Deutsche Wohnen books €672m profit in 1H

Germany’s second largest listed landlord Deutsche Wohnen has reported consolidated group profit of €672m in the first half of 2017, up from €647.2m in the same period last year, it announced in August.

Its first-half funds from operations, operating result after current interest and taxes or FFO I increased 11% to €220.8m, up from €198.7m last year. FFO I per share rose just under 7% to €0.63.

Contracted rental income grew to €366.5m compared to last year’s €347.8m. This led to an increase in the operating result, or net operating income, to €283.7m, up from €272.9m last year.

As of 30 June 2017, Deutsche Wohnen’s portfolio comprised approximately 163,000 residential and commercial units with a fair value of around €17b, excluding nursing and assisted living assets. The value of its portfolio has risen by almost €900m in the first half, with €800m of this amount attributable to the core plus segment, the majority of which was invested in Berlin.

The average monthly in-place rent across the total portfolio is €6.23 per sqm. On a like-for-like basis, the group’s letting portfolio benefitted from rental growth of 3.2%. The vacancy rate stands at 1.6%, up from 1.4% last year, 0.4% of which Deutsche Wohnen attributes to being ‘investment-related’. The group has also raised its forecast for expected rental growth to over 4% from 3.5% across its entire portfolio. It also expects its FFO I to increase to around €425m, without accounting for any further acquisitions or opportunistic disposals.

The adjusted EBITDA excluding earnings from disposals rose to €290.7m, up from €266.5m in 2016, at a largely stable cost ratio of around 11% compared to the end of 2016.

And a takeover on the part of Vonovia is not completely off the table. Deutsche Wohnen's CFO Philip Grosse, who arrived at the property company last year from Credit Suisse, gave an interview to the Financial Times newspaper earlier this year in which he said that his firm would not fundamentally oppose a renewed takeover bid from larger rival Vonovia if an ‘adequate offer’ were to be made.

 Last year Deutsche Wohnen's shareholders rejected a hostile offer from Vonovia after a prolonged struggle which would have capped a wave of consolidation in Germany's residential housing sector by creating a behemoth with more than half a million apartments.