First Berlin Equity Research has published a research update on Aroundtown SA (ISIN: LU1673108939). Analyst Ellis Acklin reiterated his BUY rating and decreased the price target from EUR 3.80 to EUR 3.40.

Abstract
Aroundtown’s 84%-owned residential subsidiary, GCP, has taken a 20.04% stake in LEG Immobilien. In our view, this is the clearest sign yet that AT is no longer operating in defensive mode. The deal uses GCP’s balance sheet to buy German residential exposure at a >13% FFO yield, offering materially better economics than comparable direct property acquisitions. It also lifts Residential to 42% of AT’s proportional portfolio and the combined Living share close to 60%. More broadly, the deal highlights how select listed German residential exposure can currently be bought on better economics than comparable bricks-and-mortar assets. The timing is notable as property stocks continue to be battered by rising bond yields. AT remains rate-sensitive, but the current sell-off increasingly appears to price in both sustained valuation pressure and renewed financing stress despite AT’s heavy refinancing work already having been completed. In our view, a stabilisation in rates, alongside resilient rental growth and continued accretive capital deployment, should be enough to drive a meaningful stock rebound. We maintain our Buy rating but trim our PT to €3.4 (old: €3.8) after updating our DCF model for the rise in German 10yr bond yields (133% upside).