Vonovia SE

The stable outlook reflects our view that Vonovia will maintain robust and stable cash flow generation, supported by ongoing demand for affordable housing in Germany, and to a lesser degree in Austria and Sweden. This should enable its EBITDA interest coverage to remain well above 2.4x for at least the next two years. We also expect the company to successfully integrate its recent transactions and ensure a large liquidity cushion afterward. In our view, Vonovia will finance any potential future acquisitions with enough equity to maintain debt to debt plus equity below 60%. We could consider a negative rating action if Vonovia deviated from its stated distribution policy, or if it decreased its liquidity cushion--for example, as a result of

...The fundamentals of the German residential property market will remain favorable for the next 12-24 months with further rent and price growth. S&P Global Ratings expects Vonovia to continue generating solid like-for-like rental income growth of at least 2%-3% over the next one-to-two years, excluding rent benefits from new construction and neighborhood development. We believe rents and residential real estate prices will continue rising this year on the back of strong market fundamentals, such as high demand for residential flats and limited new construction, particularly in metropolitan areas. The completed acquisitions of Austrian BUWOG AG and Swedish Victoria Park will also contribute to the company's cash flow generation during the forecast period....

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