German housing giants sell Berlin state €2.46bn portfolio

German residential property giants Deutsche Wohnen and Vonovia have sold a portfolio of 14,750 apartments and 200 commercial units to the state of Berlin for about €2.46 billion.

Vonovia’s portion of the sale includes 4,250 residential and commercial, sold for €811 million.

The properties have actually been acquired by three regional housing associations, HOWOGE, degewo and Berlinovo.

“With the sale, we are reaffirming our role as a trustworthy partner for the State of Berlin. The current transaction continues the constructive cooperation after we have already sold holdings to state-owned housing companies several times in the past,” Deutsche Wohnen CEO Michael Zahn said.

The sale of the apartments followed the announcement of a partnership with Vonovia in May and is part of the Future and Social Pact for Berlin. Deutsche Wohnen and Vonovia had originally offered the State of Berlin about 20,000 apartments for sale.

Approximately 19% of the holdings that the three regional companies have acquired from Deutsche Wohnen are subsidised housing built between 1950 and 1999. The purchase price is around €1.65 billion or €2,185 per sq m and takes into account the respective condition of the apartments.

Contribution to expansion of state housing portfolio

In a statement Deutsche Wohnen said that it is, “making a contribution to the expansion of the state’s own stock of socio-politically relevant residential quarters in Berlin, which the State of Berlin is striving for, but will remain a relevant and socially responsible part of urban society with over 100,000 apartments in Berlin in the future”.

Deutsche Wohnen made a “tenant promise” in 2019 which it says goes beyond the legal protection of tenants and states that in the event of rent increases no tenant will have to pay more than 30% of the net income of the household as rent. Since the outbreak of the corona pandemic, the company has waived any rent increases and set up an aid fund of €30 million.

The Future and Social Pact Housing for Berlin, to which Deutsche Wohnen and Vonovia have committed, entails aiming to create a social and sustainable housing industry, restricting rent increases to one percent for the next three years and to the level of the inflation rate for another two years. Furthermore, modernisation surcharges will not exceed €2 per sq m.