Real estate groups: profit not only at the expense of tenants

Large real estate groups generate four-digit profits per rented apartment every year. This is shown in a Sharepic by a member of the Left Party. The numbers are correct – their informative value is questionable.

“That’s how much money tenants pay to shareholders!” Under this heading is a Sharepic by the Left Party member of the Bundestag Victor Perli. According to this, Vonovia shareholders will receive a dividend of EUR 2045 per year and apartment, and Deutsche Wohnen shareholders will receive EUR 1948 per apartment. The figures for three other real estate companies are at a similar level.

Perli is a member of the budget committee and redistribution policy spokesman for the left-wing parliamentary group. Where the information came from was disclosed by the MP’s office at the request of the ARD fact finder not with and referred to one instead Article of the “daily newspaper” as well as the Berlin tenants’ association. In one Contribution from the association’s tenant magazine you can find the given numbers.

Correct numbers …

After research by the ARD fact finder if the information is correct at least in terms of magnitude, it is now even a lot higher. The conclusion is not correct, however, as the corporations only generate part of their profits from rents. In the past few years in particular, two other factors have gained in importance: the increase in the value of the property portfolio and the proceeds from sales.

This is also pointed out by the Berlin tenants’ association, from which the Sharepic figures come:

The profit of the real estate giant Deutsche Wohnen from the apartment management has decreased – due to the rent cap – from 730 million to 720 million euros. The Dax group does not mind that. Because at the same time he recorded an increase in the value of his real estate portfolio by 1.9 billion euros. The increase results only minimally from modernization investments, but mostly from an increase in the value of the land. With real estate you get richer and richer without your own intervention.

Even so, the author of the article concludes:

Deutsche Wohnen is therefore increasing the dividend distribution significantly: The shareholders are to receive EUR 1.03 per share – that is 14.4 percent more than in the previous year. The group pays out around 2,340 euros per apartment and commercial unit. This means that the tenants pay an average of 195 euros a month with their rent to the shareholders alone – around 40 percent of the rent flows directly into their pockets.

… wrong conclusions

In reality, the profit situation of the housing groups cannot be explained quite as simply as the article shows: Vonovia earned 2077.9 million euros in rents in 2020. If you add up the income from the increases in value reported by the company, sales, property development and other items, these are similarly high at 2081.8 million euros. At 1053.0 million euros, the revenue from increases in value (value add) is by far the largest reported item after rents. According to an internal calculation by Vonovia, the value of the properties rose by just under 5.6 billion euros to a good 58.9 billion euros in 2020. On the other hand, expenses for maintenance, depreciation and value retention have to be taken into account.

The profits achieved in this way are initially “virtual”, as they can only be realized if the property also retains its market value and is sold at the assumed price. However, they had a positive effect on the share price of the real estate company, so that the shareholders receive direct added value – and the tenants have to fear rising rents due to the increase in the value of the properties they live in.

Tenants are not just a source of income

It cannot be said in general that the tenants are responsible for the increase in the value of the property they use: For property owners, it is sometimes even more lucrative not to rent out apartments and only to speculate on the increase in value – which is something that happens over and over again Vacancies leads. With such speculation, tenants would be more of an obstacle to quick resale.

In short: Real estate companies themselves will not deny that they are maximizing profits. Every landlord has the right to sell his property. However, it cannot be said that “the tenant pays the dividend” in the case of listed housing companies, as the Berlin tenants’ association and MP Perli postulate.

With information from Mark Ehren, tagesschau.de