Vonovia’s report sounds good: shares in 21,000 apartments in Baden-Württemberg are being sold to institutional investors. The portfolio is worth EUR 3.3 billion, which is only around five percent less than assumed at the end of 2022. With the proceeds from the sale, Germany’s largest landlord can reduce its debt burden. Vonovia’s share price went up immediately. But is the news really as good as it sounds?
The transaction suggests that real estate prices have continued to fall since the beginning of the year. Should a value deduction of five percent be due on all Vonovia houses, this would correspond to a correction requirement of almost five billion euros. That doesn’t sound so nice anymore. It should also be borne in mind that initially good buildings are likely to be offered for sale. Listed companies in particular must prevent doubts about the value of their entire stocks arising from high discounts on sales.
In other words: For properties that are not so attractive, the need for value adjustments is more likely to be five percent + X. To rate property sales as a success these days is absurd anyway. They only show who needs money because they overextended themselves during the real estate boom.
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