Aroundtown (AO) | Buy | No surprises in Q1

Research evidence excerpt

Aroundtown (AO) | Buy | No surprises in Q1

Aroundtown Buy | Target Price: EUR3.75

Company description Management

Aroundtown Properties is a leading commercial real estate company with a focus Barak Bar-Hen, CEO

on value-add and income-generating properties primarily in Germany. Key asset Jonas Tintelnot, CFO

classes are office and hotels. The company also owns a major stake in Grand City Timothy Wright, CCMO

Properties. Key shareholders

Free float 46.00%

Avisco Group/Vergepoint 15.00%

Stumpf Capital GmbH 10.00%

Investment case Valuation methodology

Sound underlying trends in its core segments, particularly in We value Aroundtown using the blended outcome of a DCF

German residential and hotels, could well support its model, a DDM and a discounted NTA model.

operational performance. If operational trends remain Key assumptions for the DCF model are: a long-term EBITDA

reasonable, an improvement of the German property margin of 84%, growth of 2% in the long term, and a WACC of

investment market seems likely and could allow Aroundtown to 7.04% and for the discounted dividend model: growth of 2% in

more actively rotate its assets. the long term, COE of 10.2%, a long-term payout ratio of 90% of

The sound operational trends in its core segments could allow FFO I.

Aroundtown to offset headwinds from higher refinancing costs. Risks to our rating

The company's liquidity position is comfortable, as it could A strong economic downturn and/or an accelerating WFH trend

cover debt maturities up to 2028. could negatively impact office demand and rents.

Catalysts An unexpected big increase in interest rates could put pressure

Successful asset rotation. on FFO and NTA and increase the company's deleveraging

Stabilising/falling interest rate environment. needs.