Vonovia CEO Mucic Takes On Rent Politics as ECB Tightens the Screws

Luka Mucic proposes limiting price caps to one-third of rental stock, warns expropriation debates threaten investment as shares near 52-week low.

Vonovia chief executive Luka Mucic has waded into Germany’s heated housing debate with a call to overhaul the country’s rent brake, arguing that the current system is worsening the housing shortage rather than fixing it. Speaking in Düsseldorf on Tuesday, Mucic proposed limiting the price cap to just one-third of the country’s rental stock, allowing the rest to be let freely. His reasoning is blunt: Germany is short roughly 1.4 million homes, and regulation that stifles new construction only deepens the hole.

The CEO’s intervention comes as Berlin gears up for a state election in September — a vote that could reshape rental policies in the capital. Mucic warned against a blanket abolition of the rent brake, acknowledging it offers some protection, but he reserved his harshest language for the expropriation debate that has gained traction in Berlin. Employees have been taunted on trains for wearing Vonovia-branded jackets, he said, and “cars are being set on fire because Vonovia is written on them.” Bavaria is now threatening a constitutional complaint against Berlin’s expropriation plans, adding another layer of legal uncertainty for Germany’s largest residential landlord.

The political noise is amplifying a financial reality that has already dragged Vonovia’s shares to within 5% of their 52-week low of 19.53 euros. The stock recently changed hands at around 20.56 euros, down roughly 15% since the start of the year and more than 31% below its 12-month peak of 30.16 euros. The sell-off reflects a deepening tension: robust operating performance on one side, and a central bank tightening cycle that is inflating borrowing costs on the other.

The European Central Bank delivered a 25-basis-point rate hike across all three of its key rates on 11 June, lifting the deposit facility to 2.25%. Inflation in the euro area stood at 3.2% in May, well above the ECB’s target, and economists expect two more increases this year that could push the deposit rate to 2.75%. For Vonovia, the impact is brutally concrete. The group must refinance around 1.6 billion euros in 2026, followed by roughly 5 billion euros in each of the two subsequent years. Higher rates mean higher interest costs, and that is already eating into profits.

Goldman Sachs analyst Jonathan Kownator is sticking with his buy rating and has kept Vonovia on the firm’s “Conviction Buy List,” though he trimmed the price target by a razor-thin 10 cents to 34.20 euros on Monday. Kownator noted that the shares have recently broken their usual negative correlation with German Bund yields, suggesting the market is starting to look past the rate environment. The broader analyst consensus stands at 28.35 euros, with targets ranging from 18.88 euros to 38.00 euros — meaning even the bulls see material upside from current levels.

The operational picture lends some support to that optimism. Adjusted EBITDA rose 1.4% in the first quarter to 711.6 million euros, with average rents climbing 3.8% to 8.46 euros per square meter and the occupancy rate holding at 97.7%. The value-add segment — which includes Vonovia’s tradesman organisation and energy business — saw adjusted EBITDA surge more than 30%. For the full year, management expects adjusted EBITDA of between 2.95 billion and 3.05 billion euros.

Yet the bottom line tells a different story. Net profit attributable to shareholders fell 7.2% to 365.6 million euros, dragged down by higher financing costs. At the annual general meeting in May, Vonovia confirmed a dividend of 1.25 euros per share, which at the current share price yields roughly 6.3% — a standout return in the DAX. Whether that yield can compensate for the erosion from rate hikes depends largely on how aggressively the ECB pushes ahead. For now, the political calendar in Berlin looks every bit as important as the one in Frankfurt.