Aroundtown Q1 FFO I Stable, Net Rental Income Edges Up; Confirms FY25 Outlook

Aroundtown SA reported nearly stable Q1 funds from operations I (FFO I) at 76.3 million euros, with FFO I per share remaining at 0.07 euros, while profit attributable to owners surged to 216.2 million euros due to strong operational results and property revaluations; revenue declined slightly to 377.8 million euros, though net rental income increased by 1 percent to 295 million euros. The company confirmed its fiscal 2025 FFO I guidance of 280 million euros to 310 million euros but will not recommend a dividend payment for 2024 to maintain a conservative financial position.

Analysis

Aroundtown SA's first-quarter results presented a mixed financial picture, characterized by operational resilience alongside areas of caution. Funds from Operations I (FFO I) remained nearly stable at 76.3 million euros, or 0.07 euro per share, consistent with the prior year, as growth in adjusted EBITDA, which rose 1% to 251.1 million euros, was offset by higher perpetual notes attribution. A significant highlight was the surge in net profit attributable to owners to 216.2 million euros, a substantial increase from 43.0 million euros year-over-year, driven by strong operational performance and positive property revaluations, boosting earnings per share to 0.20 euro from 0.04 euro. Despite a slight decrease in total revenue to 377.8 million euros from 386.0 million euros, net rental income saw a 1% increase to 295 million euros, supported by a 3% like-for-like rental income growth that more than compensated for the impact of asset disposals. The company's EPRA NTA was reported at 8.4 billion euros, or 7.6 euros per share as of March 2025, marking a 3% per share increase from the prior year. However, Aroundtown confirmed its fiscal 2025 FFO I guidance in the range of 280 million to 310 million euros (0.26 euro to 0.28 euro per share), a notable decrease from the 315.5 million euros (0.29 euro per share) achieved in 2024. Concurrently, the board decided against recommending a dividend payment for 2024 to preserve a conservative financial position.

Key Decisions for Investors

• Investors should weigh the strong reported net profit and NTA growth against the projected decline in FFO I for fiscal 2025 and the absence of a 2024 dividend.
• The decision to forgo the dividend underscores a conservative financial strategy; income-focused investors may be deterred, while those prioritizing balance sheet strength in the current real estate climate might view this positively.
• Key areas to monitor include the sustainability of like-for-like rental growth, the impact of ongoing disposals on revenue and FFO, and future trends in property valuations which significantly influenced Q1 net profit.
• Evaluate the shares based on the updated EPRA NTA of 7.6 euros per share, considering the company's cautious FFO I outlook and its strategy to navigate the commercial real estate market.