LUXEMBOURG (dpa-AFX) - The commercial real estate specialist Aroundtown has again felt the effects of higher interest rates in the first quarter. These press on the real estate values. In addition, the company sold properties. The operating profit - measured in the industry's key indicator funds from operations (FFO 1) - fell in the first three months by around five percent year-on-year to just under 85 million euros, as the MDax-listed company announced in Luxembourg on Tuesday. For the current year, the company expects a significant decline in operating profit.

The share, which has been badly battered for months, slumped in early trading, but then recovered and rose by more than four percent to 0.94 euros. Since the turn of the year, the share price has lost 57 percent. The entire sector has recently been hit by high inflation and the associated rise in key interest rates. In recent months, these factors have put an abrupt end to the long real estate price boom in Germany. Over the past three years, Aroundtown shares have lost more than four-fifths of their value.

In the current year, Aroundtown continues to target an operating profit of 300 to 330 million euros, the company added. In 2022, the real estate group could still increase this by three percent to just under 363 million euros.

Below the line, the company reported a loss of 21.6 million euros in the first three months of 2023, for example due to the lower valuation of its properties. In the same period last year, the balance sheet still showed a profit of 124.5 million euros.

Like many others in the industry, Aroundtown wants to reduce debt with the help of property sales. In the first quarter, the company completed the sale of properties worth around 460 million euros around book value, it said. More are to follow.

Cash and cash equivalents, at three billion euros in March, and expected proceeds from signed disposals and vendor loans covered debt maturities through the end of 2025.

Net rental income shrank by almost four percent to 297 million euros in the first quarter, mainly due to the sale of properties. On a like-for-like basis, rents had increased by 3.5 percent.

While Aroundtown was able to collect significantly more rent from offices on a like-for-like basis, mainly thanks to inflation adjustments, hotel rents performed only slightly better. Hotels account for about one-fifth of Aroundtown's total portfolio by value. In 2022, the business segment had still suffered massively from restrictions due to the Corona pandemic at the beginning of the year. For the full year, the company had received only 69 percent of total rentals.

But in the meantime, guest demand for hotels is rising again significantly. At the same time, however, rising prices and staff shortages are weighing on the profitability of the hotel portfolio, Aroundtown added. For the current year, the group expects a collection rate for rents of 85 to 90 percent. By 2024, the business should have fully recovered./mne/ngu/mis