The residential real estate group Vonovia is selling its stake in a real estate portfolio and wants to sell even more apartments this year. The company intends to use the money to pay off its debts.
Germany’s largest residential real estate group Vonovia is selling its stake in the Südewo portfolio. More than 21,000 residential units in Baden-Württemberg are to change hands for one billion euros. The DAX group announced this today. The transaction values the entire Südewo portfolio at EUR 3.3 billion, with Vonovia only holding a minority stake.
The buyer, a company managed by Apollo, should have taken over Vonovia’s share by the end of May. Legal questions still have to be clarified before the takeover – for example, antitrust approval still has to be given. Vonovia has a long-term option to buy back the stake, but does not have to exercise it. Despite the sale, Vonovia will continue to control, manage and consolidate the residential units.
Two billion euros revenue from sales
The sale takes place in a phase in which Vonovia, like many other real estate groups, is suffering from rising interest rates. Now Germany’s largest residential real estate group is trying to raise funds by selling real estate. A total of around two billion euros are to be generated this year through the sale of real estate – with the sale of the Südewo portfolio, half of this target has already been reached.
Vonovia wants to use the money to reduce debt. Vonovia sold 19,760 apartments last year, but demand is low due to high real estate prices and rising interest rates. “The market has not come to a complete standstill, but with difficulty,” company boss Rolf Buch said in March when the balance sheet was presented.
No new construction projects planned for 2023
This means that the total stock of apartments owned by Voniva will decrease significantly this year. Because the group has already announced that it will not start any new construction projects in 2023 and justified this with the increased construction and financing costs.
However, projects that are already under construction should be completed. Vonovia will complete 3,450 apartments in 2023, Buch had said. “New construction that leads to reasonable rental prices is simply not economically feasible in the current situation,” he added.
The tense situation in the real estate industry is also evident on the stock market: the price has fallen by almost twelve percent since the turn of the year and by more than 40 percent in the past twelve months. Investors reacted positively to the news today, with Vonovia shares gaining more than five percent in the meantime.