alstria office REIT (ETR:AOX) said it remains on track with its strategy of reducing leverage, selling selected assets and building equity, as the German office landlord reported first-half 2026 results marked by higher funds from operations and stable operating metrics.
Maximilian Koch, CEO of alstria advisors, said the company’s equity increased during the period while loan-to-value declined slightly. He said the strategy is being supported by solid leasing activity and asset sales, despite broader geopolitical and economic uncertainty.
Portfolio and leasing activity
The portfolio was valued at approximately €3,000 per square meter, a level Koch described as relatively low in the German market and one that provides a basis for further investment in properties. Contractual rent remained near €200 million, the weighted average lease term was 5.7 years, and EPRA vacancy was stable at around 9%.
Koch said the leasing market continues to show a divergence between lower-quality space and upgraded properties. While vacancy has increased in some segments, rents are rising for high-quality space where landlords have invested in modernization, he said.
“We are producing the quality space,” Koch said, adding that this allows alstria to benefit from a supply-demand imbalance in that part of the market.
The company secured €56 million of future cash flow from leases signed during the first half. Koch noted that 2025 was alstria’s second-best leasing year, aided by several large Hamburg leases, but said the timing of major agreements can vary because negotiations often take about 18 months.
New leases were signed at an average of €28 per square meter, roughly double the portfolio average, according to Koch. He said this supported the company’s strategy of increasing the value of its space. On a portfolio-wide basis, rent growth was 2.8% in the first half, with long-term growth running at approximately 1.5 times inflation, he said.
Disposals support balance-sheet strategy
alstria sold three assets for a total of €64 million during the first six months of 2026. The sales included a newly built Mannheim property sold at a 4.4% yield, as well as a courthouse and a town hall in Dreieich, outside Frankfurt.
Koch said the company’s disposal strategy has three components:
- Harvesting cash flow from properties, investing in and refurbishing them, then selling them into the core market;
- Selling user-specific properties that may carry greater risk at lease expiry; and
- Disposing of more peripheral assets to concentrate the portfolio in the urban centers where alstria operates.
He said the properties were sold in line with book value, including assets at the more difficult end of the portfolio. Koch said this provided support for the company’s valuations and indicated that further transactions could follow under the same disposal framework.
FFO guidance raised as financing costs improve
Andreas, who presented the financial review, said revenue was modestly lower than prior periods but developed in line with the company’s plan. alstria raised its full-year funds-from-operations guidance to €74 million from €53 million, while maintaining revenue guidance of €192 million.
FFO increased 37% in the first half, driven primarily by the implementation of the company’s hedging strategy, which reduced financing costs. The FFO margin rose to 41%.
Reported selling, general and administrative expenses increased 10.6% from the prior-year period. Andreas said the increase reflected the company’s structural changes, including the migration to Luxembourg and the spin-off of alstria advisors, rather than higher underlying costs.
Under the new arrangement, alstria S.à r.l. and alstria advisors operate under a cost-plus model. Andreas said the net impact on consolidated profit and loss from this arrangement was €70,000. Office rent paid by alstria advisors to alstria entities increased rental income but was offset by advisory expenses, producing a neutral overall profit-and-loss effect. Adjusted for these structural factors, SG&A expenses were stable compared with the first half of 2025, he said.
Debt maturities and credit metrics
Investment properties remained broadly stable, as the €64 million of disposals were offset by capital expenditures. Equity increased 1.8%, mainly due to profit generated during the period, while net financial debt remained stable.
During the first half, alstria repaid a short-term facility in April and a €153 million bond that matured in June. The company raised €32 million of new secured debt. Gross financial debt declined by €160 million, funded from cash, while net debt remained stable.
Average debt maturity stood at 3.7 years, and the company has no debt maturities over the next 12 months. Andreas said alstria has begun discussions regarding the refinancing of bank debt due in 2027 and has an undrawn €200 million revolving credit facility.
Credit measures were stable or modestly improved. Consolidated EBITDA increased to €139 million, helped by lower real estate operating expenses. The consolidated coverage ratio rose to 2.6 times from 2.4 times, supported by higher EBITDA and the hedging strategy. The company said it aims to maintain the ratio well above two times and remained compliant with all financial covenants.
Responding to an analyst question, Andreas said the reported cost of debt increased to 2.6% from 2.4%, largely because a bond carrying a 0.5% coupon was repaid. He said the company expects its cost of debt to be in a range of 2.6% to 3% going forward.
Koch said alstria expects to perform in line with its updated 2026 guidance, citing continued demand for quality office assets and the company’s focus on leasing, development and balance-sheet improvement.
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.
