Vonovia (ETR:VNA) used its full-year 2025 analyst and investor call to reaffirm its near-term targets while outlining a more ambitious medium-term agenda under new CEO Luka Mucic. Management said 2025 results were in line with expectations, “in some cases even slightly above,” and confirmed guidance for 2026 and the outlook for 2028.
Mucic, speaking on his first earnings call as CEO, said the company’s operating business remains “remarkably robust,” with momentum across rental and non-rental activities. He reiterated an ambition to grow adjusted EBT per share at a mid-single-digit percentage rate per year through 2028, while aiming for “accelerated growth towards the high single digits” longer term, driven by efficiency initiatives, digital offerings, and third-party services.
2025 performance: EBITDA growth across all segments
- Rental: Adjusted EBITDA rose 2.5% despite roughly 9,000 fewer units and slightly higher operating expenses tied to inflation. Organic rent growth was 4.1%, including 2.6% market-driven growth and 1.5% from investments. Occupancy remained high at almost 98%, and the collection rate was “almost 100%.”
- Value-add: EBITDA increased 17% to EUR 198 million, largely attributed to higher contribution from the craftsmen organization via efficiency and volume gains, plus growth in the energy business. Grosse noted that, excluding a EUR 58 million one-time effect from a lease agreement signed in 2024, growth would have been “even much higher.”
- Recurring sales: While volumes were slightly below the prior year, Vonovia emphasized profitability and reported fair value step-ups of 32%. EBITDA contribution rose 44% to EUR 83 million.
- Development: Segment EBITDA more than doubled to EUR 75 million, partly driven by land sales, consistent with prior commentary during 2025.
Adjusted EBT per share grew 3.1% to EUR 2.29, with Grosse citing higher financing expenses and a higher share count due to scrip dividends paid last year. The company also introduced a new metric, adjusted shareholder earnings (adjusted EBT minus tax expenses and minorities), which management said provides clearer “bottom line” visibility. Adjusted shareholder earnings were EUR 1.85 per share in 2025, up 3.6% year over year. Grosse said minorities were 16% higher in 2025, while taxes were 6% lower.
Cash flow, balance sheet metrics, and valuation
Operating free cash flow was EUR 1.8 billion in 2025. Grosse said operating free cash flow was 3% below 2024 due to higher cash payouts to minorities related to the minority sale of Deutsche Wohnen in connection with the domination agreement, increased capitalized maintenance, and a smaller working-capital benefit as Vonovia increased activity in development to sell and its “Manage to Green” efforts.
Vonovia reported the first year-on-year EPRA NTA per share increase since 2022, with EPRA NTA “slightly above” EUR 46 per share, up 2.3% versus the end of 2024.
Key debt metrics improved year over year on a pro forma basis, according to Grosse:
- Net debt to EBITDA: 13.8x, an improvement of 0.7x
- LTV: 45.4%, down 40 basis points
- ICR: 3.8x, up 0.1x
On valuation, Grosse said the full-year outcome was a net value gain of 1.8% in 2025 on a like-for-like basis and excluding rent growth from investments, with acceleration in the second half. Including investments, full-year growth was 3.1%. Standing assets were valued at EUR 80.7 billion at year-end, with an in-place rent multiplier of 23.2x and an initial gross yield of 4.3%.
Dividend policy simplified; EUR 1.25 proposed for 2025
Management said it has simplified its dividend approach to a progressive policy targeting a 50% to 60% payout ratio of adjusted EBT. For 2025, Vonovia will propose a cash dividend of EUR 1.25 at the annual general meeting, which Grosse said is 2.5% higher than last year.
On the scrip dividend option, Grosse said the company does not intend to offer scrip unless shares trade “much closer to NTA,” defining that as a discount of no more than 10%.
Deleveraging: tighter 2028 leverage targets and more disposals
Mucic said Vonovia intends to take a “more ambitious stance on leverage,” citing the headwind from higher financing expenses. While rating agency outlooks remain stable and KPIs are improving, the company set tighter balance sheet targets to reach by the end of 2028:
- Net debt to EBITDA: less than 12x
- LTV: around 40%
- ICR: comfortably above 3x
To get there, management expects organic deleveraging via EBITDA and value growth, but also “a more active pursuit of disposal opportunities.” Mucic said all options are being reviewed, including minority positions in non-strategic participations in Germany and abroad, while emphasizing decisions will prioritize “the most sustainable way to delever” rather than the fastest route.
In Q&A, Mucic said valuation uplift alone might reduce LTV to around 43%, implying additional actions are needed to reach 40%. He described potential disposal levers including accelerating privatization sales (noting 2,333 units sold in 2025 and stating 3,000–3,500 units should be “readily possible”), monetizing minority positions (citing a roughly EUR 200 million value for the Vesteda stake), and selling non-core assets (referencing a non-core portfolio, including commercial and nursing assets and non-core residential).
He added that, for net debt, Vonovia “clearly” intends to work on absolute debt levels as well, aiming to reduce interest headwinds over time.
Growth agenda: AI-driven efficiency, digital ecosystems, and B2B services
Mucic outlined three pillars for potential accelerated growth beyond the current plan: an AI-based end-to-end process redesign, leveraging digital customer interfaces to expand partner ecosystems, and building a “meaningful B2B business” via third-party management activities.
On the non-rental contribution to EBITDA, management reiterated expectations that non-rental activities will represent at least 15% in 2026 and 20%–25% by 2028. In response to questions about the components, Mucic tied the outlook to continued growth in value-add, recurring sales, and development, highlighting scaling energy initiatives (including photovoltaic and heat pump installations) and the “Manage to Green” model, where assets are acquired, modernized, and later recycled through sales.
For B2B, Mucic said Vonovia already provides property management services for more than 70,000 units and has facility management customers. He described both “à la carte” services and more comprehensive partnerships with institutional investors covering investment management through value-added services, calling the latter more complex but potentially more meaningful. He also suggested B2B services could help retain EBITDA after portfolio disposals if Vonovia continues operating sold assets for new owners.
Regarding capital allocation, management said deleveraging comes first and that a debt-financed share buyback is “not on the cards.” Mucic also said geographic expansion through M&A is not planned, emphasizing focus on growth opportunities inside the current platform, though B2B services could extend beyond the three countries where Vonovia operates today.
About Vonovia (ETR:VNA)
Vonovia SE operates as an integrated residential real estate company in Europe. It operates through four segments: Rental, Value-Add, Recurring Sales, and Development. The company offers property management services; property-related services; and value-added services, including maintenance and modernization of residential properties, craftsmen and residential environment organization, condominium administration, cable TV, metering, energy supply, and insurances services. It also engages in the sale of individual condominiums and single-family houses; and project development activities.
