German residential landlord Deutsche Wohnen SE plans to spend up to €1.8 billion on mergers and acquisitions in 2018, Chairman and CEO Michael Zahn said during a 2017 full-year earnings call.

"In terms of M&A, we do see opportunities," Zahn said, according to a transcript. Deutsche Wohnen intends to expand its nursing and assisted living segment, Zahn added, with potential acquisitions in that area gathering pace.

The company has identified potential small bolt-on acquisitions in the company's core-plus regions, particularly in Dresden and Leipzig, that are still attractive in a market where prices have risen significantly in the last year, said Zahn. "Hopefully as in 2017, in 2018 we will be able to deploy a good chunk of that implied financial capacity for M&A," he said.

Deutsche Wohnen is retaining a loan-to-value target range for 2018 of 35% to 40%, which implies "fairly significant M&A firepower of €1.8 billion," CFO Philip Grosse said. "Based on that, I do not see a risk of any dilutive equity measures," he added.

The listed residential sector in Germany has undergone a wave of consolidation in recent years, driven by the country's largest listed property company Vonovia SE, which bought rival GAGFAH SA for €3.9 billion in 2014 and conwert Immobilien Invest SE for €1.8 billion in 2017. The company is in the process of buying Austria-based landlord and developer BUWOG AG for €5.2 billion.

Vonovia failed in a €14 billion takeover bid for Deutsche Wohnen in 2016. CFO Grosse told the Financial Times in May 2017 that his company would be open to an improved offer from Vonovia.

Grosse announced guidance for funds from operations I for fiscal year 2018 of €470 million, an increase of around 9% to €1.34 per share, not including acquisitions and disposals, he said. The company will continue with an unchanged dividend policy ratio of 65%, which should correspond to a dividend of 86 cents per share based on today's share capital, said Grosse.