The real estate giant Aroundtown has illustrated a successful formula for running a business in the challenging times of the current pandemic. As a company, they have not only focused on the right financial moves, but also on giving back to, as well as investing in social aspects. Contributing to the community and environmental causes is engrained in Aroundtown’s belief that it is the best way to sustain their business.
Just as important, however, is the company’s belief that it must provide value to its shareholders to continue to retain its sustainable business practices. Reflective of the company portfolio’s sustainability during the pandemic, Aroundtown has chosen to issue a dividend equal to €0.14 per share, for the 2019 calendar year. During the December 15th, 2020 investors meeting, it was decided that the shareholders can choose to receive the dividend in the form of cash, as well as in the form of a scrip dividend.
The company also reflected its strong fundamental belief in the underlying business values by instituting a recent share buyback policy. Aroundtown has been able to dispose of a large portion of its non-core properties selling €2.6 billion of assets above their book value. The buyback in the amount of €1 billion was done at an average price of €4.9 per share.
Because the company’s shares were traded at a significant discount to its EPRA NAV, the €1 billion buyback boosted the value per share for shareholders. Aroundtown’s management’s fast reaction to such an arbitrage opportunity further illustrates their ability to capitalize on the opportunity to create shareholder value.
Aroundtown was founded by billionaire property magnate Yakir Gabay (יקיר גבאי) in the year 2004, yet in 2015 became publicly indexed on the Euronext Stock Exchange in Paris and Frankfurt’s stock exchange at a price per share of €3.2, with a market cap of €1.5 billion.
Over the span of just a few years, the company has since become the largest publicly listed real estate company in Germany with an estimated asset value of €30 billion, and a BBB+ rating from S&P.
The real estate conglomerate primarily invests in income-generating, value-filled properties around top-tier German cities and Netherlands. The largest shareholder is Avisco which is controlled by billionaire investor Yakir Gabay (יקיר גבאי) with 10%, followed by Blackrock 5%, Fidelity, Vanguard, Allianz, Norges Bank, and many other international investment players.
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