Release Date: March 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aroundtown SA (AANNF, Financial) successfully executed capital market transactions, including perpetual note exchanges and bond issuances, which received strong investor demand.
- The company maintained a strong liquidity position with cash and liquid assets amounting to EUR3.6 billion.
- Aroundtown SA (AANNF) recorded a like-for-like rental growth of 2.9% across its portfolio, with residential and hotel sectors showing particularly strong performance.
- The company achieved a positive revaluation of 1.9% in the second half of 2024, driven by strong operational growth in the hotel and residential sectors.
- Aroundtown SA (AANNF) made significant progress in ESG initiatives, increasing the share of green-certified office properties to 65% and achieving a 30% reduction in CO2 emissions compared to 2019 levels.
Negative Points
- Net rental income decreased by 1% to EUR1.18 billion due to disposals, despite positive like-for-like rental growth.
- The company recorded a slight like-for-like value decline of 0.5% for the full year 2024, primarily due to higher discount and cap rates.
- Finance expenses increased by 2% to EUR235 million, driven by new debt raised for refinancing purposes and the expiry of certain hedging instruments.
- Aroundtown SA (AANNF) remains above S&P's thresholds for stabilizing its credit rating, necessitating further disposals and leverage reduction.
- The office sector continues to face challenges with a slight occupancy decline and cautious tenant demand due to economic uncertainties.
Q & A Highlights
Q: Can you provide insights into the letting activity in the office sector in 2024 and your plans for the portfolio given current market conditions?
A: Barak Bar-Hen, Co-CEO, stated that the office sector continues to be impacted by economic uncertainty, leading to cautious tenant behavior. However, there is a higher prolongation rate compared to previous periods. In 2024, Aroundtown prolonged 280,000 square meters of leases and signed approximately 9,000 square meters of new leases. The company expects demand for flexible spaces to increase and is adapting by creating AT World, a new workspace concept.
Q: Could you provide some more details on your evaluation results and expectations for the upcoming period?
A: Eyal David, CFO, explained that the full portfolio was valued by independent external valuers, resulting in a negative 0.5% like-for-like devaluation in 2024. However, a recovery was noted in the second half of the year, with a 1.9% positive like-for-like revaluation. The company expects operational growth to continue driving value increases, despite macroeconomic volatility.
Q: How do you plan to use your large liquidity position, and when do you expect to return to acquisitions mode?
A: Frank Roseen, Executive Director, stated that the large liquidity position is a key strength for navigating uncertainty. The company plans to use part of its liquidity for liability management and debt repayment. Acquisitions will be considered if they are accretive and part of capital recycling, with potential opportunities through the TAC fund.
Q: Can you provide an update on your disposal activity and any changes in approach given the improved environment?
A: Barak Bar-Hen, Co-CEO, reported that in 2024, Aroundtown signed EUR935 million in disposals and closed EUR740 million. The company plans to continue disposing of properties to reduce leverage and capitalize on market recovery. Disposals will also support capital recycling for potential acquisitions.
Q: What are the implications of S&P's negative outlook on your BBB+ rating, and how does that impact Aroundtown's actions going forward?
A: Eyal David, CFO, emphasized the importance of maintaining a strong credit rating. The company has taken several actions to support its rating, including perpetual exchanges and disposals. Despite improved market conditions, Aroundtown remains above S&P's thresholds and plans to continue reducing leverage to ensure compliance and position for growth opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
