China’s Xi speaks with Trump by phone, discusses Taiwan and bilateral ties
Introduction & Market Context
Hamborner REIT AG (HAB2) presented its third quarter 2025 results on November 6, highlighting a challenging period marked by declining rental income and funds from operations (FFO). The German commercial property investor, which focuses on retail and office assets, maintained a stable portfolio structure while navigating headwinds in the real estate sector. The company's stock price remained unchanged at €5.14 following the presentation, reflecting investor neutrality toward the mixed results.
Quarterly Performance Highlights
Hamborner reported a 2.8% year-over-year decline in income from rents and leases to €67.9 million for Q3 2025, down from €69.8 million in the same period last year. More concerning was the 22.8% drop in operating results to €16.4 million and a 20.5% decrease in period result to €9.2 million. The company's key earnings metric, Funds from Operations (FFO), fell 12.2% to €36.7 million, resulting in FFO per share of €0.45 compared to €0.51 in Q3 2024.
As shown in the following detailed breakdown of key financial figures:
Despite these declines, the company maintained solid balance sheet metrics with a REIT equity ratio of 55.8% (up 0.6 percentage points from year-end 2024) and a loan-to-value (LTV) ratio of 43.3% (an improvement of 0.4 percentage points from December 2024).
The company's rent development analysis reveals that while indexation contributed positively with a 2.3% increase (€2.1 million), this was offset by property disposals which reduced annualized rents by 3.5% (€3.2 million) and vacancy changes which had a 0.8% negative impact (€0.8 million).
Portfolio and Leasing Activity
Hamborner's portfolio comprised 64 properties as of September 30, 2025, with 38 retail and 26 office assets valued at €1.41 billion. The portfolio generated annualized rent of €88.6 million with a rental yield of 6.3%. While the EPRA vacancy rate increased slightly to 3.4% from 2.8% a year earlier, the company achieved like-for-like rent growth of 1.5 percentage points.
The following slide illustrates the company's portfolio composition and key metrics:
The tenant base remains heavily concentrated in the food retail sector, with EDEKA Group and Kaufland Group accounting for 14.0% and 7.5% of rent respectively. Overall, the top 10 tenants represent 52.8% of Hamborner's rental income, highlighting the company's dependence on key anchor tenants.
Hamborner's leasing activity showed a divergence between retail and office performance. The weighted average lease term (WALT) stood at 5.5 years, with retail properties enjoying longer terms (6.7 years) compared to office assets (4.0 years). New leasing activity was dominated by retail, which accounted for 94% of the 25,179 square meters leased in the first nine months of 2025.
Financial Position
The company maintained a solid financial position with €629.8 million in financial liabilities at an average cost of debt of 2.0% and an average maturity of 3.0 years. Key financial ratios included a net debt to EBITDA ratio of 10.2x and an EBITDA to interest coverage ratio of 5.1x.
The following chart illustrates the company's debt maturity profile:
Hamborner has also made progress on its ESG initiatives, particularly in reducing its carbon footprint. The company is targeting a 50% reduction in emission intensity by 2030 compared to its base year, with current emissions already showing significant improvement.
Forward-Looking Statements
Despite the challenging quarter, Hamborner has raised its full-year guidance for 2025, now expecting rental income between €89.5 million and €90.5 million (up from the previous guidance of €87.5 million to €89.0 million). FFO is projected to be between €44.0 million and €46.0 million.
The updated guidance reflects management's cautious optimism while acknowledging several influencing factors, including recent property disposals, the timing of potential acquisitions, expected increases in maintenance costs, and higher personnel and administrative expenses.
During the earnings call, executives noted that "despite the still challenging market environment, we remain fundamentally positive about the remainder of the year," while acknowledging that "letting agreements, especially on the larger side, tend to take longer" in the current market conditions.
The company also highlighted increased scrutiny from financial institutions regarding sustainability expectations, reinforcing the importance of Hamborner's ongoing ESG initiatives.
Competitive Industry Position
Hamborner's portfolio strategy continues to emphasize the stability of its retail assets, which have shown greater resilience than office properties. With a strong tenant base in essential retail sectors like food (34.5% of rent) and DIY (11.3%), the company has positioned itself to weather market uncertainties.
However, challenges remain, including rising maintenance and administrative costs, prolonged rental negotiations, and increased complexity in lease agreements, particularly concerning sustainability requirements. These factors, combined with sensitivity in rental pricing following high inflation periods, will likely continue to pressure profitability in the near term.
As the real estate sector navigates economic uncertainties, Hamborner's focus on portfolio optimization, tenant retention, and sustainability initiatives provides a foundation for long-term stability, even as short-term financial metrics reflect ongoing market challenges.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.