First Berlin Equity Research Reiterates Buy Rating for Aroundtown SA With Increased Target Price

First Berlin Equity Research has updated its recommendation for Aroundtown SA, maintaining a buy rating while boosting the target price from €3.30 to €3.40. Analyst Ellis Acklin highlights a robust operational performance in 2023, driven by a 3.2% growth in like-for-like (LFL) rental income. This momentum is expected to continue into the current year, supported by strong residential market dynamics, additional office Consumer Price Index (CPI)-indexation, and the full recovery of the hotel portfolio.

The report notes that the funds from operations (FFO 1) faced a downturn in the fourth quarter, decreasing by 13%, attributing the decline to increased financing costs and perpetual note coupons. However, Aroundtown's liquidity position remains strong, with cash and liquid assets amounting to €3 billion, covering debt maturities until mid-2026.

Furthermore, Aroundtown has introduced an exchange offer with a 15% tender option for certain perpetual note holders, aiming to restore the equity component of the notes. This initiative could potentially enhance FFO 1 through reduced coupon payments. According to First Berlin Equity Research, Aroundtown's disciplined liquidity management strategy places it in a good position to navigate the ongoing challenges in the real estate sector, warranting a continued buy recommendation with a revised target price.