Goldman Sachs has moved to lower its assessment of Aroundtown, shifting its recommendation from "neutral" to "sell" and trimming its 12-month price objective to €1.30 from €1.80, a reduction of roughly 28%. The assessment accompanied projections that the property group will face materially higher refinancing costs on a heavy near-term maturity schedule, a development that drove Aroundtown shares down by more than 3% on Monday.
At the heart of the bank's reassessment is the expectation that Aroundtown will need to refinance about €5.6 billion of debt maturing between 2026 and 2028 at an assumed interest rate of 5.5%. Goldman Sachs notes that the debt being replaced currently carries an average cost of only about 1.4% to 1.8%, and that the company's reported average cost of debt was 2.4% at the end of the first half of 2026. The bank projects the average cost of debt to rise to about 4.5% by 2030.
Goldman Sachs calculates that net financing costs will increase at roughly 18% per year over 2025-28, markedly outpacing its forecast of about 2.4% annual growth in recurring core earnings (EBITDA). That divergence underpins the broker's expectation of a decline in earnings per share of roughly 3% per annum, with EPS of about €0.23 projected for 2028 versus €0.26 in 2025.
The broker also warns of weakening interest coverage, forecasting Aroundtown's interest cover ratio to fall to about 2.2 times by 2030 from 3.3 times currently, which places the company nearer to typical debt covenant thresholds cited by the bank at below 1.8 times.
Goldman Sachs trimmed its net tangible asset (NTA) estimates for Aroundtown by more than 40%. The bank now models property yields rising by around 100 basis points by 2028, a much larger increase than the 20 basis points assumed previously. Under these assumptions, Goldman Sachs says Aroundtown's reported loan-to-value (LTV) ratio would increase to about 48%, above the board's guidance of 45%, or to roughly 63% when hybrids are included.
Portfolio composition and leasing dynamics are central to the bank's caution. Offices represent about 34% of Aroundtown's portfolio value. Office vacancy widened by approximately 60 basis points to 13.6% in the first half of the year, while like-for-like office rental growth was recorded at 0.9%. Goldman Sachs points out that roughly 27% of commercial leases expire in 2027-28, a concentration that creates re-letting and renewal risk in a period when financing pressures are elevated.
On returns, the broker forecasts a return on capital of about 3.8% in 2027 compared with its estimate of the company's cost of capital at 6.2%, indicating a spread that would be negative under the bank's scenario.
Goldman Sachs notes that Aroundtown's shares were trading at about a 78% discount to the bank's 2026 NTA estimate. While the bank acknowledges that the shares have traded at even wider discounts in the past, it flags increased vulnerability to further funding cost increases. The note states that lower interest rates or additional asset disposals could help address leverage concerns, though it also cautions that disposals would negatively affect earnings.
Liquidity at the group was cited: Aroundtown held €3.9 billion of cash and liquid assets at the end of the first half. Finally, Goldman Sachs' 2026 EPS estimate for Aroundtown is 7% below the Visible Alpha consensus, reflecting the broker's more conservative view on near-term earnings under higher financing costs.
Key data and assumptions summarized
- Rating change: "neutral" to "sell".
- 12-month price target cut to €1.30 from €1.80 (about -28%).
- Refinancing need: ~€5.6 billion maturing 2026-28, assumed refinancing rate 5.5%.
- Current debt average cost: ~1.4% to 1.8%; average cost of debt was 2.4% at end-H1 2026; projected ~4.5% by 2030.
- Net financing costs growth: ~18% per year over 2025-28; recurring core earnings growth: ~2.4% per year.
- EPS path: ~-3% per year; €0.23 EPS in 2028 vs €0.26 in 2025.
- Interest cover: 3.3 times now to ~2.2 times by 2030; covenants cited below 1.8 times.
- Assumed property yield increase: ~100 basis points by 2028 (previously 20 bps).
- Reported LTV: ~48% (63% including hybrids) vs board guidance 45%.