According to a news report by Bloomberg, Vonovia is working with advisers to explore the feasibility of a transaction involving the country’s largest residential landlords, which would need to be friendly and overcome political scrutiny. Any approach would be made after the coronavirus pandemic has eased.

Commenting on the rumours, Vonovia said that ‘acquisitions are an integral part of our strategy and are continuously reviewed’. However, it added, such a transaction would only be conceivable if ‘fundamental issues were resolved and there was political support’ in Berlin. The company’s current priority is addressing the Covid-19 crisis, the landlord added.

With around 161,000 apartments, Deutsche Wohnen is focused on the Berlin market, which has seen valuations stagnate or decline after the government earlier this year froze rents until 2025. While the law is currently in force, Germany’s top court is considering a case claiming the rent cap measures are unconstitutional.

Vonovia, the owner of around 400,000 homes across Germany, Austria and Sweden, failed in its takeover bid for Deutsche Wohnen in 2016. Deutsche Wohnen at the time called that bid hostile and not in the best interests of shareholders.

The deal would be the latest M&A operation by Vonovia. In late 2019 the €24 bn group took control of Hembla, a listed Swedish residential firm.

The move marked Vonovia's second step into the Swedish market after acquiring residential company Victoria Park in 2018. Through Victoria Park's and Hembla's portfolios, Vonovia becomes the largest landlord in Sweden, owning around 38,000 residential units and gaining exposure to Sweden's three largest cities Stockholm, Gothenburg and Malmö.