alstria office REIT (ETR:AOX) said it remained on plan through the first nine months of 2026, citing progress in asset sales, debt reduction and leasing activity as it works to strengthen its balance sheet.
CEO Maximilian Koch said the company’s EPRA net tangible assets rose to €14.32 per share from €13.85, while net loan-to-value declined slightly to 54.2%. The company reported revenue of €143 million, slightly below the prior-year period, while funds from operations increased 50% to €60 million.
“We’re deleveraging the balance sheet, we’re selling assets, and we’re building equity in the process,” Koch said during the company’s third-quarter results call.
Leasing activity reflects focus on higher-quality space
During the first nine months, alstria leased 112,000 square meters, including 44,000 square meters of new leases and 68,000 square meters of lease extensions. The activity secured €77 million in future rental income, with €44 million from new leases and €33 million from extensions.
The leasing volume was below the 209,000 square meters recorded a year earlier. Koch said the comparison was affected by several large lease extensions with the city of Hamburg in the prior year, noting that such negotiations can take about 18 months and cannot be timed to a particular quarter.
New leases were signed at an average rent of €25 per square meter, compared with about €16 per square meter for the prior leases, according to Koch. He said the company has increased office rent at a compound annual growth rate of 3.3% over time and by 3% in the first nine months of 2026.
Koch said tenants were increasingly differentiating between properties based on quality and amenities. While vacancy has risen in some parts of the office market, rents have increased for higher-quality space in which landlords have invested, he said.
The portfolio comprised 102 assets valued at €4.3 billion, or about €42 million per asset on average. Average property size was 13,500 square meters, while the portfolio’s valuation stood at about €3,100 per square meter and its valuation yield was 4.6%. Annualized rent was €199 million, the average lease term was 5.5 years, and EPRA vacancy was stable at 8.9%.
Disposals support deleveraging effort
The company signed sales of four assets in Mannheim, Dreieich, Hamburg and Düsseldorf for a combined €87 million. The properties were sold at an average discount of 5% to book value.
Koch said the assets spanned different locations and quality levels within the portfolio, and that the sales supported the company’s book values. Over alstria’s holding period, the assets generated an unlevered return equal to 1.5 times unlevered equity, he said.
The company expects improved investment-market activity for assets valued below €30 million. Its disposal strategy combines routine property sales with efforts to sharpen the portfolio by selling user-specific assets or properties located on the portfolio’s periphery.
FFO rises as hedging lowers financing costs
CFO Andreas Reiswich said gross rental income declined slightly, primarily because of asset disposals, while revenue remained in line with the company’s plan. FFO increased largely because of lower financing costs resulting from the company’s hedging activities.
The FFO margin rose to 42%, while selling, general and administrative expenses declined 7% to €23.4 million. Consolidated EBITDA increased 5% to €144 million, driven mainly by lower SG&A and real estate operating expenses.
Equity increased 5% to €1.7 billion, reflecting profit for the period and a positive movement in the hedging reserve. Net financial debt declined 1% to €2.4 billion, mainly due to repayments associated with asset disposals.
During the nine-month period, alstria repaid a €153 million bond and a €40 million Schuldschein loan, reduced bank debt by about €17 million, and raised €32 million of new secured debt. Gross financial debt fell by about €180 million.
The company’s cost of debt before hedging increased to 4.2% from 3.8%, which Reiswich attributed to the repayment of the lower-coupon bond and Schuldschein. Its consolidated coverage ratio improved to 3.1 times from 2.4 times, above the covenant requirement of 1.8 times.
Refinancing and capital spending plans
Alstria’s next significant debt maturity is a bank loan of approximately €160 million due in September 2027. Reiswich said the refinancing was in its final stages. One financing portfolio had already received credit approval and was in documentation, while a second portfolio involving two banks was also progressing through the approval process.
Management said the refinancing would reduce a mortgage financing from €500 million to about €330 million, consistent with its deleveraging strategy. The company also has an undrawn €200 million revolving credit facility.
Koch said alstria plans to invest around €100 million annually in refurbishments and capital expenditures in 2027 and subsequent years. About one-third of that spending is committed, he said, while the remainder can be adjusted depending on the pace of disposals.
Management said it intends to repay a residual bond due next year with cash rather than returning to the market for new bond financing. Koch also said the company aims to reduce leverage over the medium term and ultimately return to investment-grade status.
On property values, Koch said it was too early to provide a final year-end assessment, but he expected valuations to be roughly flat for the year, with the potential benefit of capital expenditures still to be determined.
The company also said it rebuilt its ESG database on an AI-native basis and expanded its carbon reporting scope. Reported carbon emissions under the expanded scope fell 27% between 2024 and 2025, though Koch said much of that change reflected a lower number of development projects. On a like-for-like basis, he said emissions declined 4.5%.
About alstria office REIT (ETR:AOX)
Alstria office REIT AG is the leading real-estate operator focusing solely on German office property in selected German markets. Our strategy is based on the ownership and an active management of our properties throughout their entire life cycle, strong added-value services to our customers and deep knowledge of the markets in which we operate. Alstria strives for sustainable long-term value creation while taking advantage of short-term arbitrage of inefficiencies in the real estate markets. The portfolio comprises 118 buildings with a lettable area of 1.6 million sqm and a total portfolio value of EUR 4.0 billion.
