Aroundtown suffers million-dollar loss, but maintains forecast

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In the period until the end of March, Aroundtown recorded a net loss of €21.6 million (€1 = $1.0699) compared to a profit of €124.5M in the previous year. The valuation effects amounted to minus €133M compared to the positive €81M in the previous year.

Net rental income fell by 3.8% to €297.2M, mainly due to property sales. Aroundtown completed sales worth €460M in the first quarter.

FFO 1 (Funds From Operations 1) fell by 5% to €85.6M. FFO 1 is an important indicator in the real estate industry that measures a company’s operating profitability. It is an adjusted earnings figure that adjusts net profit for certain factors such as depreciation, taxes, and non-operating expenses.

For the year 2023, Aroundtown still expects an operating profit between €300M and €330M. This would correspond to an FFO 1 per share of €0.27 to €0.30.

Thanks to the figures, the real estate group was able to stabilize somewhat on Tuesday from its months-long downward trend. The share recently gained just under 3% to €0.93. On a one-year view, however, the minus still amounts to over 79%.

The rising costs of external financing, higher capital costs, falling property values, and the attractiveness of fixed-income securities caused uncertainty and unsettled real estate investors. In this difficult environment, real estate companies must find creative solutions to counteract the pressures and regain investor confidence.

Baader Bank has maintained its assessment of Aroundtown at “Add” following the presentation of the quarterly figures, as reported by dpa-AFX. The price target remains at €1.15. According to analyst Andre Remke, the declining development of operating results is expected to continue in the coming quarters. The rising costs cannot be offset by the easing pressure on rental income in the hotel business. Nevertheless, the stock of cash and cash equivalents remains solid and continues to amount to €3 billion.

(Translated from German)