Vonovia Shares Hit 12-Month Low Despite Strong Earnings Report

Germany’s largest residential landlord, Vonovia, finds itself in a paradoxical position. The company reported a robust adjusted profit of €1.54 billion for 2025, marking a 5.3% year-on-year increase. However, investor sentiment has turned sharply negative, sending the stock price to a new 12-month low of €21.33. This represents a nearly 30% decline from its May 2025 peak of €30.25.

Debt Reduction Strategy Takes Center Stage

A key focus for the market is the company’s aggressive balance sheet management. Vonovia has outlined a plan to reduce its loan-to-value (LTV) ratio from the current 45.4% to 40% by 2028. To achieve this, management intends to execute a €5 billion portfolio disposal program. Assets on the block include commercial properties, care homes, and non-strategic holdings. The process has already begun with the planned sale of its Dutch subsidiary, Vesteda, for approximately €200 million.

Concurrently, the firm is exploring new revenue streams by opening its property management platform to external portfolios, moving beyond its core rental business. On the development front, Vonovia currently has over 4,200 apartments under construction, with long-term potential for up to 65,000 units on its existing land bank.

Rising Rents Draw Fire from Tenant Advocates

The profit growth was primarily driven by increased rental income. Group-wide, the average rent per square meter rose to €8.38 in 2025, a 4.6% increase, with the German average reaching €8.19.

Should investors sell immediately? Or is it worth buying Vonovia?

These figures have sparked significant criticism. The German Tenants’ Association has accused Vonovia of implementing “radical rent hikes.” The association alleges the company uses fabricated property features to justify raising rents beyond legally permissible limits. It further claims that while Vonovia has faced numerous legal defeats in cities like Berlin, Dresden, Dortmund, and Stuttgart, it simply factors these potential losses into its financial calculations.

Future Guidance Fails to Rally Investors

Looking ahead to 2026, Vonovia provided an adjusted EBITDA forecast ranging between €2.95 billion and €3.05 billion, up from €2.8 billion the previous year. Shareholders are set to vote on a proposed dividend increase to €1.25 per share at the Annual General Meeting on May 21, which would be a 2.5% raise.

Despite this ostensibly positive outlook, the market’s reaction remains decidedly bearish. Analysts suggest that the speed and success of Vonovia’s planned asset sales will be the critical factor in determining whether investor confidence can be restored in time for the upcoming shareholder meeting.