In a notable and unprecedented shift within the real estate investment landscape, real estate companies across the region have this year offered to repurchase 25 hybrid bonds from investors—a record number according to Bloomberg data. When senior bonds are included, the total number of expected buyback offers is projected to exceed 90 by 2025, reflecting a deliberate strategy to restructure balance sheets following a period of economic challenges.
These companies are primarily focused on redeeming bonds with high coupons while simultaneously issuing new debt at lower interest rates. The main objective is to reduce borrowing costs and extend maturities in order to improve financial positions.
These moves coincide with a favorable economic environment that supports such initiatives, as declining interest rates have opened the door to more efficient financing opportunities, particularly in the real estate sector. The recovery of credit markets and the gradual return of activity in commercial offices have further reinforced these financial decisions.
On the other hand, Julian Marks, Head of Hybrid Bonds at Nomura Asset Management, noted that performance indicators of bond issuers are showing gradual improvement. He pointed out that companies specializing in the residential sector have recorded relative stability, while those operating in the office sector have exceeded analysts’ expectations with their positive performance.
Among the most prominent pioneers of this approach is Aroundtown SA, a German company active in residential and commercial real estate investment. This year alone, the company has offered to repurchase 17 bonds.
Recently, it announced a major transaction involving nine bonds that will generate annual savings of approximately €50 million in coupon payments. This step is part of a comprehensive plan launched last year to restructure debt and replace older bonds with new ones that strengthen equity and improve credit ratings.
The sharp increases in interest rates since 2022 have pushed many highly leveraged companies to adopt new and unconventional strategies. Aroundtown, for its part, decided to forgo the first call option on some of its hybrid bonds due to the high cost of issuing new debt during that period. Since then, the company has focused on improving its financing mix to enhance flexibility in the face of market volatility.
According to its Chief Financial Officer, Jonas Tientlnot, Aroundtown has successfully refinanced bonds worth €4.6 billion through 2025, contributing to a stronger financial structure and a more diversified range of funding options.
When executing bond buybacks, companies typically offer fixed-price tender offers or rely on investor bidding. Although investors retain the option to sell voluntarily, companies tend to offer financial incentives above market value to encourage participation.
This year has seen strong demand for hybrid bond buyback offers, with the average proportion of bonds sold—originally issued in 2025—reaching around 44% of total investor holdings. Investors who chose to retain their bonds preferred to wait, aiming to benefit from potential future gains, particularly if early redemption options are exercised by borrowers.
Andreas Mayer, Founder and Chief Investment Officer at Fountain Square Asset Management, expressed appreciation for these measures, describing them as prudent and carefully considered steps.
He also noted that financial markets view positively the flexibility of bond issuers and their proactive management of financing challenges. He added that current market conditions and the improved balance between bond costs and yields encourage the replacement of high-coupon debt with lower-cost alternatives, making this a strategic option for enhancing companies’ long-term financial performance.
