Hamborner REIT Accelerates Office Property Divestment in Strategic Overhaul

German REIT Hamborner plans to cut office holdings from 43% to 10-20%, focusing on retail and DIY assets. It faces higher interest costs as it refinances 20% of its €640M debt.

German real estate investment trust Hamborner REIT is executing a fundamental portfolio restructuring, with a strategic pivot away from office assets taking center stage. This shift coincides with a pressing need to refinance a significant portion of its debt under new market conditions, a topic detailed in a recent strategic briefing.

Portfolio Rebalancing Away from Offices

A decisive strategic change is underway regarding the company's property holdings. Management plans to drastically reduce the portfolio's exposure to office real estate, aiming to cut its current 43% share down to a long-term target range of just 10% to 20%. This retreat is counterbalanced by an increased focus on retail properties and do-it-yourself (DIY) warehouse assets.

To enhance agility in this transition, Hamborner will now consider smaller-scale acquisition opportunities, targeting assets with an investment volume as low as three million euros. The company pointed to recent disposals in Lübeck and Osnabrück as evidence that its selective sales approach remains effective even in a challenging market. These transactions were completed for a combined 27.4 million euros, achieving prices in line with the latest assessed property values.

Refinancing Headwinds and Solid Equity Base

The altered interest rate environment is set to increase the company's borrowing costs. During an online roundtable, leadership confirmed total debt stands at 640 million euros, with approximately 20% of this sum requiring renegotiation in the coming year. Hamborner relies exclusively on traditional bank financing.

While the average interest cost on existing debt remains a favorable 2.1%, the management team anticipates new agreements will carry rates around 4%. Despite this near-doubling of financing expenses, the company's financial foundation is deemed robust, supported by a REIT equity ratio of 54.7%.

NAV Discount and Performance Targets

The most recent year-end property revaluation impacted the balance sheet, resulting in a space-adjusted depreciation of 65.1 million euros. This pushed the Net Asset Value (NAV) per share down to 9.07 euros. Compared to a recent closing share price of 4.62 euros, the stock continues to trade at a substantial discount. Over a 12-month period, the share price has declined by more than 24%.

For the current 2026 fiscal year, the group is targeting Funds from Operations (FFO) in a range of 38 to 42 million euros. Shareholders can expect a dividend of 0.39 euros for the past year, representing a payout ratio of 65%. The future trajectory of the company now hinges significantly on the efficient execution of its portfolio transformation, a process that must navigate rising interest costs without compromising overall profitability.