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Financial Opportunities

Vonovia has benefited from good conditions on the capital and banking market in recent years to establish a very stable capital structure. We now have a broad range of financing instruments that are balanced and stable in the long term. This is reflected in a consistently high credit rating. The latest bond issues show that our company still has good opportunities available to it, even in a difficult capital market environment, to successfully realize upcoming (re)financing measures or to raise necessary liquidity. During this phase, we are responding to the continued high level of trust placed in us by investors by paying particular attention to cost discipline and a forward-looking capital structure policy. Together with the diversification strategy for liquidity procurement that we have been pursuing for many years now, we still have the opportunity in the current capital market environment to optimize the structure and conditions of our financial liabilities.

Rising inflation and interest rates recently forced us to reassess the profitability of our investments. Ongoing pursuit of our sustainability targets remained non-negotiable during this process. As a result, we are currently focusing more on financing using our own funds (internal financing). In order to generate the necessary funds, we are continuing with the program involving the sale of selected portfolios, as announced. We are also tapping into new sources of financing. These include private equity joint ventures in which long-term investors acquire minority stakes in selected portfolios, with Vonovia retaining a buy-back option for these properties. More intensive sales efforts for our development projects will also have a positive effect on our internal financing power. All in all, stronger internal financing potential could allow for investment decisions, where appropriate opportunities arise, to boost the company’s overall profitability or to allow it to pursue more sustainability initiatives and earnings potential.

By strengthening the proportion of equity and focusing on internal financing, we have achieved optimum capital allocation. This is a significant value driver that opens up opportunities for return-oriented sustainable investment.

Strengthening of financial position, boosting the profitability of our (sustainability) investments and expanding our market share in urban areas could have a positive impact on how our investors and ratings agencies assess us, resulting in a further improvement in our attractive financing options.

Our investments in affordable homes are associated with a cash flow that is largely independent of economic factors. The resulting stability allows us to service our financial liabilities with a relative degree of certainty, even in times of economic or political crisis. This is evident, in particular, from the fact that our rent default rate, which was already low to begin with, has not increased to any significant degree, even in the year dominated by Russia’s war of aggression against Ukraine and supply chain disruption that was 2022.