UPDATE 1-Vonovia sells properties to CBRE for 560 million euros

(Adds revaluation of property portfolio, CEO comment, 2023 guidance)

FRANKFURT, May 4 (Reuters) - Vonovia sold five properties to CBRE Investment Management for about 560 million euros ($620.4 million) on Thursday, as high interest rates and the surging cost of construction and energy weigh on property values.

Two of the five properties, with a total 1,350 residential units, are in the final stages of construction, with completion expected by the end of August.

The sale price is below the book value of the properties as of the end of December and the expected costs of completion, which stood at 600 million euros, Vonovia said.

The group said the deal underlined the intrinsic value of its portfolio. At the same time, it revalued its overall property portfolio at the end of the first quarter, resulting in a total market value that was down 3.5 billion euros from the end of December, at 91.2 billion euros.

Nonetheless, Chief Executive Rolf Buch said the deal was "cause for optimism" for the wider sector.

"After a very difficult first quarter 2023 with little movement, the market is cautiously opening," he said.

Vonovia also reported a 17.8% slide in first-quarter group funds from operations (FFO) to 462.6 million euros.

It affirmed its full-year guidance for group FFO of 1.75 billion euros to 1.95 billion euros, down from 2.04 billion in 2022. ($1 = 0.9026 euros) (Reporting by Maria Sheahan and Matthias Inverardi; Editing by Jacqueline Wong)