Vonovia SE

This report does not constitute a rating action. Overview Key strengths Key risks Very large portfolio of income-generating residential property assets worth about €82.9 billion as of June 30, 2025. High reliance on Germany and its economy (and some exposure to Austria and Sweden), which poses a rent affordability risk and where regulatory pressure could potentially increase. Good asset locations in regions that enjoy supportive economic and sociodemographic trends, mostly in Germany (88% of asset value), Sweden (8.5%), and Austria (3.5%). We expect a relatively high, albeit declining, debt-to-EBITDA ratio of 15x-17x (excluding revenue from recurring sales and developments) in 2025-2027. Strong track record of positive like-for-like rental income growth, supported by a highly diversified asset and tenant base, high

...As expected, rental income growth has accelerated, supported by rising indexation and a housing shortage. The company reported 4.1% organic rental growth year on year (excluding new construction) in the first half of 2025, compared with 3.7% in 2024, 3.3% in 2023, and 2.6% in 2022. We expect modernization capital expenditure (capex) and steady indexation to continue supporting the company's rental growth for the next two years, despite very low tenant churn of 7.6% as of June 30, 2025, which limits gains from lease renewals. Revaluations may have bottomed out in Germany and be returning to slightly positive growth, with Vonovia reporting a 1.4% rise (including capex) in the first half of 2025, in line with other German residential peers. However, our assumptions remain conservatively flat for 2026-2027, given the current interest rate volatility. According to real estate brokers, the transaction market is gradually recovering for German residential. Vonovia reported a total 15.4% revaluation...

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