Aroundtown's H1 2026: On Track, But the Debt Squeeze Looms with a 2029 Inflection
Despite stable rents and a resumed dividend, rising finance costs and a higher LTV put the focus on the refinancing path.
AT1.DE · Earnings Call · 2026-08-26
A Subdued but Confident Report
Aroundtown delivered a steady H1 2026, with net rental income of EUR 591 million, stable year-on-year, and adjusted EBITDA of EUR 500 million. The highlight is not the headline numbers but the narrative around capital allocation. The company has been actively repurchasing shares at a deep discount to NAV, and it resumed its dividend after a three-year suspension. CEO Barak Bar-Hen was upbeat: “We did not experience any material impact on our operations from these external factors and come with good H1 2026 results, well on track to meet our 2026 guidance.” — Barak Bar-Hen, CEO · 2026-08-26 The FFO I came in at EUR 144 million, down 4% year-on-year, largely due to higher finance costs. Yet the company continues to portray its portfolio as resilient, with like-for-like rental growth of 2.7% and a stable EPRA vacancy at 7.6%. The more interesting action is on the balance sheet.Capital Allocation: Buybacks, Disposals, and the GCP Stake
The second quarter saw the completion of the share-to-share exchange offer for Grand City Properties (GCP), lifting Aroundtown's stake to roughly 84%. This is a continuation of a strategy that has been building for quarters, but the pace has accelerated. CFO Jonas Tintelnot stressed the discipline: “Now going forward, you see that we did the EUR 850 million already to basically take away a lot of the refinancing pressure that we would otherwise have in the coming periods.” — Jonas Tintelnot, CFO · 2026-08-26 The company also executed EUR 350 million of disposals in the first half, at a 17x rental multiple, recycling capital into higher-yielding assets and the share buyback. This disposal activity is central to the deleveraging and accretion story. The buyback itself has been aggressive: shares repurchased at an average discount of 67% to EPRA NTA per share. This is a strong signal, but it also drives the LTV up to 43% from 41% at year-end. Management insists they have headroom to the 45% board limit, but the leverage direction is distinctly higher. The commitment to buybacks was already clear in March, when Timothy Wright noted, “The buyback, we assume will take most of the year because we're limited to buy a certain amount of shares per day.” — Timothy Wright, Executive (likely Head of Investor Relations or similar) · 2026-03-09 And the GCP stake increase was foreshadowed: “Look, it's a unique opportunity, obviously, yes. It's the share price is trading right now and the FFO yield, you don't get this in the market.” — Timothy Wright, Executive (likely Head of Investor Relations or similar) · 2026-03-09The Refinancing Squeeze and a 2029 Inflection
The most revealing part of the call was the candid outlook on the funding path. Timothy Wright, Chief Capital Markets Officer, laid out the challenge:This is a key admission: FFO per share will likely decline in 2027 and 2028 before recovering. The cost of debt has already risen from 2.4% to 2.6% on a pro forma basis, and the interest cover ratio has dropped to 3.3x from 4.2x a year ago. The company's financing expenses continue to rise, and while they have enormous covenant headroom (bond covenants at 1.8x), the trend is unmistakable. The longer-term story rests on rent growth and conversion projects. Management expects around EUR 100 million of additional rental income from reletting and indexation by 2030, plus another EUR 55 million from conversions and repositionings. These are ambitious targets, and they hinge on the office-to-residential conversion staying on track. The bond covenant headroom provides a cushion, but the market will watch the ICR closely.We expect the pressure on FFO I to continue given we have a number of cheaper legacy debt maturing in those 2 years, which we will balance between repaying from our cash balance and refinancing at comparably higher rates... We expect 2029 to be the inflection point.