Vonovia, Germany's largest real estate group, is reacting to the consequences of rising interest rates, skyrocketing construction costs, high energy prices and falling profits by selling apartments. Vonovia sold a real estate package with 1350 apartments for around EUR 560 million to the investor CBRE Investment Management, the group announced on Thursday. The selling price is only slightly below the book value. The transaction "underpins the intrinsic value of our portfolio," said Vonovia CEO Rolf Buch.

However, its value is declining due to the crisis in the industry: At the end of the first quarter, Vonovia carried out an unscheduled revaluation of its entire portfolio. The market value of the real estate portfolio then fell to EUR 91.2 billion (end of 2022: EUR 94.7 billion). Buch spoke of a "snapshot". The bottom line is that Vonovia posted a loss of around two billion euros as a result of the devaluation.

"Buyer and seller can come to an agreement again"

Profit from operations (Group FFO) fell by 17.8 percent to EUR 462.6 million in the first quarter. Vonovia reaffirmed its forecast: Group FFO will shrink to between EUR 2023.1 billion and EUR 75.1 billion in 95, up from a good EUR <> billion in the previous year.

Due to the crisis in the real estate market, Buch had announced that the company wanted to sell apartments after the expansion course of recent years, including the takeover of its smaller competitor Deutsche Wohnen. Vonovia had identified packages with a volume of around EUR 13 billion for this purpose. In addition, Buch promised to bring long-term investors on board. At the end of April, the Bochum-based company sold a minority stake in a real estate portfolio to the financial investor Apollo. Together with the transaction with CBRE, which has now been announced, Vonovia has almost achieved its sales targets for 2023, Buch emphasized. Vonovia will be able to fully cover this year's refinancing needs, as well as a significant part of the refinancing due for 2024.

The transactions of the industry leader could have a signal effect for the crisis-ridden German real estate market as a whole, in which there had been hardly any major sales in recent months due to high interest rates and falling real estate prices. "After a difficult first quarter of 2023 with very little movement, the market is opening cautiously," Buch said. "Buyer and seller can come to an agreement again."