Bochum-based residential property group Vonovia is reporting core operating business that remains stable despite changing macroeconomic conditions. As Chief Executive Officer Luka Mucic announced, higher financing costs are nevertheless weighing on financial results and transaction volumes in the sales-related divisions. In response, the company is focusing on stricter yield requirements, a strategic review of the development division, consistent liquidity preservation, and an ongoing strengthening of the balance sheet.
After market sentiment had gradually improved until mid-February, geopolitical uncertainties, fresh inflation concerns, and rising interest rates led to a marked deterioration in the environment. Conditions on the financing markets worsened noticeably following the outbreak of the Middle East conflict and the ECB interest rate decision in September. For instance, the yield on Vonovia's eight-year unsecured corporate bonds climbed by around 140 basis points following the escalation in the Middle East, noticeably increasing capital costs and narrowing the scope for transactions.
Key figures for the first nine months and adjusted targets
In the first nine months of the current year, Vonovia achieved an adjusted EBITDA Total of EUR 2.19 billion, compared to EUR 2.118 billion in the prior-year period in 2025. Adjusted EBT stood at EUR 1.41 billion compared to EUR 1.460 billion in the previous year, while adjusted shareholder earnings reached EUR 1.12 billion (9M 2025: EUR 1.201 billion). The growth in the operating result was primarily offset at the EBT and shareholder earnings levels by higher interest expenses.
For full-year 2026, the group now expects adjusted EBITDA Total in the lower half of the forecast range and adjusted EBT around the lower end. Adjusted shareholder earnings are projected to be in the upper half. Organic rental growth is put at around 3.8 per cent, while operating free cash flow before changes in net working capital is forecast to be moderately below the prior-year level. Targets for 2027 and 2028 have been adjusted, with Vonovia partly relying on qualitative year-on-year comparisons in light of market volatility.
Focusing capital allocation and stability in the portfolio
To safeguard liquidity, management is specifically adapting its investment strategy to market conditions. Following four half-years of valuation gains, the company expects portfolio valuation to remain largely stable for 2026 compared to year-end 2025. Consequently, rental growth will not be reflected in full in organic value increases in the short term.
- —Strategic review of the development business focusing on affordable housing
- —Temporary suspension of new manage-to-green investments across the portfolio
- —Reduction of development-to-hold projects in favour of risk-adjusted returns
- —Focus of remaining funds on value preservation, decarbonisation, and operational performance
Despite the restraint regarding new construction projects, fundamental factors such as sustained high housing demand, low vacancy rates, and negligible rent arrears continue to support the core business. The Rental segment thus remains the cornerstone for the long-term value development of the portfolio.
