Aroundtown Q1 Earnings Call Highlights

Key Points

• Aroundtown lifted its 2026 FFO 1 guidance to EUR 275 million–EUR 305 million after increasing its stake in Grand City Properties to 81.5% from 62.5% through a share-for-share exchange offer. Management said the deal should add about EUR 35 million of annualized FFO 1 and simplify the corporate structure.
• First-quarter net rental income rose to EUR 297 million on 3% like-for-like rental growth, while FFO 1 fell 8% to EUR 70 million because of higher finance costs and profit dropped sharply without last year’s revaluation gains. EPRA NTA increased to EUR 8 per share, helped by operations and the share buyback.
• The company said it remains focused on capital recycling and balance-sheet flexibility, with about EUR 300 million of disposals signed year to date, a nearly completed EUR 250 million buyback, and EUR 4.1 billion of liquidity plus EUR 1 billion of undrawn credit lines. Aroundtown also noted improving but still below-prior-year office demand and continued portfolio conversions into higher-yielding uses.

Aroundtown ETR: AT1 reported higher first-quarter rental income and lifted its 2026 absolute FFO guidance after increasing its stake in Grand City Properties, while management said the company remains focused on capital recycling, conversions and balance-sheet flexibility amid a volatile macroeconomic backdrop.

Chief Executive Officer Barak Bar-Hen said the company “started the year strong” and had pursued “highly accretive transactions,” including an increased holding in Grand City Properties and a EUR 250 million share buyback program launched in January that is nearly complete. He said the company’s residential and hotel assets, which together now account for 53% of the portfolio, continue to perform well, while office demand is “slowly picking up” but has not returned to prior-year levels.

Bar-Hen said the macroeconomic and geopolitical environment remains mixed, creating volatility and uncertainty, particularly given the conflict in the Middle East. However, he said Aroundtown’s refinancing actions in the fourth quarter of 2025 and early 2026 were prudent and left the company with enough liquidity to cover maturities this year and next year.

Rental Income Rises, Profit Falls on Lack of Revaluation Gains

Net rental income rose to EUR 297 million in the first quarter from EUR 295 million a year earlier, driven by 3% like-for-like rental growth that more than offset the impact of net disposals. Adjusted EBITDA was broadly stable at EUR 250 million, compared with EUR 251 million in the prior-year period.

FFO 1 declined 8% to EUR 70 million from EUR 76 million, which management said was mainly due to higher finance expenses and was in line with guidance. On a per-share basis, FFO 1 was stable at EUR 0.07. Chief Financial Officer Jonas Tintelnot said lower perpetual note attribution from recent transactions was offset by higher financing expenses.

Profit for the period was EUR 119 million, down from EUR 319 million in the first quarter of 2025. Tintelnot said the decrease was mainly due to the absence of property revaluations in the first quarter of 2026, compared with a positive EUR 204 million revaluation and capital gains result in the prior-year period. Aroundtown said it will revalue the portfolio as part of its first-half results.

EPRA NTA was EUR 8 per share, up 3% from December 2025, supported by operational profits and the share buyback, which is being executed at a discount to NAV.

Grand City Stake Drives Guidance Increase

Aroundtown raised its 2026 FFO 1 guidance to a range of EUR 275 million to EUR 305 million, while keeping FFO 1 per-share guidance unchanged at EUR 0.24 to EUR 0.27. Management said the main driver of the increase was the company’s higher stake in Grand City Properties, which rose to 81.5% from 62.5% after a share-for-share exchange offer completed in April.

Chief Capital Markets Officer Timothy Wright said the exchange offer was executed at an attractive 10% FFO yield and was FFO per-share neutral from day one. The company expects the higher Grand City stake to add about EUR 35 million of annualized FFO 1, including EUR 25 million in 2026.

Wright said the transaction simplified the corporate structure, reduced minority leakage and increased Aroundtown’s exposure to residential markets in Germany and London. During the Q&A, management said Aroundtown has the option to acquire additional Grand City shares opportunistically but does not have a set ownership target.

Portfolio Growth Led by Residential and Hotels

Executive Director Frank Roseen said Aroundtown’s portfolio remains diversified, with residential assets accounting for 33%, offices 34%, hotels 20%, logistics and retail 6%, and development investment properties 7%. Germany, the Netherlands and London represent 89% of the portfolio, with Berlin the largest city exposure at 23%, followed by London at 9%, Munich at 7% and Frankfurt at 6%.

Like-for-like rental growth was 3% across the portfolio. Residential assets delivered 3.7% like-for-like growth, supported by strong market fundamentals and low vacancy. Hotels generated 4% like-for-like growth, driven by targeted investments, contractual rent step-ups and a stable operating environment. Offices recorded 1.5% growth, supported by indexation and rent revisions, though offset by slightly higher vacancy.

Roseen said Aroundtown renewed 200,000 square meters of office leases over the past 12 months at an average WALT of five years and signed 140,000 square meters of new leases at an average WALT of seven years, with rents about 11% above prior rates. The company expects overall like-for-like rental income growth of 2% to 3% in 2026.

As of March 2026, Deputy CEO Kamaldeep Manaktala said the portfolio was valued at EUR 25.1 billion and generated EUR 1.15 billion of annualized recurring rental income, corresponding to a 5% rental yield. EPRA vacancy was 7.5%, down slightly from 7.6% at year-end 2025, and WALT stood at 7.3 years.

Disposals, Buybacks and Conversions Remain Key Capital Priorities

Manaktala said Aroundtown has signed about EUR 300 million of disposals year to date and closed EUR 27 million in the first quarter at 1% above book value. After the reporting period, the company completed another EUR 270 million of disposals around book value, primarily Penta-branded hotels in Germany, Belgium and France. Those hotels had already been classified as held for sale and excluded from 2026 guidance.

On acquisitions, the company signed EUR 175 million of deals as of the first quarter, including EUR 75 million of residential assets in Germany completed after the reporting period and EUR 100 million of assets in London, with part completed in May and the balance expected to close in the third quarter.

Aroundtown is also directing disposal proceeds toward its share buyback program. Tintelnot said about 93% of the EUR 250 million program has been completed at an average price of EUR 2.55 per share, representing a roughly 67% discount to NAV. He said the company is weighing buybacks alongside dividends, acquisitions, leverage and macro conditions before deciding whether to extend the program.

Management highlighted conversions of office assets into serviced apartments, residential properties and data centers as another growth avenue. In response to emailed questions, Manaktala said planned projects shown in the company’s appendix are expected to generate an additional EUR 15 million of annual rental income, equal to an approximately 15% yield on invested capital.

Liquidity and Debt Metrics Remain in Focus

Aroundtown reported EUR 4.1 billion of liquidity plus EUR 1 billion of undrawn credit lines. The company’s average debt maturity was 3.6 years at quarter-end, extending to 4.4 years when factoring in liquidity. Tintelnot said the company’s hedging ratio was 95% and cost of debt was stable at 2.3%.

Loan-to-value stood at 42%, up from 41% at the end of 2025, while ICR was 3.4 times and net debt to EBITDA was 11 times. Aroundtown also reported EUR 17 billion of unencumbered investment properties, representing about 69% of rental income.

The company said perpetual note refinancing needs have been fully addressed following Aroundtown’s January issuance and Grand City’s subsequent perpetual note transaction. The next first call date for Aroundtown perpetual notes is in 2029, while Grand City’s is in 2031.

In the Q&A, Wright said the German office market has not fully recovered but is showing “signs of positive dynamics” from improving demand and low supply. He said the company continues to see demand across asset classes for disposals, while future valuation changes will be assessed with the first-half results.

About Aroundtown ETR: AT1

Aroundtown SA, together with its subsidiaries, operates as a real estate company in Germany, the Netherlands, and London. The company invests in commercial and residential real estate properties. It also engages in hotel, office, and shopping related activities. The company was incorporated in 2004 and is based in Luxembourg, Luxembourg.

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