Trade Estates anticipates an increase in revenue and gross profit for 2026; however, the overall outlook for the year is expected to be neutral, as the REIT prepares for an interest rate hike in the near future.
At the company’s General Meeting held yesterday, management announced that this year’s rental income is estimated to rise by 4.6% to €43 million, with adjusted EBITDA reaching €32.5 million, up 3.8%.
According to the guidance, funds from operations (FFO) for 2026 will amount to €22 million, unchanged from 2025.
It should be noted that FFO is perhaps the most important metric monitored by industry analysts, as it reflects the cash generated by the company from the leasing and management of its properties, as well as its ability to pay dividends.
“The first fact is that an interest rate hike is imminent. As you know, the tax rate for REITs is tied to the European Central Bank’s interest rate, so there is a significant likelihood that our company’s tax burden will increase,” noted Dimitris Papoulis, CEO of Trade Estates.
“Second reason: in Cyprus, we have seen a corporate tax increase from 12.5% to 15%, which imposes a burden on the property we own in Cyprus. And the third reason is that the launch of our development plan at Elliniko ties up capital that does not generate income. In other words, an extra financial cost is added without the corresponding revenue,” he added.
It should be noted that the company’s investment in Elliniko (featuring Big Box stores) is entering the construction phase and is expected to begin commercial operations in the second half of 2029.
The resilient model
Regarding broader market conditions, the CEO spoke of inflationary pressures weighing on household incomes, but also of an AEEAP business model that appears to be resilient.
“We fully understand the difficulties arising from inflationary pressures, as household income is under significant strain. However, the reason we chose from the very beginning, since the company’s founding, to focus on so-called ‘necessity shopping’ and daily needs was precisely this,” emphasized Mr. Papoulis.
“We wanted to completely separate our business from the discretionary retail sector—which pertains to traditional malls. For us, the consumer comes to meet basic needs, which is why we make sure to make their visit as convenient as possible.
For example, we offer free parking everywhere. While this could be a source of revenue, as it is for other companies, we choose not to charge for it in order to truly serve the consumer, while also ensuring the resilience of our own model.
“The first-quarter results confirm exactly that: we are seeing a clear differentiation and better performance of our own destinations compared to shopping malls and the high street,” he added.