Annual Report 2019

Financing Strategy

The financing strategy pursues various, complementary goals: These are centered on ensuring adequate, but also optimized, liquidity at all times, a balanced structure and maturity of debt capital, optimization of financing costs and credit rating maintenance. Our aim is to maintain an ideal level of debt, measured in a loan-to-value ratio of between around 40-45%.

Thanks to its broad range of equity and debt capital providers and the BBB+/Stable/A-2 long-term corporate credit ratings awarded to our company by S&P as well as the A- rating received from the largest European rating agency, Scope Group, our company has excellent access to the international debt and equity capital markets. This gives us flexible access to capital based on favorable financing conditions at all times, securing Vonovia’s liquidity on a permanent basis.

This comprehensive access to the international debt and equity capital markets gives a European residential real estate company a clear strategic competitive edge. This was recently evident in the context of our acquisitions and the successfully implemented modernization programs. Without fast and free access to the equity and debt capital markets, it would not have been possible to carry out these measures.

The latest acquisitions expose Vonovia to country risks, and it is also exposed to a currency risk due to the acquisition of Victoria Park and Hembla in Sweden. The new challenges arising from this have been incorporated into the financing strategy.

Maintenance covers the measures that are necessary to ensure that the property can continue to be used as intended over its useful life and that eliminate structural and other defects caused by wear and tear, age and weathering effects.
Classification of debtors or securities with regard to their creditworthiness or credit quality according to credit ratings. The classification is generally performed by rating agencies.