Vonovia SE reported a decline in first-quarter adjusted earnings per share, but left its full-year 2026 financial guidance unchanged on Thursday.
Adjusted EPS dropped 10% year-on-year to $0.43 for the quarter. Total EBITDA came in at $711.6 million, a 1.4% increase over the same period last year. Adjusted EBITDA from rental operations rose 6.3% to $629.7 million, underscoring continued rent-led cash generation within the core portfolio.
Performance across other EBITDA lines was mixed. EBITDA from value-add activities expanded 30% to $50 million. Conversely, EBITDA attributable to recurring sales declined 4.7% to $18.2 million, and development EBITDA contracted sharply, decreasing 74% to $13.6 million.
Rental revenue increased 4% to $874 million, with like-for-like rental growth of 4.0% in the quarter, marginally below the 4.1% figure reported for full-year 2025. The company said it expects like-for-like rental growth of 4.2% for 2026. Vacancy rates rose by 20 basis points quarter-over-quarter to 2.3%.
Earnings before tax after minorities edged down 4.1% to $462 million, a result the company said was affected by a $21 million increase in financial expenses. On an adjusted basis, earnings declined 7.2% to $365.6 million, which followed a $17 million increase in minority interests.
Despite the softer bottom-line metrics, the company maintained its full-year 2026 guidance ranges: adjusted EBITDA of $2.95 billion to $3.05 billion; adjusted earnings before tax of $1.9 billion to $2.0 billion; and adjusted shareholder earnings of $1.4 billion to $1.5 billion.
Vonovia reported EPRA net tangible assets per share of $46.57, unchanged from year-end 2025. The company also said it expects the positive movements in fair value that it observed over the past 18 months to persist into the first half of 2026.
On leverage metrics, the loan-to-value ratio improved slightly to 45.1% from 45.4% at year-end 2025. The net debt to EBITDA ratio eased to 13.7x from 13.8x. Management reiterated its medium-term balance-sheet targets - a net debt to EBITDA ratio below 12x, a loan-to-value around 40%, and an interest coverage ratio above 3x by the end of 2028.
Capital expenditure rose 8% year-on-year to $442 million for the quarter. That total included $176 million allocated to maintenance capex and $202 million directed to modernization and new construction projects.
Operating free cash flow fell to $363.9 million from $633.6 million in the first quarter of 2025. The company attributed the reduction predominantly to roughly $200 million lower working capital and about $50 million attributable to reduced recurring sales volumes.
Context and implications
The first-quarter results show a company with core rental performance that remains resilient while earnings and cash flow metrics reflect the impact of higher financial costs, increased minority interests and lower contributions from development and recurring sales. Management has chosen to keep its 2026 financial targets unchanged, signaling confidence in the underlying operational outlook despite near-term earnings pressure.