Investing.com -- Vonovia (ETR:VNAn) reported on Wednesday that it is gearing up for a renewed growth phase, targeting a 30% increase in Adjusted EBITDA by 2028.
The real estate company plans to scale up construction despite cost pressures, underscoring its long-term confidence in the housing market.
“We’re emerging from the crisis ahead of many others and, in fact, in a stronger position than when we entered it,” said CEO Rolf Buch in a statement. “No other company owns more rental properties than we do. Now is the time to fully leverage our potential and move forward as a market leader with a fresh outlook.”
For 2024, Vonovia posted an Adjusted EBITDA Total of €2.6 billion, reaching the upper end of its guidance.
The rental segment contributed €2.4 billion, supported by 4.1% organic rental growth, while the occupancy rate remained high at 98%.
The company’s net debt/EBITDA ratio declined to 14.5x from 15.6x, though leverage remains higher than its target, with a 49% EPRA Loan-to-Value (LTV) ratio.
Property values, which had previously declined, stabilized in the second half of the year with a 0.5% increase, though for the full year, valuations were down 1%.
“The property market is currently reacting strongly to the German government’s announced investment plans. The medium and long-term effects on housing prices and financing costs are yet uncertain. We are observant, but acting prudently. Our priorities are clear: a good investment grade rating and the long-term success of our business,” Vonovia said in its statement.
Vonovia completed 3,747 new apartments in 2024 and plans to begin construction on 3,000 units in 2025. However, the company reiterated the need for policy support to address construction costs, which stand at €5,000 per square meter.
“To achieve our long-term goal of around 70,000 new apartments on our own properties, we need political frameworks that will drive further reductions in construction costs,” Buch said.
“The current average cost of €5,000 per square metre will need to come down significantly, to no more than €3,500 per square metre.”
Vonovia reported recurring earnings per share of €1.99, down 7% year over year, while proposing a dividend of €1.22 per share, a 36% increase.
The dividend proposal is above analyst expectations, which had forecasted €1.19–1.20 per share.
For 2025, Vonovia expects Adjusted EBITDA between €2.7 billion and €2.8 billion, while Adjusted EBT is forecasted at €1.75 billion to €1.85 billion.
Planned investments in modernization and new construction are set to rise to €1.2 billion, with a focus on expanding photovoltaic installations.
The company has also tightened its climate targets, setting out a roadmap for long-term carbon reduction and a net-zero standard beyond 2045.
By 2028, Vonovia anticipates growing Adjusted EBITDA to between €3.2 billion and €3.5 billion, a 30% increase from 2024.
The Value-add, Development, and Recurring Sales segments, currently contributing 9% of earnings, are projected to expand their share to 20–25%.
Despite Vonovia’s positive outlook, Morgan Stanley (NYSE:MS) maintained an “underweight” rating on the stock, citing high leverage and regulated rents as limiting factors in a competitive real estate market.
The brokerage noted that Vonovia’s valuation remains under pressure, as the EPRA NTA per share declined by 3% to €45.2, leaving the stock at a 44% discount to net asset value.
While the company aims to improve financial flexibility over time, analysts highlighted that leverage remains elevated and could limit risk-taking ability in the near term.