LUXEMBOURG (dpa-AFX) - Commercial real estate specialist Aroundtown expects a significant decline in operating profit in the current year, partly due to the sale of properties. For the past year, the management also does not want to pay a dividend due to the difficult economic situation. For 2023, the Group is holding out the prospect of a payout of 20 to 23 cents per share, but this did little to help the share price. It slumped on Wednesday.

At times, the share price fell by a double-digit percentage on Wednesday - as it had the day before. Most recently, the discount was 7.1 percent to 1.26 euros. The share is thus approaching the 1 euro mark and thus penny-stock status. 2023, the share price has now fallen by more than 40 percent. The entire sector has recently been hit by high inflation and the associated rise in key interest rates. The influences had put an abrupt end to the long real estate boom in Germany in recent months. Since the summer of 2021, Aroundtown shares have already lost more than four-fifths of their value.

One trader stressed that the dividend suspension was not really surprising at first, but it was also no help to the stock story. A disappointing outlook for operating profit (FFO) in the current year is another negative point, he added. Analyst Andre Remke of Baader Bank rated the targets as meager.

For example, the key operating figure FFO1, which is important for the real estate sector, is expected to decline to between 300 and 330 million euros in 2023, the MDax group announced on Wednesday. In 2022, the company was still able to increase operating profit by three percent to just under 363 million euros.

It is currently better to keep the money together to strengthen the balance sheet and better prepare for the upcoming uncertainties, the company had already said late Tuesday evening with regard to the cancellation of the dividend. In the past year, Aroundtown had posted a loss of 457 million euros due to falling property values and amortization of intangible assets.

Despite the difficult conditions, the company managed to dispose of properties worth 1.6 billion euros in 2022, it added. In the new year, the company has already sold real estate worth 150 million euros, it said. In addition, 1.2 billion euros in current liabilities with an average maturity of one year have been repaid so far last year and this year, it said. Cash and cash equivalents and the expected proceeds from the signed disposals covered the debt maturities until the end of 2025.

Net rental income increased by 13 percent to 1.2 billion euros in 2022. The strong increase was mainly due to the acquisition of the residential real estate company Grand City Properties. Its contribution will not be fully reflected in the consolidated balance sheet until mid-2021. Adjusted for this effect, rental income declined by eight percent due to property disposals. While Aroundtown was able to collect more rent with offices on a like-for-like basis, hotel rents continued to develop weaker. Here in particular, Aroundtown is still struggling with the after-effects of the pandemic.

Hotels make up 18 percent of Aroundtown's total portfolio by value. In 2022, the company had reportedly received 69 percent of total rentals thanks to the lifting of Corona restrictions on the hospitality industry. As recently as the beginning of the year, the business had suffered massively, with more than half of its rents down due to the restrictions and proliferation of the omicron variety.

But in the meantime, the demand of guests for hotels is increasing significantly again, Aroundtown felt this clearly in the summer. Business travel is now up by a good two-thirds compared to last year, he said, although the gap to pre-pandemic levels is still more than a quarter. At the same time, rising prices and staff shortages are also weighing on the profitability of the hotel portfolio, Aroundtown added. For the current year, the group now expects a collection rate for rents of 85 to 90 percent./mne/nas/mis