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German landlord Aroundtown reports deeper loss on property market fall

Marleen Kaesebier and Chiara Holzhaeuser
Updated ·2 min read
FILE PHOTO: FILE PHOTO: FILE PHOTO: Construction industry talks with German Chancellor Scholz

By Marleen Kaesebier and Chiara Holzhaeuser

(Reuters) -Aroundtown, one of Germany's largest listed landlords, on Wednesday reported a 2.436 billion euro ($2.64 billion) loss for 2023 and said the value of its property portfolio could shrink further, reflecting the country's real-estate crisis.

After boom years driven by low interest rates, inflation and higher borrowing costs have hit the property market hard. Germany's largest property company Vonovia this month reported a record loss of more than 6 billion euros for 2023.

Aroundtown's loss was deeper than the 457.1 million euros it posted in 2022, and it reported property revaluations amounting to negative 3.2 billion euros, a like-for-like devaluation of 11%.

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In a Reuters interview, Capital Markets Officer Oschrie Massatschi said he expected further devaluations in the first half of 2024, and that the situation in the second half would depend on interest rate changes.

The company's shares, which are down about 30% year to date, fell by as much as 8% in early trading and were at the bottom of the German midcap index. However, they later rallied and were up 8.8% by 1332 GMT.

Analysts Jefferies said support came from the news that funds from operations (FFO I), a crucial metric in the sector, were stronger than expected by many analysts.

In a note, they also said the dividend suspension announced on Tuesday to conserve cash had been expected.

Aroundtown reported an FFO I of 332 million euros, down 8% from the previous year and meeting its guidance.

The Luxembourg-based company said it expects its FFO I to fall to between 280 million and 310 million euros in 2024.

The company increased its liquidity to 3 billion euros in 2023, up 11% from 2022, taking on 1 billion euros of new bank debt and selling property worth 1.2 billion euros.

Massatschi said Aroundtown has earmarked assets worth around 400 million euros for disposal for 2024.

"I'm pretty sure throughout the year, we will identify other assets that would be suitable for disposal. So this number is not a fixed number," he said.

($1 = 0.9236 euros)

(Reporting by Marleen Kaesebier and Chiara Holzhaeuser; Editing by Kim Coghill, Jamie Freed, Jane Merriman and Barbara Lewis)