Vonovia Locks In €356m Cash via Scrip Dividend as Free Cashflow Slumps and Debt Overhang Persists

Vonovia retains €356M via scrip dividend as operating cashflow halves and net debt hits €38.8B. Rent growth holds but stock near 52-week low.

Vonovia has pulled off a quiet liquidity coup, with more than a third of its shareholders opting to take new shares instead of cash dividends. The move funneled €356 million back into the German housing giant’s coffers without a single trip to the capital markets. But the headline-saving figure masks deeper strains: the company’s operating free cashflow has halved, and a €38.8 billion net debt burden continues to weigh on the stock, which sits barely 3% above its 52-week low.

The 2025 dividend payout totals €647.2 million, up 27.8% year-on-year. The decision by 35.5% of shareholders to elect the scrip dividend – receiving shares rather than cash – effectively caps the outflow and preserves capital. Yet the cash preservation is not optional: the Operating Free Cashflow tumbled to €363.9 million from €633.6 million a year earlier, squeezed by higher investments in modernisation and new construction (€442 million including maintenance in the first quarter alone) and lower property sales.

Meanwhile, the debt pile remains the elephant in the room. Net financial debt stands at €38.8 billion, translating to a loan-to-value ratio of 45.1%. Financing costs ate €205.6 million from the net financial result, dragging adjusted pre-tax profit (Adjusted EBT) down to €462.2 million. The company aims to trim LTV to roughly 40% and keep net debt below 12 times annual profit by the end of 2028 – a promise that will require sustained cash generation.

On the operational front, the core letting business is holding up. First-quarter Adjusted EBITDA from rentals rose 6.3% despite a portfolio reduction of about 4,000 units. Organic rent growth reached 4.0%, pushing the average cold rent to €8.46 per square meter. Occupancy stood at 97.7% and payment collection at 99.6%. The Value-add segment – including the in-house tradesmen and energy services – posted an EBITDA gain of over 30%.

Management confirmed its full-year guidance: Adjusted EBITDA Total between €2.95 billion and €3.05 billion, and Adjusted EBT of €1.9 billion to €2.0 billion. The EPRA net tangible asset value per share edged up to €46.57, offering a hefty buffer above the current share price of €21.56 – some 28.5% below the 52-week high of €30.16.

The dividend itself comes entirely from the company’s tax contribution account, making it tax-free for German residents – a feature long-term holders may value. Yet the stock has lost over 10% since the start of 2025. With the free cashflow under pressure and interest rates still elevated, the market remains unconvinced. Whether the scrip dividend enjoys similar uptake at the next payout will depend on how quickly Vonovia can reverse the cashflow slide without piling on more debt.