AroundTown - comment

Aroundtown’s FY25 announcements point to operational stabilisation and continued deleveraging; however, the reinstatement of dividends and the move to a higher payout target mark a clear shift towards equity prioritisation, modestly weakening what had previously been a conservative credit stance.

Alongside its FY25 results, Aroundtown launched a voluntary public share-for-share acquisition offer for Grand City Properties. The exchange ratio offers four Aroundtown shares for each GCP share, implying a 6.6% premium to GCP’s last closing price and a 13% premium to its six-month VWAP. The offer carries no minimum acceptance condition; if acceptances exceed the intended level, allocations will be scaled back on a pro-rata basis. The transaction would increase Aroundtown’s stake in GCP from 63% to a maximum of 89.5%. Both boards have unanimously recommended the offer, which is not subject to German or Luxembourg takeover regulations.

In parallel, Aroundtown confirmed the reinstatement of dividends, to be proposed at the June AGM. Newly issued shares to GCP shareholders will carry full dividend rights. The FY25 dividend equates to a 30% payout of FFO I earned in 2025, with management signalling an intention to increase the payout ratio to 50% of FFO I per share going forward. FY25 operating performance met guidance, with rental growth of 3% and flat EBITDA, while LTV continued to decline to 41% from 42%.

We will use this point to place Aroundtown on the shelf. Should any client wish us to maintain active coverage of the name, please let us know, and we will revisit this decision. At current yield levels, however, we see limited upside for credit investors.