“Vonovia Sells Minority Stake in Südewo Portfolio for One Billion Euros”

Sale for one billion euros
Vonovia turns share in real estate package into cash

4/26/2023, 5:47 p.m

Following the expansion course of recent years, Vonovia wants to sell apartments. The real estate giant is now parting with its Südewo portfolio. The group promises that nothing will change for tenants in Baden-Württemberg.

Germany’s largest real estate group Vonovia is selling a minority stake in its Südewo residential portfolio in Baden-Württemberg to US financial investor Apollo for EUR 1 billion. The transaction could have a signal effect on the troubled German real estate market, in which there have hardly been any major sales in recent months given the high interest rates and falling real estate prices. The transaction “underpins the value of our portfolio,” said Vonovia boss Buch.

Südewo became part of Vonovia in 2015, and it owns more than 21,000 apartments in Baden-Württemberg, Vonovia explained. Nothing will change for the tenants, the Bochum group will continue to manage their apartments. The transaction valued the Südewo portfolio at EUR 3.3 billion. This does not include debt and cash. This means a discount of less than five percent on the fair value of Südewo as of December 31, 2022. The company has a long-term option to buy back the stake. However, there is no obligation to exercise the option.

Vonovia also wants to use the proceeds to repay debt. “As a result of the transaction, the company can fully cover this year’s refinancing needs,” it said. The transaction is expected to close by the end of May.

Vonovia boss Buch had announced in view of the crisis on the real estate market that the company wanted to sell apartments after the expansion course of the past few years. Vonovia has identified packages with a volume of around EUR 13 billion for this. In addition, Buch had announced that it wanted to bring long-term investors on board. “The current transaction is a first success in this new approach,” explained Vonovia. The partnership with Apollo is “an important step on the way to achieving our goals for the year as a whole,” said Buch.