Grand City Raises Funds From Operations Guidance to €195 Million for 2026
Key Facts
On November 11, Grand City Properties raised its 2026 FFO I guidance range by €10 million to €185–195 million, from a previous range of €175–185 million. The new range equals €1.05–1.11 per share, according to the company’s nine-month results statement. The company attributed the increase to its investment in LEG Immobilien. It said the updated guidance takes the timing of the transaction into account, while the full-year impact is expected to emerge in 2027. This places the guidance revision in the context of an investment transaction alongside mixed operating performance for the period ended in September.
FFO I was about €136 million in the first nine months of 2026, down 4% from €141 million in the same period of 2025. The company attributed the decline mainly to higher financing expenses, a larger share of perpetual securities and a higher contribution from non-controlling interests. By contrast, net rental income rose 4% to €331 million from €320 million a year earlier. The company said like-for-like rental growth was 3.3% in September, while the vacancy rate remained at 3.6%. The figures reflect improved rental income alongside a decline in funds from operations during the period.
Adjusted EBITDA rose 4% to €265 million in the first nine months, compared with €253 million in the corresponding period of 2025. The company attributed the increase to growth in net rental income, while net operating expenses remained largely stable. But profit for the period fell to €182 million from €410 million a year earlier, and basic earnings per share declined to €0.69 from €1.84. The company said the fall in profit was mainly due to lower revaluation gains in the first half of 2026 and a one-off deferred tax income recorded in the third quarter of 2025. Chief Executive Rafael Zamir said the first nine months demonstrated the strength of the business model and its ability to create value in different market environments.
Grand City said it acquired a 20.04% stake in LEG after the reporting period ended, describing it as a financial investment with a high contribution to funds from operations. The company expects the stake to generate an annual increase of about 30% in FFO I on a pro rata basis and after financing costs. In its view, this is one of the drivers behind the 2026 guidance increase, but the transaction’s full-year impact will not emerge until 2027. It also said it may increase its stake to 29.9%, at its discretion and depending on market conditions. The company noted that it could rapidly reduce the stake substantially or sell part or all of the investment depending on market conditions.
Liquidity in September amounted to €613 million in cash and liquid assets, alongside €215 million in undrawn revolving credit facilities. After the reporting period, the company issued a €500 million short-term bond and signed a €600 million two-year bridge loan linked to the LEG transaction. The loan-to-value ratio was 34% in September, compared with 31% in December 2025, while the interest coverage ratio was 4.7 times. Unencumbered assets were valued at €7.0 billion, or 74% of the total portfolio value. The company said S&P affirmed the ratings of the group and the standalone company after the transaction.
Grand City said its 2027 debt maturities are fully covered and its next refinancing needs begin in 2028. This follows the bond issuance and the signing of the bridge loan after the reporting period, as part of financing arrangements linked to the LEG investment. Commenting on the results, Zamir said the company expects rental growth, disciplined operating execution and investment to translate into strong FFO growth in coming periods. He added that the company expects to maintain its liquidity, financial flexibility and credit profile. The company issued its third-quarter financial report on November 11, the same date it announced the increase to its annual guidance.