LUXEMBOURG (dpa-AFX) - Aroundtown subsidiary Grand City Properties increased its rental income in the first nine months of the year thanks to strong demand for residential space. However, higher financing costs weighed on the operating profit (FFO1) in the reporting period. The real estate group confirmed its targets for the year as a whole. The share price rose significantly in early trading, but then lost some of its gains. At the end of the day, the share was still up 0.86 percent at EUR 9.34.

According to an initial assessment by analyst Stephanie Dossmann from Jefferies, the company has slightly improved its key operating figures. However, borrowing costs have risen. She also assumes that Grand City Properties will not pay a dividend for 2023, as it did last year. The real estate group has so far planned to pay a dividend of 76 to 80 cents per share.

Analyst Jonathan Kownator from US bank Goldman Sachs, on the other hand, expects a dividend of 77 cents for the current year. TAG Immobilien recently cut its dividend for the second time in a row.

In the first nine months of the year, Grand City Properties increased its net rental income by four percent year-on-year to 307.5 million euros, as the SDax company announced in Luxembourg on Wednesday. The majority of the increase came from rent increases, but also from a lower vacancy rate. However, higher financing costs in particular weighed on the operating result (FFO 1), which fell by two percent to 141 million euros.

At the bottom line, the real estate group made a loss of almost EUR 398 million due to a lower revaluation of the real estate portfolio. The Luxembourg-based company had already revalued its properties at the end of the first half of the year. In the same period last year, Grand City Properties had reported a profit of just under 273 million euros.

Like other companies in the sector, the group is focusing primarily on its debt and is therefore selling properties. In the first three quarters, Grand City Properties sold apartments worth 270 million euros, the company also announced. According to earlier information, the majority of these were older properties in London and North Rhine-Westphalia. According to the company, contracts for the sale of apartments worth 130 million euros have also been signed since the beginning of the year.

The Group's total debt nevertheless rose to 5.6 billion euros by the end of September, up from 5.2 billion euros at the end of 2022.

The cost of debt remained low for the company at 1.9 percent as of September 2023, with an average term of 5.5 years, it said. The Group has cash and cash equivalents that cover debt maturities until the second quarter of 2026.

With around 63,400 apartments, Grand City Properties is particularly active in densely populated areas of Germany, such as Berlin, North Rhine-Westphalia, the Halle-Leipzig-Dresden region and the Rhine-Main area. Grand City Properties is also represented in major cities such as London and Munich. The largest shareholder is commercial real estate group Aroundtown, which holds 60 percent of the company./mne/ngu/mis