Deutsche EuroShop (ETR:DEQ) reported full-year 2025 results broadly in line with its latest forecast, as CEO Hans-Peter Kneip pointed to resilient tenant sales, a stable funding position following a debut green bond, and completed investment projects that management said are supporting footfall and leasing momentum.
Operational trends: stable footfall, higher tenant sales
Kneip said the group saw a “modest decrease” in footfall of 0.4% versus 2024, while tenant sales increased 2.2%. He described a subdued first quarter that improved as the year progressed, with “a positive trend in both visitor numbers and tenant sales” during the second and third quarters. In the fourth quarter, footfall fell 0.7% while turnover rose 1.8%, and Kneip said the company had anticipated “slightly better results” during Black Week and the run-up to Christmas, but still called the quarter “satisfactory.”
Tenant performance by sector and leasing metrics
In Germany, Kneip said health and beauty rose 2.8% year over year, with drug stores and pharmacies highlighted as key drivers. Electronics increased 1.1% and food was up 0.8%.
Fashion textiles—the largest tenant group in Germany with 28% of sales and 41% of retail space—ended 2025 down 0.5%, while general retail declined 0.4%. Kneip said shoes and leather goods, sports, and services also finished the year negative. Overall, like-for-like sales in Germany rose 0.1%, while tenants abroad posted +3%, resulting in a +0.8% increase across the entire portfolio, he said.
Kneip reported an average occupancy cost ratio (OCR) of 11.3%, which he described as “a healthy ratio” that indicates the portfolio is “well-balanced and not over-rented.” The weighted average maturity of rental contracts increased slightly to 4.9 years, with 41% of contracts maturing in 2031 or later. Occupancy increased 0.3 percentage points to 95.7%.
He also noted limited tenant concentration, with the top 10 tenants accounting for 22.5% of rental income. H&M was the largest tenant at 2.6%, followed by Deichmann and C&A at 2.5% each.
Financial results: revenue and operating profit edge lower; FFO declines
For 2025, Deutsche EuroShop posted revenue of EUR 270.4 million, down 0.4% from EUR 271.4 million. Kneip attributed the slight decline to increased rental incentives—such as construction cost subsidies and rent-free periods—along with lower revenue from land tax apportionments and insurance expense.
EBIT decreased 0.9% to EUR 214.4 million. Kneip said operating expenses rose due to one-off, non-apportionable ancillary costs tied to technical equipment renewals and storm damage, which he said was reimbursed by building insurance. He also highlighted that property tax expenses “have fallen sustainably” due to Germany’s property tax reform.
The financial result deteriorated by 30.4% (EUR 15.5 million) to -EUR 66.7 million, driven by higher interest expenses. Kneip said interest expense rose EUR 13.5 million due to interest on the inaugural green bond, prior-year loan increases, and higher interest rates on follow-on loans. He also cited EUR 2.7 million in expenses for swap terminations related to early loan repayments, and said interest income from short-term bank deposits was lower at EUR 4.6 million.
EBT excluding valuation declined 10.5% to EUR 147.8 million. Funds from operations (FFO) fell 9.2% to EUR 147.6 million, or EUR 1.95 per share, compared with EUR 2.14 per share in 2024.
Despite weaker operating and recurring earnings measures, the consolidated result increased to EUR 215.1 million from EUR 123.5 million, which Kneip attributed mainly to a higher valuation result and lower taxes. Earnings per share rose to EUR 2.84 from EUR 1.62.
Property values improved slightly, with a valuation gain of EUR 14.4 million in 2025 versus a EUR 14.6 million loss in 2024. Kneip said real estate assets increased 1.4% in 2025. The net initial yield was 6.22%, and the EPRA net initial yield was 5.89%.
Balance sheet, financing, dividend, and green bond
Kneip described the company’s funding position as “comfortable.” Following financing measures and dividend payments, loan-to-value stood at 41.3% and liquidity at EUR 387.4 million.
Total assets rose to EUR 4.6 billion after the June bond issue, which he said was driven by a higher cash balance and a slight increase in property values. Financial liabilities increased to EUR 2.1 billion, EUR 283 million higher than at the end of 2024, primarily due to the EUR 500 million bond. Kneip said loans totaling EUR 208.5 million were repaid using bond proceeds, including full repayment of loans at Herold-Center Norderstedt and Stadt-Galerie Hameln.
In June 2025, Deutsche EuroShop issued its first green bond of EUR 500 million with a 5.3-year term to October 2030 and a 4.5% annual interest rate. Kneip said the transaction was seven times oversubscribed and noted it is listed on the Euro MTF market of the Luxembourg Stock Exchange. He added that the company received a long-term issuer rating of BB+ from S&P ahead of the bond issue, while the bond itself is rated BB- by S&P.
The company paid a EUR 2.65 per share dividend in early July 2025, totaling EUR 200.7 million. For fiscal year 2025, Kneip said management intends to propose a dividend of EUR 1 per share to the AGM.
Portfolio projects, ESG initiatives, and 2026 guidance
Kneip said major investment projects at Main-Taunus-Zentrum and Rhein-Neckar-Zentrum were completed “on schedule and within budget.” At Main-Taunus-Zentrum near Frankfurt, he highlighted the opening of the Food Garden in April, built on roughly 7,000 square meters in place of a former department store building. He said the area is fully let and that footfall has increased 12% since opening.
At Rhein-Neckar-Zentrum near Mannheim, Kneip said a new leisure area called the Food and Fun Park includes new gastronomy, sports, and entertainment tenants. He cited a freestanding L’Osteria opened in February 2025 and additional attractions in a renovated former Bauhaus building, including a trampoline park, a cycling store, and a family entertainment concept featuring dark-light mini golf and an escape room. He also referenced an adjacent indoor skydiving center that he said is operating successfully.
On ESG, Kneip said the company published comprehensive ESG policies last autumn, including codes of conduct for employees and business partners and topic-specific policies on climate, energy, water, and waste, with an AI guideline in development. He added that the company’s green finance framework was rated “excellent” by Sustainable Fitch and that an allocation and impact report was published. Kneip said 20 of 21 properties hold Gold certification from the German Sustainable Building Council, with one Platinum, and that since 2025 all 21 sites are powered by renewable electricity.
For 2026, Deutsche EuroShop guided to revenue of EUR 269 million to EUR 277 million and EBIT of EUR 211 million to EUR 219 million, with a “slight upward trend” expected in both revenue and EBIT. Kneip said EBT excluding valuation and FFO are expected to decline slightly due to a planned lower financial result. The company forecasts FFO of EUR 1.77 to EUR 1.87 per share, or EUR 134 million to EUR 142 million in total, and EBT excluding valuation of EUR 134 million to EUR 142 million.
During Q&A, Kneip acknowledged increased rental incentives over the last one to two years to improve occupancy and attractiveness, saying the company expects incentives to “stabilize at a similar level for the coming years,” though it still sees “a slight upward tick needed.” He added that higher occupancy helps support rent growth, and said rent increases have been “rather slowly,” with potential to lift rents somewhat in 2026 and “hopefully more so in 2027.”
Asked about CapEx, Kneip said spending is expected to remain elevated, including projects to diversify the tenant mix toward gastronomy and entertainment. He estimated CapEx could be “close to EUR 40 million ± EUR 10 million,” depending on projects, and said it will likely remain high this year and next.
On cost inflation assumptions, Kneip said the company sees inflation potentially moving above the roughly 2.2% level seen in Germany last year, noting higher energy prices could feed through due to geopolitical conflict, though he said it was “a little bit early” to provide precise guidance.
About Deutsche EuroShop (ETR:DEQ)
Deutsche EuroShop is the only public company in Germany to invest exclusively in shopping centers in prime locations. The company currently has investments in 21 shopping centers in Germany, Austria, Poland, the Czech Republic and Hungary. The portfolio includes the Main-Taunus-Zentrum near Frankfurt, the Altmarkt-Galerie in Dresden and the Galeria Baltycka in Gdansk, among many others.
