By Marleen Kaesebier
(Reuters) -Aroundtown on Wednesday raised its full-year forecast for FFO I, a key profitability measure for real estate firms, and became the latest company to report stabilizing property valuations amid Germany’s worst real estate crisis in decades.
Its shares were up 3.5% by 0835 GMT.
After a boom driven by low interest rates, the German real estate sector has been hit hard by soaring inflation and higher borrowing costs over the past year.
Aroundtown, one of the largest listed landlords in the country, posted a narrowed loss of 432 million euros ($481.5 million) for the second quarter, versus a loss of 1.27 billion in the same period last year.
The loss was mainly due to a property devaluation 2.4% on a like-for-like basis, though the pace of the valuation decline slowed substantially due to improving economic conditions and market sentiment, the group said.
Industry leader Vonovia said earlier this month it had left the real estate crisis behind after it also reported a narrower loss for the first half of the year.
Aroundtown said it expects FFO I – its main metric measuring funds from operations – to come between 290 million and 320 million euros this year, compared to the previous forecast of 280-310 million. The range is still below the 332 million reported last year.
The outlook hike follows a similar move by its 62% owned subsidiary Grand City Properties earlier in August.
“A 3% guidance-increase in this environment at least indicates a certain stability or stabilisation,” Andre Remke, analyst at Baader Helvea, said.
Remke added he would have expected a higher property devaluation of around 2.6%. “This shows that market sentiment and the transaction market are now stabilising,” he said.
Aroundtown said it completed around 340 million euros worth of asset disposals in the first half of 2024.
($1 = 0.8972 euros)
(Reporting by Marleen Kaesebier in Gdansk; editing by Milla Nissi)
