Research Update: German Residential Property Owner Vonovia 'BBB+/A-2' Ratings Affirmed On Victoria Park AB Takeover Bid; Outlook Stable

Vonovia has announced its intention to acquire a listed Swedish peer, Victoria Park AB, for €1.7 billion, which, in our view, would expand its asset portfolio and increase country diversity. We note that the fundamentals of the Swedish letting market for residential assets appear comparable to those of Germany and believe the funding mix and the modest size of the transaction should be neutral for the company's credit metrics. We are therefore affirming our 'BBB+/A-2' ratings on Vonovia and our 'BBB-' rating on its subordinated debt. The stable outlook reflects our view that Vonovia will likely successfully integrate this acquisition following that of Buwog, while maintaining EBITDA interest coverage above 2.0x and debt-to-debt plus equity at less than 60%. On

...+ Vonovia has announced its intention to acquire a listed Swedish peer, Victoria Park AB, for 1.7 billion, which, in our view, would expand its asset portfolio and increase country diversity. + We note that the fundamentals of the Swedish letting market for residential assets appear comparable to those of Germany and believe the funding mix and the modest size of the transaction should be neutral for the company's credit metrics. + We are therefore affirming our '###+/A-2' ratings on Vonovia and our '###-' rating on its subordinated debt. + The stable outlook reflects our view that Vonovia will likely successfully integrate this acquisition following that of Buwog, while maintaining EBITDA interest coverage above 2.0x and debt-to-debt plus equity at less than 60%....

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