Aroundtown (ETR:AT1) reported stable first-half operating results for 2026, with rental growth offsetting the impact of asset sales, while higher financing costs reduced funds from operations. Management said the company remains on track to meet its full-year guidance and is continuing to recycle capital through disposals, property investments and share repurchases.
CEO Barak Bar-Hen said the macroeconomic and geopolitical backdrop remained mixed during the first half, but external volatility had not materially affected operations. He said the company’s residential and hotel holdings, which together represent 53% of the portfolio, continued to benefit from favorable market conditions, while the office segment remained relatively stable despite subdued economic activity.
Stable rental income, lower FFO
FFO I, a key recurring earnings measure for property companies, declined 4% to €144 million from €150 million, primarily due to higher financing expenses. FFO I per share was €0.13, compared with €0.14 in the first half of 2025, with the share buyback supporting the per-share outcome.
Finance expenses rose to €142 million, reflecting refinancing measures completed during 2025 and the first half of 2026. CFO Jonas Tintelnot said the company’s cost of debt stood at 2.4% as of June 30 and increased to 2.6% on a post-reporting-date basis following additional refinancing activity.
Overall profit for the period was €218 million, down from €578 million in the first half of 2025. The company said its full portfolio underwent external valuation during the reporting period, resulting in valuations that were stable compared with December 2025. EPRA NTA increased 3% to €8.00 per share, while EPRA NRV rose 2% to €9.60 per share.
Portfolio growth led by residential and hotels
Aroundtown’s portfolio was valued at €25.2 billion as of June, with annualized rental income of €1.16 billion. Residential assets represented 33% of portfolio value, offices 34%, hotels 20%, development and investment property 7%, and logistics and retail 6%.
Residential like-for-like rental growth was 3.5%, while hotels delivered 4.4% growth, supported by indexation, agreed rent step-ups, reopenings and repositioning work. Office rental growth was 0.9%, driven by indexation and rent reversion but partly offset by a slight increase in vacancy.
Executive Director Frank Roseen said the company expects full-year portfolio like-for-like rental growth of 2% to 3%. EPRA vacancy remained stable at 7.6%, while the weighted average lease term stood at 7.3 years.
Management expects approximately €100 million of additional rental income over the next three to four years from reletting and indexation, assuming like-for-like growth of roughly 2% to 3%. It also expects current conversion, redevelopment and repositioning projects to generate €55 million of additional rental income by 2030.
These projects include office-to-serviced-apartment conversions and hotel refurbishments. Deputy CEO Kamaldeep Manaktala said the current projects have a remaining investment budget of about €225 million and are expected to generate a yield of roughly 12% on total budgeted capital expenditure.
Disposals, buybacks and residential exposure
The company closed €350 million of disposals during the first half and had signed about €390 million of disposals year to date. The completed sales were executed around book value and at a rental multiple of 17 times, management said. Aroundtown also had €400 million of investment properties classified as held for sale at the reporting date.
Proceeds are being redeployed into higher-yielding opportunities, including residential acquisitions, conversion projects and share repurchases. The company said it acquired high-quality residential assets at an average yield of more than 7%.
Aroundtown increased its stake in Grand City Properties to around 84% from 81.5% following its share exchange offer and subsequent open-market purchases. Chief Capital Markets Officer Timothy Wright said the increased stake is expected to add €10 million of FFO from 2027 onward and expands the company’s exposure to German and London residential markets.
The company continued the €250 million share buyback program launched in January. Tintelnot said shares had been repurchased at an average discount of approximately 67% to EPRA NTA per share as of December 2025. Management said the program, together with the resumed dividend, represented roughly €340 million to €350 million of shareholder returns in 2026.
Debt management and 2026 outlook
Loan-to-value rose to 43% at the end of June from 41% at year-end 2025, remaining within the board’s 45% guidance. The increase reflected the share buyback and investments, partly offset by disposal proceeds. Interest coverage declined to 3.3 times, while net debt to EBITDA stood at 11.3 times.
After the reporting period, Aroundtown issued approximately €1 billion of senior unsecured notes, including an €850 million five-year euro bond with a 3.625% coupon. It also bought back about €700 million of bonds and redeemed approximately €1.1 billion of notes at maturity. The company said these actions reduced gross debt year to date and extended its maturity profile.
Liquidity stood at €3.9 billion, in addition to more than €1 billion of undrawn revolving credit facilities. The average debt maturity was 3.9 years, or 4.7 years when liquidity was included. Aroundtown said 95% of its debt was fixed or hedged.
For 2026, the company maintained guidance for FFO I of €275 million to €305 million, or €0.24 to €0.27 per share. It expects a dividend of €0.12 to €0.135 per share, subject to shareholder approval, based on its policy of distributing 50% of FFO I per share.
Wright said refinancing of lower-cost legacy debt could continue to pressure FFO through 2027 and 2028, though property-level growth and capital recycling are expected to offset that effect over time. Management identified 2029 as a potential inflection point, when maturing debt costs are expected to be closer to current refinancing rates.
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.
