November 5, 2019 / 8:02 AM / 17 days ago

UPDATE 1-Vonovia forecasts 7% growth in 2020 operating earnings

* FFO up 11% in Jan-Sept as acquisitions pay off

* Dividend of 1.57 euros proposed

* Investments rise but energy-efficient spending curbed (Adds details, background)

FRANKFURT, Nov 5 (Reuters) - Germany’s biggest residential property firm, Vonovia, on Tuesday posted a positive outlook for 2020 after achieving an 11% increase in funds from operations (FFO) in the first nine months of the year.

The DAX-listed company posted nine-month FFO of 932.8 million euros ($1.04 billion), citing recent acquisitions such as Buwog in Austria and Victoria Park in Sweden, development business, construction activity and efficiency gains.

Full-year 2019 FFO should be at the upper end of previous estimates that ranged up to 1.22 billion euros, and should see further growth of 7% next year to around 1.275 billion to 1.325 billion euros, it said.

The company intends to propose a dividend at its annual general meeting next May of 1.57 euros a share, around a 0.13 euro increase compared with its previous dividend.

“In combination with our decision to focus on dynamic growth regions in Germany, we now have a very well balanced portfolio that stands independent of individual regional economic fluctuations,” said Chief Executive Officer Rolf Buch.

Bochum-based Vonovia said it would invest 1.4 billion euros in the 2019 calendar year and so achieve a renovation rate of around 4%, down from 5% in 2018. It sees this rate declining again in 2020.

Germany is a highly regulated market in which the protection of tenants’ interests is given high priority. Vonovia said energy-efficient modernisations had decreased as it had voluntarily committed to not carry out modernisations that would lead to rent increases of more than 2 euros per square metre.

In the nine months, investment in maintenance, modernisation and construction overall rose to 1.3 billion euros from 983 million euros in the same period in 2018.

Investment in the construction of new apartments in the full year 2019 would rise to 624 million euros versus 416 million last year, the company also said.

Since going public in 2013, Vonovia has grown by swallowing up smaller rivals and expanding abroad. Apart from Austria and Sweden, it has said it is eyeing market entry in France.

Vonovia has bought a majority stake of 69.3% in Swedish peer Hembla, expanding its operations in Sweden.

It expects approval from the Swedish merger control authorities anytime soon for the deal, the company’s second major one in Sweden after Victoria Park in 2018.

Vonovia owns just under 400,000 residences and manages around 79,000 for third parties, employing more than 10,000 people.

$1 = 0.8988 euros Reporting by Vera Eckert Editing by Michelle Martin

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