LUXEMBOURG (dpa-AFX) - Aroundtown subsidiary Grand City Properties felt the impact of higher financing costs in the first quarter due to higher interest rates. Rising rental income could not compensate for that. In the first three months of 2023, operating profit (FFO 1) fell by three percent year-on-year to just under 47 million euros, as the SDax group announced in Luxembourg on Wednesday. Rents increased by 2.6 percent on a like-for-like basis and including vacancy reduction. Management led by Refael Zamir confirmed the targets for the full year.

The share price fell 2.2 percent in early trading. Since the turn of the year, the share price has thus lost more than one fifth. Over a five-year period, the share price has fallen by almost two-thirds.

Net rental income rose by a total of four percent in the first quarter to just under 101.4 million euros. Most of the increase came from rent increases and lower vacancy rates. The bottom line in the first quarter was a loss of just under 12 million euros due to a lower revaluation of the real estate portfolio. In the same period last year, Grand City Properties had reported a profit of 46.5 million euros. According to analyst Jonathan Kownator from the US bank Goldman Sachs, the figures were largely in line with expectations.

For the current year, the Luxembourg-based company is still preparing for a decline in profits in its day-to-day business and expects an operating profit of 170 to 180 million euros, down from 192 million euros in 2022.

The group, like other companies in the sector, is primarily focusing on its debt and is therefore also selling properties. In the first quarter, Grand City Properties sold apartments worth 145 million euros, around one percent below book value, the company added. Most of these were older properties in London. Since the beginning of the year, contracts for the sale of further apartments worth around 100 million euros have been signed, according to the company. The real estate group expects the transactions to be completed in the coming months.

The company's cost of debt remained low at 1.4 percent as of March 2023, with an average maturity of 5.8 years, it said. The group has cash on hand, including signed property sales that covered debt maturities through 2025, it said.

Grand City Properties, with its nearly 64,100 apartments, 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 the commercial real estate group Aroundtown, which holds 59 percent of the company./mne/niw/mis