FRANKFURT (Reuters) - German property group Vonovia raised its earnings guidance for this year after operating profit more than doubled in the first nine months, potentially strengthening its hand in a planned hostile bid for peer Deutsche Wohnen.
Helped by the quick integration of a clutch of acquisitions, Vonovia now expects funds from operations - its profit after interest and tax - of 590-600 million euros this year, compared with a forecast of 560-580 million euros given in August.
Chief Executive Rolf Buch said on a conference call he would embark on a roadshow in coming days to discuss Vonovia’s financial performance and its planned hostile bid for Deutsche Wohnen.
The proposed offer, which Vonovia’s investors need to approve at a Nov. 30 shareholder meeting, is attractive and will not be increased, Buch said. Deutsche Wohnen’s CEO has called the approach value-destroying.
He added Vonovia did not want to become a minority shareholder in Deutsche Wohnen should it fail to win more than 50 percent of the target’s stock.
After Vonovia successfully integrated five peers and reached promised synergy targets, a takeover of Deutsche Wohnen would be just as successful, Buch said.
Vonovia, which changed its name from Deutsche Annington and joined Germany’s Dax index of blue-chip companies in September, said funds from operations jumped to 432 million euros in the first nine months from 205 million in the same period last year.
The company said it was ahead of schedule in the integration of Gagfah, the property company it took over in March, with the combination underpinning an expected rise in funds from operations to 690-710 million euros in 2016.
Following the subsequent takeovers of property companies Franconia and Suedewo Group, Vonovia’s portfolio was valued at 23.1 billion euros at the end of September, compared with 12.8 billion a year earlier.
Vonovia said it was also selling about 20,000 residential units - one 600 million euro deal, with LEG Immobilien, was announced late on Monday - with the proceeds helping to cut group debt.
About 5,000 refugees are currently living in some of Vonovia’s 347,000 apartments, of which only 3.2 percent are vacant. “Hopefully it will be much more soon,” Buch said, adding the group would focus on adding floors to existing buildings.
German authorities are scrambling to find places for the thousands of refugees streaming into Germany from the Middle East, Africa and Afghanistan every day. Tens of thousands are living in tents as winter approaches.
Reporting by Jonathan Gould and Arno Schuetze; Editing by Kenneth Maxwell and Mark Potter