It was a series of massive acquisitions that turned Vonovia into Germany’s largest owner of residential property. The company, formerly known as Deutsche Annington, concluded its latest takeover in January, buying rival Conwert for around €1.7 billion ($1.9 billion) in cash and shares.
Conwert added another 24,000 apartments, especially in metropolitan areas like Berlin, Dresden and Leipzig, to the 333,000 homes that Vonovia already owned across Germany at the end of last year. That takeover was only the fourth-large acquisition since Vonovia’s became a listed company in July 2013, and one of more than a dozen since British private equity firm Terra Firma and its boss Guy Hands founded Annington in 2001.
However, faced with an ongoing property price boom in Germany, it’s no longer a buyer’s market. Gobbling up rivals is becoming more difficult: “Real estate prices were too high in 2016 for us to make any large acquisitions beyond Conwert,” Vonovia’s Chief Executive Rolf Buch said earlier this year. The biggest possible prize, acquiring its largest domestic rival Deutsche Wohnen last year in what would have been a record deal, wound up falling flat.
Shareholders will need to get used to the idea that Vonovia, which became one of Germany’s 30 blue-chip DAX-listed companies in 2015, is no longer going to bring them the kind of rapid growth they’ve come to expect.