equity markets. The measurement of liquid asset availability to a market or company is a way of gauging a market’s health. This article builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space. We analyse liquidity for ICs as a whol

Foxtons Group (FOXT LN) - 1Q24 IMS shows real momentum

Foxtons Group plc first quarter revenue rose 9% to £35.7m (1Q23: £32.9m) with growth delivered across all business segments. Trading is in line with management's expectations.

Initial Equity Trading Comments - 19 February 2024

M Winkworth+ (WINK, House Stock at 163p) - Solid FY23A results, well placed to grow

Foxtons Group - FY24 underpinned by market share gains

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Resilient FY24, confident long-term outlook

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