May 24, 2017 / 6:28 AM / 2 months ago

UPDATE 1-Vonovia lifts guidance after Q1 core profit jump

2 Min Read

* Now sees 2017 FFO I of 900-920 mln euros incl Conwert

* Previously saw FFO I of 890-910 mln euros incl Conwert

* Q1 FFO I up 17 pct at 218.2 mln euros

* Shares indicated 1.2 pct higher at top of DAX index (Adds CEO comment, share price indication, further details of earnings)

FRANKFURT, May 24 (Reuters) - Germany's biggest residential real estate company Vonovia lifted its core profit guidance for 2017 as it filled more of the flats it rents out and after it agreed to buy Austrian property group Conwert .

Demand for German real estate has risen in recent years, with investors seeking safe havens and interest rates remaining low. The arrival of more than 1 million migrants in 2015 and 2016 combined has added to increased demand for housing.

Vonovia manages around 356,000 flats, of which only 2.7 percent were vacant at the end of the first quarter, 0.1 percentage points fewer than a year earlier.

At the same time, its financing costs fell, helping to lift core profit (FFO I) for the three months through March by 17 percent to 218.2 million euros.

The group now sees its 2017 core profit coming to 900 to 920 million euros ($1.01-1.03 billion), including earnings from Conwert, compared with previous guidance for 890 to 910 million including Conwert.

The group plans to invest around 730 million euros this year to build around 2,000 additional flats. Chief Executive Rolf Buch said Vonovia would like to build even more flats but was limited by the slow process of obtaining construction permits.

Shares in Vonovia were indicated to rise 1.2 percent to the top of Germany's blue-chip DAX index in pre-market trade.

$1 = 0.8946 euros Reporting by Maria Sheahan; Editing by Victoria Bryan

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