Aroundtown - comment

Like other real estate entities, AroundTown’s operational data continues to improve quarter-on-quarter.  Asset revaluation is reaching a trough now, coupled with a positive outlook.  AroundTown continues its disposal progress, but following its refinancing earlier this year, there is no longer major pressure to execute large transactions.  Offices and Hotels are the main standalone assets of AroundTown (deconsolidating Grand City Properties). Office take-up growth continues as confidence returns on the occupier’s side, albeit below the long-term average.  The return to the office movement is strongest in Germany, with rates at c.89% of pre-pandemic, significantly higher than the USA, 66%, and London at 57%.  The Hotels segment reports 4% lff rental growth, with further growth expected, driven by steady growth in international business and leisure travel.  

We maintain our 5% long position in AroundTown’s hybrids and our 2% long equity position in GCP.  Momentum has stalled in the REITS market over the last three months, and although we see limited downside, we may exit our position before year-end on the lack of any positive event risk.