Vonovia: A Breath of Fresh Air

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  Christian Ingerl
  Redaktor

The share of Vonovia shares are currently at a crucial point: for around two months, the 100-day line has provided support on the downside, while the 200-day moving average has limited potential on the upside. As a result, the DAX share has been trading in a narrow corridor between EUR 28 and 29 for weeks, but the blue chip has just managed to break above the longer-term average. Although the share still faces a few horizontal resistances up to the annual high of EUR 33.93, the chance that this was the starting signal for a medium-term upward trend has also increased.

Positive roadshow

Vonovia is receiving strong support from the operational side. Germany’s largest residential real estate group has just successfully completed a virtual roadshow. The key message was that now that the company has finished reducing its debt, it will once again focus on growth opportunities in the coming years. This is perfect timing, as the German residential investment market is in the process of recovering.

In view of the ongoing shortage of supply and the fact that market rents are on average twice as high as actual rents, solid rental growth is easily foreseeable for many years to come. Experts assume that the average annual growth rate for rents will be over 4% until 2028. According to Head of Finance Philip Grosse, residential real estate values have also bottomed out. The manager is very confident that at least some of the rental growth will be reflected in value increases in the first half of the year. Without a significant change in bond yields, the positive trend will continue in the medium term and the strong rental growth prospects will lead to higher asset values and organic deleveraging of the balance sheet.

Political tailwind

The earnings side should also gradually gain momentum. According to estimates by Kepler Cheuvreux, EBITDA growth could significantly exceed rental growth: While the operating result in the rental segment is expected to increase in the mid-single-digit range by 2028, the recovery of the non-rental business and new growth initiatives should enable group-wide Ebitda to grow by around 30% by 2028. According to CFO Grosse, the new government policy will also benefit Vonovia. Among other things, the new coalition attaches great importance to stimulating supply through lower construction costs and faster approvals in order to reduce rents for new apartments. Government spending is also set to increase by around EUR 100 billion for the climate and transformation fund, a large proportion of which will flow into the housing market.

Change of boss

The upcoming change of CEO could also bring a breath of fresh air to the company. After 12 years in office, the current CEO Rolf Buch will hand over the reins to former SAP CFO Luka Mucic at the end of 2025. According to the experts at Kepler Cheuvreux, the new man at the helm may not have any real estate experience, but he does have extensive B2C and B2B knowledge. Consequently, there should be no significant change in strategy and, as the remaining members of the Management Board have extensive real estate experience, the transition should be smooth. “I will hand over to my successor a house in good order,” assured Buch at the most recent Annual General Meeting. To emphasize this, the CEO once again confirmed the medium-term targets. Adjusted operating profit is set to increase by 30 percent by 2028 compared to 2024.

Investment solutions

Investors who would like to bet on a breakout of the Vonovia share can invest in the Long Mini Future IVN4OZ from ZKB on the bull side. The product offers a multiplier of 4.1 and thus benefits disproportionately from rising prices of the underlying. The knock-out is located at EUR 23.7723 and thus 20.9% away from the current price level.

Anyone assuming that the German DAX will continue to take a breather at the current level can buy the newly issued Barrier Reverse Convertible RVNACV issued by Bank Vontobel with a term of one year. The product offers the prospect of a return of 8.25% p.a. The barrier is at EUR 21.20 – a buffer of 29.5%.