Deutsche Wohnen upgrades earnings forecast and dividend for 2015

German landlord Deutsche Wohnen has raised its earnings for 2015 by around 38% to €300 mln, an improvement on previous forecasts.

The company said it would increase its EPRA NAV per share by 27% and its dividend to 65% of FFO I as a result of its strong performance.

The value of its portfolio of 149,000 units is expected to grow by €1.7 bn in 2015 compared to the previous year. This corresponds to an in-place rents multiplier of around 18.2x for the entire portfolio and around 19.4x for Berlin.

The strong figures were published against the background of a takeover bid by Vonovia, Germany’s largest listed residential landlord, for Deutsche Wohnen, which is its nearest rival. Deutsche Wohnen’s board has rejected the share offer.

If the takeover went ahead it would create a super-landlord with more than 500,000 apartments and market capitalisation of €20 bn.

Vonovia has offered Deutsche Wohnen’s shareholders seven of its shares and €83.14 in cash for every 11 Deutsche Wohnen shares, which values each share at €26.46.

Deutsche Wohnen said its latest forecasts, based on an average like-for-like rent increase of 3% in 2016, would produce an EPRA NAV of between €25 and €26 per share.

The company said it benefited from a dynamic market environment in 2015, particularly in the core and core-plus regions, enabling it to cut its leverage ratio to around 38% In a statement, Deutsche Wohnen said it intended to maintain its ‘conservative financing policy within the current market environment’.

CEO Michael Zahn said: ‘Deutsche Wohnen achieved a record result in 2015. We exceeded our targets and we see ourselves in an excellent position for 2016.

‘In view of this potential, we are raising our forecast for 2016 and let our shareholders increasingly participate in this success via the increase in the dividend payout ratio. We are thereby demonstrating once again the sustainability and strength of our business model.’