FNCDY - Aroundtown: Massive Leverage Leads To A Dividend Suspension

2024-03-27 13:44:24 ET

Summary

• Aroundtown has suspended its 2023 dividend payment due to market uncertainties and the need for capital preservation.
• This decision follows a similar move by Grand City Properties, in which Aroundtown holds a controlling 63% stake.
• Aroundtown delivered an 8.5% drop in FFO I in 2023, with a further decline of 11% expected for 2024.
• Compared to Covivio, Aroundtown offers a similar market cap rate but weaker like-for-like rent growth and occupancy.
• The exceptional level of debt coupled with increasing vacancy will likely result in high share price volatility.

Introduction

Aroundtown ( AANNF ) suspended its 2023 dividend with the following press release :

Luxembourg, 26 March 2024 - The board of directors (the “Board”) of Aroundtown SA (the “Company” or “Aroundtown”) has decided today not to recommend a dividend payment for 2023 at the Company’s annual general meeting intended for 26 June 2024. The Board continues to see market uncertainties which limit visibility regarding future developments and their full impact on transaction markets and property valuations and as a result on the Company’s leverage as well as cost of financing. Under these uncertainties, it is the Board’s opinion that the Company should remain conservative in regard to capital preservation and to continue to focus on strengthening liquidity and deleveraging.

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