Aroundtown, a renowned real estate company makes its returns by hugely investing in durable and precious properties within the confines of the European market.
At a time when most organizations were experiencing despicable liquidity bottlenecks this year, for Aroundtown, it has been something close to smooth sailing. In an imperfect contrast, Aroundtown’s actual performance had been vilified by the negative stock performance mainly due to its hotel portfolio which is 23% of the total assets. Just like any other business, real estate has been hugely hit by the adverse effects of novel Coronavirus this year.
Aroundtown’s Mode of Trade
AroundTown SA predominant asset classification comprises of offices, hotels, and residential assets, while they invest in retail and wholesale assets as their non-core assets which were mostly sold during this year. This broad and diverse asset portfolio is one of AT’s outstanding features which is a considerable landmark in AroundTown’s current trading on the Prime Standard of the Frankfurt Stock Exchange. This is because AT’s successful continual development is testament to Germany’s immune 2020 economy. In Germany, AT has managed to beat the odds to become the highest-rated commercial real estate company.
Aroundtown Disposal Strategy
As a result of the sinking GDP in 2020, AroundTown acquired a breathtaking trading blueprint by executing a disposal pipeline at volumes higher than €2 billion.
DAX ® 50 ESG, a platform that tracks the performance of the 50 largest and most liquid German market stocks, included Aroundtown in its index as the highest ESG ranked real estate building block while positioning it among the tenth best rated investments in general.
Aroundtown’s Trading Talking Points
Due to Covid-19, the global trade and industrialization sectors have hit an all-time low not seen since World War 2. Notwithstanding, the real estate conglomerate generated asset sales of a staggering €2 billion, an amount higher than Aroundtown’s book value.
These were sales achieved mostly in the non-core asset sales of retail and wholesale properties. The sales in totality, meant a parallel increase in the company’s overall share buy-back volume to a whopping one billion euros.
At the advent of September, Aroundtown’s Management Board of Directors made a public interest in undertaking a purchase offer nearing 125 million shares at €5 per share. The largest shareholder, billionaire property magnate Yakir Gabay (יקיר גבאי) did not participate in the sale of shares.
Rather to the contrary, Yakir Gabay ( יקיר גבאי ) announced in the summer of 2020 that he increased his position to over 10% in Aroundtown.
All these developments are seen as Aroundtown’s propensity to take advantage of the deepening discounts in share prices. This is in a parallel contrast to investing in disposals that transcend book value. The result comes at a time when there’s a vast dissimilarity between share prices and market levels of AT’s asset values.
In 2020 alone, AroundTown’s year-to-date signed and absolute disposals volumes skyrocketed to an astonishing €2 billion, excluding an additional advanced pipeline sales nearing half a billion euros, a figure that is thrice the volume evident in the recent years.
In acquisitions, unlike at disposals, AT significantly reduced its activity by buying just a fraction of what they’d invested in recent years. This is attributed to the unprecedented dip in AroundTown’s share price traded currently at a relatively low €5.5 per share as compared to €9.3 in Epra net asset value, a discount of close to 50%.
The result of the aforementioned is AroundTown has been busy selling off assets at a premium to net value, while purchasing their own shares at a highly discounted price to NAV which remarkably increases their upcoming profitability. The most significant insight of AT is its cogent management synergy that transformed its vision from bankrolling large acquisition volumes to profiting from high volume asset sales.
While AroundTown is looking forward to a brighter future ahead, that alone doesn’t vindicate it from exposure to hotel assets accounting for 23% of its total assets. Still, the prospect of converting these hotels to residential assets like micro-apartments is a prospect the real estate giant has not entirely rule out. Ultimately, the multiple Covid-19 vaccination announcements made earlier in the month will motivate and determine the corporate managements long-standing decisions.