Bulletin: Vonovia's Disposals, Rental Growth, And Funding Access Mitigate Credit Pressure From Yield Expansion

This report does not constitute a rating action. PARIS (S&P Global Ratings) April 4, 2024--Despite asset devaluations, S&P Global Ratings anticipates that German real estate company Vonovia should be able to reduce leverage as it planned because of its strong rental fundamentals and successful asset disposals. Consumer price index (CPI) inflation in Germany is expected to reach 2.7% in 2024 and 2.2% in 2025. The growing housing shortage, combined with higher index levels in Germany, enabled Vonovia to report robust rental growth in 2023, even though low tenant rotation reduced the number of opportunities to increase rent to market levels. At 3.8%, rental growth for 2023 was at the high end of our expectations and well over the 3.3% reported

...April 4, 2024 This report does not constitute a rating action. PARIS (S&P Global Ratings) April 4, 2024--Despite asset devaluations, S&P Global Ratings anticipates that German real estate company Vonovia should be able to reduce leverage as it planned because of its strong rental fundamentals and successful asset disposals. We forecast that Vonovia's rental growth will comfortably exceed inflation in both 2024 and 2025. Consumer price index (CPI) inflation in Germany is expected to reach 2.7% in 2024 and 2.2% in 2025. The growing housing shortage, combined with higher index levels in Germany, enabled Vonovia to report robust rental growth in 2023, even though low tenant rotation reduced the number of opportunities to increase rent to market levels. At 3.8%, rental growth for 2023 was at the high end of our expectations and well over the 3.3% reported in 2022. We anticipate that Vonovia's rent levels will benefit from low housing supply and the lagging Mietspiegel rent index for at least...

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