Vonovia’s 2015 profit doubles on acquisitions, new revenues

BERLIN / Bloomberg

Vonovia SE, the German property company that last month failed in an attempt to buy its largest competitor, said full-year profit more than doubled after it added properties and tapped new revenue sources.
Funds from operations excluding sales, a measure of a real estate company’s ability to generate cash, rose to €608 million ($660 million) from €286.6 million a year earlier, Vonovia said in a statement on Thursday. FFO per share rose by 30 percent to €1.30 as the company paid for acquisitions by issuing stock. “We had a very successful year in 2015 and we’re entering 2016 with a great deal of optimism,” Vonovia Chief Executive Officer Rolf Buch said on a call with reporters.
On Nov. 3, Vonovia said its 2015 funds from operations, excluding property sales, would be between €590 million and €600 million. The company on Thursday confirmed its expectation that FFO in 2016 will be between €690 million and €710 million, with the dividend once again amounting to about 70 percent of that.

Beyond Acquisitions
Vonovia, after a string of deals that helped it double in size since 2013, last month failed to secure enough support to buy Deutsche Wohnen AG. While low interest rates and a rising stock price have enabled Vonovia to finance acquisitions cheaply, the company plans to place an increasing emphasis on selling tenants services beyond just homes.
Rental income in 2015 rose 79 percent to €1.41 billion, while the vacancy rate fell to 2.7 percent from 3.4 percent.
Vonovia will spend most of the 3 billion euros it raised for the Deutsche Wohnen acquisition to pay off debt, the company said in a presentation on its website. About €1.2 billion will be used to repay existing secured loans, €700 million to refinance a bond expiring in July, and another 700 million to pay off other debt. About 400 million euros have been spent on Deutsche Wohnen shares, it said. Advisory costs and other expenses related to the deal amounted to about 19 million euros, Buch said on the call.
The company for the first time released numbers for a business strategy it describes as “extensions,” which includes the sale of cable television connections to tenants and insurance services to other landlords. “Thanks to our most recent acquisitions, we expect to have direct access to around 1 million customers,” the company said in the statement. “We can offer these customers services that are closely related to and/or influence the rental business.”