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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.
Companies: Vonovia SE
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.
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.
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).
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.
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.
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.
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
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?
Values were up 11% in H1 20 at an annual growth pace (i.e. 5.3% for just H1 20 vs. December 2019). The range was 3% in the city of Berlin to 19% in other areas (Southern Ruhr, Kiel, Bremen). i.e. the cheapest destinations (<€1,600 per sqm in December 2019).
Vonovia reduced its FY 20 guidance slightly in Q1 20, due to the Coronavirus. Nevertheless, we believe that reducing macro-inflation in 2020-22 should end up percolating into Vonovia’s performance. We question the sustainability of lfl growth in 2021-25, which is the heart of further massive revaluations. The latter only can justify a growing share price in the future. German Residential will stay the perfect safe-haven it is in FY 20. What about 2021-22?
Up to now, we had anticipated a cycle coming progressively to its end in 2022-23 for Residential in Germany. Coronavirus is now revealed as a catalyst, provoking a crisis earlier than we expected previously. We now believe that the NAV will progressively stabilise or decrease as from 2020. However, we hope that Vonovia will stay the “relative” safe-haven it is vs. peers. The tragic consequences of growing unemployment in the future, coupled with deflation, could weigh on the topline’s consensus.
The pace of organic growth was stable in Q3 19 at c. 4.0%. Vonovia announced it will probably increase the valuation of its portfolio by another €1.6-2.3bn in H2 19 (excluding capex) vs. €2.2bn in H1 19 or c. 7% in FY 19.
The NAV increased by 8% on its December 2018 level, net of dividend, driven by an overall increase in prices per sqm. The revaluation pace again accelerated on the back of: i/ 4% lfl growth; ii/ another yield compression of 20bp from 3.4% to 3.2% (€1.4bn of the full €2.5bn revaluations in H1 19). Despite this move, until now Vonovia has been reluctant to close the gap between its book values and higher end-market prices per sqm.
Vonovia delivered two good pieces of news today. First, the FY 19 guidance (FFO) is increased by 2% and, second, the revaluations in H1 19 should be higher than those in H1 18.
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