Aroundtown stock faces refinancing pressure ahead of results

Goldman Sachs has sharpened the refinancing debate around Aroundtown. In a report published on October 12, the bank cut its rating from Neutral to Sell and reduced its 12-month price target from 1.80 euros to 1.30 euros, according to Investing.com.

Higher funding costs in focus

Goldman Sachs expects Aroundtown to refinance 5.6 billion euros of debt maturing between 2026 and 2028 at an assumed cost of 5.5 percent. The debt currently carries an average cost of 1.4 to 1.8 percent, while the company's average cost of debt was 2.4 percent at the end of the first half of 2026.

The broker forecasts Aroundtown's average cost of debt to rise to about 4.5 percent by 2030. It expects net financing costs to grow by about 18 percent a year from 2025 to 2028, compared with roughly 2.4 percent growth in recurring core earnings before interest, taxes, depreciation and amortization.

That gap feeds into the bank's earnings outlook. Goldman Sachs expects earnings per share to decline by about 3 percent a year, with 2028 earnings per share at 0.23 euros versus 0.26 euros for 2025. Its interest-cover forecast falls to 2.2 times by 2030 from 3.3 times, moving closer to debt covenants below 1.8 times.

Property assumptions add pressure

The assessment also incorporates weaker property valuation assumptions. Goldman Sachs cut its estimates for Aroundtown's net tangible assets by more than 40 percent and assumes property yields rise by 100 basis points by 2028, compared with 20 basis points in its earlier scenario.

Under that assumption, the reported loan-to-value ratio could reach 48 percent, above the board's 45 percent guidance, or about 63 percent including hybrid instruments. Offices account for 34 percent of portfolio value. Office vacancy rose to 13.6 percent in the first half, while like-for-like office rental growth was 0.9 percent. Around 27 percent of commercial leases expire in 2027 and 2028.

The broker sees some potential offsets. Lower interest rates or additional disposals could ease leverage concerns, although disposals could also reduce earnings. Aroundtown held 3.9 billion euros in cash and liquid assets at the end of the first half.

Results set the next test

The real-time quote of Aroundtown stock showed 1.66 euros on Lang & Schwarz at 10:03 CET on Monday, November 9, 0.60 percent below the Xetra close of Friday, November 6. The move places the current trading focus on funding costs and the company's ability to protect recurring earnings as lower-cost debt matures.

Aroundtown is scheduled to publish its third-quarter 2026 results on November 25. Investors will focus on refinancing progress, financing costs, occupancy and the outlook for recurring earnings.

European investors can follow the broader market through the Euro Stoxx 50.

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